EXHIBIT h.1
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund II
[ ] Common Shares of Beneficial Interest
Par Value $0.00001 per Share
UNDERWRITING AGREEMENT
[ ], 2003
UNDERWRITING AGREEMENT
[ ] , 2003
UBS Securities LLC
[ ]
c/o UBS Securities LLC
as Managing Representative
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund II, a voluntary
association with transferable shares organized and existing under and by virtue
of the laws of The Commonwealth of Massachusetts (commonly referred to as a
Massachusetts business trust) (the "Fund"), proposes to issue and sell to the
underwriters named in Schedule A annexed hereto (the "Underwriters") an
aggregate of [ ] common shares of beneficial interest (the "Firm Shares"), par
value $0.00001 per share (the "Common Shares"), of the Fund. In addition, solely
for the purpose of covering over-allotments, the Fund proposes to grant to the
Underwriters the option to purchase from the Fund up to an additional [ ] Common
Shares (the "Additional Shares"). The Firm Shares and the Additional Shares are
hereinafter collectively sometimes referred to as the Shares. The Shares are
described in the Prospectus which is referred to below.
The Fund has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively called the "Act"), and with the provisions of the Investment
Company Act of 1940, as amended, and the rules and regulations thereunder
(collectively called the "Investment Company Act"), with the Securities and
Exchange Commission (the "Commission") a registration statement on Form N-2
(File Nos. 333-104708 and 811-21338), 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 Securities 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 [ ], 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 [ ], 2003. ▇▇▇▇▇ 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 [ ], 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 [ ], 2003 (the "Transfer Agency Agreement"). UBS
Securities LLC will act as a shareholder servicing agent for the Fund pursuant
to a Shareholder Servicing Agreement by and between UBS Securities LLC and the
Investment Manager, dated as of [ ], 2003 (the "Shareholder Servicing
Agreement"). The Investment Manager and the Managing Representative have also
entered into an Additional Compensation Agreement, dated [ ], 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.
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
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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 Allianz Dresdner Asset Management of America
L.P. ("▇▇▇▇ of America"), and, upon the basis of the representations,
warranties and agreements of the Fund contained herein, ▇▇▇▇ of America
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 [ ] Shares (the "▇▇▇▇ of America
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.
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
3
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 ▇▇▇▇ of America Shares
shall be as agreed upon by ▇▇▇▇ of America and the Fund; provided,
however, that the date of such closing for the ▇▇▇▇ of America 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 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
4
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
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
5
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 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
6
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 auditors 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.
(o) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or
7
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 [ ], 2003 and [ ], 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 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.
8
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 as rights to indemnity thereunder may be limited by
federal or state securities laws.
9
(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 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
10
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 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
11
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.
(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
12
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 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
13
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 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
14
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 Manager shall pay (i) the amount by which
the Fund's offering costs (other than the sales load) exceed
$0.03 per share and (ii) all of the Fund's organizational
expenses, except that the Fund agrees to reimburse the Manager
for such organizational expenses to the extent that the aggregate
of all such organizational expenses and all offering costs (other
than the sales load) does not exceed $0.03 per share. These
organizational and offering expenses include but are 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.
15
(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:
(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
16
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 adverse change in the
general affairs, prospects, management, business, financial
condition or results of operations of the Fund (with respect to
the
17
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.
(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
18
Underwriting Agreement from the firm of auditors designated in
such Schedule. The Managing Representative also must have
received on each Closing Date a signed letter from such auditors,
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 Representative, impracticable or
inadvisable to market the Shares on the terms and in the manner
contemplated by the Prospectus; or
19
(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 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
20
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 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
21
person, unless the failure is the result of noncompliance by the
Fund with Section 5(d) hereof.
If any action, suit or proceeding (together, a
"Proceeding") is brought against an Underwriter or any such
person in respect of which indemnity may be sought against the
Fund or the Investment Manager pursuant to the foregoing
paragraph, such Underwriter or such person shall promptly notify
the Fund and the Investment Manager in writing of the institution
of such Proceeding and the Fund or the Investment Manager shall
assume the defense of such Proceeding, including the employment
of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the
omission to so notify the Fund or the Investment Manager shall
not relieve the Fund or the Investment Manager from any liability
which the Fund or the Investment Manager may have to any
Underwriter or any such person or otherwise. Such Underwriter or
such person shall have the right to employ its or their own
counsel in any such case, but the reasonable fees and expenses of
such counsel shall be at the expense of such Underwriter or of
such person unless the employment of such counsel shall have been
authorized in writing by the Fund or the Investment Manager, as
the case may be, in connection with the defense of such
Proceeding or the Fund or the Investment Manager shall not have,
within a reasonable period of time in light of the circumstances,
employed counsel to have charge of the defense of such Proceeding
or such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them
which are different from, additional to or in conflict with those
available to the Fund or the Investment Manager (in which case
the Fund, the Investment Manager shall not have the right to
direct the defense of such Proceeding on behalf of the
indemnified party or parties), in any of which events such
reasonable fees and expenses shall be borne by the Fund or the
Investment Manager and paid as incurred (it being understood,
however, that the Fund or the Investment Manager shall not be
liable for the expenses of more than one separate counsel (in
addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). Neither
the Fund nor the Investment Manager shall be liable for any
settlement of any Proceeding effected without its written consent
but if settled with the written consent of the Fund or the
Investment Manager, the Fund or the Investment Manager, as the
case may be, agrees to indemnify and hold harmless any
Underwriter and any such person from and against any loss or
liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall
have requested an indemnifying party to reimburse the indemnified
party for reasonable fees and expenses of counsel as contemplated
by the second sentence of this paragraph, then the indemnifying
party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such
settlement is
22
entered into more than 60 business days after receipt by such
indemnifying party of the aforesaid request, (ii) such
indemnifying party shall not have reimbursed the indemnified
party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the
indemnifying party at least 30 days' prior notice of its
intention to settle. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any
settlement of any pending or threatened Proceeding in respect of
which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are
the subject matter of such Proceeding and does not include an
admission of fault, culpability or a failure to act, by or on
behalf of such indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Fund and the Investment Manager, and each of their
respective shareholders, partners, managers, members, trustees,
directors and officers, and any person who controls the Fund or
the Investment Manager within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, and the successors and
assigns of all of the foregoing persons from and against any
loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally,
the Fund or the Investment Manager or any such person may incur
under the Act, the Exchange Act, the Investment Company Act, the
Advisers Act, the common law or otherwise, insofar as such loss,
damage, expense, liability or claim arises out of or is based
upon any untrue statement or alleged untrue statement of a
material fact contained in and in conformity with information
furnished in writing by or on behalf of such Underwriter to the
Fund or the Investment Manager expressly for use with reference
to such Underwriter in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment
thereof by the Fund) or in a Prospectus, or arises out of or is
based upon any omission or alleged omission to state a material
fact in connection with such information required to be stated in
such Registration Statement or such Prospectus or necessary to
make such information not misleading (with respect to the
Prospectus, in light of the circumstances under which they were
made).
If any Proceeding is brought against the Fund, the
Investment Manager or any such person in respect of which
indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Fund, the Investment Manager or such
person shall promptly notify such Underwriter in writing of the
institution of such Proceeding and such Underwriter shall assume
the defense of such Proceeding, including the employment of
counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the
23
omission to so notify such Underwriter shall not relieve such
Underwriter from any liability which such Underwriter may have to
the Fund, the Investment Manager or any such person or otherwise.
The Fund, the Investment Manager or such person shall have the
right to employ its own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of the Fund,
the Investment Manager or such person, as the case may be, unless
the employment of such counsel shall have been authorized in
writing by such Underwriter in connection with the defense of
such Proceeding or such Underwriter shall not have, within a
reasonable period of time in light of the circumstances, employed
counsel to have charge of the defense of such Proceeding or such
indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different
from or additional to or in conflict with those available to such
Underwriter (in which case such Underwriter shall not have the
right to direct the defense of such Proceeding on behalf of the
indemnified party or parties, but such Underwriter may employ
counsel and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such
Underwriter), in any of which events such fees and expenses shall
be borne by such Underwriter and paid as incurred (it being
understood, however, that such Underwriter shall not be liable
for the expenses of more than one separate counsel (in addition
to any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified
parties who are parties to such Proceeding). No Underwriter shall
be liable for any settlement of any such Proceeding effected
without the written consent of such Underwriter but if settled
with the written consent of such Underwriter, such Underwriter
agrees to indemnify and hold harmless the Fund, the Investment
Manager and any such person from and against any loss or
liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall
have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel as contemplated by the
second sentence of this paragraph, then the indemnifying party
agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 business days after
receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall not have reimbursed the indemnified
party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the
indemnifying party at least 30 days' prior notice of its
intention to settle. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any
settlement of any pending or threatened Proceeding in respect of
which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are
the
24
subject matter of such Proceeding and does not include an
admission of fault, culpability or a failure to act, by or on
behalf of such indemnified party.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b)
of this Section 9 in respect of any losses, damages, expenses,
liabilities or claims referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to
reflect the relative benefits received by the Fund and the
Investment Manager on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above
but also the relative fault of the Fund and the Investment
Manager on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in
such losses, damages, expenses, liabilities or claims, as well as
any other relevant equitable considerations. The relative
benefits received by the Fund and the Investment Manager on the
one hand and the Underwriters on the other shall be deemed to be
in the same respective proportions as the total proceeds from the
offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Fund and the total
underwriting discounts and commissions received by the
Underwriters, bear to the aggregate public offering price of the
Shares. The relative fault of the Fund and the Investment Manager
on the one hand and of the Underwriters on the other shall be
determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact
or omission or alleged omission relates to information supplied
by the Fund or the Investment Manager or by the Underwriters and
the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
damages, expenses, liabilities and claims referred to in this
subsection shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with
investigating, preparing to defend or defending any Proceeding.
(d) The Fund, the Investment Manager and the Underwriters agree that
it would not be just and equitable if contribution pursuant to
this Section 9 were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or
by any other method of allocation that does not take account of
the equitable considerations referred to in subsection (c) above.
Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the fees
and commissions received by such Underwriter. No
25
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.
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 Securities LLC, 299
▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, 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 Securities LLC each consent to the
jurisdiction of such courts and personal service with respect thereto.
The Fund and UBS Securities 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 Securities LLC or any indemnified party. Each of UBS
Securities LLC, the Fund (on its behalf and, to the extent permitted by
applicable law, on behalf of its stockholders and affiliates) and the
Investment Manager (on its behalf and, to the extent permitted by
applicable law, on behalf of its unitholders and affiliates) waives all
right to trial by jury in any action, proceeding or counterclaim
(whether based upon contract, tort or otherwise) in any way arising out
of or relating to this Agreement. Each of the Fund and the Investment
Manager agrees that a final judgment in any such action, proceeding or
counterclaim brought in any such court shall be conclusive and binding
upon the Fund and the Investment Manager, as the case may be, and may
be enforced in any other courts in the jurisdiction of which the Fund
or the Investment Manager, as the case may be, is or may be subject, by
suit upon such judgment.
13. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Fund and the
Investment Manager and to the extent provided in Section 9 hereof the
controlling persons, shareholders, partners, members, trustees,
managers, directors and officers referred to in such section, and their
respective successors, assigns, heirs, personal representatives and
executors and administrators. No other person, partnership, association
or corporation (including a purchaser, as such purchaser, from any of
the Underwriters) shall acquire or have any right under or by virtue of
this Agreement.
27
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 II
__________________________
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 Securities LLC
By: UBS Securities LLC
__________________________
By: ▇▇▇▇ ▇. Reit
Title: Executive Director
__________________________
By: ▇▇▇▇ ▇. Key
Title: Director
30
SCHEDULE A
-------------------------------------------------------------------------------
Number of Shares
Name to be Purchased
---- ---------------
-------------------------------------------------------------------------------
UBS Securities LLC [ ]
-------------------------------------------------------------------------------
Citigroup Global Markets Inc [ ]
-------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated [ ]
-------------------------------------------------------------------------------
Prudential Securities Incorporated [ ]
-------------------------------------------------------------------------------
Wachovia Capital Markets, LLC [ ]
-------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated [ ]
-------------------------------------------------------------------------------
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated [ ]
-------------------------------------------------------------------------------
▇▇▇▇▇ Fargo Securities, LLC [ ]
-------------------------------------------------------------------------------
Advest, Inc [ ]
-------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇ & Co. Inc [ ]
-------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC [ ]
-------------------------------------------------------------------------------
McDonald Investments Inc., a KeyCorp Company [ ]
-------------------------------------------------------------------------------
Quick & ▇▇▇▇▇▇, Inc., a FleetBoston Financial Company [ ]
-------------------------------------------------------------------------------
Wedbush ▇▇▇▇▇▇ Securities Inc. [ ]
-------------------------------------------------------------------------------
TOTAL [ ]
-------------------------------------------------------------------------------
A-1
SCHEDULE B
FORM OF OPINION OF
ROPES & ▇▇▇▇ LLP REGARDING THE FUND
[ ], 2003
UBS Securities LLC
[ ]
as Managing Underwriters
c/o UBS Securities LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income
Fund II (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 [ ], 2003 (the "Underwriting Agreement")
among the Fund, PIMCO Advisors Fund Management LLC (formerly, PIMCO Funds
Advisors LLC) (the "Investment Manager") and UBS Securities LLC, and [ ], 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. 333-104708) 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 April 23, 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 June 9, 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 [ ], 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 [ ], 2003
("Pre-Effective Amendment No. 3"), and Pre-Effective Amendment No. 4 to the
Original Registration Statement, including all exhibits thereto,
B-1
as filed with the Commission on [ ], 2003 ("Pre-Effective Amendment No. 4," and,
together with the Original Registration Statement, Pre-Effective Amendment No.
1, Pre-Effective Amendment No. 2 and Pre-Effective Amendment No. 3, the
"Registration Statement"); the Fund's Notification of Registration on Form N-8A
(File No. 811-21338) under the Investment Company Act, as filed with the
Commission on April 23, 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 [ ], 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 [ ], 2003, relating to the Shares and the Statement of
Additional Information of the Fund dated [ ], 2003, each as filed with the
Commission pursuant to Rule 497 under the Securities Act on [ ], 2003 (together,
the "Prospectus"); the Investment Management Agreement dated as of [ ], 2003,
between the Fund and the Investment Manager (the "Investment Management
Agreement"); the Portfolio Management Agreement dated as of [ ], 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 [ ], 2003, between the
Fund and ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co. (the "Custodian Agreement"); [the
Accounting Agency Agreement dated as of [ ], 2003, between the Fund and [▇▇▇▇▇
Brothers ▇▇▇▇▇▇▇▇ & Co.] (the "Accounting Agency Agreement")]; and the Transfer
Agency Services Agreement dated as of [ ], 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 Statement became effective as of [ ] on [ ], 2003; a letter dated [
], 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
[ ], 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 [ ], 2003, certifying copies of (a) a
Certificate of Designation by the Fund
B-2
dated [ ], 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 [ ], 2003 relating to the Fund and (4) a LEXIS search on [ ]
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 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.
B-3
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, 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
after the inquiry described above, the Commission has not issued to the Fund
notice of any hearing or other proceeding to consider suspension or revocation
of any such registration. To the best of our knowledge after due inquiry, all
required action has been taken by the Fund under the Securities Act, the
Investment Company Act and the rules and regulations thereunder in connection
with the issuance and sale of the 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
B-4
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.
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 [ ], 2003, from [ ], [ ] 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 [ ], 2003, the Exchange Act
Registration Statement has become effective.
B-5
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 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 auditors, 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 [ ], 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 or the date hereof the Prospectus contained an untrue statement
of material fact or omitted to state a material fact required to be stated
therein
B-6
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 Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois) may rely on this letter as to all matters
governed by the laws of The Commonwealth of Massachusetts in delivering its
opinion to you on the date hereof.
Very truly yours,
Ropes & ▇▇▇▇ LLP
B-8
SCHEDULE C
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING PIMCO ADVISORS FUND MANAGEMENT LLC
____ __, 2003
UBS Securities LLC
[ ]
as Managing Underwriters
c/o UBS Securities LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund II
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 II, a voluntary association with transferable shares
organized and existing under and by virtue of the laws of The Commonwealth of
Massachusetts (commonly referred to as a Massachusetts business trust) (the
"Fund"), of __________ 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 April 23, 2003 (Act
File No. 333-104708 and Investment Company Act File No. 811-21338), as amended
by Pre-Effective Amendment No. 1 filed with the Commission on June 9, 2003,
Pre-Effective Amendment No. 2 filed with the Commission on ____ __ , 2003,
Pre-Effective Amendment No. 3 filed with the Commission on ___ __, 2003, and
Pre-Effective No. 4 filed with the Commission on ___ __, 2003 (such registration
statements collectively referred to herein as the "Registration Statement"), and
an underwriting agreement dated ____ __, 2003 by and among you, the Fund and
PAFM (the "Underwriting Agreement") relating to the issuance and sale by the
Fund of _______ 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:
C-1
(a) the Underwriting Agreement;
(b) that certain Investment Management Agreement by and between the
Fund and PAFM, dated as of _____ __, 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 ____ __, 2003;
(d) that certain Shareholder Servicing Agreement with respect to the
Fund by and between PAFM and UBS Securities LLC, dated as of ____
__, 2003; and
(e) that certain Additional Compensation Agreement with respect to
the Fund by and between PAFM, Citigroup Global Markets Inc. and
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, dated as of
[ ] __, 2003.
The documents described in subsections (a)-(e) above are referred to
herein collectively as the "Transaction Documents."
In my examination, I have assumed the genuineness of all signatures
(other than those of officers of PAFM on the Transaction Documents), the
authenticity of all documents submitted to me as originals, and the conformity
to authentic original documents of all documents submitted to me as copies.
I have been furnished with, and with your consent have relied upon,
certificates of officers of PAFM with respect to certain factual matters. In
addition, I have obtained and relied upon such certificates and assurances from
public officials as I have deemed necessary.
I am opining herein as to the effect of the federal laws of the United
States, the internal laws of the State of New York and the internal laws of the
State of Delaware, and I express no opinion with respect to the applicability
thereto, or the effect thereon, of the laws of any other jurisdiction or country
or as to any matters of municipal law or the laws of any other local agencies
within any state or country. My opinions set forth in paragraph 4 below are
based upon my consideration of only those statutes, rules and regulations which,
in my experience, are normally applicable to transactions similar to those
contemplated by the Transaction Documents, generally.
Whenever a statement herein is qualified by "to my knowledge" or a
similar phrase, it is intended to indicate that I do not have current actual
knowledge of the inaccuracy of such statement. However, except as otherwise
expressly indicated, I have not undertaken any independent investigation to
determine the accuracy of any such statement, and no inference that I have any
knowledge of any matters pertaining to such statement should be drawn from my
position as Chief Legal Officer of PAFM.
C-2
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 (S)
18-101, et seq.) with all necessary limited liability company power and
authority to enter into and deliver the Transaction Documents and perform its
obligations thereunder and to carry on its business as it is now being conducted
and as described in the Registration Statement. Based solely on certificates
from public officials, I confirm that PAFM is qualified to do business in the
following States: California, New York and Connecticut, such States being those
in which its ownership or leasing of property or its conducting of business may
require such qualification and where failure to so qualify would have a material
adverse effect on the ability of PAFM to perform its obligations under the
Investment Management Agreement and the Portfolio Management Agreement.
2. The execution, delivery and performance of the Transaction
Documents by PAFM have been duly authorized by all necessary limited liability
company action of PAFM and no other actions on the part of PAFM or its
unitholders or any subsidiary of PAFM or its unitholders is necessary to
authorize and consummate the transactions contemplated thereby, and the
Transaction Documents have been duly executed and delivered by PAFM.
3. Each of the Investment Management Agreement, the Portfolio
Management Agreement, the Shareholder Servicing Agreement and the Additional
Compensation Agreement constitutes a legally valid and binding agreement of
PAFM, enforceable against PAFM in accordance with its terms.
4. Neither the execution and delivery of the Transaction Documents
by PAFM, nor the consummation by PAFM of transactions contemplated thereby, nor
compliance by PAFM with any of the terms and provisions thereof will:
(i) violate any provision of the Limited Liability Company Agreement
of PAFM, effective May 23, 2000, as amended on July 1, 2001, December 12, 2001,
and October 31, 2002, which is still in full force and effect and which has not
been further amended or supplemented through the date hereof,
(ii) violate any federal, Delaware or New York statute, rule or
regulation applicable to PAFM (other than federal and state securities or blue
sky laws, the Investment Company Act and the Investment Advisers Act of 1940, as
amended (the "Advisers Act"), as to which I express no opinion),
(iii) violate any agreement to which PAFM is a party or by which it is
bound and which is material to PAFM's businesses taken as a whole (the "Material
Agreements"),
C-3
(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.
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-4
(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 Documents with any foreign laws or regulations applicable to the
transactions contemplated by the Transaction Documents or which may affect the
Transaction Documents' enforceability.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose, or furnished to, quoted to or relied upon by
any other person, firm or corporation for any purpose, without my prior written
consent.
Very truly yours,
C-5
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-6
SCHEDULE D
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ CAPITAL MANAGEMENT LLC
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ CAPITAL MANAGEMENT LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
_____ __, 2003
UBS Securities LLC
[ ]
as Managing Underwriters
c/o UBS Securities 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 II, a voluntary association with
transferable shares organized and existing under and by virtue of the laws of
The Commonwealth of Massachusetts (commonly referred to as a Massachusetts
business trust) (the "Fund"), of an aggregate of __________ common shares of
beneficial interest, 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 April 23, 2003 (Act File No. 333-104708 and Investment Company
Act File No. 811-21338), as amended by Pre-Effective Amendment No. 1 filed with
the Commission on June 9, 2003, Pre-Effective Amendment No. 2 filed with the
Commission on ___ __, 2003, Pre-Effective Amendment No. 3 filed with the
Commission on ____ __, 2003, and Pre-Effective Amendment No. 4 filed with the
Commission on _____ __, 2003 (such registration statements collectively referred
to herein as the "Registration Statement"), and an underwriting agreement dated
_____ __, 2003, by and among you, the Fund and PIMCO Advisors Fund Management
LLC, a Delaware limited liability company ("PAFM") (the "Underwriting
Agreement").
D-1
This opinion is rendered to you pursuant to Section 6(e) of the
Underwriting Agreement. Capitalized terms used herein without definition have
the meanings assigned to them in the Underwriting Agreement.
As General Counsel of NACM, I have examined such matters of fact and
questions of law as I have considered appropriate for purposes of rendering the
opinions expressed below, except where a statement is qualified as to knowledge
or awareness, in which case I have made no or limited inquiry as specified
below. I have examined, among other things, that certain Portfolio Management
Agreement by and between NACM and PAFM, as accepted and agreed to by the Fund,
dated as of ____ __, 2003 (the "Portfolio Management Agreement").
In my examination, I have assumed the genuineness of all signatures
(other than those of officers of NACM on the Portfolio Management Agreement),
the authenticity of all documents submitted to me as originals, and the
conformity to authentic original documents of all documents submitted to me as
copies.
I have been furnished with, and with your consent have relied upon,
certificates of officers of NACM with respect to certain factual matters. In
addition, I have obtained and relied upon such certificates and assurances from
public officials as I have deemed necessary.
I am opining herein as to the effect of the federal laws of the United
States, the internal laws of the State of California and, to the extent
consistent with the laws of the State of California, the internal laws of the
State of Delaware, and I express no opinion with respect to the applicability
thereto, or the effect thereon, of the laws of any other jurisdiction or country
or as to any matters of municipal law or the laws of any other local agencies
within any state or country. My opinions set forth in paragraph 4 below are
based upon my consideration of only those statutes, rules and regulations which,
in my experience, are normally applicable to transactions similar to those
contemplated by the Portfolio Management Agreement, generally.
Whenever a statement herein is qualified by "to my knowledge" or a
similar phrase, it is intended to indicate that I do not have current actual
knowledge of the inaccuracy of such statement. However, except as otherwise
expressly indicated, I have not undertaken any independent investigation to
determine the accuracy of any such statement, and no inference that I have any
knowledge of any matters pertaining to such statement should be drawn from my
position as General Counsel of NACM.
Subject to the foregoing and the other matters set forth herein, it is
my opinion that, as of the date hereof:
1. NACM is a limited liability company and is validly existing and
in good standing under the Delaware Limited Liability Company Act (6 Del. C (S)
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
D-2
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 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
D-3
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.
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
D-4
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 AUDITOR'S LETTER
[_______], 2003
The Board of Trustees of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund II
1345 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
UBS Securities LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
as Managing Representative of the Underwriters
Ladies and Gentlemen:
We have audited the statement of assets and liabilities of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund II (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. 333-104708) and under the
Investment Company Act of 1940 (the "1940 Act") (File No. 811-21338); 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 auditors 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
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of assets and liabilities included in the Registration Statement,
except for changes that the Registration Statement discloses have
occurred or may occur. On the basis of our inquiries and our reading of
the minutes as described in Paragraph 3, nothing came to our attention
that caused us to believe that there were any such changes.
The foregoing procedures do not constitute an audit made in accordance
with generally accepted auditing standards. Accordingly, we make no
representations as to the sufficiency of the foregoing procedures for your
purposes.
This letter is solely for the information of the addressees and to
assist the underwriters in conducting and documenting their investigation of the
affairs of the Fund in connection with the offering of the securities covered by
the Registration Statement, and is not to be used, circulated, quoted or
otherwise referred to within or without the underwriting group for any other
purpose, including but not limited to the registration, purchase or sale of
securities, nor is it to be filed with or referred to in whole or in part in the
Registration Statement or any other document, except that reference may be made
to it in the underwriting agreement or in any list of closing documents
pertaining to the offering of the securities covered by the Registration
Statement.
Very Truly Yours,
PRICEWATERHOUSECOOPERS LLP
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