Exhibit h.3
PIMCO California Municipal Income Fund II
Auction Preferred Shares
Par Value $0.00001 Per Share
UNDERWRITING AGREEMENT
August 16, 2002
UNDERWRITING AGREEMENT
August 16, 2002
UBS Warburg LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
X.X. Xxxxxxx & Sons, Inc.
Prudential Securities Incorporated
as Managing Underwriters
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
PIMCO California Municipal Income Fund II, a voluntary
association with transferable shares organized and existing under and by virtue
of the laws of The Commonwealth of Massachusetts (commonly referred to as a
Massachusetts business trust) (the "Fund"), proposes to issue and sell to the
underwriters named in Schedule A annexed hereto (the "Underwriters") an
aggregate of 2,080 preferred shares of beneficial interest of the Fund, par
value $0.00001 per share, designated Series A Auction Preferred Shares of the
Fund, 2,080 preferred shares of beneficial interest of the Fund, par value
$0.00001 per share, designated Series B Auction Preferred Shares of the Fund,
2,080 preferred shares of beneficial interest of the Fund, par value $0.00001
per share, designated Series C Auction Preferred Shares of the Fund, 2,080
preferred shares of beneficial interest of the Fund, par value $0.00001 per
share, designated Series D Auction Preferred Shares of the Fund and 2,080
preferred shares of beneficial interest of the Fund, par value $0.00001 per
share, designated Series E Auction Preferred Shares of the Fund, each with a
liquidation preference of $25,000 per share (the "APS").
The Fund has filed with the Securities and Exchange Commission
(the "Commission"), in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations thereunder (collectively called
the "Act"), and with the provisions of the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder (collectively called the
"Investment Company Act"), a registration statement on Form N-2 (File Nos.
333-91742 and 811-21077), including a prospectus and a statement of additional
information, relating to the APS. The Fund has furnished to you, for use by the
Underwriters and by dealers, copies of one or more preliminary prospectuses
(including a preliminary statement of additional information) (each thereof,
including such preliminary statement of additional information, being herein
called a "Preliminary Prospectus") relating to the APS. Except where the context
otherwise requires, the registration statement, as amended when it becomes
effective (the "Effective Date"), including all documents filed as a part
thereof or incorporated by reference therein, and including any information
contained in a prospectus subsequently filed with the Commission pursuant to
Rule 497 under the Act and deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430A under the
Act is herein called the Registration Statement, and the prospectus (including
the statement of additional information), in the form filed by the Fund with the
Commission pursuant to Rule 497 under the Act or, if no such filing is required,
the form of final prospectus (including the form of final statement of
additional information) included in the Registration Statement at the time it
became effective, is herein called the Prospectus. In addition, the Fund has
filed a Notification of Registration on Form N-8A (the "Notification") pursuant
to Section 8 of the Investment Company Act.
PIMCO Funds Advisors LLC ("PIMCO Funds Advisors" or the
"Investment Manager") acts as the Fund's investment manager pursuant to an
Investment Management Agreement by and between the Fund and the Investment
Manager, dated as of June 28, 2002 (the "Investment Management Agreement").
Pacific Investment Management Company LLC ("PIMCO," or the "Portfolio Manager")
acts as the Fund's portfolio manager pursuant to a Portfolio Management
Agreement by and between the Investment Manager and PIMCO, as accepted and
agreed to by the Fund, dated as of June 28, 2002. State Street Bank & Trust Co.
acts as the custodian (the "Custodian") of the Fund's cash and portfolio assets
pursuant to a Custodian Agreement, dated as of June 28, 2002 (the "Custodian
Agreement"). PFPC Inc. acts as the Fund's transfer agent, registrar, shareholder
servicing agent and dividend disbursing agent with respect to the common shares
of the Fund (the "Transfer Agent") pursuant to a Transfer Agency Services
Agreement, dated as of June 28, 2002 (the "Transfer Agency Agreement"). Deutsche
Bank Trust Company Americas will act as the Fund's auction agent (the "Auction
Agent") for the APS pursuant to an Auction Agency Agreement, dated as of August
__, 2002 (the "Auction Agency Agreement"). The Fund has entered into a Letter
Agreement, dated as of August __, 2002, with the Depository Trust Company (the
"DTC Agreement").
The Fund, the Investment Manager and the Underwriters agree as
follows:
1. Sale and Purchase. Upon the basis of the warranties and representations and
subject to the terms and conditions herein set forth, the Fund agrees to
sell to the respective Underwriters and each of the Underwriters, severally
and not jointly, agrees to purchase from the Fund the aggregate number of
APS set forth opposite the name of such Underwriter in Schedule A attached
hereto in each case at a purchase price per share of $______. The Fund is
advised that the Underwriters intend (i) to make a public offering of their
respective portions of the APS as soon after the Effective Date as is
advisable and (ii) initially to offer the APS upon the terms set forth in
the Prospectus. The Underwriters may from time to time increase or decrease
the public offering price after the initial public offering to such extent
as they may determine.
2. Payment and Delivery. Payment of the purchase price for the APS shall be
made by the Underwriters to the Fund by Federal Funds wire transfer,
against delivery of the certificates for the APS to you through the
facilities of the Depository Trust Company ("DTC") for the respective
accounts of the Underwriters. Such payment and delivery shall be made at
10:00 A.M., New York City time on the 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" or the
"Closing Date." Certificates for the APS shall be delivered to you in
definitive form in such names and in such
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denominations as you shall specify on the second business day preceding the
Time of Purchase. For the purpose of expediting the checking of the
certificates for the APS by you, the Fund agrees to make such certificates
available to you for such purpose at least one full business day preceding
the Time of Purchase.
A certificate in definitive form representing the APS registered in
the name of Cede & Co., as nominee for DTC, shall be delivered by or on
behalf of the Fund to DTC for the account of the Underwriters.
3. Representations and Warranties of the Fund and the Investment Manager. Each
of the Fund and the Investment Manager jointly and severally represents and
warrants to each Underwriter as follows:
(a) On (A) the Effective Date and the date on which the Prospectus is
first filed with the Commission pursuant to Rule 497(b) or (h) under
the Act or a certification is first filed with the Commission pursuant
to Rule 497(j) under the Act, as the case may be, (B) the date on
which any post-effective amendment to the Registration Statement
(except any post-effective amendment which is filed with the
Commission after the later of (x) one year from the date of this
Underwriting Agreement or (y) the date on which the distribution of
the APS is completed) became or becomes effective or any amendment or
supplement to the Prospectus was or is filed with the Commission and
(C) the Closing Date, the Registration Statement, the Prospectus and
any such amendment or supplement thereto and the Notification complied
or will comply in all material respects with the requirements of the
Act and the Investment Company Act, as the case may be. On the
Effective Date and on the date that any post-effective amendment to
the Registration Statement (except any post-effective amendment which
is filed with the Commission after the later of (x) one year from the
date of this Underwriting Agreement or (y) the date on which the
distribution of the APS is completed) became or becomes effective,
neither the Registration Statement nor any such amendment did or will
contain any untrue statement of a material fact or omit to state a
material fact required to be stated in it or necessary to make the
statements in it not misleading. On the Effective Date, on the Closing
Date, and, if applicable, on the date the Prospectus or any amendment
or supplement to the Prospectus was or is filed with the Commission,
the Prospectus did not or will not, as the case may be, contain any
untrue statement of a material fact or omit to state a material fact
required to be stated in it or necessary to make the statements in it,
in light of the circumstances under which they were made, not
misleading. The foregoing representations in this Section 3(a) do not
apply to statements or omissions relating to the Underwriters made in
reliance on and in conformity with information furnished in writing to
the Fund by the Underwriters expressly for use in the Registration
Statement, the Prospectus or any amendments or supplements thereto, as
described in Section 9(f) hereof.
(b) The Fund has been duly formed and is validly existing as an
unincorporated voluntary association under the laws of The
Commonwealth of Massachusetts (commonly known as a "Massachusetts
business trust"), with full power and
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authority to conduct all the activities conducted by it, to own or
lease all assets owned or leased by it and to conduct its business as
described in the Registration Statement and Prospectus, and the Fund
is duly licensed and qualified to do business and in good standing in
each jurisdiction in which its ownership or leasing of property or its
conducting of business requires such qualification, except where the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Fund, and the Fund owns, possesses or
has obtained and currently maintains all governmental licenses,
permits, consents, orders, approvals and other authorizations, whether
foreign or domestic, necessary to carry on its business as
contemplated in the Prospectus. The Fund has no subsidiaries.
(c) The capitalization of the Fund is as set forth in the Registration
Statement and the Prospectus. The common shares of beneficial interest
of the Fund, par value $0.00001 per share (the "Common Shares"), and
the APS conform in all material respects to the description of them in
the Prospectus. All outstanding Common Shares have been duly
authorized and are validly issued, fully paid and nonassessable
(except as described in the Registration Statement). The APS to be
issued and delivered to and paid for by the Underwriters in accordance
with this Underwriting Agreement against payment therefor as provided
by this Underwriting Agreement have been duly authorized and when
issued and delivered to the Underwriters will have been validly issued
and will be fully paid and nonassessable (except as described in the
Registration Statement). No person is entitled to any preemptive or
other similar rights in connection with the issuance of the APS.
(d) The Fund is duly registered with the Commission under the Investment
Company Act as a non-diversified, closed-end management investment
company, and, subject to the filing of any final amendment to the
Registration Statement (a "Final Amendment"), if not already filed,
all action under the Act and the Investment Company Act, as the case
may be, necessary to make the public offering and consummate the sale
of the APS as provided in this Underwriting Agreement has or will have
been taken by the Fund.
(e) The Fund has, or at the relevant time had, full power and authority to
enter into each of this Underwriting Agreement, the Investment
Management Agreement, the Custodian Agreement, the Transfer Agency
Agreement, the Auction Agency Agreement and the DTC Agreement
(collectively, the "Fund Agreements") and to perform all of the terms
and provisions hereof and thereof to be carried out by it and (i) each
Fund Agreement has been duly and validly authorized, executed and
delivered by or on behalf of the Fund, (ii) each Fund Agreement does
not violate in any material respect any of the applicable provisions
of the Investment Company Act or the Investment Advisers Act of 1940,
as amended, and the rules and regulations thereunder (collectively
called the "Advisers Act"), as the case may be, and (iii) assuming due
authorization, execution and delivery by the other parties thereto,
each Fund Agreement constitutes the legal, valid and binding
obligation of the Fund enforceable in accordance with its terms, (A)
subject, as to
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enforcement, to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general equitable
principles (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (B) except as rights to
indemnity thereunder may be limited by federal or state securities
laws.
(f) None of (i) the execution and delivery by the Fund of the Fund
Agreements, (ii) the issue and sale by the Fund of the APS as
contemplated by this Underwriting Agreement and (iii) the
performance by the Fund of its obligations under any of the Fund
Agreements or consummation by the Fund of the other transactions
contemplated by the Fund Agreements conflicts with or will
conflict with, or results or will result in a breach of, the
Agreement and Declaration of Trust of the Fund, as amended through
the date hereof (the "Declaration of Trust"), and the Amended and
Restated Bylaws of the Fund, adopted in connection with the
issuance of the APS and as amended through the date hereof (the
"Amended Bylaws"), or any agreement or instrument to which the
Fund is a party or by which the Fund is bound, except where such
violation does not have a material adverse effect on the condition
(financial or other), business prospects, properties, net assets
or results of operations of the Fund, or any law, rule or
regulation, or order of any court, governmental instrumentality,
securities exchange or association or arbitrator, whether foreign
or domestic, applicable to the Fund, other than state securities
or "blue sky" laws applicable in connection with the purchase and
distribution of the APS by the Underwriters pursuant to this
Underwriting Agreement.
(g) The Fund is not currently in breach of, or in default under, any
written agreement or instrument to which it is a party or by which
it or its property is bound or affected, except where such
violation does not have a material adverse effect on the condition
(financial or other), business prospects, properties, net assets
or results of operations of the Fund.
(h) No person has any right to the registration of any securities of
the Fund because of the filing of the Registration Statement.
(i) No consent, approval, authorization or order of any court or
governmental agency or body or securities exchange or association,
whether foreign or domestic, is required by the Fund for the
consummation by the Fund of the transactions to be performed by
the Fund or the performance by the Fund of all the terms and
provisions to be performed by or on behalf of it in each case as
contemplated in the Fund Agreements, except such as (i) have been
obtained under the Act, the Investment Company Act or the Advisers
Act, and (ii) may be required under state securities or "blue sky"
laws, in connection with the purchase and distribution of the APS
by the Underwriters pursuant to this Underwriting Agreement.
(j) To the knowledge of the Fund and the Investment Manager after due
inquiry, based on representations from PricewaterhouseCoopers LLP,
whose report
5
appears in the Prospectus, PricewaterhouseCoopers LLP are
independent public accountants with respect to the Fund as
required by the Act and the Investment Company Act.
(k) The statement of assets and liabilities included in the
Registration Statement and the Prospectus presents fairly in all
material respects, in accordance with generally accepted
accounting principles in the United States applied on a consistent
basis, the financial position of the Fund as of the date
indicated.
(l) The Fund will maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with existing assets through an asset reconciliation
procedure or otherwise at reasonable intervals and appropriate
action is taken with respect to any differences.
(m) Since the date as of which information is given in the
Registration Statement and the Prospectus, except as otherwise
stated therein, (i) there has been no material adverse change in
the condition, financial or otherwise, business affairs or
business of the Fund, whether or not arising in the ordinary
course of business, (ii) there have been no transactions entered
into by the Fund other than those in the ordinary course of its
business and (iii) there has been no dividend or distribution of
any kind declared, paid or made on any class of its capital
shares.
(n) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending, or,
to the knowledge of the Fund, threatened against or affecting the
Fund, which (i) might result in any material adverse change in the
condition, financial or otherwise, business affairs or business
prospects of the Fund or might materially adversely affect the
properties or assets of the Fund or (ii) is of a character
required to be described in the Registration Statement or the
Prospectus; and there are no contracts, franchises or other
documents that are of a character required to be described in, or
that are required to be filed as exhibits to, the Registration
Statement that have not been described or filed as required.
(o) The Fund intends to direct the investment of the proceeds of the
offering of the APS in such a manner as to comply with the
requirements of Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code").
(p) The Common Shares are listed on the New York Stock Exchange.
6
(q) The APS have been, or prior to the Closing Date will be, assigned
a rating of "Aaa" by Xxxxx'x Investors Service, Inc.
(r) No advertising, sales literature or other promotional materials
(excluding road show slides or road show tapes) were authorized or
prepared by or on behalf of the Fund, the Investment Manager or
the Portfolio Manager or any representative thereof for use in
connection with the public offering or sale of the APS
(collectively referred to as the "Sales Materials"); any road show
slides or road show tapes complied and comply in all material
respects with the applicable requirements of the Act and the rules
and interpretations of the National Association of Securities
Dealers, Inc.; and no broker kits, road show slides, road show
tapes or sales materials authorized or prepared by the Fund or
authorized or prepared on behalf of the Fund by the Investment
Manager, the Portfolio Manager or any representative thereof for
use in connection with the public offering or sale of the APS
contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading.
4. Representations and Warranties of the Investment Manager. The Investment
Manager represents to each Underwriter and, in the case of paragraph (f)
also to the Fund, as follows:
(a) The Investment Manager has been duly formed, is validly existing
as a limited liability company under the laws of the State of
Delaware with full power and authority to conduct all of the
activities conducted by it, to own or lease all of the assets
owned or leased by it and to conduct its business as described in
the Registration Statement and Prospectus, and the Investment
Manager is duly licensed and qualified to do business and in good
standing in each jurisdiction in which it is required to be so
qualified, except to the extent that failure to be so qualified or
be in good standing would not have a material adverse effect on
the Investment Manager's ability to provide services to the Fund;
and the Investment Manager owns, possesses or has obtained and
currently maintains all governmental licenses, permits, consents,
orders, approvals and other authorizations, whether foreign or
domestic, necessary to carry on its business as contemplated in
the Registration Statement and the Prospectus.
(b) The Investment Manager is (i) duly registered as an investment
adviser under the Advisers Act and (ii) not prohibited by the
Advisers Act or the Investment Company Act from acting as the
investment adviser for the Fund as contemplated by the Investment
Management Agreement, the Registration Statement and the
Prospectus.
(c) The Investment Manager has, or at the relevant time had, full
power and authority to enter into each of this Underwriting
Agreement, the Investment Management Agreement and the Portfolio
Management Agreement (collectively, this Underwriting Agreement,
the Investment Management Agreement and the Portfolio Management
Agreement being referred to as the "Investment Manager
7
Agreements") and to carry out all the terms and provisions hereof
and thereof to be carried out by it; and each Investment Manager
Agreement has been duly and validly authorized, executed and
delivered by the Investment Manager; none of the Investment
Manager Agreements violates in any material respect any of the
applicable provisions of the Investment Company Act or the
Advisers Act; and assuming due authorization, execution and
delivery by the other parties thereto, each Investment Manager
Agreement constitutes a legal, valid and binding obligation of the
Investment Manager, enforceable in accordance with its terms, (i)
subject, as to enforcement, to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and to
general equitable principles (regardless of whether enforcement is
sought in a proceeding in equity or at law) and (ii) except as
rights to indemnity thereunder may be limited by federal or state
securities laws.
(d) Neither (i) the execution and delivery by the Investment Manager
of any Investment Manager Agreement nor (ii) the consummation by
the Investment Manager of the transactions contemplated by, or the
performance of its obligations under, any Investment Manager
Agreement conflicts or will conflict with, or results or will
result in a breach of, the limited liability company agreement or
other organizational documents of the Investment Manager or any
agreement or instrument to which the Investment Manager is a party
or by which the Investment Manager is bound, or any law, rule or
regulation, or order of any court, governmental instrumentality,
securities exchange or association or arbitrator, whether foreign
or domestic, applicable to the Investment Manager.
(e) No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or association,
whether foreign or domestic, is required for the consummation of
the transactions contemplated in, or the performance by the
Investment Manager of its obligations under, any Investment
Manager Agreement, as the case may be, except such as (i) have
been obtained under the Act, the Investment Company Act or the
Advisers Act, and (ii) may be required under state securities or
"blue sky" laws, in connection with the purchase and distribution
of the APS by the Underwriters pursuant to this Underwriting
Agreement.
(f) The description of the Investment Manager and its business, and
the statements attributable to the Investment Manager, in the
Registration Statement and the Prospectus comply with the
requirements of the Act and the Investment Company Act and do not
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein not misleading.
(g) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending or,
to the knowledge of the Investment Manager, threatened against or
affecting the Investment Manager of a nature required to be
disclosed in the Registration Statement or Prospectus or that
might
8
reasonably be expected to result in any material adverse change in
the ability of the Investment Manager to fulfill its respective
obligations under any Investment Manager Agreement.
(h) None of the Fund, the Investment Manager or the Portfolio Manager
has made available any promotional materials intended for use only
by qualified broker-dealers and registered representatives thereof
by means of an Internet web site or similar electronic means.
(i) The Portfolio Manager has been duly formed, is validly existing as
a limited liability company under the laws of Delaware with full
power and authority to conduct all of the activities conducted by
it, to own or lease all of the assets owned or leased by it and to
conduct its business as described in the Registration Statement
and Prospectus, and the Portfolio Manager is duly licensed and
qualified to do business and in good standing in each jurisdiction
in which it is required to be so qualified, except to the extent
that failure to be so qualified or be in good standing would not
have a material adverse affect on the Portfolio Manager's ability
to provide services to the Fund; and the Portfolio Manager owns,
possesses or has obtained and currently maintains all governmental
licenses, permits, consents, orders, approvals and other
authorizations, whether foreign or domestic, necessary to carry on
its business as contemplated in the Registration Statement and the
Prospectus.
(j) The Portfolio Manager is (i) duly registered as an investment
adviser under the Advisers Act and (ii) not prohibited by the
Advisers Act or the Investment Company Act from acting as the
investment sub-adviser for the Fund as contemplated by the
Portfolio Management Agreement, the Registration Statement and the
Prospectus.
(k) The Portfolio Manager has, or at the relevant time had, full power
and authority to enter into each of this Underwriting Agreement
and the Portfolio Management Agreement (collectively, this
Underwriting Agreement and the Portfolio Management Agreement
being referred to as the "Portfolio Manager Agreements") and to
carry out all the terms and provisions hereof and thereof to be
carried out by it; and each Portfolio Manager Agreement has been
duly and validly authorized, executed and delivered by the
Portfolio Manager; none of the Portfolio Manager Agreements
violates in any material respect any of the applicable provisions
of the Investment Company Act or the Advisers Act; and assuming
due authorization, execution and delivery by the other parties
thereto, each Portfolio Manager Agreement constitutes a legal,
valid and binding obligation of the Portfolio Manager, enforceable
in accordance with its terms, (i) subject, as to enforcement, to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in a proceeding in
equity or at law) and (ii) except as rights to indemnity
thereunder may be limited by federal or state securities laws.
9
(l) Neither (i) the execution and delivery by the Portfolio Manager of any
Portfolio Manager Agreement nor (ii) the consummation by the Portfolio
Manager of the transactions contemplated by, or the performance of its
obligations under, any Portfolio Manager Agreement conflicts or will
conflict with, or results or will result in a breach of, the limited
liability company agreement or other organizational documents of the
Portfolio Manager or any agreement or instrument to which the
Portfolio Manager is a party or by which the Portfolio Manager is
bound, or any law, rule or regulation, or order of any court,
governmental instrumentality, securities exchange or association or
arbitrator, whether foreign or domestic, applicable to the Portfolio
Manager.
(m) No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or association,
whether foreign or domestic, is required for the consummation of the
transactions contemplated in, or the performance by the Portfolio
Manager of its obligations under, any Portfolio Manager Agreement, as
the case may be, except such as (i) have been obtained under the Act,
the Investment Company Act or the Advisers Act, and (ii) may be
required under state securities or "blue sky" laws, in connection with
the purchase and distribution of the APS by the Underwriters pursuant
to this Underwriting Agreement.
(n) The description of the Portfolio Manager and its business, and the
statements attributable to the Portfolio Manager, in the Registration
Statement and the Prospectus comply with the requirements of the Act
and the Investment Company Act and do not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading.
(o) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending or, to
the knowledge of the Portfolio Manager, threatened against or
affecting the Portfolio Manager of a nature required to be disclosed
in the Registration Statement or Prospectus or that might reasonably
be expected to result in any material adverse change in the ability of
the Portfolio Manager to fulfill its respective obligations under any
Portfolio Manager Agreement.
5. Agreements of the Parties.
(a) If the registration statement relating to the APS has not yet become
effective, the Fund will promptly file any Final Amendment, if not
previously filed, with the Commission, and will use its best efforts
to cause such registration statement to become effective and, as soon
as the Fund is advised, will advise UBS Warburg LLC (the "Managing
Representative") when the Registration Statement or any amendment
thereto has become effective. If the Registration Statement has become
effective and the Prospectus contained therein omits certain
information at the time of effectiveness pursuant to Rule 430A under
the Act, the Fund will
10
file a 430A prospectus pursuant to Rule 497(h) under the Act
as promptly as practicable, but no later than the second
business day following the earlier of the date of the
determination of the offering price of the APS or the date the
Prospectus is first used after the Effective Date. If the
Registration Statement has become effective and the Prospectus
contained therein does not so omit such information, the Fund
will file a prospectus pursuant to Rule 497(b) or a
certification pursuant to Rule 497(j) under the Act as
promptly as practicable, but no later than the fifth business
day following the date of the later of the Effective Date or
the commencement of the public offering of the APS after the
Effective Date. In either case, the Fund will provide you
satisfactory evidence of the filing. The Fund will not file
with the Commission any Prospectus or any other amendment
(except any post-effective amendment which is filed with the
Commission after the later of (x) one year from the date of
this Underwriting Agreement or (y) the date on which
distribution of the APS is completed) or supplement to the
Registration Statement or the Prospectus unless a copy has
first been submitted to the Managing Representative a
reasonable time before its filing and the Managing
Representative has not objected to it in writing within a
reasonable time after receiving the copy.
(b) For the period of three years from the date hereof, the Fund will
advise the Managing Representative promptly of (1) the issuance by the
Commission of any order in respect of the Fund, the Investment Manager
or the Portfolio Manager which relates to the Fund, or which relates
to any material arrangements or proposed material arrangements
involving the Fund, the Investment Manager or the Portfolio Manager,
(2) the initiation or threatening of any proceedings for, or receipt
by the Fund of any notice with respect to, any suspension of the
qualification of the APS for sale in any jurisdiction or the issuance
of any order by the Commission suspending the effectiveness of the
Registration Statement, (3) receipt by the Fund, or any representative
or attorney of the Fund, of any other communication from the
Commission relating in any material way to the Fund, the Registration
Statement, the Notification, any Preliminary Prospectus, the
Prospectus or to the transactions contemplated by this Underwriting
Agreement and (4) the issuance by any court, regulatory body,
administrative agency or other governmental agency or body, whether
foreign or domestic, of any order, ruling or decree, or the threat to
initiate any proceedings with respect thereto, regarding the Fund,
which relates in any material way to the Fund or any material
arrangements or proposed material arrangements involving the Fund. The
Fund will make every reasonable effort to prevent the issuance of any
order suspending the effectiveness of the Registration Statement and,
if any such order is issued, to obtain its lifting as soon as
possible.
(c) If not delivered prior to the date of this Underwriting Agreement, the
Fund will deliver to the Managing Representative, without charge, a
signed copy of the Registration Statement and the Notification and of
any amendments (except any post-effective amendment which is filed
with the Commission after the later of (x) one year from the date of
this Underwriting Agreement or (y) the date on which the distribution
of the APS is completed) to either the Registration Statement or
11
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 APS is completed) (excluding exhibits) as
the Managing Representative may reasonably request.
(d) During such period as a prospectus is required by law to be delivered
by an underwriter or a dealer, the Fund will deliver, without charge,
to you, the Underwriters and any dealers, at such office or offices as
you may designate, as many copies of the Prospectus as you may
reasonably request, and, if any event occurs during such period as a
result of which it is necessary to amend or supplement the Prospectus,
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading in any material respect, or
if during such period it is necessary to amend or supplement the
Prospectus to comply with the Act or the Investment Company Act, the
Fund promptly will prepare, submit to the Managing Representative,
file with the Commission and deliver, without charge, to the
Underwriters and to dealers (whose names and addresses the Managing
Representative will furnish to the Fund) to whom APS may have been
sold by the Underwriters, and to other dealers on request, amendments
or supplements to the Prospectus so that the statements in such
Prospectus, as so amended or supplemented, will not, in light of the
circumstances under which they were made, be misleading in any
material respect and will comply with the Act and the Investment
Company Act; provided that if the amendment or supplement is required
exclusively as a result of a misstatement in or omission from the
information provided to the Fund in writing by the Underwriters
expressly for use in the Prospectus, the Fund may deliver such
amendment or supplement to the Underwriters and dealers at a
reasonable charge not to exceed the actual cost thereof to the Fund.
Delivery by the Underwriters of any such amendments or supplements to
the Prospectus will not constitute a waiver of any of the conditions
in Section 6 hereof.
(e) The Fund will make generally available to holders of the Fund's
securities, as soon as practicable but in no event later than the last
day of the 18th full calendar month following the calendar quarter in
which the Effective Date falls, an earnings statement, if applicable,
satisfying the provisions of the last paragraph of Section 11(a) of
the Act and, at the option of the Fund, Rule 158 under the Act.
(f) The Fund will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Fund's counsel and accountants in
connection with the registration of the APS and all other expenses in
connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus
and amendments and supplements thereto and the mailing and delivering
of copies thereof to the Underwriters and dealers; (ii) the cost of
printing or reproducing this Underwriting Agreement and any other
documents in connection with the offering, purchase, sale and delivery
of the APS (including advertising expenses of the Underwriters, if
any); (iii) the cost of preparing share
12
certificates; (iv) the expenses (including, but not limited
to, travel, hotels and other accommodations) incurred by the
Fund's directors, officers, employees and other personnel in
connection with meetings held with registered brokers in
connection with the offering of the APS, the preparing to
market and the marketing of the APS; (v) any fees charged by
securities rating services for rating the APS; (vi) the fees
and expenses of the DTC and its nominee, the Custodian and the
Auction Agent; and (vii) all other costs and expenses incident
to the performance of its obligations hereunder which are not
otherwise specifically provided for. It is understood,
however, that, except as provided in this Section 5 and
Section 7 hereof, the Underwriters will pay all of their own
costs and expenses, including the fees of their counsel and
stock transfer taxes, if any, on resale of any of the APS by
them, except any advertising expenses connected with any
offers they may make.
(g) If the transactions contemplated by this Underwriting Agreement are
not consummated, except as otherwise provided herein, no party will be
under any liability to any other party, except that (i) if this
Underwriting Agreement is terminated by (A) the Fund or the Investment
Manager pursuant to any of the provisions hereof or (B) by you or the
Underwriters because of any inability, failure or refusal on the part
of the Fund or the Investment Manager to comply with any material
terms or because any of the conditions in Section 6 are not satisfied,
the Investment Manager or an affiliate and the Fund, jointly and
severally, will reimburse the Underwriters for all out-of-pocket
expenses (including the reasonable fees, disbursements and other
charges of their counsel) reasonably incurred by them in connection
with the proposed purchase and sale of the APS and (ii) no Underwriter
who has failed or refused to purchase the APS agreed to be purchased
by it under this Underwriting Agreement, in breach of its obligations
pursuant to this Underwriting Agreement, will be relieved of liability
to the Fund, the Investment Manager and the other Underwriters for
damages occasioned by its default.
(h) Without the prior written consent of the Managing Representative, the
Fund will not offer, sell or register with the Commission, or announce
an offering of, any equity securities of the Fund, within 180 days
after the Effective Date, except for the APS as described in the
Prospectus and any issuance of Common Shares pursuant to the dividend
reinvestment plan established by the Fund.
(i) The Fund will direct the investment of the net proceeds of the
offering of the APS in such a manner as to comply with the investment
objective and policies of the Fund as described in the Prospectus.
(j) No later than the Closing Date, the Underwriters will provide, and
will cause any selling group member to whom they have sold APS to
provide, the Auction Agent with a list of the record names of the
persons to whom they have sold APS, the number of APS sold to each
such person, and the number of APS they are holding as of the Closing
Date; provided that in lieu of thereof, an Underwriter may
13
provide the Auction Agent with a list indicating itself as the sole
holder of all the APS sold by such Underwriter.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters to purchase the APS are subject to the accuracy on the
date of this Underwriting Agreement, and on the Closing Date, of the
representations of the Fund and the Investment Manager in this
Underwriting Agreement, to the accuracy and completeness of all material
statements made by the Fund and the Investment Manager or any of their
respective officers in any certificate delivered to the Managing
Representative or its counsel pursuant to this Underwriting Agreement, to
the performance by the Fund and the Investment Manager of their respective
obligations under this Underwriting Agreement and to each of the following
additional conditions:
(a) The Registration Statement must have become effective by 5:30 p.m.,
New York City time, on the date of this Underwriting Agreement or such
later date and time as the Managing Representative consents to in
writing. The Prospectus must have been filed in accordance with Rule
497(b) or (h) or a certificate must have been filed in accordance with
Rule 497(j), as the case may be, under the Act.
(b) No order suspending the effectiveness of the Registration Statement
may be in effect and no proceedings for such purpose may be pending
before or, to the knowledge of counsel to the Underwriters, threatened
by the Commission, and any requests for additional information on the
part of the Commission (to be included in the Registration Statement
or the Prospectus or otherwise) must be complied with or waived to the
reasonable satisfaction of the Managing Representative.
(c) Since the dates as of which information is given in the Registration
Statement and the Prospectus, (i) there must not have been any
material change in the Common Shares, the APS or the liabilities of
the Fund except as set forth in or contemplated by the Prospectus;
(ii) there must not have been any material adverse change in the
general affairs, prospects, management, business, financial condition
or results of operations of the Fund, the Investment Manager or the
Portfolio Manager whether or not arising from transactions in the
ordinary course of business as set forth in or contemplated by the
Prospectus which in the opinion of the Managing Representative would
materially adversely affect the market for the APS; (iii) the Fund
must not have sustained any material loss or interference with its
business from any court or from legislative or other governmental
action, order or decree, whether foreign or domestic, or from any
other occurrence not described in the Registration Statement and
Prospectus; and (iv) there must not have occurred any event that makes
untrue or incorrect in any material respect any statement or
information contained in the Registration Statement or Prospectus or
that is not reflected in the Registration Statement or Prospectus but
should be reflected therein in order to make the statements or
information therein (in the case of the Prospectus, in light of the
circumstances in which they were made) not misleading in any material
respect.
14
(d) The Managing Representative must have received on the Closing Date
a certificate, dated such date, of the President, a Vice President
or Managing Director and the chief financial or accounting officer
of each of the Fund and the Investment Manager certifying that (i)
the signers have carefully examined the Registration Statement,
the Prospectus, and this Underwriting Agreement, (ii) the
representations of the Fund (with respect to the certificates from
such Fund officers) and the representations of the Investment
Manager (with respect to the certificates from such officers of
the Investment Manager) in this Underwriting Agreement are
accurate on and as of the date of the certificate, (iii) there has
not been any material adverse change in the general affairs,
prospects, management, business, financial condition or results of
operations of the Fund (with respect to the certificates from such
Fund officers) or the Investment Manager (with respect to the
certificates from such officers of the Investment Manager), which
change would materially and adversely affect the ability of the
Fund or the Investment Manager, as the case may be, to fulfill its
obligations under this Underwriting Agreement or the Investment
Management Agreement, whether or not arising from transactions in
the ordinary course of business, (iv) with respect to the Fund
only, to the knowledge of such officers after reasonable
investigation, no order suspending the effectiveness of the
Registration Statement, prohibiting the sale of any of the APS or
otherwise having a material adverse effect on the Fund has been
issued and no proceedings for any such purpose are pending before
or threatened by the Commission or any other regulatory body,
whether foreign or domestic, (v) to the knowledge of the officers
of the Investment Manager, after reasonable investigation, no
order having a material adverse effect on the ability of the
Investment Manager to fulfill its obligations under this
Underwriting Agreement or the Investment Management Agreement, as
the case may be, has been issued and no proceedings for any such
purpose are pending before or threatened by the Commission or any
other regulatory body, whether foreign or domestic, and (vi) each
of the Fund (with respect to the certificates from such Fund
officers) and the Investment Manager (with respect to the
certificates from such officers of the Investment Manager) has
performed all of its respective agreements that this Underwriting
Agreement requires it to perform by the Closing Date (to the
extent not waived in writing by the Managing Representative).
(e) You must have received on the Closing Date the opinions, dated the
Closing Date, substantially in the form of Schedules B, C, D and E
to this Underwriting Agreement from the counsel identified in each
such Schedule, or in such other form as is acceptable to counsel
for the Underwriters.
(f) You must have received on the Closing Date from Skadden, Arps,
Slate, Xxxxxxx & Xxxx (Illinois) an opinion, dated the Closing
Date, with respect to the Fund, the APS, the Registration
Statement and the Prospectus, this Underwriting Agreement and the
form and sufficiency of all proceedings taken in connection with
the sale and delivery of the APS. Such opinion and proceedings
shall fulfill the requirements of this Section 6(f) only if such
opinion and proceedings are satisfactory in all respects to the
Managing Representative. The Fund, the
15
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 F
to this Underwriting Agreement from the firm of accountants
designated in such Schedule. The Managing Representative also must
have received on the Closing Date a signed letter from such
accountants, dated as of the Closing Date, confirming on the basis
of a review in accordance with the procedures set forth in their
earlier letter that nothing has come to their attention during the
period from a date not more than five business days before the
date of this Underwriting Agreement, specified in the letter, to a
date not more than five business days before the Closing Date,
that would require any change in their letter referred to in the
foregoing sentence.
(h) The APS shall have been accorded a rating of "Aaa" by Xxxxx'x
Investors Service, Inc., and a letter to such effect, dated on or
before the Closing Date, shall have been delivered to the Managing
Representative.
(i) As of the Closing Date, and assuming the receipt of the net
proceeds from the sale of the APS, the 1940 Act APS Asset Coverage
and the APS Basic Maintenance Amount (each as defined in the
Prospectus) each will be met.
All opinions, letters, evidence and certificates mentioned above
or elsewhere in this Underwriting Agreement will comply only if they are
in form and scope reasonably satisfactory to counsel for the
Underwriters, provided that any such documents, forms of which are
annexed hereto, shall be deemed satisfactory to such counsel if
substantially in such form.
7. Termination. This Underwriting Agreement may be terminated by the
Managing Representative by notifying the Fund at any time:
(a) before the later of the effectiveness of the Registration
Statement and the time when any of the APS are first generally
offered pursuant to this Underwriting Agreement by the Managing
Representative to dealers by letter or telegram;
(b) at or before the Closing Date if, in the sole judgment of the
Managing Representative, payment for and delivery of any APS is
rendered impracticable or inadvisable because (i) trading in the
APS or the Common Shares of the Fund is suspended by the
Commission or the principal exchange that lists the Common Shares,
(ii) trading in securities generally on the New York Stock
Exchange or the Nasdaq Stock Market shall have been suspended or
limited or minimum or maximum prices shall have been generally
established on such exchange or over-the-counter market, (iii)
additional material governmental restrictions, not in force on the
date of this Underwriting Agreement, have been imposed upon
trading in securities or trading has been suspended on any U.S.
securities exchange, (iv) a
16
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 APS on
the terms and in the manner contemplated by the Prospectus; or
(c) at or before the Closing Date, if any of the conditions specified
in Section 6 have not been fulfilled when and as required by this
Underwriting Agreement.
8. Substitution of Underwriters. If one or more of the Underwriters fails
(other than for a reason sufficient to justify the termination of this
Underwriting Agreement) to purchase on the Closing Date the APS agreed to
be purchased on the Closing Date by such Underwriter or Underwriters, the
Managing Representative may find one or more substitute underwriters to
purchase such APS or make such other arrangements as the Managing
Representative deems advisable, or one or more of the remaining
Underwriters may agree to purchase such APS in such proportions as may be
approved by the Managing Representative, in each case upon the terms set
forth in this Underwriting Agreement. If no such arrangements have been
made within 36 hours after the Closing Date, and
(a) the number of APS to be purchased by the defaulting Underwriters
on the Closing Date does not exceed 10% of the APS that the
Underwriters are obligated to purchase on such Closing Date, each
of the nondefaulting Underwriters will be obligated to purchase
such APS on the terms set forth in this Underwriting Agreement in
proportion to their respective obligations under this Underwriting
Agreement, or
(b) the number of APS to be purchased by the defaulting Underwriters
on the Closing Date exceeds 10% of the APS to be purchased by all
the Underwriters on the Closing Date, the Fund will be entitled to
an additional period of 24 hours within which to find one or more
substitute underwriters reasonably satisfactory to the Managing
Representative to purchase such APS on the terms set forth in this
Underwriting Agreement.
Upon the occurrence of the circumstances described in the
foregoing paragraph (b), either the Managing Representative or the Fund
will have the right to postpone the Closing Date for not more than five
business days in order that necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or
the Prospectus) may be effected by the Managing Representative and the
Fund. If the number of APS to be purchased on the Closing Date by such
defaulting Underwriter or Underwriters exceeds 10% of the APS that the
Underwriters are obligated to purchase on the Closing Date, and none of
the nondefaulting Underwriters or the Fund makes arrangements pursuant to
this Section within the period stated for the purchase of
17
the APS that the defaulting Underwriters agreed to purchase, this
Underwriting Agreement will terminate without liability on the part of
any nondefaulting Underwriter, the Fund, the Investment Manager or the
Portfolio Manager, except as provided in Sections 5(g) and 9 hereof. Any
action taken under this Section will not affect the liability of any
defaulting Underwriter to the Fund or to the nondefaulting Underwriters
arising out of such default. A substitute underwriter will become an
Underwriter for all purposes of this Underwriting Agreement.
9. Indemnity and Contribution.
(a) Each of the Fund and the Investment Manager, jointly and
severally, agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any person
who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, and the successors and
assigns of all of the foregoing persons from and against any loss,
damage, expense, liability or claim (including the reasonable cost
of investigation) which, jointly or severally, any such
Underwriter or any such person may incur under the Act, the
Exchange Act, the Investment Company Act, the Advisers Act, the
common law or otherwise, insofar as such loss, damage, expense,
liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained
in the Registration Statement (or in the Registration Statement as
amended by any post-effective amendment thereof by the Fund) or in
a Prospectus (the term "Prospectus" for the purpose of this
Section 9 being deemed to include any Preliminary Prospectus, any
Sales Materials, the Prospectus and the Prospectus as amended or
supplemented by the Fund), or arises out of or is based upon any
omission or alleged omission to state a material fact required to
be stated in either such Registration Statement or Prospectus or
necessary to make the statements made therein (with respect to the
Prospectus, in light of the circumstances under which they were
made) not misleading, except insofar as any such loss, damage,
expense, liability or claim arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact
contained in and in conformity with information furnished in
writing by or on behalf of any Underwriter to the Fund, the
Investment Manager or the Portfolio Manager expressly for use with
reference to any Underwriter in such Registration Statement or
such Prospectus or arises out of or is based upon any omission or
alleged omission to state a material fact in connection with such
information required to be stated in such Registration Statement
or such Prospectus or necessary to make such information (with
respect to the Prospectus, in light of the circumstances under
which they were made) not misleading, provided, however, that the
indemnity agreement contained in this subsection (a) with respect
to any Preliminary Prospectus or amended Preliminary Prospectus
shall not inure to the benefit of any Underwriter (or to the
benefit of any person controlling such Underwriter) from whom the
person asserting any such loss, damage, expense, liability or
claim purchased the APS which is the subject thereof if the
Prospectus corrected any such alleged untrue statement or omission
and if such Underwriter failed to send or give a copy of the
Prospectus to such person at or prior to the
18
written confirmation of the sale of such APS to such person, unless the
failure is the result of noncompliance by the Fund with Section 5(d)
hereof.
If any action, suit or proceeding (together, a "Proceeding") is
brought against an Underwriter or any such person in respect of which
indemnity may be sought against the Fund or the Investment Manager
pursuant to the foregoing paragraph, such Underwriter or such person
shall promptly notify the Fund and the Investment Manager in writing of
the institution of such Proceeding and the Fund or the Investment Manager
shall assume the defense of such Proceeding, including the employment of
counsel reasonably satisfactory to such indemnified party and payment of
all fees and expenses; provided, however, that the omission to so notify
the Fund or the Investment Manager shall not relieve the Fund or the
Investment Manager from any liability which the Fund or the Investment
Manager may have to any Underwriter or any such person or otherwise. Such
Underwriter or such person shall have the right to employ its or their
own counsel in any such case, but the reasonable fees and expenses of
such counsel shall be at the expense of such Underwriter or of such
person unless the employment of such counsel shall have been authorized
in writing by the Fund or the Investment Manager, as the case may be, in
connection with the defense of such Proceeding or the Fund or the
Investment Manager shall not have, within a reasonable period of time in
light of the circumstances, employed counsel to have charge of the
defense of such Proceeding or such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or
them which are different from, additional to or in conflict with those
available to the Fund or the Investment Manager (in which case neither
the Fund nor the Investment Manager shall have the right to direct the
defense of such Proceeding on behalf of the indemnified party or parties,
but the Fund or the Investment Manager, as the case may be, may employ
counsel and participate in the defense thereof at the expense of the Fund
or the Investment Manager, as the case may be), in any of which events
such reasonable fees and expenses shall be borne by the Fund or the
Investment Manager and paid as incurred (it being understood, however,
that the Fund or the Investment Manager shall not be liable for the
expenses of more than one separate counsel (in addition to any local
counsel) in any one Proceeding or series of related Proceedings in the
same jurisdiction representing the indemnified parties who are parties to
such Proceeding). Neither the Fund nor the Investment Manager shall be
liable for any settlement of any Proceeding effected without its written
consent but if settled with the written consent of the Fund or the
Investment Manager, the Fund or the Investment Manager, as the case may
be, agrees to indemnify and hold harmless any Underwriter and any such
person from and against any loss or liability by reason of such
settlement. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for reasonable fees and expenses of counsel as
contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of
any Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 business days after receipt by
such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall not have reimbursed the
19
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 omission to so notify such Underwriter shall not relieve such
Underwriter from any liability which such Underwriter may have to the
Fund, the Investment Manager or any such person or otherwise. The
Fund, the Investment Manager or such person shall have the right to
employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the Fund, the
Investment Manager or such person, as the case may be, unless the
employment of such counsel shall have been authorized in writing by
such Underwriter in connection with the defense of such Proceeding or
such
20
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 at the expense
of such Underwriter), in any of which events such fees and expenses
shall be borne by such Underwriter and paid as incurred (it being
understood, however, that such Underwriter shall not be liable for the
expenses of more than one separate counsel (in addition to any local
counsel) in any one Proceeding or series of related Proceedings in the
same jurisdiction representing the indemnified parties who are parties
to such Proceeding). No Underwriter shall be liable for any settlement
of any such Proceeding effected without the written consent of such
Underwriter but if settled with the written consent of such
Underwriter, such Underwriter agrees to indemnify and hold harmless
the Fund, the Investment Manager and any such person from and against
any loss or liability by reason of such settlement. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel as contemplated by the second sentence of
this paragraph, then the indemnifying party agrees that it shall be
liable for any settlement of any Proceeding effected without its
written consent if (i) such settlement is entered into more than 60
business days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior
to the date of such settlement and (iii) such indemnified party shall
have given the indemnifying party at least 30 days' prior notice of
its intention to settle. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement
of any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such
Proceeding and does not include an admission of fault, culpability or
a failure to act, by or on behalf of such indemnified party.
(c) If the indemnification provided for in this Section 9 is unavailable
to an indemnified party under subsections (a) and (b) of this Section
9 in respect of any losses, damages, expenses, liabilities or claims
referred to therein, then each applicable indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
damages, expenses, liabilities or claims (i) in such proportion as is
appropriate to reflect the relative benefits received by the Fund and
the Investment Manager on the one hand and the Underwriters on the
other hand from the offering of the APS or (ii) if the allocation
provided by clause (i)
21
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 APS. The
relative fault of the Fund and the Investment Manager on the
one hand and of the Underwriters on the other shall be
determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material
fact or omission or alleged omission relates to information
supplied by the Fund or the Investment Manager or by the
Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a
party as a result of the losses, damages, expenses,
liabilities and claims referred to in this subsection shall be
deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with
investigating, preparing to defend or defending any
Proceeding.
(d) The Fund, the Investment Manager and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in subsection (c) above. Notwithstanding
the provisions of this Section 9, no Underwriter shall be required to
contribute any amount in excess of the fees and commissions received
by such Underwriter. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their
respective underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this Section 9
and the covenants, warranties and representations of the Fund
contained in this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of any
Underwriter, its partners, directors or officers or any person
(including each partner, officer or director of such person) who
controls any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, or by or on behalf of the Fund or
the Investment Manager, its shareholders, partners, managers, members,
trustees, directors or officers or any person who controls the Fund or
the Investment Manager within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and shall survive any termination of
this Agreement or the issuance and delivery of the APS. The Fund
22
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
APS, or in connection with the Registration Statement or
Prospectus.
(f) The Fund and the Investment Manager each acknowledge that the
statements with respect to (1) the public offering of the APS as
set forth on the cover page of, and (2) selling concessions and
reallowances of selling concessions under the caption
"Underwriting" in, the Prospectus constitute the only information
furnished in writing to the Fund by the Underwriters expressly
for use in such document. The Underwriters severally confirm that
these statements are correct in all material respects and were so
furnished by or on behalf of the Underwriters severally for use
in the Prospectus.
(g) Notwithstanding any other provisions in this Section 9, no party
shall be entitled to indemnification or contribution under this
Underwriting Agreement against any loss, claim, liability,
expense or damage arising by reason of such person's willful
misfeasance, bad faith, gross negligence or reckless disregard of
its duties in the performance of its duties hereunder.
10. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram
and, if to the Underwriters, shall be sufficient in all respects if
delivered or sent to UBS Warburg LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, XX
00000-0000, 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 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
11. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out
of or in any way relating to this Agreement ("Claim"), directly or
indirectly, shall be governed by, and construed in accordance with,
the laws of the State of New York. The Section headings in this
Agreement have been inserted as a matter of convenience of reference
and are not a part of this Agreement.
12. Submission to Jurisdiction. Except as set forth below, no Claim may
be commenced, prosecuted or continued in any court other than the
courts of the State of New York located in the City and County of New
York or in the United States District Court for the Southern District
of New York, which courts shall have jurisdiction over the
adjudication of such matters, and the Fund and UBS Warburg LLC each
consent to the jurisdiction of such courts and personal service with
respect thereto. The Fund and UBS Warburg hereby consent to personal
jurisdiction, service and venue in any court in which any Claim
arising out of or in any way relating to this Agreement is brought by
any third party against UBS Warburg LLC or any indemnified party. Each
of UBS Warburg LLC, the Fund (on its behalf and, to the extent
permitted by applicable law, on behalf of its stockholders and
affiliates) and the Investment Manager (on its behalf and, to the
extent
23
permitted by applicable law, on behalf of its unitholders and
affiliates) waives all right to trial by jury in any action, proceeding
or counterclaim (whether based upon contract, tort or otherwise) in any
way arising out of or relating to this Agreement. Each of the Fund and
the Investment Manager agrees that a final judgment in any such action,
proceeding or counterclaim brought in any such court shall be
conclusive and binding upon the Fund and the Investment Manager, as the
case may be, and may be enforced in any other courts in the
jurisdiction of which the Fund or the Investment Manager, as the case
may be, is or may be subject, by suit upon such judgment.
13. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Fund and the
Investment Manager and to the extent provided in Section 9 hereof the
controlling persons, shareholders, partners, members, trustees,
managers, directors and officers referred to in such section, and their
respective successors, assigns, heirs, personal representatives and
executors and administrators. No other person, partnership, association
or corporation (including a purchaser, as such purchaser, from any of
the Underwriters) shall acquire or have any right under or by virtue of
this Agreement.
14. Counterparts. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same
agreement among the parties.
15. Successors and Assigns. This Agreement shall be binding upon the
Underwriters, the Fund and the Investment Manager, and any successor
or assign of any substantial portion of the Fund's, the Investment
Manager's, or any of the Underwriters' respective businesses and/or
assets.
16. Disclaimer of Liability of Trustees and Beneficiaries. A copy of the
Declaration of Trust 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.
24
If the foregoing correctly sets forth the understanding among the Fund, the
Investment Manager and the Underwriters, please so indicate in the space
provided below, whereupon this letter and your acceptance shall constitute a
binding agreement among the Fund, the Investment Manager and the Underwriters,
severally.
Very truly yours,
PIMCO CALIFORNIA MUNICIPAL INCOME FUND II
____________________________
By:
Title:
PIMCO FUNDS ADVISORS LLC
____________________________
By:
Title:
Accepted and agreed to as of the
date first above written, on
behalf of themselves and
the other several Underwriters
named in Schedule A
UBS WARBURG LLC
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
X.X. XXXXXXX & SONS, INC.
PRUDENTIAL SECURITIES INCORPORATED
By: UBS WARBURG LLC
_____________________________
By: Xxxx X. Reit
Title: Executive Director
_____________________________
By: Xxxx X. Key
Title: Director
SCHEDULE A
Number of Shares
Name to be Purchased
UBS Warburg LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
X.X. Xxxxxxx & Sons, Inc.
Prudential Securities Incorporated
Total
A-1
SCHEDULE B
FORM OF OPINION OF
ROPES & XXXX REGARDING THE FUND
August __, 2002
UBS Warburg LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
X.X. Xxxxxxx & Sons, Inc.
Prudential Securities Incorporated
c/o UBS Warburg LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
We have acted as counsel to PIMCO California Municipal Income Fund II (the
"Fund") in connection with the proposed issuance of 2,080 Auction Preferred
Shares, Series A, 2,080 Auction Preferred Shares, Series B, 2,080 Auction
Preferred Shares, Series C, 2,080 Auction Preferred Shares, Series D, and 2,080
Auction Preferred Shares, Series E (together, the "APS"). This opinion is
furnished to you pursuant to Section 6(e) of the Underwriting Agreement dated as
of August 16, 2002 (the "Underwriting Agreement") among the Fund, PIMCO Funds
Advisors LLC (the "Investment Manager") and UBS Warburg LLC, on behalf of itself
and the other underwriters named therein (the "Underwriters"). Capitalized terms
used in this opinion, unless otherwise defined, have the meanings specified in
the Underwriting Agreement.
We have examined signed copies of the registration statement of the Fund on
Form N-2 (File No. 333-91742) under the Securities Act of 1933, as amended (the
"Securities Act") (which also constitutes Amendment No. 4 to the Fund's
Registration Statement on Form N-2 (File No. 811-21077) 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 July 2, 2002 (the "Original Registration Statement"),
Pre-Effective Amendment No. 1 to the Original Registration Statement, including
all exhibits thereto, as filed with the Commission on August 12, 2002
("Pre-Effective Amendment No. 1") and Pre-Effective Amendment No. 2 to the
Original Registration Statement, including all exhibits thereto, as filed with
the Commission on August 16, 2002 ("Pre-Effective Amendment No. 2," and together
with Pre-Effective Amendment No. 1 and the Original Registration Statement, the
"Registration Statement"); the Fund's Notification of Registration on Form N-8A
(File No. 811-_____) under the Investment Company Act, as filed with the
Commission on April 15, 2002 (the "Notification of Registration"); the Fund's
Agreement and Declaration of Trust, as amended to the date hereof (the
"Declaration of Trust"), on file in the offices of the Secretary of State of The
Commonwealth of Massachusetts and the Clerk of the City of Boston; the Amended
and Restated Bylaws of the Fund, as amended to the date hereof (the "Amended
Bylaws"); a copy of the Prospectus dated August __, 2002, relating to the APS
and the Statement of Additional Information of the Fund dated August __, 2002,
each as filed with the Commission pursuant to
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Rule 497 under the Securities Act on August __, 2002 (together, the
"Prospectus"); the Investment Management Agreement dated as of June 18, 2002,
between the Fund and the Investment Manager (the "Investment Management
Agreement"); the Portfolio Management Agreement dated as of June 18, 2002,
between Pacific Investment Management Company 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 June 27, 2002, between
the Fund and State Street Bank and Trust Company (the "Custodian Agreement");
the Auction Agency Agreement dated as of August __, 2002, between the Fund and
Bankers Trust Company (the "Auction Agency Agreement," and together with the
Custodian Agreement, the "Fund Agreements"); and the Underwriting Agreement.
Additionally, we have relied upon the oral representation of Xx. Xxxxx X'Xxxxxxx
of the staff of the Commission to the effect that the Registration Statement
became effective as of ____ on August __, 2002, and the oral representation by a
member of the staff of the Commission on the date hereof that as of _____ a.m.,
no stop order suspending the effectiveness of the Registration Statement had
been issued and no proceeding for any such purpose was pending or threatened.
We have also examined and relied upon the original or copies of minutes of
the meetings or written consents of the shareholders and the Board of Trustees
of the Fund, 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 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 June 27, 2002, certifying copies of (a) a Certificate of
Designation by the Fund dated June 18, 2002 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 June 21, 2002 relating to the Fund and
(4) a LEXIS search on August __, 2002, of the New York Department of State,
Corporate Record, showing the "status" of the Fund as "active" and noting that
"good standing status can only be determined by performing a search in the
records of both the Department of State Corporation Records and the Department
of Tax and Franchise." We have assumed the genuineness of the signatures on all
documents examined by us, the authenticity of all documents submitted to us as
originals and the conformity to the corresponding originals of all documents
submitted to us as copies. For purposes of our opinion regarding the
effectiveness of the Registration Statement, we are relying solely on the oral
representations of the staff of the Commission.
We express no opinion as to the laws of any jurisdiction other than The
Commonwealth of Massachusetts and the United States of America. We call your
attention to the fact that each of the Underwriting Agreement and the Auction
Agency Agreement provides that it is to be governed by and construed in
accordance with the laws of the State of New York and to the fact that the
Investment Management Agreement does not provide that it is to be governed by
the laws of any particular jurisdiction. In rendering the 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
B-2
Massachusetts. Further, we express no opinion as to the state securities or Blue
Sky laws of any jurisdiction, including The Commonwealth of Massachusetts.
For purposes of our opinion set forth in paragraph 2 below with respect to
the power and authority of the Fund to own, lease and operate its properties and
conduct its business, we have relied upon certificates of officers of the Fund
as to the states in which the Fund leases or owns real property or in which it
conducts material operations.
Insofar as this opinion relates to factual matters, we have made inquiries
to officers of the Fund, the Investment Manager and the Portfolio Manager to the
extent we believe reasonable with respect to such matters and have relied inter
alia upon representations made by the Fund and the Investment Manager in the
Underwriting Agreement, representations made by the Portfolio Manager to the
Investment Manager and representations made to us by one or more officers of the
Fund, the Investment Manager or the Portfolio Manager. We have not independently
verified the accuracy of such representations. Where our opinion relates to our
"knowledge," that term means the conscious awareness of facts or other
information by any lawyer in our firm giving substantive attention to the
representation of the Fund with respect to the transactions contemplated by the
Underwriting Agreement, and does not require or imply (i) any examination of
this firm's, any such lawyer's or any other person's or entity's files, or (ii)
that any inquiry was made of any lawyer (other than the lawyers described
above). In respect of our opinions set forth in paragraphs 7, 9 and 10 below, we
have not searched the dockets of any court, administrative body or other filing
office in any jurisdiction.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Registration Statement is effective under the Securities Act; the
filing of the Prospectus pursuant to Rule 497 under the Securities Act has been
made in the manner and within the time period required by Rule 497; and based
upon oral inquiries to the Commission staff on the date hereof, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for any such purpose is pending or threatened by the Commission.
2. The Fund has been duly organized and is validly existing and in good
standing as an unincorporated voluntary association under and by virtue of the
laws of The Commonwealth of Massachusetts and has full power and authority to
own or lease its properties and to conduct its business as described in the
Registration Statement and the Prospectus. The Certificate of Designation
relating to the Fund's conduct of business in the State of New York is on file
with the Department of State of the State of New York, and the Fund is entitled
to transact intrastate business in the State of California.
3. The Fund's authorized capitalization is as set forth in the
Registration Statement and the Prospectus. The Fund has an indefinite number of
authorized common shares of beneficial interest, par value $0.00001 per share.
The APS conform in all material respects as to legal matters to the description
of them under the caption entitled "Description of APS" and "Description of
capital structure" in the Prospectus. All outstanding common shares of
beneficial interest of the Fund have been duly authorized and are validly
issued, fully paid and,
B-3
subject to the penultimate paragraph of this opinion letter, non-assessable. The
APS have been duly authorized and, when issued and delivered to the Underwriters
against payment therefor in accordance with the terms of the Underwriting
Agreement, will be validly issued, fully paid and, subject to the penultimate
paragraph of this opinion letter, non-assessable. No person is entitled to any
preemptive or other similar rights with respect to the APS.
4. The Fund was deemed to be registered with the Commission under Section
8(a) of the Investment Company Act upon receipt by the Commission of the
Notification of Registration. To our knowledge, the Commission has not issued to
the Fund notice of any hearing or other proceeding to consider suspension or
revocation of any such registration. All required action has been taken by the
Fund under the Securities Act, the Investment Company Act and the rules and
regulations thereunder in connection with the issuance and sale of the APS to
make the public offering and consummate the sale of the APS pursuant to the
Underwriting Agreement.
5. The Fund has, or at the relevant time had, full power and authority to
enter into each of the Fund Agreements and to perform all of the terms and
provisions thereof to be carried out by it. Each Fund Agreement has been duly
and validly authorized, executed and delivered by the Fund. Each Fund Agreement
complies in all material respects with all applicable provisions of the
Investment Company Act and the Investment Advisers Act of 1940, as amended, as
the case may be. Assuming due authorization, execution and delivery by the other
parties thereto, each Fund Agreement constitutes the legal, valid and binding
obligation of the Fund enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, moratorium, reorganization and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles (regardless of whether enforceability is considered in
a proceeding in equity or at law).
6. The Fund has, or at the relevant time had, full power and authority to
enter into each of the Investment Management Agreement and the Underwriting
Agreement and to perform all of the terms and provisions thereof to be carried
out by it. The Investment Management Agreement and the Underwriting Agreement
have been duly and validly authorized, executed and delivered by the Fund.
7. None of (a) the execution and delivery by the Fund of the Investment
Management Agreement, the Underwriting Agreement or any of the Fund Agreements,
(b) the issue and sale by the Fund of the APS as contemplated by the
Underwriting Agreement and (c) the performance by the Fund of its obligations
under the Investment Management Agreement, the Underwriting Agreement or any of
the Fund Agreements or the 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 Amended Bylaws or,
to our knowledge, any agreement or instrument to which the Fund is a party or by
which the Fund is bound, or violates or will violate any federal statute, law or
regulation or any judgment, injunction, order or decree of any federal
governmental agency or body that is applicable to the Fund and that is known to
us, which violation would have a material adverse effect on the condition or
business of the Fund.
B-4
8. To 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 APS by the Underwriters
pursuant to the Underwriting Agreement.
10. To our knowledge, there are no legal or governmental proceedings
pending or threatened against the Fund, or to which the Fund or any of its
properties is subject, that are required to be described in the Registration
Statement or the Prospectus but are not described therein as required.
11. To our knowledge, there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which have not been so described or filed as an exhibit
or incorporated therein by reference.
12. Each of the sections in the Prospectus entitled "Taxes" and "Tax
matters," to the extent that it states matters of United States law or legal
conclusions with respect thereto, presents a fair summary of the principal
federal income tax rules currently in effect applicable to the Fund and to the
purchase, ownership and disposition of the APS.
13. The Registration Statement (except for the financial statements and
schedules, the notes thereto and any schedules and other financial data
contained or incorporated by reference therein or omitted therefrom, as to which
we express no opinion), at the effective time set forth above, and the
Prospectus (except as aforesaid), as of the date thereof, complied as to form in
all material respects to the applicable requirements of the Securities Act and
the Investment Company Act.
We have not independently verified the accuracy, completeness or fairness
of the statements made or the information contained in the Registration
Statement or the Prospectus and, except in the respects and to the extent set
forth in paragraphs 3 and 13 above, we are not passing upon and do not assume
any responsibility therefor. In the course of the preparation by the Fund of the
Registration Statement and the Prospectus, we have participated in discussions
with your representatives and employees and officers of the Fund, the Investment
Manager and the Portfolio Manager and in discussions with the Fund's independent
accountants, in which the business and the affairs of the Fund, the Investment
Manager and the Portfolio Manager and the contents of the Registration Statement
and the Prospectus were discussed. There is no assurance that all material facts
as to the Fund, the Investment Manager, the Portfolio Manager and their
B-5
affairs were disclosed to us or that our familiarity with the Fund, the
Investment Manager or the Portfolio Manager is such that we would have
necessarily recognized the materiality of such facts as were disclosed to us,
and we have to a large extent relied upon statements of representatives of the
Fund, the Investment Manager and the Portfolio Manager as to the materiality of
the facts disclosed to us. On the basis of information that we have gained in
the course of our representation of the Fund in connection with its preparation
of the Registration Statement and the Prospectus and our participation in the
discussions referred to above, no facts have come to our attention that would
lead us to believe that as of August __, 2002, the Registration Statement
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that as of the date of the Prospectus and
the date hereof the Prospectus contained an untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light, in each case, of the circumstances under
which they were made, not misleading (in each case, other than the financial
statements and schedules, the notes thereto and any schedules and other
financial data contained or incorporated by reference therein or omitted
therefrom, as to which we express no opinion).
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Fund. However, the Fund's
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Fund and requires that notice of such disclaimer be given in each agreement,
obligation, and instrument entered into or executed by the Fund or the Trustees.
The Declaration of Trust provides for indemnification out of the property of the
Fund for all loss and expense of any shareholder held personally liable solely
by reason of being or having been a shareholder of the Fund. Thus, the risk of a
shareholder's incurring financial loss on account of being a shareholder is
limited to circumstances in which the Fund itself would be unable to meet its
obligations.
This letter and the opinions expressed herein are furnished by us to you
and are solely for benefit of the Underwriters, except that Skadden, Arps,
Slate, Xxxxxxx & Xxxx (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 & Xxxx
B-6
SCHEDULE C
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING PIMCO FUNDS ADVISORS LLC
August __, 2002
UBS Warburg LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
X.X. Xxxxxxx & Sons, Inc.
Prudential Securities Incorporated
as Managing Underwriters
c/o UBS Warburg LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: PIMCO Funds Advisors LLC
Ladies and Gentlemen:
I am the Chief Legal Officer of PIMCO Funds Advisors LLC, a Delaware
limited liability company ("PFA"), and have counseled PFA in such capacity in
connection with the sale to you by PIMCO California Municipal Income Fund II, a
voluntary association with transferable shares organized and existing under and
by virtue of the laws of The Commonwealth of Massachusetts (commonly referred to
as a Massachusetts business trust) (the "Fund"), of 2,080 Auction Preferred
Shares, Series A, 2,080 Auction Preferred Shares, Series B, 2,080 Auction
Preferred Shares, Series C, 2,080 Auction Preferred Shares, Series D, and 2,080
Auction Preferred Shares, Series E, of the Fund (the "APS"), pursuant to a
registration statement on Form N-2 under the Securities Act of 1933, as amended
(the "Act") and the Investment Company Act of 1940, as amended (the "Investment
Company Act"), filed with the Securities and Exchange Commission (the
"Commission") on July 2, 2002 (Act File No. 333-91742, and Investment Company
Act File No. 811-21077), as amended by Pre-Effective Amendment No. 1 filed with
the Commission on August 12, 2002, and Pre-Effective Amendment No. 2 filed with
the Commission on August __, 2002 (the "Registration Statement"), and an
underwriting agreement dated August __, 2002 by and among you, the Fund and PFA
(the "Underwriting Agreement") relating to the issuance and sale by the Fund of
the APS.
This opinion is rendered to you pursuant to Section 6(e) of the
Underwriting Agreement. Capitalized terms used herein without definition have
the meanings assigned to them in the Underwriting Agreement.
As such legal officer, I have examined such matters of fact and
questions of law as I have considered appropriate for purposes of rendering the
opinions expressed below, except where a statement is qualified as to knowledge
or awareness, in which case I have made no or limited inquiry as specified
below. I have examined, among other things, the following:
C-1
(a) the Underwriting Agreement;
(b) that certain Investment Management Agreement by and between the
Fund and PFA, dated as of June 18, 2002; and
(c) that certain Portfolio Management Agreement by and between
Pacific Investment Management Company LLC and PFA, as accepted
and agreed to by the Fund, dated as of June 18, 2002.
The documents described in subsections (a)-(c) above are referred to
herein collectively as the "Transaction Documents."
In my examination, I have assumed the genuineness of all signatures
(other than those of officers of PFA 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 PFA 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 PFA.
Subject to the foregoing and the other matters set forth herein, it is
my opinion that, as of the date hereof:
1. PFA is a limited liability company and is validly existing and in
good standing under the Delaware Limited Liability Company Act (6 Del. C ss..
18-101, et seq.) with all necessary limited liability company power and
authority to enter into and deliver the Transaction Documents and perform its
obligations thereunder and to carry on its business as it is now being conducted
and as described in the Registration Statement. Based solely on certificates
from public officials, I confirm that PFA 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
C-2
to so qualify would have a material adverse effect on the ability of PFA 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 PFA have been duly authorized by all necessary limited liability
company action of PFA and no other actions on the part of PFA or its unitholders
or any subsidiary of PFA or its unitholders is necessary to authorize and
consummate the transactions contemplated thereby, and the Transaction Documents
have been duly executed and delivered by PFA.
3. Each of the Investment Management Agreement and the Portfolio
Management Agreement constitutes a legally valid and binding agreement of PFA,
enforceable against PFA in accordance with its terms.
4. Neither the execution and delivery of the Transaction Documents
by PFA, nor the consummation by PFA of transactions contemplated thereby, nor
compliance by PFA with any of the terms and provisions thereof will:
(i) violate any provision of the Limited Liability Company
Agreement of PFA, effective May 23, 2000, as amended on July 1, 2001
and December 12, 2001, 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 PFA (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 PFA is a party or by
which it is bound and which is material to PFA's businesses taken as a
whole (the "Material Agreements"),
(iv) violate any order, writ, injunction or decree, known
to me and applicable to PFA, or
(v) to the best of my knowledge, require any consents,
approvals, authorizations, registrations, declarations or filings by
PFA under any federal or Delaware statute, rule or regulation
applicable to PFA, 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 PFA's businesses.
5. PFA 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
C-3
investment adviser for the Fund as contemplated by the Investment Management
Agreement, the Registration Statement and the Prospectus.
6. The description of PFA and its business, and the statements
attributable to PFA, 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 PFA 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 PFA to fulfill its obligations under either the Investment
Management Agreement or the Portfolio Management Agreement.
The opinions expressed in paragraph 3 above are subject to the
following limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or affecting
the rights or remedies of creditors generally;
(b) the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the discretion of the
court before which any proceeding therefor may be brought;
(c) the unenforceability under certain circumstances under law or
court decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy; and
(d) the unenforceability of any provision requiring the payment of
attorney's fees, except to the extent that a court determines such fees to
be reasonable.
In rendering the opinions expressed in paragraph 4 insofar as they
require interpretation of the Material Agreements (i) I have assumed with your
permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of New York
without giving effect to any choice of law provisions contained therein or any
choice of law principles which would result in application of the internal laws
of any other state and (ii) to the extent that any questions of legality or
legal construction have 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.
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To the extent that the obligations of PFA may be dependent upon such
matters, I assume for purposes of this opinion that: (i) all parties to the
Transaction Documents other than PFA 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 PFA 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 PFA are a party have been duly authorized, executed and
delivered by such parties and, other than PFA, 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,
* * *
Special Counsel for the Investment Manager shall separately opine that, assuming
the Investment Manager is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the Investment Company
Act from acting as investment adviser for the Fund as contemplated by the
Investment Management Agreement, the Registration Statement and the Prospectus,
neither the execution and delivery of the Underwriting Agreement, the Investment
Management Agreement or the Portfolio Management Agreement by the Investment
Manager, nor the consummation by the Investment Manager of the transactions
contemplated thereby, nor compliance by the Investment Manager with any of the
terms and provisions thereof will violate the provisions of the Investment
Company Act or the Advisers Act; provided, however, that such opinion may
specifically disclaim any opinion as to (a) the reasonableness of the fees to be
paid to the Investment Manager under the Investment Management Agreement and (b)
the compliance by the Investment Manager with its indemnification and
contribution obligations set forth in the Underwriting Agreement.
C-5
SCHEDULE D
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING PIMCO
August __, 2002
UBS Warburg LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
X.X. Xxxxxxx & Sons, Inc.
Prudential Securities Incorporated
as Managing Underwriters
c/o UBS Warburg LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Pacific Investment Management Company LLC
Ladies and Gentlemen:
I am the Chief Legal Officer of PIMCO Funds Advisors LLC, a Delaware
limited liability company. PFA is an affiliate of and under common control with
Pacific Investment Management Company LLC, a Delaware limited liability company
("PIMCO"). I have discussed the matters covered by this opinion with internal
counsel at PIMCO. In my capacity as Chief Legal Officer of PFA, I am rendering
this opinion on behalf of PIMCO in connection with the sale to you by PIMCO
California Municipal Income Fund II, a voluntary association with transferable
shares organized and existing under and by virtue of the laws of The
Commonwealth of Massachusetts (commonly referred to as a Massachusetts business
trust) (the "Fund"), of 2,080 Auction Preferred Shares, Series A, 2,080 Auction
Preferred Shares, Series B, 2,080 Auction Preferred Shares, Series C, 2,080
Auction Preferred Shares, Series D, and 2,080 Auction Preferred Shares, Series
E, of the Fund (the "APS"), pursuant to a registration statement on Form N-2
under the Securities Act of 1933, as amended (the "Act") and the Investment
Company Act of 1940, as amended (the "Investment Company Act"), filed with the
Securities and Exchange Commission (the "Commission") on July 2, 2002 (Act File
No. 333-91742 and Investment Company Act File No. 811-21077), as amended by
Pre-Effective Amendment No. 1 filed with the Commission on August 12, 2002, and
Pre-Effective Amendment No. 2 filed with the Commission on August __, 2002 (the
"Registration Statement"), and an underwriting agreement dated August __, 2002,
by and among you, the Fund and PFA (the "Underwriting Agreement") relating to
the issuance and sale by the Fund of the APS.
This opinion is rendered to you pursuant to Section 6(e) of the
Underwriting Agreement. Capitalized terms used herein without definition have
the meanings assigned to them in the Underwriting Agreement.
As Chief Legal Officer of PFA, 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
D-1
case I have made no or limited inquiry as specified below. I have examined,
among other things, that certain Portfolio Management Agreement by and between
PIMCO and PFA, as accepted and agreed to by the Fund, dated as of June 18, 2002
(the "Portfolio Management Agreement").
In my examination, I have assumed the genuineness of all signatures (other
than those of officers of PIMCO on the Portfolio Management Agreement), the
authenticity of all documents submitted to me as originals, and the conformity
to authentic original documents of all documents submitted to me as copies.
I have been furnished with, and with your consent have relied upon,
certificates of officers of PIMCO with respect to certain factual matters. In
addition, I have obtained and relied upon such certificates and assurances from
public officials as I have deemed necessary.
I am opining herein as to the effect of the federal laws of the United
States, the internal laws of the State of New York and the internal laws of the
State of Delaware, and I express no opinion with respect to the applicability
thereto, or the effect thereon, of the laws of any other jurisdiction or country
or as to any matters of municipal law or the laws of any other local agencies
within any state or country. My opinions set forth in paragraph 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
Chief Legal Officer of PFA.
Subject to the foregoing and the other matters set forth herein, it is my
opinion that, as of the date hereof:
1. PIMCO is a limited liability company and is validly existing and in good
standing under the Delaware Limited Liability Company Act (6 Del. C ss.. 18-101,
et seq.) with all necessary limited liability company power and authority to
enter into and deliver the Portfolio Management Agreement and perform its
obligations thereunder and to carry on its business as it is now being conducted
and as described in the Registration Statement. Based solely on certificates
from public officials, I confirm that PIMCO is qualified to do business in the
following States: California 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 PIMCO to perform its obligations under the Portfolio
Management Agreement.
2. The execution, delivery and performance of the Portfolio Management
Agreement by PIMCO have been duly authorized by all necessary limited liability
company action of PIMCO and no other actions on the part of PIMCO or its
unitholders or any subsidiary of PIMCO or its unitholders is necessary to
authorize and consummate the transactions
D-2
contemplated thereby, and the Portfolio Management Agreement has been duly
executed and delivered by PIMCO.
3. The Portfolio Management Agreement constitutes a legally valid and
binding agreement of PIMCO, enforceable against PIMCO in accordance with its
terms.
4. Neither the execution and delivery of the Portfolio Management
Agreement by PIMCO, nor the consummation by PIMCO of transactions contemplated
thereby, nor compliance by PIMCO with any of the terms and provisions thereof
will:
(i) violate any provision of the Limited Liability Company Agreement
of PIMCO, effective May 5, 2000,
(ii) violate any federal, Delaware or New York statute, rule or
regulation applicable to PIMCO (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 PIMCO is a party or by which it
is bound and which is material to PIMCO's businesses taken as a whole (the
"Material Agreements"),
(iv) violate any order, writ, injunction or decree, known to me and
applicable to PIMCO, or
(v) to the best of my knowledge, require any consents, approvals,
authorizations, registrations, declarations or filings by PIMCO under any
federal statute, rule or regulation applicable to PIMCO, except as have
been obtained under the Act, the Investment Company Act or the 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 PIMCO's businesses.
5. PIMCO is duly registered as an investment adviser under the Advisers
Act and is not prohibited by the Advisers Act or the Investment Company Act from
acting as investment sub-adviser for the Fund as contemplated by the Portfolio
Management Agreement, the Registration Statement and the Prospectus.
6. The description of PIMCO and its business, and the statements
attributable to PIMCO, set forth in the Registration Statement and the
Prospectus under the headings "Prospectus Summary - Portfolio Manager" and
"Management of the Fund" do not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
D-3
7. There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other governmental agency
or body, foreign or domestic, now pending or, to my knowledge, threatened
against PIMCO of a nature required to be disclosed in the Registration Statement
or Prospectus or that might reasonably result in any material adverse change in
the ability of PIMCO to fulfill its obligations under the Portfolio Management
Agreement.
The opinions expressed in paragraph 3 above are subject to the following
limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or affecting
the rights or remedies of creditors generally;
(b) the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the discretion of the
court before which any proceeding therefor may be brought;
(c) the unenforceability under certain circumstances under law or
court decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy; and
(d) the unenforceability of any provision requiring the payment of
attorney's fees, except to the extent that a court determines such fees to
be reasonable.
In rendering the opinions expressed in paragraph 4 insofar as they require
interpretation of the Material Agreements (i) I have assumed with your
permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of New York
without giving effect to any choice of law provisions contained therein or any
choice of law principles which would result in application of the internal laws
of any other state and (ii) to the extent that any questions of legality or
legal construction have arisen in connection with my review, I have applied the
laws of the State of New York in resolving such questions. I advise you that
certain of the Material Agreements may be governed by other laws, that such laws
may vary substantially from the law assumed to govern for purposes of this
opinion, and that this opinion may not be relied upon as to whether or not a
breach or default would occur under the law actually governing such Material
Agreements.
To the extent that the obligations of PIMCO may be dependent upon such
matters, I assume for purposes of this opinion that: (i) all parties to the
Portfolio Management Agreement other than PIMCO are duly incorporated or
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization; (ii) all parties to
the Portfolio Management Agreement other than PIMCO have the requisite power and
authority and, in the case of natural persons, legal capacity to execute and
deliver the Portfolio Management Agreement and to perform their respective
obligations under the Portfolio Management Agreement; and (iii) the Portfolio
Management Agreement has been duly
D-4
authorized, executed and delivered by such parties other than PIMCO and, other
than PIMCO, constitutes their legally valid and binding obligations, enforceable
against them in accordance with their terms. I express no opinion as to
compliance by any parties to the Portfolio Management Agreement with any state
or federal laws or regulations applicable to the subject transactions because of
the nature of their business and I express no opinion as to compliance by any
parties to the Portfolio Management Agreement with any foreign laws or
regulations applicable to the transactions contemplated by the Portfolio
Management Agreement or which may affect the Portfolio Management Agreement's
enforceability.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose, or furnished to, quoted to or relied upon by
any other person, firm or corporation for any purpose, without my prior written
consent.
Very truly yours,
D-5
SCHEDULE E
FORM OF OPINION OF XXXXXX & XXXXXXX
Based upon such facts, assumptions and representations, including the facts
set forth in the Registration Statement, Prospectus, and Statement of Additional
Information, the statements contained in the Prospectus under the heading "Tax
Matters - California Tax Matters" and in Appendix B to the Statement of
Additional Information under the heading "Factors Pertaining to California -
California Tax Matters," to the extent that such statements constitute matters
of law or legal conclusions, are correct in all material respects. This opinion
is based on current California tax laws and interpretations thereof by courts
having jurisdiction over such matters, both of which are subject to change
either prospectively or retroactively.
We have participated in the drafting of certain portions of the Prospectus
and Appendix B to the Statement of Additional Information and in connection
therewith have had limited discussions with the representatives of the Fund and
their counsel and, although we do not pass upon or assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement, the Prospectus or the Statement of Additional
Information, and have not made any independent check or verification thereof, no
facts have come to our attention which would lead us to believe that the
material contained in the Prospectus under the heading "Tax Matters - California
Tax Matters" and in Appendix B to the Statement of Additional Information under
the heading "Factors Pertaining to California," at the time the Registration
Statement became effective, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus, as of its
date and as of the date hereof, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
E-1
SCHEDULE F
FORM OF ACCOUNTANT'S LETTER
August __, 2002
The Board of Trustees of
PIMCO California Municipal Income Fund II
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
UBS Warburg LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
as Managing Representative of the Underwriters
Ladies and Gentlemen:
We have audited the statement of assets and liabilities of PIMCO
California Municipal Income Fund II (the "Fund") as of July 31, 2002 included in
the Registration Statement on Form N-2 filed by the Fund under the Securities
Act of 1933, as amended (the "Act") (File No. 333-91742), and under the
Investment Company Act of 1940, as amended (the "1940 Act") (File No.
811-21077); such statement and our report with respect to such statement are
included in the Registration Statement.
In connection with the Registration Statement:
1. We are independent public accountants with respect to the Fund
within the meaning of the Act and the applicable rules and regulations
thereunder.
2. In our opinion, the statement of assets and liabilities included in
the Registration Statement and audited by us complies as to form in all
respects with the applicable accounting requirements of the Act, the 1940
Act and the respective rules and regulations thereunder.
3. For purposes of this letter we have read the minutes of all
meetings of the Shareholders, the Board of Trustees and all Committees of
the Board of Trustees of the Fund as set forth in the minute books at the
offices of the Fund, officials of the Fund having advised us that the
minutes of all such meetings through _____________, 2002, were set forth
therein.
4. Fund officials have advised us that no financial statements as of
any date subsequent to July 31, 2002, are available. We have made inquiries
of certain officials of the Fund who have responsibility for financial and
accounting matters regarding whether
F-1
there was any change at _____________, 2002, in the capital shares or net
assets of the Fund as compared with amounts shown in the July 31, 2002,
statement of assets and liabilities included in the Registration Statement,
except for changes that the Registration Statement discloses have occurred
or may occur. On the basis of our inquiries and our reading of the minutes
as described in Paragraph 3, nothing came to our attention that caused us
to believe that there were any such changes.
The foregoing procedures do not constitute an audit made in accordance
with generally accepted auditing standards. Accordingly, we make no
representations as to the sufficiency of the foregoing procedures for your
purposes.
This letter is solely for the information of the addressees and to
assist the underwriters in conducting and documenting their investigation of the
affairs of the Fund in connection with the offering of the securities covered by
the Registration Statement, and is not to be used, circulated, quoted or
otherwise referred to within or without the underwriting group for any other
purpose, including but not limited to the registration, purchase or sale of
securities, nor is it to be filed with or referred to in whole or in part in the
Registration Statement or any other document, except that reference may be made
to it in the underwriting agreement or in any list of closing documents
pertaining to the offering of the securities covered by the Registration
Statement.
Very Truly Yours,
PRICEWATERHOUSECOOPERS LLP
F-2
