Exhibit h.4
Xxxxxxxx-Xxxxxxxxx Convertible & Income Fund II
Auction Preferred Shares
Par Value $0.00001 Per Share
UNDERWRITING AGREEMENT
September , 2003
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UNDERWRITING AGREEMENT
September __, 2003
UBS Securities LLC
Citigroup Global Markets Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Wachovia Capital Markets, LLC
c/o UBS Securities LLC
as Managing Underwriter
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Xxxxxxxx-Xxxxxxxxx Convertible & Income Fund II, a voluntary
association with transferable shares organized and existing under and by virtue
of the laws of The Commonwealth of Massachusetts (commonly referred to as a
Massachusetts business trust) (the "Fund"), proposes to issue and sell to the
underwriters named in Schedule A annexed hereto (the "Underwriters") an
aggregate of 4,040 preferred shares of beneficial interest of the Fund, par
value $0.00001 per share, designated Series A Auction Preferred Shares of the
Fund, 4,040 preferred shares of beneficial interest of the Fund, par value
$0.00001 per share, designated Series B Auction Preferred Shares of the Fund,
4,040 preferred shares of beneficial interest of the Fund, par value $0.00001
per share, designated Series C Auction Preferred Shares of the Fund, 4,040
preferred shares of beneficial interest of the Fund, par value $0.00001 per
share, designated Series D Auction Preferred Shares of the Fund, and 4,040
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.
333-107594 and 811-21338), 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
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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 Advisors Fund Management LLC ("PAFM" or the "Investment
Manager") acts as the Fund's investment manager pursuant to an Investment
Management Agreement by and between the Fund and the Investment Manager, dated
as of July 16, 2003 (the "Investment Management Agreement"). Xxxxxxxx-Xxxxxxxxx
Capital Management LLC ("NACM," or the "Portfolio Manager") acts as the Fund's
portfolio manager pursuant to a Portfolio Management Agreement by and between
the Investment Manager and NACM, as accepted and agreed to by the Fund, dated as
of July 16, 2003 (the "Portfolio Management Agreement"). Brown Brothers Xxxxxxxx
& Co. acts as the custodian (the "Custodian") of the Fund's cash and portfolio
assets pursuant to a Custodian Agreement, dated as of July 16, 2003 (the
"Custodian Agreement"). PFPC Inc. acts as the Fund's transfer agent, registrar
and dividend disbursing agent with respect to the common shares of the Fund (the
"Transfer Agent") pursuant to a Transfer Agency Services Agreement, dated as of
July 16, 2003 (the "Transfer Agency Agreement"). Deutsche Bank Trust Company
Americas will act as the Fund's auction agent (the "Auction Agent") for the APS
pursuant to an Auction Agency Agreement, dated as of September , 2003 (the
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"Auction Agency Agreement"). The Fund will enter into a Letter Agreement, dated
as of September , 2003, with the Depository Trust Company (the "DTC
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Agreement").
The Fund, the Investment Manager and the Underwriters agree as
follows:
1. Sale and Purchase. Upon the basis of the warranties and representations and
subject to the terms and conditions herein set forth, the Fund agrees to
sell to the respective Underwriters and each of the Underwriters, severally
and not jointly, agrees to purchase from the Fund the aggregate number of
APS set forth opposite the name of such Underwriter in Schedule A attached
hereto in each case at a purchase price per share of $24,750. The Fund is
advised that the Underwriters intend (i) to make a public offering of their
respective portions of the APS as soon after the Effective Date as is
advisable and (ii) initially to offer the APS upon the terms set forth in
the Prospectus. The Underwriters may from time to time increase or decrease
the public offering price after the initial public offering to such extent
as they may determine.
2. Payment and Delivery. Payment of the purchase price for the APS shall be
made by the Underwriters to the Fund by Federal Funds wire transfer,
against delivery of the certificates for the APS to you through the
facilities of the Depository Trust Company ("DTC") for the respective
accounts of the Underwriters. Such payment and delivery shall be made at
10:00 A.M., New York City time on the second business day following the
date of this Underwriting Agreement (unless another date or time shall be
agreed to by you and the Fund). The time at which such payment and delivery
are actually made is hereinafter sometimes called the "Time of Purchase" or
the "Closing Date." Certificates
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for the APS shall be delivered to you in definitive form in such names and
in such denominations as you shall specify on the second business day
preceding the Time of Purchase. For the purpose of expediting the checking
of the certificates for the 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.
Certificates in definitive form representing each series of 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
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(commonly known as a "Massachusetts business trust"), with full power
and authority to conduct all the activities conducted by it, to own or
lease all assets owned or leased by it and to conduct its business as
described in the Registration Statement and Prospectus, and the Fund
is duly licensed and qualified to do business and in good standing in
each jurisdiction in which its ownership or leasing of property or its
conducting of business requires such qualification, except where the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Fund, and the Fund owns, possesses or
has obtained and currently maintains all governmental licenses,
permits, consents, orders, approvals and other authorizations, whether
foreign or domestic, necessary to carry on its business as
contemplated in the Prospectus. The Fund has no subsidiaries.
(c) The capitalization of the Fund is as set forth in the Registration
Statement and the Prospectus. The common shares of beneficial interest
of the Fund, par value $0.00001 per share (the "Common Shares"), and
the APS conform in all material respects to the description of them in
the Prospectus. All outstanding Common Shares have been duly
authorized and are validly issued, fully paid and nonassessable
(except as described in the Registration Statement). The APS to be
issued and delivered to and paid for by the Underwriters in accordance
with this Underwriting Agreement against payment therefor as provided
by this Underwriting Agreement have been duly authorized and when
issued and delivered to the Underwriters will have been validly issued
and will be fully paid and nonassessable (except as described in the
Registration Statement). No person is entitled to any preemptive or
other similar rights in connection with the issuance of the APS.
(d) The Fund is duly registered with the Commission under the Investment
Company Act as a diversified, closed-end management investment
company, and, subject to the filing of any final amendment to the
Registration Statement (a "Final Amendment"), if not already filed,
all action under the Act and the Investment Company Act, as the case
may be, necessary to make the public offering and consummate the sale
of the APS as provided in this Underwriting Agreement has or will have
been taken by the Fund.
(e) The Fund has, or at the relevant time had, full power and authority to
enter into each of this Underwriting Agreement, the Investment
Management Agreement, the Custodian Agreement, the Transfer Agency
Agreement, the Auction Agency Agreement and the DTC Agreement
(collectively, the "Fund Agreements") and to perform all of the terms
and provisions hereof and thereof to be carried out by it and (i) each
Fund Agreement has been duly and validly authorized, executed and
delivered by or on behalf of the Fund, (ii) each Fund Agreement does
not violate in any material respect any of the applicable provisions
of the Investment Company Act or the Investment Advisers Act of 1940,
as amended, and the rules and regulations thereunder (collectively
called the "Advisers Act"), as the case may be, and (iii) assuming due
authorization, execution and delivery by the other parties thereto,
each Fund Agreement constitutes the legal, valid and binding
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obligation of the Fund enforceable in accordance with its terms, (A)
subject, as to enforcement, to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and to general
equitable principles (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (B) except as rights to indemnity
thereunder may be limited by federal or state securities laws.
(f) None of (i) the execution and delivery by the Fund of the Fund
Agreements, (ii) the issue and sale by the Fund of the 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 Third 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.
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(j) To the knowledge of the Fund and the Investment Manager after due
inquiry, based on representations from PricewaterhouseCoopers LLP,
whose report appears in the Prospectus, 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.
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(q) The APS have been, or prior to the Closing Date will be, assigned a
rating of "Aaa" by Xxxxx'x Investors Service, Inc. and "AAA" by Fitch,
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 paragraphs (f)
and (n), also to the Fund, as follows:
(a) The Investment Manager has been duly formed, is validly existing as a
limited liability company under the laws of the State of Delaware with
full power and authority to conduct all of the activities conducted by
it, to own or lease all of the assets owned or leased by it and to
conduct its business as described in the Registration Statement and
Prospectus, and the Investment Manager is duly licensed and qualified
to do business and in good standing in each jurisdiction in which it
is required to be so qualified, except to the extent that failure to
be so qualified or be in good standing would not have a material
adverse effect on the Investment Manager's ability to provide services
to the Fund; and the Investment Manager owns, possesses or has
obtained and currently maintains all governmental licenses, permits,
consents, orders, approvals and other authorizations, whether foreign
or domestic, necessary to carry on its business as contemplated in the
Registration Statement and the Prospectus.
(b) The Investment Manager is (i) duly registered as an investment adviser
under the Advisers Act and (ii) not prohibited by the Advisers Act or
the Investment Company Act from acting as the investment adviser for
the Fund as contemplated by the Investment Management Agreement, the
Registration Statement and the Prospectus.
(c) The Investment Manager has, or at the relevant time had, full power
and authority to enter into each of this Underwriting Agreement, the
Investment Management Agreement and the Portfolio Management Agreement
(collectively, this Underwriting Agreement, the Investment Management
Agreement and the Portfolio Management Agreement being referred to as
the "Investment Manager
8
Agreements") and to carry out all the terms and provisions hereof and
thereof to be carried out by it; and each Investment Manager Agreement
has been duly and validly authorized, executed and delivered by the
Investment Manager; none of the Investment Manager Agreements violates
in any material respect any of the applicable provisions of the
Investment Company Act or the Advisers Act; and assuming due
authorization, execution and delivery by the other parties thereto,
each Investment Manager Agreement constitutes a legal, valid and
binding obligation of the Investment Manager, enforceable in
accordance with its terms, (i) subject, as to enforcement, to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity
or at law) and (ii) except as rights to indemnity thereunder may be
limited by federal or state securities laws.
(d) Neither (i) the execution and delivery by the Investment Manager of
any Investment Manager Agreement nor (ii) the consummation by the
Investment Manager of the transactions contemplated by, or the
performance of its obligations under, any Investment Manager Agreement
conflicts or will conflict with, or results or will result in a breach
of, the limited liability company agreement or other organizational
documents of the Investment Manager or any agreement or instrument to
which the Investment Manager is a party or by which the Investment
Manager is bound, or any law, rule or regulation, or order of any
court, governmental instrumentality, securities exchange or
association or arbitrator, whether foreign or domestic, applicable to
the Investment Manager.
(e) No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or association,
whether foreign or domestic, is required for the consummation of the
transactions contemplated in, or the performance by the Investment
Manager of its obligations under, any Investment Manager Agreement, as
the case may be, except such as (i) have been obtained under the Act,
the Investment Company Act or the Advisers Act, and (ii) may be
required under state securities or "blue sky" laws, in connection with
the purchase and distribution of the APS by the Underwriters pursuant
to this Underwriting Agreement.
(f) The description of the Investment Manager and its business, and the
statements attributable to the Investment Manager, in the Registration
Statement and the Prospectus comply with the requirements of the Act
and the Investment Company Act and do not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading.
(g) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending or, to
the knowledge of the Investment Manager, threatened against or
affecting the Investment Manager of a nature required to be disclosed
in the Registration Statement or Prospectus or that might
9
reasonably be expected to result in any material adverse change in the
ability of the Investment Manager to fulfill its respective
obligations under any Investment Manager Agreement.
(h) None of the Fund, the Investment Manager or the Portfolio Manager has
made available any promotional materials intended for use only by
qualified broker-dealers and registered representatives thereof by
means of an Internet web site or similar electronic means.
(i) The Portfolio Manager has been duly formed, is validly existing as a
limited liability company under the laws of Delaware with full power
and authority to conduct all of the activities conducted by it, to own
or lease all of the assets owned or leased by it and to conduct its
business as described in the Registration Statement and Prospectus,
and the Portfolio Manager is duly licensed and qualified to do
business and in good standing in each jurisdiction in which it is
required to be so qualified, except to the extent that failure to be
so qualified or be in good standing would not have a material adverse
affect on the Portfolio Manager's ability to provide services to the
Fund; and the Portfolio Manager owns, possesses or has obtained and
currently maintains all governmental licenses, permits, consents,
orders, approvals and other authorizations, whether foreign or
domestic, necessary to carry on its business as contemplated in the
Registration Statement and the Prospectus.
(j) The Portfolio Manager is (i) duly registered as an investment adviser
under the Advisers Act and (ii) not prohibited by the Advisers Act or
the Investment Company Act from acting as the investment sub-adviser
for the Fund as contemplated by the Portfolio Management Agreement,
the Registration Statement and the Prospectus.
(k) The Portfolio Manager has, or at the relevant time had, full power and
authority to enter into the Portfolio Management Agreement and to
carry out all the terms and provisions hereof and thereof to be
carried out by it; and the Portfolio Management Agreement has been
duly and validly authorized, executed and delivered by the Portfolio
Manager; the Portfolio Management Agreement does not violate in any
material respect any of the applicable provisions of the Investment
Company Act or the Advisers Act; and assuming due authorization,
execution and delivery by the other parties thereto, the Portfolio
Management Agreement constitutes a legal, valid and binding obligation
of the Portfolio Manager, enforceable in accordance with its terms,
(i) subject, as to enforcement, to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and to general
equitable principles (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (ii) except as rights to indemnity
thereunder may be limited by federal or state securities laws.
(l) Neither (i) the execution and delivery by the Portfolio Manager of any
Portfolio Management Agreement nor (ii) the consummation by the
Portfolio Manager of the transactions contemplated by, or the
performance of its obligations under, any
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Portfolio Management Agreement conflicts or will conflict with, or
results or will result in a breach of, the limited liability company
agreement or other organizational documents of the Portfolio Manager
or any agreement or instrument to which the Portfolio Manager is a
party or by which the Portfolio Manager is bound, or any law, rule or
regulation, or order of any court, governmental instrumentality,
securities exchange or association or arbitrator, whether foreign or
domestic, applicable to the Portfolio Manager.
(m) No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or association,
whether foreign or domestic, is required for the consummation of the
transactions contemplated in, or the performance by the Portfolio
Manager of its obligations under, any Portfolio Management Agreement,
as the case may be, except such as (i) have been obtained under the
Act, the Investment Company Act or the Advisers Act, and (ii) may be
required under state securities or "blue sky" laws, in connection with
the purchase and distribution of the APS by the Underwriters pursuant
to this Underwriting Agreement.
(n) The description of the Portfolio Manager and its business, and the
statements attributable to the Portfolio Manager, in the Registration
Statement and the Prospectus comply with the requirements of the Act
and the Investment Company Act and do not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading.
(o) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending or, to
the knowledge of the Portfolio Manager, threatened against or
affecting the Portfolio Manager of a nature required to be disclosed
in the Registration Statement or Prospectus or that might reasonably
be expected to result in any material adverse change in the ability of
the Portfolio Manager to fulfill its respective obligations under any
Portfolio Management Agreement.
5. Agreements of the Parties.
(a) If the registration statement relating to the APS has not yet become
effective, the Fund will promptly file any Final Amendment, if not
previously filed, with the Commission, and will use its best efforts
to cause such registration statement to become effective and, as soon
as the Fund is advised, will advise UBS Securities LLC (the "Managing
Representative") when the Registration Statement or any amendment
thereto has become effective. If the Registration Statement has become
effective and the Prospectus contained therein omits certain
information at the time of effectiveness pursuant to Rule 430A under
the Act, the Fund will file a 430A prospectus pursuant to Rule 497(h)
under the Act as promptly as practicable, but no later than the second
business day following the earlier of the date of the determination of
the offering price of the APS or the date the
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Prospectus is first used after the Effective Date. If the Registration
Statement has become effective and the Prospectus contained therein
does not so omit such information, the Fund will file a prospectus
pursuant to Rule 497(b) or a certification pursuant to Rule 497(j)
under the Act as promptly as practicable, but no later than the fifth
business day following the date of the later of the Effective Date or
the commencement of the public offering of the APS after the Effective
Date. In either case, the Fund will provide you satisfactory evidence
of the filing. The Fund will not file with the Commission any
Prospectus or any other amendment (except any post-effective amendment
which is filed with the Commission after the later of (x) one year
from the date of this Underwriting Agreement or (y) the date on which
distribution of the APS is completed) or supplement to the
Registration Statement or the Prospectus unless a copy has first been
submitted to the Managing Representative a reasonable time before its
filing and the Managing Representative has not objected to it in
writing within a reasonable time after receiving the copy.
(b) For the period of three years from the date hereof, the Fund will
advise the Managing Representative promptly of (1) the issuance by the
Commission of any order in respect of the Fund, the Investment Manager
or the Portfolio Manager which relates to the Fund, or which relates
to any material arrangements or proposed material arrangements
involving the Fund, the Investment Manager or the Portfolio Manager,
(2) the initiation or threatening of any proceedings for, or receipt
by the Fund of any notice with respect to, any suspension of the
qualification of the APS for sale in any jurisdiction or the issuance
of any order by the Commission suspending the effectiveness of the
Registration Statement, (3) receipt by the Fund, or any representative
or attorney of the Fund, of any other communication from the
Commission relating in any material way to the Fund, the Registration
Statement, the Notification, any Preliminary Prospectus, the
Prospectus or to the transactions contemplated by this Underwriting
Agreement and (4) the issuance by any court, regulatory body,
administrative agency or other governmental agency or body, whether
foreign or domestic, of any order, ruling or decree, or the threat to
initiate any proceedings with respect thereto, regarding the Fund,
which relates in any material way to the Fund or any material
arrangements or proposed material arrangements involving the Fund. The
Fund will make every reasonable effort to prevent the issuance of any
order suspending the effectiveness of the Registration Statement and,
if any such order is issued, to obtain its lifting as soon as
possible.
(c) If not delivered prior to the date of this Underwriting Agreement, the
Fund will deliver to the Managing Representative, without charge, a
signed copy of the Registration Statement and the Notification and of
any amendments (except any post-effective amendment which is filed
with the Commission after the later of (x) one year from the date of
this Underwriting Agreement or (y) the date on which the distribution
of the APS is completed) to either the Registration Statement or the
Notification (including all exhibits filed with any such document) and
as many conformed copies of the Registration Statement and any
amendments thereto (except any post-effective amendment which is filed
with the Commission after
12
the later of (x) one year from the date of this Underwriting Agreement
or (y) the date on which the distribution of the APS is completed)
(excluding exhibits) as the Managing Representative may reasonably
request.
(d) During such period as a prospectus is required by law to be delivered
by an underwriter or a dealer, the Fund will deliver, without charge,
to you, the Underwriters and any dealers, at such office or offices as
you may designate, as many copies of the Prospectus as you may
reasonably request, and, if any event occurs during such period as a
result of which it is necessary to amend or supplement the Prospectus,
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading in any material respect, or
if during such period it is necessary to amend or supplement the
Prospectus to comply with the Act or the Investment Company Act, the
Fund promptly will prepare, submit to the Managing Representative,
file with the Commission and deliver, without charge, to the
Underwriters and to dealers (whose names and addresses the Managing
Representative will furnish to the Fund) to whom APS may have been
sold by the Underwriters, and to other dealers on request, amendments
or supplements to the Prospectus so that the statements in such
Prospectus, as so amended or supplemented, will not, in light of the
circumstances under which they were made, be misleading in any
material respect and will comply with the Act and the Investment
Company Act; provided that if the amendment or supplement is required
exclusively as a result of a misstatement in or omission from the
information provided to the Fund in writing by the Underwriters
expressly for use in the Prospectus, the Fund may deliver such
amendment or supplement to the Underwriters and dealers at a
reasonable charge not to exceed the actual cost thereof to the Fund.
Delivery by the Underwriters of any such amendments or supplements to
the Prospectus will not constitute a waiver of any of the conditions
in Section 6 hereof.
(e) The Fund will make generally available to holders of the Fund's
securities, as soon as practicable but in no event later than the last
day of the 18th full calendar month following the calendar quarter in
which the Effective Date falls, an earnings statement, if applicable,
satisfying the provisions of the last paragraph of Section 11(a) of
the Act and, at the option of the Fund, Rule 158 under the Act.
(f) The Fund will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Fund's counsel and accountants in
connection with the registration of the APS and all other expenses in
connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus
and amendments and supplements thereto and the mailing and delivering
of copies thereof to the Underwriters and dealers; (ii) the cost of
printing or reproducing this Underwriting Agreement and any other
documents in connection with the offering, purchase, sale and delivery
of the APS (including advertising expenses of the Underwriters, if
any); (iii) the cost of preparing share certificates; (iv) the
expenses (including, but not limited to, travel, hotels and other
accommodations) incurred by the Fund's directors, officers, employees
and other personnel in connection with meetings held with registered
brokers in
13
connection with the offering of the APS, the preparing to market and
the marketing of the APS; (v) any fees charged by securities rating
services for rating the APS; (vi) the fees and expenses of the DTC and
its nominee, the Custodian and the Auction Agent; and (vii) all other
costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for. It is
understood, however, that, except as provided in this Section 5 and
Section 7 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel and stock transfer
taxes, if any, on resale of any of the APS by them, except any
advertising expenses connected with any offers they may make.
(g) If the transactions contemplated by this Underwriting Agreement are
not consummated, except as otherwise provided herein, no party will be
under any liability to any other party, except that (i) if this
Underwriting Agreement is terminated by (A) the Fund or the Investment
Manager pursuant to any of the provisions hereof or (B) by you or the
Underwriters because of any inability, failure or refusal on the part
of the Fund or the Investment Manager to comply with any material
terms or because any of the conditions in Section 6 are not satisfied,
the Investment Manager or an affiliate and the Fund, jointly and
severally, will reimburse the Underwriters for all out-of-pocket
expenses (including the reasonable fees, disbursements and other
charges of their counsel) reasonably incurred by them in connection
with the proposed purchase and sale of the APS and (ii) no Underwriter
who has failed or refused to purchase the APS agreed to be purchased
by it under this Underwriting Agreement, in breach of its obligations
pursuant to this Underwriting Agreement, will be relieved of liability
to the Fund, the Investment Manager and the other Underwriters for
damages occasioned by its default.
(h) Without the prior written consent of the Managing Representative, the
Fund will not offer, sell or register with the Commission, or announce
an offering of, any equity securities of the Fund, within 180 days
after the Effective Date, except for the APS as described in the
Prospectus and any issuance of Common Shares pursuant to the dividend
reinvestment plan established by the Fund.
(i) The Fund will direct the investment of the net proceeds of the
offering of the APS in such a manner as to comply with the investment
objective and policies of the Fund as described in the Prospectus.
(j) No later than the Closing Date, the Underwriters will provide, and
will cause any selling group member to whom they have sold APS to
provide, the Auction Agent with a list of the record names of the
persons to whom they have sold APS, the number of APS sold to each
such person, and the number of APS they are holding as of the Closing
Date; provided that in lieu of thereof, an Underwriter may provide the
Auction Agent with a list indicating itself as the sole holder of all
the APS sold by such Underwriter.
14
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters to purchase the APS are subject to the accuracy on the date of
this Underwriting Agreement, and on the Closing Date, of the
representations of the Fund and the Investment Manager in this Underwriting
Agreement, to the accuracy and completeness of all material statements made
by the Fund and the Investment Manager or any of their respective officers
in any certificate delivered to the Managing Representative or its counsel
pursuant to this Underwriting Agreement, to the performance by the Fund and
the Investment Manager of their respective obligations under this
Underwriting Agreement and to each of the following additional conditions:
(a) The Registration Statement must have become effective by 5:30 p.m.,
New York City time, on the date of this Underwriting Agreement or such
later date and time as the Managing Representative consents to in
writing. The Prospectus must have been filed in accordance with Rule
497(b) or (h) or a certificate must have been filed in accordance with
Rule 497(j), as the case may be, under the Act.
(b) No order suspending the effectiveness of the Registration Statement
may be in effect and no proceedings for such purpose may be pending
before or, to the knowledge of counsel to the Underwriters, threatened
by the Commission, and any requests for additional information on the
part of the Commission (to be included in the Registration Statement
or the Prospectus or otherwise) must be complied with or waived to the
reasonable satisfaction of the Managing Representative.
(c) Since the dates as of which information is given in the Registration
Statement and the Prospectus, (i) there must not have been any
material change in the Common Shares, the APS or the liabilities of
the Fund except as set forth in or contemplated by the Prospectus;
(ii) there must not have been any material adverse change in the
general affairs, prospects, management, business, financial condition
or results of operations of the Fund, the Investment Manager or the
Portfolio Manager whether or not arising from transactions in the
ordinary course of business as set forth in or contemplated by the
Prospectus which in the opinion of the Managing Representative would
materially adversely affect the market for the APS; (iii) the Fund
must not have sustained any material loss or interference with its
business from any court or from legislative or other governmental
action, order or decree, whether foreign or domestic, or from any
other occurrence not described in the Registration Statement and
Prospectus; and (iv) there must not have occurred any event that makes
untrue or incorrect in any material respect any statement or
information contained in the Registration Statement or Prospectus or
that is not reflected in the Registration Statement or Prospectus but
should be reflected therein in order to make the statements or
information therein (in the case of the Prospectus, in light of the
circumstances in which they were made) not misleading in any material
respect.
(d) The Managing Representative must have received on the Closing Date a
certificate, dated such date, of the President, a Vice President or
Managing Director and the chief financial or accounting officer of
each of the Fund and the
15
Investment Manager certifying that (i) the signers have carefully
examined the Registration Statement, the Prospectus, and this
Underwriting Agreement, (ii) the representations of the Fund (with
respect to the certificates from such Fund officers) and the
representations of the Investment Manager (with respect to the
certificates from such officers of the Investment Manager) in this
Underwriting Agreement are accurate on and as of the date of the
certificate, (iii) there has not been any material adverse change in
the general affairs, prospects, management, business, financial
condition or results of operations of the Fund (with respect to the
certificates from such Fund officers) or the Investment Manager (with
respect to the certificates from such officers of the Investment
Manager), which change would materially and adversely affect the
ability of the Fund or the Investment Manager, as the case may be, to
fulfill its obligations under this Underwriting Agreement or the
Investment Management Agreement, whether or not arising from
transactions in the ordinary course of business, (iv) with respect to
the Fund only, to the knowledge of such officers after reasonable
investigation, no order suspending the effectiveness of the
Registration Statement, prohibiting the sale of any of the APS or
otherwise having a material adverse effect on the Fund has been issued
and no proceedings for any such purpose are pending before or
threatened by the Commission or any other regulatory body, whether
foreign or domestic, (v) to the knowledge of the officers of the
Investment Manager, after reasonable investigation, no order having a
material adverse effect on the ability of the Investment Manager to
fulfill its obligations under this Underwriting Agreement or the
Investment Management Agreement, as the case may be, has been issued
and no proceedings for any such purpose are pending before or
threatened by the Commission or any other regulatory body, whether
foreign or domestic, and (vi) each of the Fund (with respect to the
certificates from such Fund officers) and the Investment Manager (with
respect to the certificates from such officers of the Investment
Manager) has performed all of its respective agreements that this
Underwriting Agreement requires it to perform by the Closing Date (to
the extent not waived in writing by the Managing Representative).
(e) You must have received on the Closing Date the opinions, dated the
Closing Date, substantially in the form of Schedules B, C and D to
this Underwriting Agreement from the counsel identified in each such
Schedule, or in such other form as is acceptable to counsel for the
Underwriters.
(f) You must have received on the Closing Date from Skadden, Arps, Slate,
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 Investment Manager and the Portfolio Manager must have furnished
to such counsel such documents as counsel may reasonably request for
the purpose of enabling them to render such opinion.
16
(g) The Managing Representative must have received on the date this
Underwriting Agreement is signed and delivered by you a signed letter,
dated such date, substantially in the form of Schedule E to this
Underwriting Agreement from the firm of accountants designated in such
Schedule. The Managing Representative also must have received on the
Closing Date a signed letter from such accountants, dated as of the
Closing Date, confirming on the basis of a review in accordance with
the procedures set forth in their earlier letter that nothing has come
to their attention during the period from a date not more than five
business days before the date of this Underwriting Agreement,
specified in the letter, to a date not more than five business days
before the Closing Date, that would require any change in their letter
referred to in the foregoing sentence.
(h) The APS shall have been accorded a rating of "Aaa" by Xxxxx'x
Investors Service, Inc. and "AAA" by Fitch, Inc., and a letter to such
effect, dated on or before the Closing Date, shall have been delivered
to the Managing Representative.
(i) As of the Closing Date, and assuming the receipt of the net proceeds
from the sale of the APS, the 1940 Act APS Asset Coverage and the APS
Basic Maintenance Amount (each as defined in the Prospectus) each will
be met.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Underwriting Agreement will comply only if they are in
form and scope reasonably satisfactory to counsel for the Underwriters,
provided that any such documents, forms of which are annexed hereto, shall
be deemed satisfactory to such counsel if substantially in such form.
7. Termination. This Underwriting Agreement may be terminated by the Managing
Representative by notifying the Fund at any time:
(a) before the later of the effectiveness of the Registration Statement
and the time when any of the APS are first generally offered pursuant
to this Underwriting Agreement by the Managing Representative to
dealers by letter or telegram;
(b) at or before the Closing Date if, in the sole judgment of the Managing
Representative, payment for and delivery of any APS is rendered
impracticable or inadvisable because (i) trading in the APS or the
Common Shares of the Fund is suspended by the Commission or the
principal exchange that lists the Common Shares, (ii) trading in
securities generally on the New York Stock Exchange or the Nasdaq
Stock Market shall have been suspended or limited or minimum or
maximum prices shall have been generally established on such exchange
or over-the-counter market, (iii) additional material governmental
restrictions, not in force on the date of this Underwriting Agreement,
have been imposed upon trading in securities or trading has been
suspended on any U.S. securities exchange, (iv) a general banking
moratorium has been established by U.S. federal or New York
authorities or (v) any material adverse change in the financial or
securities markets in the United States or in political, financial or
economic conditions in
17
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 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
18
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 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.
19
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 but such fees and expenses of
such counsel shall be at the expense of the Fund or the Investment
Manager, as the case may be), in any of which events such reasonable
fees and expenses shall be borne by the Fund or the Investment Manager
and paid as incurred (it being understood, however, that the Fund or
the Investment Manager shall not be liable for the expenses of more
than one separate counsel (in addition to any local counsel) in any
one Proceeding or series of related Proceedings in the same
jurisdiction representing the indemnified parties who are parties to
such Proceeding). Neither the Fund nor the Investment Manager shall be
liable for any settlement of any Proceeding effected without its
written consent but if settled with the written consent of the Fund or
the Investment Manager, the Fund or the Investment Manager, as the
case may be, agrees to indemnify and hold harmless any Underwriter and
any such person from and against any loss or liability by reason of
such settlement. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for reasonable fees and expenses of
counsel as contemplated by the second sentence of this paragraph, then
the indemnifying party agrees that it shall be liable for any
settlement of any Proceeding effected without its written consent if
(i) such settlement is entered into more than 60 business days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and
(iii) such
20
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 Underwriter shall not have, within a reasonable period of time in
light of the circumstances, employed
21
counsel to have charge of the defense of such Proceeding or such
indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from
or additional to or in conflict with those available to such
Underwriter (in which case such Underwriter shall not have the right
to direct the defense of such Proceeding on behalf of the indemnified
party or parties, but such Underwriter may employ counsel and
participate in the defense thereof but such fees and expenses of such
counsel shall be at the expense of such Underwriter), in any of which
events such fees and expenses shall be borne by such Underwriter and
paid as incurred (it being understood, however, that such Underwriter
shall not be liable for the expenses of more than one separate counsel
(in addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). No
Underwriter shall be liable for any settlement of any such Proceeding
effected without the written consent of such Underwriter but if
settled with the written consent of such Underwriter, such Underwriter
agrees to indemnify and hold harmless the Fund, the Investment Manager
and any such person from and against any loss or liability by reason
of such settlement. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement
of any Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 business days after receipt by
such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and
(iii) such indemnified party shall have given the indemnifying party
at least 30 days' prior notice of its intention to settle. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
Proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that
are the subject matter of such Proceeding and does not include an
admission of fault, culpability or a failure to act, by or on behalf
of such indemnified party.
(c) If the indemnification provided for in this Section 9 is unavailable
to an indemnified party under subsections (a) and (b) of this Section
9 in respect of any losses, damages, expenses, liabilities or claims
referred to therein, then each applicable indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
damages, expenses, liabilities or claims (i) in such proportion as is
appropriate to reflect the relative benefits received by the Fund and
the Investment Manager on the one hand and the Underwriters on the
other hand from the offering of the APS or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to
22
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 and
the Investment Manager and each Underwriter agree promptly to notify
each
23
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 Securities 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
and, if to or the Portfolio Manager, shall be sufficient in all respects if
delivered or sent to the Portfolio Manager at the offices of the Portfolio
Manager at 000 Xxxx Xxxxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 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 Securities LLC each consent to the jurisdiction of such
courts and personal service with respect thereto. The Fund and UBS
Securities hereby consent to personal jurisdiction, service and venue in
any court in which any Claim arising out of or in any way relating to this
Agreement is brought by any third party against UBS Securities LLC or any
indemnified party. Each of UBS Securities
24
LLC, the Fund (on its behalf and, to the extent permitted by applicable
law, on behalf of its stockholders and affiliates) and the Investment
Manager (on its behalf and, to the extent permitted by applicable law, on
behalf of its unitholders and affiliates) waives all right to trial by jury
in any action, proceeding or counterclaim (whether based upon contract,
tort or otherwise) in any way arising out of or relating to this Agreement.
Each of the Fund and the Investment Manager agrees that a final judgment in
any such action, proceeding or counterclaim brought in any such court shall
be conclusive and binding upon the Fund and the Investment Manager, as the
case may be, and may be enforced in any other courts in the jurisdiction of
which the Fund or the Investment Manager, as the case may be, is or may be
subject, by suit upon such judgment.
13. Parties at Interest. The Agreement herein set forth has been and is made
solely for the benefit of the Underwriters, the Fund and the Investment
Manager and to the extent provided in Section 9 hereof the controlling
persons, shareholders, partners, members, trustees, managers, directors and
officers referred to in such section, and their respective successors,
assigns, heirs, personal representatives and executors and administrators.
No other person, partnership, association or corporation (including a
purchaser, as such purchaser, from any of the Underwriters) shall acquire
or have any right under or by virtue of this Agreement.
14. Counterparts. This Agreement may be signed by the parties in one or more
counterparts which together shall constitute one and the same agreement
among the parties.
15. Successors and Assigns. This Agreement shall be binding upon the
Underwriters, the Fund and the Investment Manager, and any successor or
assign of any substantial portion of the Fund's, the Investment Manager's,
or any of the Underwriters' respective businesses and/or assets.
16. Disclaimer of Liability of Trustees and Beneficiaries. A copy of the
Agreement and Declaration of Trust of the Fund is on file with the
Secretary of State of The Commonwealth of Massachusetts, and notice hereby
is given that this Underwriting Agreement is executed on behalf of the Fund
by an officer or Trustee of the Fund in his or her capacity as an officer
or Trustee of the Fund and not individually and that the obligations under
or arising out of this Underwriting Agreement are not binding upon any of
the Trustees, officers or shareholders individually but are binding only
upon the assets and properties of the Fund.
25
If the foregoing correctly sets forth the understanding among the
Fund, the Investment Manager and the Underwriters, please so indicate in the
space provided below, whereupon this letter and your acceptance shall constitute
a binding agreement among the Fund, the Investment Manager and the Underwriters,
severally.
Very truly yours,
XXXXXXXX-XXXXXXXXX
CONVERTIBLE & INCOME FUND II
--------------------------
By:
Title:
PIMCO ADVISORS
FUND MANAGEMENT LLC
--------------------------
By:
Title:
Accepted and agreed to as of the
date first above written, on
behalf of themselves and
the other several Underwriters
named in Schedule A
UBS SECURITIES LLC
CITIGROUP GLOBAL MARKETS INC.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
WACHOVIA CAPITAL MARKETS, LLC
By: UBS SECURITIES LLC
--------------------------
By: Xxxxx Xxxxxxxx
Title: Managing Director
--------------------------
By: Xxxx X. Xxxx
Title: Executive Director
SCHEDULE A
Number of Shares
Name to be Purchased
---- -----------------
UBS Securities LLC
Citigroup Global Markets Inc.
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
Wachovia Capital Markets, LLC
--------
Total
A-1
SCHEDULE B
FORM OF OPINION OF
ROPES & GRAY LLP REGARDING THE FUND
September , 2003
--
UBS Securities LLC
Citigroup Global Markets Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Wachovia Capital Markets, LLC
as Managing Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Dear Ladies and Gentlemen:
We have acted as counsel to Xxxxxxxx-Xxxxxxxxx Convertible & Income
Fund II (the "Fund") in connection with the proposed issuance of 4,040 Auction
Preferred Shares, Series A, 4,040 Auction Preferred Shares, Series B, 4040
Auction Preferred Shares, Series C, 4040 Auction Preferred Shares, Series D, and
4040 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 September , 2003 (the "Underwriting Agreement") among the Fund, PIMCO
Advisors Fund Management LLC (the "Investment Manager") and UBS Securities 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. 333-107594) under the Securities Act of 1933, as
amended (the "Securities Act") (which also constitutes Amendment No. 5 to the
Fund's Registration Statement on Form N-2 (File No. 811-21338) 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 August 1, 2003 (the "Original Registration
Statement"), Pre-Effective Amendment No. 1 to the Original Registration
Statement, including all exhibits thereto, as filed with the Commission on
-----
, 2003 ("Pre-Effective Amendment No. 1") and Pre-Effective Amendment No. 2 to
--
the Original Registration Statement, including all exhibits thereto, as filed
with the Commission on , 2003 ("Pre-Effective Amendment No. 2," and
----- --
together with Pre-Effective Amendment No. 1 and the Original Registration
Statement, the "Registration Statement"); the Fund's Notification of
Registration on Form N-8A (File No. 811-21338) under the Investment Company Act,
as filed with the Commission on April 23, 2003 (the "Notification of
Registration"); the Fund's Agreement and Declaration of Trust, as
B-1
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 Bylaws of the Fund, as amended to the date hereof (the
"Bylaws"); a copy of the Prospectus dated , 2003, relating to the APS
----- --
and the Statement of Additional Information of the Fund dated , 2003,
----- --
each as filed with the Commission pursuant to Rule 497 under the Securities Act
on , 2003 (together, the "Prospectus"); the Investment Management
----- --
Agreement dated as of July 16, 2003, between the Fund and the Investment Manager
(the "Investment Management Agreement"); the Portfolio Management Agreement
dated as of July 16, 2003, between Xxxxxxxx-Xxxxxxxxx Capital Management LLC
(the "Portfolio Manager") and the Investment Manager (the "Portfolio Management
Agreement"), as agreed to and accepted by the Fund; the Custodian Agreement
dated as of July 16, 2003, between the Fund and Brown Brothers Xxxxxxxx & Co.
(the "Custodian Agreement"); and the Auction Agency Agreement dated as of
-----
, 2003, between the Fund and Deutsche Bank Trust Company Americas (the
--
"Auction Agency Agreement," and, together with the Custodian Agreement, the
"Fund Agreements"); and the Underwriting Agreement. Additionally, we have relied
upon the oral representation of [ ] of the staff of the Commission to the effect
that the Registration Statement became effective as of a.m. on ,
---- ----- --
2003, and the oral representation by a member of the staff of the Commission on
the date hereof that as of a.m., no stop order suspending the effectiveness
----
of the Registration Statement had been issued and no proceeding for any such
purpose was pending or threatened.
We have also examined and relied upon the original or copies of
minutes of the meetings or written consents of the shareholders and the Board of
Trustees of the Fund, and copies of resolutions of the Board of Trustees of the
Fund certified by the Secretary of the Fund, the documents delivered to the
Underwriters by the Fund and the Investment Manager dated as of the date hereof
pursuant to the Underwriting Agreement and such other documents, including
certificates of officers and Trustees of the Fund, as we have deemed necessary
for purposes of rendering our opinions below. For purposes of paragraph 2 below,
we have relied solely on (1) the certificate of recent date of the Secretary of
State of the State of California as to the entitlement of the Fund to transact
intrastate business in the State of California, (2) a Certificate of the Special
Deputy Secretary of State of the State of New York dated September , 2003,
certifying copies of (a) a Certificate of Designation by the Fund dated [ ],
2003 and (b) a Statement under Section 18 of the New York General Associations
Law, (3) a Filing Receipt of the Department of State of the State of New York
dated September , 2003 relating to the Fund and (4) a LEXIS search on September
, 2003, of the New York Department of State, Corporate Record, showing the
"status" of the Fund as "active" and noting that "good standing status can only
be determined by performing a search in the records of both the Department of
State Corporation Records and the Department of Tax and Franchise." We have
assumed the genuineness of the signatures on all documents examined by us, the
authenticity of all documents submitted to us as originals and the conformity to
the corresponding originals of all documents submitted to us as copies. For
purposes of our opinion regarding the effectiveness of the Registration
Statement, we are relying solely on the oral representations of the staff of the
Commission.
We express no opinion as to the laws of any jurisdiction other than
The Commonwealth of Massachusetts and the United States of America. We call your
attention to the fact that each of the Underwriting Agreement, the Auction
Agency Agreement and the
B-2
Custodian Agreement provides that it is to be governed by and construed in
accordance with the laws of the State of New York and to the fact that the
Investment Management Agreement does not provide that it is to be governed by
the laws of any particular jurisdiction. In rendering the opinion as to
enforceability expressed in paragraph 5 below, we have limited the scope of our
opinion to the conclusions that would be reached by a Massachusetts court that
had determined that each of the Fund Agreements would be governed by, and
construed in accordance with, the internal laws of The Commonwealth of
Massachusetts. Further, we express no opinion as to the state securities or Blue
Sky laws of any jurisdiction, including The Commonwealth of Massachusetts.
For purposes of our opinion set forth in paragraph 2 below with
respect to the power and authority of the Fund to own, lease and operate its
properties and conduct its business, we have relied upon certificates of
officers of the Fund as to the states in which the Fund leases or owns real
property or in which it conducts material operations.
Insofar as this opinion relates to factual matters, we have made
inquiries to officers of the Fund, the Investment Manager and the Portfolio
Manager to the extent we believe reasonable with respect to such matters and
have relied inter alia upon representations made by the Fund and the Investment
Manager in the Underwriting Agreement, representations made by the Portfolio
Manager to the Investment Manager and representations made to us by one or more
officers of the Fund, the Investment Manager or the Portfolio Manager. We have
not independently verified the accuracy of such representations. Where our
opinion relates to our "knowledge," that term means the conscious awareness of
facts or other information by any lawyer in our firm giving substantive
attention to the representation of the Fund with respect to the transactions
contemplated by the Underwriting Agreement, and does not require or imply (i)
any examination of this firm's, any such lawyer's or any other person's or
entity's files, or (ii) that any inquiry was made of any lawyer (other than the
lawyers described above). In respect of our opinions set forth in paragraphs 7,
9 and 10 below, we have not searched the dockets of any court, administrative
body or other filing office in any jurisdiction.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Registration Statement and all post-effective amendments on or
before the Closing Date, if any, are effective under the Securities Act; the
filing of the Prospectus pursuant to Rule 497 under the Securities Act has been
made in the manner and within the time period required by Rule 497; and based
upon oral inquiries to the Commission staff on the date hereof, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for any such purpose is pending or threatened by the Commission.
2. The Fund has been duly organized and is validly existing and in good
standing as an unincorporated voluntary association under and by virtue of the
laws of The Commonwealth of Massachusetts and has full power and authority to
own or lease its properties and to conduct its business as described in the
Registration Statement and the Prospectus. The Certificate of Designation
relating to the Fund's conduct of business in the State of New York is on file
with the Department of State of the State of New York, and the Fund is entitled
to transact intrastate business in the State of California.
B-3
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, subject to the penultimate paragraph of this opinion letter,
non-assessable. The APS have been duly authorized and, when issued and delivered
to the Underwriters against payment therefor in accordance with the terms of the
Underwriting Agreement, will be validly issued, fully paid and, subject to the
penultimate paragraph of this opinion letter, non-assessable. No person is
entitled to any preemptive or other similar rights with respect to the APS.
4. To the best of our knowledge after due inquiry, the Fund was deemed to
be registered with the Commission under Section 8(a) of the Investment Company
Act upon receipt by the Commission of the Notification of Registration. To our
knowledge after the inquiry described above, the Commission has not issued to
the Fund notice of any hearing or other proceeding to consider suspension or
revocation of any such registration. To the best of our knowledge after due
inquiry, all required action has been taken by the Fund under the Securities
Act, the Investment Company Act and the rules and regulations thereunder in
connection with the issuance and sale of the APS to make the public offering and
consummate the sale of the APS pursuant to the Underwriting Agreement.
5. The Fund has, or at the relevant time had, full power and authority to
enter into each of the Fund Agreements and to perform all of the terms and
provisions thereof to be carried out by it. Each Fund Agreement has been duly
and validly authorized, executed and delivered by the Fund. Each Fund Agreement
complies in all material respects with all applicable provisions of the
Investment Company Act and the Investment Advisers Act of 1940, as amended, as
the case may be. Assuming due authorization, execution and delivery by the other
parties thereto, and, each Fund Agreement constitutes the legal, valid and
binding obligation of the Fund enforceable in accordance with its terms, subject
as to enforcement to bankruptcy, insolvency, moratorium, reorganization and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles (regardless of whether enforceability is
considered in a proceeding in equity or at law).
6. The Fund has, or at the relevant time had, full power and authority to
enter into each of the Investment Management Agreement and the Underwriting
Agreement and to perform all of the terms and provisions thereof to be carried
out by it. The Investment Management Agreement and the Underwriting Agreement
have been duly and validly authorized, executed and delivered by the Fund.
7. None of (a) the execution and delivery by the Fund of the Investment
Management Agreement, the Underwriting Agreement or any of the Fund Agreements,
(b) the issue and sale by the Fund of the APS as contemplated by the
Underwriting Agreement and (c) the performance by the Fund of its obligations
under the Investment Management Agreement, the Underwriting Agreement or any of
the Fund Agreements or consummation by the Fund of the other transactions
contemplated by the Investment Management Agreement, the Underwriting Agreement
or any of the Fund Agreements conflicts or will conflict with, or results
B-4
or will result in a breach of, the Declaration of Trust or the Third Amended and
Restated Bylaws or, to our knowledge, any agreement or instrument to which the
Fund is a party or by which the Fund is bound, or violates or will violate any
federal statute, law or regulation or any judgment, injunction, order or decree
of any federal governmental agency or body that is applicable to the Fund and
that is known to us, which violation would have a material adverse effect on the
condition or business of the Fund.
8. To the best of our knowledge, the Fund is not currently in breach of, or
in default under, any material written agreement or instrument to which it is a
party or by which it or its property is bound or affected.
9. No consent, approval, authorization or order of any court or
governmental agency or body or securities exchange or securities association is
required by the Fund for the consummation by the Fund of the transactions
contemplated in the Investment Management Agreement, the Underwriting Agreement
and the Fund Agreements, except such as (a) have been obtained under the
Securities Act, the Investment Company Act or the Exchange Act and (b) may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the APS by the Underwriters pursuant to the Underwriting
Agreement.
10. To our knowledge after due inquiry, there are no legal or governmental
proceedings pending or threatened against the Fund, or to which the Fund or any
of its properties is subject, that are required to be described in the
Registration Statement or the Prospectus but are not described therein as
required.
11. To the best of our knowledge after due inquiry, there are no
agreements, contracts, indentures, leases or other instruments that are required
to be described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement which have not been so described or
filed as an exhibit or incorporated therein by reference.
12. Each of the sections in the Prospectus entitled "Tax matters," to the
extent that it states matters of United States law or legal conclusions with
respect thereto, presents a fair summary of the principal federal income tax
rules currently in effect applicable to the Fund and to the purchase, ownership
and disposition of the APS.
13. The Registration Statement (except for the financial statements and
schedules, the notes thereto and any schedules and other financial data
contained or incorporated by reference therein or omitted therefrom, as to which
we express no opinion), at the effective time set forth above, and the
Prospectus (except as aforesaid), as of the date thereof, complied as to form in
all material respects to the applicable requirements of the Securities Act and
the Investment Company Act.
We have not independently verified the accuracy, completeness or
fairness of the statements made or the information contained in the Registration
Statement or the Prospectus and, except in the respects and to the extent set
forth in paragraphs 3, 12 and 13 above, we are not passing upon and do not
assume any responsibility therefor. In the course of the preparation by the Fund
of the Registration Statement and the Prospectus, we have participated in
discussions with your representatives and employees and officers of the Fund,
the Investment
B-5
Manager and the Portfolio Manager and in discussions with the Fund's independent
accountants, in which the business and the affairs of the Fund, the Investment
Manager and the Portfolio Manager and the contents of the Registration Statement
and the Prospectus were discussed. There is no assurance that all material facts
as to the Fund, the Investment Manager, the Portfolio Manager and their affairs
were disclosed to us or that our familiarity with the Fund, the Investment
Manager or the Portfolio Manager is such that we would have necessarily
recognized the materiality of such facts as were disclosed to us, and we have to
a large extent relied upon statements of representatives of the Fund, the
Investment Manager and the Portfolio Manager as to the materiality of the facts
disclosed to us. On the basis of information that we have gained in the course
of our representation of the Fund in connection with its preparation of the
Registration Statement and the Prospectus and our participation in the
discussions referred to above, no facts have come to our attention that would
lead us to believe that as of _____ __, 2003, the Registration Statement
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that as of the date of the Prospectus and
the date hereof the Prospectus contained an untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light, in each case, of the circumstances under
which they were made, not misleading (in each case, other than the financial
statements and schedules, the notes thereto and any schedules and other
financial data contained or incorporated by reference therein or omitted
therefrom, as to which we express no opinion).
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Fund's Declaration of Trust disclaims shareholder liability for
acts or obligations of the Fund and requires that notice of such disclaimer be
given in each agreement, obligation, and instrument entered into or executed by
the Fund or the Trustees. The Declaration of Trust provides for indemnification
out of the property of the Fund for all loss and expense of any shareholder held
personally liable solely by reason of being or having been a shareholder of the
Fund. Thus, the risk of a shareholder's incurring financial loss on account of
being a shareholder is limited to circumstances in which the Fund itself would
be unable to meet its obligations.
This letter and the opinions expressed herein are furnished by us to
you and are solely for benefit of the Underwriters, except that Xxxxxxx, 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 & Gray LLP
B-6
B-7
SCHEDULE C
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING PIMCO ADVISORS FUND MANAGEMENT LLC
September , 2003
--
UBS Securities LLC
[_]
as Managing Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: PIMCO Advisors Fund Management LLC
Ladies and Gentlemen:
I am the Chief Legal Officer of PIMCO Advisors Fund Management LLC, a
Delaware limited liability company ("PAFM"), and have counseled PAFM in such
capacity in connection with the sale to you by Xxxxxxxx-Xxxxxxxxx Convertible &
Income Fund II, a voluntary association with transferable shares organized and
existing under and by virtue of the laws of The Commonwealth of Massachusetts
(commonly referred to as a Massachusetts business trust) (the "Fund"), of [_]
Auction Preferred Shares, Series A, [_] Auction Preferred Shares, Series B, [_]
Auction Preferred Shares, Series C, [_] Auction Preferred Shares, Series D, and
[_] 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 August 1, 2003 (Act File No. 333-107594), and Investment
Company Act File No. 811-21338), as amended by Pre-Effective Amendment No. 1
filed with the Commission on September 22, 2003, and Pre-Effective Amendment No.
2 filed with the Commission on September , 2003 (such registration statements
--
collectively referred to herein as the "Registration Statement"), and an
underwriting agreement dated , 2003 by and among you, the Fund and PAFM
----- --
(the "Underwriting Agreement") relating to the issuance and sale by the Fund of
the APS.
This opinion is rendered to you pursuant to Section 6(e) of the
Underwriting Agreement. Capitalized terms used herein without definition have
the meanings assigned to them in the Underwriting Agreement.
As such legal officer, I have examined such matters of fact and
questions of law as I have considered appropriate for purposes of rendering the
opinions expressed below, except where a statement is qualified as to knowledge
or awareness, in which case I have made no or limited inquiry as specified
below. I have examined, among other things, the following:
(a) the Underwriting Agreement;
C-1
(b) that certain Investment Management Agreement by and between the
Fund and PAFM, dated as of July 16, 2003;
(c) that certain Portfolio Management Agreement by and between
Xxxxxxxx-Xxxxxxxxx Capital Management LLC and PAFM, as accepted
and agreed to by the Fund, dated as of July 16, 2003;
(d) that certain Shareholder Servicing Agreement with respect to the
Fund by and between PAFM and UBS Securities LLC, dated as of July
31, 2003; and
(e) that certain Additional Compensation Agreement with respect to
the Fund by and between PAFM, Citigroup Global Markets Inc. and
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated dated as of
July 31, 2003.
The documents described in subsections (a)-(e) above are referred to
herein collectively as the "Transaction Documents."
In my examination, I have assumed the genuineness of all signatures
(other than those of officers of PAFM on the Transaction Documents), the
authenticity of all documents submitted to me as originals, and the conformity
to authentic original documents of all documents submitted to me as copies.
I have been furnished with, and with your consent have relied upon,
certificates of officers of PAFM with respect to certain factual matters. In
addition, I have obtained and relied upon such certificates and assurances from
public officials as I have deemed necessary.
I am opining herein as to the effect of the federal laws of the United
States, the internal laws of the State of New York and the internal laws of the
State of Delaware, and I express no opinion with respect to the applicability
thereto, or the effect thereon, of the laws of any other jurisdiction or country
or as to any matters of municipal law or the laws of any other local agencies
within any state or country. My opinions set forth in paragraph 4 below are
based upon my consideration of only those statutes, rules and regulations which,
in my experience, are normally applicable to transactions similar to those
contemplated by the Transaction Documents, generally.
Whenever a statement herein is qualified by "to my knowledge" or a
similar phrase, it is intended to indicate that I do not have current actual
knowledge of the inaccuracy of such statement. However, except as otherwise
expressly indicated, I have not undertaken any independent investigation to
determine the accuracy of any such statement, and no inference that I have any
knowledge of any matters pertaining to such statement should be drawn from my
position as Chief Legal Officer of PAFM.
Subject to the foregoing and the other matters set forth herein, it is
my opinion that, as of the date hereof:
C-2
1. PAFM is a limited liability company and is validly existing and in
good standing under the Delaware Limited Liability Company Act (6 Del. C (S).
18-101, et seq.) with all necessary limited liability company power and
authority to enter into and deliver the Transaction Documents and perform its
obligations thereunder and to carry on its business as it is now being conducted
and as described in the Registration Statement. Based solely on certificates
from public officials, I confirm that PAFM is qualified to do business in the
following States: California, New York and Connecticut, such States being those
in which its ownership or leasing of property or its conducting of business may
require such qualification and where failure to so qualify would have a material
adverse effect on the ability of PAFM to perform its obligations under the
Investment Management Agreement and the Portfolio Management Agreement.
2. The execution, delivery and performance of the Transaction
Documents by PAFM have been duly authorized by all necessary limited liability
company action of PAFM and no other actions on the part of PAFM or its
unitholders or any subsidiary of PAFM or its unitholders is necessary to
authorize and consummate the transactions contemplated thereby, and the
Transaction Documents have been duly executed and delivered by PAFM.
3. Each of the Investment Management Agreement, the Portfolio
Management Agreement, the Shareholder Servicing Agreement and the Additional
Compensation Agreement constitutes a legally valid and binding agreement of
PAFM, enforceable against PAFM in accordance with its terms.
4. Neither the execution and delivery of the Transaction Documents by
PAFM, nor the consummation by PAFM of transactions contemplated thereby, nor
compliance by PAFM with any of the terms and provisions thereof will:
(i) violate any provision of the Limited Liability Company
Agreement of PAFM, effective May 23, 2000, as amended on July 1, 2001,
December 12, 2001, and October 31, 2002, which is still in full force and
effect and which has not been further amended or supplemented through the
date hereof,
(ii) violate any federal, Delaware or New York statute, rule or
regulation applicable to PAFM (other than federal and state securities or
blue sky laws, the Investment Company Act, and the Investment Advisers Act
of 1940, as amended (the "Advisers Act"), as to which I express no
opinion),
(iii) violate any agreement to which PAFM is a party or by which
it is bound and which is material to PAFM's businesses taken as a whole
(the "Material Agreements"),
(iv) violate any order, writ, injunction or decree, known to me
and applicable to PAFM, or
(v) to the best of my knowledge, require any consents, approvals,
authorizations, registrations, declarations or filings by PAFM under any
federal or Delaware statute, rule or regulation applicable to PAFM, except
as have been obtained under the Act, the Investment Company Act or the
Advisers Act.
C-3
No opinion is expressed in this paragraph 4 as to the application of
Section 548 of the federal Bankruptcy Code and comparable provisions of state or
foreign law or of any antifraud laws, antitrust or trade regulation laws. No
opinion is expressed in this paragraph 4 with respect to the operating licenses
necessary for PAFM's businesses.
5. PAFM is duly registered as an investment adviser under the Advisers
Act and is not prohibited by the Advisers Act or the Investment Company Act from
acting as investment adviser for the Fund as contemplated by the Investment
Management Agreement, the Registration Statement and the Prospectus.
6. The description of PAFM and its business, and the statements
attributable to PAFM, set forth in the Registration Statement or the Prospectus
under the headings "Prospectus Summary - Investment Manager" and "Management of
the Fund" do not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
7. There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other governmental agency
or body, foreign or domestic, now pending or, to my knowledge, threatened
against PAFM of a nature required to be disclosed in the Registration Statement
or Prospectus or that might reasonably result in any material adverse change in
the ability of PAFM to fulfill its obligations under either the Investment
Management Agreement or the Portfolio Management Agreement.
The opinions expressed in paragraph 3 above are subject to the
following limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or affecting the
rights or remedies of creditors generally;
(b) the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the discretion of the court
before which any proceeding therefor may be brought;
(c) the unenforceability under certain circumstances under law or
court decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such indemnification
or contribution is contrary to public policy; and
(d) the unenforceability of any provision requiring the payment of
attorney's fees, except to the extent that a court determines such fees to be
reasonable.
In rendering the opinions expressed in paragraph 4 insofar as they
require interpretation of the Material Agreements (i) I have assumed with your
permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of New York
without giving effect to any choice of law provisions contained therein or any
choice of law principles which would result in application of the internal laws
of any other state and (ii) to the extent that any questions of legality or
legal construction have
C-4
arisen in connection with my review, I have applied the laws of the State of New
York in resolving such questions. I advise you that certain of the Material
Agreements may be governed by other laws, that such laws may vary substantially
from the law assumed to govern for purposes of this opinion, and that this
opinion may not be relied upon as to whether or not a breach or default would
occur under the law actually governing such Material Agreements.
To the extent that the obligations of PAFM may be dependent upon such
matters, I assume for purposes of this opinion that: (i) all parties to the
Transaction Documents other than PAFM are duly incorporated or organized,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation or organization; (ii) all parties to the
Transaction Documents other than PAFM have the requisite power and authority
and, in the case of natural persons, legal capacity to execute and deliver the
Transaction Documents and to perform their respective obligations under the
Transaction Documents to which they are a party; and (iii) the Transaction
Documents to which such parties other than PAFM are a party have been duly
authorized, executed and delivered by such parties and, other than PAFM,
constitute their legally valid and binding obligations, enforceable against them
in accordance with their terms. I express no opinion as to compliance by any
parties to the Transaction Documents with any state or federal laws or
regulations applicable to the subject transactions because of the nature of
their business and I express no opinion as to compliance by any parties to the
Transaction Documents with any foreign laws or regulations applicable to the
transactions contemplated by the Transaction Documents or which may affect the
Transaction Documents' enforceability.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose, or furnished to, quoted to or relied upon by
any other person, firm or corporation for any purpose, without my prior written
consent.
Very truly yours,
C-5
SCHEDULE D
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT LLC
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT LLC
000 Xxxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxxx, XX 00000
September , 2003
--
UBS Securities LLC
Citigroup Global Markets Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Wachovia Capital Markets, LLC
as Managing Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Xxxxxxxx-Xxxxxxxxx Capital Management LLC
Ladies and Gentlemen:
I am the General Counsel of Xxxxxxxx-Xxxxxxxxx Capital Management LLC,
a Delaware limited liability company ("NACM"). I am licensed to practice law in
the State of California. In my capacity as General Counsel of NACM, I am
rendering this opinion on behalf of NACM in connection with the sale to you by
Xxxxxxxx-Xxxxxxxxx Convertible & Income Fund II, a voluntary association with
transferable shares organized and existing under and by virtue of the laws of
The Commonwealth of Massachusetts (commonly referred to as a Massachusetts
business trust) (the "Fund"), of 4,040 Auction Preferred Shares, Series A, 4,040
Auction Preferred Shares, Series B, 4,040 Auction Preferred Shares, Series C,
4,040 Auction Preferred Shares, Series D, and 4,040 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 August 1, 2003 (Act
File No. 333- 107594), and Investment Company Act File No. 811-21338), as
amended by Pre-Effective Amendment No. 1 filed with the Commission on ,
----- --
2003, and Pre-Effective Amendment No. 2 filed with the Commission on ,
----- --
2003 (such registration statements collectively referred to herein as the
"Registration Statement"), and an underwriting agreement dated September , 2003,
by and among you, the Fund and PIMCO Advisors Fund Management LLC, a Delaware
limited liability company ("PAFM") (the "Underwriting Agreement") relating to
the issuance and sale by the Fund of the APS.
D-1
This opinion is rendered to you pursuant to Section 6(e) of the
Underwriting Agreement. Capitalized terms used herein without definition have
the meanings assigned to them in the Underwriting Agreement.
As General Counsel of NACM, I have examined such matters of fact and
questions of law as I have considered appropriate for purposes of rendering the
opinions expressed below, except where a statement is qualified as to knowledge
or awareness, in which case I have made no or limited inquiry as specified
below. I have examined, among other things, that certain Portfolio Management
Agreement by and between PAFM and NACM, as accepted and agreed to by the Fund,
dated as of July 16, 2003 (the "Portfolio Management Agreement").
In my examination, I have assumed the genuineness of all signatures
(other than those of officers of NACM on the Portfolio Management Agreement),
the authenticity of all documents submitted to me as originals, and the
conformity to authentic original documents of all documents submitted to me as
copies.
I have been furnished with, and with your consent have relied upon,
certificates of officers of NACM with respect to certain factual matters. In
addition, I have obtained and relied upon such certificates and assurances from
public officials as I have deemed necessary.
I am opining herein as to the effect of the federal laws of the United
States, the internal laws of the State of California and, to the extent
consistent with the laws of the State of California, the internal laws of the
State of Delaware, and I express no opinion with respect to the applicability
thereto, or the effect thereon, of the laws of any other jurisdiction or country
or as to any matters of municipal law or the laws of any other local agencies
within any state or country. My opinions set forth in paragraph 4 below are
based upon my consideration of only those statutes, rules and regulations which,
in my experience, are normally applicable to transactions similar to those
contemplated by the Portfolio Management Agreement, generally.
Whenever a statement herein is qualified by "to my knowledge" or a
similar phrase, it is intended to indicate that I do not have current actual
knowledge of the inaccuracy of such statement. However, except as otherwise
expressly indicated, I have not undertaken any independent investigation to
determine the accuracy of any such statement, and no inference that I have any
knowledge of any matters pertaining to such statement should be drawn from my
position as General Counsel of NACM.
Subject to the foregoing and the other matters set forth herein, it is
my opinion that, as of the date hereof:
1. NACM is a limited liability company and is validly existing and in
good standing under the Delaware Limited Liability Company Act (6 Del. C (S).
18-101, et seq.) with all necessary limited liability company power and
authority to enter into and deliver the Portfolio Management Agreement and
perform its obligations thereunder and to carry on its business as it is now
being conducted and as described in the Registration Statement. Based solely on
certificates from public officials, I confirm that NACM is qualified to do
business in the following States: California, Illinois and New York, such States
being those in which its ownership or leasing of property or its conducting of
business may require such qualification and
D-2
where failure to so qualify would have a material adverse effect on the ability
of NACM to perform its obligations under the Portfolio Management Agreement.
2. The execution, delivery and performance of the Portfolio Management
Agreement by NACM have been duly authorized by all necessary limited liability
company action of NACM and no other actions on the part of NACM or its sole
member or any subsidiary of NACM or its sole member is necessary to authorize
and consummate the transactions contemplated thereby, and the Portfolio
Management Agreement has been duly executed and delivered by NACM.
3. The Portfolio Management Agreement constitutes a legally valid and
binding agreement of NACM, enforceable against NACM in accordance with its
terms.
4. Neither the execution and delivery of the Portfolio Management
Agreement by NACM, nor the consummation by NACM of transactions contemplated
thereby, nor compliance by NACM with any of the terms and provisions thereof
will:
(i) violate any provision of the Limited Liability Company
Agreement of NACM, effective January 1, 2002,
(ii) violate any federal, California or, to my knowledge,
Delaware statute, rule or regulation applicable to NACM (other than federal
and state securities or blue sky laws, the Investment Company Act, and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), as to
which I express no opinion),
(iii) violate any agreement to which NACM is a party or by which
it is bound and which is material to NACM's businesses taken as a whole
(the "Material Agreements"),
(iv) violate any order, writ, injunction or decree, known to me
and applicable to NACM, or
(v) to the best of my knowledge, require any consents, approvals,
authorizations, registrations, declarations or filings by NACM under any
federal statute, rule or regulation applicable to NACM, except as have been
obtained under the Act, the Investment Company Act or the Advisers Act.
No opinion is expressed in this paragraph 4 as to the application of
Section 548 of the federal Bankruptcy Code and comparable provisions of state or
foreign law or of any antifraud laws, antitrust or trade regulation laws. No
opinion is expressed in this paragraph 4 with respect to the operating licenses
necessary for NACM's businesses.
5. NACM is duly registered as an investment adviser under the Advisers
Act and is not prohibited by the Advisers Act or the Investment Company Act from
acting as investment sub-adviser for the Fund as contemplated by the Portfolio
Management Agreement, the Registration Statement and the Prospectus.
D-3
6. The description of NACM and its business, and the statements
attributable to NACM, set forth in the Registration Statement and the Prospectus
under the headings "Prospectus Summary - Portfolio Manager" and "Management of
the Fund" do not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
7. There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other governmental agency
or body, foreign or domestic, now pending or, to my knowledge, threatened
against NACM of a nature required to be disclosed in the Registration Statement
or Prospectus or that might reasonably result in any material adverse change in
the ability of NACM to fulfill its obligations under the Portfolio Management
Agreement.
The opinions expressed in paragraph 3 above are subject to the
following limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or affecting the
rights or remedies of creditors generally;
(b) the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the discretion of the court
before which any proceeding therefor may be brought;
(c) the unenforceability under certain circumstances under law or
court decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such indemnification
or contribution is contrary to public policy; and
(d) the unenforceability of any provision requiring the payment of
attorney's fees, except to the extent that a court determines such fees to be
reasonable.
In rendering the opinions expressed in paragraph 4 insofar as they
require interpretation of the Material Agreements (i) I have assumed with your
permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of
California without giving effect to any choice of law provisions contained
therein or any choice of law principles which would result in application of the
internal laws of any other state and (ii) to the extent that any questions of
legality or legal construction have arisen in connection with my review, I have
applied the laws of the State of California in resolving such questions. I
advise you that certain of the Material Agreements may be governed by other
laws, that such laws may vary substantially from the law assumed to govern for
purposes of this opinion, and that this opinion may not be relied upon as to
whether or not a breach or default would occur under the law actually governing
such Material Agreements.
To the extent that the obligations of NACM may be dependent upon such
matters, I assume for purposes of this opinion that: (i) all parties to the
Portfolio Management Agreement other than NACM are duly incorporated or
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization; (ii) all parties to
D-4
the Portfolio Management Agreement other than NACM have the requisite power and
authority and, in the case of natural persons, legal capacity to execute and
deliver the Portfolio Management Agreement and to perform their respective
obligations under the Portfolio Management Agreement; and (iii) the Portfolio
Management Agreement has been duly authorized, executed and delivered by such
parties other than NACM and, other than NACM, constitute their legally valid and
binding obligations, enforceable against them in accordance with their terms. I
express no opinion as to compliance by any parties to the Portfolio Management
Agreement with any state or federal laws or regulations applicable to the
subject transactions because of the nature of their business and I express no
opinion as to compliance by any parties to the Portfolio Management Agreement
with any foreign laws or regulations applicable to the transactions contemplated
by the Portfolio Management Agreement or which may affect the Portfolio
Management Agreement's enforceability.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose, or furnished to, quoted to or relied upon by
any other person, firm or corporation for any purpose, without my prior written
consent.
Very truly yours,
D-5
SCHEDULE E
FORM OF ACCOUNTANT'S LETTER
September , 2003
--
The Board of Trustees of
Xxxxxxxx-Xxxxxxxxx Convertible & Income Fund II
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
UBS Securities LLC
Citigroup Global Markets Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Wachovia Capital Markets, LLC
c/o UBS Securities 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
Xxxxxxxx-Xxxxxxxxx Convertible & Income Fund II (the "Fund") as of [____], 2003
included in the Registration Statement on Form N-2 filed by the Fund under the
Securities Act of 1933, as amended (the "Act") (File No. 333-107594), and under
the Investment Company Act of 1940, as amended (the "1940 Act") (File No.
811-21338); such statement and our report with respect to such statement are
included in the Registration Statement.
In connection with the Registration Statement:
1. We are independent public 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
E-1
having advised us that the minutes of all such meetings through [_],
2003 were set forth therein.
4. Fund officials have advised us that no financial statements as
of any date subsequent to [_], 2003 are available. We have made
inquiries of certain officials of the Fund who have responsibility for
financial and accounting matters regarding whether there was any
change at [_], 2003 in the capital shares or net assets of the Fund as
compared with amounts shown in the [_], 2003, statement of assets and
liabilities included in the Registration Statement, except for changes
that the Registration Statement discloses have occurred or may occur.
On the basis of our inquiries and our reading of the minutes as
described in Paragraph 3, nothing came to our attention that caused us
to believe that there were any such changes.
The foregoing procedures do not constitute an audit made in accordance
with generally accepted auditing standards. Accordingly, we make no
representations as to the sufficiency of the foregoing procedures for your
purposes.
This letter is solely for the information of the addressees and to
assist the underwriters in conducting and documenting their investigation of the
affairs of the Fund in connection with the offering of the securities covered by
the Registration Statement, and is not to be used, circulated, quoted or
otherwise referred to within or without the underwriting group for any other
purpose, including but not limited to the registration, purchase or sale of
securities, nor is it to be filed with or referred to in whole or in part in the
Registration Statement or any other document, except that reference may be made
to it in the underwriting agreement or in any list of closing documents
pertaining to the offering of the securities covered by the Registration
Statement.
Very Truly Yours,
PRICEWATERHOUSECOOPERS LLP
E-2
