Exhibit h.3
PIMCO Municipal Income Fund II
Auction Preferred Shares
Par Value $0.00001 Per Share
UNDERWRITING AGREEMENT
August 16, 2002
UNDERWRITING AGREEMENT
August 16, 2002
UBS Warburg LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
X.X. Xxxxxxx & Sons, Inc.
Prudential Securities Incorporated
as Managing Underwriters
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
PIMCO Municipal Income Fund II, a voluntary association with
transferable shares organized and existing under and by virtue of the laws of
The Commonwealth of Massachusetts (commonly referred to as a Massachusetts
business trust) (the "Fund"), proposes to issue and sell to the underwriters
named in Schedule A annexed hereto (the "Underwriters") an aggregate of 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.
333-91744 and 811-21076), including a prospectus and a statement of additional
information, relating to the APS. The Fund has furnished to you, for use by the
Underwriters and by dealers, copies of one or more preliminary prospectuses
(including a preliminary statement of additional information) (each thereof,
including such preliminary statement of additional information, being herein
called a "Preliminary Prospectus") relating to the APS. Except where the context
otherwise requires, the registration statement, as amended when it becomes
effective (the "Effective Date"), including all documents filed as a part
thereof or incorporated by reference therein, and including any information
contained in a prospectus subsequently filed with the Commission pursuant to
Rule 497 under the Act and deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430A under the Act is herein called
the Registration Statement, and the prospectus (including the statement of
additional information), in the form filed by the Fund with the Commission
pursuant to Rule 497 under the Act or, if no such filing is required, the form
of final prospectus (including the form of final statement of additional
information) included in the Registration Statement at the time it became
effective, is herein called the Prospectus. In addition, the Fund has filed a
Notification of Registration on Form N-8A (the "Notification") pursuant to
Section 8 of the Investment Company Act.
PIMCO Funds Advisors LLC ("PIMCO Funds Advisors" or the
"Investment Manager") acts as the Fund's investment manager pursuant to an
Investment Management Agreement by and between the Fund and the Investment
Manager, dated as of June 28, 2002 (the "Investment Management Agreement").
Pacific Investment Management Company LLC ("PIMCO," or the "Portfolio Manager")
acts as the Fund's portfolio manager pursuant to a Portfolio Management
Agreement by and between the Investment Manager and PIMCO, as accepted and
agreed to by the Fund, dated as of June 28, 2002. State Street Bank & Trust Co.
acts as the custodian (the "Custodian") of the Fund's cash and portfolio assets
pursuant to a Custodian Agreement, dated as of June 28, 2002 (the "Custodian
Agreement"). PFPC Inc. acts as the Fund's transfer agent, registrar, shareholder
servicing agent and dividend disbursing agent with respect to the common shares
of the Fund (the "Transfer Agent") pursuant to a Transfer Agency Services
Agreement, dated as of June 28, 2002 (the "Transfer Agency Agreement"). Deutsche
Bank Trust Company Americas will act as the Fund's auction agent (the "Auction
Agent") for the APS pursuant to an Auction Agency Agreement, dated as of August
__, 2002 (the "Auction Agency Agreement"). The Fund has entered into a Letter
Agreement, dated as of August __, 2002, with the Depository Trust Company (the
"DTC Agreement").
The Fund, the Investment Manager and the Underwriters agree as
follows:
1. Sale and Purchase. Upon the basis of the warranties and representations
and subject to the terms and conditions herein set forth, the Fund
agrees to sell to the respective Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase from the
Fund the aggregate number of APS set forth opposite the name of such
Underwriter in Schedule A attached hereto in each case at a purchase
price per share of $_______. The Fund is advised that the Underwriters
intend (i) to make a public offering of their respective portions of
the APS as soon after the Effective Date as is advisable and (ii)
initially to offer the APS upon the terms set forth in the Prospectus.
The Underwriters may from time to time increase or decrease the public
offering price after the initial public offering to such extent as they
may determine.
2. Payment and Delivery. Payment of the purchase price for the APS shall
be made by the Underwriters to the Fund by Federal Funds wire transfer,
against delivery of the certificates for the APS to you through the
facilities of the Depository Trust Company ("DTC") for the respective
accounts of the Underwriters. Such payment and delivery shall be made
at 10:00 A.M., New York City time on the third business day following
the date of this Underwriting Agreement (unless another date or time
shall be agreed to by you and the Fund). The time at which such payment
and delivery are actually made is hereinafter sometimes called the
"Time of Purchase" or the "Closing Date." Certificates for the APS
shall be delivered to you in definitive form in such names and in such
denominations as you shall specify on the second business day preceding
the Time of
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Purchase. For the purpose of expediting the checking of the
certificates for the APS by you, the Fund agrees to make such
certificates available to you for such purpose at least one full
business day preceding the Time of Purchase.
A certificate in definitive form representing the APS registered
in the name of Cede & Co., as nominee for DTC, shall be delivered by or
on behalf of the Fund to DTC for the account of the Underwriters.
3. Representations and Warranties of the Fund and the Investment Manager.
Each of the Fund and the Investment Manager jointly and severally
represents and warrants to each Underwriter as follows:
(a) On (A) the Effective Date and the date on which the Prospectus is
first filed with the Commission pursuant to Rule 497(b) or (h)
under the Act or a certification is first filed with the
Commission pursuant to Rule 497(j) under the Act, as the case may
be, (B) the date on which any post-effective amendment to the
Registration Statement (except any post-effective amendment which
is filed with the Commission after the later of (x) one year from
the date of this Underwriting Agreement or (y) the date on which
the distribution of the APS is completed) became or becomes
effective or any amendment or supplement to the Prospectus was or
is filed with the Commission and (C) the Closing Date, the
Registration Statement, the Prospectus and any such amendment or
supplement thereto and the Notification complied or will comply in
all material respects with the requirements of the Act and the
Investment Company Act, as the case may be. On the Effective Date
and on the date that any post-effective amendment to the
Registration Statement (except any post-effective amendment which
is filed with the Commission after the later of (x) one year from
the date of this Underwriting Agreement or (y) the date on which
the distribution of the APS is completed) became or becomes
effective, neither the Registration Statement nor any such
amendment did or will contain any untrue statement of a material
fact or omit to state a material fact required to be stated in it
or necessary to make the statements in it not misleading. On the
Effective Date, on the Closing Date, and, if applicable, on the
date the Prospectus or any amendment or supplement to the
Prospectus was or is filed with the Commission, the Prospectus did
not or will not, as the case may be, contain any untrue statement
of a material fact or omit to state a material fact required to be
stated in it or necessary to make the statements in it, in light
of the circumstances under which they were made, not misleading.
The foregoing representations in this Section 3(a) do not apply to
statements or omissions relating to the Underwriters made in
reliance on and in conformity with information furnished in
writing to the Fund by the Underwriters expressly for use in the
Registration Statement, the Prospectus or any amendments or
supplements thereto, as described in Section 9(f) hereof.
(b) The Fund has been duly formed and is validly existing as an
unincorporated voluntary association under the laws of The
Commonwealth of Massachusetts (commonly known as a "Massachusetts
business trust"), with full power and authority to conduct all the
activities conducted by it, to own or lease all assets
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owned or leased by it and to conduct its business as described in
the Registration Statement and Prospectus, and the Fund is duly
licensed and qualified to do business and in good standing in each
jurisdiction in which its ownership or leasing of property or its
conducting of business requires such qualification, except where
the failure to be so qualified or be in good standing would not
have a material adverse effect on the Fund, and the Fund owns,
possesses or has obtained and currently maintains all governmental
licenses, permits, consents, orders, approvals and other
authorizations, whether foreign or domestic, necessary to carry on
its business as contemplated in the Prospectus. The Fund has no
subsidiaries.
(c) The capitalization of the Fund is as set forth in the Registration
Statement and the Prospectus. The common shares of beneficial
interest of the Fund, par value $0.00001 per share (the "Common
Shares"), and the APS conform in all material respects to the
description of them in the Prospectus. All outstanding Common
Shares have been duly authorized and are validly issued, fully
paid and nonassessable (except as described in the Registration
Statement). The APS to be issued and delivered to and paid for by
the Underwriters in accordance with this Underwriting Agreement
against payment therefor as provided by this Underwriting
Agreement have been duly authorized and when issued and delivered
to the Underwriters will have been validly issued and will be
fully paid and nonassessable (except as described in the
Registration Statement). No person is entitled to any preemptive
or other similar rights in connection with the issuance of the
APS.
(d) The Fund is duly registered with the Commission under the
Investment Company Act as a diversified, closed-end management
investment company, and, subject to the filing of any final
amendment to the Registration Statement (a "Final Amendment"), if
not already filed, all action under the Act and the Investment
Company Act, as the case may be, necessary to make the public
offering and consummate the sale of the APS as provided in this
Underwriting Agreement has or will have been taken by the Fund.
(e) The Fund has, or at the relevant time had, full power and
authority to enter into each of this Underwriting Agreement, the
Investment Management Agreement, the Custodian Agreement, the
Transfer Agency Agreement, the Auction Agency Agreement and the
DTC Agreement (collectively, the "Fund Agreements") and to perform
all of the terms and provisions hereof and thereof to be carried
out by it and (i) each Fund Agreement has been duly and validly
authorized, executed and delivered by or on behalf of the Fund,
(ii) each Fund Agreement does not violate in any material respect
any of the applicable provisions of the Investment Company Act or
the Investment Advisers Act of 1940, as amended, and the rules and
regulations thereunder (collectively called the "Advisers Act"),
as the case may be, and (iii) assuming due authorization,
execution and delivery by the other parties thereto, each Fund
Agreement constitutes the legal, valid and binding obligation of
the Fund enforceable in accordance with its terms, (A) subject, as
to enforcement, to applicable bankruptcy, insolvency and similar
laws affecting
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creditors' rights generally and to general equitable
principles (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (B) except as rights to
indemnity thereunder may be limited by federal or state
securities laws.
(f) None of (i) the execution and delivery by the Fund of the Fund
Agreements, (ii) the issue and sale by the Fund of the APS as
contemplated by this Underwriting Agreement and (iii) the
performance by the Fund of its obligations under any of the
Fund Agreements or consummation by the Fund of the other
transactions contemplated by the Fund Agreements conflicts
with or will conflict with, or results or will result in a
breach of, the Agreement and Declaration of Trust of the Fund,
as amended through the date hereof (the "Declaration of
Trust"), and the Amended and Restated Bylaws of the Fund,
adopted in connection with the issuance of the APS and as
amended through the date hereof (the "Amended Bylaws"), or any
agreement or instrument to which the Fund is a party or by
which the Fund is bound, except where such violation does not
have a material adverse effect on the condition (financial or
other), business prospects, properties, net assets or results
of operations of the Fund, or any law, rule or regulation, or
order of any court, governmental instrumentality, securities
exchange or association or arbitrator, whether foreign or
domestic, applicable to the Fund, other than state securities
or "blue sky" laws applicable in connection with the purchase
and distribution of the APS by the Underwriters pursuant to
this Underwriting Agreement.
(g) The Fund is not currently in breach of, or in default under,
any written agreement or instrument to which it is a party or
by which it or its property is bound or affected, except where
such violation does not have a material adverse effect on the
condition (financial or other), business prospects,
properties, net assets or results of operations of the Fund.
(h) No person has any right to the registration of any securities
of the Fund because of the filing of the Registration
Statement.
(i) No consent, approval, authorization or order of any court or
governmental agency or body or securities exchange or
association, whether foreign or domestic, is required by the
Fund for the consummation by the Fund of the transactions to
be performed by the Fund or the performance by the Fund of all
the terms and provisions to be performed by or on behalf of it
in each case as contemplated in the Fund Agreements, except
such as (i) have been obtained under the Act, the Investment
Company Act or the Advisers Act, and (ii) may be required
under state securities or "blue sky" laws, in connection with
the purchase and distribution of the APS by the Underwriters
pursuant to this Underwriting Agreement.
(j) To the knowledge of the Fund and the Investment Manager after
due inquiry, based on representations from
PricewaterhouseCoopers LLP, whose report appears in the
Prospectus, PricewaterhouseCoopers LLP are independent public
5
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.
(q) The APS have been, or prior to the Closing Date will be,
assigned a rating of "Aaa" by Xxxxx'x Investors Service, Inc.
6
(r) No advertising, sales literature or other promotional
materials (excluding road show slides or road show tapes) were
authorized or prepared by or on behalf of the Fund, the
Investment Manager or the Portfolio Manager or any
representative thereof for use in connection with the public
offering or sale of the APS (collectively referred to as the
"Sales Materials"); any road show slides or road show tapes
complied and comply in all material respects with the
applicable requirements of the Act and the rules and
interpretations of the National Association of Securities
Dealers, Inc.; and no broker kits, road show slides, road show
tapes or sales materials authorized or prepared by the Fund or
authorized or prepared on behalf of the Fund by the Investment
Manager, the Portfolio Manager or any representative thereof
for use in connection with the public offering or sale of the
APS contained or contains any untrue statement of a material
fact or omitted or omits to state any material fact required
to be stated therein or necessary in order to make the
statements therein not misleading.
4. Representations and Warranties of the Investment Manager. The
Investment Manager represents to each Underwriter and, in the case of
paragraph (f) also to the Fund, as follows:
(a) The Investment Manager has been duly formed, is validly
existing as a limited liability company under the laws of the
State of Delaware with full power and authority to conduct all
of the activities conducted by it, to own or lease all of the
assets owned or leased by it and to conduct its business as
described in the Registration Statement and Prospectus, and
the Investment Manager is duly licensed and qualified to do
business and in good standing in each jurisdiction in which it
is required to be so qualified, except to the extent that
failure to be so qualified or be in good standing would not
have a material adverse effect on the Investment Manager's
ability to provide services to the Fund; and the Investment
Manager owns, possesses or has obtained and currently
maintains all governmental licenses, permits, consents,
orders, approvals and other authorizations, whether foreign or
domestic, necessary to carry on its business as contemplated
in the Registration Statement and the Prospectus.
(b) The Investment Manager is (i) duly registered as an investment
adviser under the Advisers Act and (ii) not prohibited by the
Advisers Act or the Investment Company Act from acting as the
investment adviser for the Fund as contemplated by the
Investment Management Agreement, the Registration Statement
and the Prospectus.
(c) The Investment Manager has, or at the relevant time had, full
power and authority to enter into each of this Underwriting
Agreement, the Investment Management Agreement and the
Portfolio Management Agreement (collectively, this
Underwriting Agreement, the Investment Management Agreement
and the Portfolio Management Agreement being referred to as
the "Investment Manager 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
7
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 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.
8
(h) None of the Fund, the Investment Manager or the Portfolio
Manager has made available any promotional materials intended
for use only by qualified broker-dealers and registered
representatives thereof by means of an Internet web site or
similar electronic means.
(i) The Portfolio Manager has been duly formed, is validly
existing as a limited liability company under the laws of
Delaware with full power and authority to conduct all of the
activities conducted by it, to own or lease all of the assets
owned or leased by it and to conduct its business as described
in the Registration Statement and Prospectus, and the
Portfolio Manager is duly licensed and qualified to do
business and in good standing in each jurisdiction in which it
is required to be so qualified, except to the extent that
failure to be so qualified or be in good standing would not
have a material adverse affect on the Portfolio Manager's
ability to provide services to the Fund; and the Portfolio
Manager owns, possesses or has obtained and currently
maintains all governmental licenses, permits, consents,
orders, approvals and other authorizations, whether foreign or
domestic, necessary to carry on its business as contemplated
in the Registration Statement and the Prospectus.
(j) The Portfolio Manager is (i) duly registered as an investment
adviser under the Advisers Act and (ii) not prohibited by the
Advisers Act or the Investment Company Act from acting as the
investment sub-adviser for the Fund as contemplated by the
Portfolio Management Agreement, the Registration Statement and
the Prospectus.
(k) The Portfolio Manager has, or at the relevant time had, full
power and authority to enter into each of this Underwriting
Agreement and the Portfolio Management Agreement
(collectively, this Underwriting Agreement and the Portfolio
Management Agreement being referred to as the "Portfolio
Manager Agreements") and to carry out all the terms and
provisions hereof and thereof to be carried out by it; and
each Portfolio Manager Agreement has been duly and validly
authorized, executed and delivered by the Portfolio Manager;
none of the Portfolio Manager Agreements violates in any
material respect any of the applicable provisions of the
Investment Company Act or the Advisers Act; and assuming due
authorization, execution and delivery by the other parties
thereto, each Portfolio Manager Agreement constitutes a legal,
valid and binding obligation of the Portfolio Manager,
enforceable in accordance with its terms, (i) subject, as to
enforcement, to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and to general
equitable principles (regardless of whether enforcement is
sought in a proceeding in equity or at law) and (ii) except as
rights to indemnity thereunder may be limited by federal or
state securities laws.
(l) Neither (i) the execution and delivery by the Portfolio
Manager of any Portfolio Manager Agreement nor (ii) the
consummation by the Portfolio Manager of the transactions
contemplated by, or the performance of its obligations under,
any Portfolio Manager Agreement conflicts or will conflict
with, or results or will
9
result in a breach of, the limited liability company agreement
or other organizational documents of the Portfolio Manager or
any agreement or instrument to which the Portfolio Manager is
a party or by which the Portfolio Manager is bound, or any
law, rule or regulation, or order of any court, governmental
instrumentality, securities exchange or association or
arbitrator, whether foreign or domestic, applicable to the
Portfolio Manager.
(m) No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or
association, whether foreign or domestic, is required for the
consummation of the transactions contemplated in, or the
performance by the Portfolio Manager of its obligations under,
any Portfolio Manager Agreement, as the case may be, except
such as (i) have been obtained under the Act, the Investment
Company Act or the Advisers Act, and (ii) may be required
under state securities or "blue sky" laws, in connection with
the purchase and distribution of the APS by the Underwriters
pursuant to this Underwriting Agreement.
(n) The description of the Portfolio Manager and its business, and
the statements attributable to the Portfolio Manager, in the
Registration Statement and the Prospectus comply with the
requirements of the Act and the Investment Company Act and do
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein not
misleading.
(o) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending
or, to the knowledge of the Portfolio Manager, threatened
against or affecting the Portfolio Manager of a nature
required to be disclosed in the Registration Statement or
Prospectus or that might reasonably be expected to result in
any material adverse change in the ability of the Portfolio
Manager to fulfill its respective obligations under any
Portfolio Manager Agreement.
5. Agreements of the Parties.
(a) If the registration statement relating to the APS has not yet
become effective, the Fund will promptly file any Final
Amendment, if not previously filed, with the Commission, and
will use its best efforts to cause such registration statement
to become effective and, as soon as the Fund is advised, will
advise UBS Warburg LLC (the "Managing Representative") when
the Registration Statement or any amendment thereto has become
effective. If the Registration Statement has become effective
and the Prospectus contained therein omits certain information
at the time of effectiveness pursuant to Rule 430A under the
Act, the Fund will file a 430A prospectus pursuant to Rule
497(h) under the Act as promptly as practicable, but no later
than the second business day following the earlier of the date
of the determination of the offering price of the APS or the
date the Prospectus is first used after the Effective Date. If
the Registration Statement has
10
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 the later of (x) one year from the
date of this Underwriting Agreement or (y) the
11
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 connection with the offering of the APS, the
preparing to market and the
12
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.
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,
13
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 Investment
Manager certifying that (i) the signers have carefully
examined the Registration Statement, the Prospectus, and this
Underwriting Agreement, (ii) the
14
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.
15
(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 a letter to such effect, dated on
or before the Closing Date, shall have been delivered to the
Managing Representative.
(i) As of the Closing Date, and assuming the receipt of the net
proceeds from the sale of the APS, the 1940 Act APS Asset
Coverage and the APS Basic Maintenance Amount (each as defined
in the Prospectus) each will be met.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Underwriting Agreement will comply only if
they are in form and scope reasonably satisfactory to counsel for the
Underwriters, provided that any such documents, forms of which are
annexed hereto, shall be deemed satisfactory to such counsel if
substantially in such form.
7. Termination. This Underwriting Agreement may be terminated by the
Managing Representative by notifying the Fund at any time:
(a) before the later of the effectiveness of the Registration
Statement and the time when any of the APS are first generally
offered pursuant to this Underwriting Agreement by the
Managing Representative to dealers by letter or telegram;
(b) at or before the Closing Date if, in the sole judgment of the
Managing Representative, payment for and delivery of any APS
is rendered impracticable or inadvisable because (i) trading
in the APS or the Common Shares of the Fund is suspended by
the Commission or the principal exchange that lists the Common
Shares, (ii) trading in securities generally on the New York
Stock Exchange or the Nasdaq Stock Market shall have been
suspended or limited or minimum or maximum prices shall have
been generally established on such exchange or
over-the-counter market, (iii) additional material
governmental restrictions, not in force on the date of this
Underwriting Agreement, have been imposed upon trading in
securities or trading has been suspended on any U.S.
securities exchange, (iv) a general banking moratorium has
been established by U.S. federal or New York authorities or
(v) any material adverse change in the financial or securities
markets in the United States or in political, financial or
economic conditions in the United States or any outbreak or
material escalation of hostilities or
16
declaration by the United States of a national emergency or
war or other calamity or crisis shall have occurred the effect
of any of which is such as to make it, in the sole judgment of
the Managing Representative, impracticable or inadvisable to
market the APS on the terms and in the manner contemplated by
the Prospectus; or
(c) at or before the Closing Date, if any of the conditions
specified in Section 6 have not been fulfilled when and as
required by this Underwriting Agreement.
8. Substitution of Underwriters. If one or more of the Underwriters fails
(other than for a reason sufficient to justify the termination of this
Underwriting Agreement) to purchase on the Closing Date the APS agreed
to be purchased on the Closing Date by such Underwriter or
Underwriters, the Managing Representative may find one or more
substitute underwriters to purchase such APS or make such other
arrangements as the Managing Representative deems advisable, or one or
more of the remaining Underwriters may agree to purchase such APS in
such proportions as may be approved by the Managing Representative, in
each case upon the terms set forth in this Underwriting Agreement. If
no such arrangements have been made within 36 hours after the Closing
Date, and
(a) the number of APS to be purchased by the defaulting
Underwriters on the Closing Date does not exceed 10% of the
APS that the Underwriters are obligated to purchase on such
Closing Date, each of the nondefaulting Underwriters will be
obligated to purchase such APS on the terms set forth in this
Underwriting Agreement in proportion to their respective
obligations under this Underwriting Agreement, or
(b) the number of APS to be purchased by the defaulting
Underwriters on the Closing Date exceeds 10% of the APS to be
purchased by all the Underwriters on the Closing Date, the
Fund will be entitled to an additional period of 24 hours
within which to find one or more substitute underwriters
reasonably satisfactory to the Managing Representative to
purchase such APS on the terms set forth in this Underwriting
Agreement.
Upon the occurrence of the circumstances described in the
foregoing paragraph (b), either the Managing Representative or the Fund
will have the right to postpone the Closing Date for not more than five
business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration
Statement or the Prospectus) may be effected by the Managing
Representative and the Fund. If the number of APS to be purchased on
the Closing Date by such defaulting Underwriter or Underwriters exceeds
10% of the APS that the Underwriters are obligated to purchase on the
Closing Date, and none of the nondefaulting Underwriters or the Fund
makes arrangements pursuant to this Section within the period stated
for the purchase of the APS that the defaulting Underwriters agreed to
purchase, this Underwriting Agreement will terminate without liability
on the part of any nondefaulting Underwriter, the Fund, the Investment
Manager or the Portfolio Manager, except as provided in Sections 5(g)
and 9 hereof. Any action taken under this Section will not affect the
17
liability of any defaulting Underwriter to the Fund or to the nondefaulting
Underwriters arising out of such default. A substitute underwriter will
become an Underwriter for all purposes of this Underwriting Agreement.
9. Indemnity and Contribution.
(a) Each of the Fund and the Investment Manager, jointly and severally,
agrees to indemnify, defend and hold harmless each Underwriter, its
partners, directors and officers, and any person who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, and the successors and assigns of all of the
foregoing persons from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation)
which, jointly or severally, any such Underwriter or any such person
may incur under the Act, the Exchange Act, the Investment Company
Act, the Advisers Act, the common law or otherwise, insofar as such
loss, damage, expense, liability or claim arises out of or is based
upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the
Fund) or in a Prospectus (the term "Prospectus" for the purpose of
this Section 9 being deemed to include any Preliminary Prospectus,
any Sales Materials, the Prospectus and the Prospectus as amended or
supplemented by the Fund), or arises out of or is based upon any
omission or alleged omission to state a material fact required to be
stated in either such Registration Statement or Prospectus or
necessary to make the statements made therein (with respect to the
Prospectus, in light of the circumstances under which they were made)
not misleading, except insofar as any such loss, damage, expense,
liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in
and in conformity with information furnished in writing by or on
behalf of any Underwriter to the Fund, the Investment Manager or the
Portfolio Manager expressly for use with reference to any Underwriter
in such Registration Statement or such Prospectus or arises out of or
is based upon any omission or alleged omission to state a material
fact in connection with such information required to be stated in
such Registration Statement or such Prospectus or necessary to make
such information (with respect to the Prospectus, in light of the
circumstances under which they were made) not misleading, provided,
however, that the indemnity agreement contained in this subsection
(a) with respect to any Preliminary Prospectus or amended Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or to
the benefit of any person controlling such Underwriter) from whom the
person asserting any such loss, damage, expense, liability or claim
purchased the APS which is the subject thereof if the Prospectus
corrected any such alleged untrue statement or omission and if such
Underwriter failed to send or give a copy of the Prospectus to such
person at or prior to the written confirmation of the sale of such
APS to such person, unless the failure is the result of noncompliance
by the Fund with Section 5(d) hereof.
If any action, suit or proceeding (together, a "Proceeding")
is brought against an Underwriter or any such person in respect of
which indemnity may be
18
sought against the Fund or the Investment Manager pursuant to
the foregoing paragraph, such Underwriter or such person shall
promptly notify the Fund and the Investment Manager in writing
of the institution of such Proceeding and the Fund or the
Investment Manager shall assume the defense of such
Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees
and expenses; provided, however, that the omission to so
notify the Fund or the Investment Manager shall not relieve
the Fund or the Investment Manager from any liability which
the Fund or the Investment Manager may have to any Underwriter
or any such person or otherwise. Such Underwriter or such
person shall have the right to employ its or their own counsel
in any such case, but the reasonable fees and expenses of such
counsel shall be at the expense of such Underwriter or of such
person unless the employment of such counsel shall have been
authorized in writing by the Fund or the Investment Manager,
as the case may be, in connection with the defense of such
Proceeding or the Fund or the Investment Manager shall not
have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense
of such Proceeding or such indemnified party or parties shall
have reasonably concluded that there may be defenses available
to it or them which are different from, additional to or in
conflict with those available to the Fund or the Investment
Manager (in which case neither the Fund nor the Investment
Manager shall have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties, but
the Fund or the Investment Manager, as the case may be, may
employ counsel and participate in the defense thereof at the
expense of the Fund or the Investment Manager, as the case may
be), in any of which events such reasonable fees and expenses
shall be borne by the Fund or the Investment Manager and paid
as incurred (it being understood, however, that the Fund or
the Investment Manager shall not be liable for the expenses of
more than one separate counsel (in addition to any local
counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding).
Neither the Fund nor the Investment Manager shall be liable
for any settlement of any Proceeding effected without its
written consent but if settled with the written consent of the
Fund or the Investment Manager, the Fund or the Investment
Manager, as the case may be, agrees to indemnify and hold
harmless any Underwriter and any such person from and against
any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for reasonable fees and
expenses of counsel as contemplated by the second sentence of
this paragraph, then the indemnifying party agrees that it
shall be liable for any settlement of any Proceeding effected
without its written consent if (i) such settlement is entered
into more than 60 business days after receipt by such
indemnifying party of the aforesaid request, (ii) such
indemnifying party shall not have reimbursed the 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
19
settlement of any pending or threatened Proceeding in respect
of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all
liability on claims that are the subject matter of such
Proceeding and does not include an admission of fault,
culpability or a failure to act, by or on behalf of such
indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and
hold harmless the Fund and the Investment Manager, and each of
their respective shareholders, partners, managers, members,
trustees, directors and officers, and any person who controls
the Fund or the Investment Manager within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and
the successors and assigns of all of the foregoing persons
from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which,
jointly or severally, the Fund or the Investment Manager or
any such person may incur under the Act, the Exchange Act, the
Investment Company Act, the Advisers Act, the common law or
otherwise, insofar as such loss, damage, expense, liability or
claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and
in conformity with information furnished in writing by or on
behalf of such Underwriter to the Fund or the Investment
Manager expressly for use with reference to such Underwriter
in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof
by the Fund) or in a Prospectus, or arises out of or is based
upon any omission or alleged omission to state a material fact
in connection with such information required to be stated in
such Registration Statement or such Prospectus or necessary to
make such information not misleading (with respect to the
Prospectus, in light of the circumstances under which they
were made).
If any Proceeding is brought against the Fund, the
Investment Manager or any such person in respect of which
indemnity may be sought against any Underwriter pursuant to
the foregoing paragraph, the Fund, the Investment Manager or
such person shall promptly notify such Underwriter in writing
of the institution of such Proceeding and such Underwriter
shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses;
provided, however, that the omission to so notify such
Underwriter shall not relieve such Underwriter from any
liability which such Underwriter may have to the Fund, the
Investment Manager or any such person or otherwise. The Fund,
the Investment Manager or such person shall have the right to
employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of the
Fund, the Investment Manager or such person, as the case may
be, unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with
the defense of such Proceeding or such Underwriter shall not
have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense
of such Proceeding or such indemnified party or parties shall
have reasonably concluded that there may be defenses available
to it or them which are different from or
20
additional to or in conflict with those available to such
Underwriter (in which case such Underwriter shall not have the
right to direct the defense of such Proceeding on behalf of
the indemnified party or parties, but such Underwriter may
employ counsel and participate in the defense thereof at the
expense of such Underwriter), in any of which events such fees
and expenses shall be borne by such Underwriter and paid as
incurred (it being understood, however, that such Underwriter
shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel) in any one
Proceeding or series of related Proceedings in the same
jurisdiction representing the indemnified parties who are
parties to such Proceeding). No Underwriter shall be liable
for any settlement of any such Proceeding effected without the
written consent of such Underwriter but if settled with the
written consent of such Underwriter, such Underwriter agrees
to indemnify and hold harmless the Fund, the Investment
Manager and any such person from and against any loss or
liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall
have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as
contemplated by the second sentence of this paragraph, then
the indemnifying party agrees that it shall be liable for any
settlement of any Proceeding effected without its written
consent if (i) such settlement is entered into more than 60
business days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such
request prior to the date of such settlement and (iii) such
indemnified party shall have given the indemnifying party at
least 30 days' prior notice of its intention to settle. No
indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or
threatened Proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such
indemnified party from all liability on claims that are the
subject matter of such Proceeding and does not include an
admission of fault, culpability or a failure to act, by or on
behalf of such indemnified party.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and
(b) of this Section 9 in respect of any losses, damages,
expenses, liabilities or claims referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
damages, expenses, liabilities or claims (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Fund and the Investment Manager on the one
hand and the Underwriters on the other hand from the offering
of the APS or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of
the Fund and the Investment Manager on the one hand and of the
Underwriters on the other in connection with the statements or
omissions which
21
resulted in such losses, damages, expenses, liabilities or
claims, as well as any other relevant equitable
considerations. The relative benefits received by the Fund and
the Investment Manager on the one hand and the Underwriters on
the other shall be deemed to be in the same respective
proportions as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting
expenses) received by the Fund and the total underwriting
discounts and commissions received by the Underwriters, bear
to the aggregate public offering price of the APS. The
relative fault of the Fund and the Investment Manager on the
one hand and of the Underwriters on the other shall be
determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material
fact or omission or alleged omission relates to information
supplied by the Fund or the Investment Manager or by the
Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a
party as a result of the losses, damages, expenses,
liabilities and claims referred to in this subsection shall be
deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with
investigating, preparing to defend or defending any
Proceeding.
(d) The Fund, the Investment Manager and the Underwriters agree
that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations
referred to in subsection (c) above. Notwithstanding the
provisions of this Section 9, no Underwriter shall be required
to contribute any amount in excess of the fees and commissions
received by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this
Section 9 and the covenants, warranties and representations of
the Fund contained in this Agreement shall remain in full
force and effect regardless of any investigation made by or on
behalf of any Underwriter, its partners, directors or officers
or any person (including each partner, officer or director of
such person) who controls any Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, or
by or on behalf of the Fund or the Investment Manager, its
shareholders, partners, managers, members, trustees, directors
or officers or any person who controls the Fund or the
Investment Manager within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, and shall survive any
termination of this Agreement or the issuance and delivery of
the APS. The Fund and the Investment Manager and each
Underwriter agree promptly to notify each other of the
commencement of any Proceeding against it and, in the case of
the Fund or the Investment Manager, against any of the Fund's
or the Investment Manager's shareholders, partners, managers,
members, trustees, directors or
22
officers in connection with the issuance and sale of the APS,
or in connection with the Registration Statement or
Prospectus.
(f) The Fund and the Investment Manager each acknowledge that the
statements with respect to (1) the public offering of the APS
as set forth on the cover page of, and (2) selling concessions
and reallowances of selling concessions under the caption
"Underwriting" in, the Prospectus constitute the only
information furnished in writing to the Fund by the
Underwriters expressly for use in such document. The
Underwriters severally confirm that these statements are
correct in all material respects and were so furnished by or
on behalf of the Underwriters severally for use in the
Prospectus.
(g) Notwithstanding any other provisions in this Section 9, no
party shall be entitled to indemnification or contribution
under this Underwriting Agreement against any loss, claim,
liability, expense or damage arising by reason of such
person's willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties in the performance of its
duties hereunder.
10. Notices. Except as otherwise herein provided, all statements, requests,
notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or
sent to UBS Warburg LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000-0000,
Attention: Syndicate Department and, if to the Fund or the Investment
Manager, shall be sufficient in all respects if delivered or sent to
the Fund or the Investment Manager, as the case may be, at the offices
of the Fund or the Investment Manager at 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
11. Governing Law; Construction. This Agreement and any claim, counterclaim
or dispute of any kind or nature whatsoever arising out of or in any
way relating to this Agreement ("Claim"), directly or indirectly, shall
be governed by, and construed in accordance with, the laws of the State
of New York. The Section headings in this Agreement have been inserted
as a matter of convenience of reference and are not a part of this
Agreement.
12. Submission to Jurisdiction. Except as set forth below, no Claim may be
commenced, prosecuted or continued in any court other than the courts
of the State of New York located in the City and County of New York or
in the United States District Court for the Southern District of New
York, which courts shall have jurisdiction over the adjudication of
such matters, and the Fund and UBS Warburg LLC each consent to the
jurisdiction of such courts and personal service with respect thereto.
The Fund and UBS Warburg hereby consent to personal jurisdiction,
service and venue in any court in which any Claim arising out of or in
any way relating to this Agreement is brought by any third party
against UBS Warburg LLC or any indemnified party. Each of UBS Warburg
LLC, the Fund (on its behalf and, to the extent permitted by applicable
law, on behalf of its stockholders and affiliates) and the Investment
Manager (on its behalf and, to the extent 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
23
or counterclaim brought in any such court shall be conclusive and
binding upon the Fund and the Investment Manager, as the case may be,
and may be enforced in any other courts in the jurisdiction of which
the Fund or the Investment Manager, as the case may be, is or may be
subject, by suit upon such judgment.
13. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Fund and the
Investment Manager and to the extent provided in Section 9 hereof the
controlling persons, shareholders, partners, members, trustees,
managers, directors and officers referred to in such section, and their
respective successors, assigns, heirs, personal representatives and
executors and administrators. No other person, partnership, association
or corporation (including a purchaser, as such purchaser, from any of
the Underwriters) shall acquire or have any right under or by virtue of
this Agreement.
14. Counterparts. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same
agreement among the parties.
15. Successors and Assigns. This Agreement shall be binding upon the
Underwriters, the Fund and the Investment Manager, and any successor or
assign of any substantial portion of the Fund's, the Investment
Manager's, or any of the Underwriters' respective businesses and/or
assets.
16. Disclaimer of Liability of Trustees and Beneficiaries. A copy of the
Declaration of Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts, and notice hereby is given that this
Underwriting Agreement is executed on behalf of the Fund by an officer
or Trustee of the Fund in his or her capacity as an officer or Trustee
of the Fund and not individually and that the obligations under or
arising out of this Underwriting Agreement are not binding upon any of
the Trustees, officers or shareholders individually but are binding
only upon the assets and properties of the Fund.
24
If the foregoing correctly sets forth the understanding among the
Fund, the Investment Manager and the Underwriters, please so indicate in the
space provided below, whereupon this letter and your acceptance shall constitute
a binding agreement among the Fund, the Investment Manager and the Underwriters,
severally.
Very truly yours,
PIMCO MUNICIPAL INCOME FUND II
_________________________
By:
Title:
PIMCO FUNDS ADVISORS LLC
_________________________
By:
Title:
Accepted and agreed to as of the
date first above written, on
behalf of themselves and
the other several Underwriters
named in Schedule A
UBS WARBURG LLC
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
X.X. XXXXXXX & SONS, INC.
PRUDENTIAL SECURITIES INCORPORATED
By: UBS WARBURG LLC
___________________________
By: Xxxx X. Reit
Title: Executive Director
___________________________
By: Xxxx X. Key
Title: Director
SCHEDULE A
Number of Shares
Name to be Purchased
---- ---------------
UBS Warburg LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
X.X. Xxxxxxx & Sons, Inc.
Prudential Securities Incorporated
Total
A-1
SCHEDULE B
FORM OF OPINION OF
ROPES & XXXX REGARDING THE FUND
August __, 2002
UBS Warburg LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
X.X. Xxxxxxx & Sons, Inc.
Prudential Securities Incorporated
c/o UBS Warburg LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
We have acted as counsel to PIMCO Municipal 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, 4,040 Auction Preferred Shares,
Series C, 4,040 Auction Preferred Shares, Series D, and 4,040 Auction Preferred
Shares, Series E (together, the "APS"). This opinion is furnished to you
pursuant to Section 6(e) of the Underwriting Agreement dated as of August 16,
2002 (the "Underwriting Agreement") among the Fund, PIMCO Funds Advisors LLC
(the "Investment Manager") and UBS Warburg LLC, on behalf of itself and the
other underwriters named therein (the "Underwriters"). Capitalized terms used in
this opinion, unless otherwise defined, have the meanings specified in the
Underwriting Agreement.
We have examined signed copies of the registration statement of the Fund on
Form N-2 (File No. 333-91744) under the Securities Act of 1933, as amended (the
"Securities Act") (which also constitutes Amendment No. 4 to the Fund's
Registration Statement on Form N-2 (File No. 811-21076) under the Investment
Company Act of 1940, as amended (the "Investment Company Act")), including all
exhibits thereto, as filed with the Securities and Exchange Commission (the
"Commission") on July 2, 2002 (the "Original Registration Statement"),
Pre-Effective Amendment No. 1 to the Original Registration Statement, including
all exhibits thereto, as filed with the Commission on August 12, 2002
("Pre-Effective Amendment No. 1") and Pre-Effective Amendment No. 2 to the
Original Registration Statement, including all exhibits thereto, as filed with
the Commission on August 16, 2002 ("Pre-Effective Amendment No. 2," and together
with Pre-Effective Amendment No. 1 and the Original Registration Statement, the
"Registration Statement"); the Fund's Notification of Registration on Form N-8A
(File No. 811-_____) under the Investment Company Act, as filed with the
Commission on April 15, 2002 (the "Notification of Registration"); the Fund's
Agreement and Declaration of Trust, as amended to the date hereof (the
"Declaration of Trust"), on file in the offices of the Secretary of State of The
Commonwealth of Massachusetts and the Clerk of the City of Boston; the Amended
and Restated Bylaws of the Fund, as amended to the date hereof (the "Amended
Bylaws"); a copy of the Prospectus dated August __, 2002, relating to the APS
and the Statement of Additional Information of the Fund dated August __, 2002,
each as filed with the Commission pursuant to
B-1
Rule 497 under the Securities Act on August __, 2002 (together, the
"Prospectus"); the Investment Management Agreement dated as of June 18, 2002,
between the Fund and the Investment Manager (the "Investment Management
Agreement"); the Portfolio Management Agreement dated as of June 18, 2002,
between Pacific Investment Management Company LLC (the "Portfolio Manager") and
the Investment Manager (the "Portfolio Management Agreement"), as agreed to and
accepted by the Fund; the Custodian Agreement dated as of June 27, 2002, between
the Fund and State Street Bank and Trust Company (the "Custodian Agreement");
the Auction Agency Agreement dated as of August __, 2002, between the Fund and
Bankers Trust Company (the "Auction Agency Agreement," and together with the
Custodian Agreement, the "Fund Agreements"); and the Underwriting Agreement.
Additionally, we have relied upon the oral representation of Xx. Xxxxx X'Xxxxxxx
of the staff of the Commission to the effect that the Registration Statement
became effective as of ____ on August __, 2002, and the oral representation by a
member of the staff of the Commission on the date hereof that as of _____ a.m.,
no stop order suspending the effectiveness of the Registration Statement had
been issued and no proceeding for any such purpose was pending or threatened.
We have also examined and relied upon the original or copies of minutes of
the meetings or written consents of the shareholders and the Board of Trustees
of the Fund, the documents delivered to the Underwriters by the Fund and the
Investment Manager dated as of the date hereof pursuant to the Underwriting
Agreement and such other documents, including certificates of officers of the
Fund, as we have deemed necessary for purposes of rendering our opinions below.
For purposes of paragraph 2 below, we have relied solely on (1) the certificate
of recent date of the Secretary of State of the State of California as to the
entitlement of the Fund to transact intrastate business in the State of
California, (2) a Certificate of the Special Deputy Secretary of State of the
State of New York dated June 27, 2002, certifying copies of (a) a Certificate of
Designation by the Fund dated June 18, 2002 and (b) a Statement under Section 18
of the New York General Associations Law, (3) a Filing Receipt of the Department
of State of the State of New York dated June 21, 2002 relating to the Fund and
(4) a LEXIS search on August __, 2002, of the New York Department of State,
Corporate Record, showing the "status" of the Fund as "active" and noting that
"good standing status can only be determined by performing a search in the
records of both the Department of State Corporation Records and the Department
of Tax and Franchise." We have assumed the genuineness of the signatures on all
documents examined by us, the authenticity of all documents submitted to us as
originals and the conformity to the corresponding originals of all documents
submitted to us as copies. For purposes of our opinion regarding the
effectiveness of the Registration Statement, we are relying solely on the oral
representations of the staff of the Commission.
We express no opinion as to the laws of any jurisdiction other than The
Commonwealth of Massachusetts and the United States of America. We call your
attention to the fact that each of the Underwriting Agreement and the Auction
Agency Agreement provides that it is to be governed by and construed in
accordance with the laws of the State of New York and to the fact that the
Investment Management Agreement does not provide that it is to be governed by
the laws of any particular jurisdiction. In rendering the opinion as to
enforceability expressed in paragraph 5 below, we have limited the scope of our
opinion to the conclusions that would be reached by a Massachusetts court that
had determined that each of the Fund Agreements would be governed by, and
construed in accordance with, the internal laws of The Commonwealth of
B-2
Massachusetts. Further, we express no opinion as to the state securities or Blue
Sky laws of any jurisdiction, including The Commonwealth of Massachusetts.
For purposes of our opinion set forth in paragraph 2 below with respect to
the power and authority of the Fund to own, lease and operate its properties and
conduct its business, we have relied upon certificates of officers of the Fund
as to the states in which the Fund leases or owns real property or in which it
conducts material operations.
Insofar as this opinion relates to factual matters, we have made inquiries
to officers of the Fund, the Investment Manager and the Portfolio Manager to the
extent we believe reasonable with respect to such matters and have relied inter
alia upon representations made by the Fund and the Investment Manager in the
Underwriting Agreement, representations made by the Portfolio Manager to the
Investment Manager and representations made to us by one or more officers of the
Fund, the Investment Manager or the Portfolio Manager. We have not independently
verified the accuracy of such representations. Where our opinion relates to our
"knowledge," that term means the conscious awareness of facts or other
information by any lawyer in our firm giving substantive attention to the
representation of the Fund with respect to the transactions contemplated by the
Underwriting Agreement, and does not require or imply (i) any examination of
this firm's, any such lawyer's or any other person's or entity's files, or (ii)
that any inquiry was made of any lawyer (other than the lawyers described
above). In respect of our opinions set forth in paragraphs 7, 9 and 10 below, we
have not searched the dockets of any court, administrative body or other filing
office in any jurisdiction.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Registration Statement is effective under the Securities Act; the
filing of the Prospectus pursuant to Rule 497 under the Securities Act has been
made in the manner and within the time period required by Rule 497; and based
upon oral inquiries to the Commission staff on the date hereof, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for any such purpose is pending or threatened by the Commission.
2. The Fund has been duly organized and is validly existing and in good
standing as an unincorporated voluntary association under and by virtue of the
laws of The Commonwealth of Massachusetts and has full power and authority to
own or lease its properties and to conduct its business as described in the
Registration Statement and the Prospectus. The Certificate of Designation
relating to the Fund's conduct of business in the State of New York is on file
with the Department of State of the State of New York, and the Fund is entitled
to transact intrastate business in the State of California.
3. The Fund's authorized capitalization is as set forth in the Registration
Statement and the Prospectus. The Fund has an indefinite number of authorized
common shares of beneficial interest, par value $0.00001 per share. The APS
conform in all material respects as to legal matters to the description of them
under the caption entitled "Description of APS" and "Description of capital
structure" in the Prospectus. All outstanding common shares of beneficial
interest of the Fund have been duly authorized and are validly issued, fully
paid and,
B-3
subject to the penultimate paragraph of this opinion letter, non-assessable. The
APS have been duly authorized and, when issued and delivered to the Underwriters
against payment therefor in accordance with the terms of the Underwriting
Agreement, will be validly issued, fully paid and, subject to the penultimate
paragraph of this opinion letter, non-assessable. No person is entitled to any
preemptive or other similar rights with respect to the APS.
4. The Fund was deemed to be registered with the Commission under Section
8(a) of the Investment Company Act upon receipt by the Commission of the
Notification of Registration. To our knowledge, the Commission has not issued to
the Fund notice of any hearing or other proceeding to consider suspension or
revocation of any such registration. All required action has been taken by the
Fund under the Securities Act, the Investment Company Act and the rules and
regulations thereunder in connection with the issuance and sale of the APS to
make the public offering and consummate the sale of the APS pursuant to the
Underwriting Agreement.
5. The Fund has, or at the relevant time had, full power and authority to
enter into each of the Fund Agreements and to perform all of the terms and
provisions thereof to be carried out by it. Each Fund Agreement has been duly
and validly authorized, executed and delivered by the Fund. Each Fund Agreement
complies in all material respects with all applicable provisions of the
Investment Company Act and the Investment Advisers Act of 1940, as amended, as
the case may be. Assuming due authorization, execution and delivery by the other
parties thereto, each Fund Agreement constitutes the legal, valid and binding
obligation of the Fund enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, moratorium, reorganization and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles (regardless of whether enforceability is considered in
a proceeding in equity or at law).
6. The Fund has, or at the relevant time had, full power and authority to
enter into each of the Investment Management Agreement and the Underwriting
Agreement and to perform all of the terms and provisions thereof to be carried
out by it. The Investment Management Agreement and the Underwriting Agreement
have been duly and validly authorized, executed and delivered by the Fund.
7. None of (a) the execution and delivery by the Fund of the Investment
Management Agreement, the Underwriting Agreement or any of the Fund Agreements,
(b) the issue and sale by the Fund of the APS as contemplated by the
Underwriting Agreement and (c) the performance by the Fund of its obligations
under the Investment Management Agreement, the Underwriting Agreement or any of
the Fund Agreements or the consummation by the Fund of the other transactions
contemplated by the Investment Management Agreement, the Underwriting Agreement
or any of the Fund Agreements conflicts or will conflict with, or results or
will result in a breach of, the Declaration of Trust or the Amended Bylaws or,
to our knowledge, any agreement or instrument to which the Fund is a party or by
which the Fund is bound, or violates or will violate any federal statute, law or
regulation or any judgment, injunction, order or decree of any federal
governmental agency or body that is applicable to the Fund and that is known to
us, which violation would have a material adverse effect on the condition or
business of the Fund.
B-4
8. To our knowledge, the Fund is not currently in breach of, or in default
under, any material written agreement or instrument to which it is a party or by
which it or its property is bound or affected.
9. No consent, approval, authorization or order of any court or
governmental agency or body or securities exchange or securities association is
required by the Fund for the consummation by the Fund of the transactions
contemplated in the Investment Management Agreement, the Underwriting Agreement
and the Fund Agreements, except such as (a) have been obtained under the
Securities Act, the Investment Company Act or the Exchange Act and (b) may be
required by the New York Stock Exchange or the National Association of
Securities Dealers, Inc. or under state securities or Blue Sky laws in
connection with the purchase and distribution of the APS by the Underwriters
pursuant to the Underwriting Agreement.
10. To our knowledge, there are no legal or governmental proceedings
pending or threatened against the Fund, or to which the Fund or any of its
properties is subject, that are required to be described in the Registration
Statement or the Prospectus but are not described therein as required.
11. To our knowledge, there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which have not been so described or filed as an exhibit
or incorporated therein by reference.
12. Each of the sections in the Prospectus entitled "Taxes" and "Tax
matters," to the extent that it states matters of United States law or legal
conclusions with respect thereto, presents a fair summary of the principal
federal income tax rules currently in effect applicable to the Fund and to the
purchase, ownership and disposition of the APS.
13. The Registration Statement (except for the financial statements and
schedules, the notes thereto and any schedules and other financial data
contained or incorporated by reference therein or omitted therefrom, as to which
we express no opinion), at the effective time set forth above, and the
Prospectus (except as aforesaid), as of the date thereof, complied as to form in
all material respects to the applicable requirements of the Securities Act and
the Investment Company Act.
We have not independently verified the accuracy, completeness or fairness
of the statements made or the information contained in the Registration
Statement or the Prospectus and, except in the respects and to the extent set
forth in paragraphs 3 and 13 above, we are not passing upon and do not assume
any responsibility therefor. In the course of the preparation by the Fund of the
Registration Statement and the Prospectus, we have participated in discussions
with your representatives and employees and officers of the Fund, the Investment
Manager and the Portfolio Manager and in discussions with the Fund's independent
accountants, in which the business and the affairs of the Fund, the Investment
Manager and the Portfolio Manager and the contents of the Registration Statement
and the Prospectus were discussed. There is no assurance that all material facts
as to the Fund, the Investment Manager, the Portfolio Manager and their
B-5
affairs were disclosed to us or that our familiarity with the Fund, the
Investment Manager or the Portfolio Manager is such that we would have
necessarily recognized the materiality of such facts as were disclosed to us,
and we have to a large extent relied upon statements of representatives of the
Fund, the Investment Manager and the Portfolio Manager as to the materiality of
the facts disclosed to us. On the basis of information that we have gained in
the course of our representation of the Fund in connection with its preparation
of the Registration Statement and the Prospectus and our participation in the
discussions referred to above, no facts have come to our attention that would
lead us to believe that as of August __, 2002, the Registration Statement
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that as of the date of the Prospectus and
the date hereof the Prospectus contained an untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light, in each case, of the circumstances under
which they were made, not misleading (in each case, other than the financial
statements and schedules, the notes thereto and any schedules and other
financial data contained or incorporated by reference therein or omitted
therefrom, as to which we express no opinion).
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Fund. However, the Fund's
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Fund and requires that notice of such disclaimer be given in each agreement,
obligation, and instrument entered into or executed by the Fund or the Trustees.
The Declaration of Trust provides for indemnification out of the property of the
Fund for all loss and expense of any shareholder held personally liable solely
by reason of being or having been a shareholder of the Fund. Thus, the risk of a
shareholder's incurring financial loss on account of being a shareholder is
limited to circumstances in which the Fund itself would be unable to meet its
obligations.
This letter and the opinions expressed herein are furnished by us to you
and are solely for benefit of the Underwriters, except that Skadden, Arps,
Slate, Xxxxxxx & Xxxx (Illinois) may rely on this letter as to all matters
governed by the laws of The Commonwealth of Massachusetts in delivering its
opinion to you on the date hereof.
Very truly yours,
Ropes & Xxxx
B-6
SCHEDULE C
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING PIMCO FUNDS ADVISORS LLC
August __, 2002
UBS Warburg LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
X.X. Xxxxxxx & Sons, Inc.
Prudential Securities Incorporated
as Managing Underwriters
c/o UBS Warburg LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: PIMCO Funds Advisors LLC
Ladies and Gentlemen:
I am the Chief Legal Officer of PIMCO Funds Advisors LLC, a
Delaware limited liability company ("PFA"), and have counseled PFA in such
capacity in connection with the sale to you by PIMCO Municipal Income Fund II, a
voluntary association with transferable shares organized and existing under and
by virtue of the laws of The Commonwealth of Massachusetts (commonly referred to
as a Massachusetts business trust) (the "Fund"), of 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 July 2, 2002 (Act File No. 333-91744, and Investment Company
Act File No. 811-21076), as amended by Pre-Effective Amendment No. 1 filed with
the Commission on August 12, 2002, and Pre-Effective Amendment No. 2 filed with
the Commission on August __, 2002 (the "Registration Statement"), and an
underwriting agreement dated August __, 2002 by and among you, the Fund and PFA
(the "Underwriting Agreement") relating to the issuance and sale by the Fund of
the APS.
This opinion is rendered to you pursuant to Section 6(e) of the
Underwriting Agreement. Capitalized terms used herein without definition have
the meanings assigned to them in the Underwriting Agreement.
As such legal officer, I have examined such matters of fact and
questions of law as I have considered appropriate for purposes of rendering the
opinions expressed below, except where a statement is qualified as to knowledge
or awareness, in which case I have made no or limited inquiry as specified
below. I have examined, among other things, the following:
C-1
(a) the Underwriting Agreement;
(b) that certain Investment Management Agreement by and between the
Fund and PFA, dated as of June 18, 2002; and
(c) that certain Portfolio Management Agreement by and between
Pacific Investment Management Company LLC and PFA, as accepted and agreed to by
the Fund, dated as of June 18, 2002.
The documents described in subsections (a)-(c) above are referred
to herein collectively as the "Transaction Documents."
In my examination, I have assumed the genuineness of all signatures
(other than those of officers of PFA on the Transaction Documents), the
authenticity of all documents submitted to me as originals, and the conformity
to authentic original documents of all documents submitted to me as copies.
I have been furnished with, and with your consent have relied upon,
certificates of officers of PFA with respect to certain factual matters. In
addition, I have obtained and relied upon such certificates and assurances from
public officials as I have deemed necessary.
I am opining herein as to the effect of the federal laws of the
United States, the internal laws of the State of New York and the internal laws
of the State of Delaware, and I express no opinion with respect to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or country or as to any matters of municipal law or the laws of any
other local agencies within any state or country. My opinions set forth in
paragraph 4 below are based upon my consideration of only those statutes, rules
and regulations which, in my experience, are normally applicable to transactions
similar to those contemplated by the Transaction Documents, generally.
Whenever a statement herein is qualified by "to my knowledge" or a
similar phrase, it is intended to indicate that I do not have current actual
knowledge of the inaccuracy of such statement. However, except as otherwise
expressly indicated, I have not undertaken any independent investigation to
determine the accuracy of any such statement, and no inference that I have any
knowledge of any matters pertaining to such statement should be drawn from my
position as Chief Legal Officer of PFA.
Subject to the foregoing and the other matters set forth herein, it
is my opinion that, as of the date hereof:
1. PFA is a limited liability company and is validly existing and
in good standing under the Delaware Limited Liability Company Act (6 Del. C ss..
18-101, et seq.) with all necessary limited liability company power and
authority to enter into and deliver the Transaction Documents and perform its
obligations thereunder and to carry on its business as it is now being conducted
and as described in the Registration Statement. Based solely on certificates
from public officials, I confirm that PFA is qualified to do business in the
following States: California, New York and Connecticut, such States being those
in which its ownership or leasing of property or its conducting of business may
require such qualification and where failure
C-2
to so qualify would have a material adverse effect on the ability of PFA to
perform its obligations under the Investment Management Agreement and the
Portfolio Management Agreement.
2. The execution, delivery and performance of the Transaction
Documents by PFA have been duly authorized by all necessary limited liability
company action of PFA and no other actions on the part of PFA or its unitholders
or any subsidiary of PFA or its unitholders is necessary to authorize and
consummate the transactions contemplated thereby, and the Transaction Documents
have been duly executed and delivered by PFA.
3. Each of the Investment Management Agreement and the Portfolio
Management Agreement constitutes a legally valid and binding agreement of PFA,
enforceable against PFA in accordance with its terms.
4. Neither the execution and delivery of the Transaction
Documents by PFA, nor the consummation by PFA of transactions contemplated
thereby, nor compliance by PFA with any of the terms and provisions thereof
will:
(i) violate any provision of the Limited Liability Company
Agreement of PFA, effective May 23, 2000, as amended on July 1, 2001
and December 12, 2001, which is still in full force and effect and
which has not been further amended or supplemented through the date
hereof,
(ii) violate any federal, Delaware or New York statute, rule
or regulation applicable to PFA (other than federal and state
securities or blue sky laws, the Investment Company Act, and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), as to
which I express no opinion),
(iii) violate any agreement to which PFA is a party or by
which it is bound and which is material to PFA's businesses taken as a
whole (the "Material Agreements"),
(iv) violate any order, writ, injunction or decree, known to
me and applicable to PFA, or
(v) to the best of my knowledge, require any consents,
approvals, authorizations, registrations, declarations or filings by
PFA under any federal or Delaware statute, rule or regulation
applicable to PFA, except as have been obtained under the Act, the
Investment Company Act or the Advisers Act.
No opinion is expressed in this paragraph 4 as to the application
of Section 548 of the federal Bankruptcy Code and comparable provisions of state
or foreign law or of any antifraud laws, antitrust or trade regulation laws. No
opinion is expressed in this paragraph 4 with respect to the operating licenses
necessary for PFA's businesses.
5. PFA is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the Investment Company
Act from acting as
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investment adviser for the Fund as contemplated by the Investment Management
Agreement, the Registration Statement and the Prospectus.
6. The description of PFA and its business, and the statements
attributable to PFA, set forth in the Registration Statement or the Prospectus
under the headings "Prospectus Summary - Investment Manager" and "Management of
the Fund" do not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
7. There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other governmental agency
or body, foreign or domestic, now pending or, to my knowledge, threatened
against PFA of a nature required to be disclosed in the Registration Statement
or Prospectus or that might reasonably result in any material adverse change in
the ability of PFA to fulfill its obligations under either the Investment
Management Agreement or the Portfolio Management Agreement.
The opinions expressed in paragraph 3 above are subject to the
following limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
or affecting the rights or remedies of creditors generally;
(b) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be
brought;
(c) the unenforceability under certain circumstances under law
or court decisions of provisions providing for the indemnification of
or contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy; and
(d) the unenforceability of any provision requiring the
payment of attorney's fees, except to the extent that a court
determines such fees to be reasonable.
In rendering the opinions expressed in paragraph 4 insofar as
they require interpretation of the Material Agreements (i) I have assumed with
your permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of New York
without giving effect to any choice of law provisions contained therein or any
choice of law principles which would result in application of the internal laws
of any other state and (ii) to the extent that any questions of legality or
legal construction have arisen in connection with my review, I have applied the
laws of the State of New York in resolving such questions. I advise you that
certain of the Material Agreements may be governed by other laws, that such laws
may vary substantially from the law assumed to govern for purposes of this
opinion, and that this opinion may not be relied upon as to whether or not a
breach or default would occur under the law actually governing such Material
Agreements.
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To the extent that the obligations of PFA may be dependent upon
such matters, I assume for purposes of this opinion that: (i) all parties to the
Transaction Documents other than PFA are duly incorporated or organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation or organization; (ii) all parties to the Transaction Documents
other than PFA have the requisite power and authority and, in the case of
natural persons, legal capacity to execute and deliver the Transaction Documents
and to perform their respective obligations under the Transaction Documents to
which they are a party; and (iii) the Transaction Documents to which such
parties other than PFA are a party have been duly authorized, executed and
delivered by such parties and, other than PFA, constitute their legally valid
and binding obligations, enforceable against them in accordance with their
terms. I express no opinion as to compliance by any parties to the Transaction
Documents with any state or federal laws or regulations applicable to the
subject transactions because of the nature of their business and I express no
opinion as to compliance by any parties to the Transaction Documents with any
foreign laws or regulations applicable to the transactions contemplated by the
Transaction Documents or which may affect the Transaction Documents'
enforceability.
This opinion is rendered only to you and is solely for your
benefit in connection with the transactions covered hereby. This opinion may not
be relied upon by you for any other purpose, or furnished to, quoted to or
relied upon by any other person, firm or corporation for any purpose, without my
prior written consent.
Very truly yours,
* * *
Special Counsel for the Investment Manager shall separately opine that, assuming
the Investment Manager is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the Investment Company
Act from acting as investment adviser for the Fund as contemplated by the
Investment Management Agreement, the Registration Statement and the Prospectus,
neither the execution and delivery of the Underwriting Agreement, the Investment
Management Agreement or the Portfolio Management Agreement by the Investment
Manager, nor the consummation by the Investment Manager of the transactions
contemplated thereby, nor compliance by the Investment Manager with any of the
terms and provisions thereof will violate the provisions of the Investment
Company Act or the Advisers Act; provided, however, that such opinion may
specifically disclaim any opinion as to (a) the reasonableness of the fees to be
paid to the Investment Manager under the Investment Management Agreement and (b)
the compliance by the Investment Manager with its indemnification and
contribution obligations set forth in the Underwriting Agreement.
C-5
SCHEDULE D
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING PIMCO
August __, 2002
UBS Warburg LLC
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
X.X. Xxxxxxx & Sons, Inc.
Prudential Securities Incorporated
as Managing Underwriters
c/o UBS Warburg LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Pacific Investment Management Company LLC
Ladies and Gentlemen:
I am the Chief Legal Officer of PIMCO Funds Advisors LLC, a
Delaware limited liability company. PFA is an affiliate of and under common
control with Pacific Investment Management Company LLC, a Delaware limited
liability company ("PIMCO"). I have discussed the matters covered by this
opinion with internal counsel at PIMCO. In my capacity as Chief Legal Officer of
PFA, I am rendering this opinion on behalf of PIMCO in connection with the sale
to you by PIMCO Municipal Income Fund II, a voluntary association with
transferable shares organized and existing under and by virtue of the laws of
The Commonwealth of Massachusetts (commonly referred to as a Massachusetts
business trust) (the "Fund"), of 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 July 2, 2002 (Act File
No. 333-91744, and Investment Company Act File No. 811-21076), as amended by
Pre-Effective Amendment No. 1 filed with the Commission on August 12, 2002, and
Pre-Effective Amendment No. 2 filed with the Commission on August __, 2002 (the
"Registration Statement"), and an underwriting agreement dated August __, 2002,
by and among you, the Fund and PFA (the "Underwriting Agreement") relating to
the issuance and sale by the Fund of the APS.
This opinion is rendered to you pursuant to Section 6(e) of the
Underwriting Agreement. Capitalized terms used herein without definition have
the meanings assigned to them in the Underwriting Agreement.
D-1
As Chief Legal Officer of PFA, I have examined such matters of
fact and questions of law as I have considered appropriate for purposes of
rendering the opinions expressed below, except where a statement is qualified as
to knowledge or awareness, in which case I have made no or limited inquiry as
specified below. I have examined, among other things, that certain Portfolio
Management Agreement by and between PIMCO and PFA, as accepted and agreed to by
the Fund, dated as of June 18, 2002 (the "Portfolio Management Agreement").
In my examination, I have assumed the genuineness of all
signatures (other than those of officers of PIMCO on the Portfolio Management
Agreement), the authenticity of all documents submitted to me as originals, and
the conformity to authentic original documents of all documents submitted to me
as copies.
I have been furnished with, and with your consent have relied
upon, certificates of officers of PIMCO with respect to certain factual matters.
In addition, I have obtained and relied upon such certificates and assurances
from public officials as I have deemed necessary.
I am opining herein as to the effect of the federal laws of the
United States, the internal laws of the State of New York and the internal laws
of the State of Delaware, and I express no opinion with respect to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or country or as to any matters of municipal law or the laws of any
other local agencies within any state or country. My opinions set forth in
paragraph 4 below are based upon my consideration of only those statutes, rules
and regulations which, in my experience, are normally applicable to transactions
similar to those contemplated by the Portfolio Management Agreement, generally.
Whenever a statement herein is qualified by "to my knowledge" or
a similar phrase, it is intended to indicate that I do not have current actual
knowledge of the inaccuracy of such statement. However, except as otherwise
expressly indicated, I have not undertaken any independent investigation to
determine the accuracy of any such statement, and no inference that I have any
knowledge of any matters pertaining to such statement should be drawn from my
position as Chief Legal Officer of PFA.
Subject to the foregoing and the other matters set forth herein,
it is my opinion that, as of the date hereof:
1. PIMCO is a limited liability company and is validly existing
and in good standing under the Delaware Limited Liability Company Act (6 Del. C
(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 PIMCO is qualified to do
business in the following States: California and New York, such States being
those in which its ownership or leasing of property or its conducting of
business may require such qualification and where failure to so qualify would
have a material adverse effect on the ability of PIMCO to perform its
obligations under the Portfolio Management Agreement.
D-2
2. The execution, delivery and performance of the Portfolio
Management Agreement by PIMCO have been duly authorized by all necessary limited
liability company action of PIMCO and no other actions on the part of PIMCO or
its unitholders or any subsidiary of PIMCO or its unitholders is necessary to
authorize and consummate the transactions contemplated thereby, and the
Portfolio Management Agreement has been duly executed and delivered by PIMCO.
3. The Portfolio Management Agreement constitutes a legally
valid and binding agreement of PIMCO, enforceable against PIMCO in accordance
with its terms.
4. Neither the execution and delivery of the Portfolio
Management Agreement by PIMCO, nor the consummation by PIMCO of transactions
contemplated thereby, nor compliance by PIMCO with any of the terms and
provisions thereof will:
(i) violate any provision of the Limited Liability
Company Agreement of PIMCO, effective May 5, 2000,
(ii) violate any federal, Delaware or New York
statute, rule or regulation applicable to PIMCO (other than federal and
state securities or blue sky laws, the Investment Company Act, and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), as to
which I express no opinion),
(iii) violate any agreement to which PIMCO is a party
or by which it is bound and which is material to PIMCO's businesses
taken as a whole (the "Material Agreements"),
(iv) violate any order, writ, injunction or decree, known
to me and applicable to PIMCO, or
(v) to the best of my knowledge, require any consents,
approvals, authorizations, registrations, declarations or filings by
PIMCO under any federal statute, rule or regulation applicable to
PIMCO, except as have been obtained under the Act, the Investment
Company Act or the Advisers Act.
No opinion is expressed in this paragraph 4 as to the
application of Section 548 of the federal Bankruptcy Code and comparable
provisions of state or foreign law or of any antifraud laws, antitrust or trade
regulation laws. No opinion is expressed in this paragraph 4 with respect to the
operating licenses necessary for PIMCO's businesses.
5. PIMCO is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the Investment Company
Act from acting as investment sub-adviser for the Fund as contemplated by the
Portfolio Management Agreement, the Registration Statement and the Prospectus.
6. The description of PIMCO and its business, and the
statements attributable to PIMCO, set forth in the Registration Statement and
the Prospectus under the headings "Prospectus Summary - Portfolio Manager" and
"Management of the Fund" do not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein
D-3
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 PIMCO of a nature required to be disclosed in the Registration Statement
or Prospectus or that might reasonably result in any material adverse change in
the ability of PIMCO to fulfill its obligations under the Portfolio Management
Agreement.
The opinions expressed in paragraph 3 above are subject to the
following limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
or affecting the rights or remedies of creditors generally;
(b) the effect of general principles of equity whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be
brought;
(c) the unenforceability under certain circumstances
under law or court decisions of provisions providing for the
indemnification of or contribution to a party with respect to a
liability where such indemnification or contribution is contrary to
public policy; and
(d) the unenforceability of any provision requiring the
payment of attorney's fees, except to the extent that a court
determines such fees to be reasonable.
In rendering the opinions expressed in paragraph 4 insofar as
they require interpretation of the Material Agreements (i) I have assumed with
your permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of New York
without giving effect to any choice of law provisions contained therein or any
choice of law principles which would result in application of the internal laws
of any other state and (ii) to the extent that any questions of legality or
legal construction have arisen in connection with my review, I have applied the
laws of the State of New York in resolving such questions. I advise you that
certain of the Material Agreements may be governed by other laws, that such laws
may vary substantially from the law assumed to govern for purposes of this
opinion, and that this opinion may not be relied upon as to whether or not a
breach or default would occur under the law actually governing such Material
Agreements.
To the extent that the obligations of PIMCO may be dependent
upon such matters, I assume for purposes of this opinion that: (i) all parties
to the Portfolio Management Agreement other than PIMCO are duly incorporated or
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization; (ii) all parties to
the Portfolio Management Agreement other than PIMCO have the requisite power and
authority and, in the case of natural persons, legal capacity to execute and
deliver the Portfolio Management Agreement and to perform their respective
obligations under the Portfolio
D-4
Management Agreement; and (iii) the Portfolio Management Agreement has been duly
authorized, executed and delivered by such parties other than PIMCO and, other
than PIMCO, constitutes their legally valid and binding obligations, enforceable
against them in accordance with their terms. I express no opinion as to
compliance by any parties to the Portfolio Management Agreement with any state
or federal laws or regulations applicable to the subject transactions because of
the nature of their business and I express no opinion as to compliance by any
parties to the Portfolio Management Agreement with any foreign laws or
regulations applicable to the transactions contemplated by the Portfolio
Management Agreement or which may affect the Portfolio Management Agreement's
enforceability.
This opinion is rendered only to you and is solely for your
benefit in connection with the transactions covered hereby. This opinion may not
be relied upon by you for any other purpose, or furnished to, quoted to or
relied upon by any other person, firm or corporation for any purpose, without my
prior written consent.
Very truly yours,
D-5
SCHEDULE E
FORM OF ACCOUNTANT'S LETTER
August __, 2002
The Board of Trustees of
PIMCO Municipal Income Fund II
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
UBS Warburg LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
as Managing Representative of the Underwriters
Ladies and Gentlemen:
We have audited the statement of assets and liabilities of
PIMCO Municipal Income Fund II (the "Fund") as of July 31, 2002 included in the
Registration Statement on Form N-2 filed by the Fund under the Securities Act of
1933, as amended (the "Act") (File No. 333-91744), and under the Investment
Company Act of 1940, as amended (the "1940 Act") (File No. 811-21076); such
statement and our report with respect to such statement are included in the
Registration Statement.
In connection with the Registration Statement:
1. We are independent public accountants with respect to the
Fund within the meaning of the Act and the applicable rules and
regulations thereunder.
2. In our opinion, the statement of assets and liabilities
included in the Registration Statement and audited by us complies as to
form in all respects with the applicable accounting requirements of the
Act, the 1940 Act and the respective rules and regulations thereunder.
3. For purposes of this letter we have read the minutes of all
meetings of the Shareholders, the Board of Trustees and all Committees
of the Board of Trustees of the Fund as set forth in the minute books
at the offices of the Fund, officials of the Fund having advised us
that the minutes of all such meetings through ____________, 2002 were
set forth therein.
4. Fund officials have advised us that no financial statements
as of any date subsequent to July 31, 2002 are available. We have made
inquiries of certain officials of the Fund who have responsibility for
financial and accounting matters regarding whether
E-1
there was any change at _____________, 2002 in the capital shares or
net assets of the Fund as compared with amounts shown in the July 31,
2002, statement of assets and liabilities included in the Registration
Statement, except for changes that the Registration Statement discloses
have occurred or may occur. On the basis of our inquiries and our
reading of the minutes as described in Paragraph 3, nothing came to our
attention that caused us to believe that there were any such changes.
The foregoing procedures do not constitute an audit made in accordance
with generally accepted auditing standards. Accordingly, we make no
representations as to the sufficiency of the foregoing procedures for your
purposes.
This letter is solely for the information of the addressees and to
assist the underwriters in conducting and documenting their investigation of the
affairs of the Fund in connection with the offering of the securities covered by
the Registration Statement, and is not to be used, circulated, quoted or
otherwise referred to within or without the underwriting group for any other
purpose, including but not limited to the registration, purchase or sale of
securities, nor is it to be filed with or referred to in whole or in part in the
Registration Statement or any other document, except that reference may be made
to it in the underwriting agreement or in any list of closing documents
pertaining to the offering of the securities covered by the Registration
Statement.
Very Truly Yours,
PRICEWATERHOUSECOOPERS LLP
E-2
