___________ Shares(1)
FIRST TRUST STRATEGIC HIGH INCOME FUND
Common Shares of Beneficial Interest
($____ Par Value)
UNDERWRITING AGREEMENT
July __, 2005
RBC Capital Markets Corporation As the Representative of the several
underwriters named in Schedule I hereto c/o RBC Capital Markets One
Liberty Plaza ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Each of First Trust Strategic High Income Fund, a Massachusetts
business trust (the "Company"), its investment adviser, First Trust
Advisors L.P., an Illinois limited partnership (the "Investment Advisor"
or "First Trust") and its investment sub-advisor, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Asset
Management (the "Sub-Advisor" or "HLAM") (each, an "Advisor" and
together, the "Advisors") confirms its agreement with RBC Capital
Markets Corporation ("RBC") and the several underwriters (collectively
with RBC, the "Underwriters") named in Schedule I hereto for whom RBC is
acting as Representative (the "Representative") with respect to the
issue and sale by the Company and the purchase by the Underwriters,
acting severally and not jointly, of an aggregate of [__________] shares
of the Company's Common Shares of Beneficial Interest ("Common Shares"),
$0.01 par value (the "Firm Shares") and with respect to the grant by the
Company to the Underwriters, acting severally and not jointly, of the
option described below to purchase all or part of the [___] additional
Common Shares (the "Option Shares", and together with the Firm Shares,
the "Shares") for the sole purpose of covering over-allotments, if any.
The respective amounts of the Firm Shares to be so purchased by the
several Underwriters are set forth opposite their names in Schedule I
hereto.
[The Company has entered into an Investment Management
Agreement with the Advisor dated __________, 2005 (the "Advisory
Agreement"), an Administration and Accounting Services Agreement dated
__________, 2005 with PFPC Inc. (the "Administration Agreement"), a
________________________
(1) Plus an option to purchase up to _______ additional shares to cover
over-allotments.
Custodian Services Agreement with PFPC Trust Company dated __________,
2005 (the "Custody Agreement"). The Company's Board of Trustees on
__________, 2005 also approved the Terms and Conditions of Appointment
of PFPC, Inc. as transfer agent and registrar for the Company (the
"Transfer Agent Terms and Conditions"). The Company and the Advisor have
entered into an Investment Sub-Advisory Agreement with HLAM dated
__________, 2005 (the "Sub-administration Agreement"). In addition, the
Company has adopted a dividend reinvestment plan (the "Dividend
Reinvestment Plan"), pursuant to which holders of Shares shall have
their dividends automatically reinvested in additional Common Shares of
the Company unless they elect to receive such dividends in cash.]
Collectively, this Agreement, the Advisory Agreement, the Administration
Agreement, the Custody Agreement, the Transfer Agent Terms and
Conditions, the Sub-administration Agreement and the Dividend
Reinvestment Plan are referred to herein as the "Company Agreements."
The Additional Compensation Agreement with RBC dated July __, 2005, each
of the Company Agreements to which the Advisor is a party and this
Agreement are collectively referred to herein as the "Advisor
Agreements."
In consideration of the mutual agreements contained herein and
of the interests of the parties in the transactions contemplated hereby,
the parties hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE ADVISORS.
The Company and the Investment Advisor jointly and severally
represent and warrant to each of the Underwriters as of the date hereof,
as of the Closing Date and each Option Closing Date, if any, (each as
defined in Section 2 below) and the Company, and the Advisors jointly
and severally represent and warrant to each of the Underwriters as of
the date hereof, as of the Closing Date and each Option Closing Date, if
any, as set forth in paragraphs 1(c), 1(h), 1(j), 1(l), 1(s), 1(t),
1(x), 1(aa) and 1(dd):
(a) A registration statement on Form N-2 (File Nos. 333-124146 and
811-21756) with respect to the Shares has been prepared by the Company
in conformity with the requirements of the Securities Act of 1933, as
amended (the "1933 Act"), the Investment Company Act of 1940, as amended
(the "1940 Act", and collectively with the 1933 Act, the "Acts"), and
the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") promulgated under
the 1933 Act and the 1940 Act and has been filed with the Commission.
Copies of such registration statement, including any amendments thereto,
the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements
and schedules, as finally amended and revised, have heretofore been
delivered by the Company to you. Such registration statement, as amended
from time to time, together with any registration statement filed by the
Company pursuant to Rule 462(b) of the 1933 Act, is herein referred to
as the "Registration Statement," which shall be deemed to include all
information omitted therefrom in reliance upon Rule 430A of the Rules
and Regulations under the 1933 Act and contained in the Prospectus
referred to below, has become effective under the Acts and no
post-effective amendment to the Registration Statement has been filed as
of the date of this Agreement. "Prospectus" means the form of prospectus
and statement of additional information included in the Registration
Statement or, if the prospectus and statement of additional information
included in the Registration Statement omit information in reliance on
Rule 430A under the Rules and Regulations under the 1933 Act and such
information is included in a prospectus and statement of additional
information filed with the Commission pursuant to Rule 497(h) under the
Rules and Regulations under the 1933 Act, the term "Prospectus" as used
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in this Agreement means the prospectus and statement of additional
information in the forms included in the Registration Statement as
supplemented by the addition of the information contained in the
prospectus (including the statement of additional information) filed
with the Commission pursuant to Rule 497(h). Each preliminary prospectus
or statement of additional information included in the Registration
Statement prior to the time it becomes effective is herein referred to
as a "Preliminary Prospectus."
(b) A notification of registration of the Company as an investment
company under the 1940 Act on Form N-8A (the "1940 Act Notification")
has been prepared by the Company in conformity with the 1940 Act and has
been filed with the Commission.
(c) The Commission has not issued an order preventing or suspending the
use of any Prospectus relating to the proposed offering of the Shares
nor instituted proceedings for that purpose and no proceedings, for any
such purpose have been instituted or are pending or, to the knowledge of
the Company or either Advisor, are contemplated by the Commission. The
Registration Statement contains, and the Prospectus and any amendments
or supplements thereto will contain, all statements which are required
to be stated therein by, and will conform to, the requirements of the
Acts and the Rules and Regulations. The Registration Statement, in the
form in which it is declared effective and also in such form as it may
be when any post-effective amendment shall become effective, and any
amendment thereto, did not contain, and will not contain, any untrue
statement of a material fact and did not omit, and will not omit, to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus and any
amendments and supplements thereto do not contain, and will not contain,
any untrue statement of material fact; and do not omit, and will not
omit, to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company and the Advisors make no representations or
warranties as to information contained in or omitted from the
Registration Statement or the Prospectus, or any such amendment or
supplement, in reliance upon, and in conformity with, written
information furnished to the Company or the Advisors by or on behalf of
any Underwriter through the Representative, specifically for use in the
preparation thereof. The 1940 Act Notification complied in all material
respects with the requirements of the 1940 Act and the Rules and
Regulations thereunder and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(d) This Agreement and each of the other Company Agreements has been
duly authorized, executed and delivered by the Company, and constitutes
a valid, legal, and binding obligation of the Company, enforceable in
accordance with its terms. The Company has full power and authority to
enter into this Agreement and each of the Company Agreements and to
authorize, issue and sell the Shares as contemplated by this Agreement.
(e) The Company has been duly formed and is validly existing under the
laws of the Commonwealth of Massachusetts as a trust with transferable
shares of the type commonly called a Massachusetts business trust. The
Declaration of Trust of the Company (the "Declaration of Trust"),
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pursuant to which the Company was established, confers upon the Trustees
named therein, and their successors in trust, power and authority to own
or lease its properties and conduct its business as described in the
Registration Statement. The Company has no direct or indirect
subsidiaries. The Company is duly qualified to transact business and is
in good standing in all jurisdictions in which the conduct of its
business requires such qualification; except where the failure to be so
qualified or to be in good standing would not have a material adverse
effect on the condition (financial or otherwise), properties, assets,
liabilities, rights, operations, earnings, business, management or
prospects of the Company, whether or not arising from transactions in
the ordinary course of business (a "Material Adverse Effect").
(f) The outstanding Common Shares of the Company have been duly
authorized and validly issued and are fully paid and non-assessable
(except as described in the Registration Statement); the Shares to be
issued and sold by the Company have been duly authorized and when issued
and paid for as contemplated herein will be validly issued, fully paid
and non-assessable (except as described in the Registration Statement);
and no preemptive rights of shareholders exist with respect to any of
the Shares or the issue and sale thereof. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights, other than
those which have been waived or satisfied, for or relating to the
registration of any Common Shares.
(g) The Company has authorized capital as set forth in the Registration
Statement and Prospectus. All of the Shares conform to the description
thereof contained in the Registration Statement. The form of
certificates, if any, for the Shares conforms to the relevant law of the
jurisdiction of the Company's organization. Immediately after the
issuance and sale of the Shares to the Underwriters, no preferred shares
of the Company shall be issued and outstanding and no holder of any
shares, securities convertible into or exchangeable or exercisable for
shares or options, warrants or other rights to purchase shares or any
other securities of the Company shall have any existing or future right
to acquire any preferred shares of the Company. No holders of securities
of the Company have rights to the registration of such securities under
the Registration Statement.
(h) The Company has not distributed and will not distribute any
prospectus or other offering material (including, without limitation,
content on the Company's website that may be deemed to be a prospectus
or other offering material) in connection with the offering and sale of
the Shares other than any Preliminary Prospectus or the Prospectus or
other materials permitted by the Acts to be distributed by the Company.
(i) The financial statements of the Company, together with related notes
and schedules as set forth or incorporated by reference in the
Registration Statement, present fairly the financial position of the
Company at the indicated dates. Such financial statements and related
schedules have been prepared in accordance with U.S. generally accepted
accounting principles, consistently applied throughout the periods
involved, except as disclosed therein, and all adjustments necessary for
a fair presentation of results for such periods have been made. The
summary financial and statistical data included or incorporated by
reference in the Registration Statement presents fairly the information
shown therein and such data has been compiled on a basis consistent with
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the financial statements presented therein and the books and records of
the Company.
(j) The Company maintains, or causes its custodian, PFPC Trust Company,
to 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 and in
accordance with the 1940 Act; (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 and to maintain compliance with the books and
records requirements under the 1940 Act; (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 at reasonable intervals and appropriate
action is taken with respect to any differences.
(k) Deloitte & Touche LLP, which has certified certain financial
statements of the Company and delivered its opinion with respect to the
financial statements and schedules included or incorporated by reference
in the Registration Statement and the Prospectus, is an independent
registered public accounting firm with respect to the Company within the
meaning of the Acts and the Rules and Regulations.
(l) There is no action, suit, claim, investigation, inquiry or
proceeding pending or, to the knowledge of the Company or either
Advisor, threatened against or affecting the Company before any court or
administrative agency or otherwise which is required to be disclosed in
the Registration Statement or which if determined adversely to the
Company might have a Material Adverse Effect or prevent or materially
delay the consummation of the transactions contemplated hereby, except
as set forth in the Registration Statement and the Prospectus.
(m) The Company has good and marketable title to all of the assets
reflected in the financial statements (or as described in the
Registration Statement) hereinabove described, subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except those
reflected in such financial statements (or as described in the
Registration Statement) or which are not material in amount.
(n) The Company has filed all federal, state, local and foreign tax
returns which have been required to be filed and has paid all taxes
whether or not indicated on such returns and all assessments received by
it. All tax liabilities have been adequately provided for in the
financial statements of the Company, and the Company does not know of
any actual or proposed additional tax assessments. There are no transfer
taxes or other similar fees or charges under federal law or the laws of
any state, or any political subdivision thereof, required to be paid in
connection with the execution and delivery of this Agreement or the
issuance by the Company or sale by the Company of the Shares.
(o) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, as it may be amended or
supplemented, there has not been any material adverse change or any
development involving a prospective change which has had or is
reasonably likely to have a Material Adverse Effect, whether or not
5
occurring in the ordinary course of business, and there has not been any
material transaction entered into or any material transaction that is
probable of being entered into by the Company, other than transactions
in the ordinary course of business and changes and transactions
described in the Registration Statement and the Prospectus, as it may be
amended or supplemented. The Company has no material contingent
obligations that are not disclosed in the Company's financial statements
in the Registration Statement and the Prospectus.
(p) The Company is not, and with the giving of notice or lapse of time
or both, will not be, in violation of or in default under its
Declaration of Trust or By-Laws or under any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or by
which it, or any of its properties, is bound and which default has had
or is reasonably likely to have a Material Adverse Effect. The execution
and delivery of this Agreement and each of the Company Agreements and
the consummation of the transactions contemplated herein and therein and
the fulfillment of the terms hereof and thereof do not and will not,
whether with or without notice or the passing of time or both, (i)
conflict with or otherwise violate any of the terms or provisions of the
Declaration of Trust or By-Laws of the Company or (ii) conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, any contract, indenture, mortgage, deed of trust or other
agreement or instrument to which the Company is a party or any order,
rule or regulation applicable to the Company of any court or of any
regulatory body or administrative agency or other governmental body
having jurisdiction, which breach or default has had or is likely to
have a Material Adverse Effect.
(q) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated (except such additional steps as may be
required by the Commission, the National Association of Securities
Dealers, Inc. (the "NASD") or such additional steps as may be necessary
to qualify the Shares for public offering by the Underwriters under
state securities or Blue Sky laws) has been obtained or made and is in
full force and effect.
(r) The Company has all material licenses, certifications, permits,
franchises, approvals, clearances and other regulatory authorizations
("Permits") from governmental authorities as are necessary to conduct
its businesses as currently conducted and as currently proposed to be
conducted and to own, lease and operate its properties in the manner
described in the Prospectus. There is no claim, proceeding or
controversy, pending or, to the knowledge of the Company or either
Advisor, threatened, involving the status of or sanctions under any of
the Permits. The Company has fulfilled and performed all of its material
obligations with respect to the Permits, and no event has occurred which
allows, or after notice or lapse of time would allow, the revocation,
termination, modification or other impairment of the rights of the
Company under such Permit. None of the Permits contains any restriction
that is materially burdensome on the Company.
(s) To the knowledge of the Company and each Advisor, there are no
affiliations or associations between any member of the NASD and any of
the Company's officers, trustees or security holders, except as set
forth in the Registration Statement or as disclosed in writing to the
Underwriters.
6
(t) Neither the Company nor either Advisor, nor to the knowledge of the
Company or either Advisor, none of their respective affiliates, has
taken or may take, directly or indirectly, any action designed to cause
or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price
of the Common Shares to facilitate the sale or resale of the Shares.
(u) The Company is duly registered under the 1940 Act as a closed-end,
diversified management investment company and the 1940 Act Notification
has been duly filed with the Commission, and, at the time of filing
thereof and at the time of filing any amendment or supplement thereto,
conformed in all material respects with all applicable provisions of the
1940 Act and the Rules and Regulations under the ▇▇▇▇ ▇▇▇. The Company
has not received any notice from the Commission pursuant to Section 8(e)
of the 1940 Act with respect to the 1940 Act Notification or the
Registration Statement (or any amendment or supplement to either of
them).
(v) The Company carries a fidelity bond sufficient to satisfy the
requirements of Rule 17g-1 under the 1940 Act.
(w) Other than as contemplated by this Agreement, the Company has not
incurred any liability for any finder's or broker's fee, or agent's
commission in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
(x) The Company has not sent or received any notice indicating the
termination of or intention to terminate any of the contracts or
agreements referred to or described in the Registration Statement or the
Prospectus, or filed as an exhibit to the Registration Statement, and no
such termination has been threatened by the Company or any other party
to any such contract or agreement. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto by the 1933 Act, the 1940
Act or by the Rules and Regulations which have not been so described and
filed as required and such contracts and documents as are summarized in
the Registration Statement or the Prospectus are fairly summarized in
all material respects.
(y) The Company owns, licenses, or otherwise has rights in all United
States and foreign patents, trademarks, service marks, tradenames,
copyrights, trade secrets and other proprietary rights necessary for the
conduct of its business as currently carried on and as proposed to be
carried on as described in the Registration Statement and the Prospectus
(collectively and together with any applications or registrations for
the foregoing, the "Intellectual Property"). Except as specifically
described in the Registration Statement or the Prospectus, (i) no third
parties have obtained rights to any such Intellectual Property from the
Company, other than licenses granted in the ordinary course and those
that would not have a Material Adverse Effect; (ii) to the Company's
knowledge, there is no infringement or misappropriation by the Company
or third parties of any such Intellectual Property; (iii) there is no
pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others challenging the Company's rights in or to
any such Intellectual Property, and the Company is unaware of any facts
which would form a basis for any such claim; and (iv) there is no
pending or, to the Company's knowledge, threatened action, suit,
7
proceeding or claim by others challenging the validity, enforceability,
or scope of any such Intellectual Property, and the Company is unaware
of any facts which would form a basis for any such claim. None of the
technology employed by the Company has been obtained or, to the
Company's knowledge, is being used by the Company in violation of the
rights of any person or third party. The Company knows of no
infringement or misappropriation by others of Intellectual Property.
(z) The conduct of business by the Company complies, and at all times
has complied, in all material respects with federal, state, local and
foreign laws, statutes, ordinances, rules, regulations, decrees, orders,
Permits and other similar items ("Laws") applicable to its business,
including, without limitation, licensing and certification Laws covering
any aspect of the business of the Company. The Company has not received
any notification asserting, nor does it have knowledge of, any present
or past failure to comply with or violation of any such Laws.
(aa) The information contained in the Registration Statement and the
Prospectus regarding the Company's expectations, plans and intentions,
and any other information that constitutes "forward-looking" information
within the meaning of the Securities Act and the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), were made by the Company on a
reasonable basis and reflect the Company's good faith belief and/or
estimate of the matters described therein. To the extent estimated or
projected, those estimates or projections set forth in the tables under
the "Summary of Fund Expenses" section of the Prospectus or any
Preliminary Prospectus have been prepared in accordance with the
requirements of Form N-2 and are reasonably believed to be attainable in
all material respects and are reasonably based.
(bb) Any certificate signed by any officer of the Company and delivered
to the Representatives or counsel for the Underwriters in connection
with the offering of the Shares contemplated hereby shall be deemed a
representation and warranty by the Company to each Underwriter and shall
be deemed to be a part of this Section 1 and incorporated herein by this
reference.
(cc) The Company has taken all required action under the Acts and the
Rules and Regulations to make the public offering and consummate the
sale of the Shares as contemplated by this Agreement.
(dd) All advertising, sales literature, promotional materials or any
other materials or information (including "prospectus wrappers", "broker
kits" and any roadshow or investor presentations), whether in oral,
printed or electronic form, authorized, provided or prepared by the
Company or either Advisor in connection with the offering and sale of
the Shares (collectively, the "Marketing Materials") complied and comply
in all material respects with the applicable requirements of the 1933
Act, the 1940 Act, the Rules and Regulations and the rules and
interpretations of the NASD and if required to be filed with the NASD
under the NASD's conduct rules were so filed. No Marketing Materials
contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
Company and the Advisors make no representations or warranties as to
information contained in or omitted from the Marketing Materials, in
8
reliance upon, and in conformity with, written information furnished to
the Company or the Advisors by or on behalf of any Underwriter through
the representative, specifically for use in the preperation thereof. Any
advertisement or sales material authorized by the Company for use in the
public offering of the Shares pursuant to Rule 482 complied with the
requirements of Rule 482 of the Rules and Regulations under the 1933
Act.
(ee) This Agreement and each of the Company Agreements comply in all
material respects with all applicable provisions of the 1940 Act, the
Rules and Regulations thereunder, the Investment Advisers Act of 1940,
as amended (the "Advisers Act"), and the rules and regulations adopted
by the Commission under the Advisers Act (the "Advisers Act Rules and
Regulations").
(ff) The Company has elected or will elect to be treated as a regulated
investment company under Subchapter M of the Code effective for its
taxable year ending October 31, 2005, and intends and expects to qualify
as a regulated investment company under Subchapter M of the Code for the
current and all future taxable years. The Company will distribute timely
all of its investment company taxable income and net capital gain so as
to avoid any corporate income tax, and the Company has taken and will
take all actions and has omitted and will omit to take all actions as
are necessary to be consistent with the foregoing, including, but not
limited to, with respect to the investment of the proceeds of the
offering of Shares contemplated by this Agreement.
(gg) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no
trustee or officer of the Company or either Advisor is an "interested
person" (as defined in the ▇▇▇▇ ▇▇▇) of the Company or either Advisor or
an "affiliated person" (as defined in the ▇▇▇▇ ▇▇▇) of any Underwriter.
2. REPRESENTATIONS AND WARRANTIES OF THE INVESTMENT ADVISOR.
The Investment Advisor represents and warrants to each of the
Underwriters as of the date hereof, as of the Closing Date and each
Option Closing Date, if any, as follows:
(a) The Investment Advisor has been duly organized and is validly
existing as a limited partnership under the laws of the State of
Illinois, with full limited partnership power and authority to own or
lease its properties and conduct its business as described in the
Registration Statement. The Investment Advisor is duly qualified to
transact business and is in good standing in all jurisdictions in which
the conduct of its business requires such qualification; except where
the failure to be so qualified or to be in good standing would not have
a Material Adverse Effect.
(b) Each Advisor Agreement has been duly authorized, executed and
delivered by the Investment Advisor, and constitutes a valid, legal, and
binding obligation of the Investment Advisor, enforceable in accordance
with its terms, except as rights to indemnity hereunder may be limited
by federal or state securities laws. The Investment Advisor has full
power and authority to enter into each Advisor Agreement.
9
(c) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Investment Advisor, threatened against the Investment
Advisor before any court or administrative agency or otherwise which if
determined adversely to the Investment Advisor might have a Material
Adverse Effect or prevent the consummation of the transactions
contemplated hereby, except as set forth in the Registration Statement
and the Prospectus.
(d) Neither the Investment Advisor, nor to the Investment Advisor's
knowledge, any of its affiliates, has taken or may take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common Shares to
facilitate the sale or resale of the Shares.
(e) The Investment Advisor carries, or is covered by, insurance,
including, at a minimum, errors and omissions insurance, in such amounts
and covering such risks as is adequate for the conduct of its businesses
and the value of its properties and as is customary for companies
engaged in similar industries. All policies of insurance insuring the
Investment Advisor or its respective businesses, assets, employees,
partners, officers and directors are in full force and effect, and the
Investment Advisor is in compliance with the terms of such policies in
all material respects. There are no claims by the Investment Advisor
under any such policy or instrument as to which an insurance company is
denying liability or defending under a reservation of rights clause.
(f) Other than as contemplated by this Agreement, the Investment Advisor
has not incurred any liability for any finder's or broker's fee, or
agent's commission in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
(g) The Investment Advisor is not, and with the giving of notice or
lapse of time or both, will not be, in violation of or in default under
its Partnership Agreement or under any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or by
which it, or any of its properties, is bound and which default has had
or is reasonably likely to have a Material Adverse Effect. The execution
and delivery of each Advisor Agreement and the consummation of the
transactions herein and therein contemplated and the fulfillment of the
terms hereof will not (i) conflict with or otherwise violate the terms
and provisions of the Partnership Agreement of the Investment Advisor or
(ii) conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any contract, indenture,
mortgage, deed of trust or other agreement or instrument to which the
Investment Advisor is a party or any order, rule or regulation
applicable to the Investment Advisor of any court or of any regulatory
body or administrative agency or other governmental body having
jurisdiction, which breach or default has had or is reasonably likely to
have a Material Adverse Effect.
(h) The Investment Advisor is duly registered as an investment adviser
under the Advisers Act and is not prohibited by the Advisers Act, the
1940 Act, the Advisers Act Rules and Regulations or the Rules and
Regulations under the 1940 Act from acting under the Advisor Agreements
as contemplated by the Registration Statement and the Prospectus (or any
amendment or supplement thereto).
10
(i) The Investment Advisor has the financial resources available to it
necessary for the performance of its services and obligations as
contemplated in the Registration Statement and the Prospectus (or any
amendment or supplement thereto) and under this Agreement and the
Advisor Agreements.
(j) The description of the Investment Advisor, its business, and the
statements attributable to the Investment Advisor, in the Registration
Statement and the Prospectus (and any amendment or supplement thereto)
or any Preliminary Prospectus complied and comply in all material
respects with the provisions of the Acts, the Advisers Act, the Rules
and Regulations and the Advisers Act Rules and Regulations and did not
and will not contain an untrue statement of a material fact necessary to
make the statements therein (in the case of a prospectus, in light of
the circumstances under which they were made) not misleading.
(k) Since the date as of which information is given in the Registration
Statement and the Prospectus through the date hereof, and except as may
otherwise be disclosed in the Prospectus, there have been no
transactions entered into by the Investment Advisor which are material
to the Investment Advisor other than in the ordinary course of its
business.
(l) Each Advisor Agreement complies in all material respects with all
applicable provisions of the 1940 Act, the Rules and Regulations under
the 1940 Act, the Advisers Act and the Advisers Act Rules and
Regulations.
3. REPRESENTATIONS AND WARRANTIES OF THE SUB-ADVISOR.
The Sub-Advisor represents and warrants to each of the
Underwriters as of the date hereof, as of the Closing Date and each
Option Closing Date, if any, as follows:
(a) The Sub-Advisor has been duly organized and is validly existing as a
corporation under the laws of the State of Kentucky, with full corporate
power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. The Sub-Advisor is
duly qualified to transact business and is in good standing in all
jurisdictions in which the conduct of its business requires such
qualification; except where the failure to be so qualified or to be in
good standing would not have a Material Adverse Effect.
(b) Each Advisor Agreement to which the Sub-Advisor is a party has been
duly authorized, executed and delivered by the Sub-Advisor, and
constitutes a valid, legal, and binding obligation of the Sub-Advisor,
enforceable in accordance with its terms, except as rights to indemnity
hereunder may be limited by federal or state securities laws. The
Sub-Advisor has full power and authority to enter into each Advisor
Agreement to which the Sub-Advisor is a party.
(c) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Sub-Advisor, threatened against the Sub-Advisor before
any court or administrative agency or otherwise which if determined
adversely to the Sub-Advisor might have a Material Adverse Effect or
prevent the consummation of the transactions contemplated hereby, except
as set forth in the Registration Statement and the Prospectus.
11
(d) Neither the Sub-Advisor, nor to the Sub-Advisor's knowledge, any of
its affiliates, has taken or may take, directly or indirectly, any
action designed to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Common Shares to facilitate the sale or
resale of the Shares.
(e) The Sub-Advisor carries, or is covered by, insurance, including, at
a minimum, errors and omissions insurance, in such amounts and covering
such risks as is adequate for the conduct of its businesses and the
value of its properties and as is customary for companies engaged in
similar industries. All policies of insurance insuring the Sub-Advisor
or its respective businesses, assets, employees, officers and directors
are in full force and effect, and the Sub-Advisor is in compliance with
the terms of such policies in all material respects. There are no claims
by the Sub-Advisor under any such policy or instrument as to which an
insurance company is denying liability or defending under a reservation
of rights clause.
(f) Other than as contemplated by this Agreement, the Sub-Advisor has
not incurred any liability for any finder's or broker's fee, or agent's
commission in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
(g) The Sub-Advisor is not, and with the giving of notice or lapse of
time or both, will not be, in violation of or in default under its
Articles of Incorporation or by-laws or under any agreement, lease,
contract, indenture or other instrument or obligation to which it is a
party or by which it, or any of its properties, is bound and which
default has had or is reasonably likely to have a Material Adverse
Effect. The execution and delivery of each Advisor Agreement to which
the Sub-Advisor is a party and the consummation of the transactions
therein contemplated and the fulfillment of the terms hereof will not
(i) conflict with or otherwise violate the terms and provisions of the
Articles of Incorporation of the Sub-Advisor or (ii) conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, any contract, indenture, mortgage, deed of trust or other
agreement or instrument to which the Sub-Advisor is a party or any
order, rule or regulation applicable to the Sub-Advisor of any court or
of any regulatory body or administrative agency or other governmental
body having jurisdiction, which breach or default has had or is
reasonably likely to have a Material Adverse Effect.
(h) The Sub-Advisor is duly registered as an investment adviser under
the Advisers Act and is not prohibited by the Advisers Act, the 1940
Act, the Advisers Act Rules and Regulations or the Rules and Regulations
under the 1940 Act from acting under the Advisor Agreements (to which
such Sub-Advisor is a party) as contemplated by the Registration
Statement and the Prospectus (or any amendment or supplement thereto).
(i) The Sub-Advisor has the financial resources available to it
necessary for the performance of its services and obligations as
contemplated in the Registration Statement and the Prospectus (or any
amendment or supplement thereto) and under this Agreement and the
Advisor Agreements (to which the Sub-Advisor is a party).
(j) The description of the Sub-Advisor, its business, and the statements
attributable to the Sub-Advisor, in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) or any Preliminary
Prospectus complied and comply in all material respects with the
12
provisions of the Acts, the Advisers Act, the Rules and Regulations and
the Advisers Act Rules and Regulations and did not and will not contain
an untrue statement of a material fact necessary to make the statements
therein (in the case of a prospectus, in light of the circumstances
under which they were made) not misleading.
(k) Since the date as of which information is given in the Registration
Statement and the Prospectus through the date hereof, and except as may
otherwise be disclosed in the Prospectus, there have been no
transactions entered into by the Sub-Advisor which are material to the
Sub-Advisor and the transactions contemplated hereby other than in the
ordinary course of its business.
(l) Each Advisor Agreement to which the Sub-Advisor is a party complies
in all material respects with all applicable provisions of the 1940 Act,
the Rules and Regulations under the 1940 Act, the Advisers Act and the
Advisers Act Rules and Regulations.
4. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants herein
contained, and subject to the conditions herein set forth, the Company
agrees to sell to the Underwriters and each Underwriter agrees,
severally and not jointly, to purchase, at a price of $__.___ per share,
the number of Firm Shares set forth opposite the name of each
Underwriter in Schedule I hereof, subject to adjustments in accordance
with Section 11 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made in
New York Clearing House funds by federal (same day) funds against
delivery of the Firm Shares to the Representatives for the several
accounts of the Underwriters. Such payment and delivery are to be made
through Full Fast Delivery through the facilities of the Depository
Trust Company, New York, New York at 9:00 a.m., New York time, on the
third business day after the date of this Agreement or at such other
time and date not later than five business days thereafter as you and
the Company shall agree upon, such time and date being herein referred
to as the "Closing Date." As used herein, "business day" means a day on
which the New York Stock Exchange is open for trading and on which banks
in New York are open for business and are not permitted by law or
executive order to be closed. The Firm Shares will be delivered in such
denominations and in such registrations as the Representatives request
in writing not later than the second full business day prior to the
Closing Date.
(c) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters
to purchase the Option Shares at the price per share as set forth in the
first paragraph of this Section. The option granted hereby may be
exercised in whole or in part by giving written notice (i) at any time
before the Closing Date and (ii) only once thereafter within 45 days
after the date of this Agreement, by RBC Capital Markets Corporation, on
behalf of the several Underwriters, to the Company setting forth the
number of Option Shares as to which the several Underwriters are
exercising the option, the names and denominations in which the Option
Shares are to be registered and the time and date at which such
certificates are to be delivered. The time and date at which the Option
Shares are to be delivered shall be determined by RBC Capital Markets
Corporation but shall not be earlier than three nor later than 10 full
13
business days after the exercise of such option, nor in any event prior
to the Closing Date (such time and date being herein referred to as the
"Option Closing Date"). If the date of exercise of the option is three
or more days before the Closing Date, the notice of exercise shall set
the Closing Date as the Option Closing Date. The number of Option Shares
to be purchased by each Underwriter shall be in the same proportion to
the total number of Option Shares being purchased as the number of Firm
Shares being purchased by such Underwriter bears to the total number of
Firm Shares, adjusted by you in such manner as to avoid fractional
shares. The option with respect to the Option Shares granted hereunder
may be exercised only to cover over-allotments in the sale of the Firm
Shares by the Underwriters. RBC Capital Markets Corporation, on behalf
of the several Underwriters, may cancel such option at any time prior to
its expiration by giving written notice of such cancellation to the
Company. To the extent, if any, that the option is exercised, payment
for the Option Shares shall be made on the Option Closing Date in
federal (same day) funds through the facilities of the Depository Trust
Company in New York, New York drawn to the order of the Company.
5. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a
public offering of the Firm Shares as soon as the Representative deems
it advisable to do so. The Firm Shares are to be initially offered to
the public at the initial public offering price set forth in the
Prospectus. The Representatives may from time to time thereafter change
the public offering price and other selling terms. To the extent, if at
all, that any Option Shares are purchased pursuant to Section 4 hereof,
the Underwriters will offer them to the public on the foregoing terms.
It is further understood that you will act as the
Representative for the Underwriters in the offering and sale of the
Shares in accordance with a Master Agreement Among Underwriters entered
into by you and the several other Underwriters.
6. COVENANTS OF THE COMPANY AND THE ADVISORS.
(a) The Company and the Investment Advisor, jointly and severally,
covenant and agree with the several Underwriters and, with respect to
Sections 6(a)(ii), 6(a)(vii), 6(a)(x) and 6(a)(xi), the Company the
Investment Advisor and the Sub-Advisor, jointly and severally, convenant
and agree with the several Underwriters, that:
(i) The Company will (A) use its best efforts to cause the Registration
Statement to become effective or, if the procedure in Rule 430A of the
Rules and Regulations under the 1933 Act is followed, to prepare and
timely file with the Commission under Rule 497 of the Rules and
Regulations under the 1933 Act a Prospectus in a form approved by the
Representative containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule 430A of
the Rules and Regulations under the 1933 Act; (B) not file any amendment
to the Registration Statement or supplement to the Prospectus of which
the Representative shall not previously have been advised and furnished
with a copy or to which the Representative shall have reasonably
objected in writing or which is not in compliance with the Rules and
Regulations; and (C) file on a timely basis all reports and any
definitive proxy or information statements required to be filed by the
14
Company with the Commission subsequent to the date of the Prospectus and
prior to the termination of the offering of the Shares by the
Underwriters.
(ii) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
(iii) The Company will advise the Representative promptly (A) when the
Registration Statement or any post-effective amendment thereto shall
have become effective; (B) of receipt of any comments from the
Commission; (C) of any request of the Commission for amendment of the
Registration Statement or for supplementation of the Prospectus or for
any additional information; and (D) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or the use of the Prospectus or of the institution of any
proceedings for that purpose. The Company will use its best efforts to
prevent the issuance of any such stop order preventing or suspending the
use of the Prospectus and to obtain as soon as possible the lifting
thereof, if issued.
(iv) The Company will cooperate with the Representative in endeavoring
to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representative may reasonably have designated in
writing and will make such applications, file such documents, and
furnish such information as may be reasonably required for that purpose,
provided the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such a
consent. The Company will, from time to time, prepare and file such
statements, reports, and other documents, as are or may be required to
continue such qualifications in effect for so long a period as the
Representative may reasonably request for distribution of the Shares.
(v) The Company will deliver to, or upon the order of, the
Representative, from time to time, as many copies of any Preliminary
Prospectus as the Representative may reasonably request. The Company
will deliver to, or upon the order of, the Representative during the
period when delivery of a Prospectus is required under the Acts, as many
copies of the Prospectus in final form, or as thereafter amended or
supplemented, as the Representative may reasonably request. The Company
will deliver to the Representative such number of copies of the
Registration Statement (including such number of copies of the exhibits
filed therewith that may reasonably be requested) and of all amendments
thereto, as the Representative may reasonably request.
(vi) The Company will comply with the Acts and the Rules and
Regulations, and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the
distribution of the Shares as contemplated in this Agreement and the
Prospectus. If during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer, any event shall occur
as a result of which, in the judgment of the Company or in the
reasonable opinion of the Underwriters, it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in
the light of the circumstances existing at the time the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary at any
time to amend or supplement the Prospectus to comply with any law, the
15
Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will
not, in the light of the circumstances when it is so delivered, be
misleading, or so that the Prospectus will comply with the law.
(vii) The Company will make generally available to its security holders,
as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an
earning statement (which need not be audited) in reasonable detail,
covering a period of at least 12 consecutive months beginning after the
effective date of the Registration Statement, which earning statement
shall satisfy the requirements of Section 11(a) of the 1933 Act and Rule
158 of the Rules and Regulations thereunder and will advise you in
writing when such statement has been so made available.
(viii) No offering, sale, short sale or other disposition of any Common
Shares or other securities convertible into or exchangeable or
exercisable for Common Shares or derivative of Common Shares (or
agreement for such) will be made for a period of 180 days after the date
of this Agreement, directly or indirectly, by the Company otherwise than
hereunder or with the prior written consent of RBC Capital Markets
Corporation.
(ix) The Company will use its best efforts to list, subject to notice of
issuance, the Shares on the New York Stock Exchange.
(x) The Company shall invest or otherwise use the net proceeds of its
sale of the Shares as described under the heading "Use of Proceeds" in
the Prospectus in such a manner as to comply with the investment
restrictions and the 1940 Act and shall report with the Commission with
respect to the sale of the Shares and the application of the proceeds
therefrom as may be required in accordance with Rule 463 under the 1933
Act.
(xi) The Company has elected or will elect to be treated as a regulated
investment company under Subchapter M of the Code effective for its
taxable year ending October 31, 2005, will distribute timely all of its
investment company taxable income and net capital gain so as to avoid
any corporate income tax, and will take all actions and omit to take all
actions as are necessary to qualify as a regulated investment company
under Subchapter M of the Code for the current and all future taxable
years and to be consistent otherwise with the foregoing, including, but
not limited to, with respect to the investment of the proceeds of the
offering of Shares contemplated by this Agreement.
(xii) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of organization of the Company, a registrar for the
Common Shares.
7. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to
the performance of the obligations of the Company under this Agreement,
including, without limiting the generality of the foregoing, the
following: accounting fees of the Company; the fees and disbursements of
counsel for the Company; the cost of printing and delivering to, or as
requested by, the Underwriters copies of the Registration Statement,
Preliminary Prospectuses, the Prospectus, the Underwriters' Selling
16
Memorandum and the Underwriters' Invitation Letter, if any, the listing
application of the New York Stock Exchange, the Blue Sky Survey and any
supplements or amendments thereto; the filing fees of the Commission;
the filing fees and expenses (including legal fees and disbursements)
incident to securing any required review by the NASD of the terms of the
sale of the Shares, estimated not to exceed $25,000; the listing fee of
the New York Stock Exchange; and the expenses, including the fees and
disbursements of counsel for the Underwriters up to a maximum amount of
$3,000, incurred in connection with the qualification of the Shares
under state securities or Blue Sky laws. The Investment Advisor has
agreed to pay (i) all organizational expenses of the Fund, and (ii)
offering costs (other than sales load, but including the partial
reimbursement of expenses described above) of the Fund that exceed $.04
per Fund Share. The Sub-Advisor has agreed to reimburse the Investment
Advisor for one-half of such organizational expenses and offering costs
of the Fund that exceed $.04 per Fund Share.
The Company shall not, however, be required to pay for any of
the Underwriters' expenses (other than those related to qualification
under NASD regulation and state securities or Blue Sky laws) except
that, if this Agreement shall not be consummated because the conditions
in Section 8 hereof are not satisfied, or because this Agreement is
terminated by the Representatives pursuant to Section 13 hereof, or by
reason of any failure, refusal or inability on the part of the Company
to perform any undertaking or satisfy any condition of this Agreement or
to comply with any of the terms hereof on its part to be performed,
unless such failure to satisfy said condition or to comply with said
terms be due to the default or omission of any Underwriter, then the
Company shall reimburse the several Underwriters for reasonable
out-of-pocket expenses, including all fees and disbursements of counsel,
reasonably incurred in connection with investigating, marketing and
proposing to market the Shares or in contemplation of performing their
obligations hereunder; but the Company shall not in any event be liable
to any of the several Underwriters for damages on account of loss of
anticipated profits from the sale by them of the Shares.
8. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the
Firm Shares on the Closing Date and the Option Shares, if any, on the
Option Closing Date are subject to the accuracy, as of the Closing Date
and the Option Closing Date, if any, of the representations and
warranties of the Company and the Advisors contained herein, and to the
performance by the Company and the Advisors of their covenants and
obligations hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments thereto
shall have become effective and any and all filings required by Rule 497
and Rule 430A of the Rules and Regulations shall have been made, and any
request of the Commission for additional information (to be included in
the Registration Statement or otherwise) shall have been disclosed to
the Representatives and complied with to their reasonable satisfaction.
No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been taken or, to the knowledge
of the Company, shall be contemplated by the Commission and no
injunction, restraining order, or order of any nature by a federal or
state court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance of the Shares.
17
(b) The Representatives shall have received on the Closing Date and the
Option Closing Date, if any, the opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP,
counsel for the Company, dated the Closing Date or the Option Closing
Date, if any, addressed to the Underwriters (and stating that it may be
relied upon by ▇▇▇▇▇▇▇ Procter LLP, counsel for the Underwriters) to the
effect that:
(i) The Company has been duly formed and is validly existing under the
laws of the Commonwealth of Massachusetts as a trust with transferable
shares of the type commonly called a Massachusetts business trust. The
Declaration of Trust confers upon the Trustees named therein, and their
successors in trust, power and authority to own or lease its properties
and conduct its business as described in the Registration Statement; and
the Company is duly qualified to transact business in all jurisdictions
in which the conduct of its business requires such qualification, or in
which the failure to qualify would have a Material Adverse Effect.
(ii) The Company has authorized and outstanding shares of beneficial
interest as set forth under the caption "Description of Shares" in the
Prospectus; all of the outstanding Common Shares have been duly
authorized and validly issued and are fully paid and non-assessable
(except as set forth in the Registration Statement) and have been
offered and sold in compliance with all laws (including, without
limitation, federal and state securities laws); all of the Shares
conform in all material respects to the description thereof contained in
the Prospectus; the Common Shares, including the Option Shares, if any,
to be sold by the Company pursuant to this Agreement have been duly
authorized and will be validly issued, fully paid and non-assessable
(except as set forth in the Registration Statement) when issued and paid
for as contemplated by this Agreement; and no preemptive rights of
shareholders exist with respect to any of the Common Shares or the issue
or sale of the Shares pursuant to the Company's Declaration of Trust and
By-Laws or any other agreement or instrument known to such counsel.
(iii) Except as described in or contemplated by the Prospectus, to the
knowledge of such counsel, there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of beneficial interest of the
Company and there are no outstanding or authorized options, warrants or
rights of any character obligating the Company to issue any of its
shares of beneficial interest or any securities convertible or
exchangeable into or evidencing the right to purchase or subscribe for
any such shares of beneficial interest; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any
securities of the Company or any other person has the right, contractual
or otherwise, which has not been satisfied or effectively waived, to
cause the Company to sell or otherwise issue to them, or to permit them
to underwrite the sale of, any of the Shares or the right to have any
Common Shares or other securities of the Company included in the
Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Acts of any
Common Shares or other securities of the Company.
(iv) The Registration Statement has become effective under the Acts and,
to the best knowledge of such counsel, no stop order proceedings with
respect thereto have been instituted or are pending or threatened under
the Acts.
18
(v) The Registration Statement, at the time it became effective under
the Acts, the Prospectus, as of its date, and each amendment or
supplement thereto, as of its respective date, complied as to form in
all material respects with the requirements of the Acts and the
applicable rules and regulations thereunder (except that such counsel
need express no opinion as to the financial statements, related
schedules and other financial data included or incorporated by reference
therein).
(vi) The statements under the captions "Management of the Fund -
Investment Management Agreement," "Management of the Fund - Investment
Advisor" "Management of the Fund - Sub-Advisor" "Dividend Reinvestment
Plan," "Description of Shares" and "Certain Provisions in the
Declaration of Trust" in the Prospectus, insofar as such statements
constitute a summary of documents referred to therein or matters of law,
fairly summarize in all material respects the information called for
with respect to such documents and matters by Form N-2.
(vii) The statements made in the Registration Statement and the
Prospectus (and any amendment or supplement thereto through the date of
the opinion) under the caption "Tax Matters" have been reviewed by such
counsel and to the extent they describe or summarize tax laws, legal
conclusions, doctrines or practices of the United States, present a fair
and accurate description or summary thereof as of the date of the
opinion.
(viii) This Agreement and each Company Agreement has been duly
authorized, executed and delivered by the Company and complies in all
material respects with all applicable provisions of the 1940 Act, the
Advisers Act, the Rules and Regulations under the 1940 Act and the
Advisers Act Rules and Regulations.
(ix) Such counsel does not know of any contracts or documents required
to be filed as exhibits to the Registration Statement or described in
the Registration Statement or the Prospectus which are not so filed or
described as required, and such contracts and documents as are
summarized in the Registration Statement or the Prospectus are fairly
summarized in all material respects.
(x) Such counsel knows of no material legal or governmental proceedings
pending or threatened against the Company except as set forth in the
Prospectus.
(xi) The execution and delivery of this Agreement and the Company
Agreements (to which the Company is a party) and the consummation of the
transactions herein contemplated do not and will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, the Declaration of Trust or By-Laws of the Company, or
any agreement or instrument known to such counsel to which the Company
is a party or by which the Company may be bound.
(xii) The Company Agreements, including this Agreement, have each been
duly authorized by all requisite action on the part of the Company,
executed and delivered by the Company, as of the dates noted therein.
Assuming due authorization, execution and delivery by the other parties
thereto, each such agreement constitutes a valid and binding agreement
of the Company, enforceable in accordance with its terms, except as
19
rights to indemnity and contribution hereunder may be limited by federal
or state securities laws and except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally.
(xiii) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and
delivery of this Agreement and the consummation of the transactions
herein contemplated (other than as may be required by the NASD or as
required by state securities and Blue Sky laws as to which such counsel
need express no opinion) except such as have been obtained or made,
specifying the same.
(xiv) The Company is duly registered under the 1940 Act as a closed-end,
diversified management investment company and the 1940 Act Notification
has been duly filed with the Commission, and, at the time of filing
thereof and at the time of filing any amendment or supplement thereto,
conformed in all material respects with all applicable provisions of the
1940 Act and the Rules and Regulations thereunder and, to such counsel's
knowledge, the Company has not received any notice from the Commission
pursuant to Section 8(e) of the 1940 Act with respect to the 1940 Act
Notification or the Registration Statement (or any amendment or
supplement to either of them).
The opinion in paragraph 8(b)(ii) will be subject to the
qualification that the shareholders of a Massachusetts business trust
may, under some circumstances, be subject to assessment at the
insistence of creditors to pay the obligations of such trust in the
event that its assets are insufficient for the purpose.
(c) The Representatives shall have received on the Closing Date and the
Option Closing Date, if any, the opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP,
counsel for the Investment Advisor, dated the Closing Date or the Option
Closing Date, if any, addressed to the Underwriters (and stating that it
may be relied upon by ▇▇▇▇▇▇▇ Procter LLP, counsel for the Underwriters)
to the effect that:
(i) The Investment Advisor has been duly organized and is validly
existing as a limited partnership under the laws of the State of
Illinois with limited partnership power and authority to own or lease
its properties and conduct its business as described in the Registration
Statement; and the Investment Advisor is duly qualified to transact
business in all jurisdictions in which the conduct of its business
requires such qualification, except where the failure to be so qualified
or to be in good standing would not have a Material Adverse Effect.
(ii) The Investment Advisor is duly registered as an investment adviser
under the Advisers Act and is not prohibited by the Advisers Act, the
1940 Act, the Advisers Act Rules and Regulations or the Rules and
Regulations under the 1940 Act from acting under the Company Agreements
(to which the Investment Advisor is a party) as contemplated by the
Registration Statement and the Prospectus (or any amendment or
supplement thereto).
(iii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Investment Advisor except
as set forth in the Prospectus.
20
(iv) The execution and delivery of each Advisor Agreement and the
consummation of the transactions contemplated therein do not and will
not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, the partnership agreement
of the Investment Advisor, or any agreement or instrument known to such
counsel to which the Investment Advisor is a party or by which the
Investment Advisor may be bound.
(v) Each Advisor Agreement has been duly authorized, executed and
delivered by the Investment Advisor and complies in all material
respects with all applicable provisions of the 1940 Act, the Advisers
Act, the Rules and Regulations under the 1940 Act and the Advisers Act
Rules and Regulations, and each Advisor Agreement constitutes a valid
and binding obligation of the Investment Advisor, enforceable in
accordance with its terms, except as rights to indemnity and
contribution hereunder may be limited by federal or state securities
laws and except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally.
(vi) The description of the Investment Advisor and its business, and the
statements attributable to the Investment Advisor, in the Registration
Statement and the Prospectus (and any amendment or supplement thereto)
complied and comply in all material respects with the provisions of the
Acts, the Advisers Act, the Rules and Regulations and the Advisers Act
Rules and Regulations.
(d) The Representatives shall have received on the Closing Date and the
Option Closing Date, if any, the opinion of JJB ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Inc., counsel for the Investment Sub-Advisor, dated the Closing Date or
the Option Closing Date, if any, addressed to the Underwriters (and
stating that it may be relied upon by ▇▇▇▇▇▇▇ Procter LLP, counsel for
the Underwriters) to the effect that:
(i) The Sub-Advisor has been duly organized and is validly existing as a
corporation under the laws of the State of Kentucky with corporate power
and authority to own or lease its properties and conduct its business as
described in the Registration Statement; and the Sub-Advisor is duly
qualified to transact business in all jurisdictions in which the conduct
of its business requires such qualification, except where the failure to
be so qualified or to be in good standing would not have a Material
Adverse Effect.
(ii) The Sub-Advisor is duly registered as an investment adviser under
the Advisers Act and is not prohibited by the Advisers Act, the 1940
Act, the Advisers Act Rules and Regulations or the Rules and Regulations
under the 1940 Act from acting under the Company Agreements (to which
the Advisor is a party) as contemplated by the Registration Statement
and the Prospectus (or any amendment or supplement thereto).
(iii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Sub-Advisor except as set
forth in the Prospectus.
(iv) The execution and delivery of each Advisor Agreement to which the
Sub-Advisor is a party and the consummation of the transactions
contemplated therein do not and will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, the [certificate of incorporation or by-laws] of the Sub-Advisor,
21
or any agreement or instrument known to such counsel to which the
Sub-Advisor is a party or by which the Sub-Advisor may be bound.
(v) Each Advisor Agreement to which the Sub-Advisor is a party has been
duly authorized, executed and delivered by the Sub-Advisor and complies
in all material respects with all applicable provisions of the 1940 Act,
the Advisers Act, the Rules and Regulations under the 1940 Act and the
Advisers Act Rules and Regulations, and each such agreement constitutes
a valid and binding obligation of the Sub-Advisor, enforceable in
accordance with its terms, except as rights to indemnity and
contribution hereunder may be limited by federal or state securities
laws and except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally.
(vi) The description of the Sub-Advisor and its business, and the
statements attributable to the Sub-Advisor, in the Registration
Statement and the Prospectus (and any amendment or supplement thereto)
complied and comply in all material respects with the provisions of the
Acts, the Advisers Act, the Rules and Regulations and the Advisers Act
Rules and Regulations.
In addition to the matters set forth in Subsection (b), (c) and
(d) of this Section, the opinions delivered pursuant to Subsection (b),
(c) and (d) of this Section shall also include a statement to the effect
that nothing has come to the attention of such counsel which leads them
to believe that (i) the Registration Statement, at the time it became
effective under the Acts (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the ▇▇▇▇ ▇▇▇) and as of
the Closing Date or the Option Closing Date, if any, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Prospectus, or any supplement
thereto, on the date it was filed pursuant to the Rules and Regulations
and as of the Closing Date or the Option Closing Date, if any, contained
an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that
such counsel need express no view as to financial statements, related
schedules and other financial data included or incorporated by reference
therein). With respect to such statement, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP (with
respect to the Fund and the Investment Advisor) and [_____] (with
respect to the Sub-Advisor) may state that their belief is based upon
the procedures set forth therein, but is without independent check and
verification.
(e) The Representatives shall have received from ▇▇▇▇▇▇▇ Procter LLP,
counsel for the Underwriters, an opinion dated the Closing Date and the
Option Closing Date, if any, with respect to matters as the
Representative reasonably may request, and such counsel shall have
received such papers and information as they request to enable them to
pass upon such matters.
(f) You shall have received, on each of the dates hereof, the Closing
Date and the Option Closing Date, if any, a letter dated the date
hereof, the Closing Date or the Option Closing Date, if any, in form and
substance satisfactory to you, of Deloitte & Touche LLP confirming that
they are an independent registered public accounting firm within the
22
meaning of the Acts and the applicable published Rules and Regulations
thereunder and stating that in their opinion the financial statements
and schedules examined by them and included or incorporated by reference
in the Registration Statement comply in form in all material respects
with the applicable accounting requirements of the Acts and the related
published Rules and Regulations; and containing such other statements
and information as is ordinarily included in accountants' "comfort
letters" to Underwriters with respect to the financial statements and
certain financial and statistical information contained or incorporated
by reference in the Registration Statement and the Prospectus.
(g) The Representatives shall have received on the Closing Date and the
Option Closing Date, if any, a certificate or certificates of the
Company's Chief Executive Officer and Chief Financial Officer to the
effect that, as of the Closing Date or the Option Closing Date, if any,
each of them severally represents as follows:
(i) The Registration Statement has become effective under the 1933 Act
and 1940 Act and no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such
purpose have been taken or are, to their knowledge, contemplated by the
Commission;
(ii) The representations and warranties of the Company contained in
Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, if any;
(iii) All filings required to have been made pursuant to Rules 497 or
430A under the 1933 Act have been made;
(iv) They have carefully examined the Registration Statement and the
Prospectus and, in their opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and
Prospectus did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, and since the effective date of the Registration Statement,
no event has occurred which should have been set forth in a supplement
to or an amendment of the Prospectus which has not been so set forth in
such supplement or amendment; and
(v) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
material adverse change or any development involving a prospective
change, which has had or is reasonably likely to have a Material Adverse
Effect, whether or not arising in the ordinary course of business.
(h) The Representatives shall have received on the Closing Date and the
Option Closing Date, if any, a certificate or certificates of the
Investment Advisor's President and Chief Financial Officer to the effect
that, as of the Closing Date or the Option Closing Date, the Investment
Advisor represents as follows:
(i) The representations and warranties of the Advisor contained in
Section 2 hereof are true and correct as of the Closing Date or the
Option Closing Date, if any;
23
(ii) They have carefully examined the Registration Statement and the
Prospectus and, in their opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and
Prospectus did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, and since the effective date of the Registration Statement,
no event has occurred which should have been set forth in a supplement
to or an amendment of the Prospectus which has not been so set forth in
such supplement or amendment; and
(iii) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
material adverse change or any development involving a prospective
change, which has had or is reasonably likely to have a Material Adverse
Effect, whether or not arising in the ordinary course of business.
(i) The Representatives shall have received on the Closing Date and the
Option Closing Date, if any, a certificate or certificates of the
Sub-Advisor's [appropriate officer] to the effect that, as of the
Closing Date or the Option Closing Date, if any, the Sub-Advisor
represents as follows:
(i) The representations and warranties of the Sub-Advisor contained in
Section 3 hereof are true and correct as of the Closing Date or the
Option Closing Date, if any;
(ii) They have carefully examined the Registration Statement and the
Prospectus and, in their opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and
Prospectus did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, and since the effective date of the Registration Statement,
no event has occurred which should have been set forth in a supplement
to or an amendment of the Prospectus which has not been so set forth in
such supplement or amendment; and
(iii) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
material adverse change or any development involving a prospective
change, which has had or is reasonably likely to have a Material Adverse
Effect, whether or not arising in the ordinary course of business.
(j) The Company shall have furnished to the Representative such further
certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related
matters as the Representatives may reasonably have requested.
(k) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on the New York Stock Exchange.
The opinions and certificates mentioned in this Agreement shall
be deemed to be in compliance with the provisions hereof only if they
are in all material respects satisfactory to the Representative and to
▇▇▇▇▇▇▇ Procter LLP, counsel for the Underwriters.
24
If any of the conditions hereinabove provided for in this
Section shall not have been fulfilled when and as required by this
Agreement to be fulfilled, the obligations of the Underwriters hereunder
may be terminated by the Representative by notifying the Company of such
termination in writing on or prior to the Closing Date or the Option
Closing Date, if any.
In such event, the Company and the Underwriters shall not be
under any obligation to each other (except to the extent provided in
Sections 7, 10 and 17 hereof).
9. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion
of the Shares required to be delivered as and when specified in this
Agreement are subject to the conditions that at the Closing Date or the
Option Closing Date, if any, no stop order suspending the effectiveness
of the Registration Statement shall have been issued and in effect or
proceedings therefor initiated or threatened.
10. INDEMNIFICATION.
(a) The Company and the Advisors, jointly and severally, agree:
(i) to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of the 1933 Act or
the Exchange Act, against any losses, claims, damages or liabilities to
which such Underwriter or any such controlling person may become subject
under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (A) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, (B) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (C) any alleged act or
failure to act by any Underwriter in connection with, or relating in any
manner to, the Shares or the offering contemplated hereby, and which is
included as part of or referred to in any loss, claim, damage, liability
or action arising out of or based upon matters covered by clause (A) or
(B) above (provided, however, that neither the Company nor either
Advisor shall be liable under this clause (C) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that
such loss, claim, damage, liability or action resulted directly from any
such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct);
provided, however, that neither the Company or the Advisors will be
liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or
alleged untrue statement, or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or
such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company or an Advisor by or through
the Representative specifically for use in the preparation thereof.
(ii) to reimburse each Underwriter and each such controlling person upon
demand for any legal or other out-of-pocket expenses reasonably incurred
by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability,
25
action or proceeding or in responding to a subpoena or governmental
inquiry related to the offering of the Shares, whether or not such
Underwriter or controlling person is a party to any action or
proceeding. In the event that it is finally judicially determined that
the Underwriters were not entitled to receive payments for legal and
other expenses pursuant to this subparagraph, the Underwriters will
promptly return all sums that had been advanced pursuant hereto.
(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company and the Advisors, each of their respective
trustees, each of their officers who have signed the Registration
Statement, and each person, if any, who controls the Company within the
meaning of the 1933 Act, against any losses, claims, damages or
liabilities to which the Company or either Advisor or any such trustee,
officer, or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or
(ii) the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made; and will reimburse any legal or other expenses
reasonably incurred by the Company or any such trustee, officer, or
controlling person in connection with investigating or defending any
such loss, claim, damage, liability, action or proceeding; provided,
however, that each Underwriter will be liable in each case to the
extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or
such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by or through the
Representative specifically for use in the preparation thereof.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity
may be sought pursuant to this Section, such person (the "indemnified
party") shall promptly notify the person against whom such indemnity may
be sought (the "indemnifying party") in writing. No indemnification
provided for in Section 10(a) or (b) shall be available to any party who
shall fail to give notice as provided in this Subsection if the party to
whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure
to give such notice, but the failure to give such notice shall not
relieve the indemnifying party or parties from any liability which it or
they may have to the indemnified party for contribution or otherwise
than on account of the provisions of Section 10(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party and shall pay as incurred the
fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to
retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred (or within 30
days of presentation) the fees and expenses of the counsel retained by
the indemnified party in the event (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel, (ii) the named parties to any such proceeding (including any
26
impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests
between them or (iii) the indemnifying party shall have failed to assume
the defense and employ counsel acceptable to the indemnified party
within a reasonable period of time after notice of commencement of the
action.
It is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more
than one separate firm for all such indemnified parties. Such firm shall
be designated in writing by you in the case of parties indemnified
pursuant to Section 10(a) and by the Company in the case of parties
indemnified pursuant to Section 10(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify
the indemnified party from and against any loss or liability by reason
of such settlement or judgment. In addition, the indemnifying party will
not, without the prior written consent of the indemnified party, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding of which indemnification may be
sought hereunder (whether or not any indemnified party is an actual or
potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim,
action or proceeding.
(d) If the indemnification provided for in this Section is unavailable
to or insufficient to hold harmless an indemnified party under Section
10(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Advisors (treated as one person
for this purpose) on the one hand and the Underwriters on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law then
each indemnifying party shall contribute to such amount paid or payable
by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of
the Company or the Advisors on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, (or actions or proceedings
in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Advisors (treated as one person for this purpose) on the one hand and
the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as
set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or the Advisors on the one hand or
the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission.
27
The Company, the Advisors and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this
Subsection 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 which does not take account of the equitable
considerations referred to above in this Subsection. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Subsection shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Subsection, (i) no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Shares purchased by such
Underwriter and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Subsection to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this
Section hereby consents to the jurisdiction of any court having
jurisdiction over any other contributing party, agrees that process
issuing from such court may be served upon him or it by any other
contributing party and consents to the service of such process and
agrees that any other contributing party may join him or it as an
additional defendant in any such proceeding in which such other
contributing party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under
this Section shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are
incurred. The indemnity and contribution agreements contained in this
Section and the representations and warranties of the Company and the
Advisors set forth in this Agreement shall remain operative and in full
force and effect, regardless of (i) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter, the
Company, its trustees or officers or any persons controlling the
Company, or the Advisors, or their respective directors or officers or
any persons controlling either Advisor (ii) acceptance of any Shares and
payment therefor hereunder, and (iii) any termination of this Agreement.
A successor to any Underwriter, or to the Company or either Advisor,
their respective directors or officers, or any person controlling the
Company or either Advisor, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this
Section.
(g) In addition to the foregoing indemnification, the Company and the
Advisors, jointly and severally, agree to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of the 1933 Act, against any losses, claims, damages
or liabilities described in the indemnity contained in Section 10(a), as
limited by the proviso set forth therein, with respect to any
advertisement or sales material authorized by the Company for use in the
public offering of the Shares pursuant to Rule 482 of the Rules and
Regulations under the 1933 Act.
28
11. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, if any, any
Underwriter shall fail to purchase and pay for the portion of the Shares
which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company),
you, as the Representative of the Underwriters, shall use your
reasonable efforts to procure within 36 hours thereafter one or more of
the other Underwriters, or any others, to purchase from the Company such
amounts as may be agreed upon and upon the terms set forth herein, the
Firm Shares or Option Shares, as the case may be, which the defaulting
Underwriter or Underwriters failed to purchase. If during such 36 hours
you, as such Representative, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option
Shares, as the case may be, agreed to be purchased by the defaulting
Underwriter or Underwriters, then (a) if the aggregate number of shares
with respect to which such default shall occur does not exceed 10% of
the Firm Shares or Option Shares, as the case may be, covered hereby,
the other Underwriters shall be obligated, severally, in proportion to
the respective numbers of Firm Shares or Option Shares, as the case may
be, which they are obligated to purchase hereunder, to purchase the Firm
Shares or Option Shares, as the case may be, which such defaulting
Underwriter or Underwriters failed to purchase, or (b) if the aggregate
number of shares of Firm Shares or Option Shares, as the case may be,
with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company
or you as the Representative of the Underwriters, will have the right,
by written notice given within the next 36-hour period to the parties to
this Agreement, to terminate this Agreement without liability on the
part of the non-defaulting Underwriters or of the Company except to the
extent provided in Section 10 hereof. In the event of a default by any
Underwriter or Underwriters, as set forth in this Section, the Closing
Date or Option Closing Date, if any, may be postponed for such period,
not exceeding seven days, as you, as Representative, may determine in
order that the required changes in the Registration Statement or in the
Prospectus or in any other documents or arrangements may be effected.
The term "Underwriter" includes any person substituted for a defaulting
Underwriter. Any action taken under this Section shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
12. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, or faxed and
confirmed as follows:
if to the Underwriters, to RBC Capital Markets Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Syndicate Director
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
29
if to the Company, to First Trust Strategic High Income Fund
[--------]
if to the Advisor, to First Trust Advisors L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
if to the Sub-Advisor, to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Asset Management
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: [_________]
13. TERMINATION.
(a) This Agreement may be terminated by you by notice to the Company at
any time prior to the Closing Date if any of the following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change
or any development involving a prospective change, which has had or is
reasonably likely to have a Material Adverse Effect; (ii) any outbreak
or escalation of hostilities or declaration of war or national emergency
or other national or international calamity or crisis or change in
economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change in the
financial markets of the United States would, in your reasonable
judgment, make it impracticable or inadvisable to market the Shares or
to enforce contracts for the sale of the Shares; (iii) suspension of
trading in securities generally on the New York Stock Exchange or
limitation on prices (other than limitations on hours or numbers of days
of trading) for securities on either such Exchange; (iv) the enactment,
publication, decree or other promulgation of any statute, regulation,
rule or order of any court or other governmental authority which in your
opinion materially and adversely affects or may materially and adversely
affect the business or operations of the Company; (v) declaration of a
banking moratorium by United States or New York State authorities; (vi)
the suspension of trading of the Company's Common Shares by the New York
Stock Exchange, the Commission, or any other governmental authority;
(vii) the taking of any action by any governmental body or agency in
respect of its monetary or fiscal affairs which in your reasonable
opinion has a material adverse effect on the securities markets in the
United States; or (viii) the failure of the conditions set forth in
Section 8 of this Agreement to be fulfilled when required to be
fulfilled.
(b) This Agreement may be terminated by either you or the Company as
provided in Section 11 of this Agreement.
30
14. SUCCESSORS.
This Agreement has been and is made solely for the benefit of
the Company, the Advisors and Underwriters and their respective
successors, executors, administrators, heirs and assigns, and the
officers, directors and controlling persons referred to herein, and no
other person will have any right or obligation hereunder. No purchaser
of any of the Shares from any Underwriter shall be deemed a successor or
assign merely because of such purchase.
15. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, and the Underwriters acknowledge and agree that
the only information furnished or to be furnished by any Underwriter to
the Company for inclusion in any Prospectus or the Registration
Statement consists of the information contained in the second paragraph
under the heading "Price Stabilization, Short Positions and Penalty
Bids" under the caption "Underwriting" in the Prospectus.
16. NO FIDUCIARY DUTY.
Notwithstanding any preexisting relationship, advisory or
otherwise, between the parties or any oral representations or assurances
previously or subsequently made by the Underwriters, the Company
acknowledges and agrees that: (a) nothing herein shall create a
fiduciary or agency relationship between the Company and the
Underwriters in connection with any aspect of the offering of securities
hereunder; (b) the Underwriters are not acting as advisors, expert or
otherwise, to the Company in connection with this offering, the sale of
the Shares or any other services the Underwriters may be deemed to be
providing hereunder, including, without limitation, with respect to the
public offering price of the Shares; (c) the relationship between the
Company and the Underwriters is entirely and solely commercial, based on
arms-length negotiations; (d) any duties and obligations that the
Underwriters may have to the Company shall be limited to those duties
and obligations specifically stated herein; (e) notwithstanding anything
in this Agreement to the contrary, the Company acknowledges that the
Underwriters may have financial interest in the success of the offering
of the Shares that is not limited to the difference between the price to
the public and the purchase price paid to the Company by the
Underwriters for the Shares and the Underwriters have no obligation to
disclose, or account to the Company for, any of such additional
financial interests; and (f) the Underwriters have advised the Company
that the Underwriters have agreements and understandings with, and owe
duties and obligations to, third parties, including purchasers and
potential purchasers of the securities, that may create or exacerbate
actual, potential or apparent conflicts of interest between the Company
and the Underwriters.
17. MASSACHUSETTS BUSINESS TRUST.
A copy of the declaration of trust of the Fund is on file with
the Secretary of the Commonwealth of Massachusetts, and notice is hereby
given that this 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 of or
arising out of this instrument are not binding upon any of the trustees,
officers or shareholders individually but are binding only upon the
assets and property of the Fund.
31
18. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of any Underwriter or controlling
person thereof, or by or on behalf of the Company or the Advisors or any
of their respective directors or officers and (c) delivery of and
payment for the Shares under this Agreement.
This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
This Agreement constitutes the entire agreement of the parties
to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof.
This Agreement may only be amended or modified in writing,
signed by all of the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit.
[remainder of page intentionally blank]
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If the foregoing letter is in accordance with your
understanding of our agreement, please sign and return to us the
enclosed duplicates hereof, whereupon it will become a binding agreement
among the Company, the Advisors and the several Underwriters in
accordance with its terms.
Very truly yours,
FIRST TRUST ADVISORS L.P.
By:_____________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ASSET MANAGEMENT
By:_____________________________________
FIRST TRUST STRATEGIC HIGH INCOME FUND
By:_____________________________________
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
RBC CAPITAL MARKETS CORPORATION
As the Representatives of the several
Underwriters listed on Schedule I
By: RBC Capital Markets Corporation
By:
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
33
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of
Firm Shares to
be Purchased
Underwriter
RBC Capital Markets Corporation.....................................
-----------------
Total _________________