First Trust/FIDAC Mortgage Income Fund
(a Massachusetts business trust)
[________] Common Shares of Beneficial Interest
(Par Value $.01 Per Share)
FORM OF PURCHASE AGREEMENT
May [__], 2005
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Advest, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
RBC Capital Markets Corporation
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated
SunTrust Capital Markets, Inc.
Wedbush ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇ Fargo Securities, LLC
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Each of First Trust/FIDAC Mortgage Income Fund, a Massachusetts
business trust (the "Fund"), its investment adviser, First Trust Advisors L.P.,
an Illinois limited partnership (the "Investment Adviser" or "First Trust"), and
its investment sub-adviser, Fixed Income Discount Advisory Company, a [_____]
corporation (the "Sub-Adviser" or "FIDAC") (each, an "Adviser" and together, the
"Advisers"), confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), Advest, Inc., ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ & Co. Incorporated, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated, J.J.B. ▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC, RBC Capital Markets Corporation,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated, SunTrust Capital Markets, Inc.,
Wedbush ▇▇▇▇▇▇ Securities Inc. and ▇▇▇▇▇ Fargo Securities, LLC and each of the
other Underwriters named in Schedule A hereto (collectively, the "Underwriters,"
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, Advest, Inc., ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ & Co. Incorporated, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated, J.J.B. ▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC, RBC Capital Markets Corporation,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated, SunTrust Capital Markets, Inc.,
Wedbush ▇▇▇▇▇▇ Securities Inc. and ▇▇▇▇▇ Fargo Securities, LLC are acting as
representatives (in such capacity, the "Representatives"), with respect to the
issue and sale by the Fund and the purchase by the Underwriters, acting
severally and not jointly, of the respective number of common shares of
beneficial interest, par value $.01 per share, of the Fund ("Common Shares") set
forth in said Schedule A, and with respect to the grant by the Fund to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of [______] additional Common
Page 1
Shares for the sole purpose of covering overallotments, if any. The aforesaid
[______] Common Shares (the "Initial Securities") to be purchased by the
Underwriters and all or any part of the [______] Common Shares subject to the
option described in Section 2(b) hereof (the "Option Securities") are
hereinafter called, collectively, the "Securities."
The Fund understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-123262 and No.
811-21727) covering the registration of the Securities under the Securities Act
of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and a notification on Form N-8A of registration of
the Fund as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations of the Commission under
the 1933 Act and the 1940 Act (the "Rules and Regulations"). Promptly after
execution and delivery of this Agreement, the Fund will either (i) prepare and
file a prospectus in accordance with the provisions of Rule 430A ("Rule 430A")
of the Rules and Regulations and paragraph (c) or (h) of Rule 497 ("Rule 497")
of the Rules and Regulations or (ii) if the Fund has elected to rely upon Rule
434 ("Rule 434") of the Rules and Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 497. The
information included in any such prospectus or in any such Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective, if applicable, (a) pursuant to paragraph (b) of
Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph
(d) of Rule 434 is referred to as "Rule 434 Information." Each prospectus used
before such registration statement became effective, and any prospectus that
omitted, as applicable, the Rule 430A Information or the Rule 434 Information,
that was used after such effectiveness and prior to the execution and delivery
of this Agreement, including in each case any statement of additional
information incorporated therein by reference, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the Rules and Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus in
the form first furnished to the Underwriters for use in connection with the
offering of the Securities, including the statement of additional information
incorporated therein by reference, is herein called the "Prospectus." If Rule
434 is relied on, the term "Prospectus" shall refer to the preliminary
prospectus dated April 26, 2005 together with the Term Sheet and all references
in this Agreement to the date of the Prospectus shall mean the date of the Term
Sheet. For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any Term Sheet or any
amendment or supplement to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Fund and the Advisers. The
Fund and the Advisers jointly and severally represent and warrant to each
Underwriter as of the date hereof and as of the Closing Time referred to in
Section 2(c) hereof, will jointly and severally represent and warrant to each
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Underwriter as of each Date of Delivery (if any) referred to in Section 2(b)
hereof, and agree with each Underwriter, as follows, except that the
representations and warranties set forth in paragraph (ix), below are made by
the Sub-Adviser based on its knowledge:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act, or order of
suspension or revocation of registration pursuant to Section 8(e) of
the 1940 Act, and no proceedings for any such purpose have been
instituted or are pending or, to the knowledge of the Fund or the
Advisers, are contemplated by the Commission, and any request on the
part of the Commission for additional information has been complied
with in all material respects.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time, the Registration Statement,
the Rule 462(b) Registration Statement, the notification on Form N-8A
and any amendments and supplements thereto complied and will comply in
all material respects with the requirements of the 1933 Act, the 1940
Act and the Rules and Regulations and did not and will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Neither the Prospectus nor any amendments or
supplements thereto, at the time the Prospectus or any such amendment
or supplement was issued and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), included or will
include any untrue statement of a material fact or omitted or will omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. If Rule 434 is used, the Fund will comply with the
requirements of Rule 434 and the Prospectus shall not be "materially
different", as such term is used in Rule 434, from the prospectus
included in the Registration Statement at the time it became effective.
Each preliminary prospectus delivered to the Underwriters for
use in connection with this offering and the prospectus filed as part
of the effective Registration Statement or as part of any amendment
thereto, or filed pursuant to Rule 497 under the 1933 Act, complied
when so filed in all material respects with the Rules and Regulations
and each preliminary prospectus and the Prospectus delivered to the
Underwriters for use in connection with this offering was identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
If a Rule 462(b) Registration Statement is required in
connection with the offering and sale of the Securities, the Fund has
complied or will comply with the requirements of Rule 111 under the
1933 Act Regulations relating to the payment of filing fees thereof.
The foregoing representations in this Section 1(a)(i) do not
apply to statements or omissions relating to the Underwriters made in
reliance on and in conformity with information furnished in writing to
the Fund by or on behalf of the Underwriters or their agents expressly
for use in the Registration Statement, the 462(b) Registration
Statement, the Prospectus or the preliminary prospectus (or any
amendment or supplement to any of the foregoing), or the descriptions
of each of the Advisers (referred to in Sections (1)(b)(iii) and
1(c)(iii) of this Agreement) contained in the foregoing.
(ii) Independent Registered Public Accounting Firm. As of the
date of the report of the independent registered public accounting firm
contained in the Registration Statement, the independent registered
public accounting firm who certified the statement of assets and
liabilities included in the Registration Statement is an independent
Page 3
registered public accounting firm as required by the 1933 Act and the
Rules and Regulations.
(iii) Financial Statements. The statement of assets and
liabilities included in the Registration Statement and the Prospectus,
together with the related notes, presents fairly in all material
respects the financial position of the Fund at the date indicated; said
statement has been prepared in conformity with U.S. generally accepted
accounting principles ("GAAP").
(iv) Expense Summary. The information set forth in the
Prospectus in the fee table contained in the section of the Prospectus
entitled "Summary of Fund Expenses" has been prepared in accordance
with the requirements of Form N-2 and to the extent estimated or
projected, such estimates or projections are reasonably believed to be
attainable and reasonably based.
(v) No Material Adverse Change. Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the financial condition, earnings or
business affairs of the Fund, whether or not arising in the ordinary
course of business (a "Material Adverse Effect"), (B) there have been
no transactions entered into by the Fund, other than those in the
ordinary course of business, which are material with respect to the
Fund, and (C) there has been no dividend or distribution of any kind
declared, paid or made by the Fund on any class of its capital shares.
(vi) Good Standing of the Fund. The Fund has been duly
organized and is validly existing as a business trust in good standing
under the laws of The Commonwealth of Massachusetts and has power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under this Agreement; and the Fund is duly qualified to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not be
expected to result in a Material Adverse Effect.
(vii) No Subsidiaries. The Fund has no subsidiaries.
(viii) Investment Company Status. The Fund is duly registered
with the Commission under the 1940 Act as a closed-end diversified
management investment company, and no order of suspension or revocation
of such registration has been issued or proceedings therefor initiated
or, to the knowledge of the Fund or any Adviser, threatened by the
Commission.
(ix) Officers and Trustees. No person is serving or acting as
an officer, trustee or investment adviser of the Fund except in
accordance with the provisions of the 1940 Act and the Rules and
Regulations and the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and the rules and regulations of the Commission
promulgated under the Advisers Act (the "Advisers Act Rules and
Regulations"). Except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement to either of them), no
trustee of the Fund is (A) an "interested person" (as defined in the
▇▇▇▇ ▇▇▇) of the Fund or (B) an "affiliated person" (as defined in the
▇▇▇▇ ▇▇▇) of any Underwriter. For purposes of this Section 1(a)(ix),
the Advisers shall be entitled to rely on written representations from
such officers and trustees.
(x) Capitalization. The authorized, issued and outstanding
shares of beneficial interest of the Fund are as set forth in the
Prospectus. All issued and outstanding common shares of beneficial
interest of the Fund have been duly authorized and validly issued and
are fully paid and non-assessable and have been offered and sold or
exchanged by the Fund in compliance with all applicable laws
(including, without limitation, federal and state securities laws);
Page 4
none of the outstanding common shares of beneficial interest of the
Fund was issued in violation of the preemptive or other similar rights
of any securityholder of the Fund.
(xi) Authorization and Description of Securities. The
Securities to be purchased by the Underwriters from the Fund have been
duly authorized for issuance and sale to the Underwriters pursuant to
this Agreement and, when issued and delivered by the Fund pursuant to
this Agreement when paid for by the Underwriters, will be validly
issued and fully paid and non-assessable. In all material respects, the
Common Shares conform to all statements relating thereto contained in
the Prospectus and such statements conform to the rights set forth in
the instruments defining the same, to the extent such rights are set
forth; no holder of the Securities will be subject to personal
liability by reason of being such a holder; and the issuance of the
Securities is not subject to preemptive or other similar rights of any
securityholder of the Fund.
(xii) Absence of Defaults and Conflicts. The Fund is not in
violation of its declaration of trust or by-laws, each as amended from
time to time, or in default in any material respects in the performance
or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which
it is a party or by which it may be bound, or to which any of the
property or assets of the Fund is subject (collectively, "Agreements
and Instruments") except for such violations or defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Investment Management Agreement, the
Sub-Advisory Agreement, the Administration and Accounting Services
Agreement, the Custodian Services Agreement and the Transfer Agency
Services Agreement referred to in the Registration Statement (as used
herein, the "Management Agreement," the "Sub-Advisory Agreement," the
"Administration Agreement," the "Custodian Agreement" and the "Transfer
Agency Agreement," respectively) and the consummation of the
transactions contemplated herein and in the Registration Statement
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectus
under the caption "Use of Proceeds") and compliance by the Fund with
its obligations hereunder have been duly authorized by all necessary
Fund actions and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Fund pursuant
to, the Agreements and Instruments (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not result in
a Material Adverse Effect), nor will such action result in any
violation of the provisions of the declaration of trust or by-laws of
the Fund, each as amended from time to time, or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Fund or any of its assets, properties or
operations, except for such violations that would not have a Material
Adverse Effect. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or
a portion of such indebtedness by the Fund.
(xiii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Fund or any Adviser, threatened, against or
affecting the Fund, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which
would reasonably be expected to result in a Material Adverse Effect, or
which would prohibit or materially delay the consummation of the
transactions contemplated in this Agreement or the performance by the
Fund of its obligations hereunder.
Page 5
(xiv) Exhibits. 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.
(xv) Possession of Intellectual Property. The Fund owns or
possesses, or can acquire on reasonable terms, or otherwise has rights
to, adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by the Fund, and the Fund has not
received any notice or is not otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any
Intellectual Property that has, or could reasonably be expected to
have, a material adverse effect.
(xvi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is or will be necessary or required for the performance by the
Fund of its obligations hereunder, in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement, except such as have been
already obtained, or with respect to which the failure to so obtain
would not have a Material Adverse Effect, or as may be required under
the 1933 Act, the 1940 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or state securities laws.
(xvii) Possession of Licenses and Permits. The Fund possesses
such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies
necessary to operate its properties and to conduct the business as
contemplated in the Prospectus, the Fund is in compliance with the
terms and conditions of all such Governmental Licenses, except where
the failure to so possess or comply would not have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force
and effect, except when the invalidity of such Governmental Licenses or
the failure of such Governmental Licenses to be in full force and
effect would not have a Material Adverse Effect; and the Fund has not
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xviii) Advertisements. Any advertising, sales literature or
other promotional material (including "prospectus wrappers" and "broker
kits") authorized in writing by or prepared by the Fund or the Advisers
used in connection with the public offering of the Securities
(collectively, "Sales Material") does not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading. Moreover,
all sales material complied and will 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,
Inc. (the "NASD").
(xix) Subchapter M. The Fund intends to direct the investment
of the proceeds of the offering described in the Registration Statement
in such a manner as to comply with the requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended ("Subchapter M of the
Code" and the "Code," respectively), and intends to qualify as a
regulated investment company under Subchapter M of the Code.
Page 6
(xx) Distribution of Offering Materials. The Fund has not
distributed and, prior to the later to occur of (A) the Closing Time
and (B) completion of the distribution of the Common Shares, will not
distribute any offering material in connection with the offering and
sale of the Common Shares other than the Registration Statement, a
preliminary prospectus, the Prospectus or the Sales Materials;
provided, however, that in no event shall this provision be applicable
with respect to any offering material distributed by any Underwriter
without the consent of the Fund or either Adviser.
(xxi) Accounting Controls. The Fund maintains a system of
internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization and with the applicable
requirements of the 1940 Act, the Rules and Regulations and the Code;
(B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain
accountability for assets and to maintain compliance with the books and
records requirements under the 1940 Act and the Rules and Regulations;
(C) access to assets is permitted only in accordance with the
management's general or specific authorization; and (D) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xxii) Absence of Undisclosed Payments. To the Fund's
knowledge, neither the Fund nor any employee or agent of the Fund has
made any payment of funds of the Fund or received or retained any
funds, which payment, receipt or retention of funds is of a character
required to be disclosed in the Prospectus (except as disclosed
therein).
(xxiii) Material Agreements. This Agreement, the Management
Agreement, the Sub-Advisory Agreement, the Administration Agreement,
the Custodian Agreement and the Transfer Agency Agreement have each
been duly authorized by all requisite action on the part of the Fund,
executed and delivered by the Fund, as of the dates noted therein and
each complies with all applicable provisions of the 1940 Act in all
material respects. Assuming due authorization, execution and delivery
by the other parties thereto, each such agreement constitutes a valid
and binding agreement of the Fund, enforceable against the Fund in
accordance with its terms, except as rights to indemnity and
contribution hereunder may be limited by federal or state securities
laws and public policy and except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors' rights and
remedies generally (whether considered in a proceeding in equity or at
law).
(xxiv) Registration Rights. There are no persons with
registration rights or other similar rights to have any securities of
the Fund registered pursuant to the Registration Statement or otherwise
registered by the Fund under the 1933 Act.
(xxv) New York Stock Exchange Listing. The Securities have been
duly authorized for listing, upon notice of issuance, on the New York
Stock Exchange ("NYSE") and the Fund's registration statement on Form
8-A under the 1934 Act has become effective.
(b) Representations and Warranties by the Investment Adviser. The
Investment Adviser represents and warrants to each Underwriter, and in the case
of paragraph (iii) also represents to the Fund, as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof as follows:
(i) Good Standing of the Investment Adviser. The Investment
Adviser has been duly organized and is validly existing and in good
standing as a limited partnership under the laws of the state of
Illinois, with full limited partnership power and authority to own,
Page 7
lease and operate its properties and to conduct its business as
described in the Prospectus and is duly qualified to transact business
and is in good standing in each other jurisdiction in which such
qualification is required, except where failure to so qualify or to be
in good standing would not result in a material adverse effect.
(ii) Investment Adviser's Status. The Investment Adviser is
duly registered and in good standing with the Commission as an
investment adviser under the Advisers Act, and is not prohibited by the
Advisers Act or the 1940 Act, or the rules and regulations under such
acts, from acting under the Management Agreement for the Fund as
contemplated by the Prospectus.
(iii) Descriptions of the Investment Adviser. The descriptions
of the Investment Adviser in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them) complied
and comply in all material respects with the provisions of the 1933
Act, the 1940 Act, the Advisers Act, the Rules and Regulations and the
Advisers Act Rules and Regulations and are true and correct and do not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
(iv) Capitalization. The Investment Adviser has the financial
resources available to it necessary for the performance of its services
and obligations as contemplated in the Prospectus, this Agreement and
under the Management Agreement, the Sub-Advisory Agreement and the
Additional Compensation Agreement between First Trust and ▇▇▇▇▇▇▇ ▇▇▇▇▇
dated [______], 2005 (the "Additional Compensation Agreement").
(v) Authorization of Agreements; Absence of Defaults and
Conflicts. This Agreement, the Management Agreement, the Sub-Advisory
Agreement and the Additional Compensation Agreement have each been duly
authorized, executed and delivered by the Investment Adviser, and,
assuming due authorization, execution and delivery by the other parties
thereto, each agreement constitutes a valid and binding obligation of
the Investment Adviser, enforceable in accordance with its respective
terms, except as rights to indemnity and contribution hereunder may be
limited by federal or state securities laws and public policy and
except as affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law); and neither
the execution and delivery of this Agreement, the Management Agreement,
the Sub-Advisory Agreement or the Additional Compensation Agreement nor
the performance by the Investment Adviser of its obligations hereunder
or thereunder will conflict with, or result in a breach of any of the
terms and provisions of, or constitute, with or without the giving of
notice or lapse of time or both, a default under, any agreement or
instrument to which the Investment Adviser is a party or by which it is
bound, the organizational documents of the Investment Adviser, or to
the Investment Adviser's knowledge, by any law, order, decree, rule or
regulation applicable to it of any jurisdiction, court, federal or
state regulatory body, administrative agency or other governmental
body, stock exchange or securities association having jurisdiction over
the Investment Adviser or its properties or operations; and no consent,
approval, authorization or order of any court or governmental authority
or agency is required for the consummation by the Investment Adviser of
the transactions contemplated by this Agreement, the Management
Agreement, the Sub-Advisory Agreement or the Additional Compensation
Agreement, except as have been obtained or may be required under the
1933 Act, the 1940 Act, the 1934 Act or state securities laws.
(vi) No Material Adverse Change. Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred
any event which should reasonably be expected to have a material
adverse effect on the ability of the Investment Adviser to perform its
Page 8
obligations under this Agreement, the Management Agreement, the
Sub-Advisory Agreement and the Additional Compensation Agreement.
(vii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Investment Adviser, threatened against or
affecting the Investment Adviser or any "affiliated person" (as such
term is defined in the ▇▇▇▇ ▇▇▇) of the Investment Adviser or any
partners, directors, officers or employees of the foregoing, whether or
not arising in the ordinary course of business, which might reasonably
be expected to result in any material adverse change in the financial
condition or earnings, business affairs or business prospects of the
Investment Adviser, materially and adversely affect the properties or
assets of the Investment Adviser or materially impair or adversely
affect the ability of the Investment Adviser to function as an
investment adviser or perform its obligations under the Management
Agreement, the Sub-Advisory Agreement and the Additional Compensation
Agreement, or which is required to be disclosed in the Registration
Statement and the Prospectus.
(viii) Absence of Violation or Default. The Investment Adviser
is not in violation of its organizational documents or in default under
any agreement, indenture or instrument, where such violation or default
would reasonably be expected to have a material adverse effect on the
ability of the Investment Adviser to function as an investment adviser
or perform its obligations under the Management Agreement, the
Sub-Advisory Agreement and the Additional Compensation Agreement.
(c) Representations and Warranties by the Sub-Adviser. The
Sub-Adviser represents and warrants to each Underwriter, and in the case of
paragraph (iii) also represents to the Fund, as of the date hereof and as of the
Closing Time referred to in Section 2(c) hereof, and will represent and warrant
to each Underwriter as of each Date of Delivery (if any) referred to in Section
2(b) hereof, as follows:
(i) Good Standing of the Sub-Adviser. The Sub-Adviser has been
duly organized and is validly existing and in good standing as a
corporation under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and the
Sub-Adviser is duly qualified to transact business and is in good
standing in each other jurisdiction in which such qualification is
required; except where the failure to so qualify or to be in good
standing would not have a material adverse effect on the ability of the
Sub-Adviser to perform its obligations hereunder and under the
Sub-Advisory Agreement.
(ii) The Sub-Adviser's Status. The Sub-Adviser is duly
registered and in good standing with the Commission as an investment
adviser under the Advisers Act, and is not prohibited by the Advisers
Act or the 1940 Act, or the rules and regulations under such acts, from
acting under the Sub-Advisory Agreement for the Fund as contemplated by
the Prospectus.
(iii) Descriptions of the Sub-Adviser. The descriptions of the
Sub-Adviser in the Registration Statement and the Prospectus (and any
amendment or supplement to either of them) complied and comply in all
material respects with the provisions of the 1933 Act, the 1940 Act,
the Advisers Act, the Rules and Regulations and the Advisers Act Rules
and Regulations and do not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(iv) Capitalization. The Sub-Adviser has the financial
resources available to it necessary for the performance of its services
and obligations as contemplated in the Prospectus, this Agreement and
under the Sub-Advisory Agreement.
Page 9
(v) Authorization of Agreements; Absence of Defaults and
Conflicts. This Agreement and the Sub-Advisory Agreement have each been
duly authorized, executed and delivered by the Sub-Adviser, and,
assuming due authorization, execution and delivery by the other parties
thereto, each agreement constitutes a valid and binding obligation of
the Sub-Adviser, enforceable against the Sub-Adviser in accordance with
its respective terms, except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws and public
policy and except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws now or hereafter in effect relating
to or affecting creditors' rights and remedies generally (whether
considered in a proceeding in equity or at law); and neither the
execution and delivery of this Agreement or the Sub-Advisory Agreement
nor the performance by the Sub-Adviser of its obligations hereunder or
thereunder will conflict with, or result in a breach of any of the
terms and provisions of, or constitute, with or without the giving of
notice or lapse of time or both, a default under any agreement or
instrument to which the Sub-Adviser is a party or by which it is bound
and which would result in any material adverse change in the condition,
financial or otherwise, or earnings, business affairs or business
prospects of the Sub-Adviser, or materially and adversely affect the
properties or assets of the Sub-Adviser or have a material adverse
effect on the ability of the Sub-Advisor to perform its obligations
hereunder and under the Sub-Advisory Agreement, the organizational
documents of the Sub-Adviser or, to the Sub-Adviser's knowledge, by any
law, order, decree, rule or regulation applicable to it of any
jurisdiction, court, federal or state regulatory body, administrative
agency or other governmental body, stock exchange or securities
association having jurisdiction over the Sub-Adviser or its respective
properties or operations; and no consent, approval, authorization or
order of any court or governmental authority or agency is required for
the consummation by the Sub-Adviser of the transactions contemplated by
this Agreement or the Sub-Advisory Agreement to which it is a party,
except as have been obtained or may be required under the 1933 Act, the
1940 Act, the 1934 Act or state securities laws.
(vi) No Material Adverse Change. Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, there has not occurred
any event which should reasonably be expected to have a material
adverse effect on the ability of the Sub-Adviser to perform its
obligations under this Agreement and the Sub-Advisory Agreement.
(vii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Sub-Adviser, threatened against or affecting the
Sub-Adviser or any "affiliated person" (as such term is defined in the
▇▇▇▇ ▇▇▇) of the Sub-Adviser or any partners, directors, officers or
employees of the foregoing, whether or not arising in the ordinary
course of business, which might reasonably be expected to result in any
material adverse change in the condition, financial or otherwise, or
earnings, business affairs or business prospects of the Sub-Adviser, to
materially and adversely affect the properties or assets of the
Sub-Adviser or to materially impair or adversely affect the ability of
the Sub-Adviser to function as an investment adviser or perform its
obligations under the Sub-Advisory Agreement, or which is required to
be disclosed in the Registration Statement and the Prospectus.
(viii) Absence of Violation or Default. The Sub-Adviser is not
in violation of its organizational documents or in default under any
agreement, indenture or instrument, where such violation or default
would reasonably be expected to have a material adverse effect on the
ability of the Sub-Adviser to function as an investment adviser or
perform its obligations under the Sub-Advisory Agreement.
Page 10
(d) Officers' Certificates. Any certificate signed by any officer
of the Fund or an Adviser delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Fund or such
Adviser, as the case may be, to each Underwriter as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Fund agrees to sell to each Underwriter, severally and not jointly,
and each Underwriter, severally and not jointly, agrees to purchase from the
Fund, at the price per share set forth in Schedule B, the number of Initial
Securities set forth in Schedule A opposite the name of such Underwriter, plus
any additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Fund hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional [_____]
Common Shares in the aggregate at the price per share set forth in Schedule B,
less an amount per share equal to any dividends or distributions declared by the
Fund and payable on the Initial Securities but not payable on the Option
Securities. The option hereby granted will expire 45 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering overallotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to the
Fund setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (a "Date
of Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as ▇▇▇▇▇▇▇ ▇▇▇▇▇ in its discretion shall make to eliminate any sales
or purchases of a fractional number of Option Securities plus any additional
number of Option Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
(c) Payment. Payment of the purchase price for, and delivery of
certificates, if any, for, the Initial Securities shall be made at the offices
of ▇▇▇▇▇▇▇▇ Chance US LLP, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at
such other place as shall be agreed upon by the Representatives and the Fund, at
10:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30
P.M. (Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be reasonably agreed
upon by the Representatives and the Fund (such time and date of payment and
delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Fund, on each Date of Delivery as specified in the notice from the
Representatives to the Fund.
Payment shall be made to the Fund by wire transfer of immediately
available funds to a bank account designated by the Fund, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
Page 11
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
one full business day before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in the City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants.
(a) The Fund and the Advisers, jointly and severally, covenant with
each Underwriter as follows:
(i) Compliance with Securities Regulations and Commission
Requests. The Fund, subject to Section 3(a)(ii), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
the Representatives promptly, and confirm the notice in writing, (i)
when any post-effective amendment to the Registration Statement shall
become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale
in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Fund will promptly effect the
filings necessary pursuant to Rule 497 and will take such steps as it
deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 497 was received for filing by the
Commission and, in the event that it was not, it will promptly file
such prospectus. The Fund will make reasonable commercial efforts to
prevent the issuance of any stop order, or order of suspension or
revocation of registration pursuant to Section 8(e) of the 1940 Act,
and, if any such stop order or order of suspension or revocation of
registration is issued, to obtain the lifting thereof at the earliest
possible moment.
(ii) Filing of Amendments. The Fund will give the
Representatives notice of its intention to file or prepare any
amendment to the Registration Statement (including any filing under
Rule 462(b)), any Term Sheet or any amendment, supplement or revision
to either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectus, will furnish the
Representatives with copies of any such documents a reasonable amount
of time prior to such proposed filing or use, as the case may be, and
will not file or use any such document to which the Representatives or
counsel for the Underwriters shall reasonably object in writing.
(iii) Delivery of Registration Statements. The Fund has
furnished or will deliver to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Registration
Statement as originally filed and of each amendment thereto (including
Page 12
exhibits filed therewith or incorporated by reference therein) and a
signed copy of all consents and certificates of experts, and will also
deliver to the Representatives, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the
extent permitted by Regulation S-T.
(iv) Delivery of Prospectuses. The Fund hereby consents to
the use by each Underwriter of any preliminary prospectus delivered by
the Fund to the Underwriter for purposes permitted by the 1933 Act. The
Fund will furnish to each Underwriter, without charge, during a period
up to 180 days following the Closing Date, such number of copies of the
Prospectus (as amended or supplemented) as such Underwriter may
reasonably request. The Prospectus and any amendments or supplements
thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(v) Continued Compliance with Securities Laws. If at any
time when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the
reasonable opinion of counsel for the Underwriters or for the Fund, to
amend the Registration Statement or amend or supplement the Prospectus
in order that the Prospectus will not include any untrue statements of
a material fact or omit to state a material fact necessary in order to
make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or
if it shall be necessary, in the opinion of such counsel, at any such
time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or
the Rules and Regulations, the Fund will promptly prepare and file with
the Commission, subject to Section 3(a)(ii), such amendment or
supplement as may be necessary to correct such statement or omission or
to make the Registration Statement or the Prospectus comply with such
requirements, and the Fund will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may
reasonably request.
(vi) Blue Sky Qualifications. The Fund will use its
reasonable best efforts, subject to the reasonable cooperation of the
Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions of
the United States as the Representatives and the Fund may designate and
to maintain such qualifications in effect for a period of not less than
one year from the later of the effective date of the Registration
Statement and any Rule 462(b) Registration Statement; provided,
however, that in no event shall the Fund be obligated to file any
general consent to service of process or to qualify as a foreign
business trust or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not
otherwise so subject. In each jurisdiction in which the Securities have
been so qualified, the Fund will file such statements and reports as
may be required by the laws of such jurisdiction to continue such
qualification, if any, in effect for a period of not less than one year
from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(vii) Rule 158. The Fund will make generally available to
its securityholders as soon as practicable an earnings statement, if
applicable, for the purposes of, and to provide the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(viii) Use of Proceeds. The Fund will use the net proceeds
received by it from the sale of the Securities substantially in the
manner specified in the Prospectus under "Use of Proceeds".
Page 13
(ix) Listing. The Fund will use its reasonable best efforts
to effect the listing of the Securities on the NYSE, subject to notice
of issuance, concurrently with the effectiveness of the Registration
Statement.
(x) Restriction on Sale of Securities. During a period of
180 days from the date of the Prospectus, the Fund will not, without
the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (A) directly or indirectly,
offer, pledge, sell, contract to sell, sell any option, rights or
warrant to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose
of Common Shares or any securities convertible into or exercisable or
exchangeable for Common Shares or file any registration statement under
the 1933 Act with respect to any of the foregoing or (B) enter into any
swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of
ownership of the Common Shares, whether any such swap or transaction
described in clause (A) or (B) above is to be settled by delivery of
Common Shares or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (1) the Securities to be sold
hereunder or (2) Common Shares issued or, for avoidance of doubt,
purchased in the open market pursuant to any dividend reinvestment
plan.
(xi) Reporting Requirements. The Fund, during the period
when the Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1940 Act and the 1934 Act within the time
periods required by the 1940 Act and the Rules and Regulations and the
1934 Act and the rules and regulations of the Commission thereunder,
respectively.
(xii) Subchapter M. The Fund intends to comply with the
requirements of Subchapter M of the Code to qualify as a regulated
investment company under the Code.
(xiii) No Manipulation of Market for Securities. The Fund
will not (a) take, directly or indirectly, any action designed to cause
or to result in, or that might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the
Fund to facilitate the sale or resale of the Securities in violation of
federal or state securities laws, and (b) except for share repurchases
permitted in accordance with applicable laws and purchases of
Securities in the open market pursuant to the Fund's dividend
reinvestment plan, until the Closing Date, or the Date of Delivery, if
any, (i) sell, bid for or purchase the Securities or pay any person any
compensation for soliciting purchases of the Securities or (ii) pay or
agree to pay to any person any compensation for soliciting another to
purchase any other securities of the Fund .
(xiv) Rule 462(b) Registration Statement. If the Fund elects
to rely upon Rule 462(b), the Fund shall file a Rule 462(b)
Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement, and the Fund shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement
or give irrevocable instructions for the payment of such fee pursuant
to Rule 111(b) under the 1933 Act.
SECTION 4. Payment of Expenses.
(a) Expenses. The Fund will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
Page 14
issuance or delivery of the Securities to the Underwriters, (iv) the fees and
disbursements of the Fund's counsel, the Fund's independent registered
accounting firm and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(a)(vi)
hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey and any supplement thereto, (vi) the printing
and delivery to the Underwriters of copies of each preliminary prospectus,
Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Securities in an
amount up to $7,500 (which will not exceed [__]% of the total price to the
public of the Common Shares sold in this offering), (x) the fees and expenses
incurred in connection with the listing of the Securities on the NYSE and (xi)
the printing of any sales material. In addition, the Fund shall pay to the
Underwriters $.00667 per Common Share as partial reimbursement of expenses
incurred in connection with the offering. The amount paid by the Fund as this
partial reimbursement to the Underwriters will not exceed .03335% of the total
price to the public of the Common Shares sold in this offering. The Investment
Adviser 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 Common Share. The
Sub-Adviser has agreed to reimburse the Investment Adviser for the lesser of (i)
$100,000 or (ii) one-half of such organizational expenses and offering costs of
the Fund that exceed $.04 per Common Share. The sum total of all compensation
received by the Underwriters in connection with this offering, including sales
load and all forms of compensation to and reimbursement of Underwriters, will
not exceed 9.0% of the total price to the public of the Common Shares sold in
this offering.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section 9(a)
hereof, the Fund and each of the Advisers, jointly and severally, agree that
they shall reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Underwriters.
These counsel fees shall not exceed $7,500.
SECTION 5. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters hereunder are subject to
the accuracy of the representations and warranties of the Fund and each of the
Advisers contained in Section 1 hereof or in certificates of any officer of the
Fund or either of the Advisers delivered pursuant to the provisions hereof, to
the performance by the Fund and each of the Advisers of their respective
covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective or will have become effective by 5:30 p.m., New York City time on the
date hereof, and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act, no notice
or order pursuant to Section 8(e) of the 1940 Act shall have been issued, and no
proceedings with respect to either shall have been initiated or threatened by
the Commission, and any request on the part of the Commission for additional
information shall have been complied with or waived to the reasonable
satisfaction of counsel to the Underwriters. A prospectus containing the Rule
430A Information shall have been filed with the Commission in accordance with
Rule 497 (or a post-effective amendment providing such information shall have
been filed and declared effective in accordance with the requirements of Rule
430A or a certificate must have been filed in accordance with Rule 497(j)) or,
if the Fund has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 497.
Page 15
(b) Opinions of Counsel for Fund and Advisers. At Closing Time, the
Representatives shall have received the favorable opinions, dated as of Closing
Time, of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLP, counsel for the Fund and First Trust,
substantially in the forms set forth in Exhibit A with respect to the Fund and
Exhibit B with respect to First Trust, and of in house, counsel for FIDAC,
substantially in the form set forth in Exhibit C, together with signed or
reproduced copies of such letters for each of the other Underwriters. In giving
such opinion such counsel may rely, as to matters governed by the laws of
jurisdictions other than the law of the State of New York and the federal law of
the United States, upon the opinions of counsel satisfactory to the
Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Fund and the Advisers and certificates of public
officials.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇▇▇ Chance US LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses (i), (ii), (vi), (vii) (solely
as to preemptive or other similar rights arising by operation of law or under
the charter or by-laws of the Fund), (viii) through (x), inclusive, (xii), (xiv)
(solely as to the information in the Prospectus under "Description of Shares")
and the last paragraph of Exhibit A hereto. In giving such opinion such counsel
may rely, as to all matters governed by the laws of jurisdictions other than the
law of the State of New York and the federal law of the United States, upon the
opinions of counsel satisfactory to the Representatives. Such counsel may also
state that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the Fund and
the Advisers and certificates of public officials.
(d) Officers' Certificates. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
financial condition, earnings or business affairs of the Fund, whether or not
arising in the ordinary course of business, and the Representatives shall have
received a certificate of a duly authorized officer of the Fund and of the chief
financial or chief accounting officer of the Fund and of the President or a Vice
President or Managing Director of each Adviser, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Sections 1(a), (b) and (c) hereof, as
applicable, are true and correct with the same force and effect as though
expressly made at and as of Closing Time, (iii) such Fund or Adviser, as
applicable, has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time, (iv) with respect
to the certificate by an officer of each Adviser only, there has been no
material adverse change in the financial condition, earnings or business affairs
of such Adviser, whether or not arising in the ordinary course of business, and
(v) with respect to the Fund only, no stop order suspending the effectiveness of
the Registration Statement, or order of suspension or revocation of registration
pursuant to Section 8(e) of the 1940 Act, has been issued and no proceedings for
any such purpose have been instituted or are pending or are contemplated by the
Commission.
(e) Independent Registered Public Accounting Firm's Comfort Letter.
At the time of the execution of this Agreement, the Representatives shall have
received from Deloitte & Touche LLP a letter dated such date, in form and
substance satisfactory to the Representatives, together with signed or
reproduced copies of such letter for each of the other Underwriters containing
statements and information of the type ordinarily included in independent
registered public accounting firms' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from Deloitte & Touche LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
Page 16
(g) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the NYSE, subject only to official notice of
issuance.
(h) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(i) Execution of Additional Compensation Agreement. At Closing Time,
▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have received the Additional Compensation Agreement, dated
as of the Closing Date, as executed by the Investment Adviser.
(j) Conditions to Purchase of Option Securities. In the event that
the Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations and
warranties of the Fund contained herein and the statements in any certificates
furnished by the Fund hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the Representatives shall have
received:
(i) Officers' Certificates. Certificates, dated such Date of
Delivery, of a duly authorized officer of the Fund and of the chief
financial or chief accounting officer of the Fund and of the President
or a Vice President or Managing Director of each Adviser confirming
that the information contained in the certificate delivered by each of
them at the Closing Time pursuant to Section 5(d) hereof remains true
and correct as of such Date of Delivery.
(ii) Opinions of Counsel for the Fund and the Advisers. The
favorable opinions of counsel for the Fund and the Advisers,
substantially in the forms set forth in Exhibit A, Exhibit B and
Exhibit C hereto, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(b) hereof.
(iii) Opinion of Counsel for the Underwriters. The favorable
opinion of ▇▇▇▇▇▇▇▇ Chance US LLP, counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from Deloitte &
Touche LLP, in form and substance satisfactory to the Representatives
and dated such Date of Delivery, substantially in the same form and
substance as the letter furnished to the Representatives pursuant to
Section 5(f) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than
three business days prior to such Date of Delivery.
(k) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the Underwriters shall have been furnished with such other
documents as they may require and as are customarily provided for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Fund and the Advisers in connection with the
organization and registration of the Fund under the 1940 Act and the issuance
and sale of the Securities as herein contemplated shall be satisfactory in form
and substance to the Representatives and counsel for the Underwriters.
(l) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled by the Fund or the Advisers when and as
required to be fulfilled, this Agreement, or, in the case of any condition to
the purchase of Option Securities, on a Date of Delivery which is after the
Closing Time, the obligations of the several Underwriters to purchase the
relevant Option Securities, may be terminated by the Representatives by notice
to the Fund and each Adviser at any time at or prior to Closing Time or such
Date of Delivery, as the case may be, and such termination shall be without
Page 17
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7, 8 and 12 shall survive any such termination and
remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Fund and the Advisers,
jointly and severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(e) below) any such settlement is effected
with the written consent of the Fund and each Adviser; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund or an
Adviser by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); provided,
further, that the indemnity agreement contained in this Section 6(a) shall not
inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) from whom the person asserting any such loss,
liability, claim, damage and expense purchased the Securities which are the
subject thereof if the Prospectus corrected any such alleged untrue statement or
omission and if such Prospectus was delivered to such Underwriter in a timely
manner and if such Underwriter failed to send or give a copy of the Prospectus
to such person at or prior to the written confirmation of the sale of such
Securities to such person.
(b) Indemnification of the Fund, Advisers, Trustees, Directors and
Officers. Each Underwriter severally agrees to indemnify and hold harmless the
Fund and the Advisers, their respective trustees and directors, each of the
Fund's officers who signed the Registration Statement, and each person, if any,
who controls the Fund or an Adviser within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act, against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
Page 18
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Fund or the Advisers by
such Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) Indemnification for Marketing Materials. In addition to the
foregoing indemnification, the Fund and the Advisers also, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 6(a),
as limited by the proviso set forth therein, with respect to any sales material.
(d) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section 6(a)
above, counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇,
and, in the case of parties indemnified pursuant to Section 6(b) above, counsel
to the indemnified parties shall be selected by the Fund or an Adviser, as
applicable. In each case such counsel shall be reasonably satisfactory to the
indemnified party, and the indemnifying party shall have the right to assume the
defense of such action. An indemnified party may participate at its own expense
in the defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified party)
also be counsel to the indemnified party. In no event shall the indemnifying
party be liable for fees and expenses of more than one counsel (in addition to
any local counsel) separate from its own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(e) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for reasonable fees and expenses of counsel,
such indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 60 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 7. Contribution.
If the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
Page 19
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Fund or the Advisers on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Fund and the Advisers on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Fund and the Advisers on the one
hand and the Underwriters on the other hand in connection with the offering of
the Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Fund and the total underwriting discount received by the Underwriters
(whether from the Fund or otherwise), in each case as set forth on the cover of
the Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the Securities as
set forth on such cover.
The relative fault of the Fund and the Advisers on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Fund or the Advisers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Fund, the Advisers and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 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 Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
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.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each trustee of the Fund and each director of an Adviser, respectively, each
officer of the Fund who signed the Registration Statement, and each person, if
any, who controls the Fund or any Adviser, within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, shall have the same rights to
contribution as the Fund and such Adviser, respectively. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
Page 20
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.
All representations, warranties and covenants contained in this
Agreement or in certificates of officers of the Fund or an Adviser submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Fund or an Adviser, and shall survive delivery
of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Fund, at any time at or prior to Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or an Adviser,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic conditions, in each case the effect of which is such as to make it,
in the judgment of the Representatives, impracticable or inadvisable to market
the Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in the Common Shares of the Fund has been suspended or materially
limited by the Commission or the NYSE, or if trading generally on the NYSE or
the American Stock Exchange or in the Nasdaq National Market has been suspended
or materially limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the NASD or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, or (iv) if a
banking moratorium has been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7, 8 and 12 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters.
If one or more of the Underwriters shall fail at Closing Time or a Date
of Delivery to purchase the Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the Representatives
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number
of Securities to be purchased on such date, this Agreement or, with respect to
any Date of Delivery which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Fund to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without liability on
the part of any non-defaulting Underwriter.
Page 21
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Fund to sell the relevant Option Securities, as
the case may be, either the Representatives or the Fund shall have the right to
postpone Closing Time or the relevant Date of Delivery, as the case may be, for
a period not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
SECTION 11. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representatives, c/o Merrill ▇▇▇▇▇ & Co., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of Equity Capital Markets; notices to the Fund or the
First Trust shall be directed, as appropriate, to the office of First Trust
Advisors L.P. at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇; and notices to FIDAC shall be directed to it at
1211 Avenue of the Americas, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
General Counsel.
SECTION 12. Parties.
This Agreement shall inure to the benefit of and be binding upon each
of the Underwriters, the Fund, the Advisers and each of their respective
partners and successors and controlling persons referred to herein. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters, the Fund, the
Advisers and their respective successors and the controlling persons and
officers, trustees and directors referred to in Sections 6 and 7 and their heirs
and legal representatives, any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters, the Fund, the Advisers and each
of their respective partners and successors, and said controlling persons and
officers, trustees and directors and their heirs and legal representatives, and
for the benefit of no other person, firm or corporation. No purchaser of
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings.
The Article and Section headings herein are for convenience only and
shall not affect the construction hereof.
SECTION 15. 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.
Page 22
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriters, the Fund and each of the Advisers in accordance with its
terms.
Very truly yours,
First Trust/FIDAC Mortgage Income Fund
By:___________________________________
Name:
Title:
First Trust Advisors L.P.
By:___________________________________
Name:
Title:
Fixed Income Discount Advisory Company
By:___________________________________
Name:
Title:
Page 23
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
ADVEST, INC.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, INCORPORATED
J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
RBC CAPITAL MARKETS CORPORATION
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & COMPANY, INCORPORATED
SUNTRUST CAPITAL MARKETS, INC.
WEDBUSH ▇▇▇▇▇▇ SECURITIES INC.
▇▇▇▇▇ FARGO SECURITIES, LLC
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
By:___________________________________
Authorized Signatory
For themselves and as Representatives of the
other Underwriters named in Schedule A hereto.
Page 24
SCHEDULE A
Number of
Name of Underwriter Initial Securities
------------------- ------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated.................................... [_______]
Advest, Inc................................................. [_______]
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated.......................... [_______]
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated........................... [_______]
J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Inc............................ [_______]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC................................. [_______]
RBC Capital Markets Corporation............................. [_______]
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated.................... [_______]
SunTrust Capital Markets, Inc............................... [_______]
Wedbush ▇▇▇▇▇▇ Securities Inc............................... [_______]
▇▇▇▇▇ Fargo Securities, LLC................................. [_______]
Total.............................................. [_______]
Sch A-1
SCHEDULE B
First Trust/FIDAC Mortgage Income Fund
[_______]Common Shares of Beneficial Interest
(Par Value $.01 Per Share)
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be $20.00.
2. The purchase price per share for the Securities to be paid by
the several Underwriters shall be $19.10, being an amount equal to the initial
public offering price set forth above less $.90 per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the overallotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Fund
and payable on the Initial Securities but not payable on the Option Securities.
Sch B-1
Exhibit A
FORM OF OPINION OF FUND'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Fund has been duly organized and is validly existing as a
business trust in good standing under the laws of The Commonwealth of
Massachusetts.
(ii) The Fund has business trust power and authority to own, lease
and operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus and to enter into and perform its
obligations under the Purchase Agreement.
(iii) The Fund is duly qualified as a foreign business trust to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect.
(iv) To the best of our knowledge, the Fund does not have any
subsidiaries.
(v) The authorized, issued and outstanding shares of beneficial
interest of the Fund are as set forth in the Prospectus under the caption
"Description of Shares--Common Shares"; all issued and outstanding shares
of beneficial interest of the Fund have been duly authorized and validly
issued and are fully paid and non-assessable and have been offered and sold
or exchanged by the Fund in compliance with all applicable laws (including,
without limitation, federal and state securities laws); the Common Shares
conform as to legal matters to all statements relating thereto contained in
the Prospectus and such description conforms to the rights set forth in the
instruments defining the same; and none of the outstanding shares of
beneficial interest of the Fund was issued in violation of the preemptive
or other similar rights of any securityholder of the Fund.
(vi) The Securities to be purchased by the Underwriters from the
Fund have been duly authorized for issuance and sale to the Underwriters
pursuant to the Purchase Agreement and, when issued and delivered by the
Fund pursuant to the Purchase Agreement against payment of the
consideration set forth in the Purchase Agreement, will be validly issued
and fully paid and non-assessable and no holder of the Securities is or
will be subject to personal liability by reason of being such a holder.
(vii) The issuance of the Securities is not subject to preemptive or
other similar rights of any securityholder of the Fund.
(viii) The Purchase Agreement has been duly authorized, executed and
delivered by the Fund.
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectus pursuant to Rule 497(c) or Rule 497(h)
has been made in the manner and within the time period required by Rule
497; and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act, and, to the best of our
knowledge, no order of suspension or revocation of registration pursuant to
Section 8(e) of the 1940 Act has been issued, and no proceedings for any
such purpose have been instituted or are pending or threatened by the
Commission.
(x) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectus and each amendment or supplement
to the
Page A-1
Registration Statement and Prospectus as of their respective effective or
issue dates (except for financial statements, supporting schedules and
other financial data included therein or omitted therefrom, as to which we
need express no opinion), and the notification on Form N-8A, complied as to
form in all material respects with the requirements of the 1933 Act, the
1940 Act and the Rules and Regulations.
(xi) If Rule 434 has been relied upon, the Prospectus was not
"materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective.
(xii) The form of certificate used to evidence the Common Shares
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the declaration of trust
and by-laws of the Fund and the requirements of the New York Stock
Exchange.
(xiii) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to which
the Fund is a party, or to which the property of the Fund is subject,
before or brought by any court or governmental agency or body, domestic or
foreign, which might reasonably be expected to result in a Material Adverse
Effect, or which might reasonably be expected to materially and adversely
affect the properties or assets of the Fund or the consummation of the
transactions contemplated in the Purchase Agreement or the performance by
the Fund of its obligations thereunder.
(xiv) The information in the Prospectus under "Description of
Shares" and "Tax Matters" and in the Registration Statement under Item 29
(Indemnification), to the extent that it constitutes matters of law,
summaries of legal matters, the Fund's declaration of trust and by-laws or
legal proceedings, or legal conclusions is correct in all material
respects.
(xv) Each of the Management Agreement, the Sub-Advisory Agreement,
the Administration Agreement, the Custodian Agreement, the Transfer Agency
Agreement and the Purchase Agreement comply in all material respects with
all applicable provisions of the 1940 Act, the Advisers Act, the Rules and
Regulations and the Advisers Act Rules and Regulations.
(xvi) The Fund is duly registered with the Commission under the 1940
Act as a closed-end diversified management investment company; and, to the
best of our knowledge, no order of suspension or revocation of such
registration has been issued or proceedings therefor initiated or
threatened by the Commission.
(xvii) To the best of our knowledge, no person is serving as an
officer, trustee or investment adviser of the Fund except in accordance
with the 1940 Act and the Rules and Regulations and the Investment Advisers
Act and the Advisers Act Rules and Regulations. Except as disclosed in the
Registration Statement and Prospectus (or any amendment or supplement to
either of them), to the best of our knowledge, no trustee of the Fund is an
"interested person" (as defined in the ▇▇▇▇ ▇▇▇) of the Fund or an
"affiliated person" (as defined in the ▇▇▇▇ ▇▇▇) of an Underwriter.
(xviii) There are no statutes or regulations that are required to be
described in the Prospectus that are not described as required.
(xix) All descriptions in the Registration Statement of contracts
and other documents to which the Fund is a party are accurate in all
material respects. To the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits
Page A-2
thereto, and the descriptions thereof or references thereto are correct in
all material respects.
(xx) To the best of our knowledge, the Fund is not in violation of
its declaration of trust or by-laws and no default by the Fund exists in
the due performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument that is described
or referred to in the Registration Statement or the Prospectus or filed or
incorporated by reference as an exhibit to the Registration Statement.
(xxi) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency (other than under the 1933 Act, the 1934 Act, the 1940
Act and the Rules and Regulations, which have been obtained, or as may be
required under the securities or blue sky laws of the various states, as to
which we need express no opinion) is necessary or required in connection
with the due authorization, execution and delivery of the Purchase
Agreement or for the offering, issuance or sale of the Securities or the
consummation of the transactions contemplated by this Agreement.
(xxii) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement (including the
issuance and sale of the Securities and the use of the proceeds from the
sale of the Securities as described in the Prospectus under the caption
"Use of Proceeds") and compliance by the Fund with its obligations under
the Purchase Agreement do not and will not, whether with or without the
giving of notice or lapse of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined in Section 1(a)(xii)
of the Purchase Agreement) under or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Fund
pursuant to any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or any other agreement or instrument, known
to us, to which the Fund is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Fund is subject,
nor will such action result in any violation of the provisions of the
charter or by-laws of the Fund, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Fund or any of its properties, assets or
operations.
(xxiii) The Purchase Agreement, the Management Agreement, the
Administration Agreement, the Sub-Advisory Agreement, the Custodian
Agreement and the Transfer Agency Agreement have each been duly authorized
by all requisite action on the part of the Fund, executed and delivered by
the Fund, 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 Fund, enforceable in
accordance with its terms, except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws and public
policy and except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
In addition, we have participated in the preparation of the Registration
Statement and the Prospectus and participated in discussions with certain
officers, trustees and employees of the Fund, representatives of Deloitte &
Touche LLP, the independent registered public accounting firm who examined the
statement of assets and liabilities of the Fund included or incorporated by
reference in the Registration Statement and the Prospectus, and you and your
representatives and we have reviewed certain Fund records and documents. While
we have not independently verified and are not passing upon, and do not assume
Page A-3
any responsibility for, the accuracy, completeness or fairness of the
information contained in the Registration Statement and the Prospectus, except
to the extent necessary to enable us to give the opinions with respect to the
Fund in paragraphs (A)(v), (xiv) and (xix), on the basis of such participation
and review, nothing has come to our attention that would lead us to believe that
the Registration Statement (except for financial statements, supporting
schedules and other financial data included therein or omitted therefrom, as to
which we do not express any belief), at the time such Registration Statement
became effective, 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 or that the Prospectus (except for financial
statements, supporting schedules and other financial data included therein or
omitted therefrom, as to which we do not express any belief), at the time the
Prospectus was issued, or at the Closing Time, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Page A-4
Exhibit B
FORM OF OPINION OF INVESTMENT ADVISER'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Investment Adviser has been duly organized and is validly
existing as a limited partnership in good standing under the laws of the
State of Illinois.
(ii) The Investment Adviser has full limited partnership power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under the Purchase Agreement.
(iii) The Investment Adviser is duly qualified to transact business
and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
would not result in a material adverse effect.
(iv) The Investment Adviser is duly registered with the Commission
as an investment adviser under the Advisers Act and is not prohibited
by the Advisers Act, the Advisers Act Rules and Regulations, the 1940 Act
or the Rules and Regulations from acting under the Management Agreement and
each of the Sub-Advisory Agreements.
(v) The Purchase Agreement, the Management Agreement, the
Sub-Advisory Agreement and the Additional Compensation Agreement have
been duly authorized, executed and delivered by the Investment Adviser, and
each of the Management Agreement, the Sub-Advisory Agreement and the
Additional Compensation Agreement constitutes a valid and binding
obligation of the Investment Adviser, enforceable in accordance with its
terms, except as rights to indemnity and contribution hereunder may be
limited by federal or state securities laws and public policy and except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and general equitable principles (whether considered in a
proceeding in equity or at law).
(vi) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to
which the Investment Adviser is a party, or to which the property of the
Investment Adviser is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which might reasonably be
expected to result in any material adverse change in the financial
condition, earnings or business affairs of the Investment Adviser,
materially and adversely affect the properties or assets of the Investment
Adviser or materially impair or adversely affect the ability of the
Investment Adviser to function as an investment adviser or perform its
obligations under the Management Agreement and the Sub-Advisory Agreement,
or which is required to be disclosed in the Registration Statement or the
Prospectus.
(vii) To the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than those
described or referred to therein or filed or incorporated by reference as
exhibits thereto, and the descriptions thereof or references thereto are
correct in all material respects.
(viii) To the best of our knowledge, the Investment Adviser is not
in violation of its limited partnership agreement, by-laws or other
organizational documents and no default by the Investment Adviser exists in
the due performance or observance of any material obligation, agreement,
Page B-1
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument that is described
or referred to in the Registration Statement or the Prospectus or filed or
incorporated by reference as an exhibit to the Registration Statement.
(ix) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act,
the 1940 Act and the Rules and Regulations, which have been obtained, or as
may be required under the securities or blue sky laws of the various
states, as to which we need express no opinion) is necessary or required in
connection with the due authorization, execution and delivery of the
Purchase Agreement.
(x) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement and compliance by the
Investment Adviser with its obligations under the Purchase Agreement do not
and will not, whether with or without the giving of notice or lapse of time
or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined in Section 1(a)(xii) of the Purchase Agreement) under or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Investment Adviser pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreement or instrument, known to us, to which the
Investment Adviser is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Investment Adviser is
subject (except for such conflicts, breaches or defaults or liens, charges
or encumbrances that would not have a material adverse effect), nor will
such action result in any violation of the provisions of the charter or
by-laws of the Investment Adviser, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Investment Adviser or any of its properties,
assets or operations (except for such violations that would not have a
material adverse effect).
In addition, we have participated in the preparation of the portions of
the Registration Statement and Prospectus describing the Investment Adviser and
participated in discussions with certain officers, trustees and employees of the
Fund and representatives of the Investment Adviser. While we have not
independently verified and are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the information
contained in such portions of the Registration Statement and the Prospectus, on
the basis of such participation and review, nothing has come to our attention
that would lead us to believe that such portions of the Registration Statement
(except for financial statements, supporting schedules and other financial data
included therein or omitted therefrom, as to which we do not express any
belief), at the time such Registration Statement became effective, 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
or that such portions of the Prospectus (except for financial statements,
supporting schedules and other financial data included therein or omitted
therefrom, as to which we do not express any belief), at the time the Prospectus
was issued, or at the Closing Time, included or include an untrue statement of a
material fact or omitted or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
Page B-2
Exhibit C
FORM OF OPINION OF INVESTMENT SUB-ADVISER'S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) The Sub-Adviser has been duly organized and is validly existing
as a corporation and in good standing under the laws of the State of
Delaware.
(ii) The Sub-Adviser has full corporate power and authority to own,
lease and operate its properties and to conduct its business as described
in the Prospectus and to enter into and perform its obligations under the
Purchase Agreement and the Sub-Advisory Agreement.
(iii) The Sub-Adviser is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to
so qualify would not result in a material adverse effect.
(iv) The Sub-Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act, and is not prohibited by the
Advisers Act, the Advisers Act rules and regulations, the 1940 Act or the
1940 Act rules and regulations from acting under the Sub-Advisory
Agreement.
(v) The Purchase Agreement and the Sub-Advisory Agreement have been
duly authorized, executed and delivered by the Sub-Adviser, and the
Sub-Advisory Agreement constitutes a valid and binding obligation of the
Sub-Adviser, enforceable against it in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and general equitable principles (whether considered in a
proceeding in equity or at law).
(vi) To my knowledge, there is not pending or threatened any action,
suit, proceeding, inquiry or investigation, to which the Sub-Adviser is a
party, or to which the property of the Sub-Adviser is subject, before or
brought by any court or governmental agency or body, domestic or foreign,
which might reasonably be expected to result in any material adverse change
in the condition, financial or otherwise, in the earnings, business affairs
or business prospects of the Sub-Adviser, materially and adversely affect
the properties or assets of the Sub-Adviser or materially impair or
adversely affect the ability of the Sub-Adviser to function as an
investment adviser or perform its obligations under the Sub-Advisory
Agreement, or which is required to be disclosed in the Registration
Statement or the Prospectus.
(vii) To my knowledge, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments to which the Sub-Adviser is a party required to be described or
referred to in the Registration Statement or to be filed as exhibits
thereto other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto, and the descriptions thereof
or references thereto are correct in all material respects.
(viii) To my knowledge, the Sub-Adviser is not in violation of its
certificate of incorporation or by-laws and no default by the Sub-Adviser
exists in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument that
is described or referred to in the Registration Statement or the Prospectus
or filed or incorporated by reference as an exhibit to the Registration
Statement.
Page C-1
(ix) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act,
the 1940 Act and the Rules and Regulations, which have been obtained, or as
may be required under the securities or blue sky laws of the various
states, as to which I express no opinion) is necessary or required in
connection with the due authorization, execution and delivery of the
Purchase Agreement.
(x) The execution, delivery and performance of the Purchase
Agreement and the Sub-Advisory Agreement and the consummation of the
transactions contemplated in the Purchase Agreement and the Sub-Advisory
Agreement and in the Registration Statement and compliance by the
Sub-Adviser with its obligations under the Purchase Agreement and the
Sub-Advisory Agreement do not and will not, whether with or without the
giving of notice or lapse of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined in Section 1(a)(xii)
of the Purchase Agreement) under or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Sub-Adviser pursuant to any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or any other agreement or instrument,
known to us, to which the Sub-Adviser is a party or by which it or any of
them may be bound, or to which any of the property or assets of the
Sub-Adviser is subject (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not have a material adverse
effect), nor will such action result in any violation of the provisions of
the charter or by-laws of the Sub-Adviser, or any applicable law, statute,
rule, regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Sub-Adviser or any of its properties, assets
or operations, except for such violation which would result in any material
adverse change in the condition, financial or otherwise, or earnings,
business affairs or business prospects of the Sub-Adviser, or materially
and adversely affect the properties or assets of the Sub-Adviser or have a
material adverse effect on the ability of the Sub-Advisor to perform its
obligations hereunder and under the Sub-Advisory Agreement.
In addition, we have participated in the preparation of the portions of
the Registration Statement and Prospectus describing the Sub-Adviser and
participated in discussions with certain officers, trustees and employees of the
Fund and representatives of the Sub-Adviser. While we have not independently
verified and are not passing upon, and do not assume any responsibility for, the
accuracy, completeness or fairness of the information contained in such portions
of the Registration Statement and the Prospectus, on the basis of such
participation and review, nothing has come to our attention that would lead us
to believe that such portions of the Registration Statement (except for
financial statements, supporting schedules and other financial data included
therein or omitted therefrom, as to which we do not express any belief), at the
time such Registration Statement became effective, 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 or that such
portions of the Prospectus (except for financial statements, supporting
schedules and other financial data included therein or omitted therefrom, as to
which we do not express any belief), at the time the Prospectus was issued, or
at the Closing Time, included or include an untrue statement of a material fact
or omitted or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
Page C-2