[________] Shares
FIRST TRUST STRATEGIC HIGH INCOME FUND II
Common Shares of Beneficial Interest
($0.01 Par Value)
UNDERWRITING AGREEMENT
[______], 2006
RBC Capital Markets Corporation
As the Representative of the several
underwriters named in Schedule I hereto
c/o RBC Capital Markets
One Liberty Plaza
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Each of First Trust Strategic High Income Fund II, a Massachusetts
business trust (the "Company"), its investment adviser, First Trust Advisors
L.P., an Illinois limited partnership (the "Investment Advisor" or "First
Trust") and its investment sub-advisor, Valhalla Capital Partners, LLC (the
"Sub-Advisor" or "Valhalla") (each, an "Advisor" and together, the "Advisors")
confirms its agreement with RBC Capital Markets Corporation ("RBC") and the
several underwriters (collectively with RBC, the "Underwriters") named in
Schedule I hereto for whom RBC is acting as Representative (the
"Representative") with respect to the issue and sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of an aggregate
of [_______] shares of the Company's Common Shares of Beneficial Interest
("Common Shares"), $0.01 par value (the "Firm Shares") and with respect to the
grant by the Company to the Underwriters, acting severally and not jointly, of
the option described below to purchase all or part of the [________] additional
Common Shares (the "Option Shares", and together with the Firm Shares, the
"Shares") for the sole purpose of covering over-allotments, if any. The
respective amounts of the Firm Shares to be so purchased by the several
Underwriters are set forth opposite their names in Schedule I hereto.
The Company has entered into an Investment Management Agreement with
the Advisor dated [_____], 2006 (the "Advisory Agreement"), an Administration
and Accounting Services Agreement dated [_____], 2006 with PFPC Inc. (the
"Administration Agreement"), a Custodian Services Agreement with PFPC Trust
Company dated [_____], 2006 (the "Custody Agreement"), and a Transfer Agency
Services Agreement with PFPC, Inc. as transfer agent and registrar for the
Company dated [____], 2006 (the "Transfer Agency Agreement"). The Company and
the Advisor have entered into an Investment Sub-Advisory Agreement with Valhalla
dated [____], 2006 (the "Sub-administration Agreement"). In addition, the
Company has adopted a dividend reinvestment plan (the "Dividend Reinvestment
Plan"), pursuant to which holders of Shares shall have their dividends
automatically reinvested in additional Common Shares of the Company unless they
elect to receive such dividends in cash. Collectively, this Agreement, the
Advisory Agreement, the Administration Agreement, the Custody Agreement, the
Transfer Agency Agreement, the Sub-administration Agreement and the Dividend
Reinvestment Plan are referred to herein as the "Company Agreements." The
Additional Compensation Agreement with RBC dated March [_], 2006, the incentive
fee agreement with ▇.▇. ▇▇▇▇▇▇▇ dated March [_], 2006 each of the Company
Agreements to which the Advisor is a party and this Agreement are collectively
referred to herein as the "Advisor Agreements."
The Company has prepared a registration statement on Form N-2 (File
Nos. 333-131194 and 811-21842) with respect to the Shares pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), the Investment
Company Act of 1940, as amended (the "1940 Act", and collectively with the
Securities Act, the "Acts") and the rules and regulations (the "Rules and
Regulations") of the United States Securities and Exchange Commission (the
"Commission") promulgated under the Securities Act and the 1940 Act. As used in
this Agreement, "Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amendment thereto, if
any, was declared effective by the Commission; "Effective Date" means the date
of the Effective Time; "Preliminary Prospectus" means each prospectus included
in such registration statement, or amendment thereof, before it became effective
under the Securities Act and any prospectus filed with the Commission by the
Company with the consent of the Underwriters pursuant to Rule 497 (a) of the
Rules and Regulations; "Pricing Prospectus" means the Preliminary Prospectus
that was included in the Registration Statement immediately prior to the
Applicable Time (as defined below); "Prospectus" means the prospectus in the
form first used to confirm sales of Shares; "Registration Statement" means such
registration statement, as amended at the Effective Time, including all
information deemed to be a part of the registration statement as of the
Effective Time pursuant to Rule 430A of the Rules and Regulations. If the
Company has filed an abbreviated registration statement to register additional
Common Shares pursuant to Rule 462(b) under the Securities Act (the "Rule 462
Registration Statement"), then any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462 Registration Statement. For
the purpose of this Agreement, the "Applicable Time" is ___:___ _m (Eastern
time) on the date of this Agreement.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE ADVISORS.
The Company and the Investment Advisor jointly and severally represent
and warrant to each of the Underwriters as of the date hereof, as of the Closing
Date and each Option Closing Date, if any, (each as defined in Section 2 below)
and the Company and the Advisors jointly and severally represent and warrant to
each of the Underwriters as of the date hereof, as of the Closing Date and each
Option Closing Date, if any, as set forth in paragraphs 1(c), 1(h), 1(j), 1(l),
1(s), 1(t), 1(x), 1(aa) and 1(dd):
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(a) A registration statement has been filed with the Commission under the
Securities Act and has become effective under the Securities Act. No stop order
suspending the effectiveness of such registration statement is in effect, and no
proceedings for such purpose are pending before or, to the knowledge of the
Company, threatened by the Commission. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus. Copies of such
registration statement and each of the amendments thereto have been delivered by
the Company to you. The Registration Statement conforms, and any further
amendments or supplements to the Registration Statement will conform, in all
material respects to the requirements of the Acts and the Rules and Regulations.
The Prospectus and the Pricing Prospectus each conforms and, as amended or
supplemented, will conform, in all material respects to the requirements of the
Acts and the Rules and Regulations. As of the Effective Date, the date hereof,
the Closing Date (as defined below) and each Option Closing Date (as defined
below), if any, the Registration Statement does not and will not, and any
further amendments to the Registration Statement will not, when they become
effective, 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 statement
therein not misleading; as of its date and the date hereof, the Prospectus does
not, and as amended or supplemented on the Closing Date and each Option Closing
Date, if any, will not, contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; the Pricing
Prospectus taken together with the final pricing information included on the
cover page of the Prospectus (collectively, the "Disclosure Package"), as of the
Applicable Time, did not include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(b) A notification of registration of the Company as an investment company
under the 1940 Act on Form N-8A (the "1940 Act Notification") has been prepared
by the Company in conformity with the 1940 Act and has been filed with the
Commission.
(c) The Commission has not issued an order preventing or suspending the
use of any Prospectus relating to the proposed offering of the Shares nor
instituted proceedings for that purpose and no proceedings, for any such purpose
have been instituted or are pending or, to the knowledge of the Company or
either Advisor, are contemplated by the Commission. The 1940 Act Notification
complied in all material respects with the requirements of the 1940 Act and the
Rules and Regulations thereunder and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(d) This Agreement and each of the other Company Agreements has been duly
authorized, executed and delivered by the Company, and constitutes a valid,
legal, and binding obligation of the Company, enforceable in accordance with its
terms. The Company has full power and authority to enter into this Agreement and
each of the Company Agreements and to authorize, issue and sell the Shares as
contemplated by this Agreement.
(e) The Company has been duly formed and is validly existing under the
laws of the Commonwealth of Massachusetts as a trust with transferable shares of
the type commonly called a Massachusetts business trust. The Declaration of
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Trust of the Company (the "Declaration of Trust"), pursuant to which the Company
was established, confers upon the Trustees named therein, and their successors
in trust, power and authority to own or lease its properties and conduct its
business as described in the Prospectus and the Disclosure Package. The Company
has no direct or indirect subsidiaries. The Company is duly qualified to
transact business and is in good standing in all jurisdictions in which the
conduct of its business requires such qualification; except where the failure to
be so qualified or to be in good standing would not have a material adverse
effect on the condition (financial or otherwise), properties, assets,
liabilities, rights, operations, earnings, business, management or prospects of
the Company, whether or not arising from transactions in the ordinary course of
business (a "Material Adverse Effect").
(f) The outstanding Common Shares of the Company have been duly authorized
and validly issued and are fully paid and non-assessable (except as described in
the Registration Statement and the Disclosure Package); the Shares to be issued
and sold by the Company have been duly authorized and when issued and paid for
as contemplated herein will be validly issued, fully paid and non-assessable
(except as described in the Registration Statement and the Disclosure Package);
and no preemptive rights of shareholders exist with respect to any of the Shares
or the issue and sale thereof. Neither the filing of the Registration Statement
nor the offering or sale of the Shares as contemplated by this Agreement gives
rise to any rights, other than those which have been waived or satisfied, for or
relating to the registration of any Common Shares.
(g) The Company has authorized capital as set forth in the Prospectus and
the Disclosure Package. All of the Shares conform to the description thereof
contained in the Prospectus and the Disclosure Package. The form of
certificates, if any, for the Shares conforms to the relevant law of the
jurisdiction of the Company's organization. Immediately after the issuance and
sale of the Shares to the Underwriters, no preferred shares of the Company shall
be issued and outstanding and no holder of any shares, securities convertible
into or exchangeable or exercisable for shares or options, warrants or other
rights to purchase shares or any other securities of the Company shall have any
existing or future right to acquire any preferred shares of the Company. No
holders of securities of the Company have rights to the registration of such
securities under the Registration Statement.
(h) The Company has not distributed and will not distribute any prospectus
or other offering material (including, without limitation, content on the
Company's website that may be deemed to be a prospectus or other offering
material) in connection with the offering and sale of the Shares other than any
Preliminary Prospectus, the Prospectus, the Disclosure Package or other
materials permitted by the Acts to be distributed by the Company.
(i) The financial statements of the Company, together with related notes
and schedules as set forth or incorporated by reference in the Registration
Statement, Prospectus and the Disclosure Package present fairly the financial
position of the Company at the indicated dates. Such financial statements and
related schedules have been prepared in accordance with U.S. generally accepted
accounting principles, consistently applied throughout the periods involved,
except as disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary financial
and statistical data included or incorporated by reference in the Registration
Statement, Prospectus and the Disclosure Package presents fairly the information
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shown therein and such data has been compiled on a basis consistent with the
financial statements presented therein and the books and records of the Company.
(j) The Company maintains, or causes its custodian, PFPC Trust Company, to
maintain, a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization and in accordance with the 1940
Act; (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
and to maintain accountability for assets and to maintain compliance with the
books and records requirements under the 1940 Act; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(k) Deloitte & Touche LLP, which has certified certain financial
statements of the Company and delivered its opinion with respect to the
financial statements and schedules included or incorporated by reference in the
Registration Statement and the Prospectus, is an independent registered public
accounting firm with respect to the Company within the meaning of the Acts and
the Rules and Regulations.
(l) There is no action, suit, claim, investigation, inquiry or proceeding
pending or, to the knowledge of the Company or either Advisor, threatened
against or affecting the Company before any court or administrative agency or
otherwise (1) that are required to be disclosed in the Registration Statement,
Prospectus or the Disclosure Package and are not so described or (2) which, if
determined adversely to the Company might have a Material Adverse Effect or
prevent or materially delay the consummation of the transactions contemplated
hereby, except as set forth in the Registration Statement, the Prospectus and
the Disclosure Package.
(m) The Company has good and marketable title to all of the assets
reflected in the financial statements (or as described in the Prospectus and the
Disclosure Package) hereinabove described, subject to no lien, mortgage, pledge,
charge or encumbrance of any kind except those reflected in such financial
statements (or as described in the Prospectus and the Disclosure Package) or
which are not material in amount.
(n) The Company has filed all federal, state, local and foreign tax
returns which have been required to be filed and has paid all taxes whether or
not indicated on such returns and all assessments received by it. All tax
liabilities have been adequately provided for in the financial statements of the
Company, and the Company does not know of any actual or proposed additional tax
assessments. There are no transfer taxes or other similar fees or charges under
federal law or the laws of any state, or any political subdivision thereof,
required to be paid in connection with the execution and delivery of this
Agreement or the issuance by the Company or sale by the Company of the Shares.
(o) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, as it may be amended or supplemented,
there has not been any material adverse change or any development involving a
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prospective change which has had or is reasonably likely to have a Material
Adverse Effect, whether or not occurring in the ordinary course of business, and
there has not been any material transaction entered into or any material
transaction that is probable of being entered into by the Company, other than
transactions in the ordinary course of business and changes and transactions
described in the Prospectus and the Disclosure Package. The Company has no
material contingent obligations that are not disclosed in the Company's
financial statements in the Registration Statement, the Prospectus and the
Disclosure Package.
(p) The Company is not, and with the giving of notice or lapse of time or
both, will not be, in violation of or in default under its Declaration of Trust
or By-Laws or under any agreement, lease, contract, indenture or other
instrument or obligation to which it is a party or by which it, or any of its
properties, is bound and which default has had or is reasonably likely to have a
Material Adverse Effect. The execution and delivery of this Agreement and each
of the Company Agreements and the consummation of the transactions contemplated
herein and therein and the fulfillment of the terms hereof and thereof do not
and will not, whether with or without notice or the passing of time or both, (i)
conflict with or otherwise violate any of the terms or provisions of the
Declaration of Trust or By-Laws of the Company or (ii) conflict with or result
in a breach of any of the terms or provisions of, or constitute a default under,
any contract, indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party or any order, rule or regulation
applicable to the Company of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction, which
breach or default has had or is likely to have a Material Adverse Effect.
(q) Each approval, consent, order, authorization, designation, declaration
or filing by or with any regulatory, administrative or other governmental body
necessary in connection with the execution and delivery by the Company of this
Agreement and the consummation of the transactions herein contemplated (except
such additional steps as may be required by the Commission, the National
Association of Securities Dealers, Inc. (the "NASD") or such additional steps as
may be necessary to qualify the Shares for public offering by the Underwriters
under state securities or Blue Sky laws) has been obtained or made and is in
full force and effect.
(r) The Company has all material licenses, certifications, permits,
franchises, approvals, clearances and other regulatory authorizations
("Permits") from governmental authorities as are necessary to conduct its
businesses as currently conducted and as currently proposed to be conducted and
to own, lease and operate its properties in the manner described in the
Prospectus and the Disclosure Package. There is no claim, proceeding or
controversy, pending or, to the knowledge of the Company or either Advisor,
threatened, involving the status of or sanctions under any of the Permits. The
Company has fulfilled and performed all of its material obligations with respect
to the Permits, and no event has occurred which allows, or after notice or lapse
of time would allow, the revocation, termination, modification or other
impairment of the rights of the Company under such Permit. None of the Permits
contains any restriction that is materially burdensome on the Company.
(s) To the knowledge of the Company and each Advisor, there are no
affiliations or associations between any member of the NASD and any of the
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Company's officers, trustees or security holders, except as set forth in the
Registration Statement or as disclosed in writing to the Underwriters.
(t) Neither the Company nor either Advisor, nor to the knowledge of the
Company or either Advisor, none of their respective affiliates, has taken or may
take, directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common Shares to facilitate
the sale or resale of the Shares.
(u) The Company is duly registered under the 1940 Act as a closed-end,
diversified management investment company and the 1940 Act Notification has been
duly filed with the Commission, and, at the time of filing thereof and at the
time of filing any amendment or supplement thereto, conformed in all material
respects with all applicable provisions of the 1940 Act and the Rules and
Regulations under the ▇▇▇▇ ▇▇▇. The Company has not received any notice from the
Commission pursuant to Section 8(e) of the 1940 Act with respect to the 1940 Act
Notification or the Registration Statement (or any amendment or supplement to
either of them).
(v) The Company carries a fidelity bond sufficient to satisfy the
requirements of Rule 17g-1 under the 1940 Act.
(w) Other than as contemplated by this Agreement, the Company has not
incurred any liability for any finder's or broker's fee, or agent's commission
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(x) The Company has not sent or received any notice indicating the
termination of or intention to terminate any of the contracts or agreements
referred to or described in the Registration Statement, the Prospectus or the
Disclosure Package, or filed as an exhibit to the Registration Statement, and no
such termination has been threatened by the Company or any other party to any
such contract or agreement. There are no contracts or documents which are
required to be described in the Registration Statement, the Prospectus or the
Disclosure Package or to be filed as exhibits thereto by the Acts or by the
Rules and Regulations which have not been so described and filed as required and
such contracts and documents as are summarized in the Registration Statement,
the Prospectus or the Disclosure Package are fairly summarized in all material
respects.
(y) The Company owns, licenses, or otherwise has rights in all United
States and foreign patents, trademarks, service marks, tradenames, copyrights,
trade secrets and other proprietary rights necessary for the conduct of its
business as currently carried on and as proposed to be carried on as described
in the Registration Statement, the Prospectus or the Disclosure Package
(collectively and together with any applications or registrations for the
foregoing, the "Intellectual Property"). Except as specifically described in the
Prospectus or the Disclosure Package, (i) no third parties have obtained rights
to any such Intellectual Property from the Company, other than licenses granted
in the ordinary course and those that would not have a Material Adverse Effect;
(ii) to the Company's knowledge, there is no infringement or misappropriation by
the Company or third parties of any such Intellectual Property; (iii) there is
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no pending or, to the Company's knowledge, threatened action, suit, proceeding
or claim by others challenging the Company's rights in or to any such
Intellectual Property, and the Company is unaware of any facts which would form
a basis for any such claim; and (iv) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others challenging
the validity, enforceability, or scope of any such Intellectual Property, and
the Company is unaware of any facts which would form a basis for any such claim.
None of the technology employed by the Company has been obtained or, to the
Company's knowledge, is being used by the Company in violation of the rights of
any person or third party. The Company knows of no infringement or
misappropriation by others of Intellectual Property.
(z) The conduct of business by the Company complies, and at all times has
complied, in all material respects with federal, state, local and foreign laws,
statutes, ordinances, rules, regulations, decrees, orders, Permits and other
similar items ("Laws") applicable to its business, including, without
limitation, licensing and certification Laws covering any aspect of the business
of the Company. The Company has not received any notification asserting, nor
does it have knowledge of, any present or past failure to comply with or
violation of any such Laws.
(aa) The information contained in the Registration Statement, the
Prospectus and the Disclosure Package regarding the Company's expectations,
plans and intentions, and any other information that constitutes
"forward-looking" information within the meaning of the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), were made by
the Company on a reasonable basis and reflect the Company's good faith belief
and/or estimate of the matters described therein. To the extent estimated or
projected, those estimates or projections set forth in the tables under the
"Summary of Fund Expenses" section of the Registration Statement, Prospectus and
the Disclosure Package have been prepared in accordance with the requirements of
Form N-2 and are reasonably believed to be attainable in all material respects
and are reasonably based.
(bb) Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Shares contemplated hereby shall be deemed a representation and
warranty by the Company to each Underwriter and shall be deemed to be a part of
this Section 1 and incorporated herein by this reference.
(cc) The Company has taken all required action under the Acts and the
Rules and Regulations to make the public offering and consummate the sale of the
Shares as contemplated by this Agreement.
(dd) All advertising, sales literature, promotional materials or any other
materials or information (including "prospectus wrappers", "broker kits" and any
roadshow or investor presentations), whether in oral, printed or electronic
form, authorized, provided or prepared by the Company or either Advisor in
connection with the offering and sale of the Shares (collectively, the
"Marketing Materials") complied and comply in all material respects with the
applicable requirements of the Securities Act, the 1940 Act, the Rules and
Regulations and the rules and interpretations of the NASD and if required to be
filed with the NASD under the NASD's conduct rules were so filed. No Marketing
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Materials contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Company and
the Advisors make no representations or warranties as to information contained
in or omitted from the Marketing Materials, in reliance upon, and in conformity
with, written information furnished to the Company or the Advisors by or on
behalf of any Underwriter through the Representative, specifically for use in
the preparation thereof. Any advertisement or sales material authorized by the
Company for use in the public offering of the Shares pursuant to Rule 482
complied with the requirements of Rule 482 of the Rules and Regulations under
the Securities Act.
(ee) This Agreement and each of the Company Agreements comply in all
material respects with all applicable provisions of the 1940 Act, the Rules and
Regulations thereunder, the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and the rules and regulations adopted by the Commission under
the Advisers Act (the "Advisers Act Rules and Regulations").
(ff) The Company has elected or will elect to be treated as a regulated
investment company under Subchapter M of the Code effective for its taxable year
ending [_____], 2006, and intends and expects to qualify as a regulated
investment company under Subchapter M of the Code for the current and all future
taxable years. The Company will distribute timely all of its investment company
taxable income and net capital gain so as to avoid any corporate income tax, and
the Company has taken and will take all actions and has omitted and will omit to
take all actions as are necessary to be consistent with the foregoing,
including, but not limited to, with respect to the investment of the proceeds of
the offering of Shares contemplated by this Agreement.
(gg) Except as disclosed in the Registration Statement, the Prospectus and
the Disclosure Package (or any amendment or supplement to either of them), no
trustee or officer of the Company or either Advisor is an "interested person"
(as defined in the ▇▇▇▇ ▇▇▇) of the Company or either Advisor or an "affiliated
person" (as defined in the ▇▇▇▇ ▇▇▇) of any Underwriter.
2. REPRESENTATIONS AND WARRANTIES OF THE INVESTMENT ADVISOR.
The Investment Advisor represents and warrants to each of the
Underwriters as of the date hereof, as of the Closing Date and each Option
Closing Date, if any, as follows:
(a) The Investment Advisor has been duly organized and is validly existing
as a limited partnership under the laws of the State of Illinois, with full
limited partnership power and authority to own or lease its properties and
conduct its business as described in the Prospectus and the Disclosure Package.
The Investment Advisor is duly qualified to transact business and is in good
standing in all jurisdictions in which the conduct of its business requires such
qualification; except where the failure to be so qualified or to be in good
standing would not have a Material Adverse Effect.
(b) Each Advisor Agreement has been duly authorized, executed and
delivered by the Investment Advisor, and constitutes a valid, legal, and binding
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obligation of the Investment Advisor, enforceable in accordance with its terms,
except as rights to indemnity hereunder may be limited by federal or state
securities laws. The Investment Advisor has full power and authority to enter
into each Advisor Agreement.
(c) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Investment Advisor, threatened against the Investment Advisor
before any court or administrative agency or otherwise (1) that is required to
be described in the Registration Statement , the Prospectus or the Disclosure
Package that are not so described, or (2) which, if determined adversely to the
Investment Advisor might have a Material Adverse Effect or prevent the
consummation of the transactions contemplated hereby, except as set forth in the
Registration Statement, the Prospectus and the Disclosure Package.
(d) Neither the Investment Advisor, nor to the Investment Advisor's
knowledge, any of its affiliates, has taken or may take, directly or indirectly,
any action designed to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation of
the price of the Common Shares to facilitate the sale or resale of the Shares.
(e) The Investment Advisor carries, or is covered by, insurance,
including, at a minimum, errors and omissions insurance, in such amounts and
covering such risks as is adequate for the conduct of its businesses and the
value of its properties and as is customary for companies engaged in similar
industries. All policies of insurance insuring the Investment Advisor or its
respective businesses, assets, employees, partners, officers and directors are
in full force and effect, and the Investment Advisor is in compliance with the
terms of such policies in all material respects. There are no claims by the
Investment Advisor under any such policy or instrument as to which an insurance
company is denying liability or defending under a reservation of rights clause.
(f) Other than as contemplated by this Agreement, the Investment Advisor
has not incurred any liability for any finder's or broker's fee, or agent's
commission in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
(g) The Investment Advisor is not, and with the giving of notice or lapse
of time or both, will not be, in violation of or in default under its
Partnership Agreement or under any agreement, lease, contract, indenture or
other instrument or obligation to which it is a party or by which it, or any of
its properties, is bound and which default has had or is reasonably likely to
have a Material Adverse Effect. The execution and delivery of each Advisor
Agreement and the consummation of the transactions herein and therein
contemplated and the fulfillment of the terms hereof will not (i) conflict with
or otherwise violate the terms and provisions of the Partnership Agreement of
the Investment Advisor or (ii) conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any contract, indenture,
mortgage, deed of trust or other agreement or instrument to which the Investment
Advisor is a party or any order, rule or regulation applicable to the Investment
Advisor of any court or of any regulatory body or administrative agency or other
governmental body having jurisdiction, which breach or default has had or is
reasonably likely to have a Material Adverse Effect.
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(h) The Investment Advisor is duly registered as an investment adviser
under the Advisers Act and is not prohibited by the Advisers Act, the 1940 Act,
the Advisers Act Rules and Regulations or the Rules and Regulations under the
1940 Act from acting under the Advisor Agreements as contemplated by the
Registration Statement, the Prospectus and the Disclosure Package.
(i) The Investment Advisor has the financial resources available to it
necessary for the performance of its services and obligations as contemplated in
the Registration Statement, the Prospectus and the Disclosure Package and under
this Agreement and the Advisor Agreements.
(j) The description of the Investment Advisor, its business, and the
statements attributable to the Investment Advisor, in the Registration
Statement, the Prospectus and the Disclosure Package or any Preliminary
Prospectus complied and comply in all material respects with the provisions of
the Acts, the Advisers Act, the Rules and Regulations and the Advisers Act Rules
and Regulations and did not and will not contain an untrue statement of a
material fact necessary to make the statements therein (in the case of a
prospectus, in light of the circumstances under which they were made) not
misleading.
(k) Since the date as of which information is given in the Registration
Statement and the Prospectus through the date hereof, and except as may
otherwise be disclosed in the Disclosure Package, there have been no
transactions entered into by the Investment Advisor which are material to the
Investment Advisor other than in the ordinary course of its business.
(l) Each Advisor Agreement complies in all material respects with all
applicable provisions of the 1940 Act, the Rules and Regulations under the 1940
Act, the Advisers Act and the Advisers Act Rules and Regulations.
3. REPRESENTATIONS AND WARRANTIES OF THE SUB-ADVISOR.
The Sub-Advisor represents and warrants to each of the Underwriters as
of the date hereof, as of the Closing Date and each Option Closing Date, if any,
as follows:
(a) The Sub-Advisor has been duly organized and is validly existing as a
limited liability company under the laws of the State of [Kentucky], with full
power and authority to own or lease its properties and conduct its business as
described in the Registration Statement, the Prospectus and the Disclosure
Package. The Sub-Advisor is duly qualified to transact business and is in good
standing in all jurisdictions in which the conduct of its business requires such
qualification; except where the failure to be so qualified or to be in good
standing would not have a Material Adverse Effect.
(b) Each Advisor Agreement to which the Sub-Advisor is a party has been
duly authorized, executed and delivered by the Sub-Advisor, and constitutes a
valid, legal, and binding obligation of the Sub-Advisor, enforceable in
accordance with its terms, except as rights to indemnity hereunder may be
limited by federal or
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state securities laws. The Sub-Advisor has full power and authority to enter
into each Advisor Agreement to which the Sub-Advisor is a party.
(c) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Sub-Advisor, threatened against the Sub-Advisor before any
court or administrative agency or otherwise which if determined adversely to the
Sub-Advisor might have a Material Adverse Effect or prevent the consummation of
the transactions contemplated hereby, except as set forth in the Registration
Statement, the Prospectus and the Disclosure Package.
(d) Neither the Sub-Advisor, nor to the Sub-Advisor's knowledge, any of
its affiliates, has taken or may take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the Common Shares to facilitate the sale or resale of the Shares.
(e) The Sub-Advisor carries, or is covered by, insurance, including, at a
minimum, errors and omissions insurance, in such amounts and covering such risks
as is adequate for the conduct of its businesses and the value of its properties
and as is customary for companies engaged in similar industries. All policies of
insurance insuring the Sub-Advisor or its respective businesses, assets,
employees, officers and directors are in full force and effect, and the
Sub-Advisor is in compliance with the terms of such policies in all material
respects. There are no claims by the Sub-Advisor under any such policy or
instrument as to which an insurance company is denying liability or defending
under a reservation of rights clause.
(f) Other than as contemplated by this Agreement, the Sub-Advisor has not
incurred any liability for any finder's or broker's fee, or agent's commission
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(g) The Sub-Advisor is not, and with the giving of notice or lapse of time
or both, will not be, in violation of or in default under its Certificate of
Formation or operating agreement or under any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or by which
it, or any of its properties, is bound and which default has had or is
reasonably likely to have a Material Adverse Effect. The execution and delivery
of each Advisor Agreement to which the Sub-Advisor is a party and the
consummation of the transactions therein contemplated and the fulfillment of the
terms hereof will not (i) conflict with or otherwise violate the terms and
provisions of the Certificate of Formation of the Sub-Advisor or (ii) conflict
with or result in a breach of any of the terms or provisions of, or constitute a
default under, any contract, indenture, mortgage, deed of trust or other
agreement or instrument to which the Sub-Advisor is a party or any order, rule
or regulation applicable to the Sub-Advisor of any court or of any regulatory
body or administrative agency or other governmental body having jurisdiction,
which breach or default has had or is reasonably likely to have a Material
Adverse Effect.
(h) The Sub-Advisor is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act, the 1940 Act, the
Advisers Act Rules and Regulations or the Rules and Regulations under the 1940
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Act from acting under the Advisor Agreements (to which such Sub-Advisor is a
party) as contemplated by the Registration Statement, the Prospectus and the
Disclosure Package.
(i) The Sub-Advisor has the financial resources available to it necessary
for the performance of its services and obligations as contemplated in the
Registration Statement, the Prospectus and the Disclosure Package and under this
Agreement and the Advisor Agreements (to which the Sub-Advisor is a party).
(j) The description of the Sub-Advisor, its business, and the statements
attributable to the Sub-Advisor, in the Registration Statement, the Prospectus
and the Disclosure Package or any Preliminary Prospectus complied and comply in
all material respects with the provisions of the Acts, the Advisers Act, the
Rules and Regulations and the Advisers Act Rules and Regulations and did not and
will not contain an untrue statement of a material fact necessary to make the
statements therein (in the case of a prospectus, in light of the circumstances
under which they were made) not misleading.
(k) Since the date as of which information is given in the Registration
Statement and the Prospectus through the date hereof, and except as may
otherwise be disclosed in the Disclosure Package, there have been no
transactions entered into by the Sub-Advisor which are material to the
Sub-Advisor and the transactions contemplated hereby other than in the ordinary
course of its business.
(l) Each Advisor Agreement to which the Sub-Advisor is a party complies in
all material respects with all applicable provisions of the 1940 Act, the Rules
and Regulations under the 1940 Act, the Advisers Act and the Advisers Act Rules
and Regulations.
4. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants herein
contained, and subject to the conditions herein set forth, the Company agrees to
sell to the Underwriters and each Underwriter agrees, severally and not jointly,
to purchase, at a price of $[____] per share, the number of Firm Shares set
forth opposite the name of each Underwriter in Schedule I hereof, subject to
adjustments in accordance with Section 11 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made in New
York Clearing House funds by federal (same day) funds against delivery of the
Firm Shares to the Representatives for the several accounts of the Underwriters.
Such payment and delivery are to be made through Full Fast Delivery through the
facilities of the Depository Trust Company, New York, New York at 9:00 a.m., New
York time, on the third business day after the date of this Agreement or at such
other time and date not later than five business days thereafter as you and the
Company shall agree upon, such time and date being herein referred to as the
"Closing Date." As used herein, "business day" means a day on which the New York
Stock Exchange is open for trading and on which banks in New York are open for
business and are not permitted by law or executive order to be closed. The Firm
Shares will be delivered in such denominations and in such registrations as the
Representatives request in writing not later than the second full business day
prior to the Closing Date.
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(c) In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase the Option
Shares at the price per share as set forth in the first paragraph of this
Section. The option granted hereby may be exercised in whole or in part by
giving written notice (i) at any time before the Closing Date and (ii) only once
thereafter within 45 days after the date of this Agreement, by RBC Capital
Markets Corporation, on behalf of the several Underwriters, to the Company
setting forth the number of Option Shares as to which the several Underwriters
are exercising the option, the names and denominations in which the Option
Shares are to be registered and the time and date at which such certificates are
to be delivered. The time and date at which the Option Shares are to be
delivered shall be determined by RBC Capital Markets Corporation but shall not
be earlier than three nor later than 10 full business days after the exercise of
such option, nor in any event prior to the Closing Date (such time and date
being herein referred to as the "Option Closing Date"). If the date of exercise
of the option is three or more days before the Closing Date, the notice of
exercise shall set the Closing Date as the Option Closing Date. The number of
Option Shares to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Shares being purchased as the number of
Firm Shares being purchased by such Underwriter bears to the total number of
Firm Shares, adjusted by you in such manner as to avoid fractional shares. The
option with respect to the Option Shares granted hereunder may be exercised only
to cover over-allotments in the sale of the Firm Shares by the Underwriters. RBC
Capital Markets Corporation, on behalf of the several Underwriters, may cancel
such option at any time prior to its expiration by giving written notice of such
cancellation to the Company. To the extent, if any, that the option is
exercised, payment for the Option Shares shall be made on the Option Closing
Date in federal (same day) funds through the facilities of the Depository Trust
Company in New York, New York drawn to the order of the Company.
5. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representative deems it advisable to
do so. The Firm Shares are to be initially offered to the public at the initial
public offering price set forth in the Prospectus. The Representatives may from
time to time thereafter change the public offering price and other selling
terms. To the extent, if at all, that any Option Shares are purchased pursuant
to Section 4 hereof, the Underwriters will offer them to the public on the
foregoing terms.
It is further understood that you will act as the Representative for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
6. COVENANTS OF THE COMPANY AND THE ADVISORS.
(a) The Company and the Investment Advisor, jointly and severally,
covenant and agree with the several Underwriters and, with respect to Sections
6(a)(ii), 6(a)(vii), 6(a)(x) and 6(a)(xi), the Company the Investment Advisor
and the Sub-Advisor, jointly and severally, covenant and agree with the several
Underwriters, that:
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(i) The Company will (A) use its best efforts to cause the Registration
Statement to become effective or, if the procedure in Rule 430A of the Rules and
Regulations under the Securities Act is followed, to prepare and timely file
with the Commission under Rule 497 of the Rules and Regulations under the
Securities Act a Prospectus in a form approved by the Representative containing
information previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rule 430A of the Rules and Regulations under the
Securities Act; (B) not file any amendment to the Registration Statement or
supplement to the Prospectus of which the Representative shall not previously
have been advised and furnished with a copy or to which the Representative shall
have reasonably objected in writing or which is not in compliance with the Rules
and Regulations; and (C) file on a timely basis all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission subsequent to the date of the Prospectus and prior to the termination
of the offering of the Shares by the Underwriters.
(ii) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
securities of the Company.
(iii) The Company will advise the Representative promptly (A) when the
Registration Statement or any post-effective amendment thereto shall have become
effective; (B) of receipt of any comments from the Commission; (C) of any
request of the Commission for amendment of the Registration Statement or for
supplementation of the Prospectus or for any additional information; and (D) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the use of the Prospectus or of the institution of
any proceedings for that purpose. The Company will use its best efforts to
prevent the issuance of any such stop order preventing or suspending the use of
the Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(iv) The Company will cooperate with the Representative in endeavoring
to qualify the Shares for sale under the securities laws of such jurisdictions
as the Representative may reasonably have designated in writing and will make
such applications, file such documents, and furnish such information as may be
reasonably required for that purpose, provided the Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to file
such a consent. The Company will, from time to time, prepare and file such
statements, reports, and other documents, as are or may be required to continue
such qualifications in effect for so long a period as the Representative may
reasonably request for distribution of the Shares.
(v) The Company will deliver to, or upon the order of, the
Representative, from time to time, as many copies of any Preliminary Prospectus
as the Representative may reasonably request. The Company will deliver to, or
upon the order of, the Representative during the period when delivery of a
Prospectus is required under the Acts, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representative may
reasonably request. The Company will deliver to the Representative such number
of copies of the Registration Statement (including such number of copies of the
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exhibits filed therewith that may reasonably be requested) and of all amendments
thereto, as the Representative may reasonably request.
(vi) The Company will comply with the Acts and the Rules and
Regulations, and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the distribution of the
Shares as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or if it is necessary at
any time to amend or supplement the Prospectus to comply with any law, the
Company promptly will prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the law.
(vii) The Company will make generally available to its security holders,
as soon as it is practicable to do so, but in any event not later than 15 months
after the effective date of the Registration Statement, an earning statement
(which need not be audited) in reasonable detail, covering a period of at least
12 consecutive months beginning after the effective date of the Registration
Statement, which earning statement shall satisfy the requirements of Section
11(a) of the Securities Act and Rule 158 of the Rules and Regulations thereunder
and will advise you in writing when such statement has been so made available.
(viii) No offering, sale, short sale or other disposition of any Common
Shares or other securities convertible into or exchangeable or exercisable for
Common Shares or derivative of Common Shares (or agreement for such) will be
made for a period of 180 days after the date of this Agreement, directly or
indirectly, by the Company otherwise than hereunder or with the prior written
consent of RBC Capital Markets Corporation.
(ix) The Company will use its best efforts to list, subject to notice of
issuance, the Shares on the New York Stock Exchange.
(x) The Company shall invest or otherwise use the net proceeds of its
sale of the Shares as described under the heading "Use of Proceeds" in the
Prospectus and the Disclosure Package in such a manner as to comply with the
investment restrictions and the 1940 Act and shall report with the Commission
with respect to the sale of the Shares and the application of the proceeds
therefrom as may be required in accordance with Rule 463 under the Securities
Act.
(xi) The Company has elected or will elect to be treated as a regulated
investment company under Subchapter M of the Code effective for its taxable year
ending [_____], 2006, will distribute timely all of its investment company
taxable income and net capital gain so as to avoid any corporate income tax, and
will take all actions and omit to take all actions as are necessary to qualify
as a regulated investment company under Subchapter M of the Code for the current
and all future taxable years and to be consistent otherwise with the foregoing,
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including, but not limited to, with respect to the investment of the proceeds of
the offering of Shares contemplated by this Agreement.
(xii) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of organization of the Company, a registrar for the Common
Shares.
7. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company under this Agreement, including,
without limiting the generality of the foregoing, the following: accounting fees
of the Company; the fees and disbursements of counsel for the Company; the cost
of printing and delivering to, or as requested by, the Underwriters copies of
the Registration Statement, Preliminary Prospectuses, the Prospectus, the
Underwriters' Selling Memorandum and the Underwriters' Invitation Letter, if
any, the listing application of the New York Stock Exchange, the filing fees of
the Commission; the filing fees incident to securing any required review by the
NASD of the terms of the sale of the Shares, the listing fee of the New York
Stock Exchange. Also, the Fund will pay the Underwriters $0.0___ [aggregate of
[$50,000]] per Common Share purchased by the Underwriters pursuant to this
Agreeement, as partial reimbursement of expenses in connection with the
Offering, provided, however, that such partial reimbursement payable by the Fund
shall not exceed 0.0___% of the aggregate offering price to the public (as set
forth in the Pricing Prospectus) of the Firm Shares that may be sold to the
Underwriters pursuant to this Agreement. The Investment Advisor has agreed to
pay (i) all organizational expenses of the Fund, and (ii) offering costs (other
than sales load, but including the partial reimbursement of expenses described
above) of the Fund that exceed $.04 per Fund Share. The Sub-Advisor has agreed
to reimburse the Investment Advisor for one-half of such organizational expenses
and offering costs of the Fund that exceed $.04 per Fund Share. To the extent
that aggregate offering expenses are less than $.04 per Fund Share, up to 0.10%
of the public offering price of the securities sold in the offering, up to such
expense limit, will be paid to First Trust Portfolios, L.P. as reimbursement for
the distribution services it provides to the Fund.
The Company shall not, however, be required to pay for any of the
Underwriters' expenses except that if this Agreement shall not be consummated
because the conditions in Section 8 hereof are not satisfied, or because this
Agreement is terminated by the Representatives pursuant to Section 13 hereof, or
by reason of any failure, refusal or inability on the part of the Company to
perform any undertaking or satisfy any condition of this Agreement or to comply
with any of the terms hereof on its part to be performed, unless such failure to
satisfy said condition or to comply with said terms be due to the default or
omission of any Underwriter, then the Company shall reimburse the several
Underwriters for reasonable out-of-pocket expenses actually incurred, including
all fees and disbursements of counsel, reasonably incurred in connection with
investigating, marketing and proposing to market the Shares or in contemplation
of performing their obligations hereunder; but the Company shall not in any
event be liable to any of the several Underwriters for damages on account of
loss of anticipated profits from the sale by them of the Shares.
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8. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm Shares
on the Closing Date and the Option Shares, if any, on the Option Closing Date
are subject to the accuracy, as of the Closing Date and the Option Closing Date,
if any, of the representations and warranties of the Company and the Advisors
contained herein, and to the performance by the Company and the Advisors of
their covenants and obligations hereunder and to the following additional
conditions:
(a) The Registration Statement and all post-effective amendments thereto
shall have become effective and any and all filings required by Rule 497 and
Rule 430A of the Rules and Regulations shall have been made, and any request of
the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company, shall be contemplated by the Commission, no
stop order suspending or preventing the use of the Pricing Prospectus shall have
been initiated, or to the knowledge of the Company, shall be contemplated by the
Commission; all requests for additional information on the part of the
Commission shall have been complied with to your reasonable satisfaction; and no
injunction, restraining order, or order of any nature by a federal or state
court of competent jurisdiction shall have been issued as of the Closing Date
which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date and the
Option Closing Date, if any, the opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, [counsel for
the Company], dated the Closing Date or the Option Closing Date, if any,
addressed to the Underwriters (and stating that it may be relied upon by ▇▇▇▇▇▇▇
Procter LLP, counsel for the Underwriters) to the effect that:
(i) The Company has been duly formed and is validly existing
under the laws of the Commonwealth of Massachusetts as a trust with transferable
shares of the type commonly called a Massachusetts business trust. The
Declaration of Trust confers upon the Trustees named therein, and their
successors in trust, power and authority to own or lease its properties and
conduct its business as described in the Prospectus and the Disclosure Package;
and the Company is duly qualified to transact business in all jurisdictions in
which the conduct of its business requires such qualification, or in which the
failure to qualify would have a Material Adverse Effect.
(ii) The Company has authorized and outstanding shares of
beneficial interest as set forth under the caption "Description of Shares" in
the Prospectus and the Disclosure Package; all of the outstanding Common Shares
have been duly authorized and validly issued and are fully paid and
non-assessable (except as set forth in the Registration Statement) and have been
offered and sold in compliance with all laws (including, without limitation,
federal and state securities laws); all of the Shares conform in all material
respects to the description thereof contained in the Prospectus and the
Disclosure Package; the Common Shares, including the Option Shares, if any, to
be sold by the Company pursuant to this Agreement have been duly authorized and
will be validly issued, fully paid and non-assessable (except as set forth in
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the Registration Statement) when issued and paid for as contemplated by this
Agreement; and no preemptive rights of shareholders exist with respect to any of
the Common Shares or the issue or sale of the Shares pursuant to the Company's
Declaration of Trust and By-Laws or any other agreement or instrument known to
such counsel.
(iii) Except as described in or contemplated by the Prospectus
and the Disclosure Package, to the knowledge of such counsel, there are no
outstanding securities of the Company convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of beneficial
interest of the Company and there are no outstanding or authorized options,
warrants or rights of any character obligating the Company to issue any of its
shares of beneficial interest or any securities convertible or exchangeable into
or evidencing the right to purchase or subscribe for any such shares of
beneficial interest; and except as described in the Prospectus, to the knowledge
of such counsel, no holder of any securities of the Company or any other person
has the right, contractual or otherwise, which has not been satisfied or
effectively waived, to cause the Company to sell or otherwise issue to them, or
to permit them to underwrite the sale of, any of the Shares or the right to have
any Common Shares or other securities of the Company included in the
Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Acts of any Common
Shares or other securities of the Company.
(iv) The Registration Statement and any 462(b) Registration
Statement have become effective under the Securities Act; any required filing of
the Prospectus pursuant to Rule 497(h) has been made in the manner and within
the time period required by Rule 497(h); and to the best of such counsel's
knowledge after due investigation, no stop order suspending the effectiveness of
the Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of such counsel, threatened by the Commission.
(v) The Registration Statement, at the time it became effective
under the Acts, the Prospectus, as of its date, and each amendment or supplement
thereto, as of its respective date, complied as to form in all material respects
with the requirements of the Acts and the applicable rules and regulations
thereunder (except that such counsel need express no opinion as to the financial
statements, related schedules and other financial data included or incorporated
by reference therein).
(vi) The statements under the captions "Management of the Fund -
Investment Management Agreement," "Management of the Fund - Investment Advisor"
"Management of the Fund - Sub-Advisor" "Dividend Reinvestment Plan,"
"Description of Shares" and "Certain Provisions in the Declaration of Trust" in
the Prospectus, insofar as such statements constitute a summary of documents
referred to therein or matters of law, fairly summarize in all material respects
the information called for with respect to such documents and matters by Form
N-2.
(vii) The statements made in the Registration Statement and the
Prospectus (and any amendment or supplement thereto through the date of the
opinion) under the caption "Tax Matters" have been reviewed by such counsel and
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to the extent they describe or summarize tax laws, legal conclusions, doctrines
or practices of the United States, present a fair and accurate description or
summary thereof as of the date of the opinion.
(viii) This Agreement and each Company Agreement has been duly
authorized, executed and delivered by the Company and complies in all material
respects with all applicable provisions of the 1940 Act, the Advisers Act, the
Rules and Regulations under the 1940 Act and the Advisers Act Rules and
Regulations.
(ix) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or described in
the Registration Statement, the Prospectus or the Disclosure Package which are
not so filed or described as required, and such contracts and documents as are
summarized in the Registration Statement, the Prospectus or the Disclosure
Package are fairly summarized in all material respects.
(x) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company except as set forth in the
Registration Statement, the Prospectus and the Disclosure Package.
(xi) The execution and delivery of this Agreement and the
Company Agreements (to which the Company is a party) and the consummation of the
transactions herein contemplated do not and will not conflict with or result in
a breach of any of the terms or provisions of, or constitute a default under,
the Declaration of Trust or By-Laws of the Company, or any agreement or
instrument known to such counsel to which the Company is a party or by which the
Company may be bound.
(xii) The Company Agreements, including this Agreement, have
each been duly authorized by all requisite action on the part of the Company,
executed and delivered by the Company, as of the dates noted therein. Assuming
due authorization, execution and delivery by the other parties thereto, each
such agreement (other than this Agreement) constitutes a valid and binding
agreement of the Company, enforceable in accordance with its terms, except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws and except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally.
(xiii) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by state securities
and Blue Sky laws as to which such counsel need express no opinion) except such
as have been obtained or made, specifying the same.
(xiv) The Company is duly registered under the 1940 Act as a
closed-end, diversified management investment company and the 1940 Act
Notification has been duly filed with the Commission, and, at the time of filing
thereof and at the time of filing any amendment or supplement thereto, conformed
in all material respects with all applicable provisions of the 1940 Act and the
Rules and Regulations thereunder and, to such counsel's knowledge, the Company
has not received any notice from the Commission pursuant to Section 8(e) of the
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1940 Act with respect to the 1940 Act Notification or the Registration Statement
(or any amendment or supplement to either of them).
The opinion in paragraph 8(b)(ii) will be subject to the qualification
that the shareholders of a Massachusetts business trust may, under some
circumstances, be subject to assessment at the insistence of creditors to pay
the obligations of such trust in the event that its assets are insufficient for
the purpose.
(c) The Representatives shall have received on the Closing Date and the
Option Closing Date, if any, the opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for
the Investment Advisor, dated the Closing Date or the Option Closing Date, if
any, addressed to the Underwriters (and stating that it may be relied upon by
▇▇▇▇▇▇▇ Procter LLP, counsel for the Underwriters) to the effect that:
(i) The Investment Advisor has been duly organized and is
validly existing as a limited partnership under the laws of the State of
Illinois with limited partnership power and authority to own or lease its
properties and conduct its business as described in the Registration Statement;
and the Investment Advisor is duly qualified to transact business in all
jurisdictions in which the conduct of its business requires such qualification,
except where the failure to be so qualified or to be in good standing would not
have a Material Adverse Effect.
(ii) The Investment Advisor is duly registered as an investment
adviser under the Advisers Act and is not prohibited by the Advisers Act, the
1940 Act, the Advisers Act Rules and Regulations or the Rules and Regulations
under the 1940 Act from acting under the Company Agreements (to which the
Investment Advisor is a party) as contemplated by the Registration Statement and
the Prospectus (or any amendment or supplement thereto).
(iii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Investment Advisor except as set
forth in the Prospectus.
(iv) The execution and delivery of each Advisor Agreement and
the consummation of the transactions contemplated therein do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the partnership agreement of the Investment Advisor,
or any agreement or instrument known to such counsel to which the Investment
Advisor is a party or by which the Investment Advisor may be bound.
(v) Each Advisor Agreement has been duly authorized, executed
and delivered by the Investment Advisor and complies in all material respects
with all applicable provisions of the 1940 Act, the Advisers Act, the Rules and
Regulations under the 1940 Act and the Advisers Act Rules and Regulations, and
each Advisor Agreement (other than this Agreement) constitutes a valid and
binding obligation of the Investment Advisor, enforceable in accordance with its
terms, except as rights to indemnity and contribution hereunder may be limited
by federal or state securities laws and except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally.
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(vi) The description of the Investment Advisor and its business,
and the statements attributable to the Investment Advisor, in the Registration
Statement, the Prospectus and the Disclosure Package (and any amendment or
supplement thereto) complied and comply in all material respects with the
provisions of the Acts, the Advisers Act, the Rules and Regulations and the
Advisers Act Rules and Regulations.
(d) The Representatives shall have received on the Closing Date and the
Option Closing Date, if any, the opinion of [____________], counsel for the
Investment Sub-Advisor, dated the Closing Date or the Option Closing Date, if
any, addressed to the Underwriters (and stating that it may be relied upon by
▇▇▇▇▇▇▇ Procter LLP, counsel for the Underwriters) to the effect that:
(i) The Sub-Advisor has been duly organized and is validly
existing as a corporation under the laws of the State of [Kentucky] with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement; and the Sub-Advisor is duly
qualified to transact business in all jurisdictions in which the conduct of its
business requires such qualification, except where the failure to be so
qualified or to be in good standing would not have a Material Adverse Effect.
(ii) The Sub-Advisor is duly registered as an investment adviser
under the Advisers Act and is not prohibited by the Advisers Act, the 1940 Act,
the Advisers Act Rules and Regulations or the Rules and Regulations under the
1940 Act from acting under the Company Agreements (to which the Advisor is a
party) as contemplated by the Registration Statement and the Prospectus (or any
amendment or supplement thereto).
(iii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Sub-Advisor except as set forth in
the Prospectus.
(iv) The execution and delivery of each Advisor Agreement to
which the Sub-Advisor is a party and the consummation of the transactions
contemplated therein do not and will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, the
certificate of incorporation or by-laws of the Sub-Advisor, or any agreement or
instrument known to such counsel to which the Sub-Advisor is a party or by which
the Sub-Advisor may be bound.
(v) Each Advisor Agreement to which the Sub-Advisor is a party
has been duly authorized, executed and delivered by the Sub-Advisor and complies
in all material respects with all applicable provisions of the 1940 Act, the
Advisers Act, the Rules and Regulations under the 1940 Act and the Advisers Act
Rules and Regulations, and each such agreement (other than this Agreement)
constitutes a valid and binding obligation of the Sub-Advisor, enforceable in
accordance with its terms, except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws and except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally.
(vi) The description of the Sub-Advisor and its business, and
the statements attributable to the Sub-Advisor, in the Registration Statement,
-22-
the Prospectus and the Disclosure Package (and any amendment or supplement
thereto) complied and comply in all material respects with the provisions of the
Acts, the Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations.
In addition to the matters set forth in Subsection (b), (c) and (d) of
this Section, the opinions delivered pursuant to Subsection (b), (c) and (d) of
this Section shall also include a statement to the effect that nothing has come
to the attention of such counsel which leads them to believe that (i) the
Registration Statement, at the time it became effective under the Acts (but
after giving effect to any modifications incorporated therein pursuant to Rule
430A under the Securities Act) and as of the Closing Date or the Option Closing
Date, if any, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) that the Disclosure Package, as of the
Applicable Time, contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements therein, in
the light of circumstances under which they were made, not misleading, and (iii)
the Prospectus, or any supplement thereto, on the date it was filed pursuant to
the Rules and Regulations and as of the Closing Date or the Option Closing Date,
if any, contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, related schedules and
other financial data included or incorporated by reference therein). With
respect to such statement, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP (with respect to the Fund and
the Investment Advisor) and [________] (with respect to the Sub-Advisor) may
state that their belief is based upon the procedures set forth therein, but is
without independent check and verification.
(e) The Representatives shall have received from ▇▇▇▇▇▇▇ Procter LLP,
counsel for the Underwriters, an opinion dated the Closing Date and the Option
Closing Date, if any, with respect to matters as the Representative reasonably
may request, and such counsel shall have received such papers and information as
they request to enable them to pass upon such matters.
(f) You shall have received, on each of the dates hereof, the Closing
Date and the Option Closing Date, if any, a letter dated the date hereof, the
Closing Date or the Option Closing Date, if any, in form and substance
satisfactory to you, of Deloitte & Touche LLP confirming that they are an
independent registered public accounting firm within the meaning of the Acts and
the applicable published Rules and Regulations thereunder and stating that in
their opinion the financial statements and schedules examined by them and
included or incorporated by reference in the Registration Statement comply in
form in all material respects with the applicable accounting requirements of the
Acts and the related published Rules and Regulations; and containing such other
statements and information as is ordinarily included in accountants' "comfort
letters" to Underwriters with respect to the financial statements and certain
financial and statistical information contained or incorporated by reference in
the Registration Statement and the Prospectus.
(g) The Representatives shall have received on the Closing Date and the
Option Closing Date, if any, a certificate or certificates of the Company's
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Chief Executive Officer and Chief Financial Officer to the effect that, as of
the Closing Date or the Option Closing Date, if any, each of them severally
represents as follows:
(i) The Registration Statement has become effective under the
Securities Act and 1940 Act and no stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings for such purpose
have been taken or are, to their knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company contained
in Section 1 hereof are true and correct as of the Closing Date or the Option
Closing Date, if any;
(iii) All filings required to have been made pursuant to Rules
497 or 430A under the Securities Act have been made;
(iv) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration Statement
were true and correct, and such Registration Statement and Prospectus did not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is given
in the Disclosure Package, there has not been any material adverse change or any
development involving a prospective change, which has had or is reasonably
likely to have a Material Adverse Effect, whether or not arising in the ordinary
course of business.
(h) The Representatives shall have received on the Closing Date and the
Option Closing Date, if any, a certificate or certificates of the Investment
Advisor's President and Chief Financial Officer to the effect that, as of the
Closing Date or the Option Closing Date, the Investment Advisor represents as
follows:
(i) The representations and warranties of the Advisor contained
in Section 2 hereof are true and correct as of the Closing Date or the Option
Closing Date, if any;
(ii) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration Statement
were true and correct, and such Registration Statement and Prospectus did not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(iii) Since the respective dates as of which information is
given in the Disclosure Package, there has not been any material adverse change
-24-
or any development involving a prospective change, which has had or is
reasonably likely to have a Material Adverse Effect, whether or not arising in
the ordinary course of business.
(i) The Representatives shall have received on the Closing Date and the
Option Closing Date, if any, a certificate or certificates of the Sub-Advisor's
President to the effect that, as of the Closing Date or the Option Closing Date,
if any, the Sub-Advisor represents as follows:
(i) The representations and warranties of the Sub-Advisor
contained in Section 3 hereof are true and correct as of the Closing Date or the
Option Closing Date, if any;
(ii) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration Statement
were true and correct, and such Registration Statement and Prospectus did not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(iii) Since the respective dates as of which information is
given in the Disclosure Package, there has not been any material adverse change
or any development involving a prospective change, which has had or is
reasonably likely to have a Material Adverse Effect, whether or not arising in
the ordinary course of business.
(j) The Company shall have furnished to the Representative such further
certificates and documents confirming the representations and warranties,
covenants and conditions contained herein and related matters as the
Representatives may reasonably have requested.
(k) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on the New York Stock Exchange.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representative and to ▇▇▇▇▇▇▇ Procter LLP,
counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representative by notifying the Company of such termination in writing on or
prior to the Closing Date or the Option Closing Date, if any.
In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 7, 10 and 17
hereof).
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9. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of the
Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
if any, no stop order suspending the effectiveness of the Registration Statement
shall have been issued and in effect or proceedings therefor initiated or
threatened.
10. INDEMNIFICATION.
(a) The Company and the Advisors, jointly and severally, agree:
(i) to indemnify and hold harmless each Underwriter, its
partners, members, directors and officers and each person, if any, who controls
such Underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities to which such Underwriter or
any such controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (A) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Pricing Prospectus, the
Prospectus or any amendment or supplement thereto, (B) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (C) any alleged act
or failure to act by any Underwriter in connection with, or relating in any
manner to, the Shares or the offering contemplated hereby, and which is included
as part of or referred to in any loss, claim, damage, liability or action
arising out of or based upon matters covered by clause (A) or (B) above
(provided, however, that neither the Company nor either Advisor shall be liable
under this clause (C) to the extent that it is determined in a final judgment by
a court of competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its gross negligence or willful
misconduct); provided, however, that neither the Company or the Advisors will be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission made in the Registration Statement,
any Preliminary Prospectus, the Pricing Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company or an Advisor by or through the
Representative specifically for use in the preparation thereof.
(ii) to reimburse each Underwriter and each such controlling
person upon demand for any legal or other out-of-pocket expenses reasonably
incurred by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability, action or
proceeding or in responding to a subpoena or governmental inquiry related to the
offering of the Shares, whether or not such Underwriter or controlling person is
a party to any action or proceeding. In the event that it is finally judicially
determined that the Underwriters were not entitled to receive payments for legal
and other expenses pursuant to this subparagraph, the Underwriters will promptly
return all sums that had been advanced pursuant hereto.
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(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company and the Advisors, each of their respective trustees, each
of their officers who have signed the Registration Statement, and each person,
if any, who controls the Company within the meaning of the Securities Act,
against any losses, claims, damages or liabilities to which the Company or
either Advisor or any such trustee, officer, or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Pricing Prospectus, the Prospectus or any amendment or
supplement thereto, or (ii) the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made; and will reimburse any legal or other expenses reasonably
incurred by the Company or any such trustee, officer, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that each Underwriter will
be liable in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission has been
made in the Registration Statement, any Preliminary Prospectus, the Pricing
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
the Representative specifically for use in the preparation thereof.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
10(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Subsection if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 10(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of presentation) the
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action.
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It is understood that the indemnifying party shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by you in the case
of parties indemnified pursuant to Section 10(a) and by the Company in the case
of parties indemnified pursuant to Section 10(b). The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment. In
addition, the indemnifying party will not, without the prior written consent of
the indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
(d) If the indemnification provided for in this Section is unavailable
to or insufficient to hold harmless an indemnified party under Section 10(a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Advisors (treated as one
person for this purpose) on the one hand and the Underwriters on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company or the Advisors on
the one hand and the Underwriters on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Advisors (treated as one person for this purpose) on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Advisors on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, the Advisors and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this Subsection were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
-28-
Subsection. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Subsection shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Subsection, (i) no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this Subsection to contribute are several in proportion to their
respective underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Pricing Prospectus, the Prospectus or any supplement
or amendment thereto, each party against whom contribution may be sought under
this Section hereby consents to the jurisdiction of any court having
jurisdiction over any other contributing party, agrees that process issuing from
such court may be served upon him or it by any other contributing party and
consents to the service of such process and agrees that any other contributing
party may join him or it as an additional defendant in any such proceeding in
which such other contributing party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section shall be paid by the indemnifying party to the indemnified party as such
losses, claims, damages, liabilities or expenses are incurred. The indemnity and
contribution agreements contained in this Section and the representations and
warranties of the Company and the Advisors set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its trustees or officers or any persons
controlling the Company, or the Advisors, or their respective directors or
officers or any persons controlling either Advisor (ii) acceptance of any Shares
and payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Underwriter, or to the Company or either Advisor, their
respective directors or officers, or any person controlling the Company or
either Advisor, shall be entitled to the benefits of the indemnity, contribution
and reimbursement agreements contained in this Section.
(g) In addition to the foregoing indemnification, the Company and the
Advisors, jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities described in the indemnity contained in Section 10(a), as limited by
the proviso set forth therein, with respect to any advertisement or sales
material authorized by the Company for use in the public offering of the Shares
pursuant to Rule 482 of the Rules and Regulations under the Securities Act.
11. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, if any, any
Underwriter shall fail to purchase and pay for the portion of the Shares which
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such Underwriter has agreed to purchase and pay for on such date (otherwise than
by reason of any default on the part of the Company), you, as the Representative
of the Underwriters, shall use your reasonable efforts to procure within 36
hours thereafter one or more of the other Underwriters, or any others, to
purchase from the Company such amounts as may be agreed upon and upon the terms
set forth herein, the Firm Shares or Option Shares, as the case may be, which
the defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representative, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company or you
as the Representative of the Underwriters, will have the right, by written
notice given within the next 36-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the non-defaulting
Underwriters or of the Company except to the extent provided in Section 10
hereof. In the event of a default by any Underwriter or Underwriters, as set
forth in this Section, the Closing Date or Option Closing Date, if any, may be
postponed for such period, not exceeding seven days, as you, as Representative,
may determine in order that the required changes in the Registration Statement
or in the Prospectus or in any other documents or arrangements may be effected.
The term "Underwriter" includes any person substituted for a defaulting
Underwriter. Any action taken under this Section shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
12. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, or faxed and confirmed as
follows:
if to the Underwriters, to RBC Capital Markets Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Syndicate Director
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company, to First Trust Strategic High Income Fund II
c/o First Trust Advisors L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
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if to the Advisor, to First Trust Advisors L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
if to the Sub-Advisor, to Valhalla Capital Partners, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
13. TERMINATION.
(a) This Agreement may be terminated by you by notice to the Company at
any time prior to the Closing Date if any of the following has occurred: (i)
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change or any development
involving a prospective change, which has had or is reasonably likely to have a
Material Adverse Effect; (ii) any outbreak or escalation of hostilities or
declaration of war or national emergency or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or change
in the financial markets of the United States would, in your reasonable
judgment, make it impracticable or inadvisable to market the Shares or to
enforce contracts for the sale of the Shares; (iii) suspension of trading in
securities generally on the New York Stock Exchange or limitation on prices
(other than limitations on hours or numbers of days of trading) for securities
on either such Exchange; (iv) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of any court or other
governmental authority which in your opinion materially and adversely affects or
may materially and adversely affect the business or operations of the Company;
(v) declaration of a banking moratorium by United States or New York State
authorities; (vi) the suspension of trading of the Company's Common Shares by
the New York Stock Exchange, the Commission, or any other governmental
authority; (vii) the taking of any action by any governmental body or agency in
respect of its monetary or fiscal affairs which in your reasonable opinion has a
material adverse effect on the securities markets in the United States; or
(viii) the failure of the conditions set forth in Section 8 of this Agreement to
be fulfilled when required to be fulfilled.
(b) This Agreement may be terminated by either you or the Company as
provided in Section 11 of this Agreement.
14. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Company, the Advisors and Underwriters and their respective successors,
executors, administrators, heirs and assigns, and the officers, directors and
controlling persons referred to herein, and no other person will have any right
or obligation hereunder. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
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15. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company for
inclusion in any Preliminary Prospectus, Prospectus or the Registration
Statement consists of the information contained in the second paragraph under
the heading "Price Stabilization, Short Positions and Penalty Bids" under the
caption "Underwriting" in the Prospectus.
16. NO FIDUCIARY DUTY.
Notwithstanding any preexisting relationship, advisory or otherwise,
between the parties or any oral representations or assurances previously or
subsequently made by the Underwriters, the Company acknowledges and agrees that:
(a) nothing herein shall create a fiduciary or agency relationship
between the Company and the Underwriters in connection with any aspect of the
offering of securities hereunder;
(b) the Underwriters are not acting as advisors, expert or otherwise, to
the Company in connection with this offering, the sale of the Shares or any
other services the Underwriters may be deemed to be providing hereunder,
including, without limitation, with respect to the public offering price of the
Shares;
(c) the relationship between the Company and the Underwriters is
entirely and solely commercial, based on arms-length negotiations;
(d) any duties and obligations that the Underwriters may have to the
Company shall be limited to those duties and obligations specifically stated
herein;
(e) notwithstanding anything in this Agreement to the contrary, the
Company acknowledges that the Underwriters may have financial interest in the
success of the offering of the Shares that is not limited to the difference
between the price to the public and the purchase price paid to the Company by
the Underwriters for the Shares and the Underwriters have no obligation to
disclose, or account to the Company for, any of such additional financial
interests; and
(f) the Underwriters have advised the Company that the Underwriters have
agreements and understandings with, and owe duties and obligations to, third
parties, including purchasers and potential purchasers of the securities, that
may create or exacerbate actual, potential or apparent conflicts of interest
between the Company and the Underwriters.
17. MASSACHUSETTS BUSINESS TRUST.
A copy of the declaration of trust of the Fund is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
this Agreement is executed on behalf of the Fund by an officer or trustee of the
Fund in his or her capacity as an officer or trustee of the Fund and not
individually and that the obligations of or arising out of this instrument are
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not binding upon any of the trustees, officers or shareholders individually but
are binding only upon the assets and property of the Fund.
18. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
the Advisors or any of their respective directors or officers and (c) delivery
of and payment for the Shares under this Agreement.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof.
This Agreement may only be amended or modified in writing, signed by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit.
[remainder of page intentionally blank]
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If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Advisors and
the several Underwriters in accordance with its terms.
Very truly yours,
FIRST TRUST ADVISORS L.P.
By:_____________________________________
VALHALLA CAPITAL PARTNERS, LLC
By:_____________________________________
FIRST TRUST STRATEGIC HIGH INCOME
FUND II
By:_____________________________________
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of the
date first above written.
RBC CAPITAL MARKETS CORPORATION
As the Representatives of the several
Underwriters listed on Schedule I
By: RBC Capital Markets Corporation
By:
__________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
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SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of
Firm Shares to
Underwriter be Purchased
----------- --------------
RBC Capital Markets Corporation [___]
-----------------
Total