EXHIBIT(h)(2)
UNDERWRITER PARTICIPATION AGREEMENT
This Agreement, dated as of July __, 2003, is entered into
among Xxxxxx Brothers Asset Management Inc., a Delaware corporation ("Xxxxxx
Brothers"), Xxxxxx Brothers/First Trust Income Opportunity Fund, a Delaware
statutory trust (the "Fund"), and First Trust Portfolios L.P. ("First Trust")
with respect to certain distribution assistance to be provided by First Trust
pertaining to the public offering of the Fund's common shares of beneficial
interest (the "Common Shares") and (at a later date) preferred shares of
beneficial interest ("Preferred Shares") of the Fund (collectively, the
"Shares"). In consideration of their mutual promises herein, the parties agree
as follows:
1. Status of First Trust.
(a) First Trust represents and warrants to
Xxxxxx Brothers and the Fund that:
(i) First Trust is a broker-dealer
registered as such with the Securities and Exchange Commission (the "SEC") and
is registered or qualified in all capacities and jurisdictions required by
reason of any participation in the distribution of Shares by it while providing
the services described above and each employee or agent of First Trust who
participates in the distribution of Shares has all necessary licenses and
qualifications in all capacities and jurisdictions required by reason of any
participation in a distribution of Shares pursuant to this Agreement.
(ii) First Trust is a registered
broker-dealer and is a member of the National Association of Securities Dealers,
Inc. (the "NASD") and it agrees to abide by all of the rules and regulations of
the NASD in connection with the participation in the distribution of Shares
including, without limitation, the NASD Conduct Rules. First Trust agrees to
notify Xxxxxx Brothers and the Fund in writing immediately in the event of (1)
its expulsion or suspension from the NASD, or (2) its being found to have
violated any applicable federal or state law, rule or regulation arising out of
its activities as a broker-dealer or in connection with this Agreement, or which
may otherwise affect in any material way its ability to act in accordance with
the terms of this Agreement. First Trust's expulsion from the NASD will
automatically terminate this Agreement immediately without notice. Suspension of
First Trust from the NASD for violation of any applicable federal or state law,
rule or regulation will terminate this Agreement effective immediately upon
Xxxxxx Brothers' written notice of termination to First Trust.
(iii) First Trust is familiar with and
understands the requirements of the Securities Act of 1933, as amended (the
"1933 Act"), and has substantial experience with offers and sales of securities
by issuers involving a public offering under the 1933 Act.
(iv) First Trust also represents and
warrants to the Fund that it is a limited partnership duly organized and validly
existing in good standing under the laws of the jurisdiction in which it is
organized.
(v) First Trust represents that it has
adopted a written Code of Ethics in compliance with Rule 17j-1 under the
Investment Company Act of 1940, as amended (the "1940 Act"), and will provide
the Fund with any amendments to such Code and any certifications required by
Rule l7j -1.
(vi) All advertising, sales literature,
promotional materials or any other material or information (including
"prospectus wrappers", "broker kits" and any roadshow or investor
presentations), whether in oral, printed or electronic form (collectively, the
"Marketing Materials"), prepared by First Trust for its exclusive use in
connection with the offering and sale of the Shares comply and will comply in
all material respects with the applicable requirements of the 1933 Act,
including the rules and regulations of the SEC under the Securities Act, 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; and no Marketing Materials contain
or will contain 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 First Trust shall not be deemed to be in
breach of this representation insofar as non-compliance with applicable laws or
regulations, or any untrue statement or omission, results from the Fund or
Xxxxxx Brothers providing an untrue statement of a material fact to First Trust
or failing to provide any material fact to First Trust.
(b) The Fund assumes no obligation or
responsibility as to First Trust's right to participate in the distribution of
the Fund's Shares in any jurisdiction. If First Trust, while performing the
services it provides the Fund hereunder, becomes subject to the laws of any
non-U.S. jurisdiction, First Trust will take, at its own expense, such action,
if any, as may be necessary to comply with the laws of such non-U.S.
jurisdictions.
(c) First Trust agrees that it will maintain the
registrations, qualifications, exemptions and memberships referred to in
paragraphs (a) and (b) in good standing and in full force and effect throughout
the term of this Agreement.
2. Services Provided by First Trust. First Trust shall
provide, at Xxxxxx Brothers' request, certain distribution and marketing
services for the Fund, including, but not limited to:
(a) making available information and consulting
services to members of the underwriting syndicate formed to make the primary
offering of the Shares;
(b) assist underwriters in conducting road
shows;
(c) preparing Marketing Materials and
presentations for brokers and intermediaries who may have clients interested in
acquiring Shares ("Brokers");
(d) developing contacts with Brokers and
replying to information requests from prospective investors or Brokers;
(e) aiding in the secondary market support of
the Fund through preparation and dissemination of regular written and oral
communications with the Fund's New
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York Stock Exchange specialist, the closed-end fund analyst community and
various information providers specializing in the dissemination of closed-end
fund information;
(f) communicating to the investment community
any changes made to the Fund's investment strategies; and
(g) host analyst or Broker meetings as
appropriate.
3. First Trust's Covenants.
(a) First Trust covenants and agrees that, in
connection with providing the services as described above, First Trust will not
participate in any distribution of Shares to any person that is not a registered
broker-dealer, and will not offer Shares, or solicit offers for Shares, of the
Fund.
(b) First Trust covenants and agrees that it
will not make any representations or provide any information to any person
concerning the Fund other than those contained in the Fund's registration
statement on Form N-2 (the "Registration Statement") or any Marketing Materials
approved by the Fund and Xxxxxx Brothers.
(c) First Trust covenants and agrees to use
information provided by the Fund or Xxxxxx Brothers only in the manner intended
(e.g., documents marked "internal use only" will not be disseminated to any
person other than a registered broker-dealer).
(d) First Trust covenants that the execution and
delivery of this Agreement and the performance of its services contemplated
hereby (i) have been duly authorized by all necessary action and all other
authorizations and approvals (if any) required for its lawful execution and
delivery of this Agreement and its performance hereunder have been obtained and
(ii) does not and will not violate any federal or state laws, rules or
regulations.
4. Independent Contractor. Neither Xxxxxx Brothers nor the
Fund shall be liable for any acts of First Trust or any employee, officer, agent
or affiliate of First Trust, and nothing contained herein shall be construed as
creating, or be deemed to create, the relationship of employer and employee
between the parties, nor any agency, joint venture, or partnership. First Trust
shall at all times be, and be deemed to be, an independent contractor. First
Trust, its employees, officers, agents and affiliates shall, under no
circumstances, have any authority to act for or to bind Xxxxxx Brothers or the
Fund in any way or to sign the name of Xxxxxx Brothers or the Fund or to
represent that Xxxxxx Brothers or the Fund is in any way responsible for the
acts or omissions of First Trust. First Trust shall not be required to devote
any minimum amount of time to performing its obligations under this Agreement.
5. Representations and Warranties by the Fund. The Fund
represents and warrants to First Trust as of the date hereof as follows:
(a) Compliance With Registration Requirements.
The Registration Statement has been filed with the SEC under the 1933 Act and
the 1940 Act and order of suspension or revocation of registration pursuant to
Section 8(e) of the 1940 Act and no proceedings for any such purpose have been
instituted or are pending or, to the knowledge of the
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Fund, are contemplated by the SEC, and any request on the part of the SEC for
additional information has been, or is being, complied with.
At the respective times the Registration Statement and any
post-effective amendments thereto become effective, the Registration Statement,
the notification of Form N-8A and any amendments and supplements thereto will
comply in all material respects, with the requirements of the 1933 Act and the
1940 Act and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading. Neither the prospectus nor any amendments or
supplements thereto, at the time the prospectus or any such amendment or
supplement will be issued, will include an untrue statement of a material fact
or will omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading.
(b) Independent Accountants. To the knowledge of
the Fund's officers, the accountants who will be certifying the statement of
assets and liabilities included in the Registration Statement are independent
public accountants as required by the 1933 Act.
(c) Financial Statements. To the knowledge of
the Fund's officers, the statement of assets and liabilities that will be
included in the Registration Statement and the prospectus, together with the
related notes, will present fairly the financial position of the Fund at the
date indicated; said statement will be prepared in conformity with generally
accepted accounting principles ("GAAP").
(d) No Material Adverse Change. Since the
respective dates as of which information is given in the Registration Statement
and the prospectus, except as otherwise stated therein, (i) there has been no
material adverse change in the business, financial condition, stockholder's
equity or results of operations of the Fund (a "Material Adverse Effect"), (ii)
there have been no transactions entered into by the Fund, other than those in
the ordinary course of business, which are material with respect to the Fund,
and (iii) there has been no dividend or distribution of any kind declared, paid
or made by the Fund on any class of its capital stock.
(e) Good Standing of the Fund. The Fund has been
duly organized and is validly existing as a statutory trust in good standing
under the laws of the State of Delaware and has statutory trust power and
authority to own, lease and operate its properties and to conduct its business
as described in the prospectus and to enter into and perform its obligations
under this Agreement; and the Fund is duly qualified as a foreign statutory
trust to transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse Effect.
(f) No Subsidiaries. The Fund has no
subsidiaries.
(g) Investment Company Status. The Fund is duly
registered with the SEC under the 1940 Act as a closed-end, diversified
management investment company, and no
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order of suspension or revocation of such registration has been issued or
proceedings therefor initiated or threatened by the Commission.
(h) Capitalization. The authorized, issued and
outstanding shares of beneficial interest in the Fund is as set forth in the
prospectus as of the date thereof under the caption "Description of Shares." All
issued and outstanding shares of beneficial interest in the Fund have been duly
authorized and validly issued and are fully paid and non-assessable, except as
provided for in the Fund's declaration of trust ("Declaration of Trust") and
have been offered and sold or exchanged by the Fund in compliance with all
applicable laws (including, without limitation, federal and state securities
laws); none of the outstanding shares of beneficial interest in the Fund was
issued in violation of the preemptive or other similar rights of any
securityholder of the Fund.
(i) Description of Common Shares. The Common
Shares conform to all statements relating thereto contained in the prospectus
and such description conforms to the rights set forth in the instruments
defining the same. No holder of the Common Shares will be subject to personal
liability by reason of being such a holder and the issuance of the Common Shares
is not subject to the preemptive or other similar rights of any securityholder
of the Fund.
(j) Absence of Defaults and Conflicts. The Fund
is not in violation of its Declaration of Trust or by-laws ("By-Laws"), or in
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or other agreement or instrument to which it is
a party or by which it may be bound, or to which any of the property or assets
of the Fund is subject (collectively, "Agreements and Instruments"), except for
such violations or defaults that would not result in a Material Adverse Effect;
and the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein and in the Registration
Statement and compliance by the Fund with its obligations hereunder have been
duly authorized by all necessary corporate action and do not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Fund (except for such conflicts, breaches or defaults or liens, charges or
encumbrances that in the aggregate would not reasonably be expected to have a
Material Adverse Effect), nor will such action result in any violation of the
provisions of the agreement and Declaration of Trust or By-Laws of the Fund or
any applicable law, statute, rule, regulation, judgment, order, writ or decree
of any government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Fund or any of its assets, properties or
operations.
(k) Absence Of Proceedings. There are no legal
or governmental proceedings pending to which the Fund is a party or of which any
property or assets of the Fund is subject which, is reasonably likely to be
determined adversely to the Fund, and if determined adversely to the Fund, would
be reasonably likely to have a Material Adverse Effect; and to the best of the
Fund's knowledge, no such proceedings are threatened by governmental authorities
or threatened by others.
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(l) Absence of Further Requirements. No filing
with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency is
necessary or required for the consummation of the transactions contemplated by
this Agreement, except such as have been already obtained or as may be required
under the 1933 Act, the 1940 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or under the rules of the NASD.
(m) Possession of Licenses And Permits. The Fund
possesses such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to operate its
properties and to conduct the business as contemplated in the prospectus; the
Fund is in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse Effect; and the Fund has not
received any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(n) Subchapter M. The Fund intends to direct the
investment of the proceeds of the offering described in the Registration
Statement in such a manner as to comply with the requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended ("Subchapter M of the Code" and
the "Code," respectively), and intends to qualify as a "regulated investment
company" under Subchapter M of the Code.
(o) NYSE Listing. The Common Shares have been
duly approved for listing upon official notice of issuance on the New York Stock
Exchange (the "NYSE") and the Fund has filed a registration statement on Form
8-A under the 1934 Act.
6. Representations and Warranties by Xxxxxx Brothers.
Xxxxxx Brothers represents and warrants to First Trust as of the date hereof as
follows:
(a) Good Standing of Xxxxxx Brothers. Xxxxxx
Brothers has been duly organized and is validly existing and in good standing as
a corporation under the laws of the State of Delaware with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, except where the failure
to so qualify or to be in good standing would not reasonably be expected to have
a Material Adverse Effect.
(b) Investment Adviser Status. Xxxxxx Brothers
is duly registered and in good standing with the SEC as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act") and
is not prohibited by the Advisers Act or the 1940 Act, or the rules and
regulations under such acts, from acting under the investment advisory agreement
to which it is a part with the Fund (the "Investment Advisory Agreement") as
contemplated by the prospectus.
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(c) Capitalization. Xxxxxx Brothers has the
financial resources available to it necessary for the performance of its
services and obligations as contemplated in the prospectus, this Agreement and
under the Investment Advisory Agreement.
(d) Authorization of Agreements; Absence of
Defaults and Conflicts. The execution, delivery and performance of this
Agreement and the Investment Advisory Agreement and the consummation of the
transactions contemplated hereby and thereby will not (i) conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which Xxxxxx Brothers is a party
or by which Xxxxxx Brothers is bound or to which any of the property or assets
of Xxxxxx Brothers is subject, (ii) result in any violation of the provisions of
the charter documents or by-laws of Xxxxxx Brothers or (iii) result in the
violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over Xxxxxx Brothers of any of
its properties or assets, except in the case of clauses (i) and (iii), such
conflicts, breaches or violations that in the aggregate would not reasonably be
expected to have a Material Adverse Effect; and no consent, approval,
authorization or order of any such court or governmental agency or body is
required for the consummation by Xxxxxx Brothers of the transactions
contemplated by this Agreement or the Investment Advisory Agreement, except as
have been obtained or may be required under the 1933 Act, the 1940 Act, the 1934
Act, state securities laws or the rules of the NASD.
(e) No Material Adverse Change. Since the
respective dates as of which information is given in the Registration Statement
and the prospectus, except as otherwise stated therein, to the best of Xxxxxx
Brothers' knowledge there has not occurred any event which should reasonably be
expected to have a Material Adverse Effect on the ability of Xxxxxx Brothers to
perform its obligations under this Agreement and the Investment Advisory
Agreement.
(f) Absence of Proceedings. There are no legal
or governmental proceedings pending to which Xxxxxx Brothers is a party or of
which any property or assets of Xxxxxx Brothers is the subject which is
reasonably likely to be determined adversely to Xxxxxx Brothers and, if
determined adversely to Xxxxxx Brothers, would be reasonably likely to have a
Material Adverse Effect; and to the best of Xxxxxx Brothers' knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(g) Absence Of Violation Or Default. Xxxxxx
Brothers is not in violation of its certificate of incorporation, its by-laws or
other organizational documents or in default under any agreement, except for
such violations or defaults that would not reasonably be expected to have a
Material Adverse Effect.
7. Covenants Of The Fund.
(a) The Fund covenants with First Trust as
follows:
(i) Compliance with Securities
Regulations and SEC Requests. The Fund, subject to Section 7(a) (ii) below, will
comply with the requirements of Rule 430A, as applicable, and will notify First
Trust immediately, and confirm the notice in writing, (A) when
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any post-effective amendment to the Registration Statement shall become
effective, or any supplement to the prospectus or any amended prospectus shall
have been filed, (B) of the receipt of any comments from the SEC, (C) of any
request by the SEC for any amendment to the Registration Statement or any
amendment or supplement to the prospectus or for additional information and (D)
of the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the Common
Shares for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Fund will promptly
effect the filings necessary pursuant to Rule 497 and will take such steps as it
deems necessary to ascertain promptly whether the form of prospectus transmitted
for filing under Rule 497 was received for filing by the SEC and, in the event
that it was not, it will promptly file such prospectus. The Fund will make a
reasonable effort to prevent the issuance of any stop order, or order of
suspension or revocation of registration pursuant to Section 8(e) of 1940 Act
and, if any such stop order or order of suspension or revocation of registration
is issued, to obtain the lifting thereof at the earliest possible moment.
(ii) Filing of Amendments. The Fund will
give First Trust notice of its intention to file or prepare any amendment to the
Registration Statement, any term sheet or any amendment, supplement or revision
to the prospectus included in the Registration Statement that becomes effective,
will furnish First Trust with copies of any such documents within a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file or use any such document to which First Trust shall reasonably
object.
(iii) Delivery Of Prospectuses. The Fund
shall deliver to First Trust, without charge, as many copies of each preliminary
prospectus as First Trust reasonably requests, and the Fund hereby consents to
the use of such copies for purposes permitted by the 1933 Act, except as
provided in Section 3(a) of this Agreement. The Fund will furnish to First
Trust, without charge, during the period when the prospectus is required to be
delivered under the 1933 Act or the 1934 Act, such number of copies of the
prospectus (as amended or supplemented) as First Trust may reasonably request.
The prospectus and any amendments or supplements thereto furnished to First
Trust will be identical to the electronically transmitted copies thereof filed
with the SEC pursuant to XXXXX, except to the extent permitted by Regulation
S-T.
(iv) Continued Compliance with
Securities Laws. If at any time it shall be necessary, in the opinion of the
Fund's counsel, to amend the Registration Statement or amend or supplement the
prospectus in order to comply with the requirements of the 1933 Act, the Fund
will promptly prepare and file with the SEC, subject to Section 6(a)(ii) above,
such amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the prospectus comply with
such requirements, and the Fund will furnish to First Trust such number of
copies of such amendment or supplement as First Trust may reasonably request.
(v) Blue Sky Qualifications. The Fund
will use its best efforts, in cooperation with First Trust, to qualify the
Common Shares for offering and sale under the applicable securities laws of such
states and other jurisdictions of the United States as First Trust may designate
and to maintain such qualifications in effect for a period of not less than one
year
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from the later of the effective date of the Registration Statement; provided,
however, that the Fund shall not be obligated to file any general consent to
service of process or to qualify as a foreign statutory trust or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the common shares
have been so qualified, the Fund will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of the
Registration Statement.
(vi) Use Of Proceeds. The Fund will use
the net proceeds received by it from the sale of the Common Shares in the manner
specified in the prospectus under "Use of Proceeds."
(vii) Reporting Requirements. The Fund,
during the period when the prospectus is required to be delivered under the 1933
Act or the 1934 Act, will seek to file all documents required to be filed with
the SEC pursuant to the 1940 Act and the 1934 Act within the time periods
required by the 1940 Act and the 1934 Act and the rules and regulations of the
SEC thereunder, respectively.
8. Standard Of Care. First Trust shall perform its duties
and obligations hereunder as a reasonable person in like circumstances would
perform such duties and obligations.
9. Indemnification.
(a) First Trust shall indemnify and hold
harmless the Fund, Xxxxxx Brothers and their respective affiliates, partners,
members, managers, shareholders, officers, directors, agents and employees,
including, but not limited to, the underwriters of the Shares, from and against
any loss, claim, damage, liability, joint or several (including reasonable
attorneys' fees and expenses), or any action in respect thereof, to which the
Fund, Xxxxxx Brothers or their respective affiliates, partners, members,
managers, shareholders, officers, directors, agents and employees, including,
but not limited to, the underwriters of the Shares, may become subject insofar
as such loss, claim, damage, liability or action arises out of, or is based
upon: (i) any willful misfeasance or gross negligence by First Trust in the
performance of its duties and obligations hereunder; (ii) any violation of any
applicable law by First Trust, its employees, agents or representatives; or
(iii) any untrue statement or alleged untrue statement of material fact
contained in any preliminary prospectus, the Registration Statement or the
prospectus or in any amendment or supplement thereto, or (iv) the omission or
alleged omission to state in any preliminary prospectus, the Registration
Statement or the prospectus, or in any amendment or supplement thereto, any
material fact required to be stated therein or necessary to make the statements
therein not misleading, but, with respect to (iii) and (iv) above, only to the
extent that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information concerning First Trust furnished to the Fund or Xxxxxx Brothers by
or on behalf of First Trust specifically for inclusion therein, and shall
reimburse the Fund and Xxxxxx Brothers and their respective affiliates,
partners, members, managers, shareholders, officers, directors, agents and
employees, including, but not limited to, the underwriters of the Shares, for
any legal or other expenses reasonably
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incurred by any of them in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expense are incurred. The foregoing indemnity agreement is in addition to
any liability which First Trust may otherwise have to the Fund, Xxxxxx Brothers
and their respective affiliates, partners, members, managers, shareholders,
officers, directors, agents and employees, including, but not limited to, the
underwriters of the Shares, as the case may be, in reliance upon any untrue
statement or alleged untrue statement of a material fact contained in the Fund's
Registration Statement or any amendment thereto, or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or final prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, regarding First Trust.
(b) The Fund and Xxxxxx Brothers shall jointly
and severally indemnify and hold harmless First Trust, and its affiliates,
partners, members, managers, shareholders, officers, directors, agents and
employees, from and against any loss, claim, damage, liability, joint or
several, including reasonable attorneys' fees and expenses, or any action in
respect thereof, to which First Trust or its affiliates, partners, members,
managers, shareholders, officers, directors, agents and employees may become
subject, under the 1933 Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon: (i) any untrue statement or
alleged untrue statement of material fact contained (A) in any preliminary
prospectus, the Registration Statement or the prospectus or in any amendment or
supplement thereto, including the Rule 430A Information, if applicable, or (B)
in any Marketing Materials that were not prepared by First Trust for its
exclusive use, (ii) the omission or alleged omission to state in any preliminary
prospectus, the Registration Statement or the prospectus, or in any amendment or
supplement thereto, or in any Marketing Materials that were not prepared by
First Trust for its exclusive use, any material fact required to be stated
therein or necessary to make the statements therein not misleading, or (iii) any
act or failure to act or any alleged act or failure to act by First Trust in
connection with, or relating in any manner to, the Shares or the offering
thereof, 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 caused by
clause (i) or (ii) above (provided that neither the Fund nor Xxxxxx Brothers
shall be liable under this clause (iii) 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 First Trust through its gross
negligence or willful misconduct), and shall reimburse First Trust and each such
affiliate, partner, member, manager, shareholder, officer, director, agent and
employee promptly upon demand for any legal or other expenses reasonably
incurred by them in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that neither the Fund nor Xxxxxx
Brothers shall be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any preliminary prospectus, the Registration Statement or the prospectus, or in
any such amendment or supplement, in reliance upon and in conformity with
written information concerning First Trust furnished to the Fund or Xxxxxx
Brothers by or on behalf of First Trust specifically for
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inclusion therein. The foregoing indemnity agreement is in addition to any
liability which the Fund or Xxxxxx Brothers may otherwise have to First Trust or
to any affiliate, partner, member, manager, shareholder, officer, director,
agent or employee.
(c) The indemnified party (the "Indemnified
Party") shall give notice to the other party (the "Indemnifying Party") promptly
after the summons or other first legal process is served on the Indemnified
Party for any claim, notice of claim or arbitration demand as to which indemnity
may be sought pursuant to paragraphs (a), (b) and (c) of this Section 9. The
Indemnified Party shall assume the defense of any such claim or any litigation
resulting from it, provided that the Indemnifying Party may participate in such
defense at its own expense. The failure of the Indemnified Party to give notice
as provided in this paragraph (d) shall not relieve the Indemnifying Party from
any liability unless such failure to give proper notice prohibits the
Indemnifying Party from defending the claim. No Indemnifying Party, in the
defense of any such claim or litigation, shall, without the consent of the
Indemnified Party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term the giving by the claimant or
plaintiff to the Indemnified Party of a release from all liability in respect of
such claim or litigation.
(d) The provisions of this Section 9 shall
survive the termination of this Agreement.
10. Fees. In consideration for its services for the Fund
hereunder, First Trust shall receive (i) a one-time fee of $100,000 from Xxxxxx
Brothers or its affiliate and (ii) a fee, payable by Xxxxxx Brothers from its
own resources in such amount as is mutually agreed upon by Xxxxxx Brothers and
First Trust.
11. Notices.
Except as otherwise specifically provided in this Agreement,
all notices required or permitted to be given pursuant to this Agreement shall
be given in writing and delivered by personal delivery or by postage prepaid,
registered or certified first class mail, return receipt requested, nationally
recognized overnight courier service, or by facsimile, electronic mail or
similar means of same day delivery (with a confirming copy by mail as provided
herein). Unless otherwise notified in writing, all notices to the Fund, Xxxxxx
Brothers and First Trust shall be given or sent to the addresses set forth
below.
If to the Fund:
Xxxxxx Brothers/First Trust Income Opportunity Fund
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxx
tel: 000.000.0000
fax: 000.000.0000
e-mail: xxxxxxxx@xxxxxx.xxx
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If to Xxxxxx Brothers:
Xxxxxx Brothers Asset Management Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
tel: 000.000.0000
fax: 000.000.0000
e-mail: xxxxxxx@xxxxxx.xxx
If to First Trust:
First Trust Portfolios L.P.
0000 Xxxxxxxxxxx Xxxx
Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
tel: 000-000-0000
fax: 000-000-0000
e-mail: XXxxxxxx@XXXxxxxxxxxx.xxx
12. Termination and Amendment.
(a) This Agreement shall continue for an initial
period of two (2) years and thereafter shall continue automatically for
successive annual periods, provided such continuance is specifically approved at
least annually by (a) a vote of a majority of the Fund's board of trustees
("Board") and (b) a vote of a majority of the Fund's Board members who are not
interested persons (as defined in the 0000 Xxx) of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable (a) by the Fund, without penalty, on
thirty (30) days' written notice, by a vote of a majority of the Fund's Board,
(b) on sixty (60) days' written notice by First Trust or (c) on thirty (30)
days' written notice, by Xxxxxx Brothers. This Agreement shall automatically
terminate in the event of its "assignment" (as is defined in the 0000 Xxx) or
upon the termination of the servicing agreement between the Fund and First
Trust.
(b) This Agreement may be amended only by a
writing signed by the parties hereto.
13. Miscellaneous.
(a) This Agreement sets forth the entire
Agreement between the parties hereto and replaces and supersedes all other
understandings, commitments, and agreements relating to the subject matter
hereto.
(b) No waiver of any provision of this Agreement
or the performance thereof shall be effective unless in writing signed by the
party making such waiver or shall be deemed to be a waiver of any other
provision or the performance thereof or of any future performance.
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(c) If any provision of this Agreement is
determined to be unenforceable, the remaining provisions shall remain
enforceable to the extent permissible.
(d) This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
(e) The Supreme Court of the State of New York
in the county of New York shall have exclusive jurisdiction over any action,
suit or proceeding against any party with respect to this Agreement and each
party hereby irrevocably waives, to the fullest extent permitted by law, any
objection that it may have, whether now or in the future, to the laying of venue
in, or to the jurisdiction of, any and each of such courts for the purposes of
any such suit, action, proceeding or judgment and further waives any claim that
any such suit, action, proceeding or judgment has been brought in an
inconvenient forum, and each party hereby submits to such jurisdiction.
Notwithstanding the place where this Agreement may be executed by any of the
parties thereto, the parties expressly agree that all the terms and provisions
hereof shall be construed under the laws of the State of New York.
(f) The parties to this Agreement hereby
irrevocably waive any and all right to a trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
thereby.
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IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as of the date first set forth above.
XXXXXX BROTHERS/FIRST TRUST INCOME
OPPORTUNITY FUND
By: ________________________________________
Name:
Title:
XXXXXX BROTHERS ASSET MANAGEMENT INC.
By: ________________________________________
Name:
Title:
FIRST TRUST PORTFOLIOS L.P.
By: ________________________________________
Name:
Title:
[Signature Page to Underwriter Participation Agreement]
