INTERIM INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this [ ] day of March, 2014 by and among First Trust
Dividend and Income Fund, a Massachusetts business trust (the "Fund"), First
Trust Advisors L.P., an Illinois limited partnership (the "Manager") and a
registered investment adviser with the Securities and Exchange Commission
("SEC"), and Chartwell Investment Partners, Inc., a Pennsylvania corporation and
a registered investment adviser with the SEC ("New Chartwell").
WHEREAS, the Fund is a closed-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Fund has retained the Manager to serve as the investment
manager for the Fund pursuant to an Investment Management Agreement between the
Manager and the Fund (as such agreement may be modified from time to time, the
"Management Agreement");
WHEREAS, the Management Agreement provides that the Manager may, subject
to the initial and periodic approvals required under Section 15 of the 1940 Act,
appoint a sub-adviser at its own cost and expense for the purpose of furnishing
certain services required under the Management Agreement;
WHEREAS, the Fund and the Manager have retained Chartwell Investment
Partners, L.P. ("Chartwell") to furnish investment advisory services for the
Fund's investment portfolio pursuant to an Investment Sub-Advisory Agreement
dated September 16, 2013 (the "Sub-Advisory Agreement");
WHEREAS, TriState Capital Holdings, Inc. ("TriState"), New Chartwell (a
wholly owned subsidiary of TriState), Chartwell and certain owners of Chartwell
have entered into a definitive asset purchase agreement pursuant to which New
Chartwell will acquire substantially all of the assets of Chartwell (the
"Transaction") for certain compensation;
WHEREAS, the consummation of the Transaction may operate as an
"assignment" of the Sub-Advisory Agreement that terminates the Sub-Advisory
Agreement pursuant to Section 7 thereof;
WHEREAS, the Fund and the Manager desire to retain New Chartwell to
furnish certain investment advisory services for the Fund's investment
portfolio; and
WHEREAS, the Fund and the Manager desire to enter into this agreement (the
"Agreement") pursuant to Rule 15a-4 under the 1940 Act, under which New
Chartwell will furnish certain investment advisory services for the Fund upon
the terms and conditions hereafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Appointment. The Fund and the Manager hereby appoint New Chartwell to
provide certain sub-investment advisory services to the Fund for the period and
on the terms set forth in this Agreement. New Chartwell accepts such appointment
and agrees to furnish the services herein set forth for the compensation herein
provided. New Chartwell shall, for all purposes herein provided, be deemed an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for nor represent the Fund or the Manager in any
way, nor otherwise be deemed an agent of the Fund or the Manager.
2. Services to Be Performed. Subject always to the supervision of the
Fund's Board of Trustees (the "Board of Trustees" or the "Board") and the
Manager, New Chartwell will act as sub-adviser for, and manage on a
discretionary basis the investment and reinvestment of the assets of the Fund,
furnish an investment program in respect of, make investment decisions for, and
place all orders for the purchase and sale of securities and other instruments
for the Fund's investment portfolio, all on behalf of the Fund and as described
in the Fund's most recent effective registration statement on Form N-2, as the
same may thereafter be amended from time to time. In the performance of its
duties, New Chartwell will in all material respects (a) satisfy any applicable
fiduciary duties it may have to the Fund, (b) monitor the Fund's investments,
and (c) comply with the provisions of the Fund's Declaration of Trust and
By-laws, as amended from time to time and communicated by the Fund or the
Manager to New Chartwell in writing, and the stated investment objectives,
policies and restrictions of the Fund as such objectives, policies and
restrictions may subsequently be changed by the Fund's Board of Trustees and
communicated by the Fund or the Manager to New Chartwell in writing. The Fund or
the Manager has provided New Chartwell with current copies of the Fund's
Declaration of Trust, By-laws, prospectus, statement of additional information
and any amendments thereto, and any objectives, policies or limitations not
appearing therein as they may be relevant to New Chartwell's performance under
this Agreement.
New Chartwell is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio investments for the Fund, and is
directed to use its commercially reasonable efforts to obtain best execution,
which includes most favorable net results and execution of the Fund's orders,
taking into account all appropriate factors, including price, dealer spread or
commission, size and difficulty of the transaction and research or other
services provided. Subject to approval by the Fund's Board of Trustees and
compliance with the policies and procedures adopted by the Board of Trustees for
the Fund and to the extent permitted by and in conformance with applicable law
(including Rule 17e-1 under the 1940 Act), New Chartwell may select brokers or
dealers affiliated with New Chartwell. It is understood that New Chartwell will
not be deemed to have acted unlawfully, or to have breached a fiduciary duty to
the Fund, or be in breach of any obligation owing to the Fund under this
Agreement, or otherwise, solely by reason of its having caused the Fund to pay a
member of a securities exchange, a broker or a dealer a commission for effecting
a securities transaction for the Fund in excess of the amount of commission
another member of an exchange, broker or dealer would have charged if New
Chartwell determined in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or New Chartwell's
overall responsibilities with respect to its accounts, including the Fund, as to
which it exercises investment discretion.
In addition, New Chartwell may, to the extent permitted by applicable law,
aggregate purchase and sale orders of securities placed with respect to the
assets of the Fund with similar orders being made simultaneously for other
accounts managed by New Chartwell or its affiliates, if in New Chartwell's
reasonable judgment such aggregation shall result in an overall economic benefit
to the Fund, taking into consideration the selling or purchase price, brokerage
commissions and other expenses. In the event that a purchase or sale of an asset
of the Fund occurs as part of any aggregate sale or purchase orders, the
objective of New Chartwell and any of its affiliates involved in such
transaction shall be to allocate the securities so purchased or sold, as well as
expenses incurred in the transaction, among the Fund and other accounts in a
fair and equitable manner. Nevertheless, the Fund and Manager acknowledge that
under some circumstances, such allocation may adversely affect the Fund with
respect to the price or size of the securities positions obtainable or salable.
Whenever the Fund and one or more other investment advisory clients of New
Chartwell have available funds for investment, investments suitable and
appropriate for each will be allocated in a manner believed by New Chartwell to
be equitable to each, although such allocation may result in a delay in one or
more client accounts being fully invested that would not occur if such an
allocation were not made. Moreover, it is possible that due to differing
investment objectives or for other reasons, New Chartwell and its affiliates may
purchase securities of an issuer for one client and at approximately the same
time recommend selling or sell the same or similar types of securities for
another client.
New Chartwell will not arrange purchases or sales of securities between
the Fund and other accounts advised by New Chartwell or its affiliates unless
(a) such purchases or sales are in accordance with applicable law (including
Rule 17a-7 of the 0000 Xxx) and the Fund's policies and procedures, (b) New
Chartwell determines the purchase or sale is in the best interests of the Fund,
and (c) the Fund's Board of Trustees has approved these types of transactions.
The Fund may adopt policies and procedures that modify or restrict New
Chartwell's authority regarding the execution of the Fund's portfolio
transactions provided herein. Such policies and procedures and any amendment
thereto will be communicated by the Manager to New Chartwell.
New Chartwell will communicate to the officers and Trustees of the Fund
such information relating to transactions for the Fund as they may reasonably
request. In no instance will the Fund's portfolio securities be purchased from
or sold to the Manager, New Chartwell or any affiliated person of either the
Fund, the Manager, or New Chartwell, except as may be permitted under the 1940
Act.
New Chartwell further agrees that it:
(a) will use the same degree of skill and care in providing such
services as it uses in providing services to other fiduciary accounts for
which it has investment responsibilities;
(b) will (i) conform in all material respects to all applicable
rules and regulations of the SEC, (ii) comply in all material respects
with all policies and procedures adopted by the Board of Trustees for the
Fund and communicated to New Chartwell in writing and, (iii) conduct its
activities under this Agreement in all material respects in accordance
with any applicable law and regulations of any governmental authority
pertaining to its investment advisory activities;
(c) will report to the Manager and to the Board of Trustees of the
Fund on a quarterly basis and will make appropriate persons available for
the purpose of reviewing with representatives of the Manager and the Board
of Trustees on a regular basis at such times as the Manager or the Board
of Trustees may reasonably request in writing regarding the management of
the Fund, including, without limitation, review of the general investment
strategies of the Fund, the performance of the Fund's investment portfolio
in relation to relevant standard industry indices and general conditions
affecting the marketplace and will provide various other reports from time
to time as reasonably requested by the Manager or the Board of Trustees of
the Fund; and
(d) will prepare and maintain such books and records with respect to
the Fund's securities and other transactions for the Fund's investment
portfolio as required for registered investment advisers under applicable
law or as otherwise requested by the Manager or the Board and will prepare
and furnish the Manager and the Fund's Board of Trustees such periodic and
special reports as the Board or the Manager may reasonably request. New
Chartwell further agrees that all records that it maintains for the Fund
are the property of the Fund and New Chartwell will surrender promptly to
the Fund any such records upon the request of the Manager or the Fund
(provided, however, that New Chartwell shall be permitted to retain copies
thereof); and shall be permitted to retain originals (with copies to the
Fund) to the extent required under Rule 204-2 of the Investment Advisers
Act of 1940 or other applicable law.
3. Expenses. During the term of this Agreement, New Chartwell will pay all
expenses incurred by it in connection with its activities under this Agreement
other than (i) the cost of securities and other assets purchased for the Fund,
and (ii) the costs directly associated with purchasing and selling securities
and other assets for the Fund, if any, including, but not limited to, brokerage
commissions, stamps, duties, taxes and custody fees related to transfers.
4. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Manager will pay New Chartwell, and New
Chartwell agrees to accept as full compensation therefor, a portfolio management
fee (the "Management Fee") equal to the annual rate of 0.50% of the Fund's
Managed Assets (as defined below) allocated to New Chartwell. The compensation
accrued hereunder will be held in an interest-bearing escrow account with the
Fund's custodian or another bank (as defined in the 0000 Xxx) designated by the
Fund. If a new investment sub-advisory agreement (the "New Sub-Advisory
Agreement") with New Chartwell for the Fund is approved by the vote of a
majority of the outstanding voting securities of the Fund by the end of the
150-day term of this Agreement, the amount in the escrow account (including the
interest earned) will be paid to New Chartwell. If a majority of the outstanding
voting securities of the Fund does not approve the New Sub-Advisory Agreement
with New Chartwell within the 150-day period, New Chartwell will be paid, out of
the escrow account, the lesser of: (i) any costs incurred by New Chartwell in
performing this Agreement (plus interest earned on that amount while in escrow);
or (ii) the total amount in the escrow account (plus interest earned).
For purposes of calculating the Management Fee, Managed Assets means the
average daily gross asset value of the Fund (including assets attributable to
the Fund's Preferred Shares (as such term is defined in the Fund's prospectus),
if any, and the principal amount of borrowings, if any), minus the sum of the
Fund's accrued and unpaid dividends on any outstanding Preferred Shares and
accrued liabilities (other than the principal amount of any borrowings incurred,
commercial paper or notes issued by the Fund). For purposes of determining
Managed Assets, the liquidation preference of any outstanding Preferred Shares
of the Fund is not treated as a liability.
For the month and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement is in effect during the month and year, respectively.
5. Services to Others. The Fund and the Manager acknowledge that New
Chartwell now acts, or may in the future act, as an investment adviser to other
managed accounts and as investment adviser or investment sub-adviser to one or
more other investment companies. In addition, the Fund and the Manager
acknowledge that the persons employed by New Chartwell to assist in New
Chartwell's duties under this Agreement will not devote their full time to such
efforts. It is also agreed that New Chartwell may use any supplemental research
obtained for the benefit of the Fund in providing investment advice to its other
investment advisory accounts and for managing its own accounts.
6. Limitation of Liability. New Chartwell shall not be liable for, and the
Fund and the Manager will not take any action against New Chartwell to hold New
Chartwell liable for, any error of judgment or mistake of law or for any loss
suffered by the Fund or the Manager (including, without limitation, by reason of
the purchase, sale or retention of any security) in connection with the
performance of New Chartwell's duties under this Agreement, except for a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the New Chartwell in the performance of its duties under this Agreement, or by
reason of its reckless disregard of its obligations and duties under this
Agreement.
7. Term; Termination. This Agreement shall become effective upon
consummation of the Transaction (the "Effective Date") and shall remain in full
force for (i) 150 days following the Effective Date or (ii) until a vote of a
majority of the outstanding voting securities of the Fund shall approve the New
Sub-Advisory Agreement with New Chartwell or (iii) unless sooner terminated as
hereinafter provided, whichever occurs first.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Manager or New Chartwell upon sixty (60) days' written notice to the
other parties. This Agreement may also be terminated by the Fund by action of
the Board of Trustees of the Fund or by a vote of a majority of the outstanding
voting securities of the Fund upon ten (10) calendar days' written notice to New
Chartwell by the Fund without payment of any penalty.
This Agreement may be terminated at any time without the payment of any
penalty by the Manager, the Board of Trustees of the Fund or by vote of a
majority of the outstanding voting securities of the Fund in the event that it
shall have been established by a court of competent jurisdiction that New
Chartwell or any officer or director of New Chartwell has taken any action that
results in a breach of the material covenants of New Chartwell set forth herein.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right of New Chartwell
to receive payments on any unpaid balance of the compensation described in
Section 4 earned prior to such termination and for any additional period during
which New Chartwell serves as such for the Fund, subject to applicable law.
8. Compliance Certification. From time to time New Chartwell shall provide
such certifications with respect to Rule 38a-1 under the 1940 Act as are
reasonably requested by the Fund or the Manager. In addition, New Chartwell
will, from time to time, provide a written assessment of its compliance program
in conformity with current industry standards that is reasonably acceptable to
the Fund to enable the Fund to fulfill its obligations under Rule 38a-1 under
the 1940 Act.
9. Notice. Any notice under this Agreement shall be sufficient in all
respects if given in writing and delivered by commercial courier providing proof
of delivery and addressed as follows or addressed to such other person or
address as such party may designate for receipt of such notice.
If to the Manager or the Fund: If to New Chartwell:
First Trust Dividend and Income Fund Chartwell Investment Partners, Inc.
First Trust Advisors L.P. 0000 Xxxxxxxxx Xxxxx, Xxxxx 000
000 X. Xxxxxxx Xxxxx, Xxxxx 000 Xxxxxx, Xxxxxxxxxxxx 00000
Xxxxxxx, Xxxxxxxx 00000 Attention: Xxxxx X. Xxxxxxx
Attention: Secretary
If by Facsimile: (000) 000-0000
If by Facsimile: (000) 000-0000
10. Limitations on Shareholder and Trustee Liability. All parties hereto
are expressly put on notice of the Fund's Declaration of Trust and all
amendments thereto, a copy of which is on file with the Secretary of the
Commonwealth of Massachusetts, and the limitation of shareholder and trustee
liability contained therein and a copy of which has been provided to New
Chartwell prior to the date hereof. This Agreement is executed on behalf of the
Fund by an officer of the Fund in his or her capacity as an officer and not
individually and is not binding upon any of the Trustees, officers or
shareholders of the Fund individually but the obligations imposed upon the Fund
by this Agreement are binding only upon the assets and property of the Fund, and
persons dealing with the Fund must look solely to the assets of the Fund for the
enforcement of any claims.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement will be binding upon and shall inure to the benefit of the parties
hereto and their respective successors.
12. Applicable Law. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 10 hereof, which shall be
construed in accordance with the laws of Massachusetts) the laws of the State of
Illinois.
13. Amendment, Etc. This Agreement may only be amended, or its provisions
modified or waived, in a writing signed by the party against which such
amendment, modification or waiver is sought to be enforced.
14. Authority. Each party represents to the others that it is duly
authorized and fully empowered to execute, deliver and perform this Agreement.
The Fund represents that engagement of New Chartwell has been duly authorized by
the Fund and is in accordance with the Fund's Declaration of Trust and other
governing documents of the Fund.
15. Severability. Each provision of this Agreement is intended to be
severable from the others so that if any provision or term hereof is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the validity of the remaining provisions and terms hereof; provided,
however, that the provisions governing payment of the Management Fee described
in Section 4 are not severable.
16. Entire Agreement. This Agreement constitutes the sole and entire
agreement of the parties hereto with respect to the subject matter expressly set
forth herein.
IN WITNESS WHEREOF, the Fund, the Manager and New Chartwell have caused
this Agreement to be executed as of the day and year first above written.
FIRST TRUST ADVISORS L.P. CHARTWELL INVESTMENT PARTNERS, INC.
By: _______________________________ By: __________________________________
Title: ________________________ Title: ___________________________
FIRST TRUST DIVIDEND AND INCOME FUND
By: _______________________________
Title: ________________________
