First Defined Portfolio Fund, LLC
Investment Advisory and Management Agreement
This Investment Advisory and Management Agreement (the "Agreement") made
this 16th day of November, 1999, by and between First Defined Portfolio
Fund, LLC, a Delaware limited liability company (the "Company"), on
behalf of each series (each a "fund" and collectively, the "funds") of
the Company, and First Trust Advisors L.P. (the "Adviser"), an Illinois
limited partnership.
Whereas, the Company and the Adviser wish to enter into this Agreement
setting forth the terms and conditions under which the Adviser will
perform certain investment advisory and management services for the
funds listed in Schedule A attached hereto, and be compensated for such
services by the funds.
Now, Therefore, in consideration of the premises and mutual agreements
hereinafter contained, the Company and the Adviser hereby agree as
follows:
Section 1. Investment Advisory Services.
Section 1.1. During the Term (as such term is defined in Section
5 hereof) of this Agreement, the Adviser shall serve as the investment
adviser (within the meaning of the Investment Advisers Act of 1940, as
amended) of the funds. In such capacity, the Adviser shall render the
following services and perform the following functions for and on behalf
of the funds:
(a) Furnish continuous advice and recommendations to the
funds with respect to the acquisition, holding or disposition of any or
all of the securities or other assets which the funds may own or
contemplate acquiring from time to time;
(b) Cause its officers to attend meetings and furnish oral or
written reports, as the Company reasonably may request, in order to keep
the Trustees and appropriate officers of the Company fully informed
regarding the investment portfolios of the funds, the investment
recommendations of the Adviser, and the considerations which form the
basis for such recommendations; and
(c) Supervise the management of the fund's investments,
including the purchase, sale, retention or lending of securities and
other investments in accordance with the direction of the appropriate
officers of the Company.
Section 1.2. The services of the Adviser to the funds are not
exclusive, and nothing contained herein shall be deemed or construed to
prohibit, limit, or otherwise restrict the Adviser from rendering
investment or other advisory services to any third person, whether
similar to those to be provided to the funds hereunder or otherwise.
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Section 2. Compensation of Adviser.
Section 2.1. For its services hereunder, each fund shall pay the
Adviser an annual fee (the "Fee") as set forth in Schedule B. The Fee
will be computed daily and payable monthly in arrears.
Section 2.2. Notwithstanding the provisions of Section 2.1
hereof, the amount of the Fee to be paid with respect to the first and
last months of this Agreement shall be pro rated based on the number of
calendar days in such quarter.
Section 2.3. The Adviser may voluntarily waive Fees or reimburse
expenses at any time. Any amounts waived or reimbursed by the Adviser
are subject to reimbursement by the fund within the following three
years, to the extent such reimbursement by the fund would not cause the
fund to exceed any current expense limitation.
Section 3. Expenses Paid by the Adviser.
Section 3.1. Subject to the provisions of Section 3.2 hereof, the
Adviser shall pay the following expenses relating to the management and
operation of the funds:
(a) All reasonable fees, charges, costs and expenses and all
reasonable compensation of all officers and Trustees of the funds
relating to the performance of their duties to the funds; provided,
however, that the Adviser shall not pay any such amounts to any Outside
Trustees (for purposes of this Agreement, an "Outside Trustee" is any
Trustee of the Company who is not an "Interested Person," within the
meaning of Section 2(a)(19) of the Investment Company Act of 1940, as
amended (the "1940 Act")); and provided, further, that in the event that
any person serving as an officer of the Company has both executive
duties attendant to such office and administrative duties to the Company
apart from such office, the Adviser shall not pay any amounts relating
to the performance of such duties;
(b) All costs of office equipment and personnel necessary for
and allocable to the performance of the obligations of the Adviser
hereunder.
Section 3.2. Except as provided in this Section, nothing
contained in this Agreement shall be deemed or construed to impose upon
the Adviser any obligation to incur, pay, or reimburse the funds for any
other costs of or relating to the funds.
Section 4. Expenses Paid by the Funds.
Section 4.1. Except as provided in Section 3 hereof, the funds
hereby assume and shall pay all fees, costs and expenses incurred by, or
on behalf, or for the benefit of the funds, including without limitation:
(a) All costs of any custodian or depository;
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(b) All costs for bookkeeping, accounting, pricing and
auditors' services;
(c) All costs of leased office space of or allocable to the
funds within the offices of the Adviser or in such other place as may be
mutually agreed upon between the parties from time to time;
(d) All costs of any transfer agent and registrar of
interests of the funds ("Interests");
(e) All costs incurred by any Outside Trustee of the Company
in connection with the performance of his duties relating to the affairs
of the Company in such capacity as an Outside Trustee of the Company,
and costs relating to the performance by any officer of the Company,
performing duties on behalf of the funds apart from such office, all in
accordance with Section 3.1 (a) hereof;
(f) All brokers' commissions and other costs incurred in
connection with the execution of the funds' portfolio transactions;
(g) All taxes and other costs payable by or on behalf of the
funds to federal, state or other governmental agencies;
(h) All costs of printing, recording and transferring
certificates representing Interests;
(i) All costs in connection with the registration of the
funds and the Interests with the Securities and Exchange Commission
("SEC"), and the continuous maintenance of the effectiveness of such
registrations, and the registration and qualification of Interests of
the funds under state or other securities laws, including, without
limitation, the preparation and printing of registration statements,
prospectuses and statements of additional information for filing with
the SEC and other authorities;
(j) All costs of preparing, printing and mailing
prospectuses, statements of additional information and reports to
holders of Interests;
(k) All costs of Interest holders' and Trustees' meetings and
of preparing, printing and mailing all information and documents,
including without limitation all notices, financial reports and proxy
materials, to holders of Interests;
(l) All costs of legal counsel for the Company and for
Trustees of the Company in connection with the rendering of legal advice
to or on behalf of the funds, including, without limitation, legal
services rendered in connection with the funds' existence, corporate and
financial structure and relations with its Interest holders,
registrations and qualifications of securities under federal, state and
other laws, issues of securities, expenses which the funds have herein
assumed whether customary or not, and extraordinary matters, including,
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without limitation, any litigation involving the Company, Trustees, or
officers of the Company relating to the affairs of the funds, employees
or agents of the funds;
(m) All costs of licenses to utilize trademarks, trade
names, service marks or other proprietary interests;
(n) All costs associated with membership in trade
associations; and
(o) All costs of filing annual and other reports with the SEC
and other regulatory authorities.
In the event that the Adviser provides any of the foregoing services or
pays any of these expenses, the funds promptly shall reimburse the
Adviser therefor.
Section 5. Term; Termination.
Section 5.1. This Agreement shall continue in effect, unless
sooner terminated in accordance with the provisions of Section 5.2, for
a period of two years beginning the date hereof, and shall continue in
effect from year to year thereafter (collectively, the "Term");
provided, however, that any such continuation shall be expressly
approved at least annually either by the Trustees, including a majority
of the Trustees who are not parties hereto or Interested Persons of any
such party, cast at a meeting called for the purpose of voting on such
renewal, or the affirmative vote of a majority of the Outstanding Voting
Securities (as such term is defined in Section 2(a)(42) of the 0000 Xxx)
of the funds.
(a) Any continuation of this Agreement pursuant to Section
5.1 hereof shall be deemed to be specifically approved if such approval
occurs:
(i) with respect to the first continuation hereof, during the 60
days prior to and including the earlier of (A) the date specified herein
for the termination of this Agreement in the absence of such approval,
or (B) the second anniversary of the execution of this Agreement; and
(ii) with respect to any subsequent continuation hereof, during the
60 days prior to and including the first anniversary of the date upon
which the most recent previous annual continuance of this Agreement
became effective; or
(iii)at such other date or time provided in or permitted by Rule
15a-2 under the 1940 Act.
Section 5.2. This Agreement may be terminated at any time,
without penalty, as follows:
(a) By a majority of the Trustees of the Company who are not
parties hereto or Interested Persons of any such party, or by the
affirmative vote of a majority of the Outstanding Voting Securities of
the Company, upon at least 60 days' prior written notice to the Adviser
at its principal place of business; and
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(b) By the Adviser, upon at least 60 days' prior written
notice to the Company at its principal place of business.
Section 6. Retention of Control by Funds.
The Company acknowledges that the investment advice and recommendations
to be provided by the Adviser hereunder are advisory in nature only.
The Company further acknowledges that, at all times during the Term
hereof, the funds (and not the Adviser) shall retain full control over
the investment policies of the funds. Nothing contained herein shall be
deemed or construed to limit, prohibit or restrict the right or ability
of the Trustees of the Company to delegate to the appropriate officers
of the Company, or to a committee of Trustees of the Company, the power
to authorize purchases, sales or other actions affecting the portfolios
of the funds between meetings of the Trustees of the Company; provided,
however, that all such purchases, sales or other actions so taken during
such time shall be consistent with the investment policies of the funds
and shall be reported to the Board of Trustees of the Company at its
next regularly scheduled meeting.
Section 7. Brokers and Brokerage Commissions.
Section 7.1. For purposes of this Agreement, brokerage
commissions paid by the funds upon the purchase or sale of the funds'
portfolio securities shall be considered a cost of securities of the
funds and shall be paid by the funds in accordance with Section 4.1(e)
hereof.
Section 7.2. The Adviser shall place funds portfolio transactions
with brokers and dealers who render satisfactory service in the
execution of orders at the most favorable prices and at reasonable
commission rates; provided, however, that the Adviser may pay a broker
or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another broker or dealer would
have charged for effecting such transaction, if the Adviser determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer, in terms of either that particular transaction or the
overall responsibilities of the Adviser.
Section 7.3. In placing portfolio business with broker-dealers
for or on behalf of the funds, the Adviser shall seek the best execution
of each such transaction, and all such brokerage placements shall be
consistent with the Rules of Conduct of NASD Regulation, Inc.
Notwithstanding the foregoing, the funds shall retain the right to
direct the placement of all portfolio transactions for or on behalf of
the funds, and, in furtherance thereof, the funds may establish policies
or guidelines to be followed by the Adviser in its placement of the
funds' portfolio transactions pursuant to the foregoing provisions. The
Adviser shall report to the Trustees of the Company at least on a
quarterly basis regarding the placement of the funds' portfolio
transactions.
Section 7.4. The Adviser shall not deal with any affiliate in any
transaction hereunder in which such affiliate acts as a principal, nor
shall the Adviser, in rendering services to the funds hereunder, execute
any negotiated trade with any affiliate if execution thereof involves
such affiliate's acting as a principal with respect to any part of an
order for or on behalf of the funds.
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Section 8. Assignment.
This Agreement may not be assigned by either party hereto. This
Agreement shall terminate automatically in the event of any assignment
(as such term is defined in Section 2(a)(4) of the 1940 Act). Any
attempted assignment of this Agreement shall be of no force and effect.
Section 9. Amendments.
This Agreement may be amended in writing signed by both parties hereto;
provided, however, that no such amendment shall be effective unless
approved by a majority of the Trustees of the Company who are not
parties hereto or Interested Persons of any such party cast at a meeting
called for the purpose of voting on such amendment and by the
affirmative vote of a majority of the Outstanding Voting Securities of
the funds.
Section 10. Liability.
The Adviser, its partners, directors, officers, employees, and certain
other persons performing specific functions for a fund will only be
liable to the fund for losses resulting from willful misfeasance, bad
faith, gross negligence, or reckless disregard of their obligations and
duties under the Agreement.
Section 11. Section 817(H) Diversification.
The Adviser is responsible for compliance with the provisions of Section
817(h) of the Internal Revenue Code of 1986, as amended ("Code"),
applicable to each fund (relating to the diversification requirements
applicable to investments in underlying variable annuity contracts).
Section 12. Governing Law.
This Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Illinois, without reference to
the conflict of laws provisions thereof. In the event of any
inconsistency between this Agreement and the 1940 Act, the 1940 Act
shall govern, and the inconsistent provisions of this Agreement shall be
construed so as to eliminate such inconsistency.
Section 13. Non-Liability of Certain Persons.
Any obligation of the Company hereunder shall be binding only upon the
assets of the Company (or the applicable fund thereof) and shall not be
binding upon any Trustee, officer, employee, agent, member or interest-
holder of the Company. Neither the authorization of any action by any
Trustee, officer, employee, agent, member or interest-holder of the
Company nor the execution of this agreement on behalf of the Fund shall
impose any liability upon any Trustee, officer, employee, agent, member
or interest-holder of the Company.
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Section 14. Use of Adviser's Name.
The Company may use the name "First Defined Portfolio Fund, LLC" and the
Portfolio names listed in Schedule A or any other name derived from the
name "First Trust" or "Nike Securities" only for so long as this
Agreement or any extension, renewal or amendment hereof remains in
effect, including any similar agreement with any organization which
shall have succeeded to the business of Adviser as investment adviser.
At such time as this Agreement or any extension, renewal or amendment
hereof, or such other similar agreement shall no longer be in effect,
the Company will cease to use any name derived from the name "First
Trust" or "Nike Securities" or otherwise connected with Adviser, or with
any organization which shall have succeeded to Adviser's business as
investment adviser.
In Witness Whereof, the parties hereto have executed this Agreement as
of the date first above written.
First Defined Portfolio Fund, LLC
By /s/ Xxxxx X. Xxxxx
_______________________________
Name: ____________________________
Title: President
__________________________
First Trust Advisors L.P.
By /s/ Xxxxxx XxXxxxxxx
_______________________________
Name: ____________________________
Title: President
__________________________
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Schedule A
1. The Dow (sm) Target 5 Portfolio
2. The Dow (sm) DART 10 Portfolio
3. Global Target 15 Portfolio
4. S&P Target 10 Portfolio
5. NASDAQ Target 15 Portfolio
6. First Trust 10 Uncommon Values Portfolio
7. First Trust Energy Portfolio
8. First Trust Financial Services Portfolio
9. First Trust Pharmaceutical Portfolio
10. First Trust Technology Portfolio
11. First Trust Internet Portfolio
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Schedule B
Fee Rate
1. The Dow (sm) Target 5 Portfolio 0.60%
2. The Dow (sm) DART 10 Portfolio 0.60%
3. Global Target 15 Portfolio 0.60%
4. S&P Target 10 Portfolio 0.60%
5. NASDAQ Target 15 Portfolio 0.60%
6. First Trust 10 Uncommon Values Portfolio 0.60%
7. First Trust Energy Portfolio 0.60%
8. First Trust Financial Services Portfolio 0.60%
9. First Trust Pharmaceutical Portfolio 0.60%
10. First Trust Technology Portfolio 0.60%
11. First Trust Internet Portfolio 0.60%
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