INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this _____ day of March, 2004, by and among
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund, a
Massachusetts business trust (the "Fund"), First Trust Advisors LP, an Illinois
limited partnership and a federally registered investment adviser ("Manager"),
and Macquarie Infrastructure Fund Adviser, LLC, a Delaware limited liability
company and a federally registered investment adviser ("Sub-Adviser").
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 Manager to serve as the investment
manager for the Fund pursuant to an Investment Management Agreement between
Manager and the Fund (as such agreement may be modified from time to time,
"Management Agreement");
WHEREAS, Management Agreement provides that Manager may, subject to the
initial and periodic approvals required under Section 15 of the 1940 Act,
appoint one or more sub-advisers for the purpose of furnishing certain services
required under Management Agreement; and
WHEREAS, the Fund and Manager desire to retain Sub-Adviser to furnish
investment advisory services for a certain designated portion of the Fund's
investment portfolio, 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 Manager hereby appoint Sub-Adviser to
provide certain sub-investment advisory services to the Fund for the period and
on the terms set forth in this Agreement. Sub-Adviser accepts such appointment
and agrees to furnish the services herein set forth for the compensation herein
provided.
2. Services to be Performed. Subject always to the supervision of
Fund's Board of Trustees and Manager, Sub-Adviser will act as sub-adviser for,
manage the investment and reinvestment of the Fund's assets with respect to,
furnish an investment program in respect of, make investment decisions for, and
place all orders for the purchase and sale of securities for the portion of the
Fund's investment portfolio invested or to be invested in equity securities as
well as other securities and instruments issued by U.S. and non-U.S. issuers
that manage, own and/or operate infrastructure and utility assets in a select
group of countries (the "Core Component") all on behalf of the Fund and as
described in the Fund's registration statement on Form N-2 (File No. 333-112202)
as declared effective by the Securities and Exchange Commission and as the same
may be amended from time to time (the "Registration Statement"). In the
performance of its duties, Sub-Adviser will satisfy its fiduciary duties to the
Fund, will monitor the Fund's investments in the Core Component, and will 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 Manager to Sub-Adviser in
writing, and the stated investment objectives, policies and restrictions of the
Fund applicable to the Core Component, as such objectives, policies and
restrictions may subsequently be changed by the Fund's Board of Trustees and
communicated by the Fund or Manager to Sub-Adviser in writing. The Fund or
Manager will promptly provide Sub-Adviser with current copies of the Fund's
Declaration of Trust, By-laws, prospectus, statement of additional information
and any amendments to any thereof.
Sub-Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of the Fund's securities with respect to the
Core Component on behalf of 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 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 of the 1940 Act), Sub-Adviser may select brokers or dealers
affiliated with Sub-Adviser. It is understood that Sub-Adviser 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
transaction for the Fund in excess of the amount of commission another member of
an exchange, broker or dealer would have charged if Sub-Adviser 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 Sub-Adviser's overall responsibilities with
respect to its accounts, including the Fund, as to which it exercises investment
discretion. In addition, if in the judgment of Sub-Adviser, the Fund would be
benefited by supplemental services, Sub-Adviser is authorized to pay spreads or
commissions to brokers or dealers furnishing such services in excess of spreads
or commissions that another broker or dealer may charge for the same
transaction, provided that Sub-Adviser determined in good faith that the
commission or spread paid was reasonable in relation to the services provided
and complies with the Fund's policies and procedures.
In addition, Sub-Adviser may, to the extent permitted by applicable
law, aggregate purchase and sale orders of securities placed with respect to the
Core Component with similar orders being made simultaneously for other accounts
managed by Sub-Adviser or its affiliates, if in Sub-Adviser'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 Sub-Adviser 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 an 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 positions obtainable or salable. Whenever the Fund and one
or more other investment advisory clients of Sub-Adviser have available funds
for investment, investments suitable and appropriate for each will be allocated
in a manner believed by Sub-Adviser 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,
Sub-Adviser and its affiliates may purchase securities of an issuer for one
-2-
client and at approximately the same time recommend selling or sell the same or
similar types of securities for another client.
Sub-Adviser will not arrange purchases or sales of securities between
the Fund and other accounts advised by Sub-Adviser 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) Sub-Adviser
determines the purchase or sale is in the best interests of the Fund, and (c)
the Fund's Board of Trustees have approved these types of transactions.
Subject to compliance with applicable law, the Fund's investment
objectives, policies and restrictions and the policies and procedures adopted by
the Board of Trustee for the Fund, Sub-Adviser may cause the Fund to invest in
securities of issuers advised or managed by persons affiliated with Sub-Adviser.
To the extent the Fund seeks to adopt, amend or eliminate any
objectives, policies, restrictions or procedures in a manner that modifies or
restricts Sub-Adviser's authority regarding the execution of the Fund's
portfolio transactions, the Fund agrees to use reasonable commercial efforts to
consult with Sub-Adviser regarding the modifications or restrictions prior to
such adoption, amendment or elimination.
Sub-Adviser 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 portfolio securities be purchased from or sold to
Manager, Sub-Adviser or any affiliated person of any of the Fund, Manager, or
Sub-Adviser, except as may be permitted under the 1940 Act.
Sub-Adviser 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, in all material respects, conform to all applicable
Rules and Regulations of the Securities and Exchange Commission and
comply with all policies and procedures adopted by the Board of
Trustees for the Fund and communicated to Sub-Adviser in writing and,
in addition, will conduct its activities under this Agreement in
accordance with any applicable regulations of any governmental
authority pertaining to its investment advisory activities;
(c) will report regularly to Manager and to the Board of
Trustees of the Fund (generally on a quarterly basis) and will make
appropriate persons available for the purpose of reviewing with
representatives of Manager and the Board of Trustees on a regular basis
at reasonable times 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 Manager or the Board of Trustees of the Fund;
and
-3-
(d) will prepare and maintain such books and records with
respect to the Fund's securities transactions for the Core Component as
required for registered investment advisers under applicable law or as
otherwise reasonably requested by Manager and will prepare and furnish
Manager and the Fund's Board of Trustees such periodic and special
reports as the Board or Manager may reasonably request. Sub-Adviser
further agrees that all records that it maintains for the Fund are the
property of the Fund and Sub-Adviser will surrender promptly to the
Fund any such records upon the request of Manager or the Fund;
provided, however, that Sub-Adviser 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.
The Sub-Adviser's duties and obligations shall be limited to those
expressly set out in this Agreement. The Manager and the Fund acknowledge such
limitation.
3. Expenses. During the term of this Agreement, Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities and other assets (including, legal
expenses and the costs and expenses of due diligence undertaken by third parties
incurred by the Sub-Adviser in connection with the purchase or proposed purchase
of such securities or assets, previously approved in writing by the Fund's Chief
Financial Officer, and brokerage commissions, if any). However, if approved in
writing by the Fund's Chief Financial Officer, Sub-Adviser may be reimbursed for
certain extraordinary expenses.
4. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Fund will pay Sub-Adviser, and, subject to the
Supplemental Management Fee (defined below), Sub-Adviser agrees to accept as
full compensation therefore, a portfolio management fee (the "Core Management
Fee") equal to:
(i) the annual rate of 0.60% multiplied by that portion of
the Total Assets comprising the Core Component; and
(ii) if the Total Assets are more than $250 million, an
additional fee at the annual rate of 0.05% multiplied by that portion
of the Total Assets over $250 million.
To the extent Sub-Adviser invests a portion of the Core Component in
unlisted securities (the "Core Unlisted Portion"), the Fund will pay Sub-Adviser
a supplemental portfolio management fee (the "Supplemental Management Fee",
together with the Core Management Fee, the "Management Fee") equal to the annual
rate of 0.60% multiplied by the Total Assets attributable to the Core Unlisted
Portion; provided, however, that in no event shall the Core Unlisted Portion be
deemed to exceed, for purposes of calculating the Supplemental Management Fee,
25% of the Core Component. The Supplemental Fee shall be in addition to the Core
Management Fee.
For purposes of calculating the Management Fee, "Total Assets" means
the average daily gross asset value of the Fund (including assets attributable
-4-
to the Fund's preferred shares, if any, and the principal amount of borrowings),
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 or other forms of indebtedness
issued by the Fund and the liquidation preference of any outstanding preferred
shares). The Management Fee shall be payable in arrears on or about the last day
of each fiscal quarter during the term of this Agreement.
For the quarter and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of the Management Fee and
Supplemental Fee on the basis of the number of days that the Agreement is in
effect during the quarter and year, respectively.
5. Expense Reimbursement. Sub-Adviser agrees to pay one-half of (i)
all organizational costs and (ii) all offering costs of the Fund (other than
sales load) that exceed $0.04 per Common Share (as such term is defined in the
Fund's prospectus). The term "organization costs" and "offering costs" shall
have the meanings ascribed to them in Sections 8.18-8.25 of the AICPA Audit and
Accounting Guide, Audits for Investment Companies, with Conforming Changes as of
May 1, 2002.
6. Services to Others. The Fund and Manager acknowledge that
Sub-Adviser may in the future act as an investment adviser to other managed
accounts and as investment adviser or sub-investment adviser to one or more
other investment companies that are not a series of the Fund. In addition, the
Fund and Manager acknowledge that the persons employed by Sub-Adviser to assist
in Sub-Adviser's duties under this Agreement will not devote their full time to
such efforts. It is also agreed that Sub-Adviser 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.
7. Limitation of Liability. Sub-Adviser shall not be liable for, and
the Fund and Manager will not take any action against Sub-Adviser to hold
Sub-Adviser liable for, any error of judgment or mistake of law or for any loss
suffered by the Fund (including, without limitation, by reason of the purchase,
sale or retention of any security) in connection with the performance of
Sub-Adviser's duties under this Agreement, except for a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Sub-Adviser in
the performance of its duties under this Agreement, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
8. Term; Termination; Amendment. This Agreement shall become effective
with respect to the Fund on the same date as Management Agreement between the
Fund and Manager becomes effective, provided that it has been approved by a vote
of a majority of the outstanding voting securities of the Fund in accordance
with the requirements of the 1940 Act, and shall remain in full force until the
two-year anniversary of the date of its effectiveness unless sooner terminated
as hereinafter provided. This Agreement shall continue in force from year to
year thereafter, but only as long as such continuance is specifically approved
for the Fund at least annually in the manner required by the 1940 Act and the
rules and regulations thereunder; provided, however, that if the continuation of
this Agreement is not approved for the Fund, Sub-Adviser may continue to serve
-5-
in such capacity for the Fund in the manner and to the extent permitted by the
1940 Act and the rules and regulations thereunder. For the avoidance of doubt,
the termination of Management Agreement or other termination of or resignation
by Manager as investment adviser to the Fund shall not in and of itself cause
the termination of this Agreement. In such cases, Sub-Adviser may continue to
provide the services herein set forth for the compensation provided herein.
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 Manager or Sub-Adviser 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 or by a vote of a majority of the outstanding voting
securities of such Fund upon sixty (60) days' written notice to Sub-Adviser by
the Fund without payment of any penalty.
Manager and Sub-Adviser have entered into an agreement that provides,
among other things, that if Manager or the Fund terminates or fails to renew
this Agreement other than for cause (as defined in the agreement), Manager shall
resign as adviser to the Fund and shall not be reinstated as investment adviser
or sub-adviser to the Fund. The Fund acknowledges that the terms of such
agreement have been fully described to the Board of Trustees.
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 Sub-Adviser
to receive payments on any unpaid balance of the compensation described in
Section 4 hereof earned prior to such termination and for any additional period
during which Sub-Adviser serves as such for the Fund, subject to applicable law.
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 or sent by facsimile and addressed as follows or addressed to such
other person or address as such party may designate for receipt of such notice.
If to Manager or Fund: If to Sub-Adviser:
Macquarie/First Trust Global Infrastructure Macquarie Infrastructure Fund Adviser, LLC
/Utilities Dividend & Income Fund 000 0xx Xxxxxx, 00xx Xxxxx
First Trust Advisors Xxx Xxxx, Xxx Xxxx 00000
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000 Xxxxxxxxx: Xxxxxx Xxxxx
Lisle, Illinois 60532
Attention: General Counsel
If by Facsimile: (000) 000-0000
10. Limitations on Liability. All parties hereto are expressly put on
notice of the Fund's Agreement and 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
-6-
therein. This Agreement is executed on behalf of the Fund by the Fund's officers
in their capacity as officers 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 and those assets belonging to 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 Sub-Adviser 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 hereof are not severable.
16. Entire Agreement. This Agreement constitutes the sole and entire
agreement of the parties with regard to the subject matter of this Agreement.
Any written or oral agreements, statements, promises, negotiations or
representations not expressly set forth in this Agreement are of no force and
effect.
-7-
IN WITNESS WHEREOF, the Fund, Manager and Sub-Adviser have caused this
Agreement to be executed as of the day and year first above written.
FIRST TRUST ADVISORS LP MACQUARIE INFRASTRUCTURE FUND
ADVISER, LLC
By: __________________________________ By: ____________________________________
Title: _________________________ Title: __________________________
MACQUARIE/FIRST TRUST GLOBAL
INFRASTRUCTURE/UTILITIES
DIVIDEND & INCOME FUND
By: ___________________________________
Title: __________________________
-8-
