CLOSED-END FUND SERVICES AGREEMENT
- FUND ADMINISTRATION SERVICES
- FUND ACCOUNTING SERVICES
FIRST TRUST ACTIVE DIVIDEND INCOME FUND
SEPTEMBER 20, 2007
FUND SERVICES AGREEMENT
TABLE OF CONTENTS
SECTION PAGE
1. Appointment................................................ 1
2. Representations and Warranties............................. 1
3. Delivery of Documents...................................... 3
4. Services Provided.......................................... 4
5. Fees and Expenses.......................................... 5
6. Standard of Care; Liability................................ 7
7. Term....................................................... 10
8. Notices.................................................... 11
9. Waiver..................................................... 12
10. Force Majeure and Disaster Recovery........................ 12
11. Amendments................................................. 13
12. Severability............................................... 13
13. Governing Law.............................................. 14
14. Confidentiality............................................ 14
15. Obligations of the Fund.................................... 16
16. Reports to Fund by Independent Public Accountants.......... 16
17. Compliance................................................. 16
18. No Agency.................................................. 16
19. Certifications............................................. 16
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FUND SERVICES AGREEMENT
TABLE OF CONTENTS (CONTINUED)
Signatures......................................................... 15
PAGE
Schedule A -- Fees and Expenses.................................. A-1
Schedule B -- General Description of Fund Administration
and Compliance Services........................ B-1
Schedule C -- Description of Fund Accounting Services............ C-1
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FUND SERVICES AGREEMENT
AGREEMENT made as of September 20, 2007 by and between First Trust Active
Dividend Income Fund (the "Fund"), a Massachusetts business trust and X.X.
Xxxxxx Investor Services Co. ("X.X. Xxxxxx"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, the Fund is registered as a closed-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to contract with X.X. Xxxxxx to provide
certain services with respect to the Fund; NOW, THEREFORE, in consideration of
the premises and mutual covenants herein contained, it is agreed between the
parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints X.X. Xxxxxx to provide services
for the Fund, as described hereinafter, subject to the supervision of the Board
of Trustees of the Fund (the "Board"), for the period and on the terms set forth
in this Agreement. X.X. Xxxxxx accepts such appointment and agrees to furnish
the services herein set forth in return for the compensation as provided in
Section 5 of and Schedule A to this Agreement.
2. REPRESENTATIONS AND WARRANTIES.
(a) X.X. Xxxxxx represents and warrants to the Fund that:
(i) X.X. Xxxxxx is a corporation, duly organized and existing
under the laws of the State of Delaware;
(ii) X.X. Xxxxxx is duly qualified to carry on its business in the
Commonwealth of Massachusetts;
(iii) X.X. Xxxxxx is empowered under applicable laws and by its
Certificate of Incorporation and By-Laws to enter into and perform this
Agreement;
(iv) all requisite corporate proceedings have been taken to
authorize X.X. Xxxxxx to enter into and perform this Agreement;
(v) X.X. Xxxxxx has, and will continue to have, access to the
facilities, personnel and equipment required to fully perform its duties and
obligations hereunder;
(vi) no legal or administrative proceedings have been instituted
or threatened which would impair X.X.Xxxxxx'x ability to perform its duties and
obligations under this Agreement;
(vii) X.X. Xxxxxx'x entrance into this Agreement shall not cause a
material breach or be in material conflict with any other agreement or
obligation of X.X. Xxxxxx or any law or regulation applicable to X.X. Xxxxxx;
(viii) X.X. Xxxxxx will enter into and maintain in effect with
appropriate parties from time to time business continuation and disaster
recovery procedures with respect to its services under this Agreement , subject
to Section 10 of this Agreement;
(ix) X.X. Xxxxxx will comply with all policies and procedures of
the Fund, and with any requirements set forth in the registration statement of
the Fund and operate in accordance with the Fund's compliance procedures, to the
extent applicable to the services provided by X.X. Xxxxxx pursuant to this
Agreement;
(x) X.X. Xxxxxx undertakes to comply with all applicable
requirements of the Securities Act of 1933,as amended, the Securities Exchange
Act of 1934, as amended and the 1940 Act, and any laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to be
performed by X.X. Xxxxxx hereunder; and
(xi) assuming execution and delivery of this Agreement by the
Fund, this Agreement is X.X. Xxxxxx'x legal, valid and binding obligation,
enforceable in accordance with its terms.
(b) The Fund represents and warrants to X.X. Xxxxxx that:
(i) the Fund is a Massachusetts business trust, duly organized and
existing and in good standing under the laws of Massachusetts;
(ii) the Fund is empowered under applicable laws and by its
Declaration of Trust and By-Laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize the
Fund to enter into and perform this Agreement;
(iv) the Fund is registered as an investment company under the
1940 Act;
(v) a registration statement on Form N-2 filed under the
Securities Act of 1933, as amended ("1933 Act") and the 1940 Act has been filed
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with the Securities and Exchange Commission ("SEC") and will be effective and
will remain effective as required by law, and all necessary filings under the
laws of the states will have been made and will be current during the term of
this Agreement;
(vi) no legal or administrative proceedings have been instituted
or threatened which would impair the Fund's ability to perform its duties and
obligations under this Agreement;
(vii) the Fund's registration statement complies in all material
respects with the 1933 Act and the 1940 Act (including the rules and regulations
thereunder) and the Fund's prospectus and statement of additional information do
not contain any untrue statement of material fact or omit to state a material
fact necessary to make the statements therein not misleading; provided, however,
that this representation and warranty does not eliminate any obligations of X.X.
Xxxxxx to comply with the applicable laws as they relate to information provided
by X.X. Xxxxxx that is included in the Fund's prospectus and/or statement of
additional information.
(viii) the Fund's entrance into this Agreement shall not cause a
material breach or be in material conflict with any other applicable agreement
to which the Fund is bound.
3. DELIVERY OF DOCUMENTS. The Fund or its agent will promptly furnish to
X.X. Xxxxxx such copies, properly certified or authenticated, of contracts,
documents and other related information that X.X. Xxxxxx may reasonably request
or requires to properly discharge its duties hereunder. Such documents may
include but are not limited to the following:
(a) Resolutions of the Board authorizing the appointment of X.X.
Xxxxxx to provide certain services to the Fund and approving this Agreement;
(b) The Fund's Declaration of Trust;
(c) The Fund's By-Laws;
(d) The Fund's Notification of Registration on Form N-8A under the
1940 Act as filed with the SEC;
(e) The Fund's registration statement including exhibits, as amended,
on Form N-2 (the "Registration Statement") under the 1933 Act and the 1940 Act,
as filed with the SEC;
(f) Copies of the Investment Advisory Agreement between the Fund and
its investment adviser (the "Advisory Agreement");
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(g) Auditors' reports;
(h) The Fund's prospectus and statement of additional information and
all amendments and supplements thereto (such prospectus and statement of
additional information and supplements thereto, as presently in effect and as
from time to time hereafter amended and supplemented, herein called the
"Prospectuses"); and
(i) Such other relevant agreements as the Fund may enter into from
time to time such as securities lending agreements, futures and commodities
account agreements, brokerage agreements and options agreements necessary for
X.X. Xxxxxx to fulfill its obligations under this Agreement.
4. SERVICES PROVIDED.
(a) X.X. Xxxxxx will provide the following services subject to the
control, direction and supervision of the Board and in compliance with the
objectives, policies and limitations set forth in the Fund's Registration
Statement, Declaration of Trust and By-Laws; applicable laws and regulations;
and all resolutions, codes, policies and procedures implemented by the Board, of
which X.X. Xxxxxx has been notified by the Fund:
(i) Fund Administration; and
(ii) Fund Accounting.
A detailed description of the above services is contained in Schedules
B and C to this Agreement. (b) X.X. Xxxxxx will also:
(i) provide office facilities with respect to the provision of the
services contemplated herein (which may be in the offices of X.X. Xxxxxx or a
corporate affiliate of X.X. Xxxxxx);
(ii) provide or otherwise obtain personnel sufficient for
provision of the services contemplated herein;
(iii) furnish equipment and other materials, which are necessary
for provision of the services contemplated herein; and
(iv) keep records relating to the services provided hereunder in
such form and manner as X.X. Xxxxxx may deem appropriate or advisable, as
required by the 1940 Act and the rules thereunder and any other applicable law.
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To the extent required by Section 31 of the 1940 Act and the rules thereunder,
X.X. Xxxxxx agrees that all such records prepared or maintained by X.X. Xxxxxx
relating to the services provided hereunder are the property of the Fund and
will be preserved for the periods prescribed under Rule 31a-2 under the 1940
Act, maintained, and made available in accordance with such Section and rules.
In addition, X.X. Xxxxxx agrees to make such books and records available for
inspection by the Fund or by regulatory authorities such as the SEC at
reasonable times and otherwise to keep confidential all books and records and
other information relative to the Fund and its shareholders as provided in
Section 14(b) of this Agreement. Upon reasonable notice by the Fund, X.X. Xxxxxx
will provide copies of Fund documents and reasonable access to its premises for
valid Fund purposes, including requests for access by the Fund's auditors. X.X.
Xxxxxx shall promptly, upon reasonable notice by the Fund, turn over to the Fund
and cease to retain the Fund's files, records and documents created and
maintained by X.X. Xxxxxx pursuant to this Agreement.
5. FEES AND EXPENSES.
(a) As compensation for the services rendered to the Fund pursuant to
this Agreement the Fund shall pay X.X. Xxxxxx monthly fees determined as set
forth in Schedule A to this Agreement. Such fees are to be billed monthly and
shall be due and payable thirty (30) days after receipt of the invoice. Upon any
termination of the provision of services under this Agreement before the end of
any month, the fee for the part of the month before such termination shall be
prorated according to the proportion which such part bears to the full monthly
period and shall be payable upon the date of such termination.
(b) For the purpose of determining fees calculated as a function of
the Fund's assets, the value of the Fund's assets shall be computed as required
by its Prospectus, generally accepted accounting principles, and resolutions of
the Board.
(c) The Fund may request additional services, additional processing,
or special reports, with such specifications and requirements documentation as
may be reasonably required by X.X. Xxxxxx. In addition, significant regulatory
and legal changes and changes in the Fund's status may necessitate additional
services, processing or reports. In either instance, if the parties hereto agree
that X.X. Xxxxxx will provide such services or arrange for their provision, X.X.
Xxxxxx shall be entitled to additional fees and expenses as mutually agreed by
the parties hereto.
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(d) X.X. Xxxxxx will bear its own expenses in connection with the
performance of the services under this Agreement except as provided herein or as
agreed to by the parties. The Fund agrees to promptly reimburse X.X. Xxxxxx for
any services, equipment or supplies ordered by or for the Fund through X.X.
Xxxxxx at the Fund's request and for any other commercially reasonable expenses
that X.X. Xxxxxx may incur on the Fund's behalf at the Fund's request or as
consented to by the Fund in advance in writing. In addition, at the Fund's
request J.P., Xxxxxx may utilize one or more independent pricing services
designated by the Fund to obtain securities prices and to act as backup to the
primary pricing services designated by the Fund, in connection with determining
the net asset value of the Fund. The Fund will reimburse X.X. Xxxxxx for the
Fund's share of the cost of such services based upon the actual usage, or a pro
rata estimate of the use, of the services for the benefit of the Fund. With
respect to the foregoing, X.X. Xxxxxx shall provide, upon request by the Fund,
original invoices, calculations related to the Fund's share of the cost and
other reasonable items requested by the Fund.
(e) All fees, out-of-pocket expenses, or additional charges of X.X.
Xxxxxx shall be billed on a monthly basis and shall be due and payable within
thirty (30) days of receipt of the invoice unless disputed by the Fund.
(f) X.X. Xxxxxx will render, after the close of each month in which
services have been furnished, a statement reflecting all of the charges for such
month. Undisputed charges remaining unpaid after thirty (30) days of the receipt
of an invoice with respect to such charges shall bear interest in finance
charges equivalent to, in the aggregate, the Prime Rate plus two percent per
year and all costs and expenses of effecting collection of any such sums,
including reasonable attorney's fees, shall be paid by the Fund to X.X. Xxxxxx
unless such delay in payment is attributable to X.X. Xxxxxx or its affiliates,
in which case no interest shall be charged and no collection costs shall be paid
by the Fund.
(g) In the event that the Fund is more than sixty (60) days delinquent
in its payments of monthly xxxxxxxx due and payable in connection with this
Agreement (with the exception of specific amounts which may be contested in good
faith by the Fund), this Agreement may be terminated upon sixty (60) days'
written notice to the Fund by X.X. Xxxxxx, provided, however, that the Fund
shall have sixty (60) days from the date of such notice to cure such delinquent
payment. Disputed amounts are not due and payable while they are being
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investigated. With respect to disputed amounts, the methodology underlying the
calculation of such amounts invoiced to the Fund by X.X. Xxxxxx shall be
presented to the Fund upon its request.
6. STANDARD OF CARE; LIABILITY.
(a) X.X. Xxxxxx will use reasonable care in performing its obligations
under this Agreement. X.X. Xxxxxx will not be in violation of this Agreement
with respect to any matter as to which it has satisfied its obligation of
reasonable care.
(b) X.X. Xxxxxx agrees to defend, indemnify and hold the Fund and its
officers, directors and employees harmless from any and all taxes, charges,
expenses, assessments, claims and liabilities (including, without limitation,
reasonable attorneys' fees and disbursements and liabilities arising under the
Securities Laws and any state and foreign securities and blue sky laws)
("Claims") arising directly from the negligence, bad faith or willful
misfeasance of X.X. Xxxxxx in the performance of its duties hereunder.
Nevertheless, under no circumstances will X.X. Xxxxxx be liable for any
indirect, incidental, consequential or special damages (including, without
limitation, lost profits) of any form incurred by any person or entity, whether
or not foreseeable and regardless of the type of action in which such a claim
may be brought, with respect to X.X. Xxxxxx'x performance under this Agreement
or X.X. Xxxxxx'x role as fund accountant or administrator.
(c) The Fund will indemnify X.X. Xxxxxx, and its directors, officers,
employees and agents ("Indemnitees") against, and hold them harmless from, any
liabilities, losses, claims, costs, damages, penalties, fines, obligations, or
expenses of any kind whatsoever (including, without limitation, reasonable
attorneys', accountants', consultants or experts' fees or disbursements
("Liabilities")) that may be imposed on, incurred by or asserted against any of
Indemnitees in connection with or arising out of X.X. Xxxxxx'x performance under
this Agreement, provided Indemnitees have not acted with negligence or bad faith
or engaged in fraud or willful misconduct in connection with the Liabilities in
question, including but not limited to those arising out of or attributable to:
(i) any and all actions of the Indemnitees required to be taken
pursuant to this Agreement;
(ii) the reliance on or use by the Indemnitees of information,
records, or documents which are received by the Indemnitees and furnished to it
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or them by or on behalf of the Fund (other than by employees of X.X. Xxxxxx),
and which have been prepared or maintained by the Fund or any third party on
behalf of the Fund;
(iii) the Fund's refusal or failure to comply with the terms of
this Agreement or the Fund's lack of good faith, or its actions, or lack
thereof, involving negligence or willful misfeasance;
(iv) the breach of any material representation or warranty of the
Fund hereunder;
(v) following any instructions or other directions reasonably
believed to be requests of the Fund or otherwise duly authorized other than by
employees of X.X. Xxxxxx and upon which X.X. Xxxxxx is authorized to rely
pursuant to the terms of this Agreement;
(vi) the recognition and processing by X.X. Xxxxxx of any share
certificates which are reasonably believed to bear the proper signatures of the
officers of the Fund and the proper countersignature of any transfer agent or
registrar of the Fund;
(vii) any delays, inaccuracies, errors in or omissions from
information or data provided to X.X. Xxxxxx by the Fund, its investment
advisers, and/or subadvisers, data services, corporate action services, pricing
services or securities brokers and dealers unless such delays, inaccuracies,
errors or omissions are the result of any action or inaction by the Indemnitees;
(viii) the offer or sale of shares by the Fund in violation of any
requirement under the Federal securities laws or regulations or the securities
laws or regulations of any state, or in violation of any stop order or other
determination or ruling by any Federal agency or any state agency with respect
to the offer or sale of such shares in such state (1) resulting from activities,
actions, or omissions by the Fund or its service providers (other than X.X.
Xxxxxx) and agents, or (2) existing or arising out of activities, actions or
omissions by or on behalf of the Fund prior to the effective date of this
Agreement;
(ix) any failure of the Fund's registration statement to
materially comply with the 1933 Act and the 1940 Act (including the rules and
regulations thereunder) and any other applicable laws, or any untrue statement
of a material fact or omission of a material fact necessary to make any
statement therein not misleading in a Fund's prospectus; provided that, this
obligation to indemnify shall not apply if such statement or omission or alleged
statement or omission was made in reliance upon and in conformity with
information furnished by X.X. Xxxxxx;
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(x) the actions taken by the Fund, its investment adviser and its
distributor in compliance with applicable securities, tax, commodities and other
laws, rules and regulations, or the failure to so comply; and
(xi) all actions, inactions, omissions, or errors caused by third
parties to whom the Fund or the Indemnitees have assigned any rights and/or
delegated any duties under this Agreement at the request of or as required by
the Fund, its investment advisers, distributor, administrator or sponsor.
(d) In performing its services hereunder, X.X. Xxxxxx shall be
entitled to rely on any oral or written instructions, notices or other
communications, including electronic transmissions, from the Fund and its
custodians, officers and directors, investment advisers and sub-advisers,
investors, agents and other service providers which X.X. Xxxxxx reasonably
believes to be genuine, valid and authorized. X.X. Xxxxxx shall also be entitled
to consult with and rely on the advice and opinions of outside legal counsel and
public accountants retained by the Fund, as necessary or appropriate.
(e) The indemnifying party shall have the option to defend the
indemnified party against any claim which may be the subject of this
indemnification, and in the event that the indemnifying party so elects, it will
so notify the indemnified party, and thereupon the indemnifying party shall take
over complete defense of the claim. In the event the indemnifying party elects
to assume the control of the defense of the claim, the indemnified party may
participate in such proceeding and retain additional counsel but shall bear all
fees and expenses of such retention of such counsel, unless (i) the indemnifying
party shall have specifically authorized the retention of such counsel, or (ii)
if the indemnifying party and the indemnified party agree that the retention of
such counsel is required as a result of a conflict of interest. In the event the
indemnifying party assumes control of any proceeding, the indemnifying party
shall keep the indemnified party notified of the progress of such proceeding
and, upon request, consult with the indemnified party and counsel. The
indemnifying party will, upon request by the indemnified party, either pay in
the first instance or reimburse the indemnified party for any expense subject to
indemnity hereunder. The indemnifying party shall not settle or compromise any
proceeding without the prior written consent of the indemnified party unless (i)
such settlement or compromise involves no admission of guilt, wrongdoing, or
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misconduct by the indemnified party, (ii) such settlement or compromise does not
impose any obligations or restrictions on the indemnified party other than
obligations to pay money that are subject to indemnity under this Agreement and
(iii) the indemnifying party shall have paid or made arrangements satisfactory
to the indemnified party for payment of amounts payable by the indemnified party
in connection with such settlement. The indemnified party shall in no case
confess any claim or make any compromise in any case which the indemnifying
party will be asked to indemnify the indemnified party except with indemnifying
party's prior written consent. The indemnified party shall be entitled to rely
on and may act upon advice of counsel (who may be counsel for indemnifying
party) on all matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. It is understood and agreed that when
the indemnified party is X.X. Xxxxxx, this section (e) shall not apply to any
claims that affect other customers of X.X. Xxxxxx.
7. TERM.
(a) This Agreement shall be effective on the date first written above
and shall continue until June 12, 2008 (the "Initial Term"). Upon the expiration
of the Initial Term, this Agreement shall automatically renew for successive
terms of one (1) year ("Renewal Terms") each, unless the Fund or X.X. Xxxxxx
provides written notice to the other of its intent not to renew. Such notice
must be received not less than 90 days prior to the expiration of the Initial
Term or the then current Renewal Term.
(b) Notwithstanding Section 7.1(a):
(i) Either party may terminate this Agreement immediately on
written notice to the other party in the event that a
material breach of this Agreement by the other party has not
been cured within thirty (30) days of that party being given
written notice of the material breach;
(ii) Either party may terminate this Agreement immediately on
written notice to the other party upon the other party being
declared bankrupt, entering into a composition with
creditors, obtaining a suspension of payment, being put
under court controlled management or being the subject of a
similar measure;
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(iii) Upon the Fund's notice to X.X. Xxxxxx of (a) the Fund's
liquidation and termination, (b) Fund's filing of Form N-8F
with the Securities and Exchange Commission to apply for
deregistration as an investment company or (c) the Fund's
reorganization, either party may terminate this Agreement
immediately on written notice to the other party, or on such
date as may be specified in such written notice; and
(iv) The Fund may terminate this Agreement at any time on sixty
(60) days' written notice to X.X. Xxxxxx upon payment of a
termination fee. The termination fee will be an amount equal
to six (6) times the average monthly fees paid during the
six month period prior to the Fund's notice of termination,
or since the date X.X. Xxxxxx commenced providing services
under this Agreement if that period is less than six months.
For the avoidance of any doubt, the Fund shall not be
obligated to pay any termination fee if it does not renew
this Agreement under Section 7.1(a) or terminates this
Agreement under Section 7.1(b)(i), (ii) or (iii).
8. NOTICES. Any notice required or permitted hereunder shall be in writing
and shall be deemed effective on the date of personal delivery (by private
messenger, courier service or otherwise) or upon confirmed receipt of telex or
facsimile, whichever occurs first, or upon receipt if by mail to the parties at
the following address (or such other address as a party may specify by notice to
the other):
If to the Fund:
First Trust Active Dividend Income Fund
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000
Attention: General Counsel
Fax: 000-000-0000
Confirm: 000-000-0000
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If to X.X. Xxxxxx:
X.X. Xxxxxx Investor Services Co. 00 Xxxxxxx
Xxxxxx Xxxxxx, XX 00000 Attention: Legal
Department Fax: 000-000-0000
9. WAIVER. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver nor
shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be in
writing signed by the waiving party.
10. FORCE MAJEURE AND DISASTER RECOVERY. (a) X.X. Xxxxxx will maintain and
update from time to time business continuation and disaster recovery procedures
with respect to its fund administration and accounting business that it
reasonably determines from time to time meet reasonable commercial standards.
X.X. Xxxxxx will have no liability, however, for any damage, loss, expense or
liability of any nature that the Fund may suffer or incur, caused by an act of
God, fire, flood, civil or labor disturbance, war, terrorism, act of any
governmental authority or other act or threat of any authority (de jure or de
facto), legal constraint, fraud or forgery (except where such fraud or forgery
is attributable to X.X. Xxxxxx, its agents or their employees), malfunction of
equipment or software (except where such malfunction is primarily attributable
to X.X. Xxxxxx'x negligence or willful misconduct in maintaining the equipment
or software), failure of or the effect of rules or operations of any external
funds transfer system, inability to obtain or interruption of external
communications facilities, or any cause beyond the reasonable control of X.X.
Xxxxxx (including, without limitation, the non-availability of an appropriate
foreign exchange). X.X. Xxxxxx shall endeavor to promptly notify the Fund when
it becomes aware of any situation outlined above, but it shall not be liable for
failure to do so.
(b) In the event of a failure or a delay, X.X. Xxxxxx (i) shall not
discriminate against the Fund in making computer time and personnel available to
input or process the transactions contemplated by this Agreement, and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.
Each such event hereinbefore described is a "Force Majeure"). If, as a result of
a Force Majeure, X.X. Xxxxxx is rendered unable, in whole or in part, to carry
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out its obligations under this Agreement (including, without limitation, the
payment of money) then the obligations of X.X. Xxxxxx, so far as and to the
extent that the obligations are affected by such Force Majeure, shall be
suspended during the continuation of any inability so caused. X.X. Xxxxxx shall
use reasonable efforts to resume service and mitigate loss to the Fund through
implementation of its disaster recovery and business continuation plan. X.X.
Xxxxxx shall, as soon as reasonably practicable, notify the Fund of a Force
Majeure that may affect services provided to the Fund under this Agreement.
(c) Whenever a Force Majeure causes X.X. Xxxxxx to allocate limited
resources between or among X.X. Xxxxxx'x customers, the Fund shall receive no
less priority treatment than is accorded to other similarly situated customers
of X.X. Xxxxxx, with respect to such allocation.
11. AMENDMENTS. This Agreement may be modified or amended from time to time
by mutual written agreement between the parties. No provision of this Agreement
may be changed, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, discharge
or termination is sought.
12. SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable, the balance of the Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance it shall nevertheless
remain applicable to all other persons and circumstances.
13. GOVERNING LAW. This Agreement will be construed, regulated and
administered under the laws of the U.S. (including the applicable provisions of
the 1940 Act and rules thereunder) or State of New York, as applicable, without
regard to New York's principles regarding conflict of laws. To the extent that
the laws of the State of New York or the U.S. (other than the 1940 Act and rules
thereunder), as applicable, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act or rules thereunder, the latter shall
control. The U.S. District Court for the Southern District of New York will have
the sole and exclusive jurisdiction over any lawsuit or other judicial
proceeding relating to or arising from this Agreement. If that court lacks
federal subject matter jurisdiction, the Supreme Court of the State of New York,
New York County will have sole and exclusive jurisdiction. Either of these
courts will have the proper venue for any such lawsuit or judicial proceeding,
and the parties waive any objection to venue or their convenience as a forum.
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The parties agree to submit to the jurisdiction of any of the courts specified
and to accept service of process to vest personal jurisdiction over them in any
of these courts. The parties further hereby knowingly, voluntarily and
intentionally waive (to the fullest extent permitted by any applicable statute,
treaty, rule, regulation or common law and any applicable decree, injunction,
judgment, order, formal interpretation or ruling caused by a court or government
entity), any right to a trial by jury with respect to any such lawsuit or
judicial proceeding arising or relating to this Agreement or the transactions
contemplated hereby.
14. CONFIDENTIALITY. (a) Each party shall keep confidential any information
relating to the other party's business ("Confidential Information").
Confidential Information shall include (i) any data or information that is
competitively sensitive material, and not generally known to the public,
including, but not limited to, information about product plans, marketing
strategies, finances, operations, customer relationships, customer profiles,
customer lists, sales estimates, business plans, and internal performance
results relating to the past, present or future business activities of the Fund
or X.X. Xxxxxx and their respective subsidiaries and affiliated companies; (ii)
any scientific or technical information, design, process, procedure, formula, or
improvement that is commercially valuable and secret in the sense that its
confidentiality affords the Fund or X.X. Xxxxxx a competitive advantage over its
competitors; (iii) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object code, flow
charts, databases, inventions, know-how, and trade secrets, whether or not
patentable or copyrightable; and (iv) anything designated as confidential.
(b) Notwithstanding the foregoing, information shall not be
Confidential Information and shall not be subject to such confidentiality
obligations if: (i) it is necessary for X.X. Xxxxxx to release such information
in connection with the provision of services under this Agreement; (ii) it is
already known to the receiving party at the time it is obtained; (iii) it is or
becomes publicly known or available through no wrongful act of the receiving
party; (iv) it is rightfully received from a third party who, to the best of the
receiving party's knowledge, is not under a duty of confidentiality; (v) it is
released by the protected party to a third party without restriction; (vi) it is
requested or required to be disclosed by the receiving party pursuant to a court
order, subpoena, governmental or regulatory agency request or law (provided the
receiving party will provide the other party written notice of the same, to the
-14-
extent such notice is permitted); (vii) it is relevant to the defense of any
claim or cause of action asserted against the receiving party; (viii) it has
been or is independently developed or obtained by the receiving party; or (ix)
it is necessary for X.X. Xxxxxx to release such information to X.X. Xxxxxx'x
internal or external accountants or legal counsel who are subject to a duty of
confidentiality.
(c) X.X. Xxxxxx acknowledges and agrees that in connection with its
services under this Agreement it receives non-public confidential portfolio
holdings information ("Portfolio Information") with respect to the Fund. X.X.
Xxxxxx agrees that, subject to the foregoing provisions of and the exceptions
set forth in this Section 14 (other than the exception set forth above in
subsection (b)(i) of this Section 14, which exception shall not be applicable to
the Fund's Portfolio Information), X.X. Xxxxxx will keep confidential the Fund's
Portfolio Information and will not disclose the Fund's Portfolio Information
other than pursuant to a written certification or instructions from the Fund;
provided that without the need for such a written certification or instructions
and notwithstanding any other provision of this Section 14 to the contrary, the
Fund's Portfolio Information may be disclosed to the Fund's custodian, any third
party pricing services, securities depositories, securities exchanges, or
affiliates of X.X. Xxxxxx (meaning entities that control, are controlled by, or
under common control with X.X. Xxxxxx), in each case, to the extent necessary in
connection with the provision of services under this Agreement and which shall
be subject to a duty of confidentiality with respect to such Portfolio
Information.
15. OBLIGATIONS OF THE FUND. It is expressly acknowledged and agreed that
the obligations of the Fund hereunder shall not be binding upon any of the
shareholders, Trustees, officers, employees or agents of the Fund personally,
but shall bind only the assets and property of the Fund as provided in the
Fund's Declaration of Trust. The execution and delivery of this Agreement have
been authorized by the Trustees of the Fund and signed by an officer of such
Fund, acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Fund as provided in the Fund's
Declaration of Trust.
-15-
16. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS. X.X. Xxxxxx shall
provide to the Fund, at such times as the Fund may reasonably require, which
shall be at least annually, reports by independent public accountants on the
accounting system and internal accounting controls relating to the services
provided by X.X. Xxxxxx under this Agreement. Such reports shall be of
sufficient scope and in sufficient detail to provide reasonable assurance that
any material inadequacies would be disclosed by such examination and, if there
are no such inadequacies, the reports shall so state.
17. COMPLIANCE. (a) X.X. Xxxxxx represents that it has implemented policies
and procedures to ensure adequate training and supervision of employees and
vendor management.
(b) X.X. Xxxxxx agrees to provide at the Fund's request a
certification as to its knowledge concerning information, controls and
procedures related to the Fund's financial reports and compliance with
Xxxxxxxx-Xxxxx Act requirements.
18. NO AGENCY. It is hereby acknowledged and agreed that X.X. Xxxxxx is
acting in its capacity as an independent contractor for all purposes under this
Agreement rather than as an agent of the Fund, and, other than as specified
above, shall have no authority to act on behalf of the Fund.
19. CERTIFICATIONS. From time to time as requested by the Fund, X.X. Xxxxxx
shall provide to the Fund such certifications and sub-certifications with
respect to compliance policies and procedures under Rule 38a-1 under the 1940
Act and such other matters that may be reasonably requested by the Fund or the
Fund's Chief Compliance Officer from time to time. In addition, X.X. Xxxxxx
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 of the
1940 Act.
-16-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers designated below as of the date first written above.
FIRST TRUST ACTIVE DIVIDEND INCOME FUND
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
X.X. XXXXXX INVESTOR SERVICES CO.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
-17-
FUND SERVICES AGREEMENT
SCHEDULE A
FEES AND EXPENSES
FUND ACCOUNTING AND ADMINISTRATION FEES
FUND ACCOUNTING CORE SERVICE FEES
-------------------------------------------------- ----------------------------------------------
PRODUCT ANNUAL FEE
-------------------------------------------------- ----------------------------------------------
-------------------------------------------------- ----------------------------------------------
PER FUND CHARGE Calculated monthly based on average daily
net assets
First $50 million 6 bp
Next $50 million 3 bp
Over $100 million 1.5 bp
-------------------------------------------------- ----------------------------------------------
FUND ADMINISTRATION CORE SERVICE FEES
-------------------------------------------------- ----------------------------------------------
PRODUCT FEE
-------------------------------------------------- ----------------------------------------------
-------------------------------------------------- ----------------------------------------------
PER FUND CHARGE ANNUAL FEE
Treasury and Compliance $15,000 per fund
Tax $10,000 per fund
-------------------------------------------------- ----------------------------------------------
FUND REGULATORY CORE SERVICE FEES
-------------------------------------------------- ----------------------------------------------
PRODUCT FEE
-------------------------------------------------- ----------------------------------------------
-------------------------------------------------- ----------------------------------------------
BOARD OF TRUSTEES / DIRECTORS ANNUAL FEE
4 meetings per year 1 Fund - $60,000*
-------------------------------------------------- ----------------------------------------------
________________________________
*This amount is based on the fee schedule set forth below which sets forth,
based on the number of funds advised by First Trust Advisors L.P.
entering into Closed-End Fund Services Agreements with X.X. Xxxxxx, the
aggregate fees to be charged for providing services to all such funds.
As of the date hereof, the Fund is the only fund that has entered into
a Closed-End Fund Services Agreement with X.X. Xxxxxx.
AGGREGATE FUND REGULATORY CORE SERVICE FEES:
-------------------------------------------
If 1 fund, aggregate fees = $60,000.
If 2 funds, aggregate fees = $90,000.
If 3 or more funds, aggregate fees = $125,000.
A-2
OUT-OF-POCKET FEES
-------------------------------------------------------------------------------
OUT-OF-POCKET CHARGES
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
The Fund will reimburse JPMorgan for out-of-pocket expenses incurred on its
behalf, as set forth below and in Section 5 of this Agreement.
Custody out-of-pocket charges include, but are not limited to, re-registration
charges, scrip fees, ad valorum taxes, and transportation costs for shipment of
physical securities. Fund Accounting out-of-pocket charges include, but are not
limited to, pricing vendor charges, express mail, archiving, SAS 70 reviews, and
printing/copying charges.
Fund Administration out-of-pocket charges include, but are not limited to,
travel to Board of Directors meetings (if applicable), overnight courier
charges, and printing/copying charges for Board Book materials, Xxxxxxxx-Xxxxx
Act sub-certification process, and CCO Office Support.
Fund Regulatory out-of-pocket expenses include, but are not limited to, SEC
filing fees, XXXXX filing fees, Board book materials and supplies, expenses of
typesetting and printing of offering circulars, Prospectuses and SAIs for
regulatory purposes.
-------------------------------------------------------------------------------
A-3
FUND SERVICES AGREEMENT
SCHEDULE B
GENERAL DESCRIPTION OF FUND ADMINISTRATION
AND COMPLIANCE SERVICES
X.X. Xxxxxx'x Fund Administration and Compliance Services are designed and
intended to address the Fund's routine tax reporting, portfolio compliance and
general administration needs. X.X. Xxxxxx will work closely with the Fund's
experts, such as its public accountants and legal counsel, with respect to these
services.
I. ROUTINE TAX SERVICES
A. TAX FILINGS. Working with the Fund's independent public
accountants or other professionals, assist with the
preparation and filing of (1) the Fund's Federal tax returns
on Form 1120 RIC and Form 8613 and (2) such state and local
returns as directed by the Fund.
B. TAX PROVISIONS. Prepare and review fiscal and excise tax
provisions.
C. SUPPLEMENTARY TAX INFORMATION. Prepare for review by the
Fund's officers, supplementary information for shareholders'
tax purposes as directed by the Fund.
D. PREPARATION AND REVIEW. To the extent not specifically
referred to in A., B. or C. above or II.B below, preparation
and review of
(1) fiscal and excise tax provisions (includes all book/tax
adjustments set forth in the Service Level Document);
(2) Year end re-characterizations, return of capital foreign tax
credit and tax-exempt percentage for Form 1099;
(3) Year end shareholder reporting requirements;
(4) Periodic distributions, if necessary;
(5) 60-day notice information;
(6) Quarterly tax-exempt asset test and annual foreign security
asset test.
E. LIQUIDATIONS OR MERGERS. ax preparation and review of all items
regarding liquidations or mergers.
F. SUPPORT. Support financial statement process by preparing and
reviewing the following:
(1) ROC SOP disclosure;
(2) Tax footnote disclosure.
(3) 60-day notice information
II. ROUTINE COMPLIANCE
X.X. Xxxxxx will provide assistance to the Fund and its investment adviser with
respect to compliance with federal tax and securities laws. Responsibility for
such compliance services are subject to the development of a more precise
allocation of duties and responsibilities between X.X. Xxxxxx, the adviser and
other relevant service providers. In addition, X.X. Xxxxxx'x provision of
compliance services is designed to assist the Fund and its adviser but is not
intended as an assumption by X.X. Xxxxxx of the adviser's fiduciary duties and
legal responsibilities to the Fund.
A. PORTFOLIO COMPLIANCE. Monitor and periodically test the Fund's
compliance with such investment restrictions and other
regulatory requirements, as may be agreed to between the
adviser, X.X. Xxxxxx and the Fund (e.g., issuer or industry
diversification, etc.).
B. TAX COMPLIANCE. Monitor the Fund's status as regulated
investment company under Subchapter M of the Internal Revenue
Code of 1986 as amended (the "Code"). In furtherance of, and
without limiting the generality of the foregoing, periodically
test, including on required quarterly testing dates, the
Fund's compliance with the requirements of Section 851 of the
Internal Revenue Code and applicable Treasury Regulations for
qualification as a regulated investment company. These tests
shall be performed in a manner that will permit the Fund to
take advantage of any applicable cure periods.
C. POLICIES AND PROCEDURES COMPLIANCE. Assist the investment
adviser with monitoring its compliance with Fund Board
directives, such as "Approved Issuers Listings for Repurchase
Agreements", Rule 17a-7, Rule 17e-1 and Rule 12d3-1
procedures.
III. REGULATORY AFFAIRS AND CORPORATE GOVERNANCE
A. AMENDMENTS TO REGISTRATION STATEMENT. Prepare and coordinate
with the Fund's counsel post-effective amendments to the
Fund's registration statement on Form N-2, as needed, and
coordinate with the Fund's financial printer to file such
amendments.
B-2
B. BOARD MATERIALS AND MEETINGS. Draft agendas, resolutions and
materials for regular quarterly and special Board meetings and
draft written consents of the Board. Coordinate the
preparation, assembly and mailing of Board materials. Attend
Board meetings and draft minutes thereof.
C. CORPORATE CALENDAR. Maintain a calendar of Board meetings,
required SEC filing deadlines and Board approval deadlines.
D. NOTICES OF ANNUAL MEETINGS AND PROXY STATEMENTS. Assist in the
preparation of notices of annual or special meetings of
shareholders and proxy materials relating to such meetings. At
the direction of the Fund, prepare and coordinate the filing
and mailing of the Fund's annual proxy statement.
E. FIDELITY BONDS AND INSURANCE POLICIES. Assist in obtaining the
fidelity bond and directors' and officers'/errors and
omissions insurance policies for the Fund in accordance with
the requirements of Rule 17g-1 and 17d-1(d)(7) under the 1940
Act as such bond and policies are approved by the Fund's board
of directors. Monitor the Fund's assets to assure adequate
fidelity bond coverage is maintained.
All regulatory services are subject to the review and approval
of Fund counsel.
IV. GENERAL ADMINISTRATION
A. BOARD MATERIALS. Prepare or compile performance and expense
information, financial reports, and compliance data and
information for inclusion in the Fund's regular quarterly
Board meeting materials.
B. DIVIDEND DISTRIBUTIONS. Calculate dividend distributions in
accordance with distribution policies detailed in the Fund's
prospectus or Board resolutions. Assist Fund management in
making final determinations of distribution amounts.
C. EXPENSE ACCRUALS. Prepare Fund expense projections, establish
accruals and review on a periodic basis, including expenses
based on a percentage of average daily net assets (e.g.,
management, sub-advisory and administrative fees) and expenses
based on actual charges annualized and accrued daily (audit
fees, registration fees, Trustees' fees, etc.).
D. EXPENSE PAYMENTS. Arrange, if directed by the appropriate Fund
officers, for the payment of the Fund's expenses.
E. REPORTS TO STATISTICAL SERVICE PROVIDERS. Report Fund
performance to five outside statistical service providers on a
monthly basis, as directed by Fund management.
F. REGULATORY EXAMINATIONS. Provide assistance and coordinate
communications and data collection, of records and documents
B-3
held by X.X. Xxxxxx on the Fund's behalf, with respect to
regulatory examinations of the Fund, including examination by
the SEC staff.
G. NON-EXECUTIVE OFFICERS. Furnish appropriate non-executive
officers for the Fund, such as assistant treasurers and
secretaries.
H. SHAREHOLDER COMMUNICATION. Review and provide assistance on
shareholder communications.
I. CONTRACTUAL SERVICE PROVIDERS. Coordinate contractual
relationships and communications between the Fund and its
contractual service providers.
J. OTHER SERVICES. Such other services as the parties hereto may
from time to time agree upon in writing.
B-4
FUND SERVICES AGREEMENT
SCHEDULE C
DESCRIPTION OF FUND ACCOUNTING SERVICES
X.X. Xxxxxx shall provide the following accounting services to the Fund:
A. Maintenance of the books and records for the Fund's assets,
including records of all securities transactions as required by Rule
31a-1 under the 1940 Act, and as such rule or any successor rules
may be amended from time to time.
B. Calculation of the Fund's Net Asset Value in accordance with the
Prospectus and duly approved valuation policies and procedures and
transmission to NASDAQ and to such other entities as directed by the
Fund.
C. Accounting for dividends, capital gains and interest received and
distributions made by the Fund.
D. Coordinate with the Fund's independent auditors with respect to the
annual audit, and as otherwise requested by the Fund.
E. As mutually agreed upon, X.X. Xxxxxx will provide domestic and/or
international reports.
F. Journalize investment, capital share and income and expense
activities.
G. Verify investment buy/sell trade tickets when received from the
investment adviser for the Fund (the "Adviser") and transmit trades
to the Fund's custodian (the "Custodian") for proper settlement.
H. Maintain individual ledgers for investment securities. I. Maintain
historical tax lots for each security.
J. Reconcile cash and investment balances of the Fund with the
Custodian, and provide the Adviser with the beginning cash balance
available for investment purposes.
K. Update the cash availability throughout the day as required by the
Adviser.
L. Post to and prepare the Statement of Assets and Liabilities and the
Statement of Operations.
M. Calculate various contractual expenses (e.g., advisory and custody
fees).
N. Monitor the expense accruals and notify an officer of the Fund of
any proposed adjustments.
O. Control all disbursements and authorize such disbursements upon
written instructions.
P. Calculate capital gains and losses.
Q. Determine net income.
R. Obtain security market quotes from independent pricing services
approved by the Adviser, or if such quotes are unavailable, then
obtain such prices from the Adviser, and in either case calculate
the market value of the Fund's investments.
S. Transmit or mail a copy of the daily portfolio valuation to the
Adviser. T. Compute net asset value.
U. As appropriate, compute yields, total return, expense ratios,
portfolio turnover rate, and, if required, portfolio average
dollar-weighted maturity.
V. Review complex corporate actions.
B-2
