FORM OF BOARD ADMINISTRATION SERVICES AGREEMENT
THIS AGREEMENT is made as of February 5, 2007 by and between PFPC INC.,
a Massachusetts corporation ("PFPC"), and each of the entities listed on Exhibit
A attached hereto and made a part hereof (each, a "Fund" and together, the
"Funds").
W I T N E S S E T H :
WHEREAS, each Fund is registered as a management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, each Fund wishes to retain PFPC to provide board administration
services and PFPC wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and intending to be legally bound hereby the parties
hereto agree as follows: 1. Definitions. As used in this Agreement:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(c) "Authorized Person" means any officer of a Fund and any other
person duly authorized by a Fund to give Oral Instructions and
Written Instructions on behalf of such Fund. An Authorized
Person's scope of authority may be limited by setting forth such
limitation in a written document signed by both parties hereto.
(d) "Oral Instructions" mean oral instructions received by PFPC from
an Authorized Person or from a person reasonably believed by PFPC
to be an Authorized Person. PFPC may, in its sole discretion in
each separate instance, consider and rely upon instructions it
receives from an Authorized Person via electronic mail as Oral
Instructions.
(e) "SEC" means the Securities and Exchange Commission.
(f) "Securities Laws" means the 1933 Act, the 1934 Act and the 0000
Xxx.
(g) "Shares" mean the shares of beneficial interest of a Fund.
(h) "Written Instructions" mean (i) written instructions signed by an
Authorized Person and received by PFPC or (ii) trade instructions
transmitted (and received by PFPC) by means of an electronic
transaction reporting system access to which requires use of a
password or other authorized identifier. The instructions may be
delivered electronically (with respect to sub-item (ii) above) or
by hand, mail, tested telegram, cable, telex or facsimile sending
device.
2. Appointment. Each Fund hereby appoints PFPC to provide board
administration services to such Fund, in accordance with the terms set
forth in this Agreement, effective as of the date set forth on Exhibit A
with respect to the Fund. PFPC accepts such appointment and agrees to
furnish such services.
3. Compliance with Rules and Regulations.
PFPC undertakes to comply with all applicable requirements of the
Securities Laws, and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties to be
performed by PFPC hereunder. Except as specifically set forth herein,
PFPC assumes no responsibility for such compliance by a Fund or other
entity.
4. Instructions.
(a) Unless otherwise provided in this Agreement, PFPC shall act only
upon Oral Instructions or Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instruction or
Written Instruction it receives from an Authorized Person (or
from a person reasonably believed by PFPC to be an Authorized
Person) pursuant to this Agreement. PFPC may assume that any Oral
Instruction or Written Instruction received hereunder is not in
any way inconsistent with the provisions of organizational
documents or this Agreement or of any vote, resolution or
proceeding of a Fund's board of directors or of a Fund's
shareholders, unless and until PFPC receives Written Instructions
to the contrary.
(c) Each Fund agrees to forward to PFPC Written Instructions
confirming Oral Instructions (except where such Oral Instructions
are given by PFPC or its affiliates) so that PFPC receives the
Written Instructions by the close of business on the same day
that such Oral Instructions are received. The fact that such
confirming Written Instructions are not received by PFPC or
differ from the Oral Instructions shall in no way invalidate the
transactions or enforceability of the transactions authorized by
the Oral Instructions or PFPC's ability to rely upon such Oral
Instructions.
5. Right to Receive Advice.
(a) Advice of a Fund. If PFPC is in doubt as to any action it should
or should not take, PFPC may request directions or advice,
including Oral Instructions or Written Instructions, from a Fund.
(b) Advice of Counsel. If PFPC shall be in doubt as to any question
of law pertaining to any action it should or should not take,
PFPC may request advice from counsel of its own choosing (who may
be counsel for a Fund, a Fund's investment adviser or PFPC, at
the option of PFPC). Each Fund shall pay the reasonable cost of
any counsel retained by PFPC with prior notice to such Fund.
(c) Conflicting Advice. In the event of a conflict between directions
or advice or Oral Instructions or Written Instructions PFPC
receives from a Fund and the advice PFPC receives from counsel,
PFPC may rely upon and follow the advice of counsel.
(d) Protection of PFPC. PFPC shall be indemnified by a Fund and
without liability for any action PFPC takes or does not take in
reliance upon directions or advice or Oral Instructions or Written
Instructions PFPC receives from or on behalf of such Fund or from
counsel and which PFPC believes, in good faith, to be consistent
with those directions or advice and Oral Instructions or Written
Instructions. Nothing in this section shall be construed so as to
impose an obligation upon PFPC (i) to seek such directions or
advice or Oral Instructions or Written Instructions, or (ii) to
act in accordance with such directions or advice or Oral
Instructions or Written Instructions.
6. Records; Visits.
The books and records pertaining to a Fund which are in the possession
or under the control of PFPC shall be the property of such Fund. Such
books and records shall be prepared and maintained as required by the
1940 Act and other applicable securities laws, rules and regulations
provided a Fund provides PFPC with written notice of such laws, rules
and regulations, other than the 1940 Act and the Internal Revenue Code
of 1986, as amended, that are applicable. A Fund and Authorized Persons
shall have access to such books and records at all times during PFPC's
normal business hours upon reasonable advance notice. Upon the
reasonable request of a Fund, copies of any such books and records shall
be provided by PFPC to such Fund or to an Authorized Person, at the
Fund's expense.
7. Confidentiality. The parties shall keep confidential any information
relating to another party's business ("Confidential Information").
Confidential Information shall include (a) 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 a Fund or PFPC and their
respective subsidiaries and affiliated companies; (b) any scientific or
technical information, design, process, procedure, formula, or
improvement that is commercially valuable and secret in the sense that
its confidentiality affords a Fund or PFPC a competitive advantage over
its competitors; (c) 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 (d)
anything designated as confidential. Notwithstanding the foregoing,
information shall not be Confidential Information and shall not be
subject to such confidentiality obligations if: (a) it is necessary for
PFPC to release such information in connection with the provision of
services under this Agreement; (b) it is already known to the receiving
party at the time it is obtained; (c) it is or becomes publicly known or
available through no wrongful act of the receiving party; (d) 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; (e) it is
released by the protected party to a third party without restriction;
(f) 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 extent such notice is
permitted); (g) it is Fund information provided by PFPC in connection
with an independent third party compliance or other review; (h) it is
relevant to the defense of any claim or cause of action asserted against
the receiving party; or (i) it has been or is independently developed or
obtained by the receiving party. PFPC 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. PFPC agrees that, subject to the foregoing
provisions of and the exceptions set forth in this
Section 7 (other than the exception set forth above in this Section 7 as
sub-item (a), which exception set forth in sub-item (a) shall not be
applicable to a Fund's Portfolio Information), PFPC will keep
confidential a Fund's Portfolio Information and will not disclose a
Fund's Portfolio Information other than pursuant to a Written
Instruction (which Written Instruction may be a standing Written
Instruction); provided that without the need for such a Written
Instruction and notwithstanding any other provision of this Section 7 to
the contrary, a Fund's Portfolio Information may be disclosed to third
party pricing services which are engaged by PFPC 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.
8. PFPC System. PFPC shall retain title to and ownership of any and all
data bases, computer programs, screen formats, report formats,
interactive design techniques, derivative works, inventions,
discoveries, patentable or copyrightable matters, concepts, expertise,
patents, copyrights, trade secrets, and other related legal rights
utilized by PFPC in connection with the services provided by PFPC to a
Fund.
9. Disaster Recovery. PFPC shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to
the extent appropriate equipment is available. In the event of equipment
failures, PFPC shall, at no additional expense to a Fund, take
reasonable steps to minimize service interruptions. PFPC shall have no
liability with respect to the loss of data or service interruptions
caused by equipment failure, provided such loss or interruption is not
caused by PFPC's own willful misfeasance, bad faith, negligence or
reckless disregard of its duties or obligations under this Agreement.
10. Compensation.
(a) As compensation for services rendered by PFPC during the term of
this Agreement, each Fund, on behalf of each of its portfolios,
will pay to PFPC a fee or fees as may be agreed to in writing by
the Fund and PFPC.
(b) The undersigned hereby represents and warrants to PFPC that (i)
the terms of this Agreement, (ii) the fees and expenses
associated with this Agreement, and (iii) any benefits accruing
to PFPC or to the adviser or sponsor to a Fund in connection with
this Agreement, including but not limited to any fee waivers,
conversion cost reimbursements, up front payments, signing
payments or periodic payments made or to be made by PFPC to such
adviser or sponsor or any affiliate of a Fund relating to this
Agreement have been fully disclosed to the board of directors of
such Fund and that, if required by applicable law, such board of
directors has approved or will approve the terms of this
Agreement, any such fees and expenses, and any such benefits.
11. Indemnification.
(a) Each Fund agrees severally and not jointly to indemnify,
defend and hold harmless PFPC and its affiliates, including their
respective officers, directors, agents and employees, from 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 or indirectly from any action or
omission to act which PFPC takes in connection with the provision
of services to a Fund. Neither PFPC, nor any of its affiliates,
shall be indemnified against any liability (or any expenses
incident to such liability) caused by PFPC's or its affiliates'
own
willful misfeasance, bad faith, negligence or reckless
disregard in the performance of PFPC's activities under this
Agreement. The provisions of this Section 11 shall survive
termination of this Agreement.
(b) Indemnification of a Fund. PFPC agrees to defend,
indemnify and hold a Fund and its officers, directors and
employees harmless from any and all Claims arising
directly or indirectly from the negligence, bad faith or
willful misfeasance of PFPC in the performance of its
duties hereunder. Notwithstanding the foregoing, a Fund
shall not be indemnified against any Claim caused by such
Fund's or such Fund's other service providers' willful
misfeasance, bad faith or negligence.
(c) Indemnification Procedure.
(i) Notice of the Action. A party that seeks indemnification
under this Agreement must promptly give the other party
notice of any legal action; provided, however, that a
delay in notice does not relieve an indemnifying party of
any liability to an indemnified party, except to the
extent the indemnifying party shows that the delay
prejudiced the defense of the action.
(ii) Participating in or Assuming the Defense. The indemnifying
party may participate in the defense at any time or it may
assume the defense by giving notice to the other party.
After assuming the defense, the indemnifying party:
(1) must select an attorney that is satisfactory to the
other party;
(2) is not liable to the other party for any later
attorney's fees or for any other later expenses
that the other party incurs, except for reasonable
investigation costs;
(3) must not compromise or settle the action without
the other party's consent (but the other party must
not unreasonably withhold its consent); and
(4) is not liable for any compromise or settlement made
without its consent.
(iii) Failing to Assume the Defense. If the indemnifying party
fails to participate in or assume the defense within 15
days after receiving notice of the action, the
indemnifying party is bound by any determination made in
the action or by any compromise or settlement made by the
other party.
12. Responsibility of PFPC.
(a) PFPC shall be under no duty to take any action
hereunder on behalf of a Fund except as specifically set forth
herein or as may be specifically agreed to by PFPC and such Fund
in a written amendment hereto. PFPC shall be obligated to
exercise commercially reasonable care and diligence in the
performance of its duties hereunder and to act in good faith in
performing services provided for under this Agreement. PFPC shall
be liable only for any damages arising out of PFPC's failure to
perform its duties under this Agreement to the extent such
damages arise out of PFPC's willful misfeasance, bad faith,
negligence or reckless disregard of such duties.
(b) Notwithstanding anything in this Agreement to the contrary,
(i) PFPC shall not be liable for losses, delays, failure, errors,
interruption or loss of data occurring directly or indirectly by
reason of circumstances beyond its reasonable control, including
without limitation acts of God; action or inaction of civil or
military authority; public enemy; war; terrorism; riot; fire;
flood; sabotage; epidemics; labor disputes; civil commotion;
interruption, loss or malfunction of utilities, transportation,
computer or communications capabilities; insurrection; elements
of nature; or non-performance by a third party; and (ii) PFPC
shall not be under any duty or obligation to inquire into and
shall not be liable for the validity or invalidity, authority or
lack thereof, or truthfulness or accuracy or lack thereof, of any
instruction, direction, notice,
instrument or other information which PFPC reasonably
believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary,
(i) neither PFPC nor its affiliates shall be liable for any
consequential, incidental, exemplary, punitive, special or
indirect losses or damages, whether or not the likelihood of
such losses or damages was known by PFPC or its affiliates; and
(ii) PFPC's liability to a Fund for any loss, claim, suit,
controversy, breach or damage of any nature whatsoever (including
but not limited to those arising out of or related to this
Agreement) and regardless of the form of action or legal theory
("Loss") shall not exceed the fees received by PFPC for services
provided hereunder during the twelve (12) months immediately
prior to the date of Loss; provided that PFPC's cumulative
maximum liability for all Losses shall not exceed $100,000.
(d) Each party shall have a duty to mitigate damages for which the
other party may become responsible.
(e) The provisions of this Section 12 shall survive termination of
this Agreement. 13. Description of Board Administration Services
on a Continuous Basis.
PFPC will perform the following Board administration services with
respect to a Fund:
(i) Add items relating to the Funds to meeting notices,
agendas and resolutions being prepared by PFPC for
audit committee meetings, quarterly meetings and special board
meetings of First Defined Portfolio Fund, LLC and First Trust
closed-end funds, for which PFPC currently provides board
administration services along with any closed-end or open-end
funds to which the parties mutually agree in writing that PFPC
will provide board administration services for in the future
("Covered Funds");
(ii) Gather other materials for the Funds' board meetings for
insertion into the board books of the Covered Funds;
(iii) Attend the Funds' board meetings, provided that such meetings are
concurrent with the Covered Funds' board meetings and that the
Funds and the Covered Funds share the same board;
(iv) Add Fund board matters (i.e., resolutions and relevant
disclosure) to the Covered Funds' board meeting minutes being
drafted by PFPC; and
(v) Maintain the files for the Funds' board meeting materials.
All board services are subject to the review and approval of Fund
counsel.
14. Duration and Termination.
(a) This Agreement shall be effective on the date first written above
and shall continue until June 12, 2008 (the "Initial Term").
(b) Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) year
("Renewal Terms") each, unless a Fund or PFPC provides written
notice to the other of its intent not to renew. Such notice must
be received not less than ninety (90) days prior to the
expiration of the Initial Term or the then current Renewal Term.
If this Agreement is terminated with respect to less than all of
the Funds, the rights, obligations and duties of the remaining
parties shall not be affected.
(c) In the event a termination notice is given by a Fund, all
expenses associated with movement of records and materials and
conversion thereof to a successor accounting and administration
services agent(s) (and any other service provider(s)), and all
trailing expenses incurred by PFPC, will be borne by such Fund.
(d) If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other
party (the "Non-Defaulting Party") may give written notice
thereof to the Defaulting Party, and if such material breach
shall not have been remedied within thirty (30) days after such
written notice is given, then the Non-Defaulting Party may
terminate this Agreement by giving thirty (30) days written
notice of such termination to the Defaulting Party. In all cases,
termination by the Non-Defaulting Party shall not constitute a
waiver by the Non-Defaulting Party of any other rights it might
have under this Agreement or otherwise against the Defaulting
Party.
15. Notices. Notices shall be addressed (a) if to PFPC, at
000 Xxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: President
(or such other address as PFPC may inform a Fund in writing); (b) if to
the Funds, at 0000 Xxxxxxxxxxx Xxxx, Xxxxx, XX 00000, Attention: W.
Xxxxx Xxxxxxx or (c) if to neither of the foregoing, at such other
address as shall have been given by like notice to the sender of any
such notice or other communication by the other party. If notice is sent
by confirming telegram, cable, telex or facsimile sending device, it
shall be deemed to have been given immediately. If notice is sent by
first-class mail, it shall be deemed to have been given three days after
it has been mailed. If notice is sent by messenger, it shall be deemed
to have been given on the day it is delivered.
16. Amendments. This Agreement, or any term thereof, may be changed or
waived only by written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
17. Assignment. PFPC may assign its rights hereunder to any majority-owned
direct or indirect subsidiary of PFPC or of The PNC Financial Services
Group, Inc., provided that PFPC gives the Fund 30 days prior written
notice of such assignment.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
19. Further Actions. The parties agree to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof.
20. Miscellaneous.
(a) Notwithstanding anything in this Agreement to the contrary, each
Fund agrees not to make any modifications to its registration
statement or adopt any policies which would affect materially the
obligations or responsibilities of PFPC hereunder without the
prior written approval of PFPC, which approval shall not be
unreasonably withheld or delayed.
(b) Except as expressly provided in this Agreement, PFPC hereby
disclaims all representations and warranties, express or implied,
made to a Fund or any other person, including, without
limitation, any warranties regarding quality, suitability,
merchantability, fitness for a particular purpose or otherwise
(irrespective of any course of dealing, custom or usage of
trade), of any services or any goods provided incidental to
services provided under this Agreement. PFPC disclaims any
warranty of title or non-infringement except as otherwise set
forth in this Agreement.
(c) As between each separate Fund and PFPC, this Agreement embodies
the entire agreement and understanding between the parties and
supersedes all prior agreements and understandings relating to
the subject matter hereof, provided that the parties may embody
in one or more separate documents their agreement, if any, with
respect to delegated duties. 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. Notwithstanding any provision hereof, the
services of PFPC are not, nor shall they be, construed as
constituting legal advice or the provision of legal services for
or on behalf of a Fund or any other person. (d) Each Fund will
provide such information and documentation as PFPC may reasonably
request in connection with services provided by PFPC to a Fund.
(e) This Agreement shall be deemed to be a contract made in
Delaware and governed by Delaware law, without
regard to principles of conflicts of law.
(f) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted
assigns.
(g) The facsimile signature of any party to this Agreement shall
constitute the valid and binding execution hereof by such party.
(h) Each Fund and PFPC agree that the obligations of a Fund
under the Agreement shall not be binding upon any of the
directors, shareholders, nominees, officers, employees or agents,
whether past, present or future, of such Fund individually, but
are binding only upon the assets and property of such Fund (or
applicable series thereof), as provided in the Declaration of
Trust. The execution and delivery of this Agreement have been
authorized by the directors of each Fund, and signed by an
authorized officer of each Fund, acting as such, and neither such
authorization by such directors nor such execution and delivery
by such officer shall be deemed to have been made by any of them
or any shareholder of a Fund individually or to impose any
liability on any of them or any shareholder of a Fund personally,
but shall bind only the assets and property of a Fund (or
applicable series thereof), as provided in the Articles of
Incorporation or Declaration of Trust.
(i) PFPC is entering into this Agreement with each of the Funds
separately and not jointly, and any duty, obligation or liability
owed or incurred by PFPC with respect to a particular Fund shall
be owed or incurred solely with respect to that Fund, and shall
not in any way create any duty, obligation or liability with
respect to any other Fund. This Agreement shall be interpreted to
carry out the intent of the parties hereto that PFPC is entering
into a separate arrangement with each separate Fund.
(j) To help the U.S. government fight the funding of terrorism and
money laundering activities, U.S. Federal law requires each
financial institution to obtain, verify, and record certain
information that identifies each person who initially opens an
account with that financial institution on or after October 1,
2003. Certain of PFPC's affiliates are financial institutions,
and PFPC may, as a matter of policy, request (or may have already
requested) a Fund's name, address and taxpayer identification
number or other government-issued identification number, and, if
such party is a natural person, that party's date of birth. PFPC
may also ask (and may have already asked) for additional
identifying information, and PFPC may take steps (and may have
already taken steps) to verify the authenticity and accuracy of
these data elements.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By: ____________________
Title: ____________________
FIRST TRUST EXCHANGE-TRADED FUND
By: ____________________
Title: ____________________
FIRST TRUST EXCHANGE-TRADED
ALPHADEX FUND
By: ____________________
Title: ____________________
FIRST TRUST EXCHANGE-TRADED FUND II
By: ____________________
Title: ____________________
EXHIBIT A
List of Funds
Fund Agreement Effective Date
---- ------------------------
FIRST TRUST EXCHANGE-TRADED FUND February 5, 2007
FIRST TRUST EXCHANGE-TRADED ALPHADEX FUND February 5, 2007
FIRST TRUST EXCHANGE-TRADED FUND II April __, 2007
