BOARD ADMINISTRATION SERVICES AGREEMENT
THIS AGREEMENT is made as of ___________, 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. 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 the First Trust closed-end funds, for which
PFPC provides board administration services along with
any funds to which PFPC will provide board
administration services for in the future ("Existing
Funds");
(ii) Gather other materials for the Funds' board meetings
for insertion into the board books of the Existing
Funds;
(iii) Attend the Funds' board meetings, provided that such
meetings are concurrent with the Existing Funds' board
meetings and that the Funds and the Existing Funds
share the same board;
(iv) Add Fund board matters (i.e., resolutions and relevant
disclosure) to the Existing 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) During the term of this Agreement and for one year
thereafter, a Fund shall not (with the exceptions noted
in the immediately succeeding sentence) knowingly
solicit or recruit for employment or hire any of PFPC's
employees, and a Fund shall cause the Fund's sponsor
and the Fund's affiliates to not (with the exceptions
noted in the immediately succeeding sentence) knowingly
solicit or recruit for employment or hire any of PFPC's
employees. To "knowingly" solicit, recruit or hire
within the meaning of this provision does not include,
and therefore does not prohibit, solicitation,
recruitment or hiring of a PFPC employee by a Fund, a
Fund's sponsor or an affiliate of the Fund if the PFPC
employee was identified by such entity solely as a
result of the PFPC employee's response to a general
advertisement by such entity in a publication of trade
or industry interest or other similar general
solicitation by such entity
(c) 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.
(d) 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.
(e) Each Fund will provide such information and
documentation as PFPC may reasonably request in
connection with services provided by PFPC to a Fund.
(f) This Agreement shall be deemed to be a contract made in
StateDelaware and governed by placeStateDelaware law,
without regard to principles of conflicts of law.
(g) 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.
(h) The facsimile signature of any party to this Agreement
shall constitute the valid and binding execution hereof
by such party.
(i) 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.
(j) 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.
(k) To help the country-regionplaceU.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: ____________________
EXHIBIT A
LIST OF FUNDS
FIRST TRUST EXCHANGE-TRADED FUND
FIRST TRUST EXCHANGE-TRADED ALPHADEX FUND
