CUSTODY AGREEMENT
AGREEMENT, dated as of May 4, 2007 between First Trust Exchange-Traded
Alphadex(TM) Fund, a business trust organized and existing under the laws of the
Commonwealth of Massachusetts having its principal office and place of business
at 0000 Xxxxxxxxxxx Xxxx, Xxxxx, Xxxxxxxx 00000 (the "Trust") and The Bank of
New York, a New York banking corporation having its principal office and place
of business at Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Custodian").
WITNESSETH:
WHEREAS, the Trust is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Trust, so authorized, intends that this Agreement be
applicable to each of its series as set forth on Schedule II (each such series
together with all other series subsequently established by the Trust and made
subject to this Agreement by amendment hereof, being referred to as a "Fund" and
collectively as the "Funds"); and
WHEREAS, the Trust desires to retain the Custodian to provide for the
Funds the services described herein, and the Custodian is willing to provide
such services, all as more fully set forth below;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words shall have the
meanings set forth below:
"AUTHORIZED PERSON" shall be any person, whether or not an officer or
employee of the Trust, duly authorized by the Trust's board to execute any
Certificate or to give any Oral Instruction with respect to one or more
Accounts, such persons to be designated in a Certificate annexed hereto as
Schedule I hereto or such other Certificate as may be received by Custodian from
time to time.
"BNY AFFILIATE" shall mean any office, branch or subsidiary of The Bank
of New York Company, Inc.
"BOOK-ENTRY SYSTEM" shall mean the Federal Reserve/Treasury book-entry
system for receiving and delivering securities, its successors and nominees.
"BUSINESS DAY" shall mean any day on which Custodian and relevant
Depositories are open for business.
"CERTIFICATE" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to Custodian,
which is actually received by Custodian by letter or facsimile transmission and
signed on behalf of the Trust by an Authorized Person or a person reasonably
believed by Custodian to be an Authorized Person.
"COMPOSITE CURRENCY UNIT" shall mean the Euro or any other composite
currency unit consisting of the aggregate of specified amounts of specified
currencies, as such unit may be constituted from time to time.
"DEPOSITORY" shall include (a) the Book-Entry System, (b) the
Depository Trust Company, (c) any other clearing agency or securities depository
registered with the Securities and Exchange Commission identified to the Trust
from time to time, and (d) the respective successors and nominees of the
foregoing.
"FOREIGN DEPOSITORY" shall mean (a) Euroclear, (b) Clearstream Banking,
societe anonyme, (c) each Eligible Securities Depository as defined in Rule
17f-7 under the Investment Company Act of 1940, as amended, identified to the
Trust prior to the use of such Foreign Depository on Schedule III (as the same
may be changed by Custodian from time to time and identified to the Trust) and
(d) the respective successors and nominees of the foregoing identified to the
Trust prior to the use of such successor or nominee.
"INSTRUCTIONS" shall mean communications transmitted by electronic or
telecommunications media, including S.W.I.F.T., computer-to-computer interface,
or dedicated transmission lines.
"ORAL INSTRUCTIONS" shall mean verbal instructions received by
Custodian from an Authorized Person or from a person reasonably believed by
Custodian to be an Authorized Person.
"SECURITIES" shall include, without limitation, any common stock and
other equity securities, bonds, debentures and other debt securities, notes,
mortgages or other obligations, and any instruments representing rights to
receive, purchase, or subscribe for the same, or representing any other rights
or interests therein (whether represented by a certificate or held in a
Depository or by a Subcustodian).
"SUBCUSTODIAN" shall mean a bank (including any branch thereof) or
other financial institution (other than a Foreign Depository) located outside
the U.S. which is utilized by Custodian in connection with the purchase, sale or
custody of Securities hereunder and identified to the Trust from time to time,
and their respective successors and nominees.
"TRANSFER AGENT" shall mean The Bank of New York.
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ARTICLE II
APPOINTMENT OF CUSTODIAN; ACCOUNTS;
REPRESENTATIONS, WARRANTIES, AND COVENANTS
SECTION 1. (a) The Trust hereby appoints Custodian as custodian of
all Securities and cash at any time delivered to Custodian during the term of
this Agreement, and authorizes Custodian to hold Securities in registered form
in its name or the name of its nominees. Custodian hereby accepts such
appointment and agrees to establish and maintain one or more securities accounts
and cash accounts for each Fund in which Custodian will hold Securities and cash
as provided herein. Custodian shall maintain books and records segregating the
assets of each Fund from the assets of any other Fund. Such accounts (each, an
"Account"; collectively, the "Accounts") shall be in the name of the Trust.
(b) Custodian may from time to time establish on its books and records
such sub-accounts within each Account as the Trust and Custodian may agree upon
(each a "Special Account"), and Custodian shall reflect therein such assets as
the Trust may specify in a Certificate or Instructions.
(c) Custodian may from time to time establish pursuant to a written
agreement with and for the benefit of a broker, dealer, future commission
merchant or other third party identified in a Certificate or Instructions such
accounts on such terms and conditions as the Trust and Custodian shall agree,
and Custodian shall transfer to such account such Securities and money as the
Trust may specify in a Certificate or Instructions.
SECTION 2. The Trust hereby represents and warrants, which
representations and warranties shall be continuing and shall be deemed to be
reaffirmed upon each delivery of a Certificate or each giving of Oral
Instructions or Instructions by the Trust, that:
(a) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on its
business as now conducted, to enter into this Agreement, and to perform
its obligations hereunder;
(b) This Agreement has been duly authorized, executed and
delivered by the Trust, approved by a resolution of its board,
constitutes a valid and legally binding obligation of the Trust in
respect of each Fund thereof from time to time existing, enforceable in
accordance with its terms, and there is no statute, regulation, rule,
order or judgment binding on it, and no provision of its charter or
by-laws, nor of any mortgage, indenture, credit agreement or other
contract binding on it or affecting its property, which would prohibit
its execution or performance of this Agreement;
(c) It is conducting its business in substantial compliance
with all applicable laws and requirements, both state and federal, and
has obtained all regulatory licenses, approvals and consents necessary
to carry on its business as now conducted;
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(d) It will not use the services provided by Custodian
hereunder in any manner that is, or will result in, a violation of any
law, rule or regulation applicable to the Trust;
(e) If the Trust's foreign custody manager is not the
Custodian or a BNY Affiliate, the Trust's Board or its foreign custody
manager, as defined in Rule 17f-5 under the Investment Company Act of
1940, as amended (the "`40 Act"), has determined that use of each
Subcustodian (including any Replacement Custodian (as defined below))
which Custodian or any Subcustodian is authorized to utilize in
accordance with Section 1(a) of Article III hereof, satisfies the
applicable requirements of the `40 Act and 17f-5 thereunder, as the
case may be;
(f) The Trust or its investment adviser has determined that
the custody arrangements of each Foreign Depository provide reasonable
safeguards against the custody risks associated with maintaining assets
with such Foreign Depository within the meaning of Rule 17f-7 under the
`40 Act;
(g) It is fully informed of the protections and risks
associated with various methods of transmitting Instructions and Oral
Instructions and delivering Certificates to Custodian, shall cause each
Authorized Person to safeguard and treat with extreme care any user and
authorization codes, passwords and/or authentication keys, understands
that there may be more secure methods of transmitting or delivering the
same than the methods selected by the Trust, agrees that the security
procedures (if any) to be utilized provide a commercially reasonable
degree of protection in light of its particular needs and
circumstances, and acknowledges and agrees that Instructions need not
be reviewed by Custodian, may conclusively be presumed by Custodian to
have been given by person(s) duly authorized, and may be acted upon as
given;
(h) It shall manage its borrowings, including, without
limitation, any advance or overdraft (including any day-light
overdraft) in the Accounts, so that the aggregate of its total
borrowings for each Fund does not exceed the amount such Fund is
permitted to borrow under the `40 Act;
(i) Its transmission or giving of, and Custodian acting upon
and in reliance on, Certificates, Instructions, or Oral Instructions
pursuant to this Agreement shall at all times comply with the `40 Act;
(j) It shall impose and maintain restrictions on the
destinations to which cash may be disbursed by Instructions to ensure
that each disbursement is for a proper purpose; and
(k) It has the right to make the pledge and grant the
security interest and security entitlement to Custodian contained in
Section 1 of Article V hereof, free of any right of redemption or prior
claim of any other person or entity, such pledge and such grants shall
have a first priority subject to no setoffs, counterclaims, or other
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liens or grants prior to or on a parity therewith, and it shall take
such additional steps as Custodian may require to assure such priority.
SECTION 3. The Trust hereby covenants that it shall from time to time
complete and execute and deliver to Custodian upon Custodian's request a Form FR
U-1 (or successor form) whenever the Trust borrows from Custodian any money to
be used for the purchase or carrying of margin stock as defined in Federal
Reserve Regulation U.
ARTICLE III
CUSTODY AND RELATED SERVICES
SECTION 1. (a) Subject to the terms hereof, the Trust hereby
authorizes Custodian to hold any Securities received by it from time to time for
the account of the Trust and its applicable Fund. Custodian shall be entitled to
utilize, subject to subsection (c) of this Section 1, Depositories,
Subcustodians (provided if the Trust's foreign custody manager is not the
Custodian or a BNY Affiliate, the Custodian has received notice of the
Subcustodians approved by the Trust's board or foreign custody manager), and,
subject to subsection (d) of this Section 1, Foreign Depositories, to the extent
possible in connection with its performance hereunder. Securities and cash held
in a Depository or Foreign Depository will be held subject to the rules, terms
and conditions of such entity. Securities and cash held through Subcustodians
shall be held subject to the terms and conditions of Custodian's agreements with
such Subcustodians. Subcustodians may be authorized to hold Securities in
Foreign Depositories in which such Subcustodians participate. Unless otherwise
required by local law or practice or a particular subcustodian agreement,
Securities deposited with a Subcustodian, a Depositary or a Foreign Depository
will be held in a commingled account, in the name of Custodian, holding only
Securities held by Custodian as custodian for its customers. Custodian shall
identify on its books and records the Securities and cash belonging to the Trust
and each Fund thereof, whether held directly or indirectly through Depositories,
Foreign Depositories, or Subcustodians. Custodian shall, directly or indirectly
through Subcustodians, Depositories, or Foreign Depositories, endeavor, to the
extent feasible, to hold Securities in the country or other jurisdiction in
which the principal trading market for such Securities is located, where such
Securities are to be presented for cancellation and/or payment and/or
registration, or where such Securities are acquired. Custodian at any time may
cease utilizing any Subcustodian and/or may replace a Subcustodian with a
different Subcustodian (the "Replacement Subcustodian"). In the event Custodian
selects a Replacement Subcustodian, Custodian shall not utilize such Replacement
Subcustodian until after the Trust's board or foreign custody manager has
determined that utilization of such Replacement Subcustodian satisfies the
requirements of the `40 Act and Rule 17f-5 thereunder.
(b) In the event that the Trust desires to have the Custodian serve as
foreign custody manager to a Fund, and the Custodian agrees to provide such
services, the Trust and Custodian shall enter into a Foreign Custody Manager
Agreement substantially in the form attached as Appendix II.
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(c) Unless Custodian has received a Certificate or Instructions to the
contrary, Custodian shall hold Securities indirectly through a Subcustodian only
if (i) the Securities are not subject to any right, charge, security interest,
lien or claim of any kind in favor of such Subcustodian or its creditors or
operators, including a receiver or trustee in bankruptcy or similar authority,
except for a claim of payment for the safe custody or administration of
Securities on behalf of the Trust by such Subcustodian, and (ii) beneficial
ownership of the Securities is freely transferable without the payment of money
or value other than for safe custody or administration.
(d) With respect to each Depository, Custodian (i) shall exercise due
care in accordance with reasonable commercial standards in discharging its
duties as a securities intermediary to obtain and thereafter maintain Securities
or financial assets deposited or held in such Depository and (ii) will provide,
promptly upon request by the Trust, such reports as are available concerning the
internal accounting controls and financial strength of Custodian.
(e) With respect to each Foreign Depository, Custodian shall exercise
reasonable care, prudence, and diligence (i) to provide the Trust with an
analysis of the custody risks associated with maintaining assets with the
Foreign Depository in accordance with Rule 17f-7(a)(1)(i)(A) of the `40 Act, and
(ii) to monitor such custody risks on a continuing basis and promptly notify the
Trust of any material change in such risks in accordance with Rule
17f-7(a)(1)(i)(B) of the x00 Xxx. The Custodian shall only utilize a Foreign
Depository that it has determined satisfies the requirements of Rule 17f-7(b)(1)
as an "Eligible Securities Depository" (as defined in Rule 17f-7(b)(1)) and has
provided the risk analysis required in (i) of this paragraph (e). In such a
manner as Custodian deems reasonable, Custodian shall give the Trust prompt
notice of any material change known to Custodian, that would adversely affect
Custodian's determination that an entity is an Eligible Securities Depository.
The Trust acknowledges and agrees that such analysis and monitoring shall be
made on the basis of, and limited by, information gathered from Subcustodians or
through publicly available information otherwise obtained by Custodian, and
shall not include any evaluation of Country Risks. As used herein the term
"Country Risks" shall mean with respect to any Foreign Depository: (a) the
financial infrastructure of the country in which it is organized, (b) such
country's prevailing custody and settlement practices, (c) nationalization,
expropriation or other governmental actions, (d) such country's regulation of
the banking or securities industry, (e) currency controls, restrictions,
devaluations or fluctuations, and (f) market conditions which affect the order
execution of securities transactions or affect the value of securities.
SECTION 2. Custodian shall furnish the Trust with an advice of daily
transactions (including a confirmation of each transfer of Securities) and a
monthly summary of all transfers to or from the Accounts.
SECTION 3. With respect to all Securities held hereunder, Custodian
shall, unless otherwise instructed to the contrary:
(a) Receive all income and other payments and advise the
Trust as promptly as practicable of any such amounts due but not paid;
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(b) Present for payment and receive the amount paid upon all
Securities which may mature and advise the Trust as promptly as
practicable of any such amounts due but not paid;
(c) Forward to the Trust copies of all information or
documents that it may actually receive from an issuer of Securities
which, in the opinion of Custodian, are intended for the beneficial
owner of Securities;
(d) Execute, as custodian, any certificates of ownership,
affidavits, declarations or other certificates under any tax laws now
or hereafter in effect in connection with the collection of bond and
note coupons;
(e) Hold directly or through a Depository, a Foreign
Depository, or a Subcustodian all rights and similar Securities issued
with respect to any Securities credited to an Account hereunder; and
(f) Endorse for collection checks, drafts or other negotiable
instruments.
Section 4. (a) Custodian shall notify the Trust of rights or
discretionary actions with respect to Securities held hereunder, and of the date
or dates by when such rights must be exercised or such action must be taken,
provided that Custodian has actually received, from the issuer or the relevant
Depository (with respect to Securities issued in the United States) or from the
relevant Subcustodian, Foreign Depository, or a nationally or internationally
recognized bond or corporate action service to which Custodian subscribes,
timely notice of such rights or discretionary corporate action or of the date or
dates such rights must be exercised or such action must be taken. Absent actual
receipt of such notice, Custodian shall have no liability for failing to so
notify the Trust.
(b) Whenever Securities (including, but not limited to, warrants,
options, tenders, options to tender or non-mandatory puts or calls) confer
discretionary rights on the Trust or provide for discretionary action or
alternative courses of action by the Trust, the Trust shall be responsible for
making any decisions relating thereto and for directing Custodian to act. In
order for Custodian to act, it must receive the Trust's Certificate or
Instructions at Custodian's offices, addressed as Custodian may from time to
time request, not later than noon (New York time) at least two (2) Business Days
prior to the last scheduled date to act with respect to such Securities (or such
earlier date or time as Custodian may specify to the Trust). Absent Custodian's
timely receipt of such Certificate or Instructions, Custodian shall not be
liable for failure to take any action relating to or to exercise any rights
conferred by such Securities.
Section 5. All voting rights with respect to Securities, however
registered, shall be exercised by the Trust or its designee. For Securities
issued in the United States, Custodian's only duty shall be to mail to the Trust
any documents (including proxy statements, annual reports and signed proxies)
actually received by Custodian relating to the exercise of such voting rights.
With respect to Securities issued outside of the United States, Custodian's only
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duty shall be to provide the Trust with access to a provider of global proxy
services at the Trust's request. The Trust shall be responsible for all costs
associated with its use of such services.
SECTION 6. Custodian shall promptly advise the Trust upon Custodian's
actual receipt of notification of the partial redemption, partial payment or
other action affecting less than all Securities of the relevant class. If
Custodian, any Subcustodian, any Depository, or any Foreign Depository holds any
Securities in which the Trust has an interest as part of a fungible mass,
Custodian, such Subcustodian, Depository, or Foreign Depository may select the
Securities to participate in such partial redemption, partial payment or other
action in any non-discriminatory manner that it customarily uses to make such
selection.
SECTION 7. Custodian shall not under any circumstances accept bearer
interest coupons which have been stripped from United States federal, state or
local government or agency securities unless explicitly agreed to by Custodian
in writing.
SECTION 8. The Trust on behalf of the applicable Fund shall be liable
for all taxes, assessments, duties and other governmental charges, including any
interest or penalty with respect thereto ("Taxes"), with respect to any cash or
Securities held on behalf of the Trust and the applicable Fund or any
transaction related thereto. The Trust on behalf of the applicable Fund shall
indemnify Custodian and each Subcustodian for the amount of any Tax that
Custodian, any such Subcustodian or any other withholding agent is required
under applicable laws (whether by assessment or otherwise) to pay on behalf of,
or in respect of income earned by or payments or distributions made to or for
the account of the Trust on behalf of the applicable Fund (including any payment
of Tax required by reason of an earlier failure to withhold). Custodian shall,
or shall instruct the applicable Subcustodian or other withholding agent to,
withhold the amount of any Tax which is required to be withheld under applicable
law upon collection of any dividend, interest or other distribution made with
respect to any Security and any proceeds or income from the sale, loan or other
transfer of any Security. In the event that Custodian or any Subcustodian is
required under applicable law to pay any Tax for or in respect of the Trust on
behalf of the applicable Fund, Custodian is hereby authorized to withdraw cash
from any cash account in the amount required to pay such Tax and to use such
cash, or to remit such cash to the appropriate Subcustodian or other withholding
agent, for the timely payment of such Tax in the manner required by applicable
law. If the aggregate amount of cash in all cash accounts is not sufficient to
pay such Tax, Custodian shall promptly notify the Trust on behalf of the
applicable Fund of the additional amount of cash (in the appropriate currency)
required, and the Trust on behalf of the applicable Fund shall directly deposit
such additional amount in the appropriate cash account promptly after receipt of
such notice, for use by Custodian as specified herein. In the event that
Custodian reasonably believes that Trust is eligible, pursuant to applicable law
or to the provisions of any tax treaty, for a reduced rate of, or exemption
from, any Tax which is otherwise required to be withheld or paid for or in
respect of the Trust on behalf of the applicable Fund under any applicable law,
Custodian shall, or shall instruct the applicable Subcustodian or withholding
agent to, either withhold or pay such Tax at such reduced rate or refrain from
withholding or paying such Tax, as appropriate; provided that Custodian shall
have received from the Trust all documentary evidence of residence or other
qualification for such reduced rate or exemption required to be received under
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such applicable law or treaty. In the event that Custodian reasonably believes
that a reduced rate of, or exemption from, any Tax is obtainable only by means
of an application for refund, Custodian and the applicable Subcustodian shall
have no responsibility for the accuracy or validity of any forms or
documentation provided by the Trust to Custodian hereunder. The Trust on behalf
of the applicable Fund hereby agrees to indemnify and hold harmless Custodian
and each Subcustodian in respect of any liability arising from any
underwithholding or underpayment of any Tax which results from the inaccuracy or
invalidity of any such forms or other documentation, and such obligation to
indemnify shall be a continuing obligation of the Trust on behalf of the
applicable Fund, its successors and assigns notwithstanding the termination of
this Agreement.
SECTION 9. (a) For the purpose of settling Securities and foreign
exchange transactions, the Trust shall provide Custodian with sufficient
immediately available funds for all transactions by such time and date as
conditions in the relevant market dictate. As used herein, "sufficient
immediately available funds" shall mean either (i) sufficient cash denominated
in U.S. dollars to purchase the necessary foreign currency, or (ii) sufficient
applicable foreign currency, to settle the transaction. Custodian shall provide
the Trust with immediately available funds each day which result from the actual
settlement of all sale transactions, based upon advices received by Custodian
from Subcustodians, Depositories, and Foreign Depositories. Such funds shall be
in U.S. dollars or such other currency as the Trust may specify to Custodian.
(b) Any foreign exchange transaction effected by Custodian in
connection with this Agreement may be entered with Custodian or a BNY Affiliate
acting as principal or otherwise through customary banking channels. The Trust
may issue a standing Certificate or Instructions with respect to foreign
exchange transactions, but Custodian may establish rules or limitations
concerning any foreign exchange facility made available to the Trust. The Trust
shall bear all risks of investing in Securities or holding cash denominated in a
foreign currency.
(c) To the extent that Custodian has agreed to provide pricing or other
information services in connection with this Agreement, Custodian is authorized
to utilize any vendor (including brokers and dealers of Securities) reasonably
believed by Custodian to be reliable to provide such information. The Trust
understands that certain pricing information with respect to complex financial
instruments (e.g., derivatives) may be based on calculated amounts rather than
actual market transactions and may not reflect actual market values, and that
the variance between such calculated amounts and actual market values may or may
not be material. Where vendors do not provide information for particular
Securities or other property, an Authorized Person may advise Custodian in a
Certificate regarding the fair market value of, or provide other information
with respect to, such Securities or property as determined by it in good faith.
Custodian shall not be liable for any loss, damage or expense incurred as a
result of errors or omissions with respect to any pricing or other information
utilized by Custodian hereunder.
SECTION 10. Custodian shall promptly send to the Trust (a) any reports
it receives from a Depository on such Depository's system of internal accounting
control, and (b) such reports on its own system of internal accounting control
as the Trust may reasonably request from time to time.
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SECTION 11. Until such time as Custodian receives a certificate to the
contrary with respect to a particular Security, Custodian may release the
identity of the Trust to an issuer which requests such information pursuant to
the Shareholder Communications Act of 1985 for the specific purpose of direct
communications between such issuer and shareholder.
ARTICLE IV
PURCHASE AND SALE OF SECURITIES; CREDITS TO ACCOUNT
SECTION 1. Promptly after each purchase or sale of Securities by the
Trust, the Trust shall deliver to Custodian a Certificate or Instructions, or
with respect to a purchase or sale of a Security generally required to be
settled on the same day the purchase or sale is made, Oral Instructions
specifying all information Custodian may reasonably request to settle such
purchase or sale. Custodian shall account for all purchases and sales of
Securities on the actual settlement date unless otherwise agreed by Custodian.
SECTION 2. The Trust understands that when Custodian is instructed to
deliver Securities against payment, delivery of such Securities and receipt of
payment therefor may not be completed simultaneously. Notwithstanding any
provision in this Agreement to the contrary, settlements, payments and
deliveries of Securities may be effected by Custodian or any Subcustodian in
accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction in which the transaction
occurs, including, without limitation, delivery to a purchaser or dealer
therefor (or agent) against receipt with the expectation of receiving later
payment for such Securities. The Trust assumes full responsibility for all
risks, including, without limitation, credit risks, involved in connection with
such deliveries of Securities.
SECTION 3. Custodian may, as a matter of bookkeeping convenience or
by separate agreement with the Trust, credit the Account with the proceeds from
the sale, redemption or other disposition of Securities or interest, dividends
or other distributions payable on Securities prior to its actual receipt of
final payment therefor. All such credits shall be conditional until Custodian's
actual receipt of final payment and may be reversed by Custodian to the extent
that final payment is not received. Payment with respect to a transaction will
not be "final" until Custodian shall have received immediately available funds
which under applicable local law, rule and/or practice are irreversible and not
subject to any security interest, levy or other encumbrance, and which are
specifically applicable to such transaction.
ARTICLE V
OVERDRAFTS OR INDEBTEDNESS
SECTION 1. If Custodian should in its sole discretion advance funds
on behalf of any Fund which results in an overdraft (including, without
limitation, any day-light overdraft) because the money held by Custodian in an
Account for such Fund shall be insufficient to pay the total amount payable upon
a purchase of Securities specifically allocated to such Fund, as set forth in
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Certificate, Instructions or Oral Instructions, or if an overdraft arises in the
separate account of a Fund for some other reason, including, without limitation,
because of a reversal of a conditional credit or the purchase of any currency,
or if the Trust is for any other reason indebted to Custodian with respect to a
Fund, including any indebtedness to The Bank of New York under a cash management
and related services agreement with the Trust, if any (except a borrowing for
investment or for temporary or emergency purposes using Securities as collateral
pursuant to a separate agreement and subject to the provisions of Section 2 of
this Article), such overdraft or indebtedness shall be deemed to be a loan made
by Custodian to the Trust for such Fund payable on demand and shall bear
interest from the date incurred at a rate per annum ordinarily charged by
Custodian to its institutional customers, as such rate may be adjusted from time
to time. In addition, the Trust hereby agrees that Custodian shall to the
maximum extent permitted by law have a continuing lien, security interest, and
security entitlement in and to any property, including, without limitation, any
investment property or any financial asset, of such Fund at any time held by
Custodian for the benefit of such Fund or in which such Fund may have an
interest which is then in Custodian's possession or control or in possession or
control of any third party acting in Custodian's behalf. The Trust authorizes
Custodian, in its sole discretion, at any time to charge any such overdraft or
indebtedness together with interest due thereon against any balance of account
standing to such Fund's credit on Custodian's books.
SECTION 2. If the Trust borrows money from any bank (including
Custodian if the borrowing is pursuant to a separate agreement) for investment
or for temporary or emergency purposes using Securities held by Custodian
hereunder as collateral for such borrowings, the Trust shall deliver to
Custodian a Certificate specifying with respect to each such borrowing: (a) the
Fund to which such borrowing relates; (b) the name of the bank, (c) the amount
of the borrowing, (d) the time and date, if known, on which the loan is to be
entered into, (e) the total amount payable to the Trust on the borrowing date,
(f) the Securities to be delivered as collateral for such loan, including the
name of the issuer, the title and the number of shares or the principal amount
of any particular Securities, and (g) a statement specifying whether such loan
is for investment purposes or for temporary or emergency purposes and that such
loan is in conformance with the `40 Act and the applicable Fund's prospectus.
Custodian shall deliver on the borrowing date specified in a Certificate the
specified collateral against payment by the lending bank of the total amount of
the loan payable, provided that the same conforms to the total amount payable as
set forth in the Certificate. Custodian may, at the option of the lending bank,
keep such collateral in its possession, but such collateral shall be subject to
all rights therein given the lending bank by virtue of any promissory note or
loan agreement. Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this Section. The Trust shall cause all Securities released from
collateral status to be returned directly to Custodian, and Custodian shall
receive from time to time such return of collateral as may be tendered to it. In
the event that the Trust fails to specify in a Certificate the Fund, the name of
the issuer, the title and number of shares or the principal amount of any
particular Securities to be delivered as collateral by Custodian, Custodian
shall not be under any obligation to deliver any Securities.
-11-
ARTICLE VI
SALE AND REDEMPTION OF SHARES
Custodian shall, upon receipt of instructions from the Transfer Agent,
make funds and securities available for payment to, or in accordance with the
instructions of, the Transfer Agent for the redemption or repurchase of shares
of the applicable Fund ("Shares") which shall have been accepted by the Transfer
Agent. The Custodian will transfer any Securities to or on the order of the
person identified by the Transfer Agent in the manner specified by the Transfer
Agent (either through the Depository Trust Company ("DTC") or otherwise). Any
cash redemption payment (less any applicable cash redemption transaction fees)
shall be effected as specified by the Transfer Agent either through DTC or
through wire transfer in the case of redemptions effected outside of DTC. All
funds and securities to be made available for payment with respect to a
transaction, shall be out of funds and securities held for the Account of the
specified Fund.
ARTICLE VII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
SECTION 1. Whenever the Trust shall determine that a Fund shall pay a
dividend or distribution on Shares it shall furnish to Custodian Instructions or
a Certificate setting forth with respect to the Fund specified therein the date
of the declaration of such dividend or distribution, the total amount payable,
and the payment date.
SECTION 2. Upon the payment date specified in such Instructions or
Certificate, Custodian shall pay out of the money held for the account of such
Fund the total amount payable to the dividend agent of the Trust specified
therein.
ARTICLE VIII
CONCERNING CUSTODIAN
SECTION 1. (a) Except as otherwise expressly provided herein,
Custodian shall not be liable for any costs, expenses, damages, liabilities or
claims, including attorneys' and accountants' fees (collectively, "Losses"),
incurred by or asserted against the Trust or, or in respect of, any Fund, except
those Losses arising out of Custodian's own negligence or willful misconduct.
Custodian shall have no liability whatsoever for the action or inaction of any
Depositories or of Foreign Depositories, except in each case to the extent such
action or inaction is a direct result of the Custodian's failure to fulfill its
duties hereunder. With respect to any Losses incurred by the Trust or any Fund
as a result of the acts or any failures to act by any Subcustodian (other than a
BNY Affiliate), Custodian shall take appropriate action to recover such Losses
from such Subcustodian; and Custodian's sole responsibility and liability to the
Trust or Fund shall be limited to amounts so received from such Subcustodian
(exclusive of costs and expenses incurred by Custodian). In no event shall
Custodian be liable to the Trust, any Fund or any third party for special,
indirect or consequential damages, or lost profits or loss of business, arising
in connection with this Agreement, except Custodian shall be liable to the Trust
-12-
and any applicable Fund for direct money damages caused by Custodian's own
negligence or willful misconduct, nor shall BNY or any Subcustodian be liable:
(i) for acting in accordance with any Certificate or Oral Instructions actually
received by Custodian and reasonably believed by Custodian to be given by an
Authorized Person; (ii) for acting in accordance with Instructions without
reviewing the same; (iii) for conclusively presuming that all Instructions are
given only by person(s) duly authorized; (iv) for conclusively presuming that
all disbursements of cash directed by the Trust, whether by a Certificate, an
Oral Instruction, or an Instruction, are in accordance with Sections 2(i) and
(j) of Article II hereof; (v) for holding property in any particular country,
including, but not limited to, Losses resulting from nationalization,
expropriation or other governmental actions; regulation of the banking or
securities industry; exchange or currency controls or restrictions, devaluations
or fluctuations; availability of cash or Securities or market conditions which
prevent the transfer of property or execution of Securities transactions or
affect the value of property; (vi) for any Losses due to forces beyond the
control of Custodian, including without limitation strikes, work stoppages, acts
of war or terrorism, insurrection, revolution, nuclear or natural catastrophes
or acts of God, or interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; (vii) for the
insolvency of any Subcustodian (other than a BNY Affiliate), any Depository, or,
except to the extent such action or inaction is a direct result of the
Custodian's failure to fulfill its duties hereunder, any Foreign Depository;
(viii) for any Losses arising from the applicability of any law or regulation
now or hereafter in effect, or from the occurrence of any event, including,
without limitation, implementation or adoption of any rules or procedures of a
Foreign Depository, which may affect, limit, prevent or impose costs or burdens
on, the transferability, convertibility, or availability of any currency or
Composite Currency Unit in any country or on the transfer of any Securities, and
in no event shall Custodian be obligated to substitute another currency for a
currency (including a currency that is a component of a Composite Currency Unit)
whose transferability, convertibility or availability has been affected,
limited, or prevented by such law, regulation or event, and to the extent that
any such law, regulation or event imposes a cost or charge upon Custodian in
relation to the transferability, convertibility, or availability of any cash
currency or Composite Currency Unit, such cost or charge shall be for the
account of the Trust and the respective Fund, and Custodian may treat any
account denominated in an affected currency as a group of separate accounts
denominated in the relevant component currencies; or (ix) for any action or
inaction taken or omitted to by Custodian in good faith in accordance with the
advice or opinion of counsel for the Trust or its own outside counsel.
(b) Custodian may enter into subcontracts, agreements and
understandings with any BNY Affiliate, whenever and on such terms and conditions
as it deems necessary or appropriate to perform its services hereunder. No such
subcontract, agreement or understanding shall discharge Custodian from its
obligations hereunder.
(c) The Trust on behalf of the applicable Fund agrees to indemnify
Custodian and hold Custodian harmless from and against any and all Losses
sustained or incurred by or asserted against Custodian by reason of or as a
result of any action or inaction, or arising out of Custodian's performance
hereunder, including reasonable fees and expenses of counsel incurred by
-13-
Custodian in a successful defense of claims by the Trust on behalf of the
applicable Fund; provided however, that the Trust on behalf of the applicable
Fund shall not indemnify Custodian for those Losses arising out of Custodian's
own negligence or willful misconduct. This indemnity shall be a continuing
obligation of the Trust on behalf of the applicable Fund, its successors and
assigns, notwithstanding the termination of this Agreement.
SECTION 2. Without limiting the generality of the foregoing,
Custodian shall be under no obligation to inquire into, and shall not be liable
for:
(a) Any Losses incurred by the Trust, any Fund or any other
person as a result of the receipt or acceptance of fraudulent, forged
or invalid Securities, or Securities which are otherwise not freely
transferable or deliverable without encumbrance in any relevant market;
(b) The validity of the issue of any Securities purchased,
sold, or written by or for the Trust or any Fund, the legality of the
purchase, sale or writing thereof, or the propriety of the amount paid
or received therefor;
(c) The legality of the sale or redemption of any Shares, or
the propriety of the amount to be received or paid therefor;
(d) The legality of the declaration or payment of any
dividend or distribution by the Trust in respect of any Fund;
(e) The legality of any borrowing by the Trust;
(f) The legality of any loan of portfolio Securities, nor
shall Custodian be under any duty or obligation to see to it that any
cash or collateral delivered to it by a broker, dealer or financial
institution or held by it at any time as a result of such loan of
portfolio Securities is adequate security for the Trust and the
applicable Fund against any loss it might sustain as a result of such
loan, which duty or obligation shall be the sole responsibility of the
Trust and such Fund. In addition, Custodian shall be under no duty or
obligation to see that any broker, dealer or financial institution to
which portfolio Securities of any Fund are lent makes payment to it of
any dividends or interest which are payable to or for the account of
the Fund during the period of such loan or at the termination of such
loan, provided, however that Custodian shall promptly notify the Trust
in the event that such dividends or interest are not paid and received
when due;
(g) The sufficiency or value of any amounts of money and/or
Securities held in any Special Account in connection with transactions
by the Trust; whether any broker, dealer, futures commission merchant
or clearing member makes payment to the Trust of any variation margin
payment or similar payment which the Trust may be entitled to receive
from such broker, dealer, futures commission merchant or clearing
-14-
member, or whether any payment received by Custodian from any broker,
dealer, futures commission merchant or clearing member is the amount
the Trust is entitled to receive, or to notify the Trust of Custodian's
receipt or non-receipt of any such payment; or
(h) Whether any Securities at any time delivered to, or held
by it or by any Subcustodian, for the account of the Trust and
specifically allocated to a Fund are such as properly may be held by
the Trust or such Fund under the provisions of its then current
prospectus and statement of additional information, or to ascertain
whether any transactions by the Trust, whether or not involving
Custodian, are such transactions as may properly be engaged in by the
Trust.
SECTION 3. Custodian may, with respect to questions of law
specifically regarding an Account, obtain the advice of outside counsel and
shall not be liable with respect to anything done or omitted by it in good faith
in conformity with such advice.
SECTION 4. Custodian shall be under no obligation to take action to
collect any amount payable on Securities in default, or if payment is refused
after due demand and presentment.
SECTION 5. Custodian shall have no duty or responsibility to inquire
into, make recommendations, supervise, or determine the suitability of any
transactions affecting any Account.
SECTION 6. The Trust shall pay to Custodian the fees and charges as
may be specifically agreed upon from time to time and such other fees and
charges at Custodian's standard rates for such services as may be applicable.
The Trust shall reimburse Custodian for all costs associated with the conversion
of the Trust's Securities hereunder and the transfer of Securities and records
kept in connection with this Agreement. The Trust shall also reimburse Custodian
for out-of-pocket expenses which are a normal incident of the services provided
hereunder.
SECTION 7. Custodian has the right to debit any cash account held for
the Trust or a Fund for any amount payable by such Fund or the Trust in respect
of such Fund in connection with any and all obligations of the Trust in respect
of such Fund to Custodian. In addition to the rights of Custodian under
applicable law and other agreements, at any time when the Trust shall not have
honored any of its obligations to Custodian, Custodian shall have the right
without notice to the Trust to retain or set-off, against such obligations of
the Trust, any Securities or cash Custodian or a BNY Affiliate may directly or
indirectly hold for the account of the Trust or any Fund, and any obligations
(whether matured or unmatured) that Custodian or a BNY Affiliate may have to the
Trust in any currency or Composite Currency Unit. Any such asset of, or
obligation to, the Trust or Fund may be transferred to Custodian and any BNY
Affiliate in order to effect the above rights.
SECTION 8. The Trust agrees to forward to Custodian a Certificate or
Instructions confirming Oral Instructions by the close of business of the same
day that such Oral Instructions are given to Custodian. The Trust agrees that
the fact that such confirming Certificate or Instructions are not received or
that a contrary Certificate or contrary Instructions are received by Custodian
shall in no way affect the validity or enforceability of transactions authorized
-15-
by such Oral Instructions and effected by Custodian. If the Trust elects to
transmit Instructions through an on-line communications system offered by
Custodian, the Trust's use thereof shall be subject to the Terms and Conditions
attached as Appendix I hereto, and Custodian shall provide user and
authorization codes, passwords and authentication keys only to an Authorized
Person or a person reasonably believed by Custodian to be an Authorized Person.
SECTION 9. The books and records pertaining to the Trust which are in
possession of Custodian shall be the property of the Trust. Such books and
records shall be prepared and maintained as required by the `40 Act and the
rules thereunder. The Trust, or its authorized representatives, shall have
access to such books and records during Custodian's normal business hours. Upon
the reasonable request of the Trust, copies of any such books and records shall
be provided by Custodian to the Trust or its authorized representative. Upon the
reasonable request of the Trust, Custodian shall provide in hard copy or on
computer disc any records included in any such delivery which are maintained by
Custodian on a computer disc, or are similarly maintained.
SECTION 10. It is understood that Custodian is authorized to supply
any information regarding the Accounts which is required by any law, regulation
or rule now or hereafter in effect. The Custodian shall provide the Trust with
any report obtained by the Custodian on the system of internal accounting
control of a Depository, and with such reports on its own system of internal
accounting control as the Trust may reasonably request from time to time.
SECTION 11. Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set forth
in this Agreement, and no covenant or obligation shall be implied against
Custodian in connection with this Agreement.
SECTION 12. From time to time as requested by the Trust, the Custodian
shall provide to the Trust such certifications and sub-certifications, in the
form agreed to by the Trust and the Custodian, with respect to Form N-Qs, Form
N-CSRs, compliance policies and procedures under Rule 38a-1 under the Investment
Company Act of 1940, as amended, and such other matters that may be reasonably
requested by the Trust or the Trust's Chief Compliance Officer from time to
time. In addition, the Custodian 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 Trust to enable the Trust to
fulfill its obligations under Rule 38a-1 of the Investment Company Act of 1940,
as amended.
ARTICLE IX
TERMINATION
SECTION 1. Either of the parties hereto may terminate this Agreement
by giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of
giving of such notice. In the event such notice is given by the Trust, it shall
be accompanied by a copy of a resolution of the board of the Trust, certified by
the Secretary or any Assistant Secretary, electing to terminate this Agreement
-16-
and designating a successor custodian or custodians, each of which shall be a
bank or trust company having not less than $2,000,000 aggregate capital, surplus
and undivided profits. In the event such notice is given by Custodian, the Trust
shall, on or before the termination date, deliver to Custodian a copy of a
resolution of the board of the Trust, certified by the Secretary or any
Assistant Secretary, designating a successor custodian or custodians. In the
absence of such designation by the Trust, Custodian may designate a successor
custodian which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. Upon the date set forth in
such notice this Agreement shall terminate, and Custodian shall upon receipt of
a notice of acceptance by the successor custodian on that date deliver directly
to the successor custodian all Securities and money then owned by the Trust and
any Fund and held by it as Custodian, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it shall then be
entitled.
SECTION 2. If a successor custodian is not designated by the Trust or
Custodian in accordance with the preceding Section, the Trust shall, upon the
date specified in the notice of termination of this Agreement and upon the
delivery by Custodian of all Securities (other than Securities which cannot be
delivered to the Trust) and money then owned by the Trust and any Fund, be
deemed to be its own custodian and Custodian shall thereby be relieved of all
duties and responsibilities pursuant to this Agreement, other than the duty with
respect to Securities which cannot be delivered to the Trust to hold such
Securities hereunder in accordance with this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 1. Each party shall keep confidential any information
relating to the other 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 the Trust
or Custodian 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 the Trust or Custodian 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 Custodian 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
-17-
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 relevant to the defense of any claim
or cause of action asserted against the receiving party; (h) it has been or is
independently developed or obtained by the receiving party; or (i) it is
necessary for Custodian to release such information to Custodian's internal or
external accountants or legal counsel who are subject to a duty of
confidentiality. Custodian 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 Trust.
Custodian agrees that, subject to the foregoing provisions of and the exceptions
set forth in this Article X Section 1 (other than the exception set forth above
in this Article X Section 1 as sub-item (a), which exception set forth in
sub-item (a) shall not be applicable to the Trust's Portfolio Information),
Custodian will keep confidential the Trust's Portfolio Information and will not
disclose the Trust's Portfolio Information other than pursuant to a written
Certificate or Instructions; provided that without the need for such a written
Certification or Instructions and notwithstanding any other provision of this
Article X Section 1 to the contrary, the Trust's Portfolio Information may be
disclosed to third party pricing services which are engaged by Custodian 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.
SECTION 2. The Trust agrees to furnish to Custodian a new Certificate
of Authorized Persons in the event of any change in the then present Authorized
Persons. Until such new Certificate is received, Custodian shall not be liable
in acting upon Certificates or Oral Instructions of such present Authorized
Persons.
SECTION 3. Each notice, request, demand, approval or other
communication which may be or is required to be given under this Agreement shall
be in writing in English and shall be deemed to have been sufficiently given
when received by the intended party, if delivered personally at the address set
forth below for the intended party during normal business hours at such address,
if sent by facsimile transmission to the respective facsimile transmission
numbers of the parties set forth below, or if sent by recognized overnight
courier service or by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Trust: First Trust Exchange-Traded Alphadex(TM) Fund
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
Confirm: 000-000-0000
If to BNY: The Bank of New York
000 Xxxxxxx Xxxxxx, 00X
Xxx Xxxx, Xxx Xxxx 00000
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Attention: Xxxxxxx Xxxxxxx
Facsimile: 000-000-0000
Confirm: 000-000-0000
Notices shall be given to such other addressee or address, or both, or by way of
such other facsimile transmission number, as a particular party may from time to
time designate by written notice to the other parties hereto given in accordance
with this Section.
SECTION 4. Each and every right granted to either party hereunder or
under any other document delivered hereunder or in connection herewith, or
allowed it by law or equity, shall be cumulative and may be exercised from time
to time. No failure on the part of either party to exercise, and no delay in
exercising, any right will operate as a waiver thereof, nor will any single or
partial exercise by either party of any right preclude any other or future
exercise thereof or the exercise of any other right.
SECTION 5. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any exclusive
jurisdiction, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected thereby. This Agreement may not be
amended or modified in any manner except by a written agreement executed by both
parties, except that any amendment to the Schedule I hereto need be signed only
by the Trust and any amendment to Appendix I hereto need be signed only by
Custodian. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by either party without the written
consent of the other.
SECTION 6. This Agreement shall be construed in accordance with the
substantive laws of the State of New York, without regard to conflicts of laws
principles thereof. The Trust and Custodian hereby consent to the jurisdiction
of a state or federal court situated in New York City, New York in connection
with any dispute arising hereunder. The Trust hereby irrevocably waives, to the
fullest extent permitted by applicable law, any objection which it may now or
hereafter have to the laying of venue of any such proceeding brought in such a
court and any claim that such proceeding brought in such a court has been
brought in an inconvenient forum. The Trust and Custodian each hereby
irrevocably waives any and all rights to trial by jury in any legal proceeding
arising out of or relating to this Agreement.
SECTION 7. (a) It is expressly acknowledged and agreed that the
obligations of the Trust (and Funds thereof) hereunder shall not be binding upon
any of the shareholders, Trustees, officers, employees or agents of the Trust
(and Funds thereof), personally, but shall bind only the trust property of the
Trust and the applicable Fund as provided in the Trust's Declaration of Trust.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust and signed by an officer of the Trust, 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 trust
property of the Trust and the applicable Fund as provided in the Trust's
Declaration of Trust.
-19-
(b) This Agreement is an agreement entered into between the
Custodian and the Trust with respect to each Fund. With respect to any
obligation of the Trust on behalf of any Fund arising out of this Agreement, the
Custodian shall look for payment of such obligation solely to the assets of the
Fund to which such obligation relates with the same effect as if the Custodian
had separately contracted with the Trust by separate written instrument with
respect to each Fund.
(c) As used herein, the "applicable Fund" shall be each Fund
in respect of which any amount due the Custodian arises, and if any amount due
the Custodian arises in respect of more than one Fund, the same shall be
allocated by the Custodian among such Funds in accordance with Section 7(b) of
this Article. Any amounts due the Custodian which may not be allocated in
accordance with the preceding sentence shall constitute General Liabilities as
defined in the Trust's Declaration of Trust and allocated by the Trust and paid
in accordance with the provisions thereof.
SECTION 8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the Trust and Custodian have caused this Agreement
to be executed by their respective officers, thereunto duly authorized, as of
the day and year first above written.
FIRST TRUST EXCHANGE-TRADED ALPHADEX (TM) FUND
By /s/ Xxxxx X. Xxxxx
---------------------------------------
Title: President
Tax Identification No:________________________
THE BANK OF NEW YORK
By /s/ Xxxxxx X. XxXxxx
----------------------------------------
Title: Managing Director
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SCHEDULE I
CERTIFICATE OF AUTHORIZED PERSONS
(THE TRUST - ORAL AND WRITTEN INSTRUCTIONS)
The undersigned hereby certifies that he/she is the duly elected and
acting Secretary of First Trust Exchange-Traded Alphadex(TM) Fund (the "Trust"),
and further certifies that the following officers or employees of the Trust have
been duly authorized in conformity with the Trust's Declaration of Trust and
By-Laws to deliver Certificates and Oral Instructions to The Bank of New York
("Custodian") pursuant to the Custody Agreement between the Trust and Custodian
dated May 4, 2007 and that the signatures appearing opposite their names are
true and correct:
NAME TITLE SIGNATURE
Xxxxx X. Xxxxx Chairman of the Board
______________________________________ ____________________________ _____________________________
NAME TITLE SIGNATURE
Xxxx Xxxxxxx Treasurer
______________________________________ ____________________________ _____________________________
NAME TITLE SIGNATURE
W. Xxxxx Xxxxxxx Secretary
______________________________________ ____________________________ _____________________________
NAME TITLE SIGNATURE
Xxxxxx Xxxxxxxxx Vice President
______________________________________ ____________________________ _____________________________
NAME TITLE SIGNATURE
Xxxxx Xxxxx Assistant Treasurer
______________________________________ ____________________________ _____________________________
NAME TITLE SIGNATURE
Xxxxxx Xxxxx Assistant Secretary
______________________________________ ____________________________ _____________________________
NAME TITLE SIGNATURE
Xxxxxx Xxxxxxxxxxx Vice President
______________________________________ ____________________________ _____________________________
NAME TITLE SIGNATURE
Xxxxxxx Xxxxxx Assistant Vice President
______________________________________ ____________________________ _____________________________
(Continued on Following Page)
Schedule I
NAME TITLE SIGNATURE
Xxxxx Xxxxxx Vice President
______________________________________ ____________________________ _____________________________
This certificate supersedes any certificate of Authorized Persons you
may currently have on file.
[seal]
By:______________________________________
Title: Secretary
Date:___________________________________
Schedule I -2-
SCHEDULE II
First Trust Consumer Discretionary AlphaDEX(TM) Fund
First Trust Consumer Staples AlphaDEX(TM) Fund
First Trust Energy AlphaDEX(TM) Fund
First Trust Financials AlphaDEX(TM) Fund
First Trust Health Care AlphaDEX(TM) Fund
First Trust Industrials / Producer Durables AlphaDEX(TM) Fund
First Trust Materials AlphaDEX(TM) Fund
First Trust Technology AlphaDEX(TM) Fund
First Trust Utilities AlphaDEX(TM) Fund
First Trust Large Cap Core AlphaDEX(TM) Fund
First Trust Mid Cap Core AlphaDEX(TM) Fund
First Trust Small Cap Core AlphaDEX(TM) Fund
First Trust Large Cap Growth Opportunities AlphaDEX(TM) Fund
First Trust Large Cap Value Opportunities AlphaDEX(TM) Fund
First Trust Multi Cap Growth AlphaDEX(TM) Fund
First Trust Multi Cap Value AlphaDEX(TM) Fund
Schedule II
SCHEDULE III
FOREIGN DEPOSITORIES
Schedule III
APPENDIX I
ELECTRONIC SERVICES TERMS AND CONDITIONS
1.LICENSE; USE. (a) This Appendix I shall govern use by FIRST
TRUST EXCHANGE-TRADED ALPHADEX (TM) FUND (the "Trust") of electronic
communications, information delivery, portfolio management and banking services,
that The Bank of New York and its affiliates (herein "BNY") may provide in
connection with the services as Custodian pursuant to the annexed Custody
Agreement (the "Agreement"), such as The Bank of New York Inform (TM) and The
Bank of New York CA$H-Register Plus(R), and any computer software, proprietary
data and documentation provided by BNY to the Trust in connection therewith
(collectively, the "ELECTRONIC SERVICES"). In the event of any conflict between
the terms of this Appendix I and the main body of this Agreement with respect to
the Trust's use of the Electronic Services, the terms of this Appendix I shall
control.
(b) BNY grants to the Trust a personal, nontransferable and
nonexclusive license to use the Electronic Services to which the Trust
subscribes solely for the purpose of transmitting instructions and information
("Written Instructions"), obtaining reports, analyses and statements and other
information and data, making inquiries and otherwise communicating with BNY in
connection with the Trust's relationship with BNY, as Custodian pursuant to the
Agreement. The Trust shall use the Electronic Services solely for its own
internal and proper business purposes and not in the operation of a service
bureau. Except as set forth herein, no license or right of any kind is granted
to the Trust or any other person with respect to the Electronic Services. The
Trust acknowledges that BNY and its suppliers retain and have title and
exclusive proprietary rights to the Electronic Services, including any trade
secrets or other ideas, concepts, know-how, methodologies, and information
incorporated therein and the exclusive rights to any copyrights, trade dress,
look and feel, trademarks and patents (including registrations and applications
for registration of either), and other legal protections available in respect
thereof (unless such information was provided by the Trust). The Trust further
acknowledges that all or a part of the Electronic Services may be copyrighted or
trademarked (or a registration or claim made therefor) by BNY or its suppliers.
The Trust shall not take any action with respect to the Electronic Services
inconsistent with the foregoing acknowledgments, nor shall the Trust attempt to
decompile, reverse engineer or modify the Electronic Services. The Trust may not
copy, distribute, sell, lease or provide, directly or indirectly, the Electronic
Services or any portion thereof to any other person or entity without BNY's
prior written consent. The Trust may not remove any statutory copyright notice
or other notice included in the Electronic Services. The Trust shall reproduce
any such notice on any reproduction of any portion of the Electronic Services
and shall add any statutory copyright notice or other notice upon BNY's request.
(c) Portions of the Electronic Services may contain, deliver or rely on
data supplied by third parties ("Third Party Data"), such as pricing data and
indicative data, and services supplied by third parties ("Third Party Services")
such as analytic and accounting services. Third Party Data and Third Party
Services supplied hereunder are obtained from sources that BNY believes to be
reliable but, except to the extent otherwise expressly provided in the Agreement
with respect to the duties of BNY as Custodian, are provided without any
independent investigation by BNY. BNY and its suppliers do not represent or
warrant that the Third Party Data or Third Party Services are correct, complete
or current. Third Party Data and Third Party Services are proprietary to their
suppliers, are provided solely for the Trust's internal use, and may not be
reused, disseminated or redistributed in any form. The Trust shall not use any
Third Party Data in any manner that would act as a substitute for obtaining a
license for the data directly from the supplier. Third Party Data and Third
Appendix I
Party Services should not be used in making any investment decision. BNY AND ITS
SUPPLIERS ARE NOT RESPONSIBLE FOR ANY RESULTS OBTAINED FROM THE USE OF OR
RELIANCE UPON THIRD PARTY DATA OR THIRD PARTY SERVICES. BNY's suppliers of Third
Party Data and Services are intended third party beneficiaries of this Section
1(c) and Section 5 below.
(d) The Trust understands and agrees that any links in the Electronic
Services to Internet sites may be to sites sponsored and maintained by third
parties. BNY make no guarantees, representations or warranties concerning the
information contained in any third party site (including without limitation that
such information is correct, current, complete or free of viruses or other
contamination), or any products or services sold through third party sites. All
such links to third party Internet sites are provided solely as a convenience to
the Trust and the Trust accesses and uses such sites at its own risk. A link in
the Electronic Services to a third party site does not constitute BNY's
endorsement, authorisation or sponsorship of such site or any products and
services available from such site.
2. EQUIPMENT. The Trust shall obtain and maintain at its own cost
and expense all equipment and services, including but not limited to
communications services, necessary for it to utilize and obtain access to the
Electronic Services, and BNY shall not be responsible for the reliability or
availability of any such equipment or services.
3. PROPRIETARY INFORMATION. The Electronic Services, and any
proprietary data (including Third Party Data), processes, software, information
and documentation made available to the Trust (other than which are or become
part of the public domain or are legally required to be made available to the
public) (collectively, the "Information"), are the exclusive and confidential
property of BNY or its suppliers. However, for the avoidance of doubt, reports
generated by the Trust containing information relating to its account(s) (except
for Third Party Data contained therein) are not deemed to be within the meaning
of the term "Information." The Trust shall keep the Information confidential by
using the same care and discretion that the Trust uses with respect to its own
confidential property and trade secrets, but not less than reasonable care. Upon
termination of the Agreement or the licenses granted herein for any reason, the
Trust shall return to BNY any and all copies of the Information which are in its
possession or under its control (except that the Trust may retain reports
containing Third Party Data, provided that such Third Party Data remains subject
to the provisions of this Appendix). The provisions of this Section 3 shall not
affect the copyright status of any of the Information which may be copyrighted
and shall apply to all information whether or not copyrighted.
4. MODIFICATIONS. BNY reserves the right to modify the Electronic
Services from time to time. The Trust agrees not to modify or attempt to modify
the Electronic Services without BNY's prior written consent. The Trust
Appendix I -2-
acknowledges that any modifications to the Electronic Services, whether by the
Trust or BNY and whether with or without BNY's consent, shall become the
property of BNY.
5. NO REPRESENTATIONS OR WARRANTIES; LIMITATION OF LIABILITY.
==========================================================
BNY AND ITS MANUFACTURERS AND SUPPLIERS MAKE NO WARRANTIES OR
REPRESENTATIONS WITH RESPECT TO THE ELECTRONIC SERVICES OR ANY THIRD
PARTY DATA OR THIRD PARTY SERVICES, EXPRESS OR IMPLIED, IN FACT OR IN
LAW, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY,
NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE. CUSTOMER
ACKNOWLEDGES THAT THE ELECTRONIC SERVICES, THIRD PARTY DATA AND THIRD
PARTY SERVICES ARE PROVIDED "AS IS." TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, IN NO EVENT SHALL BNY OR ANY SUPPLIER BE LIABLE FOR ANY
DAMAGES, WHETHER DIRECT, INDIRECT SPECIAL, OR CONSEQUENTIAL, WHICH
CUSTOMER MAY INCUR IN CONNECTION WITH THE ELECTRONIC SERVICES, THIRD
PARTY DATA OR THIRD PARTY SERVICES, EVEN IF BNY OR SUCH SUPPLIER KNEW OF
THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL BNY OR ANY SUPPLIER BE
LIABLE FOR ACTS OF GOD, MACHINE OR COMPUTER BREAKDOWN OR MALFUNCTION,
INTERRUPTION OR MALFUNCTION OF COMMUNICATION FACILITIES, LABOR
DIFFICULTIES OR ANY OTHER SIMILAR OR DISSIMILAR CAUSE BEYOND THEIR
REASONABLE CONTROL.
6. SECURITY; RELIANCE; UNAUTHORIZED USE; FUNDS TRANSFERS. BNY
will establish security procedures to be followed in connection with the use of
the Electronic Services, and the Trust agrees to comply with the security
procedures. The Trust understands and agrees that the security procedures are
intended to determine whether instructions received by BNY as Custodian through
the Electronic Services are authorized but are not (unless otherwise specified
in writing) intended to detect any errors contained in such instructions. The
Trust will cause all persons utilizing the Electronic Services to treat any user
and authorization codes, passwords, authentication keys and other security
devices with the highest degree of care and confidentiality. Upon termination of
the Trust's use of the Electronic Services, the Trust shall return to BNY any
security devices (e.g., token cards) provided by BNY. BNY is hereby irrevocably
authorized to comply with and rely upon on Written Instructions and other
communications, whether or not authorized, received by it through the Electronic
Services. The Trust acknowledges that it has sole responsibility for ensuring
that only Authorized Persons (as defined in the Agreement) use the Electronic
Services and that to the fullest extent permitted by applicable law BNY shall
not be responsible nor liable for any unauthorized use thereof or for any losses
sustained by the Trust arising from or in connection with the use of the
Electronic Services or BNY's reliance upon and compliance with Written
Instructions and other communications received through the Electronic Services.
With respect to instructions for a transfer of funds issued through the
Electronic Services, when instructed to credit or pay a party by both name and a
unique numeric or alpha-numeric identifier (e.g. ABA number or account number),
BNY, its affiliates, and any other bank participating in the funds transfer, may
rely solely on the unique identifier, even if it identifies a party different
than the party named. Such reliance on a unique identifier shall apply to
Appendix I -3-
beneficiaries named in such instructions as well as any financial institution
which is designated in such instructions to act as an intermediary in a funds
transfer. It is understood and agreed that unless otherwise specifically
provided herein, and to the extent permitted by applicable law, the parties
hereto shall be bound by the rules of any funds transfer system utilized to
effect a funds transfer hereunder.
7. ACKNOWLEDGMENTS. BNY, as Custodian, shall acknowledge through
the Electronic Services its receipt of each Written Instruction communicated
through the Electronic Services, and in the absence of such acknowledgment BNY
shall not be liable for any failure to act in accordance with such Written
Instruction and the Trust may not claim that such Written Instruction was
received by BNY. The Custodian may in its discretion decline to act upon any
instructions or communications that are insufficient or incomplete (and in such
event, the Custodian shall use commercially reasonable efforts to advise the
Trust of any instruction or communication which it determines to be insufficient
or incomplete in such manner that the Trust may submit a revised instruction or
communication) or are not received by the Custodian by the time specified in the
Agreement for the Custodian to act upon, or in accordance with such,
instructions or communications.
8. VIRUSES. Each of the Trust and BNY, as Custodian, agrees to
use reasonable efforts to prevent the transmission through the Electronic
Services of any software or file which contains any viruses, worms, harmful
component or corrupted data and agrees not to use any device, software, or
routine to interfere or attempt to interfere with the proper working of the
Electronic Services.
9. ENCRYPTION. The Trust acknowledges and agrees that encryption
may not be available for every communication through the Electronic Services, or
for all data. The Trust agrees that BNY may deactivate any encryption features
at any time, without notice or liability to the Trust, for the purpose of
maintaining, repairing or troubleshooting its systems.
10. ON-LINE INQUIRY AND MODIFICATION OF RECORDS. In connection
with the Trust's use of the Electronic Services, BNY may, at the Trust's
request, permit the Trust to enter data directly into a BNY database for the
purpose of modifying certain information maintained by BNY's systems, including,
but not limited to, change of address information. To the extent that the Trust
is granted such access, the Trust agrees to indemnify and hold BNY harmless from
all loss, liability, cost, damage and expense (including attorney's fees and
expenses) to which BNY may be subjected or which may be incurred in connection
with any claim which may arise out of or as a result of changes to BNY database
records initiated by the Trust.
11. AGENTS. The Trust may, on advance written notice to the BNY,
permit its agents and contractors who are not otherwise identified as Authorized
Persons ("Agents") to access and use the Electronic Services on the Trust's
behalf, except that the BNY reserves the right to prohibit the Trust's use of
any particular Agent for any reason. The Trust shall require its Agent(s) to
agree in writing to be bound by the terms of the Agreement and this Appendix,
and the Trust shall be liable and responsible for any act or omission of such
Appendix I -4-
Agent in the same manner, and to the same extent, as though such act or omission
were that of the Trust. Each submission of a Written Instruction or other
communication by the Agent through the Electronic Services shall constitute a
representation and warranty by the Trust that the Agent continues to be duly
authorized by the Trust to so act on its behalf and the BNY may rely on the
representations and warranties made herein in complying with such Written
Instruction or communication. Any Written Instruction or other communication
through the Electronic Services by an Agent shall be deemed that of the Trust,
and the Trust shall be bound thereby whether or not authorized. The Trust may,
subject to the terms of this Appendix and upon advance written notice to the
Bank, provide a copy of the Electronic Service user manuals to its Agent if the
Agent requires such copies to use the Electronic Services on the Trust's behalf.
Upon cessation of any such Agent's services, the Trust shall promptly terminate
such Agent's access to the Electronic Services, retrieve from the Agent any
copies of the manuals and destroy them, and retrieve from the Agent any token
cards or other security devices provided by BNY and return them to BNY.
12. PROPRIETARY RIGHTS. Notwithstanding Section 5, all
intellectual property rights in the Electronic Services are either owned by BNY
or secured by it for use as contemplated hereunder.
Appendix I -5-
APPENDIX II
FOREIGN CUSTODY MANAGER AGREEMENT
AGREEMENT between FIRST TRUST EXCHANGE-TRADED ALPHADEX (TM) FUND, a
business trust organized and existing under the laws of the Commonwealth of
Massachusetts having its principal office and place of business at 0000
Xxxxxxxxxxx Xxxx, Xxxxx, Xxxxxxxx 00000 (the "Trust") and The Bank of New York
("BNY").
W I T N E S S E T H:
WHEREAS, the Trust desires to appoint BNY as a Foreign Custody Manager
as defined in the Rule (as such term is defined below) on the terms and
conditions contained herein;
WHEREAS, BNY desires to serve as a Foreign Custody Manager and perform
the duties set forth herein on the terms and conditions contained herein with
respect to one or more Funds (as such term is defined below);
NOW THEREFORE, in consideration of the mutual promises hereinafter
contained in this Agreement, the Trust and BNY hereby agree as follows:
ARTICLE I.
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1. "BOARD" shall mean the board of directors or board of trustees,
as the case may be, of the Trust.
2. "ELIGIBLE FOREIGN CUSTODIAN" shall have the meaning provided in
the Rule.
3. "MONITORING SYSTEM" shall mean a system established by BNY to
fulfill the Responsibilities specified in clauses (d) and (e) of Section
1 of Article III of this Agreement.
4. "RESPONSIBILITIES" shall mean the responsibilities delegated to
BNY under the Rule as a Foreign Custody Manager to a Fund with respect to
each Specified Country and each Eligible Foreign Custodian selected by
BNY, as such responsibilities are more fully described in Article III of
this Agreement.
5. "RULE" shall mean Rule 17f-5 under the Investment Company Act of
1940, as amended effective June 12, 2000.
Appendix II
6. "FUND" shall mean the respective portfolios, if any, of the Trust
listed on Schedule I hereto, and if none are listed, references to Fund
shall be references to the Trust.
7. "SPECIFIED COUNTRY" shall mean each country listed on Schedule II
attached hereto and each country, other than the United States,
constituting the primary market for a security with respect to which the
Trust has given settlement instructions to The Bank of New York as
custodian (the "Custodian") under its Custody Agreement with the Trust.
ARTICLE II.
BNY AS A FOREIGN CUSTODY MANAGER
1. The Trust on behalf of its Board hereby delegates to BNY with respect to each
Specified Country the Responsibilities to be performed for each Fund of the
Trust.
2. BNY accepts the Board's delegation of Responsibilities with respect to each
Specified Country and agrees in performing the Responsibilities as a Foreign
Custody Manager to exercise reasonable care, prudence and diligence such as a
person having responsibility for the safekeeping of the Trust's assets would
exercise.
3. BNY shall provide to the Board at such times as the Board deems reasonable
and appropriate based on the circumstances of the Trust's foreign custody
arrangements written reports notifying the Board of the placement of assets of
the Trust with a particular Eligible Foreign Custodian within a Specified
Country and of any material change in the arrangements (including the contract
governing such arrangements) with respect to assets of the Trust with any such
Eligible Foreign Custodian.
ARTICLE III.
RESPONSIBILITIES
1. Subject to the provisions of this Agreement, BNY shall with respect to each
Specified Country select an Eligible Foreign Custodian. In connection therewith,
BNY shall: (a) determine that assets of the Trust held by such Eligible Foreign
Custodian will be subject to reasonable care, based on the standards applicable
to custodians in the relevant market in which such Eligible Foreign Custodian
operates, after considering all factors relevant to the safekeeping of such
assets, including, without limitation, those contained in paragraph (c)(1) of
the Rule; (b) determine that the Trust's foreign custody arrangements with each
Eligible Foreign Custodian are governed by a written contract with the Custodian
which will provide reasonable care for the Trust's assets based on the standards
specified in paragraph (c)(1) of the Rule; (c) determine that each contract with
an Eligible Foreign Custodian shall include the provisions specified in
paragraph (c)(2)(i)(A) through (F) of the Rule or, alternatively, in lieu of any
or all of such (c)(2)(i)(A) through (F) provisions, such other provisions as BNY
determines will provide, in their entirety, the same or a greater level of care
and protection for the assets of the Trust as such specified provisions; (d)
monitor pursuant to the Monitoring System the appropriateness of maintaining the
assets of the Trust with a particular Eligible Foreign Custodian pursuant to
paragraph (c)(1) of the Rule and the performance of the contract governing such
arrangement; and (e) advise the Trust whenever BNY determines under the
Appendix II -2-
Monitoring System that an arrangement (including, any material change in the
contract governing such arrangement) described in preceding clause (d) no longer
meets the requirements of the Rule.
2. For purposes of preceding Section 1 of this Article, BNY's determination of
appropriateness shall not include, nor be deemed to include, any evaluation of
Country Risks associated with investment in a particular country. For purposes
hereof, "Country Risks" shall mean systemic risks of holding assets in a
particular country including but not limited to (a) an Eligible Foreign
Custodian's use of any depositories that act as or operate a system or a
transnational system for the central handling of securities or any equivalent
book-entries; (b) such country's financial infrastructure; (c) such country's
prevailing custody and settlement practices; (d) nationalization, expropriation
or other governmental actions; (e) regulation of the banking or securities
industry; (f) currency controls, restrictions, devaluations or fluctuations; and
(g) market conditions which affect the orderly execution of securities
transactions or affect the value of securities.
ARTICLE IV.
REPRESENTATIONS
1. The Trust hereby represents that: (a) this Agreement has been duly
authorized, executed and delivered by the Trust on behalf of the Fund,
constitutes a valid and legally binding obligation of the Trust enforceable in
accordance with its terms, and no statute, regulation, rule, order, judgment or
contract binding on the Trust prohibits the Trust's execution or performance of
this Agreement; (b) this Agreement has been approved and ratified by the Board
at a meeting duly called and at which a quorum was at all times present, and (c)
the Board or the Trust's investment advisor has considered the Country Risks
associated with investment in each Specified Country and will have considered
such risks prior to any settlement instructions being given to the Custodian
with respect to any other country.
2. BNY hereby represents that: (a) BNY is duly organized and existing under the
laws of the State of New York, with full power to carry on its businesses as now
conducted, and to enter into this Agreement and to perform its obligations
hereunder; (b) this Agreement has been duly authorized, executed and delivered
by BNY, constitutes a valid and legally binding obligation of BNY enforceable in
accordance with its terms, and no statute, regulation, rule, order, judgment or
contract binding on BNY prohibits BNY's execution or performance of this
Agreement; and (c) BNY has established the Monitoring System.
ARTICLE V.
CONCERNING BNY
1. BNY shall not be liable for any costs, expenses, damages, liabilities or
claims, including attorneys' and accountants' fees, sustained or incurred by, or
asserted against, the Trust or any Fund except to the extent the same arises out
of the failure of BNY to exercise the care, prudence and diligence required by
Section 2 of Article II hereof. In no event shall BNY be liable to the Trust,
any Fund, the Board, or any third party for special, indirect or consequential
damages, or for lost profits or loss of business, arising in connection with
this Agreement.
Appendix II -3-
2. The Trust on behalf of the applicable Fund shall indemnify BNY and hold it
harmless from and against any and all costs, expenses, damages, liabilities or
claims, including attorneys' and accountants' fees, sustained or incurred by, or
asserted against, BNY by reason or as a result of any action or inaction, or
arising out of BNY's performance hereunder, provided that the Trust, on behalf
of the applicable Fund, shall not indemnify BNY to the extent any such costs,
expenses, damages, liabilities or claims arises out of BNY's failure to exercise
the reasonable care, prudence and diligence required by Section 2 of Article II
hereof.
3. For its services hereunder, the Trust agrees to pay to BNY such compensation
and out-of-pocket expenses as shall be mutually agreed.
4. BNY shall have only such duties as are expressly set forth herein. In no
event shall BNY be liable for any Country Risks associated with investments in a
particular country.
ARTICLE VI.
MISCELLANEOUS
1. This Agreement constitutes the entire agreement between the Trust and BNY as
a Foreign Custody Manager, and no provision in the Custody Agreement between the
Trust and the Custodian shall affect the duties and obligations of BNY
hereunder, nor shall any provision in this Agreement affect the duties or
obligations of the Custodian under the Custody Agreement.
2. Each notice, request, demand, approval or other communication which may be or
is required to be given under this Agreement shall be in writing in English and
shall be deemed to have been sufficiently given when received by the intended
party, if delivered personally at the address set forth below for the intended
party during normal business hours at such address, if sent by facsimile
transmission to the respective facsimile transmission numbers of the parties set
forth below, or if sent by recognized overnight courier service or by United
States registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Trust: First Trust Exchange-Traded Alphadex(TM) Fund
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
Confirm: 000-000-0000
If to BNY: The Bank of New York
000 Xxxxxxx Xxxxxx, 00X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile: 000-000-0000
Confirm: 000-000-0000
Notices shall be given to such other addressee or address, or both, or by way of
such other facsimile transmission number, as a particular party may from time to
time designate by written notice to the other parties hereto given in accordance
with this Section.
Appendix II -4-
3. Each party shall keep confidential any information relating to the other
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 the Trust or BNY 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
the Trust or BNY 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 BNY 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
relevant to the defense of any claim or cause of action asserted against the
receiving party; (h) it has been or is independently developed or obtained by
the receiving party; or (i) it is necessary for BNY to release such information
to BNY's internal or external accountants or legal counsel who are subject to a
duty of confidentiality. BNY 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 Trust. BNY
agrees that, subject to the foregoing provisions of and the exceptions set forth
in this Section 3 (other than the exception set forth above in this Section 3 as
sub-item (a), which exception set forth in sub-item (a) shall not be applicable
to the Trust's Portfolio Information), BNY will keep confidential the Trust's
Portfolio Information and will not disclose the Trust's Portfolio Information
other than pursuant to a written instruction from the Trust; provided that
without the need for such a written instruction and notwithstanding any other
provision of this Section 3 to the contrary, the Trust's Portfolio Information
may be disclosed to third party pricing services which are engaged by BNY 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.
4. From time to time as requested by the Trust, BNY shall provide to the Trust
such certifications and sub-certifications, in the form agreed to by the Trust
and BNY, with respect to Form N-Qs, Form N-CSRs, and compliance policies and
procedures under Rule 38a-1 under the 1940 Act, as amended, and such other
matters that may be reasonably requested by the Trust or the Trust's Chief
Compliance Officer from time to time. In addition, BNY will, from time to time,
provide a written assessment of its compliance program in conformity with
current industry standards that is reasonably acceptable to enable the Trust to
fulfill its obligations under Rule 38a-1 of the 1940 Act.
Appendix II -5-
5. In the event that the Trust establishes one or more additional Funds with
respect to which it desires to have BNY serve as Foreign Custody Manager under
the terms hereof, it shall so notify BNY in writing, and if BNY agrees in
writing to provide such services, such Fund will be added to this Agreement.
6. In case any provision in or obligation under this Agreement shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
thereby. This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties. This Agreement shall extend to and
shall be binding upon the parties hereto, and their respective successors and
assigns; provided however, that this Agreement shall not be assignable by either
party without the written consent of the other.
7. This Agreement shall be construed in accordance with the substantive laws of
the State of New York, without regard to conflicts of laws principles thereof.
The Trust and BNY hereby consent to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute arising
hereunder. The Trust hereby irrevocably waives, to the fullest extent permitted
by applicable law, any objection which it may now or hereafter have to the
laying of venue of any such proceeding brought in such a court and any claim
that such proceeding brought in such a court has been brought in an inconvenient
forum. The Trust and BNY each hereby irrevocably waives any and all rights to
trial by jury in any legal proceeding arising out of or relating to this
Agreement.
8. The parties hereto agree that in performing hereunder, BNY is acting solely
on behalf of the Trust and no contractual or service relationship shall be
deemed to be established hereby between BNY and any other person by reason of
this Agreement.
9. (a) It is expressly acknowledged and agreed that the obligations of the Trust
(and Funds thereof) hereunder shall not be binding upon any of the shareholders,
Trustees, officers, employees or agents of the Trust (and Funds thereof),
personally, but shall bind only the trust property of the Trust and the
applicable Fund, as provided in the Trust's Declaration of Trust. The execution
and delivery of this Agreement have been authorized by the Trustees of the Trust
and signed by an officer of the Trust, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust and the applicable Fund as provided in the Trust's Declaration of
Trust.
(b) This Agreement is an agreement entered into between BNY and the
Trust with respect to each Fund. With respect to any obligation of the Trust on
behalf of any Fund arising out of this Agreement, the BNY shall look for payment
of such obligation solely to the assets of the Fund to which such obligation
relates with the same effect as if the BNY had separately contracted with the
Trust by separate written instrument with respect to each Fund.
(c) As used herein, the "applicable Fund" shall be each Fund in respect
of which any costs, expenses, damages, liabilities or claims previously
specified arise in whole or in part, and if any such costs, expenses, damages,
liabilities or claims arise in respect of more than one Fund, the same shall be
Appendix II -6-
allocated by BNY among such Funds in accordance with Section 7 of Article X of
the Custody Agreement between the Trust and BNY. Any amounts due BNY which may
not be allocated in accordance with the preceding sentence shall constitute
General Liabilities as defined in the Trust's Declaration of Trust and allocated
by the Trust and paid in accordance with the provisions thereof.
10. This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
11. This Agreement shall terminate simultaneously with the termination of the
Custody Agreement between the Trust and the Custodian, and may otherwise be
terminated by either party giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than thirty
(30) days after the date of such notice.
IN WITNESS WHEREOF, the Trust and BNY have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the date
first above written.
By
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Title:
Tax Identification No.:
THE BANK OF NEW YORK
By
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Title:
Appendix II -7-
SCHEDULE I
Funds of the Trust
Appendix II--
Schedule I
SCHEDULE II
Specified Countries
Appendix II--
Schedule II
