CUSTODY AGREEMENT
AGREEMENT, dated as of June 12, 2012 between First Trust Exchange-Traded
Fund IV, a business trust organized and existing under the laws of the
Commonwealth of Massachusetts having its principal office and place of business
at 000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 (the "Trust") and
The Bank of New York Mellon, 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.
"BNYM Affiliate" shall mean any office, branch or subsidiary of The Bank
of New York Mellon Corporation.
"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 securities depository, book-entry system or
clearing agency authorized to act as such under applicable law 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) 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 Mellon.
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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 BNYM 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) Prior to any settlement instructions being given to the
Custodian requiring the services of a Foreign Depository, the Trust's
investment advisor has indicated that it shall have determined that the
custody arrangements of such 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
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priority subject to no setoffs, counterclaims, or other 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 (i) if the Custodian employs a Subcustodian for custody
of assets located in the U.S., the Custodian has received notice of the approval
of such Subcustodian by the Trust's board, and (ii) if the Trust's foreign
custody manager is not the Custodian or a BNYM Affiliate, the Custodian has
received notice of the Subcustodians approved by the Trust's board or foreign
custody manager for custody of assets located outside the U.S.), 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
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services, the Trust and Custodian shall enter into a Foreign Custody Manager
Agreement substantially in the form attached as Appendix II.
(c) Unless applicable law otherwise requires or 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 the Depository.
(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.
(f) With respect to each country in which the Custodian or a Subcustodian
maintains assets for a Fund pursuant to this Agreement, the Custodian will, as
requested by the Trust from time to time, furnish the Trust the information
specified in Appendix III.
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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;
(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
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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
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
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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, (i) provide the Trust with required forms to apply for such reduction
or exemption, if any, and, if such service is provided by the applicable
Subcustodian, request such Subcustodian continually to monitor the availability
of any reduction or exemption (and the Custodian shall provide to the Trust from
time to time upon request a list of the Subcustodians providing such monitoring
service), and (ii) 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 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 BNYM Affiliate acting as
principal or otherwise through customary banking channels upon such terms, and
for such compensation, as the Trust and the Custodian or its affiliate may agree
upon. The Trust may issue a standing Certificate or Instructions with respect to
foreign exchange transactions, but Custodian or its affiliate will establish
terms of trading, 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. Without limiting
the foregoing, the Trust shall bear the risks that rules or procedures imposed
by Depositories, exchange controls, assets freezes or other laws, rules,
regulations or orders shall prohibit or impose burdens or costs on the transfer
to, by or for the accounts of the Trust with respect to an applicable Fund of
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Securities or cash held outside the United States or denominated in a currency
other than U.S. dollars or the conversion of cash from one currency into another
currency. Custodian shall not be obligated to substitute another currency for a
currency whose transferability, convertibility or availability has been affected
by such law, regulation, rule or procedure. Neither Custodian nor any
Subcustodian shall be liable to the Trust or any Fund for loss resulting from
any of the foregoing events.
(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.
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
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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, in
any currency, 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 a 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 Mellon 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 in
the relevant currency, 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.
- 11 -
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.
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.
- 12 -
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
BNYM Affiliate), Depository or Foreign Depository, Custodian shall take
appropriate action to recover such Losses from such Subcustodian, Depository or
Foreign Depository, and Custodian's sole responsibility and liability to the
Trust or Fund shall be limited to amounts so received from such Subcustodian,
Depository or Foreign Depository (exclusive of costs and expenses incurred by
Custodian) except to the extent the action or inaction of the relevant
Subcustodian; Depository or Foreign Depository is a direct result of the
Custodian's own negligence or willful misconduct. 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
and any applicable Fund for direct money damages caused by Custodian's own
negligence or willful misconduct, nor shall the Custodian or any Subcustodian
(except only with respect to clause (vii), which shall not limit a
Subcustodian's liability in respect of its own insolvency) 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
- 13 -
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 BNYM 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 BNYM 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
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, provided, however, that if the Custodian
is serving as foreign custody manager to a Fund in accordance with a Foreign
Custody Manager Agreement in the form annexed as Appendix II, the Custodian's
indemnification for Losses arising from the acts of any Eligible Foreign
Custodian selected by the Custodian shall be subject to such further limitations
as shall be provided in the Foreign Custody Manager Agreement. 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.
- 14 -
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 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
- 15 -
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 BNYM 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 BNYM 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 BNYM 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
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.
- 16 -
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. From time to time as requested by the Trust, the Custodian shall
request from each Subcustodian, and provide to the Trust upon receipt, such
Subcustodian's annual financial information, reports on accounting controls and
compliance policies and procedures.
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
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
- 17 -
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 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
- 18 -
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 (i) to Subcustodians and (ii) 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. The Custodian's
agreements with its Subcustodians require the Subcustodian, subject to any
applicable law, to use best efforts to maintain the confidentiality of matters
concerning the property held by the Subcustodian for the account of a Fund.
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 Fund IV
000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
Confirm: 000-000-0000
If to the
Custodian: The Bank of New York Mellon
000 Xxxxxxx Xxxxxx, 00X
Xxx Xxxx, Xxx Xxxx 00000
- 19 -
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.
- 20 -
(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 FUND IV
By /s/ Mar X. Xxxxxxx
--------------------------------------------
Title: President
-------------------------------------
Tax Identification No:
----------------------
THE BANK OF NEW YORK MELLON
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Title: Managing Director
-------------------------------------
- 21 -
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 Fund IV (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
Mellon ("Custodian") pursuant to the Custody Agreement between the Trust and
Custodian dated __________, 20__ and that the signatures appearing opposite
their names are true and correct:
NAME TITLE SIGNATURE
--------------------- --------------------- ---------------------
NAME TITLE SIGNATURE
--------------------- --------------------- ---------------------
NAME TITLE SIGNATURE
--------------------- --------------------- ---------------------
NAME TITLE SIGNATURE
--------------------- --------------------- ---------------------
NAME TITLE SIGNATURE
--------------------- --------------------- ---------------------
NAME TITLE SIGNATURE
--------------------- --------------------- ---------------------
NAME TITLE SIGNATURE
--------------------- --------------------- ---------------------
NAME TITLE SIGNATURE
--------------------- --------------------- ---------------------
(Continued on Following Page)
NAME TITLE SIGNATURE
--------------------- --------------------- ---------------------
This certificate supersedes any certificate of Authorized Persons you may
currently have on file.
[seal]
By
--------------------------------------------
Title: Secretary
-------------------------------------
Date:
-------------------------------------
- 2 -
SCHEDULE II
First Trust North American Energy Infrastructure Fund
First Trust High Yield Long/Short ETF
First Trust Senior Loan Fund
SCHEDULE III
FOREIGN DEPOSITORIES
APPENDIX I
ELECTRONIC SERVICES TERMS AND CONDITIONS
1. License; Use. (a) This Appendix I shall govern use by FIRST TRUST
EXCHANGE-TRADED FUND IV (the "Trust") of electronic communications, information
delivery, portfolio management and banking services, that The Bank of New York
Mellon and its affiliates (herein "BNYM") may provide in connection with the
services as Custodian pursuant to the annexed Custody Agreement (the
"Agreement"), such as The Bank of New York Mellon Inform (TM) and The Bank of
New York Mellon CA$H-Register Plus(R), and any computer software, proprietary
data and documentation provided by BNYM 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) BNYM 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 BNYM in connection
with the Trust's relationship with BNYM, 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 BNYM 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 BNYM 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 BNYM'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 BNYM'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 BNYM believes to be
reliable but, except to the extent otherwise expressly provided in the Agreement
with respect to the duties of BNYM as Custodian, are provided without any
independent investigation by BNYM. BNYM 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
Party Services should not be used in making any investment decision. BNYM AND
ITS SUPPLIERS ARE NOT RESPONSIBLE FOR ANY RESULTS OBTAINED FROM THE USE OF OR
RELIANCE UPON THIRD PARTY DATA OR THIRD PARTY SERVICES. BNYM'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. BNYM 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 BNYM'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 BNYM 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 BNYM 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 BNYM 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.
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4. Modifications. BNYM 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 BNYM's prior written consent. The Trust
acknowledges that any modifications to the Electronic Services, whether by the
Trust or BNYM and whether with or without BNYM's consent, shall become the
property of BNYM.
5. NO REPRESENTATIONS OR WARRANTIES; LIMITATION OF LIABILITY. BNYM 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 BNYM 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 BNYM OR SUCH SUPPLIER KNEW OF THE POSSIBILITY OF SUCH
DAMAGES. IN NO EVENT SHALL BNYM 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. BNYM 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 BNYM 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 BNYM any
security devices (e.g., token cards) provided by BNYM. BNYM 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
BNYM 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 BNYM'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
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unique numeric or alpha-numeric identifier (e.g. ABA number or account number),
BNYM, 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 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
affect a funds transfer hereunder.
7. Acknowledgments. BNYM, 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 BNYM 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 BNYM.
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 BNYM, 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 BNYM 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, BNYM may, at the Trust's request, permit
the Trust to enter data directly into a BNYM database for the purpose of
modifying certain information maintained by BNYM'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 BNYM harmless from
all loss, liability, cost, damage and expense (including attorney's fees and
expenses) to which BNYM 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 BNYM database
records initiated by the Trust.
11. Agents. The Trust may, on advance written notice to the BNYM, 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 BNYM reserves the right to prohibit the Trust's use of
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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
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 BNYM 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 BNYM and return them to BNYM.
12. Proprietary Rights. Notwithstanding Section 5, all intellectual
property rights in the Electronic Services are either owned by BNYM or secured
by it for use as contemplated hereunder.
On-line communications terms.doc
(9/06)
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APPENDIX II
FOREIGN CUSTODY MANAGER AGREEMENT
AGREEMENT between FIRST TRUST EXCHANGE-TRADED FUND IV, a business trust
organized and existing under the laws of the Commonwealth of Massachusetts
having its principal office and place of business at 000 Xxxx Xxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 (the "Trust") and The Bank of New York Mellon
("BNYM").
WITNESSETH:
WHEREAS, the Trust desires to appoint BNYM as a Foreign Custody Manager as
defined in the Rule (as such term is defined below) on the terms and conditions
contained herein;
WHEREAS, BNYM 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 BNYM 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 BNYM 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 BNYM
under the Rule as a Foreign Custody Manager to a Fund with respect to each
Specified Country and each Eligible Foreign Custodian selected by BNYM, 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.
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 Mellon as custodian (the
"Custodian") under its Custody Agreement with the Trust.
ARTICLE II.
BNYM AS A FOREIGN CUSTODY MANAGER
1. The Trust on behalf of its Board hereby delegates to BNYM with respect
to each Specified Country the Responsibilities to be performed for each Fund of
the Trust.
2. BNYM 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. BNYM 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, BNYM shall with respect to
each Specified Country select an Eligible Foreign Custodian. In connection
therewith, BNYM 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 BNYM 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
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the Trust whenever BNYM determines under the 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, BNYM'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 Trust's investment advisor has indicated that it will consider the Country
Risks associated with investment in each Specified Country prior to any
settlement instructions being given to the Custodian with respect to any other
country.
2. BNYM hereby represents that: (a) BNYM 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 BNYM, constitutes a valid and legally binding obligation of BNYM
enforceable in accordance with its terms, and no statute, regulation, rule,
order, judgment or contract binding on BNYM prohibits BNYM's execution or
performance of this Agreement; and (c) BNYM has established the Monitoring
System.
ARTICLE V.
CONCERNING BNYM
1. BNYM 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 BNYM to exercise the care, prudence and diligence required
by Section 2 of Article II hereof. In no event shall BNYM 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.
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2. The Trust on behalf of the applicable Fund shall indemnify BNYM 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, BNYM by reason or as a result of any action or
inaction, or arising out of BNYM's performance hereunder, provided that the
Trust, on behalf of the applicable Fund, shall not indemnify BNYM to the extent
any such costs, expenses, damages, liabilities or claims arises out of BNYM's
failure to exercise the reasonable care, prudence and diligence required by
Section 2 of Article II hereof or to the extent any such costs, expenses,
damages, liabilities or claims is attributable to the actions or omissions of an
Eligible Foreign Custodian selected by BNYM and arises out of the failure of
BNYM 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 BNYM such
compensation and out-of-pocket expenses as shall be mutually agreed.
4. BNYM shall have only such duties as are expressly set forth herein. In
no event shall BNYM 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
BNYM 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
BNYM 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 Fund IV
000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
Confirm: 000-000-0000
If to BNYM: The Bank of New York Mellon
000 Xxxxxxx Xxxxxx, 00X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile: 000-000-0000
Confirm: 000-000-0000
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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.
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 BNYM 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 BNYM 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 BNYM 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 BNYM to release such information
to BNYM's internal or external accountants or legal counsel who are subject to a
duty of confidentiality. BNYM 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. BNYM
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), BNYM 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 BNYM 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, BNYM shall provide to the
Trust such certifications and sub-certifications, in the form agreed to by the
Trust and BNYM, 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
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matters that may be reasonably requested by the Trust or the Trust's Chief
Compliance Officer from time to time. In addition, BNYM 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.
5. In the event that the Trust establishes one or more additional Funds
with respect to which it desires to have BNYM serve as Foreign Custody Manager
under the terms hereof, it shall so notify BNYM in writing, and if BNYM 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 BNYM 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 BNYM 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, BNYM is acting
solely on behalf of the Trust and no contractual or service relationship shall
be deemed to be established hereby between BNYM 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 BNYM 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 BNYM shall look for payment of
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such obligation solely to the assets of the Fund to which such obligation
relates with the same effect as if the BNYM 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 allocated by
BNYM among such Funds in accordance with Section 7 of Article X of the Custody
Agreement between the Trust and BNYM. Any amounts due BNYM 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 BNYM have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the date
first above written.
FIRST TRUST EXCHANGE-TRADED FUND IV
By
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Title:
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Tax Identification No:
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THE BANK OF NEW YORK MELLON
By
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Title:
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SCHEDULE I
FUNDS OF THE TRUST
SCHEDULE II
SPECIFIED COUNTRIES
APPENDIX III
The Custodian shall furnish, upon the initial placing of Securities and
cash into a country and annually thereafter, unless the Custodian has otherwise
notified the Trust, the following information:
A. Opinions of local counsel concerning:
i. Whether applicable foreign law would restrict the access afforded
the Trust's independent public accountants to books and records kept
by an Eligible Foreign Custodian located in that country.
ii. Whether applicable foreign law would restrict the Trust's ability to
recover its Securities and cash in the event of the bankruptcy of an
Eligible Foreign Custodian located in that country.
iii. Whether applicable foreign law would restrict the Trust's ability to
recover Securities that are lost while under the control of an
Eligible Foreign Custodian located in that country.
B. Written information concerning:
i. Expropriation, nationalization, freezes or confiscation of the
Securities in that country.
ii. Difficulties in converting cash and cash equivalents to U.S. dollars
in that country.
C. A market report with respect to the following topics:
i. the securities regulatory environment of the country,
ii. restrictions on ownership by foreigners, including preinvestment
approvals,
iii. foreign exchange and money transfer
iv. execution and settlement of trades
v. taxation, and
vi. depositories.
D. Analysis of Foreign Depositories specified in paragraph (e) of
Section 1 of Article III of the Custody Agreement.
E. To aid the Trust in monitoring country risk, the Custodian shall
also make available market flashes with respect to changes in the
information in market reports.
