CUSTODIAN AGREEMENT
THIS AGREEMENT, dated as of April 8, 2011, between First Trust Exchange-Traded
AlphaDEX(R) Fund II, a business trust organized under the laws of the
Commonwealth of Massachusetts and registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 as amended ("the 1940 ACT")
(the TRUST), and XXXXX BROTHERS XXXXXXXX & CO., a limited partnership formed
under the laws of the State of New York (BBH&CO. or the CUSTODIAN).
W I T N E S S E T H:
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 A (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 covenants and agreements herein
contained, the Fund and BBH&Co. hereby agree, as follows:
1. APPOINTMENT OF CUSTODIAN. The Trust hereby appoints BBH&Co. as the Trust's
Custodian, and BBH&Co. hereby accepts such appointment and agrees to
establish and maintain one or more accounts for each Fund in which
Custodian will hold Investments as provided herein. Custodian shall
maintain books and records, segregating the assets of each Fund from the
assets of any other Fund. All Investments of the Fund delivered to the
Custodian or its agents or Subcustodians shall be dealt with as provided
in this Agreement. The duties of the Custodian with respect to the Fund's
Investments shall be only as set forth expressly in this Agreement which
duties are generally comprised of safekeeping and various administrative
duties that will be performed in accordance with Instructions and as
reasonably required to effect Instructions.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE FUND. The Trust hereby
represents, warrants and covenants each of the following:
2.1. This Agreement has been, and at the time of delivery of each
Instruction such Instruction will have been, duly authorized,
executed and delivered by the Trust. Neither this Agreement nor any
Instruction issued thereunder violates any Applicable Law or
conflicts with or constitutes a default under a Fund's prospectus,
articles of organization or other constitutive document or any
agreement, judgment, order or decree to which a Fund is a party or
by which it or its Investments is bound.
2.2. By providing an Instruction with respect to the first acquisition of
an Investment in a jurisdiction other than the United States of
America, a Fund shall be deemed to have confirmed to the Custodian
that a Fund has (a) assessed and accepted all material Country or
Sovereign Risks and accepted responsibility for their occurrence,
(b) made all determinations required to be made by a Fund under the
1940 Act, and (iii) appropriately and adequately disclosed to its
shareholders, other investors and all persons who have rights in or
to such Investments, all material investment risks, including those
relating to the custody and settlement infrastructure or the
servicing of securities in such jurisdiction.
2.3. The Trust shall safeguard and shall solely be responsible for the
safekeeping of any testkeys, identification codes, passwords, other
security devices or statements of account with which the Custodian
provides it. If the Fund uses any on-line or similar communications
service made available by the Custodian, the Trust shall be solely
responsible for ensuring the security of its access to the service
and for the use of the service, and shall only attempt to access the
service and the Custodian's computer systems as directed by the
Custodian. If the Custodian provides any computer software to the
Trust relating to the services described in this Agreement, the
Trust will only use the software for the purposes for which the
Custodian provided the software to the Trust, and will abide by the
license agreement accompanying the software and any other security
policies which the Custodian provides to the Trust.
2.4. By providing an Instruction in respect of an Investment (which
Instruction may relate to among other things, the execution and/or
settlement of trades), the Trust hereby (i) authorizes BBH&Co. to
complete such documentation as may be required or appropriate for
the execution of the Instruction, and agrees to be contractually
bound to the terms of such documentation "as is" without recourse
against BBH&Co.; (ii) represents, warrants and covenants that it has
accepted and agreed to comply with all Applicable Law, terms and
conditions to which it and/or its Investment may be bound, including
without limitation, requirements imposed by the Investment
prospectus or offering circular, subscription agreement, any
application or other documentation relating to an Investment (e.g.,
compliance with suitability requirements and eligibility
restrictions); (iii) acknowledges and agrees that BBH&Co. will not
be responsible for the accuracy of any information provided to it by
or on behalf of a Fund, or for any underlying commitment or
obligation inherent to an Investment; (iv) except as otherwise
provided for in Section 2.4.1, represents, warrants and covenants
that it will not effect any sale, transfer or disposition of
Investment(s) held in BBH&Co.'s name by any means other than the
issuance of an Instruction by a Fund to BBH&Co.; (v) acknowledges
that collective investment schemes (and/or their agent(s)) in which
a Fund invests may pay to BBH&Co. certain fees (including without
limitation, shareholder servicing and/or trailer fees) in respect of
a Fund's investments in such schemes; (vi) agrees that BBH&Co. shall
have no obligation or responsibility whatsoever to respond to, or
provide capital in connection with any capital calls, letters of
intent of other requirements as set out in the prospectus or
offering circular of an Investment; (vii) represents, warrants and
covenants that it will provide BBH&Co. with such information as is
necessary or appropriate to enable BBH&Co.'s performance pursuant to
an Instruction or under this Agreement; (viii) represents that it is
not a "Plan" (which term includes (1) employee benefit plans that
are subject to the United States ("US") Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or plans, individual
retirement accounts and other arrangements that are subject to
Section 4975 of the US Internal Revenue Code of 1986, as amended
(the "Code"), (2) plans, individual retirement accounts and other
arrangements that are subject to the prohibited transaction
provisions of Section 406 of ERISA or Section 4975 of the Code, and
(3) entities the underlying assets of which are considered to
include "plan assets" of such plans, accounts and arrangements), or
an entity purchasing shares on behalf of, or with the "plan assets"
of, a Plan; (ix) undertakes to inform BBH&Co. and to keep the same
updated as to the status under ERISA or Section 4975 of the Code,
each as amended, of the beneficial investor to the Investment, and
as to any tax withholding or benefit to which an Investment may be
subject; (x) acknowledges that BBH&Co. shall have no obligation to
fund any order placed by the Fund for which the Fund does not have
sufficient cash on deposit with BBH&Co.; and (xi) agrees that
BBH&Co. shall be held harmless for the acts, omissions or any
unlawful activity of any agent of the Fund, or any transfer agent or
other agent of an Investment in which the Fund may invest.
2.4.1 To the extent that a Fund holds Investments in an account
opened in the name of BBH&Co. as custodian for and at the
direction of a Fund, and a Fund requests that BBH&Co. provide
a Fund with the capability to place orders and execute trades
in fund shares directly with such fund companies and/or their
transfer agents which shall be settled in an account
established with each such fund company or its transfer agent,
the Fund hereby acknowledges that BBH&Co. is under no
obligation to agree to such arrangement but if BBH&Co. so
agrees, the Fund (i) acknowledges that all relevant terms
under Section 2.4 above apply thereto, (ii) authorizes BBH&Co.
as custodian, to grant a limited power of attorney to the Fund
or its designated agent to enable the Fund to so execute,
(iii) agrees to ensure that any instructions issued by the
Fund or its designated agent shall also be concurrently
submitted to BBH&Co., and (iv) shall adhere to any BBH&Co.
procedures established with each such fund or its transfer
agent with respect thereto including, but not limited to, the
terms of the limited power of attorney. The Fund also
acknowledges and agrees that (1) BBH&Co. is acting solely in
its capacity as custodian and is not acting as a broker or
introducing broker on behalf of the Fund, (2) BBH&Co. is not
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receiving compensation in connection with the Fund's execution
hereunder of trades with each such fund other than its usual
and customary custody fees and transaction charges, (3) it
will provide such account opening information to each such
fund and/or transfer agent as and when requested by such fund
and/or transfer agent, and (4) BBH&Co. is not responsible for
(a) providing information published by the relevant
distributor of each such fund including, but not limited to,
the prospectus for each such Investment in a fund or for
resolving execution queries or complaints relative to any such
Investment, and (b) assessing the suitability of any such
Investment executed directed by the Fund.
3. REPRESENTATION AND WARRANTY OF BBH&CO. BBH&Co. hereby represents and
warrants that this Agreement has been duly authorized, executed and
delivered by BBH&Co. and does not and will not violate any Applicable Law
or conflict with or constitute a default under BBH&Co.'s limited
partnership agreement or any agreement, instrument, judgment, order or
decree to which BBH&Co. is a party or by which it is bound.
4. INSTRUCTIONS. Unless otherwise explicitly indicated herein, the Custodian
shall perform its duties pursuant to Instructions. As used herein, the
term INSTRUCTION shall mean a directive initiated by the Fund, acting
through its board of directors or trustees or other Authorized Person,
which directive shall conform to the requirements of this Section 4.
4.1. AUTHORIZED PERSONS. For purposes hereof, an AUTHORIZED PERSON shall
be a person or entity authorized to give Instructions to the
Custodian by written notices or otherwise for or on behalf of the
Fund in accordance with procedures delivered to and acknowledged by
the Custodian. The Custodian may treat any Authorized Person as
having the full authority of the Fund to issue Instructions
hereunder unless the notice of authorization contains explicit
limitations as to said authority. The Custodian shall be entitled to
rely upon the authority of Authorized Persons until it receives
appropriate written notice from the Fund to the contrary.
4.2. FORM OF INSTRUCTION. Each Instruction shall be transmitted by such
secured or authenticated electro-mechanical means as the Custodian
shall make available to the Fund from time to time unless the Fund
shall elect to transmit such Instruction in accordance with
Subsections 4.2.1 through 4.2.3 of this Section.
4.2.1 FUND DESIGNATED SECURED-TRANSMISSION METHOD. Instructions may
be transmitted through a secured or tested electro-mechanical
means identified by the Fund or by an Authorized Person
entitled to give Instruction and acknowledged and accepted by
the Custodian, it being understood that such acknowledgment
shall authorize the Custodian to accept such means of delivery
but shall not represent a judgment by the Custodian as to the
reasonableness or security of the means utilized by the
Authorized Person.
4.2.2 WRITTEN INSTRUCTIONS. Instructions may be transmitted in a
writing that bears the manual signature of Authorized Persons.
4.2.3 OTHER FORMS OF INSTRUCTION. Instructions may also be
transmitted by another means determined by the Fund or
Authorized Persons and acknowledged and accepted by the
Custodian (subject to the same limits as to acknowledgements
as are contained in Subsection 4.2.1, above) including
Instructions given orally or by SWIFT or telefax (whether
tested or untested).
When an Instruction is given by means established under Subsections
4.2.1 through 4.2.3, it shall be the responsibility of the Custodian
to use reasonable care to adhere to any security or other procedures
established in writing between the Custodian and the Authorized
Person with respect to such means of Instruction, but the Authorized
Person shall be solely responsible for determining that the
particular means chosen is reasonable under the circumstances. Oral
Instructions shall be binding upon the Custodian only if and when
the Custodian takes action with respect thereto. With respect to
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telefax instructions, the parties agree and acknowledge that receipt
of legible instructions cannot be assured, that the Custodian cannot
verify that authorized signatures on telefax instructions are
original or properly affixed, and that the Custodian shall not be
liable for losses or expenses incurred through actions taken in
reasonable reliance on inaccurately stated, illegible or
unauthorized telefax instructions. The provisions of Section 4A of
the Uniform Commercial Code shall apply to Funds Transfers performed
in accordance with Instructions. The Funds Transfer Services
Schedule and the Electronic and Online Services Schedule to this
Agreement shall each comprise a designation of a means of delivering
Instructions for purposes of this Section 4.2.
4.3. COMPLETENESS AND CONTENTS OF INSTRUCTIONS. The Authorized Person
shall be responsible for assuring the adequacy and accuracy of
Instructions. Particularly, upon any acquisition or disposition or
other dealing in the Fund's Investments and upon any delivery and
transfer of any Investment or moneys, the person initiating the
Instruction shall give the Custodian an Instruction with appropriate
detail, including, without limitation:
4.3.1 The transaction date and the date and location of settlement;
4.3.2 The specification of the type of transaction;
4.3.3 A description of the Investments or moneys in question,
including, as appropriate, quantity, price per unit, amount of
money to be received or delivered and currency information.
Where an Instruction is communicated by electronic means, or
otherwise where an Instruction contains an identifying number
such as a CUSIP, SEDOL or ISIN number, the Custodian shall be
entitled to rely on such number as controlling notwithstanding
any inconsistency contained in the Instruction, particularly
with respect to Investment description; and
4.3.4 The name of the broker or similar entity concerned with
execution of the transaction.
If the Custodian determines that an Instruction is either unclear or
incomplete, the Custodian may give prompt notice of such determination to
the Fund, and the Fund shall thereupon amend or otherwise reform the
Instruction. In such event, the Custodian shall have no obligation to take
any action in response to the Instruction initially delivered until the
redelivery of an amended or reformed Instruction.
4.4. TIMELINESS OF INSTRUCTIONS. In giving an Instruction, the Fund shall
take into consideration delays which may occur due to the
involvement of a Subcustodian or agent, differences in time zones,
and other factors particular to a given market, exchange or issuer.
When the Custodian has established specific timing requirements or
deadlines with respect to particular classes of Instruction, or when
an Instruction is received by the Custodian at such a time that it
could not reasonably be expected to have acted on such instruction
due to time zone differences or other factors beyond its reasonable
control, the execution of any Instruction received by the Custodian
after such deadline or at such time (including any modification or
revocation of a previous Instruction) shall be at the risk of the
Fund.
5. SAFEKEEPING OF FUND ASSETS. The Custodian shall hold Investments delivered
to it or Subcustodians for the Fund in accordance with the provisions of
this Section. The Custodian shall not be responsible for (a) the
safekeeping of Investments not delivered or that are not caused to be
issued to it or its Subcustodians; or, (b) pre-existing faults or defects
in Investments that are delivered to the Custodian or its Subcustodians.
The Custodian is hereby authorized to hold with itself or a Subcustodian,
and to record in one or more accounts, all Investments delivered to and
accepted by the Custodian, any Subcustodian or their respective agents
pursuant to an Instruction or in consequence of any corporate action or
income event. The Custodian shall hold Investments for the account of the
Fund and shall segregate Investments from assets belonging to the
Custodian and shall cause its Subcustodians to segregate Investments from
assets belonging to the Subcustodian in an account held for the Fund or in
an account maintained by the Subcustodian generally for non-proprietary
assets of the Custodian.
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5.1. USE OF SECURITIES DEPOSITORIES. The Custodian may deposit and
maintain Investments in any Securities Depository, either directly
or through one or more Subcustodians appointed by the Custodian.
Investments held in a Securities Depository shall be held (a)
subject to the agreement, rules, statement of terms and conditions
or other document or conditions effective between the Securities
Depository and the Custodian or the Subcustodian, as the case may
be, and (b) in an account for the Fund or in bulk segregation in an
account maintained for the non-proprietary assets of the entity
holding such Investments in the Depository. If market practice or
the rules and regulations of the Securities Depository prevent the
Custodian, the Subcustodian or (any agent of either) from holding
its client assets in such a separate account, the Custodian, the
Subcustodian or other agent shall as appropriate segregate such
Investments for benefit of the Fund or for benefit of clients of the
Custodian generally on its own books.
5.2. CERTIFICATED ASSETS. Investments which are certificated may be held
in registered or bearer form: (a) in the Custodian's vault; (b) in
the vault of a Subcustodian or agent of the Custodian or a
Subcustodian; or (c) in an account maintained by the Custodian,
Subcustodian or agent at a Securities Depository; all in accordance
with customary market practice in the jurisdiction in which any
Investments are held.
5.3. REGISTERED ASSETS. Investments which are registered may be
registered in the name of the Custodian, a Subcustodian, or in the
name of the Fund or a nominee for any of the foregoing, and may be
held in any manner set forth in Section 5.2 above with or without
any identification of fiduciary capacity in such registration.
5.4. BOOK ENTRY ASSETS. Investments which are represented by book-entry
may be so held in an account maintained by the Book-entry Agent on
behalf of the Custodian, a Subcustodian or another Agent of the
Custodian, or a Securities Depository.
5.5. REPLACEMENT OF LOST INVESTMENTS. In the event of a loss of
Investments for which loss the Custodian is responsible under the
terms of this Agreement, the Custodian shall replace such
Investment, or in the event that such replacement cannot be
effected, the Custodian shall pay to the Fund the fair market value
of such Investment based on the last available price as of the close
of business in the relevant market on the date that a claim was
first made to the Custodian with respect to such loss, or such other
lesser amount as shall be agreed by the parties.
6. ADMINISTRATIVE DUTIES OF THE CUSTODIAN. The Custodian shall perform the
following administrative duties with respect to Investments of the Fund.
6.1. PURCHASE OF INVESTMENTS. Pursuant to Instruction, Investments
purchased for the account of the Fund shall be paid for (a) against
delivery thereof to the Custodian or a Subcustodian, as the case may
be, either directly or through a Clearing Corporation or a
Securities Depository (in accordance with the rules of such
Securities Depository or such Clearing Corporation), or (b)
otherwise in accordance with an Instruction, Applicable Law,
generally accepted trade practices, or the terms of the instrument
representing such Investment.
6.2. SALE OF INVESTMENTS. Pursuant to Instruction, Investments sold for
the account of the Fund shall be delivered (a) against payment
therefor in cash, by check or by bank wire transfer, (b) by credit
to the account of the Custodian or the applicable Subcustodian, as
the case may be, with a Clearing Corporation or a Securities
Depository (in accordance with the rules of such Securities
Depository or such Clearing Corporation), or (c) otherwise in
accordance with an Instruction, Applicable Law, generally accepted
trade practices, or the terms of the instrument representing such
Investment.
6.3. DELIVERY AND RECEIPT IN CONNECTION WITH BORROWINGS OF THE FUND OR
OTHER COLLATERAL AND MARGIN REQUIREMENTS. Pursuant to Instruction,
the Custodian may deliver or receive Investments or cash of the Fund
in connection with borrowings or loans by the Fund and other
collateral and margin requirements.
6.4. FUTURES AND OPTIONS. If, pursuant to an Instruction, the Custodian
shall become a party to an agreement with the Fund and a futures
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commission merchant regarding margin (Tri-Party Agreement), the
Custodian shall (a) receive and retain, to the extent the same are
provided to the Custodian, confirmations or other documents
evidencing the purchase or sale by the Fund of exchange-traded
futures contracts and commodity options, (b) when required by such
Tri-Party Agreement, deposit and maintain in an account opened
pursuant to such Agreement (Margin Account), segregated either
physically or by book-entry in a Securities Depository for the
benefit of any futures commission merchant, such Investments as the
Fund shall have designated as initial, maintenance or variation
"margin" deposits or other collateral intended to secure the Fund's
performance of its obligations under the terms of any
exchange-traded futures contracts and commodity options; and (c)
thereafter pay, release or transfer Investments into or out of the
margin account in accordance with the provisions of such Agreement.
Alternatively, the Custodian may deliver Investments, in accordance
with an Instruction, to a futures commission merchant for purposes
of margin requirements in accordance with Rule 17f-6 under the 1940
Act. The Custodian shall in no event be responsible for the acts and
omissions of any futures commission merchant to whom Investments are
delivered pursuant to this Section; for the sufficiency of
Investments held in any Margin Account; or, for the performance of
any terms of any exchange-traded futures contracts and commodity
options.
6.5. CONTRACTUAL OBLIGATIONS AND SIMILAR INVESTMENTS. From time to time,
the Fund's Investments may include Investments that are not
ownership interests as may be represented by certificate (whether
registered or bearer), by entry in a Securities Depository or by
Book-Entry Agent, registrar or similar agent for recording ownership
interests in the relevant Investment. If the Fund shall at any time
acquire such Investments, including without limitation deposit
obligations, loan participations, repurchase agreements and
derivative arrangements, the Custodian shall (a) receive and retain,
to the extent the same are provided to the Custodian, confirmations
or other documents evidencing the arrangement; and (b) perform on
the Fund's account in accordance with the terms of the applicable
arrangement, but only to the extent directed to do so by
Instruction. The Custodian shall have no responsibility for
agreements running to the Fund as to which it is not a party other
than to retain, to the extent the same are provided to the
Custodian, documents or copies of documents evidencing the
arrangement and, in accordance with Instruction, to include such
arrangements in reports made to the Fund.
6.6. EXCHANGE OF SECURITIES. Unless otherwise directed by Instruction,
the Custodian shall: (a) exchange securities held for the account of
the Fund for other securities in connection with any reorganization,
recapitalization, conversion, stock split, change of par value of
shares or similar event, and (b) deposit any such securities in
accordance with the terms of any reorganization or protective plan.
6.7. SURRENDER OF SECURITIES. Unless otherwise directed by Instruction,
the Custodian may surrender securities: (a) in temporary form for
definitive securities; (b) for transfer into the name of an entity
allowable under Section 5.3; and (c) for a different number of
certificates or instruments representing the same number of shares
or the same principal amount of indebtedness.
6.8. RIGHTS, WARRANTS, ETC. Pursuant to Instruction, the Custodian shall
(a) deliver warrants, puts, calls, rights or similar securities to
the issuer or trustee thereof, or to any agent of the issuer or
trustee, for purposes of exercising such rights or selling such
securities, and (b) deliver securities in response to any tender
offer.
6.9. MANDATORY CORPORATE ACTIONS. Unless otherwise directed by
Instruction, the Custodian shall: (a) comply with the terms of all
mandatory or compulsory exchanges, calls, tenders, redemptions or
similar rights of securities ownership affecting securities held on
the Fund's account and promptly notify the Fund of such action; and
(b) collect all stock dividends, rights and other items of like
nature with respect to such securities.
6.10. INCOME COLLECTION. Unless otherwise directed by Instruction, the
Custodian shall collect any amount due and payable to the Fund with
respect to Investments and promptly credit the amount collected to a
Principal or Agency Account; provided, however, that the Custodian
shall not be responsible for: (a) the collection of amounts due and
payable with respect to Investments that are in default or (b) the
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collection of cash or share entitlements with respect to Investments
that are not registered in the name of the Custodian or its
Subcustodians. The Custodian is hereby authorized to endorse and
deliver any instrument required to be so endorsed and delivered to
effect collection of any amount due and payable to the Fund with
respect to Investments.
6.11. CORPORATE ACTION INFORMATION. In fulfilling the duties set forth in
Sections 6.6 through 6.10 above, the Custodian shall provide to the
Fund such material information pertaining to a corporate action
which the Custodian actually receives; provided that the Custodian
shall not be responsible for the completeness or accuracy of such
information. Information relative to any pending corporate action
made available to the Fund via any of the services described in the
Electronic and Online Services Schedule shall constitute the
delivery of such information by the Custodian. Any advance credit of
cash or shares expected to be received as a result of any corporate
action shall be subject to actual collection and may be reversed by
the Custodian.
6.12. PROXY MATERIALS. The Custodian shall deliver, or cause to be
delivered, to the Fund proxy forms, notices of meeting, and any
other notices or announcements materially affecting or relating to
Investments received by the Custodian. Information relative to any
pending corporate action made available to the Fund via any of the
services described in the Electronic and Online Services Schedule
shall constitute the delivery of such information by the Custodian.
6.13. OWNERSHIP CERTIFICATES AND DISCLOSURE OF THE FUND'S INTEREST. The
Custodian is hereby authorized to execute on behalf of the Fund
ownership certificates, affidavits or other disclosure required
under Applicable Law or established market practice in connection
with the receipt of income, capital gains or other payments by the
Fund with respect to Investments, or in connection with the sale,
purchase or ownership of Investments.
With respect to securities issued in the United States of America,
the Custodian [XX] may [ ] may not release the identity of the Fund
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 the Fund. IF NO BOX IS
CHECKED, THE CUSTODIAN SHALL RELEASE SUCH INFORMATION UNTIL IT
RECEIVES CONTRARY INSTRUCTIONS FROM THE FUND. With respect to
securities issued outside of the United States of America,
information shall be released in accordance with law or custom of
the particular country in which such security is located.
6.14. TAXES. The Custodian shall, where applicable, assist the Fund in the
reclamation of taxes withheld on dividends and interest payments
received by the Fund. In the performance of its duties with respect
to tax withholding and reclamation, the Custodian shall be entitled
to rely on the advice of counsel and upon information and advice
regarding the Fund's tax status that is received from or on behalf
of the Fund without duty of separate inquiry.
6.15. OTHER DEALINGS. The Custodian shall otherwise act as directed by
Instruction, including without limitation effecting the free
payments of moneys or the free delivery of securities, provided that
such Instruction shall indicate the purpose of such payment or
delivery and that the Custodian shall record the party to whom the
payment or delivery is made.
6.16. NONDISCRETIONARY DETAILS AND MINOR EXPENSES. The Custodian shall
attend to all nondiscretionary details in connection with the sale
or purchase or other administration of Investments, except as
otherwise directed by Instruction, and may make payments to itself
or others for minor expenses of administering Investments under this
Agreement, provided that the Fund shall have the right to request an
accounting with respect to such expenses.
6.17. USE OF AGENTS. The Custodian may at any time in its discretion
appoint (and may at any time remove) agents (other than
Subcustodians) to carry out some or all of the administrative
provisions of this Agreement (AGENTS), provided, however, that the
appointment of an Agent shall not relieve the Custodian of its
administrative obligations under this Agreement.
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7. CASH ACCOUNTS, DEPOSITS AND MONEY MOVEMENTS. Subject to the terms and
conditions set forth in this Section 7, the Fund hereby authorizes the
Custodian to open and maintain, with itself or with Subcustodians, cash
accounts in United States Dollars, in such other currencies as are the
currencies of the countries in which the Fund maintains Investments or in
such other currencies as the Fund shall from time to time request by
Instruction. Notwithstanding anything in this Agreement to the contrary,
the Fund shall be liable as principal for any overdrafts occurring in any
cash accounts.
7.1. TYPES OF CASH ACCOUNTS. Cash accounts opened on the books of the
Custodian (PRINCIPAL ACCOUNTS) shall be opened in the name of the
Fund. Such accounts collectively shall be a deposit obligation of
the Custodian and shall be subject to the terms of this Section 7
and the general liability provisions contained in Section 9. Cash
accounts opened on the books of a Subcustodian may be opened in the
name of the Fund or the Custodian or in the name of the Custodian
for its customers generally (AGENCY ACCOUNTS). Such deposits shall
be obligations of the Subcustodian and shall be treated as an
Investment of the Fund. Accordingly, the Custodian shall be
responsible for exercising reasonable care in the administration of
such accounts, but shall not be liable for their repayment in the
event the Subcustodian, by reason of its bankruptcy, insolvency or
otherwise, fails to make repayment. In connection with the services
provided hereunder, the Custodian is hereby directed to open cash
accounts on its books and records from time to time for the purposes
of receiving subscriptions and/or processing redemptions on behalf
of the Fund, and/or for the purposes of aggregating, netting and/or
clearing transactions (including, without limitation foreign
exchange, repurchase agreements, capital stock activity, expense
payment) or other administrative purposes on behalf of the Fund or
the Fund and affiliated funds (each an "Account"). Each such Account
shall be subject to the terms and conditions of this Agreement
(including, without limitation Section 7.6) and the Fund shall be
liable for the satisfaction of its own obligations in connection
with each Account; provided however, the Fund shall not be liable
for the obligations of any other affiliated fund thereunder.
7.1.1 ADMINISTRATIVE ACCOUNTS. In connection with the services
provided hereunder, the Custodian is hereby directed to open
cash accounts on its books and records from time to time for
the purposes of receiving subscriptions and/or processing
redemptions on behalf of the Fund and/or for the purposes of
aggregating, netting and/or clearing transactions (including,
without limitation foreign exchange, repurchase agreements,
capital stock activity, expense payment) or other
administrative purposes, each on behalf of the Fund (each an
"Account"). Each such Account shall be subject to the terms
and conditions of this Agreement and the Fund shall be liable
for the satisfaction of its obligations in connection with
each Account.
7.2. PAYMENTS AND CREDITS WITH RESPECT TO THE CASH ACCOUNTS. The
Custodian shall make payments from or deposits to any of the cash
accounts in the course of carrying out its administrative duties,
including but not limited to income collection with respect to the
Fund's Investments, and otherwise in accordance with Instructions.
The Custodian and its Subcustodians shall be required to credit
amounts to the cash accounts only when moneys are actually received
in cleared funds in accordance with banking practice in the country
and currency of deposit. Any credit made to any Principal or Agency
Account before actual receipt of cleared funds shall be provisional
and may be reversed by the Custodian in the event such payment is
not actually collected. Unless otherwise specifically agreed in
writing by the Custodian or any Subcustodian, all deposits shall be
payable only at the branch of the Custodian or Subcustodian where
the deposit is made or carried.
7.3. CURRENCY AND RELATED RISKS. The Fund bears the risks of holding or
transacting in any currency, including any xxxx to market exposure
associated with a foreign exchange transaction undertaken with the
Custodian. The Custodian shall not be liable for any loss or damage
arising from the applicability of any law or regulation now or
hereafter in effect, or from the occurrence of any event, which may
delay or affect the transferability, convertibility or availability
of any currency in the country (a) in which such Principal or Agency
Accounts are maintained or (b) in which such currency is issued, and
in no event shall the Custodian be obligated to make payment of a
deposit denominated in a currency during the period during which its
transferability, convertibility or availability has been affected by
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any such law, regulation or event. Without limiting the generality
of the foregoing, neither the Custodian nor any Subcustodian shall
be required to repay any deposit made at a foreign branch of either
the Custodian or Subcustodian if such branch cannot repay the
deposit due to a cause for which the Custodian would not be
responsible in accordance with the terms of Section 9 of this
Agreement unless the Custodian or such Subcustodian expressly agrees
in writing to repay the deposit under such circumstances. All
currency transactions in any account opened pursuant to this
Agreement are subject to exchange control regulations of the United
States and of the country where such currency is the lawful currency
or where the account is maintained. Any taxes, costs, charges or
fees imposed on the convertibility of a currency held by the Fund
shall be for the account of the Fund.
7.4. FOREIGN EXCHANGE TRANSACTIONS. The Custodian shall, subject to the
terms of this Section, settle foreign exchange transactions
(including contracts, futures, options and options on futures) on
behalf and for the account of the Fund with such currency brokers or
banking institutions, including Subcustodians, as the Fund may
direct pursuant to Instructions. The Custodian may act as principal
in any foreign exchange transaction with the Fund in accordance with
Section 7.4.2 of this Agreement. The obligations of the Custodian in
respect of all foreign exchange transactions (whether or not the
Custodian shall act as principal in such transaction) shall be
contingent on the free, unencumbered transferability of the currency
transacted on the actual settlement date of the transaction.
7.4.1 THIRD PARTY FOREIGN EXCHANGE TRANSACTIONS. The Custodian shall
process foreign exchange transactions (including without
limitation contracts, futures, options, and options on
futures), where any third party acts as principal counterparty
to the Fund on the same basis it performs duties as agent for
the Fund with respect to any other of the Fund's Investments.
Accordingly the Custodian shall only be responsible for
delivering or receiving currency on behalf of the Fund in
respect of such contracts pursuant to Instructions. The
Custodian shall not be responsible for the failure of any
counterparty (including any Subcustodian) in such agency
transaction to perform its obligations thereunder. The
Custodian (a) shall transmit cash and Instructions to and from
the currency broker or banking institution with which the Fund
has executed a foreign exchange contract or option, (b) may
make free outgoing payments of cash in the form of Dollars or
foreign currency without receiving confirmation of a foreign
exchange contract or option or confirmation that the
countervalue currency completing the foreign exchange contract
has been delivered or received or that the option has been
delivered or received, (c) may, in connection with cash
payments made to third party currency brokers/dealers for
settlement of the Fund's foreign exchange spot or forward
transactions, foreign currency swap transactions and similar
foreign exchange transactions, process settlements using the
facilities of the CLS Bank according to CLS Bank's standard
terms and conditions, and (d) shall hold in safekeeping all
confirmations, certificates and other documents and agreements
received by the Custodian and evidencing or relating to such
foreign exchange transactions. The Fund accepts full
responsibility for its use of third-party foreign exchange
dealers and for execution of the foreign exchange contracts
and options and understands that the Fund shall be responsible
for any and all costs and interest charges which may be
incurred by the Fund or the Custodian as a result of the
failure or delay of third parties to deliver foreign exchange.
7.4.2 FOREIGN EXCHANGE WITH THE CUSTODIAN AS PRINCIPAL. The
Custodian, as principal, may enter into foreign exchange
transactions with the Fund as the Custodian and the Fund may
agree from time to time. In this event, the foreign exchange
transaction will be performed in accordance with the
particular agreement of the parties, or in the event a
principal foreign exchange transaction is initiated by
Instruction in the absence of a specific agreement, in
accordance with the usual commercial terms of the Custodian
and the Online Terms and Conditions described in Section 12.13
of this Agreement. .
7.5. DELAYS. If no event of Force Majeure shall have occurred and be
continuing and in the event that a delay shall have been caused by
the negligence or willful misconduct of the Custodian in carrying
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out an Instruction to credit or transfer cash, the Custodian shall
be liable to the Fund: (a) with respect to Principal Accounts, for
interest to be calculated at the rate customarily paid on such
deposit and currency by the Custodian on overnight deposits at the
time the delay occurs for the period from the day when the transfer
should have been effected until the day it is in fact effected; and,
(b) with respect to Agency Accounts, for interest to be calculated
at the rate customarily paid on such deposit and currency by the
Subcustodian on overnight deposits at the time the delay occurs for
the period from the day when the transfer should have been effected
until the day it is in fact effected. The Custodian shall not be
liable for delays in carrying out Instructions to transfer cash
which are not due to the Custodian's own negligence or willful
misconduct.
7.6. ADVANCES. If, for any reason in connection with this Agreement the
Custodian or any Subcustodian makes an Advance to facilitate
settlement or otherwise for the benefit of the Fund (whether or not
any Principal or Agency Account shall be overdrawn either during, or
at the end of, any Business Day), the Fund hereby does:
7.6.1 acknowledge that the Fund shall have no right, title or
interest in or to any Investments purchased with such Advance
or proceeds of such Investments, and that any credit to an
account of Fund shall be provisional, until: (a) the debit of
the Principal or Agency Account by Custodian for an amount
equal to Advance Costs; and/or (b) if such debit produces an
overdraft in such account, reimbursement to the Custodian or
Subcustodian for the amount of such overdraft;
7.6.2 acknowledge that the Custodian has an automatically perfected
statutory security interest in Investments purchased with any
such Advance pursuant to Section 9-206 of the Uniform
Commercial Code as in effect in the State of New York from
time to time;
7.6.3 in addition, in order to secure the obligations of the Fund to
pay or perform any and all obligations of the Fund pursuant to
this Agreement, including without limitation to repay any
Advance made pursuant to this Agreement, grant to the
Custodian a security interest in all Investments and proceeds
thereof (as defined in the Uniform Commercial Code as
currently in effect in the State of New York); and agree to
take, and agree that the Custodian may take, in respect of the
security interest referenced above, any further actions that
the Custodian may reasonably require.
7.7. CUSTODIAN'S RIGHTS Neither the Custodian nor any Subcustodian shall
be obligated to make any Advance or to allow an Advance to occur to
the Fund, and in the event that the Custodian or any Subcustodian
does make or allow an Advance, any such Advance and any transaction
giving rise to such Advance shall be for the account and risk of the
Fund and shall not be deemed to be a transaction undertaken by the
Custodian for its own account and risk. If such Advance shall have
been made or allowed by a Subcustodian or any other person, the
Custodian may assign all or part of its security interest referenced
above and any other rights granted to the Custodian hereunder to
such Subcustodian or other person. If the Fund shall fail to repay
the Advance Costs when due, the Custodian or its assignee, as the
case may be, shall be entitled to a portion of the available cash
balance in any Agency or Principal Account equal to such Advance
Costs, and the Fund authorizes the Custodian, on behalf of the Fund,
to pay an amount equal to such Advance Costs irrevocably to such
Subcustodian or other person, and to dispose of any property in such
Account to the extent necessary to make such payment. Any
Investments credited to accounts subject to this Agreement created
pursuant hereto shall be treated as financial assets credited to
securities accounts under Articles 8 and 9 of the Uniform Commercial
Code as in effect in the State of New York from time to time.
Accordingly, the Custodian and any Subcustodian shall have the
rights and benefits of a secured creditor that is a securities
intermediary under such Articles 8 and 9.
7.8. INTEGRATED ACCOUNT. For purposes hereof, deposits maintained in all
Principal Accounts (whether or not denominated in Dollars) shall
collectively constitute a single and indivisible current account
with respect to the Fund's obligations to the Custodian or its
assignee, and balances in the Principal Accounts shall be available
for satisfaction of the Fund's obligations under this Section 7. The
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Custodian shall further have a right of offset against the balances
in any Agency Account maintained hereunder to the extent that the
aggregate of all Principal Accounts is overdrawn.
8. Subcustodians and Securities Depositories. Subject to the provisions
hereinafter set forth in this Section 8, the Fund hereby authorizes the
Custodian to utilize Securities Depositories to act on behalf of the Fund
and to appoint from time to time and to utilize Subcustodians. With
respect to securities and funds held by a Subcustodian, either directly or
indirectly (including by a Securities Depository or Clearing Corporation),
notwithstanding any provisions of this Agreement to the contrary, payment
for securities purchased and delivery of securities sold may be made prior
to receipt of securities or payment, respectively, and securities or
payment may be received in a form in accordance with (a) governmental
regulations, (b) rules of Securities Depositories and Clearing Agencies,
(c) generally accepted trade practice in the applicable local market, (d)
the terms and characteristics of the particular Investment, or (e) the
terms of Instructions.
8.1. DOMESTIC SUBCUSTODIANS AND SECURITIES DEPOSITORIES. The Custodian
may deposit and/or maintain, either directly or through one or more
Agents appointed by the Custodian, Investments of the Fund in any
Securities Depository in the United States, including The Depository
Trust Company, provided such Depository meets applicable
requirements of the Federal Reserve Bank or of the Securities and
Exchange Commission. The Custodian may, from time to time, appoint
any bank as defined in Section 2(a)(5) of the 1940 Act meeting the
requirements of a custodian under Section 17(f) of the 1940 Act and
the rules and regulations thereunder to act on behalf of the Fund as
a Subcustodian for purposes of holding Investments of the Fund in
the United States.
8.2. FOREIGN SUBCUSTODIANS AND SECURITIES DEPOSITORIES. Unless instructed
otherwise by the Fund, the Custodian may deposit and/or maintain
non-U.S. Investments of the Fund in any non-U.S. Securities
Depository provided such Securities Depository meets the
requirements of an "eligible securities depository" under Rule 17f-7
promulgated under the 1940 Act, or any successor rule or regulation
("Rule 17f-7") or which by order of the Securities and Exchange
Commission is exempted therefrom. Prior to the time that securities
are placed with such depository, but subject to the provisions of
Section 8.2.4 below, the Custodian shall have prepared an assessment
of the custody risks associated with maintaining assets with the
Securities Depository and shall have established a system to monitor
such risks on a continuing basis in accordance with subsection 8.2.3
of this Section. Additionally, the Custodian may, from time to time,
appoint (a) any bank, trust company or other entity meeting the
requirements of an "eligible foreign custodian" under Rule 17f-5 or
which by order of the Securities and Exchange Commission is exempted
therefrom, or (b) any bank as defined in Section 2(a)(5) of the 1940
Act meeting the requirements of a custodian under Section 17(f) of
the 1940 Act and the rules and regulations thereunder, to act on
behalf of the Fund as a Subcustodian for purposes of holding
Investments of the Fund outside the United States.
8.3. DELEGATION OF BOARD REVIEW OF SUBCUSTODIANS. From time to time, the
Custodian may agree to perform certain reviews of Subcustodians and
of Subcustodian Contracts as the delegate of the Fund's Board. In
such event, the Custodian's duties and obligations with respect to
this delegated review will be performed in accordance with the terms
of the attached 17f-5 Delegation Schedule to this Agreement.
8.4. BOARD APPROVAL OF FOREIGN SUBCUSTODIANS. Unless and except to the
extent that the Board has delegated to the Custodian and the
Custodian has accepted delegation of review of certain matters
concerning the appointment of Subcustodians pursuant to Subsection
8.3, the Custodian shall, prior to the appointment of any
Subcustodian for purposes of holding Investments of the Fund outside
the United States, obtain written confirmation of the approval of
the Board of Trustees or Directors of the Fund with respect to (a)
the identity of a Subcustodian, and (b) the Subcustodian agreement
which shall govern such appointment, such approval to be signed by
an Authorized Person. An Instruction to open an account in a given
country shall comprise authorization of the Custodian to hold assets
in such country in accordance with the terms of this Agreement. The
Custodian shall not be required to make independent inquiry as to
the authorization of the Fund to invest in such country.
8.5. MONITORING AND RISK ASSESSMENT OF SECURITIES DEPOSITORIES. Prior to
the placement of any assets of the Fund with a non-U.S. Securities
- 11 -
Depository, the Custodian: (a) shall provide to the Fund or its
authorized representative an assessment of the custody risks
associated with maintaining assets within such Securities
Depository; and (b) shall have established a system to monitor the
custody risks associated with maintaining assets with such
Securities Depository on a continuing basis and to promptly notify
the Fund or its Investment Adviser of any material changes in such
risk. In performing its duties under this subsection, the Custodian
shall use reasonable care and may rely on such reasonable sources of
information as may be available including but not limited to: (i)
published ratings; (ii) information supplied by a Subcustodian that
is a participant in such Securities Depository; (iii) industry
surveys or publications; (iv) information supplied by the depository
itself, by its auditors (internal or external) or by the relevant
Foreign Financial Regulatory Authority. It is acknowledged that
information procured through some or all of these sources may not be
independently verifiable by the Custodian and that direct access to
Securities Depositories is limited under most circumstances.
Accordingly, the Custodian shall not be responsible for errors or
omissions in its duties hereunder provided that it has performed its
monitoring and assessment duties with reasonable care. The risk
assessment shall be provided to the Fund or its Investment Advisor
by such means as the Custodian shall reasonably establish. Advices
of material change in such assessment may be provided by the
Custodian in the manner established as customary between the Fund
and the Custodian for transmission of material market information.
8.6. RESPONSIBILITY FOR SUBCUSTODIANS. Except as provided in the last
sentence of this Section 8.6, the Custodian shall be liable to the
Fund for any loss or damage to the Fund caused by or resulting from
the acts or omissions of any Subcustodian to the extent that such
acts or omissions would be deemed to be negligence, gross negligence
or willful misconduct in accordance with the terms of the relevant
subcustodian agreement under the laws, circumstances and practices
prevailing in the place where the act or omission occurred. 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, Custodian
shall take appropriate action to recover any losses from such
Subcustodian. The liability of the Custodian in respect of the
countries and Subcustodians designated by the Custodian, from time
to time on the Global Custody Network Listing shall be subject to
the additional condition that the Custodian actually recovers such
loss or damage from the Subcustodian.
8.7. NEW COUNTRIES. The Fund shall be responsible for informing the
Custodian sufficiently in advance of a proposed investment which is
to be held in a country in which no Subcustodian is authorized to
act in order that the Custodian shall, if it deems appropriate to do
so, have sufficient time to establish a subcustodial arrangement in
accordance herewith. In the event, the Custodian is unable to
establish such arrangements prior to the time the investment is to
be acquired, the Custodian is authorized to designate at its
discretion a local safekeeping agent, and the use of the local
safekeeping agent shall be at the sole risk of the Fund, and
accordingly the Custodian shall be responsible to the Fund for the
actions of such agent if and only to the extent the Custodian shall
have recovered from such agent for any damages caused the Fund by
such agent.
9. RESPONSIBILITY OF THE CUSTODIAN. In performing its duties and obligations
hereunder, the Custodian shall use reasonable care under the facts and
circumstances prevailing in the market where performance is effected.
Subject to the specific provisions of this Section, the Custodian shall be
liable for any direct damage incurred by the Fund in consequence of the
Custodian's negligence, bad faith or willful misconduct. In no event shall
the Custodian be liable hereunder for any special, indirect, punitive or
consequential damages arising out of, pursuant to or in connection with
this Agreement even if the Custodian has been advised of the possibility
of such damages. It is agreed that the Custodian shall have no duty to
assess the risks inherent in the Fund's Investments or to provide
investment advice with respect to such Investments and that the Fund as
principal shall bear any risks attendant to particular Investments such as
failure of counterparty or issuer.
9.1. LIMITATIONS OF PERFORMANCE. The Custodian shall not be responsible
under this Agreement for any failure to perform its duties, and
shall not be liable hereunder for any loss or damage in association
with such failure to perform for or in consequence of the following
causes:
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9.1.1 FORCE MAJEURE. Force Majeure shall mean any circumstance or
event which is beyond the reasonable control of the Custodian,
a Subcustodian or any agent of the Custodian or a Subcustodian
and which adversely affects the performance by the Custodian
of its obligations hereunder, by the Subcustodian of its
obligations under its Subcustody Agreement or by any other
Agent of the Custodian or the Subcustodian, including any
event caused by, arising out of or involving (a) an act of
God, (b) accident, fire, water or wind damage or explosion,
(c) any computer, system or other equipment failure or
malfunction caused by any computer virus or the malfunction or
failure of any communications medium, (d) any interruption of
the power supply or other utility service, (e) any strike or
other work stoppage, whether partial or total, (f) any delay
or disruption resulting from or reflecting the occurrence of
any Country or Sovereign Risk, (g) any disruption of, or
suspension of trading in, the securities, commodities or
foreign exchange markets, whether or not resulting from or
reflecting the occurrence of any Country or Sovereign Risk,
(h) any encumbrance on the transferability of a currency or a
currency position on the actual settlement date of a foreign
exchange transaction, whether or not resulting from or
reflecting the occurrence of any Country or Sovereign Risk, or
(i) any other cause similarly beyond the reasonable control of
the Custodian.
9.1.2 COUNTRY RISK. Country Risk shall mean, with respect to the
acquisition, ownership, settlement or custody of Investments
in a jurisdiction, all risks relating to, or arising in
consequence of, systemic and markets factors affecting the
acquisition, payment for or ownership of Investments including
(a) the prevalence of crime and corruption, (b) the inaccuracy
or unreliability of business and financial information, (c)
the instability or volatility of banking and financial
systems, or the absence or inadequacy of an infrastructure to
support such systems, (d) custody and settlement
infrastructure of the market in which such Investments are
transacted and held, (e) the acts, omissions and operation of
any Securities Depository, (f) the risk of the bankruptcy or
insolvency of banking agents, counterparties to cash and
securities transactions, registrars or transfer agents, and
(g) the existence of market conditions which prevent the
orderly execution or settlement of transactions or which
affect the value of assets.
9.1.3 SOVEREIGN RISK. Sovereign Risk shall mean, in respect of any
jurisdiction, including the United States of America, where
Investments are acquired or held hereunder or under a
Subcustody Agreement, (a) any act of war, terrorism, riot,
insurrection or civil commotion, (b) the imposition of any
investment, repatriation or exchange control restrictions by
any Governmental Authority, (c) the confiscation,
expropriation or nationalization of any Investments by any
Governmental Authority, whether de facto or de jure, (d) any
devaluation or revaluation of the currency, (e) the imposition
of taxes, levies or other charges affecting Investments, (f)
any change in the Applicable Law, or (g) any other economic or
political risk incurred or experienced.
9.2. LIMITATIONS ON LIABILITY. The Custodian shall not be liable for any
loss, claim, damage or other liability arising from the following
causes:
9.2.1 FAILURE OF THIRD PARTIES. The failure of any third party
including: (a) any issuer of Investments or Book-Entry Agent
or other agent of an issuer; (b) any counterparty with respect
to any Investment, including any issuer of exchange-traded or
other futures, option, derivative or commodities contract; (c)
failure of an Investment Advisor, foreign custody manager or
other agent of the Fund; or (d) failure of other third parties
similarly beyond the control or choice of the Custodian.
9.2.2 INFORMATION SOURCES. The Custodian may rely upon information
received from issuers of Investments or agents of such
issuers, information received from Subcustodians and from
other commercially reasonable sources such as commercial data
bases and the like, but shall not be responsible for specific
inaccuracies in such information, provided that the Custodian
has relied upon such information in good faith, or for the
- 13 -
failure of any commercially reasonable information provider.
9.2.3 RELIANCE ON INSTRUCTION. Action by the Custodian or the
Subcustodian in accordance with an Instruction, even when such
action conflicts with, or is contrary to any provision of, the
Fund's declaration of trust, certificate of incorporation or
by-laws or other constitutive document, Applicable Law, or
actions by the trustees, directors or shareholders of the
Fund.
9.2.4 RESTRICTED SECURITIES. The limitations inherent in the rights,
transferability or similar investment characteristics of a
given Investment of the Fund.
10. INDEMNIFICATION. 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.
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.
11. REPORTS AND RECORDS. The Custodian shall:
11.1. create and maintain records relating to the performance of its
obligations under this Agreement;
11.2. make available to the Fund, its auditors, agents and employees, upon
reasonable request and during normal business hours of the
Custodian, all records maintained by the Custodian pursuant to
Section 11.1 above, subject, however, to all reasonable security
requirements of the Custodian then applicable to the records of its
custody customers generally; and
11.3. make available to the Fund all Electronic Reports; it being
understood that the Custodian shall not be liable hereunder for the
inaccuracy or incompleteness thereof or for errors in any
information included therein.
11.4. The Fund shall examine all records, however produced or transmitted,
promptly upon receipt and notify the Custodian promptly of any
discrepancy or error. Unless the Fund delivers written notice of any
such discrepancy or error within a reasonable time after its receipt
of the records, the records shall be deemed to be true and accurate.
11.5. The Fund acknowledges that the Custodian obtains information on the
value of assets from outside sources which may be utilized in
certain reports made available to the Fund. The Custodian deems such
sources to be reliable but the Fund acknowledges and agrees that the
Custodian does not verify such information nor make any
representations or warrantees as to its accuracy or completeness and
accordingly shall be without liability in selecting and using such
sources and furnishing such information.
12. MISCELLANEOUS.
12.1. POWERS OF ATTORNEY, ETC. The Fund will promptly execute and deliver,
upon request, such proxies, powers of attorney or other instruments
as may be necessary or desirable for the Custodian to provide, or to
cause any Subcustodian to provide, custody services.
12.2. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
understanding and agreement of the parties hereto and supersedes any
other oral or written agreements heretofore in effect between the
Fund and the Custodian with respect to the subject matter hereof. No
provision of this Agreement may be amended or terminated except by a
statement in writing signed by the party against which enforcement
of the amendment or termination is sought, provided, however, that
an Instruction shall, whether or not such Instruction shall
- 14 -
constitute a waiver, amendment or modification for purposes hereof,
be deemed to have been accepted by the Custodian when it commences
actions pursuant thereto or in accordance therewith. In the event of
a conflict between the terms of this Agreement and the terms of a
service level agreement or other operating agreement in place
between the parties from time to time, the terms of this Agreement
shall control.
12.3. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the Custodian/Administrator and the
Fund and their successors and assignees, provided that the Fund may
not assign this Agreement without the prior written consent of the
Custodian. Each party agrees that only the parties to this Agreement
and/or their successors in interest shall have a right to enforce
the terms of this Agreement. Accordingly, no client of the Fund or
other third party shall have any rights under this Agreement and
such rights are explicitly disclaimed by the parties.
12.4. GOVERNING LAW, JURISDICTION AND VENUE. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW
PRINCIPLES OF SUCH STATE. THE PARTIES HERETO IRREVOCABLY CONSENT TO
THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND THE FEDERAL COURTS LOCATED IN NEW YORK CITY. THE FUND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY ACTION OR PROCEEDING IN ANY OF THE AFORESAID
COURTS AND ANY CLAIM THAT ANY SUCH ACTION OR PROCEEDING HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. FURTHERMORE, EACH PARTY HERETO
HEREBY IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
12.5. NOTICES. Notices and other writings contemplated by this Agreement,
other than Instructions, shall be delivered (a) by hand, (b) by
first class registered or certified mail, postage prepaid, return
receipt requested, (c) by a nationally recognized overnight courier,
or (d) by facsimile transmission, provided that any notice or other
writing sent by facsimile transmission shall also be mailed, postage
prepaid, to the party to whom such notice is addressed. All such
notices shall be addressed, as follows:
If to the Fund: c/o First Trust Advisors L.P.
000 X. Xxxxxxx Xx., Xxxxx 000
Xxxxxxx, XX 00000
Attn: General Counsel
Telephone: (000) 000-0000
Facsimile (000) 000-0000
Email: xxxxxxxx@xxxxxxxxxxxx.xxx
If to the Custodian: Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Head of Investor Services
or such other address as the Fund or the Custodian may have
designated in writing to the other. Notices given by the Custodian
pursuant to Section 12.13 may also be given by electronic mail to
the email address of any Authorized Person. The Fund agrees that
such notices given by electronic mail shall be conclusively presumed
to have been delivered and received by the Fund as of the date such
electronic mail was sent by the Custodian, as recorded by the
Custodian's systems.
12.6. HEADINGS. Paragraph headings included herein are for convenience of
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reference only and shall not modify, define, expand or limit any of
the terms or provisions hereof.
12.7. SEVERABILITY. In the event any provision of this Agreement is
determined to be void or unenforceable, such determination shall not
affect the remainder of this Agreement, which shall continue to be
in force.
12.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This
Agreement shall become effective when one or more counterparts have
been signed and delivered by the Fund and the Custodian. A photocopy
or telefax of the Agreement shall be acceptable evidence of the
existence of the Agreement and the Custodian shall be protected in
relying on the photocopy or telefax until the Custodian has received
the original of the Agreement.
12.9. CONFIDENTIALITY. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all
information provided by each party to the other regarding its
business and operations. All confidential information provided by a
party hereto shall be used by any other party hereto solely for the
purpose of rendering or obtaining services pursuant to this
Agreement and, except as may be required in carrying out this
Agreement, shall not be disclosed to any third party without the
prior consent of such providing party. The foregoing shall not be
applicable to any information that is publicly available when
provided or thereafter becomes publicly available other than through
a breach of this Agreement, or that is required to be disclosed by
or to any bank examiner of the Custodian or any Subcustodian, any
Regulatory Authority, any auditor of the parties hereto, or by
judicial or administrative process or otherwise by Applicable Law.
12.10. TAPE-RECORDING. The Fund on behalf of itself and its Customers
authorizes the Custodian to tape record any and all telephonic or
other oral instructions given to the Custodian by or on behalf of
the Fund, including from any Authorized Person. This authorization
will remain in effect until and unless revoked by the Fund in
writing. The Fund further agrees to solicit valid written or other
consent from any of its employees with respect to telephone
communications to the extent such consent is required by applicable
law.
12.11. COUNSEL/CERTIFIED PUBLIC ACCOUNTANT. In fulfilling its duties
hereunder, the Custodian shall be entitled to receive and act upon
the advice of (i) counsel and/or a certified public accountant
regularly retained by the Custodian in respect of such matters, (ii)
counsel and/or a certified public accountant for the Fund or (iii)
such counsel or certified public accountant as the Fund and the
Custodian may agree upon, with respect to all matters, and the
Custodian shall be without liability for any action reasonably taken
or omitted pursuant to such advice.
12.12. CONFLICT. Nothing contained in this Agreement shall prevent the
Custodian and its associates from (i) dealing as a principal or an
intermediary in the sale, purchase or loan of the Fund's Investments
to, or from the Custodian or its associates; (ii) acting as a
custodian, a subcustodian, a trustee, an agent, securities dealer,
an investment manager or in any other capacity for any other client
whose interests may be adverse to the interest of the Fund; or (iii)
buying, holding, lending, and dealing in any way in any assets for
the benefit of its own account, or for the account of any other
client whose interests may be adverse to the Fund notwithstanding
that the same or similar assets may be held or dealt in by, or for
the account of the Fund by the Custodian. The Fund hereby
voluntarily consents to, and waives any potential conflict of
interest between the Custodian and/or its associates and the Fund,
and agrees that:
(a) the Custodian's and/or its associates' engagement in any such
transaction shall not disqualify the Custodian from continuing
to perform as the custodian of the Fund under this Agreement;
(b) the Custodian and/or its associates shall not be under any
duty to disclose any information in connection with any such
transaction to the Fund;
(c) the Custodian and/or its associates shall not be liable to
account to the Fund for any profits or benefits made or
derived by or in connection with any such transaction; and
12.13. Online TERMS AND CONDITIONS. Foreign exchange services provided
under or otherwise referenced in this Agreement will be performed
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and subject to the terms and conditions posted on the Custodian's
website at
xxxx://xxx.xxx.xxx/xx/xxxxxxxxxxxxxxxxxx/XxxxxxxxXxxxx.xxx (the "FX
Online Terms and Conditions"), which terms are available in hardcopy
upon request, and which terms may be updated from time to time. The
Custodian shall provide notice of any change to the FX Online Terms
and Conditions to the Fund at least ten business days prior to their
taking effect, unless the Custodian determines that the
circumstances require that a shorter period apply. Foreign exchange
transactions that occur or are placed on or after the effective date
of such changes, as stated in the applicable notice, shall be
governed by the modified FX Online Terms and Conditions.
12.14. (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.
(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 for 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 12.14(b). 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.
13. DEFINITIONS. The following defined terms will have the respective meanings
set forth below.
13.1. ADVANCE(S) shall mean any extension of credit by or through the
Custodian or by or through any Subcustodian and shall include,
without limitation, amounts due to the Custodian as the principal
counterparty to any foreign exchange transaction with the Fund as
described in Section 7.4.2 hereof, or paid to third parties for
account of the Fund or in discharge of any expense, tax or other
item payable by the Fund.
13.2. ADVANCE COSTs shall mean any Advance, interest on the Advance and
any related expenses, including without limitation any xxxx to
market loss of the Custodian or Subcustodian on any Investment to
which Section 7.6.1 applies.
13.3. AGENCY ACCOUNT(S) shall mean any deposit account opened on the books
of a Subcustodian or other banking institution in accordance with
Section 7.1 hereof.
13.4. AGENT(S) shall have the meaning set forth in the last sentence of
Section 6 hereof.
13.5. APPLICABLE LAW shall mean with respect to each jurisdiction, all (a)
laws, statutes, treaties, regulations, guidelines (or their
equivalents); (b) orders, interpretations, licenses and permits; and
(c) judgments, decrees, injunctions, writs, orders and similar
actions by a court of competent jurisdiction; compliance with which
is required or customarily observed in such jurisdiction.
13.6. AUTHORIZED PERSON(S) shall mean any person or entity authorized to
give Instructions on behalf of the Fund in accordance with Section
4.1 hereof.
- 17 -
13.7. BOOK-ENTRY AGENT(S) shall mean an entity acting as agent for the
issuer of Investments for purposes of recording ownership or similar
entitlement to Investments, including without limitation a transfer
agent or registrar.
13.8. CLEARING CORPORATION shall mean any entity or system established for
purposes of providing securities settlement and movement and
associated functions for a given market(s).
13.9. DELEGATION SCHEDULE shall mean any separate schedule entered into
between the Custodian and the Fund or its authorized representative
with respect to certain matters concerning the appointment and
administration of Subcustodians delegated to the Custodian pursuant
to Rule 17f-5 under the 1940 Act.
13.10. ELECTRONIC AND ONLINE SERVICES SCHEDULE shall mean any separate
agreement entered into between the Custodian and the Fund or its
authorized representative with respect to certain matters concerning
certain electronic and online services as described therein and as
may be made available from time to time by the Custodian to the
Fund.
13.11. ELECTRONIC REPORTS shall mean any reports prepared by the Custodian
and remitted to the Fund or its authorized representative via the
internet or electronic mail.
13.12. FOREIGN CUSTODY MANAGER shall mean the Fund's foreign custody
manager appointed pursuant to Rule 17f-5 of the 1940 Act.
13.13. FOREIGN FINANCIAL REGULATORY AUTHORITY shall have the meaning given
by Section 2(a)(50) of the 0000 Xxx.
13.14. FUNDS TRANSFER SERVICES SCHEDULE shall mean any separate schedule
entered into between the Custodian and the Fund or its authorized
representative with respect to certain matters concerning the
processing of payment orders from Principal Accounts of the Fund.
13.15. GLOBAL CUSTODY NETWORK LISTING shall mean the Countries and
Subcustodians approved for Investments in non-U.S. Markets.
13.16. INSTRUCTION(S) shall have the meaning assigned in Section 4 hereof.
13.17. INVESTMENT ADVISOR shall mean any person or entity who is an
Authorized Person to give Instructions with respect to the
investment and reinvestment of the Fund's Investments.
13.18. INVESTMENT(S) shall mean any investment asset of the Fund, including
without limitation securities, bonds, notes, and debentures as well
as receivables, derivatives, contractual rights or entitlements and
other intangible assets, but shall not include any Principal
Account.
13.19. MARGIN ACCOUNT shall have the meaning set forth in Section 6.4
hereof.
13.20. PRINCIPAL ACCOUNT(S) shall mean deposit accounts of the Fund carried
on the books of BBH&Co. as principal in accordance with Section 7
hereof.
13.21. SAFEKEEPING ACCOUNT shall mean an account established on the books
of the Custodian or any Subcustodian for purposes of segregating the
interests of the Fund (or clients of the Custodian or Subcustodian)
from the assets of the Custodian or any Subcustodian.
13.22. SECURITIES DEPOSITORY shall mean a central or book entry system or
agency established under Applicable Law for purposes of recording
the ownership and/or entitlement to investment securities for a
given market that, if a foreign Securities Depository, meets the
definitional requirements of Rule 17f-7 under the 1940 Act.
- 18 -
13.23. SUBCUSTODIAN(S) shall mean each foreign bank appointed by the
Custodian pursuant to Section 8 hereof, but shall not include
Securities Depositories.
13.24. TRI-PARTY AGREEMENT shall have the meaning set forth in Section 6.4
hereof.
13.25. 1940 ACT shall mean the Investment Company Act of 1940.
14. COMPENSATION. The Fund agrees to pay to the Custodian (a) a fee in an
amount set forth in the fee letter between the Fund and the Custodian in
effect on the date hereof or as amended from time to time, and (b) all
out-of-pocket expenses incurred by the Custodian, including the fees and
expenses of all Subcustodians and other amounts paid by the Custodian to a
third party for account or benefit of the Fund, and payable from time to
time. Amounts payable by the Fund under and pursuant to this Section 14
shall be payable by wire transfer to the Custodian at BBH&Co. in New York,
New York.
15. TERMINATION. This Agreement may be terminated by either party in
accordance with the provisions of this Section. The provisions of this
Agreement and any other rights or obligations incurred or accrued by any
party hereto prior to termination of this Agreement shall survive any
termination of this Agreement.
15.1. TERM, NOTICE AND EFFECT. This Agreement shall have an initial term
of one (1) years from the date hereof. Thereafter, this Agreement
shall automatically renew for successive one (1) year periods unless
either party terminates this Agreement by written notice effective
no sooner than seventy-five (75) days following the date that notice
to such effect shall be delivered to the other party at its address
set forth in Section 12.5 hereof. Notwithstanding the foregoing
provisions, either party may terminate this Agreement at any time
(a) for cause, which is a material breach of the Agreement not cured
within 60 days, in which case termination shall be effective upon
written receipt of notice by the non-terminating party, or (b) upon
thirty (30) days written notice to the other party in the event that
either party is adjudged bankrupt or insolvent, or there shall be
commenced against such party a case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect.
15.2. NOTICE AND SUCCESSION. In the event a termination notice is given by
a party hereto, all reasonable costs and expenses associated with
any required systems, facilities, procedures, personnel, and other
resourced modifications as well as the movement of records and
materials and the conversion thereof shall be paid by the Fund for
which Services shall cease to be performed hereunder. Furthermore,
to the extent that it appears impracticable given the circumstances
to effect an orderly delivery of the necessary and appropriate
records of BBH to a successor within the time specified in the
notice of termination as aforesaid, BBH and the Fund agree that this
Agreement shall remain in full force and effect for such reasonable
period as may be required to complete necessary arrangements with a
successor.
15.3. SUCCESSOR CUSTODIAN. In the event of the appointment of a successor
custodian, it is agreed that the Investments of the Fund held by the
Custodian or any Subcustodian shall be delivered to the successor
custodian in accordance with reasonable Instructions. The Custodian
agrees to cooperate with the Fund in the execution of documents and
performance of other actions necessary or desirable in order to
facilitate the succession of the new custodian. If no successor
custodian shall be appointed, the Custodian shall in like manner
transfer the Fund's Investments in accordance with Instructions.
15.4. DELAYED SUCCESSION. If no Instruction has been given as of the
effective date of termination, Custodian may at any time on or after
such termination date and upon ten (10) consecutive calendar days
written notice to the Fund either (a) deliver the Investments of the
Fund held hereunder to the Fund at the address designated for
receipt of notices hereunder; or (b) deliver any investments held
hereunder to a bank or trust company having a capitalization of
$2,000,000 USD equivalent and operating under the Applicable Law of
the jurisdiction where such Investments are located, such delivery
to be at the risk of the Fund. In the event that Investments or
moneys of the Fund remain in the custody of the Custodian or its
Subcustodians after the date of termination owing to the failure of
the Fund to issue Instructions with respect to their disposition or
owing to the fact that such disposition could not be accomplished in
accordance with such Instructions despite diligent efforts of the
- 19 -
Custodian, the Custodian shall be entitled to compensation for its
services with respect to such Investments and moneys during such
period as the Custodian or its Subcustodians retain possession of
such items and the provisions of this Agreement shall remain in full
force and effect until disposition in accordance with this Section
is accomplished.
16. COMPLIANCE POLICIES AND PROCEDURES. To assist the Fund in complying with
Rule 38a-1 of the 1940 Act, BBH&Co. represents that it has adopted written
policies and procedures reasonably designed to prevent violation of the
federal securities laws in fulfilling its obligations under the Agreement
and that it has in place a compliance program to monitor its compliance
with those policies and procedures. BBH&Co will upon request provide the
Fund with information about our compliance program as mutually agreed.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
The undersigned acknowledges that (I/we) have received a copy of this document.
XXXXX BROTHERS XXXXXXXX & CO. First Trust Exchange-Traded AlphaDEX(R) Fund II
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxx
----------------------------------- ----------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxxx
Title: Senior Vice President Title: Chief Financial Officer
Date: April 8, 2011
Xxxxx Brothers Xxxxxxxx & Co. ("BBH&Co.") is a limited partnership organized
under the laws of the United States of America ("US") and is subject to the US
Treasury Regulations set forth under 00 XXX 000, et seq. BBH&Co. may not
establish any relationship with any Prohibited Person or Entity as such term is
defined under the regulations. No customer of BBH&Co. may be owned or controlled
by an entity or person: (i) that is listed in the Annex to, or is otherwise
subject to the provisions of Executive Order 13224, issued on September 24, 2001
("EO13224")
xxx.xxxxxxxx.xxx/xxxxxxx/xxxxxxxxxxx/xxxx/xxxxxxxx/xxxxxx/xxxxxx.xxx; (ii) whose
name appears on the United States Treasury Department's Office of Foreign Assets
Control ("OFAC") most current list of "Specifically Designated National and
Blocked Persons" (which list may be published from time to time in various
mediums including, but not limited to, the OFAC website; (iii) who commits,
threatens to commit or supports "terrorism", as such term is defined in EO13224;
or (iv) who is otherwise affiliated with any entity or person listed above (any
and all parties or persons described in clauses (i) through (iv) above are
herein referred to as a "Prohibited Person").
- 20 -
SCHEDULE A
1. First Trust Developed Markets ex-US AlphaDEX Fund
2. First Trust Emerging Markets AlphaDEX Fund
3. First Trust Asia Pacific ex-Japan AlphaDEX Fund
4. First Trust Europe AlphaDEX Fund
5. First Trust Latin America AlphaDEX Fund
6. First Trust Brazil AlphaDEX Fund
7. First Trust China AlphaDEX Fund
8. First Trust Japan AlphaDEX Fund
9. First Trust South Korea AlphaDEX Fund
10. First Trust Australia AlphaDEX Fund
11. First Trust Canada AlphaDEX Fund
12. First Trust Germany AlphaDEX Fund
13. First Trust Hong Kong AlphaDEX Fund
14. First Trust India AlphaDEX Fund
15. First Trust Switzerland AlphaDEX Fund
16. First Trust Taiwan AlphaDEX Fund
17. First Trust United Kingdom AlphaDEX Fund
18. First Trust Global Commodity AlphaDEX Fund
19. First Trust Developed Markets Small Cap AlphaDEX Fund
20. First Trust Emerging Markets Small Cap AlphaDEX Fund
- 21 -
FUNDS TRANSFER SERVICES SCHEDULE
("FTSS")
In accordance with Section 4.2 of the Custodian Agreement, the Fund acknowledges
the following terms and conditions in respect of all funds transfers affected by
the Custodian. References to UCC 4A shall mean Article 4A of the Uniform
Commercial Code as currently in effect in the State of New York. Terms not
otherwise defined herein shall have the meanings accorded to them in the
Custodian Agreement.
1. Transmission of Payment Orders. Each FT Instruction shall be transmitted by
such secured or authenticated means and subject to such security procedures as
the Custodian shall make available to the Fund from time to time (such
transmission method and security procedures, a CUSTODIAN DESIGNATED SECURITY
PROCEDURE), unless the Fund shall elect to transmit such FT Instruction in
accordance with a Fund Designated Security Procedure (as defined in Section 4
below). The Fund acknowledges and agrees that the Custodian will use the
security procedures referenced in Sections 3 and 4 below solely to authenticate
a FT Instruction, as set forth herein, and not to detect any errors or omissions
therein.
2. Custodian Designated Security Procedure. The Custodian will make the
following Custodian Designated Security Procedures available to the Fund for use
in communicating FT Instructions to the Custodian:
o BBH Worldview(R) Payment Products. The Custodian offers to the Fund
use of its BBH Worldview Payment Products ("BBH Worldview"), which
are Custodian proprietary on-line payment order authorization
facilities with built-in authentication procedures. The Custodian
and the Fund shall each be responsible for maintaining the
confidentiality of passwords or other codes used by them in
connection with BBH Worldview. The Custodian will act on FT
Instructions received through BBH Worldview without duty of further
confirmation unless the Fund notifies the Custodian that its
password is not secure. The Fund agrees that access to, and use of,
BBH Worldview shall be governed by an Electronic and On-line
Services Schedule, which the Fund will execute prior to access to
BBH Worldview.
o SWIFT Transmission. The Custodian and the Fund shall comply with
SWIFT's authentication procedures. The Custodian will act on FT
Instructions received via SWIFT provided the instruction is
authenticated by the SWIFT system.
o Written Instructions. Instructions may be transmitted in an original
writing that bears the manual signature of an Authorized Person(s).
3. Fund Designated Security Procedure. FT Instructions may be transmitted
through such other means, and subject to such additional security procedures, as
may be elected by the Fund (or by an Authorized Person entitled to give
Instructions) and acknowledged and accepted by the Custodian (the transmission
methods and security procedures referenced below, as may be supplemented by such
additional security procedures, each a FUND DESIGNATED SECURITY PROCEDURE); it
being understood that the Custodian's acknowledgment shall authorize it to
accept such means of delivery but shall not represent a judgment by the
Custodian as to the reasonableness or security of the means utilized by the
Fund.
o Computer Transmission. The Custodian is able to accept transmissions
sent from the Fund's computer facilities to the Custodian's computer
facilities. If the Fund determines to use its proprietary
transmission or other electronic transmission method, it must
provide Custodian sufficient notice and information to allow testing
or other confirmation that FT Instructions received via the Fund
Designated Security Procedure can be processed in good time and
order. The Custodian may require the Fund to execute additional
documentation prior to the use of such transmission method.
o Facsimile Transmission.
A FT Instruction transmitted to the Custodian by facsimile transmission
must be transmitted by the Fund to a telephone number specified from time
to time by the Custodian for such purposes. The Custodian will then follow
one of the procedures below:
- 22 -
1. If the facsimile requests a non-repetitive order, the Custodian
will call the Fund and request to speak to a person authorized to
validate orders on behalf of the Fund, and confirm the authorization
and details of the payment order (a CALLBACK);
2. If the facsimile FT Instruction pertains to a repetitive payment
order (see Section 7 below), the Custodian may (at its sole
discretion) perform a Callback. The Fund acknowledges that prior to
its issuance of any repetitive payment order, it must (a) request
that the appropriate repetitive payment order process be approved
and set up at the Custodian, and (b) complete such documentation as
may be required by the Custodian, including a PPO (as defined in
Section 7).
The Custodian shall rely on the purported identity of the originator but
due to the lack of reliability of a facsimile signature, it will not
perform signature verification on facsimiles.
o Telephonic. The Fund may call a telephonic payment order into the
Custodian at the telephone number designated from time-to-time by
the Custodian for that purpose. The caller shall identify
herself/himself as an Authorized Person. The Custodian shall obtain
the FT Instruction details from the caller. The Custodian shall then
follow one of the procedures below:
i. If the telephonic FT Instruction pertains to a non-repetitive
payment order, the Custodian will perform a Callback; or
ii. If the telephonic FT Instruction pertains to a repetitive
payment order (see Section 7 below), the Custodian may (at its sole
discretion) perform a Callback. The Fund acknowledges that prior to
its issuance of any repetitive payment order, it must (a) request
that the appropriate repetitive payment order process be approved
and set up at the Custodian, and (b) complete such documentation as
may be required by the Custodian, including a PPO.
In electing to transmit a FT Instruction via a Fund Designated Security
Procedure, the Fund (i) agrees to be bound by the transaction(s) or payment
order(s) specified on said FT Instruction, whether or not authorized, and
accepted by the Custodian in compliance with such Fund Designated Security
Procedure, and (ii) accepts the risk associated with such Fund Designated
Security Procedure and confirms it is commercially reasonable for the
transmission and authentication of the FT Instruction.
The parties agree that the Fund's transmission of a FT Instruction by means of
any of the above Fund Designated Security Procedures and the Custodian's
acceptance and execution of such FT Instruction shall constitute a FT
Instruction sent via a Fund Designated Security Procedure and governed by the
terms of this FTSA.
4. Rejection of Payment Orders; Rescission of Designated Security Procedure. The
Custodian shall give the Fund timely notice of the Custodian's rejection of a FT
Instruction. Such notice may be given in writing, via a Custodian Designated
Security Procedure or any Fund Designated Security Procedure used by the Fund,
or orally by telephone, each of which is hereby deemed commercially reasonable.
In the event the Custodian fails to execute a properly executable FT Instruction
and fails to give the Fund notice of the Custodian's non-execution, the
Custodian shall be liable only for the Fund's actual damages and only to the
extent that such damages are recoverable under UCC 4A. The Custodian, after
providing prior written notice, may decide to no longer accept a particular Fund
or Custodian Designated Security Procedure, or to do so only on revised terms,
in the event that it determines that such agreed or established method of
transmission represents a security risk or is attendant to any general change in
the Custodian's policy regarding FT Instructions. Notwithstanding anything in
this FTSA and the Agreement to the contrary, the Custodian shall in no event be
liable for any consequential, indirect, special or punitive damages under this
FTSA, whether or not such damages relate to services covered by UCC 4A, even if
the Custodian was advised of the possibility of such damages.
5. Cancellation of Payment Orders. The Fund may cancel a FT Instruction but the
Custodian shall have no liability for the Custodian's failure to act on a
cancellation FT Instruction unless the Custodian has received such cancellation
FT Instruction at a time and in a manner affording the Custodian reasonable
- 23 -
opportunity to act prior to the Custodian's execution of the original FT
Instruction. Any cancellation FT Instruction shall be sent and confirmed by such
means as is set forth in Section 3 or 4 above.
6. Preauthorized Repetitive Payment Orders. The Fund may establish with the
Custodian a process to preauthorize certain repetitive payments or transfers.
The Fund will execute all documentation required by the Custodian, including a
separate Preauthorized Repetitive Payment Order (PPO) form. The PPO shall be
delivered to the Custodian in writing or by another Custodian Designated
Security Procedure or Fund Designated Security Procedure, and will become
effective after the Custodian shall have had a reasonable opportunity to act
thereon (or if later, two (2) banking days after receipt by the Custodian). The
PPO may take the form of either:
(i) A standing instruction in which the Fund provides in the PPO all
required information for a FT Instruction (except for the transfer
date and amount) on a "standing instructions" basis. The Fund may
from time-to-time instruct the Custodian to make a payment under the
PPO, in writing or another Custodian Designated Security Procedure
or Fund Designated Security Procedure, which instruction shall
reference the repetitive line number (a number assigned to it by the
Custodian after execution of the PPO), details of the payment, the
transfer date and the amount of the transfer; or
(ii) A recurring instruction in which the Fund supplies all required
information for a FT Instruction with an instruction to process such
payments with a specific frequency.
7. Responsibility for the Detection of Errors in Payment Orders; Liability of
the Parties. The purpose of any Fund Designated Security Procedure or Custodian
Designated Security Procedure is to confirm the authenticity of any FT
Instruction and is not designed to detect errors or omissions in such FT
Instructions. Therefore, the Custodian is not responsible for detecting any Fund
error or omission contained in any FT Instruction received by the Custodian. In
the event that the FT Instruction either (i) identifies the beneficiary by both
a name and an identifying or Fund account number and the name and number
identify different persons or entities, or (ii) identifies any Fund by both a
name and an identifying number and the number identifies a person or entity
different from the Fund identified by name, execution of the relevant payment
order, payment to the beneficiary, cancellation of the payment order or actions
taken by the Custodian or any Fund in respect of such payment order may be made
solely on the basis of the number.
The Custodian shall not be liable for interest on the amount of any FT
Instruction that was not authorized or was erroneously executed unless the Fund
so notifies the Custodian within thirty (30) days following the Fund's receipt
of notice that such FT Instruction was processed. Any compensation payable in
the form of interest shall be payable in accordance with UCC 4A. If a FT
Instruction in the name of the Fund and accepted by the Custodian was not
authorized by the Fund, the liability of the parties will be governed by the
applicable provisions of UCC 4A.
- 24 -
ELECTRONIC AND ON-LINE SERVICES SCHEDULE
This Electronic and On-Line Services Schedule (this SCHEDULE) to a Custodian
Agreement dated as of April __, 2011 (as amended from time to time hereafter,
the AGREEMENT) by and between Xxxxx Brothers Xxxxxxxx & Co. (WE, US OUR) and
First Trust Exchange-Traded AlphaDEX(R) Fund II (YOU, YOUR), provides general
provisions governing your use of and access to the Services (as hereinafter
defined) provided to you by us via the Internet (at xxx.xxxxx.xxx or such other
URL as we may instruct you to use to access our products) and via a direct
dial-up connection between your computer and our computers, as of
________________, _____, 2011 (the EFFECTIVE DATE). Use of the Services
constitutes acceptance of the terms and conditions of this Schedule, any
Appendices hereto, the Terms and Conditions posted on our web site, and any
terms and conditions specifically governing a particular Service or our other
products, which may be set forth in the Agreement or in a separate related
agreement (collectively, the RELATED AGREEMENTS).
1. GENERAL TERMS.
You will be granted access to our suite of online products, which may
include, but shall not be limited to the following services via the
Internet or dial-up connection (each separate service is a SERVICE;
collectively referred to as the SERVICES):
1.1. BBH WorldView(R), a system for effectuating securities and fund
trade instruction and execution, processing and handling
instructions, and for the input and retrieval of other information;
1.2. F/X WorldView, a system for executing foreign exchange trades;
1.3. Fund WorldView, a system for receiving fund and prospectus
information;
1.4. BBHCOnnect, a system for placing securities trade instructions and
following the status and detail of trades;
1.5. ActionViewSM, a system for receiving certain corporate action
information; and, 1.6. Such other services as we shall from time to
time offer.
2. SECURITY / PASSWORDS.
2.1. A digital certificate and/or an encryption key may be required to
access certain Services. You may apply for a digital certificate
and/or an encryption key by following the procedures set forth at
xxxx://xxx.xxx.xxx/xxxxx/. You also will need an identification code
(ID) and password(s) (PASSWORD) to access the Services.
2.2. You agree to safeguard your digital certificate and/or encryption
key, ID, and Password and not to give or make available,
intentionally or otherwise, your digital certificate, ID, and/or
Password to any unauthorized person. You must immediately notify us
in writing if you believe that your digital certificate and/or
encryption key, Password, or ID has been compromised or if you
suspect unauthorized access to your account by means of the Services
or otherwise, or when a person to whom a digital certificate and/or
an encryption key, Password, or ID has been assigned leaves or is no
longer permitted to access the Services.
2.3. We will not be responsible for any breach of security, or for any
unauthorized trading or theft by any third party, caused by your
failure (be it intentional, unintentional, or negligent) to maintain
the confidentiality of your ID and/or Password and/or the security
of your digital certificate and/or encryption key.
3. INSTRUCTIONS.
3.1. Proper instructions under this Schedule shall be provided as
designated in the Related Agreements (INSTRUCTIONS).
3.2. The following additional provisions apply to Instructions provided
via the Services:
a. Instructions sent by electronic mail will not be accepted or
acted upon.
b. You authorize us to act upon Instructions received through the
Services utilizing your digital certificate, ID, and/or
Password as though they were duly authorized written
instructions, without any duty of verification or inquiry on
our part, and agree to hold us harmless for any losses you
experience as a result.
c. From time to time, the temporary unavailability of third party
telecommunications or computer systems required by the
Services may result in a delay in processing Instructions. In
such an event, we shall not be liable to you or any third
party for any liabilities, losses, claims, costs, damages,
penalties, fines, obligations, or expenses of any kind
- 25 -
(including without limitation, reasonable attorneys',
accountants', consultants', or experts' fees and
disbursements) that you experience due to such a delay.
4. ELECTRONIC DOCUMENTS.
We may make periodic statements, disclosures, notices, and other documents
available to you electronically, and, subject to any delivery and receipt
verification procedures required by law, you agree to receive such
documents electronically and to check the statements for accuracy. If you
believe any such statement contains incorrect information, you must follow
the procedures set forth in the Related Agreement(s).
5. MALICIOUS CODE.
You understand and agree that you will be responsible for the introduction
(by you, your employees, agents, or representatives) into the Services,
whether intentional or unintentional, of (i) any virus or other code,
program, or sub-program that damages or interferes with the operation of
the computer system containing the code, program or sub-program, or halts,
disables, or interferes with the operation of the Services themselves; or
(ii) any device, method, or token whose knowing or intended purpose is to
permit any person to circumvent the normal security of the Services or the
system containing the software code for the Services (MALICIOUS CODE). You
agree to take all necessary actions and precautions to prevent the
introduction and proliferation of any Malicious Code into those systems
that interact with the Services.
6. INDEMNIFICATION.
For avoidance of doubt, you hereby agree that the provisions in the
Related Agreement(s) related to your indemnification of us and any
limitations on our liability and responsibilities to you shall be
applicable to this Agreement, and are hereby expressly incorporated
herein. You agree that the Services are comprised of telecommunications
and computer systems, and that it is possible that Instructions,
information, transactions, or account reports might be added to, changed,
or omitted by electronic or programming malfunction, unauthorized access,
or other failure of the systems which comprise the Services, despite the
security features that have been designed into the Services. You agree
that we will not be liable for any action taken or not taken in complying
with the terms of this Schedule, except for our willful misconduct or
gross negligence. The provisions of this paragraph shall survive the
termination of this Schedule and the Related Agreements.
7. PAYMENT.
You may be charged for services hereunder as set forth in a fee schedule
from time to time agreed by us.
8. TERM/TERMINATION.
8.1. This Schedule is effective as of the date you sign it or first use
the Services, whichever is first, and continues in effect until such
time as either you or we terminate the Schedule in accordance with
this Section 8 and/or until your off-line use of the Services is
terminated.
8.2. We may terminate your access to the Services at any time, for any
reason, with five (5) business days prior notice; provided that we
may terminate your access to the Services with no prior notice (i)
if your account with us is closed, (ii) if you fail to comply with
any of the terms of this Agreement, (iii) if we believe that your
continued access to the Services poses a security risk, or (iv) if
we believe that you are violating or have violated applicable laws,
and we will not be liable for any loss you may experience as a
result of such termination. You may terminate your access to the
Services at any time by giving us ten (10) business days notice.
Upon termination, we will cancel all your Passwords and IDs and any
in-process or pending Instructions will be carried out or cancelled,
at our sole discretion.
9. MISCELLANEOUS.
9.1. NOTICES. All notices, requests, and demands (other than routine
operational communications, such as Instructions) shall be in such
form and effect as provided in the Related Agreement(s).
9.2. INCONSISTENT PROVISIONS. Each Service may be governed by separate
terms and conditions in addition to this Schedule and the Related
Agreement(s). Except where specifically provided to the contrary in
this Schedule, in the event that such separate terms and conditions
conflict with this Schedule and the Related Agreement(s), the
provisions of this Schedule shall prevail to the extent this
Schedule applies to the transaction in question.
9.3. BINDING EFFECT; ASSIGNMENT; SEVERABILITY. This Schedule shall be
binding on you, your employees, officers and agents. We may assign
or delegate our rights and duties under this Schedule at any time
- 26 -
without notice to you. Your rights under this Schedule may not be
assigned without our prior written consent. In the event that any
provision of this Schedule conflicts with the law under which this
Schedule is to be construed or if any such provision is held invalid
or unenforceable by a court with jurisdiction over you and us, such
provision shall be deemed to be restated to effectuate as nearly as
possible the purposes of the Schedule in accordance with applicable
law. The remaining provisions of this Schedule and the application
of the challenged provision to persons or circumstances other than
those as to which it is invalid or unenforceable shall not be
affected thereby, and each such provision shall be valid and
enforceable to the full extent permitted by law.
9.4. CHOICE OF LAW; JURY TRIAL. This Schedule shall be governed by and
construed, and the legal relations between the parties shall be
determined, in accordance with the laws of the State of New York,
without giving effect to the principles of conflicts of laws. Each
party agrees to waive its right to trial by jury in any action or
proceeding based upon or related to this Agreement. The parties
agree that all actions and proceedings based upon or relating to
this Schedule shall be litigated exclusively in the federal and
state courts located within New York City, New York.
The undersigned acknowledges that (I/we) have received a copy of this document.
FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND II ("YOU")
By: /s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Financial Officer
Date: April 8, 2011
- 27 -
17F-5 DELEGATION SCHEDULE
By its execution of this Delegation Schedule dated as of April 8, 2011, between
FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND II, a Massachusetts business trust
registered with the Securities and Exchange Commission (the COMMISSION) under
the Investment Company Act of 1940, as amended (the 1940 ACT), acting through
its Board of Directors/Trustees or its duly appointed representative (the
"Trust" on behalf of each series listed on Appendix A hereto each a "FUND" and
collectively, the "FUNDS"), hereby appoints XXXXX BROTHERS XXXXXXXX & CO., a New
York limited partnership with an office in Boston, Massachusetts (the DELEGATE)
as its delegate to perform certain functions with respect to the custody of each
Fund's Assets outside the United States.
1. Maintenance of Fund's Assets Abroad. The Trust, acting through its Board or
its duly authorized representative, hereby instructs the Delegate pursuant to
the terms of the Custodian Agreement dated as of the date hereof executed by and
between the Trust and the Delegate (the CUSTODIAN AGREEMENT) to place and
maintain each Fund's Assets in countries outside the United States in accordance
with Instructions received from the Fund's Investment Advisor. Such instruction
shall constitute an Instruction under the terms of the Custodian Agreement. The
Trust acknowledges that (a) the Delegate shall perform services hereunder only
with respect to the countries where it accepts delegation as Foreign Custody
Manager as indicated on the Delegate's Global Custody Network Listing; (b)
depending on conditions in the particular country, advance notice may be
required before the Delegate shall be able to perform its duties hereunder in or
with respect to such country (such advance notice to be reasonable in light of
the specific facts and circumstances attendant to performance of duties in such
country); and (c) nothing in this Delegation Schedule shall require the Delegate
to provide delegated or custodial services in any country, and there may from
time to time be countries as to which the Delegate determines it will not
provide delegation services.
2. Delegation. Pursuant to the provisions of Rule 17f-5 under the 1940 Act as
amended, the Board hereby delegates to the Delegate, and the Delegate hereby
accepts such delegation and agrees to perform only those duties set forth in
this Delegation Schedule concerning the safekeeping of each Fund's Assets in
each of the countries as to which it acts as the Board's delegate. The Delegate
is hereby authorized to take such actions on behalf of or in the name of each
Fund as are reasonably required to discharge its duties under this Delegation
Schedule, including, without limitation, to cause each Fund's Assets to be
placed with a particular Eligible Foreign Custodian in accordance herewith. The
Trust confirms to the Delegate that the Trust or its Investment Adviser has
considered the Sovereign Risk and prevailing Country Risk as part of its
continuing investment decision process, including such factors as may be
reasonably related to the systemic risk of maintaining each Fund's Assets in a
particular country, including, but not limited to, financial infrastructure,
prevailing custody and settlement systems and practices (including the use of
any Securities Depository in the context of information provided by the
Custodian in the performance of its duties as required under Rule 17f-7 and the
terms of the Custodian Agreement governing such duties), and the laws relating
to the safekeeping and recovery of the Fund's Assets held in custody pursuant to
the terms of the Custodian Agreement.
3. Selection of Eligible Foreign Custodian and Contract Administration. The
Delegate shall perform the following duties with respect to the selection of
Eligible Foreign Custodians and administration of certain contracts governing
each Fund's foreign custodial arrangements:
(a) Selection of Eligible Foreign Custodian. The Delegate shall place and
maintain each Fund's Assets with an Eligible Foreign Custodian, provided
that the Delegate shall have determined that the Fund's Assets will be
subject to reasonable care based on the standards applicable to custodians
in the relevant market after considering factors relevant to the
safekeeping of such assets including without limitation:
(i) The Eligible Foreign Custodian's practices, procedures, and
internal controls, including, but not limited to, the physical
protections available for certificated securities (if applicable),
the controls and procedures for dealing with any Securities
Depository, the method of keeping custodial records, and the
security and data protection practices;
(ii) Whether the Eligible Foreign Custodian has the requisite
financial strength to provide reasonable care for the Fund's Assets;
(iii) The Eligible Foreign Custodian's general reputation and
standing; and
(iv) Whether the Fund will have jurisdiction over and be able to
enforce judgments against the Eligible Foreign Custodian, such as by
virtue of the existence of any offices of such Eligible Foreign
- 28 -
Custodian in the United States or such Eligible Foreign Custodian's
appointment of an agent for service of process in the United States
or consent to jurisdiction in the United States.
The Delegate shall be required to make the foregoing determination to the
best of its knowledge and belief based only on information reasonably
available to it.
(b) Contract Administration. The Delegate shall cause that the foreign
custody arrangements with an Eligible Foreign Custodian shall be governed
by a written contract that the Delegate has determined will provide
reasonable care for Fund assets based on the standards applicable to
custodians in the relevant market. Each such contract shall, except as set
forth in the last paragraph of this subsection (b), include provisions
that provide:
(i) For indemnification or insurance arrangements (or any
combination of the foregoing) such that the Fund will be adequately
protected against the risk of loss of assets held in accordance with
such contract;
(ii) That the Fund's Assets will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the
Eligible Foreign Custodian or its creditors except a claim of
payment for their safe custody or administration or, in the case of
cash deposits, liens or rights in favor of creditors of such
Custodian arising under bankruptcy, insolvency or similar laws;
(iii) That beneficial ownership of the Fund's Assets will be freely
transferable without the payment of money or value other than for
safe custody or administration;
(iv) That adequate records will be maintained identifying the Fund's
Assets as belonging to the Fund or as being held by a third party
for the benefit of the Fund;
(v) That the Fund's independent public accountants will be given
access to those records described in (iv) above or confirmation of
the contents of such records; and
(vi) That the Delegate will receive sufficient and timely periodic
reports with respect to the safekeeping of the Fund's Assets,
including, but not limited to, notification of any transfer to or
from the Fund's account or a third party account containing the
Fund's Assets.
Such contract may contain, in lieu of any or all of the provisions
specified in this Section 3(b), such other provisions that the Delegate
determines will provide, in their entirety, the same or a greater level of
care and protection for the Fund's Assets as the specified provisions, in
their entirety.
(c) Limitation to Delegated Selection. Notwithstanding anything in this
Delegation Schedule to the contrary, the duties under this Section 3 shall
apply only to Eligible Foreign Custodians selected by the Delegate and
shall not apply to Securities Depositories or to any Eligible Foreign
Custodian that the Delegate is directed to use pursuant to Section 7 of
this Delegation Schedule.
4. Monitoring. The Delegate shall establish a system to monitor at reasonable
intervals (but at least annually) the appropriateness of maintaining the Fund's
Assets with each Eligible Foreign Custodian that has been selected by the
Delegate pursuant to Section 3 of this Delegation Schedule. The Delegate shall
monitor the continuing appropriateness of placement of the Fund's Assets in
accordance with the criteria established under Section 3(a) of this Delegation
Schedule. The Delegate shall monitor the continuing appropriateness of the
contract governing the Fund's arrangements in accordance with the criteria
established under Section 3(b) of this Delegation Schedule.
5. Reporting. At least annually and more frequently as mutually agreed between
the parties, the Delegate shall provide to the Board written reports specifying
placement of the Fund's Assets with each Eligible Foreign Custodian selected by
the Delegate pursuant to Section 3 of this Delegation Schedule and shall
promptly report on any material changes to such foreign custody arrangements.
Delegate will prepare such a report with respect to any Eligible Foreign
Custodian that the Delegate has been instructed to use pursuant to Section 7 of
this Delegation Schedule only to the extent specifically agreed with respect to
the particular situation.
6. Withdrawal of Fund's Assets. If the Delegate determines that an arrangement
with a specific Eligible Foreign Custodian selected by the Delegate under
Section 3 of this Delegation Schedule no longer meets the requirements of said
Section, Delegate shall withdraw the Fund's Assets from the non-complying
- 29 -
arrangement as soon as reasonably practicable; provided, however, that if in the
reasonable judgment of the Delegate, such withdrawal would require liquidation
of any of the Fund's Assets or would materially impair the liquidity, value or
other investment characteristics of the Fund's Assets, it shall be the duty of
the Delegate to provide information regarding the particular circumstances and
to act only in accordance with Instructions of the Fund or its Investment
Advisor with respect to such liquidation or other withdrawal.
7. Direction as to Eligible Foreign Custodian. Notwithstanding this Delegation
Schedule, the Fund, acting through its Board, its Investment Advisor or its
other Authorized Representative, may direct the Delegate to place and maintain
the Fund's Assets with a particular Eligible Foreign Custodian, including
without limitation with respect to investment in countries as to which the
Custodian will not provide delegation services. In such event, the Delegate
shall be entitled to rely on any such instruction as an Instruction under the
terms of the Custodian Agreement and shall have no duties under this Delegation
Schedule with respect to such arrangement save those that it may undertake
specifically in writing with respect to each particular instance.
8. Standard of Care. In carrying out its duties under this Delegation Schedule,
the Delegate agrees to exercise reasonable care, prudence and diligence such as
a person having responsibility for safekeeping the Fund's Assets would exercise.
9. Representations. The Delegate hereby represents and warrants that it is a
U.S. Bank and that this Delegation Schedule has been duly authorized, executed
and delivered by the Delegate and is a legal, valid and binding agreement of the
Delegate.
The Fund hereby represents and warrants that its Board of Directors has
determined that it is reasonable to rely on the Delegate to perform the
delegated responsibilities provided for herein and that this Delegation Schedule
has been duly authorized, executed and delivered by the Fund and is a legal,
valid and binding agreement of the Fund.
10. Effectiveness; termination. This Delegation Schedule shall be effective as
of the date on which this Delegation Schedule shall have been accepted by the
Delegate, as indicated by the date set forth below the Delegate's signature.
This Delegation Schedule may be terminated at any time, without penalty, by
written notice from the terminating party to the non-terminating party. Such
termination shall be effective on the 30th calendar day following the date on
which the non-terminating party shall receive the foregoing notice. The
foregoing to the contrary notwithstanding, this Delegation Schedule shall be
deemed to have been terminated concurrently with the termination of the
Custodian Agreement.
11. Notices. Notices and other communications under this Delegation Schedule are
to be made in accordance with the arrangements designated for such purpose under
the Custodian Agreement unless otherwise indicated in a writing referencing this
Delegation Schedule and executed by both parties.
12. Definitions. Capitalized terms not otherwise defined in this Delegation
Schedule have the following meanings:
a. Country Risk - shall have the meaning set forth in Section 9.1.2 of the
Custodian Agreement.
b. Eligible Foreign Custodian - shall have the meaning set forth in Rule
17f-5(a)(1) of the 1940 Act and shall also include a U.S. Bank.
c. Fund's Assets - shall mean any of the Fund's investments (including
foreign currencies) for which the primary market is outside the United
States, and such cash and cash equivalents as are reasonably necessary to
effect the Fund's transactions in such investments.
d. Instructions - shall have the meaning set forth in the Custodian
Agreement.
e. Securities Depository - shall have the meaning set forth in Rule 17f-7
of the 1940 Act.
f. Sovereign Risk - shall have the meaning set forth in Section 9.1.3 of
the Custodian Agreement.
- 30 -
g . U.S. Bank - shall mean a bank which qualifies to serve as a custodian
of assets of investment companies under Section 17(f) of the 1940 Act.
13. Governing Law and Jurisdiction. This Delegation Schedule shall be construed
in accordance with the laws of the State of New York. The parties hereby submit
to the exclusive jurisdiction of the Federal courts sitting in the State of New
York or the Commonwealth of Massachusetts or of the state courts of either such
State or such Commonwealth.
14. Fees. Delegate shall perform its functions under this Delegation Schedule
for the compensation determined under the Custodian Agreement.
15. Integration. This Delegation Schedule sets forth all of the Delegate's
duties with respect to the selection and monitoring of Eligible Foreign
Custodians, the administration of contracts with Eligible Foreign Custodians,
the withdrawal of assets from Eligible Foreign Custodians and the issuance of
reports in connection with such duties. The terms of the Custodian Agreement
shall apply generally as to matters not expressly covered in this Delegation
Schedule, including dealings with the Eligible Foreign Custodians in the course
of discharge of the Delegate's obligations under the Custodian Agreement.
16.
(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.
(b) This Agreement is an agreement entered into between the Delegate 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 Delegate shall look for
payment of such obligation solely to the assets for the Fund to which such
obligation relates with the same effect as if the Delegate 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 Delegate arises, and if any amount due the Delegate arises in
respect of more than one Fund, the same shall be allocated by the Delegate among
such Funds in accordance with Section 16(b). Any amounts due the Delegate 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.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
The undersigned acknowledges that (I/we) have received a copy of this document.
XXXXX BROTHERS XXXXXXXX & CO. FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND II
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxx
----------------------------------- ----------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxxx
Title: Senior Vice President Title: Chief Financial Officer
- 31 -
SCHEDULE A
TO
THE CUSTODIAN AGREEMENT
BETWEEN
FIRST TRUST EXCHANGE-TRADED ALPHADEX FUND II
and
XXXXX BROTHERS XXXXXXXX & CO.
Dated as of 4/27/2012
The following is a list of Funds/Portfolios for which the Custodian shall serve
under a Custodian Agreement dated as of 4/08/2011 "the Agreement":
FIRST TRUST DEVELOPED MARKETS EX-US AlphaDEX FUND
FIRST TRUST EMERGING MARKETS AlphaDEX FUND
FIRST TRUST ASIA PACIFIC EX-JAPAN AlphaDEX FUND
FIRST TRUST EUROPE AlphaDEX FUND
FIRST TRUST LATIN AMERICA AlphaDEX FUND
FIRST TRUST BRAZIL AlphaDEX FUND
FIRST TRUST CHINA AlphaDEX FUND
FIRST TRUST JAPAN AlphaDEX FUND
FIRST TRUST SOUTH KOREA AlphaDEX FUND
FIRST TRUST GERMANY AlphaDEX FUND
FIRST TRUST CANADA AlphaDEX FUND
FIRST TRUST AUSTRALIA AlphaDEX FUND
FIRST TRUST UNITED KINGDOM AlphaDEX FUND
FIRST TRUST TAIWAN AlphaDEX FUND
FIRST TRUST HONG KONG AlphaDEX FUND
FIRST TRUST SWITZERLAND AlphaDEX FUND
FIRST TRUST DEVELOPED MARKETS EX-US SMALL CAP AlphaDEX FUND
FIRST TRUST EMERGING MARKETS SMALL CAP AlphaDEX FUND
IN WITNESS WHEREOF, each of the parties hereto has caused this to be executed in
its name and on behalf of each such Fund/Portfolio.
FIRST TRUST EXCHANGE-TRADED AlphaDEX FUND II
BY: /s/ Xxxx X. Xxxxxxx
----------------------------
NAME: Xxxx X. Xxxxxxx
TITLE: President
