DISTRIBUTION AGREEMENT
Exhibit e(1)
THIS DISTRIBUTION AGREEMENT (the
“Agreement’) is made as the last date on the signature
page, between PROCURE ETF TRUST I (the
“Trust”), a Delaware
statutory trust and Quasar
Distributors, LLC (the “Distributor”), a Delaware
limited liability company.
ProcureAM, LLC, the investment advisor to the Trust (the
“Adviser”),
is a party hereto with respect to Article 5
only.
******
WHEREAS, the Trust
is registered as an open-end investment management company
organized as a statutory trust and comprised of a number of series
of securities, each series representing a portfolio of securities
(each a “Fund” and collectively
the “Funds”), having filed
with the U.S. Securities and Exchange Commission (the
“SEC”)
a registration statement on Form N-1A under the Securities Act of
1933, as amended (the “1933 Act”), and the
Investment Company Act of 1940, as amended (the “1940 Act”);
WHEREAS, the Trust
intends to create and redeem shares (the “Shares”) of each Fund on
a continuous basis only in aggregations of 50,000 Shares
constituting a Creation Unit as such term is defined in each
applicable registration statement;
WHEREAS, the Shares
of each Fund will be listed on one or more national securities
exchanges (together, the “Listing
Exchanges”);
WHEREAS, the Trust
desires to retain the Distributor to act as the distributor with
respect to the issuance and distribution of Creation Units of each
Fund, hold itself available to receive and process orders for such
Creation Units in the manner set forth in the applicable
registration statement, and to enter into arrangements with
broker-dealers who may solicit purchases of Creation Units and with
broker-dealers and others to provide for servicing of shareholder
accounts and for distribution assistance, including broker-dealer
and shareholder support;
WHEREAS, the
Distributor is a registered broker-dealer under the Securities
Exchange Act of 1934, as amended (the “1934 Act”) and a member
of the Financial Industry Regulatory Authority (“FINRA”) (the successor
organization to the National Association of Securities Dealers,
Inc.); and
WHEREAS, the
Distributor desires to provide the services described herein to the
Trust.
NOW, THEREFORE, in consideration of the
mutual covenants hereinafter contained, intending to be legally
bound, the Trust and Distributor hereby agree as
follows:
ARTICLE
1. Sale of Creation Units;
Services. The Trust grants to the Distributor the right to
sell Creation Units of each Fund listed in Schedule A hereto as the same
may be amended from time to time upon mutual agreement of the
parties, on the terms and during the term of this Agreement and
subject to the registration requirements of the 1933 Act and the
rules and regulations of the SEC, and the Distributor hereby
accepts such appointment and agrees to act in such capacity
hereunder.
ARTICLE
2. Solicitation of Sales. In
consideration of these rights granted to the Distributor, the
Distributor agrees to use all reasonable efforts in connection with
the distribution of Creation Units of the Trust; provided, however, that the Distributor
shall not be prevented from entering into like arrangements with
other issuers.
ARTICLE
3. Authorized Representations. The
Distributor is not authorized by the Trust to give any information
or to make any representations other than those contained in the
current registration statements, prospectuses and statements of
additional information of the Trust filed with the SEC or contained
in shareholder reports or other material that may be prepared by or
on behalf of the Trust for the Distributor’s
use.
ARTICLE
4. Registration of Shares. The
Trust agrees that it will take all action necessary to register an
unlimited number of Shares on Form N-1A. The Trust shall make
available to the Distributor such number of copies of its currently
effective prospectus and statement of additional information as the
Distributor may reasonably request. The Trust shall furnish to the
Distributor copies of all information, financial statements and
other papers which the Distributor may reasonably request for use
in connection with the distribution of Creation Units of the Trust.
The Trust represents and warrants that it has or will have made as
of the date on which Distributor begins distributing Creation
Units, all applicable filings to exempt the Creation Units from
registration under applicable rules and regulations.
ARTICLE
5. Compensation. As compensation
for providing the services under this Agreement:
(a)
The
Distributor shall be entitled to no compensation or reimbursement
of expenses from the Trust for the services provided by the
Distributor pursuant to this Agreement. However, the Trust may,
with respect to any Fund, pay to the Distributor compensation
pursuant to the terms of any Distribution and Service Plan in
effect at the time in respect to that Fund. The Distributor may
receive compensation from ProcureAM, LLC (“Adviser”)
related to its services hereunder or for additional services as may
be agreed to between the Adviser and Distributor in writing. The
Distributor shall be compensated for providing the services set
forth in this Agreement in accordance with the fee schedule set
forth on Schedule B hereto (as amended from time to
time).
(b)
The
Adviser shall bear the cost and expenses of: (i) the registration
of the Creation Units for sale under the 1933 Act.
(c)
The
Distributor shall pay (i) all expenses relating to
Distributor’s broker-dealer qualification and registration
under the 1934 Act; (ii) the expenses incurred by the Distributor
in connection with routine FINRA filing fees (other than those
filing fees for which the Adviser reimburses the Distributor); and
(iii) all other expenses incurred in connection with the
distribution services provided under this Agreement that are not
reimbursed by the Adviser, including office space, equipment, and
personnel as may be necessary or convenient to provide the
services.
(d)
Notwithstanding
anything in this Agreement to the contrary, the Distributor and its
affiliates may receive compensation or reimbursement from the
Adviser with respect to any services not included under this
Agreement, as may be agreed upon by the parties from time to
time.
ARTICLE
6. Indemnification of Distributor.
The Trust agrees to indemnify, defend and hold harmless the
Distributor and each of its directors and officers and each person,
if any, who controls the Distributor within the meaning of Section
15 of the 1933 Act against any loss, liability, claim, damages or
expense (including the reasonable cost of investigating or
defending any alleged loss, liability, claim, damages, or expense
and reasonable counsel fees and disbursements incurred in
connection therewith), (i) arising by reason of any person
acquiring any Shares or Creation Units, based upon the ground that
the registration statement, prospectus, shareholder reports or
other information filed or made public by the Trust (as from time
to time amended) included an untrue statement of a material fact or
omitted to state a material fact required to be stated or necessary
in order to make the statements made not misleading or (ii) any
breach of any representation, warranty or covenant made by the
Trust in this Agreement. However, the Trust does not agree to
indemnify the Distributor or hold it harmless to the extent that
the statements or omission was made in reliance upon, and in
conformity with, information furnished to the Trust by or on behalf
of the Distributor.
In no
case (i) is the indemnity of the Trust to be deemed to protect the
Distributor against any liability to the Trust or its Shareholders
to which the Distributor or such person otherwise would be subject
by reason of willful misfeasance, bad faith or negligence in the
performance of its duties or by reason of its reckless disregard of
its obligations and duties under this Agreement, or (ii) is the
Trust to be liable to the Distributor under the indemnity agreement
contained in this Article 6 with respect to any claim made against
the Distributor or any person indemnified unless the Distributor or
other person shall have notified the Trust in writing of the claim
within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall
have been served upon the Distributor or such other person (or
after the Distributor or the person shall have received notice of
service on any designated agent). However, failure to notify the
Trust of any claim shall not relieve the Trust from any liability
which it may have to the Distributor or any person against whom
such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph.
The
Trust shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit
brought to enforce any claims subject to this indemnity provision.
If the Trust elects to assume the defense of any such claim, the
defense shall be conducted by counsel chosen by the Trust and
satisfactory to the indemnified defendants in the suit whose
approval shall not be unreasonably withheld. In the event that the
Trust elects to assume the defense of any suit and retain legal
counsel, the indemnified defendants shall bear the fees and
expenses of any additional legal counsel retained by them. If the
Trust does not elect to assume the defense of a suit, it will
reimburse the indemnified defendants for the reasonable fees and
expenses of any legal counsel retained by the indemnified
defendants.
The
Trust agrees to notify the Distributor promptly of the commencement
of any litigation or proceedings against it or any of its officers
or Trustees in connection with the issuance or sale of any of its
Shares or Creation Units.
ARTICLE
7. Indemnification of Trust. The
Distributor covenants and agrees that it will indemnify and hold
harmless the Trust and each of its Trustees, officers, employees
and each person, if any, who controls the Trust within the meaning
of Section 15 of the 1933 Act, against any loss, liability,
damages, claim or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, damages,
claim or expense and reasonable counsel fees incurred in connection
therewith) based upon the 1933 Act or any other statute or common
law and arising by reason of any person acquiring any Shares or
Creation Units, and alleging a wrongful act of the Distributor or
any of its employees or alleging that the registration statement,
prospectus, shareholder reports or other information filed or made
public by the Trust (as from time to time amended) included an
untrue statement of a material fact or omitted to state a material
fact required to be stated or necessary in order to make the
statements not misleading, insofar as the statement or omission was
made in reliance upon and in conformity with information furnished
to the Trust by or on behalf of the Distributor.
Without
limiting the generality of the foregoing, Distributor shall
indemnify and hold the Trust harmless from and against any and all
actual losses, expenses, and liabilities (including reasonable
attorneys' fees) that the Trust may sustain or incur arising out of
any breach of this Agreement.
In no
case (i) is the indemnity of the Distributor in favor of the Trust
or any other person indemnified to be deemed to protect the Trust
or any other person against any liability to which the Trust or
such other person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in
this paragraph with respect to any claim made against the Trust or
any person indemnified unless the Trust or person, as the case may
be, shall have notified the Distributor in writing of the claim
within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall
have been served upon the Trust or upon any person (or after the
Trust or such person shall have received notice of service on any
designated agent). However, failure to notify the Distributor of
any claim shall not relieve the Distributor from any liability
which it may have to the Trust or any person against whom the
action is brought otherwise than on account of its indemnity
agreement contained in this paragraph.
The
Distributor shall be entitled to participate, at its own expense,
in the defense or, if it so elects, to assume the defense of any
suit brought to enforce the claim, but if the Distributor elects to
assume the defense, the defense shall be conducted by legal counsel
chosen by the Distributor and satisfactory to the indemnified
defendants whose approval shall not be unreasonably withheld. In
the event that the Distributor elects to assume the defense of any
suit and retain counsel, the defendants in the suit shall bear the
fees and expenses of any additional legal counsel retained by them.
If the Distributor does not elect to assume the defense of any
suit, it will reimburse the indemnified defendants in the suit for
the reasonable fees and expenses of any counsel retained by
them.
The
Distributor agrees to notify the Trust promptly of the commencement
of any litigation, regulatory action (including an investigation)
or proceedings against it or any of its officers in connection with
the issue and sale of any of the Trust’s Shares or Creation
Units.
ARTICLE
8. Contribution; Consequential
Damages.
(a)
If the
indemnification provided for in Sections 6 and 7 is insufficient or
unavailable to any indemnified party under such sections in respect
of any losses, claims, damages, liabilities or expenses referred to
therein as a result of a court of competent jurisdiction’s
decision not to enforce such agreement of the parties, then the
indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by
damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative benefits received by the Trust
on the one hand and the Distributor on the other from the offering
of the Shares. If, however, the allocation based upon relative
benefit to each party provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect
the relative fault of the Trust on the one hand and the Distributor
on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions
in respect thereof), as well as any other relevant equitable
considerations. Further, if the indemnified party failed to give
the indemnifying party notice of the claim and the indemnifying
party was prejudiced by such failure, then each indemnifying party
shall contribute to such amount paid or payable by such indemnified
party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Trust on the
one hand and the Distributor on the other in connection with the
statements or omissions which resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as
any other relevant equitable considerations. The relative benefits
received by the Trust on the one hand and the Distributor on the
other shall be deemed to be in the same proportion as the amount of
gross proceeds received by the Trust from the offering of the
Shares under this Agreement (expressed in dollars) bears to the net
profits received by the Distributor under this Agreement. The
relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Trust on the
one hand or the Distributor on the other and the parties’
relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Trust and the
Distributor agree that it would not be just and equitable if
contributions pursuant to this section were determined by pro rata
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect
thereof) referred to above shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(b)
In no
event and under no circumstances shall either party to this
Agreement be liable to anyone, including, without limitation, the
other party, for consequential damages for any act or failure to
act under any provision of this Agreement.
ARTICLE
9. Effective Date. This Agreement
shall be effective upon its execution, and, unless terminated as
provided, shall continue in force for two years from the date
hereof, and thereafter from year to year, provided that such annual
continuance is approved by (i) either the vote of a majority of the
Trustees of the Trust, or the vote of a majority of the outstanding
voting securities of the Trust, and (ii) the vote of a majority of
those Trustees of the Trust who are not parties to this Agreement
or the Trust’s distribution plan or interested persons of any
such party (“Qualified Trustees”),
cast in person at a meeting called for the purpose of voting on the
approval. This Agreement may be terminated at any time without
penalty by a vote of the directors; by vote of a majority of the
outstanding voting securities of the Company; or by the Distributor
upon not less than sixty days prior written notice to the other
party; and shall automatically terminate upon its assignment. As
used in this paragraph the terms “vote of a majority of the
outstanding voting securities,” “assignment” and
“interested person” shall have the respective meanings
specified in the 1940 Act. In addition, this Agreement may at any
time be terminated without penalty by the Trust, by a vote of a
majority of Qualified Trustees or by vote of a majority of the
outstanding voting securities of the Trust upon not less than sixty
days prior written notice to the other party.
ARTICLE
10. Notices. All notices provided
for or permitted under this Agreement shall be deemed effective
upon receipt, and shall be in writing and (a) delivered personally,
(b) sent by commercial overnight courier with written verification
of receipt, or (c) sent by certified or registered U.S. mail,
postage prepaid and return receipt requested, to the party to be
notified, at the address for such party set forth
below.
Notices
to the Distributor shall be sent to the attention of:
Quasar
Distributors, LLC
Attn:
President
000
Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxxx 00000
Notice
to the Trust shall be sent to:
c/o
ProcureAM, LLC
00
Xxxxxxxx Xxxx
Xxxxxxxxx,
XX 00000
Notices
to the Adviser shall be sent to:
ProcureAM,
LLC
00
Xxxxxxxx Xxxx
Xxxxxxxxx,
XX 00000
Attn:
ARTICLE
11. Limitation of Liability. A copy
of the Agreement and Declaration of Trust is on file with the
Secretary of State of the State of Delaware, and notice is hereby
given that this Agreement is executed on behalf of the Trustees of
the Trust as Trustees and not individually and that the obligations
of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Trust individually but binding only
upon the assets and property of the Trust.
ARTICLE
12. Dispute Resolution. Whenever
either party desires to institute legal proceedings against the
other concerning this Agreement, it shall provide written notice to
that effect to such other party. The party providing such notice
shall refrain from instituting said legal proceedings for a period
of thirty (30) days following the date of provision of such notice.
During such period, the parties shall attempt in good faith to
amicably resolve their dispute by negotiation among their executive
officers.
ARTICLE
13. Entire Agreement; Amendments.
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement, draft or proposal with
respect to the subject matter hereof. This Agreement or any part
hereof may be changed or waived only by an instrument in writing
signed by the party against which enforcement of such change or
waiver is sought.
ARTICLE
14. Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of
the State of Delaware without giving effect to any conflict of laws
or choice of laws rules or principles thereof. To the extent that
the applicable laws of the State of Delaware, or any of the
provisions of this Agreement, conflict with the applicable
provisions of the 1933 Act or the 1940 Act, these acts shall
control.
ARTICLE
15. Counterparts. This Agreement
may be executed in two or more counterparts, all of which shall
constitute one and the same instrument. Each such counterpart shall
be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one
such counterpart. This Agreement shall be deemed executed by both
parties when any one or more counterparts hereof or thereof,
individually or taken together, bears the original or facsimile
signatures of each of the parties.
ARTICLE
16. Force Majeure. No breach of any
obligation of a party to this Agreement (other than obligations to
pay amounts owed) will constitute an event of default or breach to
the extent it arises out of a cause, existing or future, that is
beyond the control and without negligence of the party otherwise
chargeable with breach or default, including without limitation:
strike; lockout or other labor dispute; flood; war; riot; theft;
act of terrorism, earthquake or natural disaster. Either party
desiring to rely upon any of the foregoing as an excuse for default
or breach will, when the cause arises, give to the other party
prompt notice of the facts which constitute such cause; and, when
the cause ceases to exist, give prompt notice thereof to the other
party.
ARTICLE
17. Severability. Any provision of
this Agreement that is determined to be invalid or unenforceable in
any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability in such jurisdiction, without
rendering invalid or unenforceable the remaining provisions of this
Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. If a court of competent
jurisdiction declares any provision of this Agreement to be invalid
or unenforceable, the parties agree that the court making such
determination shall have the power to reduce the scope, duration,
or area of the provision, to delete specific words or phrases, or
to replace the provision with a provision that is valid and
enforceable and that comes closest to expressing the original
intention of the parties, and this Agreement shall be enforceable
as so modified.
ARTICLE
18. Confidential
Information.
(a)
The
Distributor and the Trust (in such capacity, the “Receiving
Party”) acknowledge and agree to maintain the confidentiality
of Proprietary and Confidential Information (as hereinafter
defined) provided by the Distributor and the Trust (in such
capacity, the “Disclosing Party”) in connection with
this Agreement. The Receiving Party shall not disclose or
disseminate the Disclosing Party’s Confidential Information
to any Person other than (a) those employees, agents, contractors,
subcontractors and licensees of the Receiving Party, or (b) with
respect to the Distributor as a Receiving Party, to those
employees, agents, contractors, subcontractors and licensees of any
agent or affiliate, who have a need to know it in order to assist
the Receiving Party in performing its obligations, or to permit the
Receiving Party to exercise its rights under this Agreement. In
addition, the Receiving Party (a) shall take all reasonable steps
to prevent unauthorized access to the Disclosing Party’s
Confidential Information, and (b) shall not use the Disclosing
Party’s Confidential Information, or authorize other Persons
to use the Disclosing Party’s Confidential Information, for
any purposes other than in connection with performing its
obligations or exercising its rights hereunder. As used herein,
“reasonable steps” means steps that a party takes to
protect its own, similarly confidential or proprietary information
of a similar nature, which steps shall in no event be less than a
reasonable standard of care.
(b)
The
term “Confidential Information,” as used herein, shall
mean all index licenses, business strategies, plans and procedures,
proprietary information, methodologies, data and trade secrets, and
other confidential information and materials (including, without
limitation, any non-public personal information as defined in
Regulation S-P) of the Disclosing Party, its affiliates, their
respective clients or suppliers, or other Persons with whom they do
business, that may be obtained by the Receiving Party from any
source or that may be developed as a result of this
Agreement.
(c)
The
provisions of this Article 18 respecting Confidential Information
shall not apply to the extent, but only to the extent, that such
Confidential Information: (a) is already known to the Receiving
Party free of any restriction at the time it is obtained from the
Disclosing Party, (b) is subsequently learned from an independent
third party free of any restriction and without breach of this
Agreement; (c) is or becomes publicly available through no wrongful
act of the Receiving Party or any third party; (d) is independently
developed by or for the Receiving Party without reference to or use
of any Confidential Information of the Disclosing Party; or (e) is
required to be disclosed pursuant to an applicable law, rule,
regulation, government requirement or court order, or the rules of
any stock exchange (provided, however, that the Receiving Party
shall advise the Disclosing Party of such required disclosure
promptly upon learning thereof in order to afford the Disclosing
Party a reasonable opportunity to contest, limit and/or assist the
Receiving Party in crafting such disclosure).
(d)
The
Receiving Party shall advise its employees, agents, contractors,
subcontractors and licensees, and shall require its agents and
affiliates to advise their employees, agents, contractors,
subcontractors and licensees, of the Receiving Party’s
obligations of confidentiality and non-use under this Article 18,
and shall be responsible for ensuring compliance by its and its
affiliates’ employees, agents, consultants, contractors,
subcontractors and licensees with such obligations. In addition,
the Receiving Party shall require all persons that are provided
access to the Disclosing Party’s Confidential Information,
other than the Receiving Party’s accountants and legal
counsel, to execute confidentiality or non-disclosure agreements
containing provisions substantially similar to those set forth in
this Article 18. The Receiving Party shall promptly notify the
Disclosing Party in writing upon learning of any unauthorized
disclosure or use of the Disclosing Party’s Confidential
Information by such persons.
(e)
Upon
the Disclosing Party’s written request following the
termination of this Agreement, the Receiving Party promptly shall
return to the Disclosing Party, or destroy, all Confidential
Information of the Disclosing Party provided under or in connection
with this Agreement, including all copies, portions and summaries
thereof. Notwithstanding the foregoing sentence, (a) the Receiving
Party may retain one copy of each item of the Disclosing
Party’s Confidential Information for purposes of identifying
and establishing its rights and obligations under this Agreement,
for archival or audit purposes and/or to the extent required by
applicable law, and (b) the Distributor shall have no obligation to
return or destroy Confidential Information of the Trust that
resides in save tapes of Distributor; provided, however, that in
either case all such Confidential Information retained by the
Receiving Party shall remain subject to the provisions of Article
18 for so long as it is so retained. If requested by the Disclosing
Party, the Receiving Party shall certify in writing its compliance
with the provisions of this paragraph.
ARTICLE
19. Anti-Money Laundering. The
Distributor represents that it has in place anti-money laundering
procedures which comply with applicable law in jurisdictions in
which Shares are distributed. The Distributor agrees to notify the
Trust of any suspicious activity of which it becomes aware relating
to transactions involving Shares. Upon reasonable request, the
Distributor agrees to provide the Trust with documentation relating
to its anti-money laundering policies and procedures.
ARTICLE
20. Use of Name.
(a)
The
Trust shall not use the name of the Distributor, or any of its
affiliates, in any prospectus or statement of additional
information, sales literature, and other material relating to the
Trust in any manner without the prior written consent of the
Distributor (which shall not be unreasonably withheld); provided,
however, that the Distributor hereby approves all lawful uses of
the names of the Distributor and its affiliates in the prospectus
and statement of additional information of the Trust and in all
other materials which merely refer in accurate terms to their
appointment hereunder or which are required by applicable law,
regulations or otherwise by the SEC, FINRA, or any state securities
authority.
(b)
Neither
the Distributor nor any of its affiliates shall use the name of the
Trust in any publicly disseminated materials, including sales
literature, in any manner without the prior written consent of the
Trust (which shall not be unreasonably withheld); provided,
however, that the Trust hereby approves all lawful uses of its name
in any required regulatory filings of the Distributor which merely
refer in accurate terms to the appointment of the Distributor
hereunder, or which are required by applicable law, regulations or
otherwisebythe SEC, FINRA, or any state securities
authority.
ARTICLE
21. Insurance.
(a)
The
Distributor agrees to maintain liability insurance coverage which
is, in scope and amount, consistent with coverage customary in the
industry for distribution activities similar to the distribution
activities provided to the Trust hereunder. The Distributor shall
notify the Trust upon receipt of any notice of material, adverse
change in the terms or provisions of its insurance coverage that
may materially and adversely affect the Trust’s rights
hereunder. Such notification shall include the date of change and
the reason or reasons therefore. The Distributor shall notify the
Trust of any material claims against it, whether or not covered by
insurance that may materially and adversely affect the
Trust’s rights hereunder.
(b)
The
Trust hereby represents that it maintains adequate insurance
coverage with respect to its responsibilities pursuant to this
Agreement, including commercially reasonable fidelity bond(s),
errors and omissions, directors and officers, professional
liability insurance. The Distributor shall be included as an
additional insured on the Trust’s commercial liability
policies and shall be named as a loss payee on the Trust’s
fidelity bond(s). All of the foregoing policies shall be issued by
insurance companies having an “A minus” rating or
better by A.M. Best Company or an equivalent Standard &
Poor’s rating. The Trust shall furnish Certificates of
Insurance evidencing all of the foregoing insurance coverages upon
execution of this Agreement, and annually upon the written request
of the Distributor. Annually upon the written request of the
Distributor, the Trust shall provide insurance policy documentation
evidencing the Trust’s “additional insured”
status with respect to the Trust’s Commercial General
Liability and “loss payee” status with respect to the
Trust’s Fidelity Bond. The Trust shall promptly inform the
Distributor of any material changes to its policies, endorsements
or coverages.
ARTICLE
22. Representations, Warranties and
Covenants.
(a)
The
Trust represents, warrants and covenants that:
i.
it is
duly organized, validly existing and in good standing under the
laws of the state of its formation, and has all requisite power
under the laws of such state and applicable federal law to conduct
its business as now being conducted and to perform its obligations
as contemplated by this Agreement;
ii.
this
Agreement has been duly authorized by the board of trustees of the
Trust, including by unanimous affirmative vote of all of the
independent directors of the Trust and, when executed and delivered
by the Trust, will constitute a legal, valid and binding obligation
of the Trust, enforceable against the Trust in accordance with its
terms;
iii.
it
shall timely perform all obligations identified in this Agreement
as obligations of the Trust, including, without limitation,
providing the Distributor with all marketing materials reasonably
requested by the Distributor and giving all necessary consents or
approvals in good faith and within a timely manner;
iv.
it is
not a party to any, and there are no, pending or threatened legal,
administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations or inquiries
(collectively, “Actions”) of any nature against it, its
advisor or its properties or assets which could, individually or in
the aggregate, have a material effect upon its business or
financial condition, and there is no injunction, order, judgment,
decree, or regulatory restriction imposed upon it or any of its
properties or assets;
v.
it is
an investment company that is duly registered under all applicable
laws and regulations, including, without limitation the 1940 Act,
and each Fund is a separate series of the Trust;
vi.
it is
and will continue to be in compliance with all applicable laws and
regulations aimed at the prevention and detection of money
laundering and/or the financing of terrorism activities including
Bank Secrecy Act, as amended by USA PATRIOT Act, U.S. Treasury
Department, including the Office of Foreign Asset Control
(“OFAC”), Financial Crimes and Enforcement Network
(“FinCEN”) and the SEC
vii.
it has
an anti-money laundering program (“AML Program”), that
at minimum includes, (i) an AML compliance officer designated to
administer and oversee the AML Program, (ii) ongoing training for
appropriate personnel, (iii) internal controls and procedures
reasonably designed to prevent and detect suspicious activity
monitoring and terrorist financing activities; (iv) procedures to
comply with know your customer requirements and to verify the
identity of all customers; and (v) appropriate record keeping
procedures;
viii.
each
Prospectus has been prepared in accordance with all applicable laws
and regulations and, at the time such Prospectus was filed with the
SEC and became effective, no Prospectus will include an untrue
statement of a material fact or omit to state a material fact that
is required to be stated therein so as to make the statements
contained in such Prospectus not misleading. As used in this
Agreement, the term, “Prospectus” means any prospectus,
registration statement, statement of additional information, proxy
solicitation and tender offer materials, annual or other periodic
report of the Trust or any Fund of the Trust or any advertising,
marketing, shareholder communication, or promotional material
generated by the Trust or an Adviser from time to time, as
appropriate, including all amendments or supplements thereto and
applicable law;
ix.
it will
notify the Distributor as soon as reasonably practical in advance
of any matter which could materially affect the Distributor’s
performance of its duties and obligations under this Agreement,
including any amendment to the Prospectus;
x.
it will
provide Distributor with a copy of each Prospectus as soon as
reasonably possible prior to or contemporaneously with filing the
same with an applicable regulatory body;
xi.
it
shall fully cooperate with requests from government regulators and
the Distributor for information relating to customers and/or
transactions involving the Creation Units, as permitted by law, in
order for the Distributor to comply with its regulatory
obligations; and
xii.
in the
event it determines that it is in the interest of the Trust to
suspend or terminate the sale of any Creation Units, the Trust
shall promptly notify the Distributor of such fact in advance and
in writing prior to the date on which the Trust desires to cease
offering the Creation Units.
(b)
Distributor
hereby represents, warrants and covenants as follows:
i.
it has
full power, right and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby;
the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
approved by all requisite actions on its part, and no other
proceedings on its part are necessary to approve this Agreement or
to consummate the transactions contemplated hereby; this Agreement
has been duly executed and delivered by it; this Agreement
constitutes a legal, valid and binding obligation, enforceable
against it in accordance with its terms; xx.xx has (a)
conducted a review of its supervisory controls system and has made
available to the Fund the most current report of such review and
any updates thereto and (b) will make available to the Trust for
inspection a report of any changes in how it conducts its business
that would materially change the results of its most recent review
of its supervisory controls system and any other changes to its
business that would affect the business of the Trust or the
Trust’s investment adviser; iii. it (a) shall
maintain in effect a business interruption plan, and enter into any
agreements necessary with appropriate parties making reasonable
provisions for emergency use of electronic data processing
equipment customary in the industry and (b) take commercially
reasonable steps to minimize service interruptions in the event of
equipment failures at no additional expense to the
Trust;
iv.
it is
not a party to any, and there are no, pending or threatened Actions
of any nature against it or its properties or assets which could,
individually or in the aggregate, have a material effect upon its
business or financial condition, and there is no injunction, order,
judgment, decree, or regulatory restriction imposed specifically
upon it or any of its properties or assets;
v.
it is
registered as a broker-dealer with the SEC under the 1934 Act and a
member of FINRA in good standing;
vi.
it
shall not give any information or to make any representations other
than those contained in the current Prospectus of the Trust filed
with the SEC or contained in shareholder reports or other material
that may be prepared by or on behalf of the Trust for the
Distributor’s use; and
vii.
it may
prepare and distribute sales literature and other material as it
may deem appropriate, provided that such literature and materials
have been prepared in accordance with applicable rules and
regulations.
(SIGNATURES ON THE FOLLOWING PAGE)
IN WITNESS WHEREOF, the Trust and Distributor have each duly
executed this Agreement, as of last date written
below.
|
|
|
QUASAR DISTRIBUTORS, LLC
|
||
|
By:
|
/s/
Xxxxxx Xxxx
|
|
By:
|
/s/
Xxxxxx Xxxxx
|
|
Name:
|
Xxxxxx
Xxxx
|
|
Name:
|
Xxxxxx
Xxxxx
|
|
Title:
|
President
|
|
Title
|
President
|
|
Date:
|
11/05/19
|
|
Date:
|
11/12/19
|
|
ProcureAM, LLC (with respect to Article 5 only)
|
|
|
By:
|
/s/
Xxxxxx Xxxx
|
|
Name:
|
Xxxxxx
Xxxx
|
|
Title:
|
President
|
|
Date:
|
11/05/2019
|
SCHEDULE A
Separate
Series of Procure ETF Trust
I
|
Name of Series
|
|
|
|
|
|
LGBTQ Loyalty 100 ETF
|
|
Schedule B to the Distribution Agreement
Base Fee for Quasar Distributors, LLC Regulatory Distribution
Services
The following reflects the greater of the basis point fee or annual
minimum for funds in the Procure ETF Trusts. To illustrate, for 5
Funds U.S. Bancorp Fund Services LLC (“USBFS”) will
receive the greater of the Annual Minimum per Fund in the Trust
($50,000/Year) or the calculated Basis Points on the total AUM in
the Trust.
|
Annual
Minimum per Fund
|
Basis
Points on Trust AUM
|
||
|
Funds
1-10
|
$10,000
|
First
$500m
|
1.5 bp
|
|
Funds
11+
|
$7,500
|
Next
$500m
|
1.0 bp
|
|
|
|
Balance 050
bp
|
|
1 Each fund, regardless of
asset size, will have fees allocated to it equal to the per fund
minimum. Should the complex level basis point fee calculation
exceed the complex level minimum fee level calculation, the fees in
excess of the minimum will be allocated to each fund based on
percent on AUM.
2 Subject to annual CPI
increase - All Urban Consumers - U.S. City
Average.
Fees are calculated pro rata and billed monthly
Schedule B (continues) to the Distribution Agreement
Quasar Distributors, LLC Regulatory Distribution Services in
addition to the Base Fee
Standard Advertising Compliance Review
■
$125
per communication piece for the first 10 pages (minutes if audio or
video); $10 per page (minute if audio or video)
thereafter.
■
$125
FINRA filing fee per communication piece for the first 10 pages
(minutes if audio or video); $10 per page (minute if audio or
video) thereafter. FINRA filing fee subject to change. (FINRA
filing fee may not apply to all communication pieces.)
Expedited Advertising Compliance Review
■
$600
for the first 10 pages (minutes if audio or video); $25 per page
(minute if audio or video) thereafter, 24 hour initial
turnaround.
■
$600
FINRA filing fee per communication piece for the first 10 pages
(minutes if audio or video); $50 per page (minute if audio or
video) thereafter. FINRA filing fee subject to change. (FINRA
filing fee may not apply to all communication pieces.)
The Following are OPTIONAL Services Provided by USBFS upon Client
Request
Licensing of Investment Advisor’s Staff
■
$2,800
per year per registered representative
■
Quasar
sponsors the following licenses: Series 0, 0, 00, 00, 00, 00,
00
x
All
associated FINRA and state fees for registered representatives,
including license and renewal fees
Marketing Support Services
■ Fund
Fact Sheets
–
Design
– $1,000 per fact sheet, includes first
production
–
Production
– $500 per fact sheet per each production period
■
Web
sites, third-party data provider costs, brochures, and other sales
support materials – Project priced via Quasar
proposal
Miscellaneous Expenses
All
other miscellaneous fees and expenses, including but not limited to
the following, will be separately billed as incurred:
■
Production,
printing, distribution, and placement of advertising, sales
literature, and materials
■
Engagement
of designers, free-xxxxx writers, and public relations
firms
■
Postage,
overnight delivery charges
■
FINRA
registration fees and other costs to fulfill regulatory
requirements
■
Travel,
lodging, and meals
In
addition to the fees described above, additional fees may be
charged to the extent that changes to applicable laws, rules or
regulations require additional work or expenses related to services
provided (e.g., compliance with new liquidity risk management and
reporting requirements).
Fees
are calculated pro rata and billed monthly
