FORM OF FUND OF FUNDS INVESTMENT AGREEMENT [AB Fund acquiring ETFs]
Exhibit (h)(3)
FORM
OF
FUND OF FUNDS INVESTMENT AGREEMENT
[AB Fund acquiring ETFs]
THIS AGREEMENT, dated as of , between each [AB investment company], on behalf of the series thereof listed on Schedule A hereto, severally and not jointly (each, an “Acquiring Fund”), and each [ETF Trust], on behalf of the series thereof listed on Schedule A hereto, severally and not jointly (each, an “Acquired Fund” and together with the Acquiring Funds, the “Funds”).
WHEREAS, each Fund is registered with the U.S. Securities and Exchange Commission (“SEC”) as an investment company under the Investment Company Act of 1940, as amended, (the “1940 Act”);
WHEREAS, Section 12(d)(1)(A) of the 1940 Act limits the extent to which a registered investment company may invest in shares of other registered investment companies, Section 12(d)(1)(B) limits the extent to which a registered investment company, its principal underwriter or registered brokers or dealers may knowingly sell shares of such registered investment company to other investment companies, and Section 12(d)(1)(C) limits the extent to which an investment company may invest in the shares of a registered closed-end investment company;
WHEREAS, Rule 12d1-4 under the 1940 Act (the “Rule”) permits registered investment companies, such as the Acquiring Funds, to invest in shares of other registered investment companies, such as the Acquired Funds, in excess of the limits of Section 12(d)(1) of the 1940 Act subject to compliance with the conditions of the Rule; and
WHEREAS, an Acquiring Fund may, from time to time, invest in shares of one or more Acquired Funds in excess of the limitations of Section 12(d)(1)(A) in reliance on the Rule.
NOW THEREFORE, in accordance with the Rule, the Acquiring Fund[s] and the Acquired Fund[s] desire to set forth the following terms pursuant to which the Acquiring Fund[s] may invest in the Acquired Fund[s] in reliance on the Rule.
| 1. | Terms of Investment |
| (a) | In order to help reasonably address the risk of undue influence on an Acquired Fund by an Acquiring Fund, and to assist the Acquired Fund’s investment adviser with making the required findings under the Rule, each Acquiring Fund and the Acquired Fund agree as follows: |
| (i) | [In-kind redemptions. The Acquiring Fund acknowledges and agrees that, if and to the extent consistent with the Acquired Fund’s registration statement, as amended from time to time, and Rule 6c-11, the Acquired Fund may honor any redemption request from the Authorized Participant acting as an intermediary to execute the Acquiring Fund’s transaction partially or wholly in-kind.] |
| (ii) | [Timing/advance notice of transactions. Upon the request of the Acquired Fund, the Acquiring Fund will use reasonable efforts to spread orders given to an Authorized Participant that reasonably are expected to result in that Authorized Participant redeeming shares from the Acquired Fund (greater than [ ]% of the Acquired Fund’s total outstanding shares) over multiple days or to |
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provide advance notification of such orders to the Acquired Fund whenever practicable and only if consistent with the Acquiring Fund’s and its shareholders’ best interests. The Acquired Fund acknowledges and agrees that any notification provided pursuant to the foregoing is not a commitment to sell the Acquired Fund shares and constitutes an estimate that may differ materially from the amount, timing and manner in which a redemption request is submitted, if any. The Acquiring Fund and Acquired Fund each acknowledge and agree that this voluntary notification provision does not apply to trades placed by the Acquiring Fund in secondary markets.] |
| (iii) | [Scale of investment. Upon a reasonable request by an Acquired Fund, the Acquiring Fund will provide summary information regarding the anticipated timeline of its investment in the Acquired Fund and the scale of its contemplated investments in the Acquired Fund.] |
| (b) | In order to assist the Acquiring Fund’s investment adviser with evaluating the complexity of the structure and fees and expenses associated with an investment in an Acquired Fund, each Acquired Fund shall provide each Acquiring Fund with information on the fees and expenses of the Acquired Fund reasonably requested by the Acquiring Fund with reference to the Rule. |
| 2. | Representations of the Acquired Funds |
In connection with any investment by an Acquiring Fund in an Acquired Fund in excess of the limitations in Section 12(d)(1)(A), the Acquired Fund agrees to: (i) comply with all conditions of the Rule, as interpreted or modified by the SEC or its Staff from time to time, applicable to Acquired Funds; (ii) comply with its obligations under this Agreement; and (iii) promptly notify the Acquiring Fund if such Acquired Fund fails to comply with the Rule with respect to an investment by the Acquiring Fund, as interpreted or modified by the SEC or its Staff from time to time, or this Agreement.
| 3. | Representations of the Acquiring Funds |
In connection with any investment by an Acquiring Fund in an Acquired Fund in excess of the limitations in Section 12(d)(1)(A), the Acquiring Fund agrees to: (i) comply with all conditions of the Rule, as interpreted or modified by the SEC or its Staff from time to time, applicable to Acquiring Funds; (ii) comply with its obligations under this Agreement; and (iii) promptly notify the Acquired Fund if such Acquiring Fund fails to comply with the Rule with respect to its investment in such Acquired Fund, as interpreted or modified by the SEC or its Staff from time to time, or this Agreement.
| 4. | Indemnification |
Each Acquiring Fund agrees to hold harmless and indemnify each Acquired Fund, including any of its principals, directors, officers, employees and agents, against and from any and all losses, expenses or liabilities incurred by or claims or actions (“Claims”) asserted against the Acquired Fund or its principals, directors, officers, employees and agents, to the extent such Claims result from (i) a violation by the Acquiring Fund of any provision of this Agreement or (ii) a violation by the Acquiring Fund or the Acquiring Fund’s investment adviser of the conditions of the Rule with respect to an investment covered by this Agreement, such indemnification to include any reasonable counsel fees and expenses incurred in connection with investigating and/or defending such Claims; provided, however, that an Acquiring Fund shall not be liable for indemnifying any Acquired Fund or any of its principals, directors, officers, employees and agents for any Claims resulting from violations that occur as a result of incomplete or inaccurate information provided by the Acquired Fund to the Acquiring Fund pursuant to terms and conditions of the Rule or this Agreement.
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Each Acquired Fund agrees to hold harmless and indemnify each Acquiring Fund, including any of its principals, directors, officers, employees and agents, against and from any Claims asserted against the Acquiring Funds or its principals, directors, officers, employees and agents, to the extent such Claims result from (i) a violation by the Acquired Fund of any provision of this Agreement or (ii) a violation by the Acquired Fund or the Acquired Fund’s investment adviser of the conditions of the Rule with respect to an investment covered by this Agreement, such indemnification to include any reasonable counsel fees and expenses incurred in connection with investigating and/or defending such Claims; provided, however, that an Acquired Fund shall not be liable for indemnifying any Acquiring Fund or any of its principals, directors, officers, employees and agents for any Claims resulting from violations that occur as a result of incomplete or inaccurate information provided by the Acquiring Fund to the Acquired Fund pursuant to terms and conditions of the Rule or this Agreement.
| 5. | Miscellaneous |
| (a) | This Agreement shall be governed by the laws of the State of New York without regard to its choice of law principles. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. An electronic copy of a signature received in Portable Document Format (PDF) or a copy of a signature received via a fax machine shall be deemed to be of the same force and effect as an original signature on an original executed document. |
| (b) | In any action involving the Acquiring Funds under this Agreement, the Acquired Fund agrees to look solely to the individual Acquiring Fund(s) that are involved in the matter in controversy and not to any other series of _______ Trust. |
| (c) | In any action involving the Acquired Fund under this Agreement, each Acquiring Fund agrees to look solely to the Acquired Fund and not to any other series of AB ______. |
| (d) | [FOR Massachusetts business trusts: In the case of the [applicable trust(s)], a copy of the Declaration of Trust of [name of applicable trust(s)] is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that no trustee, officer, employee, agent, employee or shareholder of the Fund[(s)] shall have any personal liability under this Agreement, and that this Agreement is binding only upon the assets and property of the [applicable Fund(s)]]. |
| 6. | Notices |
All notices, including all information that either party is required to provide under the terms of this Agreement and the Rule, shall be in writing and shall be delivered by registered or overnight mail, facsimile, or electronic mail to the address for each party specified below.
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| If to __________Trust: | If to AB ____________: | |
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____________ Trust Attention: Email:
With a copy to: name address Email:
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Name c/o AllianceBernstein L.P. 000 Xxxxxxxx Xxxxxx 00xx Xxxxx Xxxxxxxxx, XX 00000 Email:
With a copy to: Xxxxxx X. Xxxxx, Esq. c/o AllianceBernstein, L.P. 0000 Xxxxxx xx xxx Xxxxxxxx Xxx Xxxx, XX 00000 Email: xxxxxx.xxxxx@xxxxxxxxxxxxxxxxx.xxx
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| 7. | Term and Termination; Assignment; Amendment |
| (a) | This Agreement shall be effective for the duration of the Acquired Fund’s and the Acquiring Funds’ reliance on the Rule, as interpreted or modified by the SEC or its Staff from time to time. While the terms of the Agreement shall only be applicable to investments in Funds made in reliance on the Rule, as interpreted or modified by the SEC or its Staff from time to time, the Agreement shall continue in effect until terminated pursuant to Section 6(b). |
| (b) | This Agreement shall continue until terminated in writing by either party upon 60 days’ written notice to the other party. Upon termination of this Agreement, no Acquiring Fund may purchase additional shares of the Acquired Fund beyond the Section 12(d)(1)(A) limits in reliance on the Rule. Each Acquiring Fund’s obligation in Section 1(a) of this Agreement to provide advance notice of redemptions shall survive termination of this Agreement until the Acquiring Funds’ aggregate investment in the Acquired Fund is less than 3% of the Acquired Fund’s total outstanding shares. Termination of this Agreement on behalf of any Fund shall not terminate this Agreement with respect to any other Fund that is a party hereto. |
| (c) | This Agreement may not be assigned by either party without the prior written consent of the other. |
| (d) | This Agreement may be amended only by a writing that is signed by each affected party. |
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
[Acquired Fund]
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| Name of Authorized Signer | Signature | |
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[Acquiring Fund]
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| Name of Authorized Signer | Signature | |
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SCHEDULE A
List of Funds to Which the Agreement Applies
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Acquiring Funds |
Acquired Funds |
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