DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of December 12, 2018, between Axonic Alternative
Income Fund, a Delaware statutory trust (the “Fund”), and ALPS Distributors, Inc., a Colorado corporation (“ALPS”).
3. |
Documents. The Fund has furnished or will furnish, upon request,
ALPS with copies of the Fund’s Agreement and Declaration of Trust, advisory agreements, custodian agreement, transfer agency agreement, administration agreement, current prospectus, statement of additional information, periodic Fund
reports, and all forms relating to any plan, program or service offered by the Fund. The Fund shall furnish, within a reasonable time period, to ALPS a copy of any amendment or supplement to any of the above-mentioned documents. Upon
request, the Fund shall furnish promptly to ALPS any additional documents necessary or advisable to perform its functions hereunder, including, but not limited to, each repurchase offer notification filed by the Fund with the SEC. As
used in this Agreement the terms “registration statement,” “prospectus” and “statement of additional information” shall mean any registration statement, prospectus and statement of additional information filed by the Fund with the SEC
and any amendments and supplements thereto that are filed with the SEC.
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4. Sales of Shares.
(a) |
The Fund grants to ALPS the right to sell the Shares as agent on behalf of the Fund, during the term of this Agreement, subject to the registration
requirements of the Securities Act of 1933, as amended (the “1933 Act”), the 1940 Act, and of the laws governing the sale of securities in the various states (“Blue Sky Laws”), under the terms and conditions set forth in this Agreement.
ALPS shall have the right to sell, as agent on behalf of the Fund, the Shares covered by the registration statement, prospectus and statement of additional information for the Fund then in effect under the 1933 Act and 1940 Act.
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(b) |
The rights granted to ALPS shall be exclusive, except that the Fund reserves the right to sell Shares directly to investors on applications received and
accepted by the Fund.
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(c) |
Except as otherwise noted in the Fund’s current prospectus and/or statement of additional information, all Shares sold to investors by ALPS or the Fund will
be sold at the public offering price. The public offering price for all accepted subscriptions will be the net asset value per Share, as determined in the manner described in the Fund’s current prospectus and/or statement of additional
information.
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(d) |
Repurchases of Shares of the Fund will be made at the net asset value per Share in accordance with the Fund’s applicable repurchase offer, then current
prospectus and Rule 23c-3 of the 1940 Act. If a fee in connection with any repurchase offer is in effect, such fee will be paid to the Fund. The net asset value of the Shares will be calculated by the Fund or by another entity on
behalf of the Fund. ALPS has no duty to inquire into, or liability for, the accuracy of the net asset value per Share as calculated or the Fund’s compliance with any periodic repurchase offer in accordance with Rule 23c-3 of the 1940
Act and/or related policies adopted by the Fund.
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(e) |
The Fund reserves the right to suspend sales and ALPS’ authority to process orders for Shares on behalf of the Fund if, in the judgment of the Fund, it is in
the best interests of the Fund to do so. Suspension will continue for such period as may be determined by the Fund. The Fund agrees to promptly notify ALPS in the event that the Fund determines not to issue a repurchase offer in
accordance with the specified schedule set forth in the Fund’s then current prospectus.
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(f) |
In consideration of these rights granted to ALPS, ALPS agrees to use best efforts to distribute the Shares. ALPS shall review and file Fund advertising
materials with the SEC and/or FINRA to the extent required by the 1934 Act and the 1940 Act and the rules and regulations thereunder, and by the rules of FINRA. This shall not prevent ALPS from entering into like arrangements (including
arrangements involving the payment of underwriting commissions) with other issuers. ALPS will act only on its own behalf as principal should it choose to enter into selling agreements with selected dealers or others.
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(g) |
ALPS is not authorized by the Fund to give any information or to make any representations other than those contained in the registration statement or
prospectus and statement of additional information, or contained in shareholder reports, repurchase offer notifications or other material that may be prepared by or on behalf of the Fund for ALPS’ use. Consistent with the foregoing,
ALPS may prepare and distribute sales literature or other material as it may deem appropriate in consultation with the Fund, provided such sales literature complies with applicable laws and regulations.
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(h) |
The Fund agrees that it will take all action necessary to register the Shares under the 1933 Act and the 1940 Act (subject to the necessary approval of its
shareholders). The Fund shall make available to ALPS, at ALPS’ expense, such number of copies of its prospectus, statement of additional information, and periodic reports as ALPS may reasonably request. The Fund shall furnish to ALPS
copies of all information, financial statements, repurchase offer notifications and other papers, which ALPS may reasonably request for use in connection with the distribution of Shares of the Fund.
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(i) |
The Fund agrees to execute any and all documents and to furnish any and all information and otherwise to take all actions that may be reasonably necessary in
connection with the qualification of the Shares for sale in such states as ALPS may designate. The Fund must notify ALPS in writing of the states in which the Shares may be sold and must notify ALPS in writing of any changes to the
information contained in the previous notification.
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(j) |
The Fund shall not use the name of ALPS, or any of its affiliates, in any prospectus or statement of additional information, sales literature, and other
material relating to the Fund in any manner without the prior written consent of ALPS (which shall not be unreasonably withheld); provided, however, that ALPS hereby approves all lawful uses of the names of ALPS and its affiliates in
the prospectus and statement of additional information of the Fund and in all other materials which merely refer in accurate terms to its appointment hereunder or which are required by the SEC, FINRA or any state securities authority.
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(k) |
Neither ALPS nor any of its affiliates shall use the name of the Fund in any publicly disseminated materials, including sales literature, in any manner
without the prior written consent of the Fund (which shall not be unreasonably withheld); provided, however, that the Fund hereby approves all lawful uses of its name in any required regulatory filings of ALPS which merely refer in
accurate terms to the appointment of ALPS hereunder, or which are required by the SEC, FINRA or any state securities authority.
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(l) |
ALPS will promptly transmit any orders received by it for purchase, redemption, or exchange of the Shares to the Fund’s transfer agent.
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(m) |
ALPS shall maintain membership with the National Securities Clearing Corporation (“NSCC”) and any other similar successor organization to sponsor a
participant number for the Fund in order to enable the Shares to be traded through FundSERV. ALPS will not be responsible for any operational matters associated with the settlement of Fund transactions through FundSERV or Networking.
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(n) |
The Fund agrees to issue Shares of the Fund and to request The Depository Trust Company to record on its books the ownership of such Shares in accordance with
the book-entry system procedures described in the prospectus in such amounts as ALPS has requested through the transfer agent in writing or other means of data transmission, as promptly as practicable after receipt by the Fund of the
requisite deposit securities and cash component (together with any fees) and acceptance of such order, upon the terms described in the Registration Statement.
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(o) |
At the request of the Fund, ALPS enters into agreements with financial intermediaries in connection with the sale of Fund shares. ALPS will not be obligated
to make payments to any such financial intermediaries unless ALPS has received an authorized payment from the Fund paid under a distribution plan (if any) or other such plan or fee approved by the Fund’s board of trustees, and/or if
payment is received from the Fund’s investment adviser. In addition, to the extent that ALPS is requested or required by the Fund to enter into financial intermediary agreements commonly referred to as Non-Standard Financial
Intermediary Agreements on behalf of the Fund, the Fund shall indemnify and hold ALPS harmless from and against any and all losses and liabilities that ALPS may incur arising out of or relating to: (i) ALPS’ actions or failures to act
pursuant to any such Non-Standard Financial Intermediary Agreement; (ii) any representations made by ALPS in any Non-Standard Financial Intermediary on behalf of the Fund and/or in the capacity as the Fund’s agent; or (iii) any
indemnification provided by ALPS under any such Non-Standard Financial Intermediary Agreement on behalf of the Fund and/or in the capacity as the Fund’s agent; provided, however, that the Fund shall not be liable for ALPS’ willful
misfeasance, bad faith, gross negligence, or reckless disregard by ALPS in the performance of its duties and obligations under any such Non-Standard Financial Intermediary Agreement.
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5. |
Insurance. ALPS will maintain at its expense an errors and
omissions insurance policy adequate to cover its distribution activities hereunder relating to the Fund.
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(a) |
Advice of the Fund and Service Providers. If ALPS
is in doubt as to any action it should or should not take, ALPS may request directions, advice, or instructions from the Fund or, as applicable, the Fund’s investment adviser, custodian, or other service providers.
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(b) |
Advice of Counsel. If ALPS is in doubt as to any
question of law pertaining to any action it should or should not take, ALPS may request advice from counsel of its own choosing (who may be counsel for the Fund, the Fund’s investment adviser, or ALPS, at the option of ALPS) at its own
expense.
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(c) |
Conflicting Advice. In the event of a conflict
between directions, advice or instructions ALPS receives from the Fund or any service provider and the advice ALPS receives from counsel, ALPS may in its sole discretion rely upon and follow the advice of counsel. ALPS will provide the
Fund with prior written notice of its intent to follow advice of counsel that is materially inconsistent with directions, advice or instructions from the Fund. Upon request, ALPS will provide the Fund with a copy of such advice of
counsel.
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(b) |
In the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard by ALPS in the performance of its duties,
obligations, or responsibilities set forth in this Agreement, ALPS and its affiliates, including their respective officers, directors, agents, and employees, shall not be liable for, and the Fund agrees to indemnify, defend and hold
harmless such persons from, all taxes, charges, expenses, assessments, claims, and liabilities (including, without limitation, attorneys’ fees and disbursements and liabilities arising under applicable federal and state laws) arising
directly or indirectly from the following:
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(i) |
the inaccuracy of factual information furnished to ALPS by the Fund or the Fund’s investment adviser, custodians, or other service providers;
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(ii) |
any claim that the registration statement, prospectus, statement of additional information, shareholder report, sales literature and
advertisements approved for use by the Fund and/or the Fund’s investment adviser or other information filed or made public by the Fund (as from time to time amended) including an untrue statement of a material fact or omission of a
material fact required to be stated therein or necessary in order to make the statements therein (and in the case of the prospectus and statement of additional information, in light of the circumstances under which they were made) not
misleading under the 1933 Act, the 1940 Act, or any other statute, regulation, self-regulatory organization rule or applicable common law, except to the extent the statement or omission was made in reliance upon, and in conformity with,
information furnished to the Fund by or on behalf of ALPS;
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(iii) |
any wrongful act of the Fund or any of its employees;
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(iv) |
any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates;
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(v) |
losses, delays, failure, errors, interruption or loss of data occurring directly or indirectly by reason of circumstances beyond its reasonable control, including without limitation, acts of
God, action or inaction of civil or military authority, war, terrorism, riot, fire, flood, sabotage, labor disputes, elements of nature, or non-performance by a third party;
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(vi) |
any liability of ALPS resulting from a representation, warranty or covenant made by the Fund to ALPS under this Agreement;
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(v) |
ALPS’ reliance on any instruction, direction, notice, instrument or other information from the Fund or the Fund’s investment adviser that ALPS reasonably
believes to be genuine;
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(vi) |
any liability of ALPS resulting from a representation, covenant or warranty that ALPS makes, or any indemnification that ALPS provides, on behalf of the Trust
or a Fund in an intermediary agreement relating to a Fund;
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(vii) |
loss of data or service interruptions caused by the Fund’s (or a Fund service provider’s) equipment failure; or
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(x) |
any other action or omission to act which ALPS takes in connection with the provision of services to the Fund.
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(c) |
ALPS shall indemnify and hold harmless the Fund, the Fund’s investment adviser and their respective officers, directors/trustees, agents, and
employees from and against any and all taxes, charges, expenses, assessments, claims, and liabilities (including, without limitation, attorneys’ fees and disbursements and liabilities arising under applicable federal and state laws)
arising directly or indirectly from ALPS’ willful misfeasance, bad faith, gross negligence, or reckless disregard in the performance of its duties, obligations, or responsibilities set forth in this Agreement.
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8. |
Activities of ALPS. The services of ALPS under
this Agreement are not to be deemed exclusive, and ALPS shall be free to render similar services to others. The Fund recognizes that from time to time directors, officers and employees of ALPS may serve as
directors, officers and employees of other corporations or businesses (including other investment companies) and that such other corporations and businesses may include ALPS as part of their name and that ALPS or its affiliates may
enter into distribution agreements or other agreements with such other corporations and businesses.
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9. |
Accounts and Records. The accounts and records maintained by ALPS shall be the property of the Fund. ALPS shall prepare, maintain and preserve such accounts and records as required by the 1940 Act and other applicable securities laws, rules and regulations. ALPS shall surrender such accounts and records to the Fund, in the form in which
such accounts and records have been maintained or preserved, promptly upon receipt of instructions
from the Fund. The
Fund shall have access to such accounts and records at all times during ALPS’ normal business hours. Upon the
reasonable request of the Fund, copies of any such books and records shall be provided by ALPS to the Fund at the Fund’s expense. ALPS shall assist the Fund, the Fund’s independent auditors, or, upon approval of the Fund, any regulatory body, in any requested review of the Fund’s accounts and records, and reports by ALPS or its
independent accountants concerning its accounting system and internal auditing controls will be open to such entities for audit or inspection upon reasonable request. ALPS or its undersigned as defined by Rule 17a-4 of the 1934 Act,
shall have access to all electronic communications, including password access to the system storing the electronic communications, of registered representatives of ALPS that are associated with the Fund and are required to be
maintained under Rule 17a-4 of the 1934 Act and FINRA Rules 3110 and 3010. Electronic storage media maintained by the Fund will comply with Rule 17a-4 of the 1934 Act.
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10. |
Confidential and Proprietary Information. ALPS
agrees that it will, on behalf of itself and its officers and employees, treat all transactions contemplated by this Agreement, and all records and information relative to the Fund and its current and former shareholders and other
information germane thereto, as confidential and as proprietary information of the Fund and not to use, sell, transfer, or divulge such information or records to any person for any purpose other than performance of its duties hereunder,
except after prior notification to and approval in writing from the Fund, which approval shall not be unreasonably withheld. Approval may not be withheld where ALPS may be exposed to civil, regulatory, or criminal proceedings for
failure to comply, when requested to divulge such information by duly constituted authorities, or when requested by the Fund. When requested to divulge such information by duly constituted authorities, ALPS shall use reasonable
commercial efforts to request confidential treatment of such information. ALPS shall have in place and maintain physical, electronic, and procedural safeguards reasonably designed to protect the security, confidentiality, and integrity
of, and to prevent unauthorized access to or use of records and information relating to the Fund and its current and former shareholders.
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11. |
Compliance with Rules and Regulations. ALPS shall comply
(and to the extent ALPS takes or is required to take action on behalf of the Fund hereunder shall cause the Fund to comply) with all applicable requirements of the 1940 Act and other applicable laws, rules, regulations, orders and
code of ethics, as well as all investment restrictions, policies and procedures adopted by the Fund of which ALPS has knowledge (it being understood that ALPS is deemed to have knowledge of all investment restrictions, policies or procedures set out in the Fund’s public filings or otherwise provided to ALPS). Except as set out in this Agreement,
ALPS assumes no responsibility for such compliance by the Fund. ALPS shall maintain at all times a program reasonably designed to prevent violations of the federal securities laws (as defined in Rule
38a-1 under the 0000 Xxx) with respect to the services provided, and shall provide to the Fund a certification to such effect no less than annually or as otherwise reasonably requested by the Fund. ALPS shall make available its
compliance personnel and shall provide at its own expense summaries and other relevant materials relating to such program as reasonably requested by the Fund.
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12. |
Representations and Warranties of ALPS. ALPS
represents and warrants to the Fund that:
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13. |
Representations and Warranties of the Fund. The
Fund represents and warrants to ALPS that:
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(c)
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(d)
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The registration statement and each Fund's prospectus and statement of additional information:
(i) have been prepared, and all sales literature and advertisements approved by the Fund and/or the Fund's investment adviser or other materials prepared by or on behalf of the Fund for ALPS' use ("Sales Materials") shall be prepared, in
all material respects, in conformity with the 1933 Act, the 1940 Act and the rules and regulations of the SEC (the "Rules and Regulations") and (ii) contain, and all Sales Materials shall contain, all statements required to be stated
therein in accordance with the 1933 Act, the 1940 Act and the Rules and Regulations.
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(e)
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All statements of fact contained therein, or to be contained in all sales literature and
advertisements approved by the Fund and/or the Fund's investment adviser or other materials prepared by or on behalf of the Fund for ALPS' use ("Sales Materials") , are or will be true and correct in all material respects at the time
indicated or the effective date, as the case may be, and none of the registration statement, any Fund's prospectus or statement of additional information, nor any Sales Materials shall include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of each Fund's prospectus and statement of additional information in light of the circumstances in which made, not
misleading. The Fund shall, from time to time, file such amendment or amendments to the registration statement and each Fund's prospectus and statement of additional information as, in the light of future developments, shall, in the
opinion of the Fund's counsel, be necessary in order to have the registration statement and each Fund's prospectus and statement of additional information at all times contain all material facts required to be stated therein or necessary
to make the statements therein, in the case of each Fund's prospectus or statement of additional information in light of the circumstances in which made, not misleading. The Fund shall not file any amendment to the registration statement
or a Fund's prospectus or statement of additional information without providing ALPS reasonable notice thereof in advance, provided that nothing in this Agreement shall in any way limit the Fund's right to file at any time such amendments
to the registration statement or a Fund's prospectus or statement of additional information as the Fund may deem advisable. Notwithstanding the foregoing, the Fund shall not be deemed to make any representation or warranty as to any
information or statement provided by ALPS for inclusion in the registration statement or any Fund's prospectus or statement of additional information.
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14. |
Consultation Between the Parties. ALPS and the Fund shall
regularly consult with each other regarding ALPS’ performance of its obligations under this Agreement. In connection therewith, the Fund shall submit to ALPS at a reasonable time in advance of filing with the SEC reasonably final copies
of any amended or supplemented registration statement (including exhibits) under the 1933 Act and the 1940 Act and any repurchase offer notification; provided, however, that nothing contained in this Agreement shall in any way limit the
Fund’s right to file at any time such amendments to any registration statement and/or supplements to any prospectus or statement of additional information, of whatever character, as the Fund may deem advisable, such right being in all
respects absolute and unconditional.
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15. |
Anti-Money Laundering. ALPS agrees to maintain an anti-money
laundering program in compliance with Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA Patriot Act”) and all applicable laws and
regulations promulgated thereunder. ALPS confirms that, as soon as possible, following the request from the Fund, ALPS will supply the Fund with copies of ALPS’ anti-money laundering policy and procedures, and such other relevant
certifications and representations regarding such policy and procedures as the Fund may reasonably request from time to time. ALPS will provide, to the Fund, any Financial Crimes Enforcement Network (FinCEN) request received pursuant to
USA Patriot Act Section 314(a), which the Fund may then provide to its transfer agent. ALPS shall promptly notify the Fund in writing in the event of any violation of its anti-money laundering program to the extent it relates solely to
services provided by ALPS to the Fund.
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16. |
Business Interruption Plan. ALPS 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. In the event of
equipment failures, ALPS shall, at no additional expense to the Fund, take commercially reasonable steps to minimize service interruptions.
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(a) |
Initial Term. This Agreement shall become effective as of the date first written above (“Effective Date”) and shall continue thereafter throughout the period that ends two (2) years after the Effective Date (the “Initial
Term”).
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(b) |
Renewal Term. If not sooner terminated, this Agreement
shall renew at the end of the Initial Term and shall thereafter continue for successive annual periods, provided such continuance is specifically approved at least annually (i) by the Fund’s Board of
Trustees or (ii) by a vote of a majority of the outstanding voting securities of the Fund, provided that in either event the continuance is also approved by the majority of the Trustees of the Fund who are not interested persons (as
defined in the 0000 Xxx) of any party to this Agreement by vote cast in person at a meeting called for the purpose of voting on such approval. If a plan under Rule 12b-1 of the 1940 Act is in effect, continuance of the plan and this
Agreement must be approved at least annually by a majority of the Trustees of the Fund who are not interested persons (as defined in the 0000 Xxx) and have no financial interest in the operation of such plan or in any agreements related
to such plan, cast in person at a meeting called for the purpose of voting on such approval.
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10
(c) |
This Agreement is terminable without penalty on ninety (90) days’ written notice by the Fund’s Board of Trustees, by vote of the holders of a majority of the
outstanding voting securities of the relevant portfolio of the Fund, or by ALPS.
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(d) |
Deliveries Upon Termination. Upon
termination of this Agreement, ALPS agrees to cooperate in the orderly transfer of distribution duties and shall deliver to the Fund or as otherwise directed by the Fund (at the expense of
the Fund) all records and other documents made or accumulated in the performance of its duties for the Fund hereunder.
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18. |
Assignment. This Agreement will automatically
terminate in the event of its assignment (as defined in the 1940 Act). This Agreement shall not be assignable by the Fund without the prior written consent of ALPS, such consent not to be unreasonably withheld by
ALPS.
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19. |
Governing Law. The provisions of this Agreement
shall be construed and interpreted in accordance with the laws of the State of New York and the 1940 Act and the rules thereunder. To the extent that the laws of the State of New York
conflict with the 1940 Act or such rules, the latter shall control.
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20. |
Names. The obligations of the Fund entered into in
the name or on behalf thereof by any director/trustee, shareholder, representative, or agent thereof are made not individually, but in such capacities, and are not binding upon any of the directors, shareholders, representatives or
agents of the Fund personally, but bind only the property of the Fund, and all persons dealing with the Fund must look solely to the property of the Fund for the enforcement of any claims against the Fund.
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21. |
Amendments to this Agreement. This Agreement may
only be amended by the parties in writing.
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22. |
Notices. All notices and other communications
hereunder shall be in writing, shall be deemed to have been given when received or when sent by telex or facsimile, and shall be given to the following addresses (or such other addresses as to which notice is given):
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000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: ______________
Fax:
24. |
Counterparts. This Agreement may be executed by
the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
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25. |
Entire Agreement. This Agreement embodies the
entire agreement and understanding among the parties and supersedes all prior agreements and understandings relating to the subject matter hereof; provided, however, that ALPS may embody in one or more separate documents its agreement,
if any, with respect to delegated duties and oral instructions.
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By: /s/ Xxxx Flaws
Title: Treasurer, Principal Financial Officer and
Principal Accounting Officer
Title:
SVP & Director of Distribution Services
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APPENDIX A
● Act as legal underwriter/distributor
and provide such information as may be reasonably requested by the Fund’s Board in order for the Board to assess and review ALPS’ services in connection with the Board’s requirements under Section 15(c) of the 1940 Act.
● Maintain and supervise FINRA
registrations for licensed individuals
o Client access through online registered representative portal
o Coordinate Continuing Education requirements
o Administer and maintain required filings/licenses with FINRA
● Provide investment company
advertising and sales literature review, approval and record maintenance in accordance with the Letter Agreement by and between ALPS and Axonic Capital LLC, including
o Online submission, review/approval, & real-time status updates through AVA Advertising
Review Portal
o File required materials with FINRA
o Provide advertising regulatory and disclosure guidance
● Prepare, update, execute &
maintain financial intermediary agreements
o Online access to be provided by ALPS through ALPS Virtual Access (AVA)
o maintain books and records consistent with record retention requirements applicable to it as the
principal underwriter and distribution of the Fund with respect to financial intermediary agreements
● Administer intermediary due diligence
program
o ALPS shall conduct a due diligence review of each financial intermediary that executes a selling
agreement in accordance with ALPS’ due diligence program.
o Provide ongoing monitoring of financial intermediary relationships
o Established risk ranking methodology & reporting
● Perform financial intermediary
payments & reporting
● Support financial intermediary
relations
o Consult and support client’s distribution model & strategy
o Fulfill key account intermediary initial and ongoing information and due diligence requests
● Provide quarterly reporting,
including (i) a scorecard regarding a summary of services provided by ALPS; (ii) a Rule 38a-1 under the 1940 Act certification; (iii) a Rule 17j-1 under the 1940 Act Code of Ethics Certification; and (iv) to the extent applicable, a summary of any
material changes to ALPS’ policies and procedures.