INVESTMENT ADVISORY AGREEMENT
Exhibit (d)(i)
This
Investment Advisory Agreement (“Agreement”) is made and
entered into as of September 1, 2018, by and between Procure ETF
Trust II, a Delaware
trust (“Trust”), on behalf of the funds listed on
Appendix A, each a series of shares of the Trust (each, a
“Fund” and, collectively, “Funds”), and
ProcureAM, LLC, a Delaware limited liability company
(“Advisor”).
WHEREAS, the Trust
is an open-end management investment company, registered under the
Investment Company Act of 1940, as amended (“1940
Act”);
WHEREAS, the Trust
is authorized to issue shares of beneficial interest in separate
series with each such series representing interests in a separate
portfolio of securities and other assets of the Trust;
WHEREAS, the
Advisor is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (“Advisers Act”), and
engages in the business of asset management; and
WHEREAS, the Trust
desires to retain the Advisor to render certain investment
management services to the Funds, and the Advisor is willing to
render such services; and
WHEREAS,
capitalized terms not otherwise defined in this Agreement have the
meanings assigned to them in a Fund’s most recent
prospectus.
NOW,
THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Obligations of
Investment Advisor
(a) Services.
The Advisor shall provide a
continuous program of investment management for the Funds, subject
to the general supervision of the Trust’s Board of Trustees
and the provisions of this Agreement. Specifically, and without
limiting the generality of the foregoing, the Advisor agrees to
perform the following services (“Services”) for each
Fund either directly or through any sub-advisor appointed in
accordance with the provisions of subsection (c)
below;
(1) manage
the investment and reinvestment of the assets of each Fund for the
period and on the terms set forth in this
Agreement;
(2) continuously review, supervise, and
administer the investment program of each Fund;
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(3) determine, in its discretion, the securities to
be purchased, retained or sold (and implement those decisions) with
respect to each Fund;
(4) with the assistance of
the Funds’ distributor, determine the number of shares of the
Funds that will be created or redeemed each Business Day based on
the purchase orders submitted by Authorized
Participants;
(5)
provide, in a timely manner, such information as may be reasonably
requested by the Trust or its designated agents in connection with,
among other things, information about each Fund sufficient for a
pricing service or other entity to calculate the Intraday
Indicative Value of the shares of such Fund every fifteen seconds
each Business Day;
(6)
provide the Trust and the Funds with records concerning the
Advisor’s activities under this Agreement which the Trust and
the Funds are required to maintain;
(7)
render regular reports to the Trust’s trustees and officers
concerning the Advisor’s discharge of the foregoing
responsibilities.; and
(8) arrange
for other necessary services, including custodial, transfer agency
and administration.
(b)
Control of the
Trust. The Advisor shall discharge the responsibilities
described in subsection (a) subject to the control of the trustees
and officers of the Trust and in compliance with (i) such policies
as the trustees may from time to time establish; (ii) the relevant
Fund’s objectives, policies, and limitations as set forth in
its prospectus and statement of additional information, as the same
may be amended from time to time; and (iii) with all applicable
laws and regulations.
(c)
Sub-Advisor and
Agents. All Services to be furnished by the Advisor under
this Agreement may be furnished through the medium of any managers,
officers or employees of the Advisor or through such other parties
(including, without limitation, a sub-advisor) as the Advisor may
determine from time to time.
(d)
Expenses and
Personnel. The Advisor agrees, at its own expense or at the
expense of one or more of its affiliates, to render the Services
and to provide the office space, furnishings, equipment and
personnel as may be reasonably required in the judgment of the
trustees and officers of the Trust to perform the Services on the
terms and for the compensation provided herein. The Advisor shall
authorize and permit any of its officers, managers and employees,
who may be elected as trustees or officers of the Trust, to serve
in the capacities in which they are elected. Except to the extent
expressly assumed by the Advisor herein and except to the extent
required by law to be paid by the Advisor, the Trust shall pay all
costs and expenses in connection with its operation.
(e)
Books and Records.
The Advisor hereby undertakes and agrees to maintain all records
not maintained by a service provider or sub-adviser pursuant to
their agreements with the Trust or Advisor, in the form and for the
period required by Rule 31a-2 under the 1940 Act. All books and
records prepared and maintained by the Advisor for the Trust and
each Fund under this Agreement shall be the property of the Trust
and such Fund and, upon request therefor, the Advisor shall
surrender to the Trust and such Fund such of the books and records
so requested. The
Advisor further agrees that it will not disclose or use any records
or information obtained pursuant to this Agreement in any manner
whatsoever except as authorized in this Agreement and that it will
keep confidential any information obtained pursuant to this
Agreement and disclose such information only if the Trust has
authorized such disclosure, or if such disclosure is required by
federal or state regulatory authorities.
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(f)
Additional Services
Provided at the Expense of the Trust. The Advisor agrees, at
the expense of the Trust or the Advisor, (i) to prepare all
required tax returns of the Trust and each Fund, (ii) to prepare
and submit reports to existing shareholders, (iii) to update
periodically the prospectuses and statements of additional
information of the Trust and (iv) to prepare reports to be filed
with the Securities and Exchange Commission (“SEC”) and
other regulatory authorities. In each case, the Advisor may cause a
sub-advisor to perform such duties.
2.
Fund
Transactions.
(a)
General. The
Advisor is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for each
Fund. With respect to brokerage selection, the Advisor shall seek
to obtain the best overall execution for Fund transactions, which
is a combination of price, quality of execution and other factors.
As permitted by Section 28(e) of the Securities Exchange Act of
1934, as amended (“Section 28(e)”), the Advisor may pay
to a broker which provides brokerage and research services (as such
services are defined in Section 28(e)) to a Fund an amount of
disclosed commission in excess of the commission which another
broker would have charged for effecting that transaction. Such
practice is subject to a good faith determination that such
commission is reasonable in light of the services provided and to
such policies as the Trust’s trustees may adopt from time to
time. Such services of brokers are used by the Advisor in
connection with all of its investment activities, and some of such
services obtained in connection with the execution of transactions
for a Fund may be used in managing other investment
accounts.
(b)
Mixed-Use Services.
On occasion, a broker-dealer might furnish the Advisor with a
service which has a mixed use (i.e., the service is used both for
investment and brokerage activities and for other activities).
Where this occurs, the Advisor will reasonably allocate the cost of
the service, so that the portion or specific component which
assists in investment and brokerage activities is obtained using
portfolio commissions from a Fund or other managed accounts, and
the portion or specific component which provides other assistance
(for example, administrative or non-research assistance) is paid
for by the Advisor from its own funds.
(c)
Exclusivity. Where
the Advisor deems the purchase or sale of a security to be in the
best interest of a Fund as well as its other customers (including
any other fund or other investment company or advisory account for
which the Advisor acts as investment adviser), the Advisor, to the
extent permitted by applicable laws and regulations, may aggregate
the securities to be sold or purchased for a Fund with those to be
sold or purchased for such other customers in order to obtain the
best net price and most favorable execution under the
circumstances. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Advisor, as applicable, in the
manner it considers to be equitable and consistent with its
fiduciary obligations to such Fund and such other customers. In
some instances, this procedure may adversely affect the price and
size of the position obtainable for a Fund.
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(d) Affiliated
Broker-Dealers. Broker or
dealers selected by the Advisor for the purchase and sale of
securities or other investment instruments for a Fund may include a
sub-advisor, or brokers or dealers affiliated with a sub-advisor,
provided such orders comply with Rules 17e-1 and 10f-3 under the
1940 Act and the Trust’s Rule 17e-1 and Rule 10f-3
Procedures, respectively, in all respects, or any other applicable
exemptive rules or orders applicable to the
Advisor.
(e) Reporting.
The Advisor will promptly communicate to the officers and the
trustees of the Trust such information relating to portfolio
transactions as they may reasonably request.
(f)
Delegation. The
Advisor may delegate or share responsibility for Fund transactions
and the terms of this Section 2 with a sub-advisor, pursuant to the
terms of Section 1(c).
3.
Compensation of the
Advisor.
(a) For the services
rendered, the facilities furnished and expenses assumed by the
Advisor, each Fund shall pay to the Advisor at the end of each
calendar month a fee for the Fund calculated as a percentage of the
average daily net assets of the Fund at the annual rates set forth
in Schedule A of
this Agreement. The Advisor’s fee is accrued daily at 1/365th
of the applicable annual rate set forth in Schedule A.
Schedule A shall
be amended from time to time to reflect the addition and/or
termination of any Fund as a Fund hereunder and to reflect any
change in the advisory fees payable with respect to any Fund duly
approved in accordance with Section 8 hereof. For the purpose
of the fee accrual, the daily net assets of each Fund are
determined in the manner and at the times set forth in the
Fund’s current Prospectus and, on days on which the net
assets are not so determined, the net asset value computation to be
used shall be as determined on the immediately preceding day on
which the net assets were determined. In the event of termination
of this Agreement, all compensation due through the date of
termination will be calculated on a pro-rated basis through the
date of termination and paid within fifteen business days of the
date of termination. The Advisor may waive all or a portion of its
fees provided for hereunder and such waiver will be treated as a
reduction in the purchase price of its services. The Advisor shall
be contractually bound under this Agreement by the terms of any
publicly-announced waiver of its fee, or any limitation of a
Fund’s expenses, as if such waiver or limitation were fully
set forth in this Agreement. The waiver of any of the
Advisor’s fee shall not obligate the Advisor to waive any of
its fee on a subsequent occasion. The Advisor may delegate that a
third party or affiliate may receive payment of all or a part of
the Advisor’s fee.
(b) The Advisor agrees to
pay all expenses of the Trust, except for: (i) brokerage expenses
and other expenses (such as stamp taxes) connected with the
execution of portfolio transactions or in connection with creation
and redemption transactions; (ii) legal fees or expenses in
connection with any arbitration, litigation or pending or
threatened arbitration or litigation, including any settlements in
connection therewith; (iii) compensation and expenses of the
Trustees of the Trust who are not officers, directors/trustees,
partners or employees of the Advisor or its affiliates
(“Independent Trustees”); (iv) compensation and
expenses of counsel to the Independent Trustees, (iv) compensation
and expenses of the Trust’s chief compliance officer; (v)
extraordinary expenses; (vi) distribution fees and expenses paid by
the Trust under any distribution plan adopted pursuant to Rule
12b-1 under the 1940 Act; and (vii) the advisory fee payable to the
Advisor hereunder. The payment or assumption by the Advisor of any
expense of the Trust that the Advisor is not required by this
Agreement to pay or assume shall not obligate the Advisor to pay or
assume the same or any similar expense of the Trust on any
subsequent occasion.
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4.
Status of Investment
Advisor. The services of the Advisor to the Trust and each
Fund are not to be deemed exclusive, and the Advisor shall be free
to render similar services to others so long as its services to the
Trust and the Funds are not impaired thereby. The Advisor shall be
deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent the Trust or the Funds in any way or otherwise be deemed
an agent of the Trust or the Funds. Nothing in this Agreement shall
limit or restrict the right of any manager, officer or employee of
the Advisor, who may also be a trustee, officer or employee of the
Trust, to engage in any other business or to devote his or her time
and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar
nature.
5.
Permissible
Interests. Trustees, agents, and shareholders of the Trust
are or may be interested in the Advisor (or any successor thereof)
as managers, officers, members or otherwise; and managers,
officers, agents, and members of the Advisor are or may be
interested in the Trust as trustees, shareholders or otherwise; and
the Advisor (or any successor) is or may be interested in the Trust
as a shareholder or otherwise.
6.
Limits of Liability;
Indemnification. The Advisor assumes no responsibility under
this Agreement other than to render the services called for
hereunder. The Advisor shall not be liable for any error of
judgment or for any loss suffered by the Trust or a Fund in
connection with the matters to which this Agreement relates, except
a loss resulting from a breach of fiduciary duty with respect to
receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in
Section 36(b)(3) of the 0000 Xxx) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the
performance of, or from reckless disregard by it of its obligations
and duties under, this Agreement. It is agreed that the Advisor
shall have no responsibility or liability for the accuracy or
completeness of the Trust’s registration statement under the
1940 Act or the Securities Act of 1933, as amended (“1933
Act”), except for information supplied by the Advisor for
inclusion therein. The Trust agrees to indemnify the Advisor to the
full extent permitted by the Trust’s Declaration of
Trust.
7.
Term. Unless
terminated as provided in this Agreement, this Agreement shall
remain in full force and effect for an initial term of two (2)
calendar years commencing on the date on which the first of the
Funds commences operations, and from year to year thereafter
provided such continuance is approved at least annually by the vote
of a majority of the trustees of the Trust who are not
“interested persons” (as defined in the Act) of the
Trust, which vote must be cast in person at a meeting called for
the purpose of voting on such approval; provided, however,
that:
(a) the
Trust may, at any time and without the payment of any penalty,
terminate this Agreement upon 60 days written notice of a decision
to terminate this Agreement by (i) the Trust’s trustees; or
(ii) the vote of a majority of the outstanding voting securities of
the Funds;
(b) the
Agreement shall immediately terminate in the event of its
assignment (within the meaning of the 1940 Act and the rules
promulgated thereunder);
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(c) the
Advisor may, at any time and without the payment of any penalty,
terminate this Agreement upon 60 days’ written notice to the
Trust and the Funds; and
(d) the
terms of paragraph 6 of this Agreement shall survive the
termination of this Agreement.
8.
Amendments. No
provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this
Agreement shall be effective with respect to a Fund until approved
by (a) to the extent required by applicable law, the vote of the
holders of a majority of such Fund’s outstanding voting
securities and (b) a majority of those trustees of the Trust who
are not parties to this Agreement or interested persons of any such
party cast in person at a meeting called for the purpose of voting
on such approval. Additional Funds may be added to Appendix A by
written agreement of the Trust and the Advisor.
9.
Applicable Law.
This Agreement shall be construed in accordance with, and governed
by, the laws of the State of New York without regard to the
principles of the conflict of laws or the choice of
laws.
10.
Representations and
Warranties.
(a)
Representations and
Warranties of the Advisor. The Advisor hereby represents and
warrants to the Trust as follows:
(i) the
Advisor is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware and is fully
authorized to enter into this Agreement and carry out its duties
and obligations hereunder;
(ii)
the Advisor is registered as an investment adviser with the SEC
under the Advisers Act, shall maintain such registration in effect
at all times during the term of this Agreement, and shall notify
the Trust immediately if the Advisor ceases to be so
registered;
(iii)
the Advisor has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and Rule 204A-1 of
the Advisers Act ( as amended from time to time) and if it has not
already done so, will provide the Trust with a copy of that code,
together with evidence of its adoption. Within 20 days of the end
of each calendar quarter during which this Agreement remains in
effect, the chief compliance officer of the Advisor shall certify
to the Trust that the Advisor has complied with the requirements of
Rule 17j-1 (as amended from time to time) during the previous
quarter and that there have been no violations of the
Advisor’s code of ethics or, if such a violation has
occurred, that appropriate action has been taken in response to
such violation. Upon written request of the Trust, the Advisor
shall permit representatives of the Trust to examine the reports
(or summaries of the reports) required to be made to the Advisor by
Rule 17j-1(c)(1) and other records evidencing enforcement of the
code of ethics;
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(iv) the
Advisor, pursuant to Rule 206(4)-7 under the Advisers Act, has
adopted written policies and procedures designed to prevent
violations of the Advisers Act and the rules thereunder, including
include policies and procedures designed to minimize potential
conflicts of interest among the Funds and any other accounts
advised or managed by it or its affiliates, such as cross trading
policies, as well as those designed to ensure the equitable
allocation of portfolio transactions and brokerage
commissions;
(v) the
Advisor has adopted policies and procedures as required under
Section 204A of the Advisers Act, which are reasonably
designed in light of the nature of its business to prevent the
misuse, in violation of the Advisers Act or the Exchange Act or the
rules thereunder, of material non-public information by the Advisor
or certain associated persons, and has adopted policies and
procedures to monitor and restrict securities trading by certain
employees of the Advisor; and
(vi) the
Advisor shall not receive any incentive fees for outperforming the
underlying index of any Fund.
(b)
Representations and
Warranties of the Trust. The Trust hereby represents and
warrants to the Advisor as follows: (i) the Trust has been duly
organized as a trust under the laws of the State of Delaware and is
authorized to enter into this Agreement and carry out its terms;
(ii) shares of each Fund are (or will be) registered for offer and
sale to the public under the 1933 Act; and (iii) such registrations
will be kept in effect during the term of this
Agreement.
11.
Liability of Trust and
Funds. It is expressly agreed that the obligations of the
Trust hereunder shall not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees of the Trust
personally, but shall bind only the trust property of the Trust as
provided in the Declaration of Trust. This Agreement shall not be
deemed to have been made by any of them individually or to impose
any liability on them personally. With respect to any obligation of
the Trust or a Fund arising under this Agreement, the Advisor shall
look for payment or satisfaction of such obligation solely to the
assets and property of the Fund to which such obligation relates,
and under no circumstances shall the Advisor have the right to set
off claims relating to a Fund by applying property of any other
series of the Trust. The business and contractual relationships
created by this Agreement, consideration for entering into this
Agreement, and the consequences of such relationship and
consideration relate solely to the Trust and the
Funds.
12.
Use of Names. The
Trust acknowledges that all rights to the name(s) “Procure
ETF Trust II” and Procure Shares and any derivatives thereof
(“Names”), as well as any logos that are now or shall
hereafter be associated with Names (“Logos”), belong to
the Advisor, and that the Trust is being granted a limited license
to use such Names and Logos in its name, the name of its series and
the name of its classes of shares. In the event that this Agreement
is terminated, and the Advisor no longer acts as investment adviser
to the Trust, the Advisor reserves the right to withdraw from the
Trust and the Funds the uses of Names and Logos or any name or logo
that would imply a continuing relationship between the Trust or the
Funds and the Advisor or any of its affiliates.
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13. Assignment.
The Advisor may not assign this Agreement and this Agreement shall
automatically terminate in the event of an
“assignment,” as such term is defined in
Section 2(a)(4) of the 1940 Act. The Advisor shall notify the
Trust’s administrator and Board in writing sufficiently in
advance of any proposed change of “control,” as defined
in Section 2(a)(9) of the 1940 Act, so as to enable the Trust
to: (a) consider whether an assignment will occur,
(b) consider whether to enter into a new Investment Advisory
Agreement with the Advisor, and (c) prepare, file, and deliver
any disclosure document, proxy solicitation or other material
related to a proposed “change of control”, to a
Fund’s shareholders as may be required by applicable
law.
14.
Severability. If
any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby, and to this extent, the
provisions of this Agreement shall be deemed to be
severable.
15.
Notice. Notices of
any kind to be given to the Trust hereunder by the Advisor shall be
in writing and shall be duly given if mailed or delivered to the
Trust at 00 Xxxxxxxx Xxxx, Xxxxxxxxx, XX 00000, Attention: Xxxxxx
Xxxx, or to such other address or to such individual as shall be so
specified by the Trust to the Advisor. Notices of any kind to be
given to the Advisor hereunder by the Trust shall be in writing and
shall be duly given if mailed or delivered to the Advisor at the
Trust at 00 Xxxxxxxx Xxxx, Xxxxxxxxx, XX 00000, Attention: Xxxxxx
Xxxx, or at such other address or to such individual as shall be so
specified by the Advisor to the Trust. Notices shall be deemed to
have been given on the date delivered personally or by courier
service, or three days after sent by registered or certified mail,
postage prepaid, return receipt requested.
16. Miscellaneous.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors (subject to Sections 7(b) and
13 hereof). Anything herein to the contrary notwithstanding, this
Agreement shall not be construed to require, or to impose any duty
upon, either of the parties to do anything in violation of any
applicable laws or regulations. Any provision in this Agreement
requiring compliance with any statute or regulation shall mean such
statute or regulation as amended and in effect from time to
time.
17. Governing
Law. This
Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York without giving effect to the
conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any
federal law, regulation or rule, including the 1940 Act and the
Advisers Act and any rules and regulations promulgated
thereunder.
[Signature Page to Follow]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and the year first written
above.
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By: /s/
Xxxxxx Xxxx
Name:
Xxxxxx Xxxx
Title:
Sole Board Member
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ProcureAM
LLC
By: /s/
Xxxxxx Xxxx
Name:
Xxxxxx Xxxx
Title:
President
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Appendix A
Name of Fund Fee
Rate (% of the average daily net assets)
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Procure
Space ETF
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0.75
%
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