AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is
adopted as of this 13th day of November, 2017 by and among (i) ETF
Series Solutions ("ESS"), on behalf of its series the Master Income
ETF (the "Existing Fund"), (ii) GraniteShares ETF Trust
("GraniteShares Trust"), on behalf of its series the GraniteShares
HIPS US High Income ETF (the "Acquiring Fund"), and (iii) solely for
the purposes of Section 9.1 of this Agreement, GraniteShares Advisors
LLC.
WHEREAS, the parties hereto intend for the Acquiring Fund and the
Existing Fund to enter into a transaction pursuant to which: (i) the
Existing Fund will transfer all its assets to the Acquiring Fund in
exchange for (a) the Acquiring Fund's assumption of certain of the
Existing Fund's liabilities, and (b) the corresponding shares of the
Acquiring Fund of equal value to the net assets of the Existing Fund
being acquired, and (ii) the Existing Fund will distribute the shares
of the Acquiring Fund to Shareholders of the Existing Fund, in
connection with the liquidation and termination of the Existing Fund,
all upon the terms and conditions hereinafter set forth in this
Agreement (such transaction, a "Reorganization");
WHEREAS, the Existing Fund and the Acquiring Fund are open-end,
registered investment companies of the management type; and
WHEREAS, this Agreement is intended to be and is adopted as a plan
of reorganization with respect to the Reorganization within the
meaning of Section 368(a) of the United States Internal Revenue Code
of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements hereinafter set forth, and intending to be
legally bound, the parties hereto covenant and agree as follows:
1.
DESCRIPTION OF THE REORGANIZATION
1.1. Plan of Transaction
(a) Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the
Existing Fund agrees to transfer to the Acquiring Fund all of the
Existing Fund's assets as set forth in Section 1.1(b), and the
Acquiring Fund agrees in consideration therefor (i) to deliver to the
Existing Fund that number of Acquiring Fund shares ("Acquiring Fund
Shares") determined by dividing the value of the Existing Fund's
assets net of any liabilities assumed by the Acquiring Fund, computed
in the manner and as of the time and date set forth in
Section 2.1(a), by the net asset value of one share of the Acquiring
Fund, computed in the manner and as of the time and date set forth in
Section 2.1(b); and (ii) to assume all of the liabilities of the
Existing Fund (whether or not reflected in the Closing Statement of
Assets and Liabilities defined in Section 1.1(b)) other than (1) the
obligations of the Existing Fund under this Agreement, including the
indemnification provisions set forth in Section 9.3 and (2) any
liabilities arising out of the termination of the Agreements set
forth on Schedule 7.1(h) (collectively, the "Excluded Liabilities").
Acquiring Fund Shares shall be delivered to the Existing Fund in
Creation Unit aggregations only, meaning, for purposes of the
Reorganization only, specified blocks of 50,000 Acquiring Fund Shares
(each a "Creation Unit Aggregation").
The Existing Fund will distribute the Acquiring Fund Shares received
by the Existing Fund pro rata to the Existing Fund's shareholders of
record determined as of the Closing (as defined in this
Section 1.1(a)) (the "Existing Fund Shareholders"). All Acquiring
Fund Shares delivered to the Existing Fund shall be delivered at net
asset value without a sales load, commission, transaction fee or
other similar fee being imposed. Such transactions shall take place
at the closing provided for in Section 3.1 (the "Closing").
(b) The assets of the Existing Fund to be acquired by the Acquiring
Fund (the "Assets") shall consist of all assets, including, without
limitation, all cash, cash equivalents, securities, commodities and
futures interests, claims (whether absolute, contingent, known or
unknown, accrued or unaccrued, and including, without limitation, any
interest in pending or future legal claims in connection with past or
present holdings, whether in the form of class action claims, opt-
out, or other direct litigation claims or regulator or government
established investor recovery funds claims and any and all resulting
recoveries), dividends or interest or other receivables that are
owned by the Existing Fund, copies of all books and records of the
Existing Fund on the Closing Date, and any deferred or prepaid
expenses shown on the unaudited statement of assets and liabilities
of the Existing Fund prepared as of the effective time of the Closing
(the "Closing Statement of Assets and Liabilities") in accordance
with accounting principles generally accepted in the United States of
America ("GAAP") applied consistently with those of the Existing
Fund's most recent audited statement of assets and liabilities, if
any. The Assets of the Existing Fund shall be delivered free and
clear of all liens, encumbrances, hypothecations and claims
whatsoever, and there shall be no restrictions on the full transfer
thereof.
(c) Any regulatory reporting responsibility of the Existing Fund,
including the responsibility for filing regulatory reports, tax
returns, and other documents, is and shall remain the responsibility
of the Existing Fund up to and including the Closing Date, as defined
in Section 3.1, and such later date on which the Existing Fund is
terminated. For the avoidance of doubt, the Existing Fund shall be
responsible for (i) preparing and filing the Existing Fund's Form N-
CSR (including the annual report to shareholders) for the fiscal year
ended November 30, 2017, (ii) delivering the Existing Fund's annual
report to shareholders for such fiscal year, and (iii) preparing and
filing the Existing Fund's Form N-PX for the period July 1, 2017
through the Closing Date.
(d) Immediately after the transfer of Assets provided for in
Section 1.1(a), the Existing Fund will distribute to the Existing
Fund Shareholders determined as of the Closing, on a pro rata basis,
the Acquiring Fund Shares received by the Existing Fund pursuant to
Section 1.1(a) and will completely liquidate, dissolve and terminate.
The distribution, liquidation, dissolution and termination referenced
in this Section 1.1(d) will be accomplished with respect to the
shares of beneficial interest of the Existing Fund ("Existing Fund
Shares") by the transfer of the Acquiring Fund Shares received by the
Existing Fund then credited to the account of the Existing Fund on
the books of the Acquiring Fund in the names of the Existing Fund
Shareholders. The Acquiring Fund shall have no obligation to inquire
as to the validity, propriety or correctness of such records, but
shall assume that such transaction is valid, proper and correct.
(e) Prior to the Closing, the Acquiring Fund will issue one share of
beneficial interest of the Acquiring Fund (the "Initial Share") to
GraniteShares Advisors LLC or one of its affiliates (the "Sole
Shareholder") in exchange for a nominal amount for the sole purpose
of allowing the Sole Shareholder to approve certain matters to
facilitate the organization of the Acquiring Fund. Prior to the
Closing, the Initial Share will be redeemed and cancelled by the
Acquiring Fund in exchange for an amount equal to the consideration
received by the Acquiring Fund for such Initial Share.
2.
VALUATION
2.1. With respect to the Reorganization:
(a) The value of the Assets and the liabilities of the Existing Fund
shall be computed as of the close of regular trading on the New York
Stock Exchange (the "NYSE") on the business day immediately preceding
the Closing Date, as defined in Section 3.1 (the "Valuation Date"),
using the valuation procedures approved by the Board of Trustees of
ESS.
(b) The net asset value of an Acquiring Fund Share shall be the net
asset value per share as determined by the Board of Trustees of
GraniteShares Trust.
(c) All computations of value hereunder shall be made by or under
the direction of the Acquiring Fund's pricing agent.
3.
CLOSING AND CLOSING DATE
3.1. The Closing of the transactions contemplated by this Agreement
shall be at 9:30 a.m. Eastern time on December 18, 2017, or such
other date as the parties may agree in writing (the "Closing Date").
All acts taking place at the Closing shall be deemed to take place
simultaneously as of immediately prior to the opening of regular
trading on the New York Stock Exchange, on the Closing Date, unless
otherwise agreed to by the parties.
3.2. With respect to the Reorganization:
(a) The Existing Fund shall cause U.S. Bank National Association,
the custodian for the Existing Fund, to deliver at the Closing a
certificate of an authorized officer stating that (a) the Assets
shall have been delivered in proper form to the custodian for the
Acquiring Fund, immediately prior to the Closing and (b) all
necessary taxes in connection with the delivery of the Assets,
including all applicable federal and state stock transfer stamps, if
any, have been paid or provision for payment has been made. The
Existing Fund's portfolio securities represented by a certificate or
other written instrument shall be presented by the custodian for the
Existing Fund to the custodian for the Acquiring Fund for examination
no later than five business days preceding the Closing Date and
transferred and delivered by the Existing Fund as of the Closing by
the Existing Fund for the account of the Acquiring Fund duly endorsed
in proper form for transfer in such condition as to constitute good
delivery thereof. The Existing Fund's portfolio securities and
instruments deposited with a securities depository, as defined in
Rule 17f-4 under the Investment Company Act of 1940 ("1940 Act"),
shall be delivered as of the Closing by book entry in accordance with
the customary practices of such depositories and the custodian for
the Acquiring Fund. The cash to be transferred by the Existing Fund
shall be delivered by wire transfer of federal funds as of the
Closing. If the Existing Fund is unable to make such delivery as of
the Closing in the manner contemplated by this Section for the reason
that any of such securities or other investments purchased prior to
the Closing have not yet been delivered to the Existing Fund or its
broker, then the Acquiring Fund may, in its sole discretion, waive
the delivery requirements of this Section with respect to said
undelivered securities or other investments if the Existing Fund has,
by the Closing, delivered to the Acquiring Fund or the Acquiring
Fund's Custodian executed copies of an agreement of assignment and
escrow and due bills executed on behalf of said broker or brokers,
together with such other documents as may be required by the
Acquiring Fund or the Acquiring Fund's Custodian, such as brokers'
confirmation slips.
(b) The Existing Fund shall cause U.S. Bancorp Fund Services, LLC,
the transfer agent for the Existing Fund, to deliver at the Closing a
certificate of an authorized officer stating that its records contain
the names and addresses of the Existing Fund Shareholders and the
number and percentage ownership (to three decimal places) of
outstanding Existing Fund Shares owned by the Existing Fund
Shareholder immediately prior to the Closing. The Acquiring Fund
shall issue and deliver a confirmation evidencing the Acquiring Fund
Shares or provide evidence satisfactory to the Existing Fund that
such Acquiring Fund Shares have been credited to the Existing Fund's
account on the books of the Acquiring Fund. At the Closing, each
party shall deliver to the other such bills of sale, checks,
assignments, share certifications, if any, receipts or other
documents as such other party or its counsel may reasonable request
to effect the transaction contemplated by the Agreement. The cash to
be transferred by the Acquiring Fund shall be delivered by wire
transfer of federal funds as of the Closing.
(c) In the event that immediately prior to the Valuation Date (a)
the NYSE or another primary trading market for portfolio securities
of the Existing Fund shall be closed to trading or trading thereupon
shall be restricted, or (b) trading or the reporting of trading on
such Exchange or elsewhere shall be disrupted so that, in the
judgment of the Board of Trustees of either party to this Agreement,
accurate appraisal of the value of the Existing Fund Shares is
impracticable, the Closing Date shall be postponed until the first
business day after the day when trading shall have been fully resumed
and reporting shall have been restored.
4.
REPRESENTATIONS AND WARRANTIES
4.1. ESS, on behalf of itself or, where applicable, the Existing
Fund, represents and warrants to GraniteShares Trust and the
Acquiring Fund as follows:
(a) ESS is a Delaware statutory trust duly organized, validly
existing and in good standing under the laws of the State of Delaware
with power under the Agreement and Declaration of Trust of ESS to own
all of its properties and assets and to carry on its business as it
is now being conducted and, subject to approval of the shareholders
of the Existing Fund, to carry out the Agreement. The Existing Fund
is a separate series of ESS duly designated in accordance with the
applicable provisions of ESS' Agreement and Declaration of Trust.
ESS and the Existing Fund are qualified to do business in all
jurisdictions in which they are required to be so qualified, except
jurisdictions in which the failure to so qualify would not have a
material adverse effect on ESS or the Existing Fund. The Existing
Fund has all material federal, state and local authorizations
necessary to own all of its properties and assets and to carry on its
business as now being conducted, except authorizations which the
failure to so obtain would not have a material adverse effect on the
Existing Fund;
(b) ESS is a registered investment company classified as a
management company of the open-end type, and its registration with
the U.S. Securities and Exchange Commission (the "Commission") as an
investment company under the 1940 Act, and the registration of the
shares of the Existing Fund under the Securities Act of 1933 ("1933
Act"), are in full force and effect, and no action or proceeding to
revoke or suspend such registrations is pending or, to the knowledge
of ESS, threatened;
(c) No consent, approval, authorization, or order of any court,
Governmental Authority or the Financial Industry Regulatory Authority
("FINRA") is required for the consummation by the Existing Fund and
ESS of the transactions contemplated herein, except such as have been
obtained or will be obtained at or prior to the Closing under the
1933 Act, the Securities Exchange Act of 1934 ("1934 Act"), the 0000
Xxx, xxxxx securities laws, and the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976;
(d) The Existing Fund is not, and the execution, delivery and
performance of this Agreement by the Existing Fund will not result
(i) in violation of Delaware law or of ESS' Agreement and Declaration
of Trust or by-laws, (ii) in a violation or breach of, or constitute
a default under, any material agreement, indenture, exemptive order,
instrument, contract, lease or other undertaking to which the
Existing Fund is a party or by which it is bound, and the execution,
delivery and performance of this Agreement by the Existing Fund will
not result in the acceleration of any obligation, or the imposition
of any penalty, under any agreement, indenture, instrument, contract,
lease, judgment or decree to which the Existing Fund is a party or by
which it is bound, or (iii) in the creation or imposition of any
lien, charge or encumbrance on any property or assets of the Existing
Fund;
(e) Except as otherwise disclosed to and accepted, in writing by or
on behalf of the Acquiring Fund, all material contracts or other
commitments (other than this Agreement), including without limitation
the contracts set forth in Schedule 7.1(h), will be terminated with
respect to the Existing Fund at or prior to the Closing without
liability to the Existing Fund and such termination shall not result
in the acceleration of any obligations of the Existing Fund on or
prior to the Closing.
(f) The current prospectus and statement of additional information
of the Existing Fund and each prospectus and statement of additional
information of the Existing Fund used at all times between the
commencement of operations of the Existing Fund and the date of this
Agreement conforms or conformed at the time of its use in all
material respects to the applicable requirements of the 1933 Act and
the 1940 Act and the rules and regulations of the Commission
thereunder and does not or did not at the time of its use include any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not materially misleading;
(g) The Existing Fund is in compliance in all material respects
with, and during the last three years prior to the date of this
Agreement was in compliance in all materials respects with, the
investment policies and restrictions set forth in the Existing Fund's
then applicable prospectus and statement of additional information;
(h) The Existing Fund is in compliance in all material respects
with, and during the last three years prior to the date of this
Agreement was in compliance in all materials respects with, the
requirements of the 1933 Act, 1934 Act, and the 1940 Act and all
rules and regulations under each of the foregoing, and state
securities laws and regulations;
(i) The Existing Fund is in compliance in all material respects
with, and during the last three years prior to the date of this
Agreement was in compliance in all materials respects with, its
policies and procedures adopted pursuant to Rule 38a-1 under the 1940
Act including without limitation the valuation policies and
procedures of ESS, and during the twelve-month period preceding the
date of this Agreement, there have been no material miscalculations
of the net asset value of the Existing Fund or the net asset value
per share of the Existing Fund that have not been remedied or will
not be remedied prior to the Closing in accordance with industry
practices and the policies of ESS;
(j) Except as otherwise disclosed to and accepted by or on behalf of
the Acquiring Fund, the Existing Fund will as of the Closing have
good title to the Assets and full right, power, and authority to
sell, assign, transfer and deliver such Assets free of adverse
claims, including any liens or other encumbrances, and upon delivery
and payment for such Assets, the Acquiring Fund will acquire good
title thereto, free of adverse claims and subject to no restrictions
on the full transfer thereof, including, without limitation, such
restrictions as might arise under the 1933 Act;
(k) The financial statements of the Existing Fund for the Existing
Fund's most recently completed fiscal year, if any, have been (or, if
such fiscal year-end is within the last sixty (60) days, will be)
audited by the independent registered public accounting firm
identified in the Existing Fund's prospectus or statement of
additional information included in the Existing Fund's registration
statement on Form N-1A (the "Prospectus" and "Statement of Additional
Information"). Such statements, as well as the unaudited, semi-annual
financial statements for the semi-annual period next succeeding the
Existing Fund's most recently completed fiscal year, if any, were
prepared in accordance with accounting principles generally accepted
in the United States of America ("GAAP") consistently applied, and
such statements present fairly, in all material respects, the
financial condition of the Existing Fund as of such date in
accordance with GAAP, and there are no known contingent liabilities
of the Existing Fund required to be reflected on a balance sheet
(including the notes thereto) in accordance with GAAP as of such date
not disclosed therein. No significant deficiency, material weakness,
fraud, significant change, or other factor that could significantly
affect the internal controls of the Existing Fund has been disclosed
or is required to be disclosed in the Existing Fund's reports on Form
N-CSR and, to the knowledge of the Existing Fund, no such disclosure
will be required as of the Closing;
(l) Since the last day of the Existing Fund's most recently
completed fiscal year, there has not been any material adverse change
in the Existing Fund's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of
business;
(m) (i) For each taxable year of its operation (including for the
taxable year that includes the Closing Date that portion of such
taxable year ending on the Closing Date), the Existing Fund has
been, and will be, treated as a separate corporation for federal
income tax purposes pursuant to Section 851(g) of the Code, has
met and will meet the requirements of Subchapter M of the Code
for qualification as a regulated investment company and has
elected to be treated as such, has been eligible to and has
computed its federal income tax under Section 852 of the Code,
and has not been, and will not be, liable for any material
income or excise tax under Section 852 or 4982 of the Code. The
Existing Fund has no earnings and profits accumulated with
respect to any taxable year in which the provisions of
Subchapter M of the Code did not apply to the Existing Fund.
(ii) All federal, state, local, and foreign income Tax Returns
and other material Tax Returns (including, for the avoidance of
doubt, dividend reporting forms, and other Tax-related reports)
of the Existing Fund required by law to have been filed on or
before the Closing Date have been (or will be) duly and timely
filed (taking into account any permitted extensions) and are or
will be correct in all material respects, and all federal,
state, local, foreign and other Taxes of the Existing Fund
(whether or not shown as due or required to be shown as due on
said Tax Returns ) for tax periods ending on or before the
Closing Date have been (or will be) duly and timely paid or
provision has been (or will be) made by the Existing Fund for
the payment thereof and any such unpaid taxes as of the date of
the financial statements referred to in paragraph (i) above are
properly reflected on such financial statements.
(iii) There are no audits, examinations, investigations or
other proceedings pending or threatened by any Taxing Authority
in writing with respect to the Existing Fund, and no waivers or
extensions of any statute of limitations that remain open with
respect to Taxes have been granted or requested in writing or,
to the best knowledge of the Existing Fund, in any other manner
with respect to the Existing Fund.
(iv) No Taxing Authority with which the Existing Fund does not
file Tax Returns has claimed in writing or, to the best
knowledge of the Existing Fund, in any other manner that such
Existing Fund is or may be subject to taxation by that Taxing
Authority, and no Taxing Authority with which the Existing Fund
does not file a particular Tax Return has claimed in writing or,
to the best knowledge of the Existing Fund, in any other manner
that the Existing Fund is or may be required to file such Tax
Return. No issue has been raised by any Tax Authority in any
prior examination of the Existing Fund which, by application of
the same or similar principles, could reasonably be expected to
result in a material proposed deficiency for any subsequent
taxable period. The Existing Fund has delivered a disclosure
schedule to the Acquiring Fund listing (A) all jurisdictions in
which the Existing Fund pays Taxes and/or files Tax Returns and
(B) all federal, state, and local income and franchise Tax
Returns filed by, or on behalf of, the Existing Fund, and each
such disclosure schedule is accurate and complete;
As used in this Agreement:
"Governmental Authority" means any nation, state, territory,
province, county, city or other unit or subdivision thereof or any
entity, authority, agency, department, board, commission,
instrumentality, court or other judicial body authorized on behalf of
any of the foregoing to exercise legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
governmental or non-governmental self-regulatory organization.
"Tax" or "Taxes" means (i) any and all federal, state, local,
foreign and other taxes, assessments, levies, duties, fees and other
governmental or similar charges, including without limitation income,
profits, gross receipts, net proceeds, alternative or add-on minimum,
ad valorem, value added, turnover, sales, use, property, unclaimed
property, personal property (tangible and intangible), environmental,
stamp, leasing, lease, user, excise, duty, franchise, capital,
capital stock, transfer, registration, license, withholding, social
security (or similar), unemployment, disability, payroll, employment,
fuel, excess profits, occupational, premium, windfall profit,
severance, estimated, or other governmental charge of any kind
whatsoever and (ii) any liability related to an item described in
clause (i) of this definition and arising (a) from being or having
been a member of an affiliated, consolidated, combined, unitary group
or similar group for federal, state, local or foreign tax purposes or
(b) as a result of being a successor to another person or transferee
thereof, or pursuant to contract (other than pursuant to a contract
the principal purpose of which is not allocation of an item described
in clause (i) of this definition), in all cases together with any
interest, penalties, additions to tax or additional amounts imposed
in connection with any of the foregoing.
"Taxing Authority" means, with respect to any Tax, the Governmental
Authority that imposes such Tax and the agency (if any) charged with
the collection of such Tax for such Governmental Authority.
"Tax Return" means any return, declaration, report, claim for
refund, information return or any similar filing or statement filed
with any Taxing Authority (domestic, foreign or otherwise) that is
related to Taxes, including any form, schedule or attachment thereto
and any amendment or supplement thereof;
(n) All issued and outstanding shares of the Existing Fund are duly
authorized and validly issued and outstanding, fully paid and non-
assessable by ESS and, in every state where offered or sold, such
offers and sales have been in compliance in all material respects
with applicable registration and/or notice requirements of the 1933
Act and state and local regulatory authorities and will be held at
the time of closing by the persons and in the amounts set forth in
the records of the transfer agent of the Existing Fund;
(o) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action, if any, on the part of
the Board of Trustees of ESS, on behalf of the Existing Fund, and
subject to the due authorization, execution and delivery of this
Agreement by the other parties hereto, this Agreement will constitute
a valid and binding obligation of the Existing Fund, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(p) The books and records of the Existing Fund are true and correct
in all material respects and contain no material omissions with
respect to information required to be maintained under the laws,
rules and regulations applicable to the Existing Fund;
(q) The Existing Fund is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A)
of the Code;
(r) The Existing Fund has no unamortized or unpaid organizational
fees or expenses;
(s) The information to be furnished by the Existing Fund for use in
applications for orders, registration statements or proxy materials
or for use in any other document filed or to be filed with any
federal, state, or local regulatory authority (including any national
securities exchange or FINRA), which may be necessary in connection
with the transactions contemplated hereby, shall be accurate and
complete in all material respects and shall comply in all material
respects with federal securities and other laws and regulations
applicable thereto;
(t) The Proxy Statement referred to in Section 5.1(c), only insofar
as it relates to ESS and the Existing Fund, will, on the effective
date of the Proxy Statement and on the Closing Date, (i) comply in
all material respects with the provisions and regulations of the 1933
Act, the 1934 Act and the 1940 Act, as applicable, and (ii) not
contain 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 light of the circumstances under which such
statements are made, not materially misleading; provided, however,
that the representations and warranties in this paragraph shall not
apply to statements in or omissions from the Proxy Statement made in
reliance upon and in conformity with the information that was
furnished by GraniteShares Trust on behalf of the Acquiring Fund for
use therein; and
(u) There is no action, suit, proceeding, claim, arbitration, matter
or investigation pending or threatened against or affecting the
Existing Fund at law, in equity or otherwise, in, before or by any
court, Governmental Authority, or arbitrator, and there is no
unsatisfied judgment, injunction, decree or regulatory restriction
imposed specifically upon the Existing Fund or any of its properties,
assets, trustees, officers, employees or agents that could reasonably
be expected to materially and adversely affect its business or its
ability to consummate the Reorganization.
4.2. GraniteShares Trust, on behalf of itself or, where applicable,
the Acquiring Fund represents and warrants to ESS and the Existing
Fund as follows:
(a) GraniteShares Trust is a Delaware statutory trust duly
organized, validly existing and in good standing under the laws of
the State of Delaware with power under GraniteShares Trust's
Agreement and Declaration of Trust to own all of its properties and
assets and to carry on its business as it is now being conducted and
to carry out the Agreement. The Acquiring Fund is a separate series
of GraniteShares Trust duly designated in accordance with the
applicable provisions of GraniteShares Trust's Agreement and
Declaration of Trust. GraniteShares Trust and Acquiring Fund are
qualified to do business in all jurisdictions in which they are
required to be so qualified, except jurisdictions in which the
failure to so qualify would not have a material adverse effect on
GraniteShares Trust or Acquiring Fund. The Acquiring Fund has all
material federal, state and local authorizations necessary to own all
of it properties and assets and to carry on its business as now being
conducted, except authorizations which the failure to so obtain would
not have a material adverse effect on the Acquiring Fund;
(b) GraniteShares Trust is a registered investment company
classified as a management company of the open-end type, and its
registration with the Commission as an investment company under the
1940 Act and the registration of the shares of the Acquiring Fund
under the 1933 Act are in full force and effect, and no action or
proceeding to revoke or suspend such registrations is pending or, to
the knowledge of GraniteShares, threatened;
(c) No consent, approval, authorization, or order of any court,
Governmental Authority or FINRA is required for the consummation by
the Acquiring Fund and GraniteShares Trust of the transactions
contemplated herein, except such as have been or will be obtained at
or prior to the Closing under the 1933 Act, the 1934 Act, the 1940
Act, state securities laws, and the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976;
(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement by the Acquiring Fund will not result
(i) in violation of Delaware law or of GraniteShares Trust's
Agreement and Declaration of Trust or by-laws, (ii) in a violation or
breach of, or constitute a default under, any material agreement,
indenture, exemptive order, instrument, contract, lease or other
undertaking to which the Acquiring Fund is a party to or by which it
is bound, and the execution, delivery and performance of the
Agreement by the Acquiring Fund will not result in the acceleration
of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree
to which the Acquiring Fund is a party or by which it is bound, or
(iii) in the creation or imposition of any lien, charge or
encumbrance on any property or assets of the Acquiring Fund;
(e) The Acquiring Fund is, and will be at the time of Closing, a new
series of GraniteShares Trust formed for the purpose of receiving the
assets and assuming the liabilities of the Existing Fund in
connection with the Reorganization and, accordingly, the Acquiring
Fund will not have commenced operations, prepared books of account
and related records or financial statements or carried on any
business activities, except as necessary to facilitate the
organization of the Acquiring Fund as a new series of GraniteShares
Trust prior to its commencement of operations. Except with respect to
the consideration received in exchange for the issuance of the
Initial Share, the Acquiring Fund has not owned any assets and will
not own any assets prior to the Closing. As of the time immediately
prior to the Closing, there will be no issued or outstanding
securities issued by the Acquiring Fund, other than the Initial Share
issued to the Sole Shareholder for the purpose set forth in
Section 1.1(f) above. The Initial Share will be redeemed and
cancelled prior to the Closing;
(f) By the Closing, GraniteShares Trust's Board of Trustees and
officers shall have taken all actions as are necessary under the 1933
Act, 1934 Act, 1940 Act and any applicable state securities laws for
the Acquiring Fund to commence operations as a registered open-end
management investment company, including, without limitation,
approving and authorizing the execution of investment advisory
contracts in the manner required by the 1940 Act and approving and
authorizing the execution of such other contracts as are necessary
for the operation of the Acquiring Fund;
(g) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action, if any, on the part of
the Board of Trustees of GraniteShares Trust, on behalf of the
Acquiring Fund, and subject to the due authorization, execution and
delivery of this Agreement by the other parties hereto, this
Agreement will constitute a valid and binding obligation of the
Acquiring Fund, enforceable in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors' rights and to
general equity principles;
(h) The shares of the Acquiring Fund to be issued and delivered to
the Existing Fund, for the account of the Existing Fund Shareholders,
pursuant to the terms of this Agreement, have been duly authorized
and, when so issued and delivered, will be duly and validly issued
Acquiring Fund Shares, and, upon receipt of the Existing Fund's
Assets in accordance with the terms of this Agreement, will be fully
paid and non-assessable by GraniteShares Trust;
(i) The Acquiring Fund (i) will elect to be taxed as a regulated
investment company under Subchapter M of the Code, will qualify for
the tax treatment afforded regulated investment companies under the
Code for its taxable year that includes the Closing Date, and intends
to continue to qualify for such treatment for its subsequent taxable
years, (ii) will be eligible to compute its federal income tax under
Section 852 of the Code for the taxable year that includes the
Closing Date, and (iii) will be treated as a separate corporation for
federal income tax purposes pursuant to Section 851(g) of the Code
for the taxable year that includes the Closing Date. The Acquiring
Fund has not taken any action, caused any action to be taken or
caused any action to fail to be taken, which action or failure could
cause the Acquiring Fund to fail to qualify as a regulated investment
company for its taxable year that includes the Closing Date. The
Acquiring Fund has no earnings and profits accumulated in any taxable
year;
(j) The books and records of the Acquiring Fund are true and correct
in all material respects and contain no material omissions with
respect to information required to be maintained under laws, rules,
and regulations applicable to the Acquiring Fund;
(k) The Acquiring Fund is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A)
of the Code;
(l) The Acquiring Fund has no unamortized or unpaid organizational
fees or expenses for which it does not expect to be reimbursed;
(m) The information to be furnished by the Acquiring Fund for use in
applications for orders, registration statements or proxy materials
or for use in any other documents filed or to be filed with any
federal, state, or local regulatory authority (including any national
securities exchange or FINRA), which may be necessary in connection
with the transactions contemplated hereby, shall be accurate and
complete in all material respects and shall comply in all material
respects with federal securities and other laws and regulations
applicable thereto;
(n) At the Closing, the current prospectus and statement of
additional information of the Acquiring Fund will conform in all
material respects to the applicable requirements of the 1933 Act and
the 1940 Act and the rules and regulations of the Commission
thereunder and will not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(o) The Proxy Statement referred to in Section 5.1(c), only insofar
as it relates to GraniteShares Trust and the Acquiring Fund, will, on
the effective date of the Proxy Statement and on the Closing Date,
(i) comply in all material respects with the provisions and
regulations of the 1933 Act, the 1934 Act and the 1940 Act and (ii)
not contain 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 light of the circumstances under which
such statements were made, not materially misleading; provided,
however, that the representation and warranties in this
paragraph shall not apply to statements in or omissions from the
Proxy Statement made in reliance upon and in conformity with
information that was furnished by the Existing Fund for use therein;
and
(p) There is no action, suit, proceeding, claim, arbitration, matter
or investigation pending or threatened against or affecting the
Acquiring Fund at law, in equity or otherwise, in, before or by any
court, Governmental Authority, or arbitrator, and there is no
unsatisfied judgment, injunction, decree or regulatory restriction
imposed specifically upon any of the Acquiring Fund or any of its
properties, assets, trustees, officers, employees or agents that
could reasonably be expected to materially and adversely affect its
business or its ability to consummate the Reorganization.
5. COVENANTS OF THE ACQUIRING FUND AND THE EXISTING FUND
5.1. With respect to the Reorganization:
(a) The Existing Fund: (i) will operate its business in the ordinary
course and substantially in accordance with past practices between
the date hereof and the Closing, it being understood that such
ordinary course of business may include the declaration and payment
of customary dividends and distributions, and any other distribution
that may be advisable, and (ii) shall use its reasonable best efforts
to preserve intact its business organization and material assets and
maintain the rights, franchises and business and customer relations
necessary to conduct the business operations of the Existing Fund in
the ordinary course in all material respects. Prior to the Closing,
the Acquiring Fund will carry on no business activities, other than
as are necessary in connection with the organization of a new series
of an investment company prior to its commencement of operations.
(b) ESS will call a meeting of the Existing Fund shareholders to
consider and act upon this Agreement and to take all other action
necessary to obtain approval of the transactions contemplated herein.
(c) In connection with the meeting of the Existing Fund shareholders
referred to in Section 5.1(b) above, the Existing Fund will provide
the Acquiring Fund with information regarding the Existing Fund, and
the Acquiring Fund will provide the Existing Fund with information
regarding the Acquiring Fund, reasonably necessary for the
preparation of a Prospectus/Proxy Statement on Form N-14 (the "Proxy
Statement"), in compliance with the 1933 Act, the 1934 Act and the
1940 Act. GraniteShares Trust will file the Proxy Statement with the
Commission.
(d) The Existing Fund covenants that the Acquiring Fund Shares to be
issued pursuant to this Agreement are not being acquired for the
purpose of making any distribution thereof, other than in accordance
with the terms of this Agreement.
(e) The Existing Fund will assist the Acquiring Fund in obtaining
such information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of the Existing Fund's shares.
(f) If requested by the Acquiring Fund, ESS, on behalf of the
Existing Fund, will provide the Acquiring Fund with (1) a statement
of the respective tax basis and holding period of all investments to
be transferred by the Existing Fund to the Acquiring Fund, (2) a copy
(which may be in electronic form) of the shareholder ledger accounts
including, without limitation, the name, address and taxpayer
identification number of each shareholder of record, the number of
shares of beneficial interest held by each shareholder, the dividend
reinvestment elections applicable to each shareholder, and the backup
withholding and nonresident alien withholding certifications, notices
or records on file with the Existing Fund with respect to each
shareholder, for all of the shareholders of record of the Existing
Fund as of the Closing, who are to become holders of the Acquiring
Fund as a result of the transfer of Assets (the "Existing Fund
Shareholder Documentation"), certified by its transfer agent or its
President or Vice-President to the best of their knowledge and
belief, (3) copies of the tax books and records of the Existing Fund
for purposes of preparing any returns required by law to be filed for
tax periods ending after the Closing Date, and (4) all FASB ASC 740-
10-25 (formerly FIN 48) workpapers and supporting statements
pertaining to the Existing Fund (the "FIN 48 Workpapers"). The
foregoing information to be provided within such timeframes as is
mutually agreed by the parties.
(g) Subject to the provisions of this Agreement, the Acquiring Fund
and the Existing Fund will each take, or cause to be taken, all
action, and do or cause to be done all things, reasonably necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
(h) Promptly after the Closing, the Existing Fund will make one or
more liquidating distributions to its shareholders consisting of the
Acquiring Fund Shares received at the Closing, as set forth in
Section 1.1(d) hereof.
(i) If requested by the Acquiring Fund, ESS, on behalf of the
Existing Fund, shall deliver to the Acquiring Fund a statement of the
earnings and profits (accumulated and current) of the Existing Fund
for federal income tax purposes that will be carried over to the
Acquiring Fund as a result of Section 381 of the Code. The
information to be provided under this paragraph shall be provided
within such timeframes as is mutually agreed by the parties.
(j) It is the intention of the parties that the Reorganization will
qualify as a reorganization within the meaning of Section 368(a) of
the Code. None of the parties to the Reorganization shall take any
action or cause any action to be taken (including, without limitation
the filing of any Tax Return) that is inconsistent with such
treatment or results in the failure of the Reorganization to qualify
as a reorganization within the meaning of Section 368(a) of the Code.
(k) Any reporting responsibility of the Existing Fund, including,
but not limited to, the responsibility for filing regulatory reports,
Tax Returns relating to tax periods ending on or prior to the Closing
Date (whether due before or after the Closing Date), or other
documents with the Commission, any state securities commission, and
any federal, state or local Taxing Authorities or any other relevant
regulatory authority, is and shall remain the responsibility of the
Existing Fund, except as otherwise is mutually agreed by the parties.
(l) If requested by the Acquiring Fund, ESS, on behalf of the
Existing Fund, shall deliver to the Acquiring Fund copies of: (1) the
federal, state and local income Tax Returns filed by or on behalf of
the Existing Fund for the prior three (3) taxable years; and (2) any
of the following that have been issued to or for the benefit of or
that otherwise affect the Existing Fund and which have continuing
relevance: (a) rulings, determinations, holdings or opinions issued
by any federal, state, local or foreign Taxing Authority and (b)
legal opinions.
6.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE EXISTING FUND
6.1. With respect to the Reorganization, the obligations of ESS, on
behalf of the Existing Fund, to consummate the transactions provided
for herein shall be subject, at the Existing Fund's election, to the
performance by the Acquiring Fund of all of the obligations to be
performed by it hereunder on or before the Closing, and, in addition
thereto, the following conditions:
(a) All representations and warranties of the Acquiring Fund and
GraniteShares Trust contained in this Agreement shall be true and
correct in all material respects as of the date hereof and, except as
they may be affected by the transactions contemplated by this
Agreement, as of the Closing, with the same force and effect as if
made on and as of the Closing;
(b) GraniteShares Trust shall have delivered to ESS as of the
Closing a certificate executed in its name by its President or Vice
President and Treasurer, in form and substance reasonably
satisfactory to ESS and dated as of the Closing Date, to the effect
that the representations and warranties of or with respect to the
Acquiring Fund made in this Agreement are true and correct at and as
of the Closing, except as they may be affected by the transactions
contemplated by this Agreement;
(c) GraniteShares Trust and the Acquiring Fund shall have performed
all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by GraniteShares
Trust and the Acquiring Fund, on or before the Closing;
(d) A prospectus of the Acquiring Fund relating to the continuous
offering of Acquiring Fund Shares in Creation Units shall have become
effective under the 1933 Act and no stop orders suspending the
effectiveness thereof shall have been issued and, to the best
knowledge of the Acquiring Fund, no investigation or proceeding for
that purpose shall have been instituted or be pending, threatened or
contemplated under the 1933 Act. Following the Reorganization, a
"Creation Unit" shall consist of 50,000 Acquiring Fund Shares; and
(e) The Existing Fund shall have received at the Closing an opinion
of Xxxxxx Price P.C., counsel to GraniteShares Trust, in a form
reasonably satisfactory to the Existing Fund, and dated as of the
Closing Date, to the effect that:
(i) the Agreement has been duly authorized, executed and
delivered by GraniteShares Trust, on behalf of the Acquiring
Fund, and, assuming due authorization, execution and delivery of
the Agreement by ESS, on behalf of the Existing Fund, is a valid
and binding obligation of GraniteShares Trust, on behalf of the
Acquiring Fund, enforceable against the Acquiring Fund in
accordance with its terms; and
(ii) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by the Acquiring Trust or the
Acquiring Fund of the transactions contemplated by the
Agreement, except such as may be required under the 1933 Act,
the 1934 Act, the 1940 Act, and the rules and regulations under
those Acts (it being understood that counsel has made no
independent investigation or analysis with respect to state
securities laws and is not opining thereon).
7.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
7.1. With respect to the Reorganization, the obligations of
GraniteShares Trust, on behalf of the Acquiring Fund, to consummate
the transactions provided for herein shall be subject, at the
Acquiring Fund's election, to the performance by the Existing Fund of
all of the obligations to be performed by it hereunder on or before
the Closing and, in addition thereto, the following conditions:
(a) All representations and warranties of ESS and the Existing Fund
contained in this Agreement shall be true and correct in all material
respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing,
with the same force and effect as if made on and as of the Closing;
(b) The Existing Fund shall have delivered to the Acquiring Fund a
Closing Statement of Assets and Liabilities, certified by the
Treasurer of the Existing Fund;
(c) ESS shall have delivered to GraniteShares Trust as of the
Closing a certificate executed in its name by its President or Vice
President and Treasurer, in form and substance reasonably
satisfactory to GraniteShares Trust and dated as of the Closing, to
the effect that the representations and warranties of or with respect
to the Existing Fund made in this Agreement are true and correct at
and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement;
(d) If requested by Acquiring Fund, ESS, on behalf of the Existing
Fund, shall have delivered to GraniteShares Trust (i) a statement of
the Existing Fund's Assets, together with a list of portfolio
securities of the Existing Fund showing the adjusted tax basis of
such securities by lot and the holding periods of such securities, as
of the Closing, certified by the Treasurer of ESS, (ii) the Existing
Fund Shareholder Documentation, (iii) the FIN 48 Workpapers, (iv) to
the extent permitted by applicable law, all information pertaining
to, or necessary or useful in the calculation or demonstration of,
the investment performance of the Existing Fund, and/or (v) a
statement of earnings and profits as provided in Section 5.1(i);
(e) U.S. Bank National Association, the Existing Fund's custodian
shall have delivered the certificate contemplated by Sections 3.2(a)
of this Agreement, duly executed by an authorized officer of U.S.
Bank National Association;
(f) U.S. Bancorp Fund Services, LLC, the Existing Fund's transfer
agent shall have delivered the certificates contemplated by Sections
3.2(b) of this Agreement, duly executed by an authorized officer of
U.S. Bancorp Fund Services, LLC;
(g) ESS and the Existing Fund shall have performed all of the
covenants and complied with all of the provisions required by this
Agreement to be performed or complied with by ESS and the Existing
Fund, on or before the Closing;
(h) The Acquiring Fund shall have received evidence that the
contracts set forth on Schedule 7.1(h) shall have been terminated
with respect to the Existing Fund.
(i) The Acquiring Fund shall have received at the Closing an opinion
of Xxxxxx, Xxxxx & Xxxxxxx LLP ("MLB"), counsel to ESS, in a form
reasonably satisfactory to the Acquiring Fund, and dated as of the
Closing Date, to the effect that:
(i) the Agreement has been duly authorized, executed and
delivered by ESS, on behalf of the Existing Fund, and, assuming
due authorization, execution and delivery of the Agreement by
GraniteShares Trust, on behalf of the Acquiring Fund, is a valid
and binding obligation of ESS, on behalf of the Existing Fund,
enforceable against ESS and the Existing Fund in accordance with
its terms; and
(ii) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by ESS or the Existing Fund of the
transactions contemplated by the Agreement, except such as may
be required under the 1933 Act, the 1934 Act, the 1940 Act, and
the rules and regulations under those Acts (it being understood
that counsel has made no independent investigation or analysis
with respect to state securities laws and is not opining
thereon).
8.
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE EXISTING FUND
With respect to the Reorganization, if any of the conditions set
forth below have not been satisfied on or before the Closing with
respect to the Existing Fund or the Acquiring Fund, GraniteShares
Trust or ESS, respectively, shall, at its option, not be required to
consummate the transactions contemplated by this Agreement:
8.1. The Agreement shall have been approved by the requisite vote of
the holders of the outstanding shares of the Existing Fund in
accordance with the provisions of ESS' Agreement and Declaration of
Trust, Delaware law, and the 1940 Act. Notwithstanding anything
herein to the contrary, neither the Existing Fund nor the Acquiring
Fund may waive the condition set forth in this Section 8.1;
8.2. On the Closing Date, no action, suit or other proceeding shall
be pending or, to ESS' or GraniteShares Trust's knowledge, threatened
before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection
with, this Agreement, the transactions contemplated herein;
8.3. All consents of other parties and all other consents, orders
and permits of federal, state and local regulatory authorities deemed
necessary by the Acquiring Fund or the Existing Fund to permit
consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to
obtain any such consent, order or permit would not involve a risk of
a material adverse effect on the assets or properties of the
Acquiring Fund or the Existing Fund, provided that either party
hereto may for itself waive any of such conditions;
8.4. For a period beginning at the Closing Date and ending no less
than three years thereafter, the ESS shall, at no cost or expense to
the Acquiring Trust, maintain directors and officers errors and
omissions insurance that is substantially equivalent in scope to the
current coverage ("Insurance") covering the present and former
Trustees and officers of ESS, with respect to the Existing Fund, with
respect to "Wrongful Acts" (as defined under the Insurance) committed
prior to the Closing Date.
8.5. ESS and GraniteShares Trust shall have received a favorable
opinion of Xxxxxx Price P.C. addressed to the Acquiring Fund and the
Existing Fund substantially to the effect that with respect to the
Existing Fund and the Acquiring Fund for federal income tax purposes:
(i) the acquisition by the Acquiring Fund of all of the assets
of the Existing Fund, as provided for in the Plan, in exchange
solely for Acquiring Fund shares and the assumption by the
Acquiring Fund of all of the liabilities of the Existing Fund
except the Excluded Liabilities, immediately followed by the
distribution by the Existing Fund to its shareholders of all the
Acquiring Fund shares in complete liquidation of the Existing
Fund and the termination of the Existing Fund promptly
thereafter, will qualify as a reorganization within the meaning
of Section 368(a) of the Code, and the Existing Fund and the
Acquiring Fund each will be a "party to the reorganization"
within the meaning of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by the Existing Fund
upon the transfer of all of its assets to the Acquiring Fund in
exchange solely for Acquiring Fund shares and the assumption by
the Acquiring Fund of all the liabilities of the Existing Fund
except the Excluded Liabilities pursuant to Section 361(a) and
Section 357(a) of the Code or upon the distribution of Acquiring
Fund Shares to shareholders of the Existing Fund in complete
liquidation pursuant to Section 361(c)(1) of the Code;
(iii) no gain or loss will be recognized by the Acquiring
Fund upon the receipt by it of all of the assets of the Existing
Fund in exchange for the assumption of all of the liabilities of
the Existing Fund except the Excluded Liabilities and the
Acquiring Fund Shares pursuant to Section 1032(a) of the Code;
(iv) the tax basis of the assets of the Existing Fund received
by the Acquiring Fund will be the same as the tax basis of such
assets in the hands of the Existing Fund immediately prior to
the exchange pursuant to Section 362(b) of the Code;
(v) the holding periods of the assets of the Existing Fund in
the hands of the Acquiring Fund will include the periods during
which such assets were held by the Existing Fund pursuant to
Section 1223(2) of the Code;
(vi) no gain or loss will be recognized by the shareholders of
the Existing Fund upon the exchange of all of their Existing
Fund shares for the Acquiring Fund shares pursuant to
Section 354(a) of the Code;
(vii) the aggregate tax basis of the Acquiring Fund shares
received by a shareholder of the Existing Fund will be the same
as the aggregate tax basis of the Existing Fund shares exchanged
therefor pursuant to Section 358(a)(1) of the Code;
(viii) the holding period of the Acquiring Fund shares
received by a shareholder of the Existing Fund will include the
holding period of the Existing Fund shares exchanged therefor,
provided that the shareholder held the Existing Fund shares as a
capital asset on the date of the exchange pursuant to
Section 1223(1) of the Code;
(ix) the Acquiring Fund will succeed to and take into account as
of the date of the transfer (as defined in Section 1.381(b)-1(b)
of the regulations issued by the United States Treasury
("Treasury Regulations")) the items of the Existing Fund
described in Section 381(c) of the Code, subject to the
conditions and limitations specified in Sections 381, 382, 383
and 384 of the Code and the Treasury Regulations thereunder.
No opinion will be expressed as to (1) the effect of the
Reorganization on the Existing Fund, the Acquiring Fund or any
shareholder of the Existing Fund with respect to any asset (including
without limitation any stock held in a passive foreign investment
company as defined in section 1297(a) of the Code) as to which
unrealized gain or loss is required to be recognized for federal
income tax purposes (a) at the end of a taxable year (or on the
termination thereof) or (b) upon the transfer of such asset
regardless of whether such transfer would otherwise be a non-taxable
transaction under the Code, or (2) any other federal tax issues
(except those set forth above) and all state, local, or foreign tax
issues of any kind.
Such opinion shall be based on customary assumptions, limitations
and such representations as Xxxxxx Price P.C. may reasonably request,
as well as the representations and warranties made in this Agreement
which counsel may treat as representations and warranties made to it.
The Existing Fund and Acquiring Fund will cooperate to make and
certify the accuracy of such representations. Notwithstanding
anything herein to the contrary, neither the Acquiring Fund nor the
Existing Fund may waive the conditions set forth in this Section 8.4.
9.
FEES AND EXPENSES; INDEMNIFICATION
9.1. GraniteShares Advisors LLC or an affiliate of GraniteShares
Advisors LLC will bear the expenses relating to the Reorganization,
whether or not the Reorganization is consummated. The costs of the
Reorganization shall include, but shall not be limited to, costs
associated with organizing the Acquiring Fund, preparation, printing
and distribution of the Proxy Statement for the Reorganization, legal
fees, accounting fees, and expenses of soliciting Existing Fund
shareholders and holding meetings of the Existing Fund shareholders
(and adjournments thereof). For the avoidance of doubt, neither the
Acquiring Fund nor the Existing Fund will bear the expenses relating
to the Reorganization.
9.2. GraniteShares Trust, out of the Acquiring Fund's assets and
property (including any amounts paid to the Acquiring Fund pursuant
to any applicable liability insurance policies), agrees to indemnify
and hold harmless ESS and the members of ESS' Board of Trustees and
ESS' officers from and against any and all losses, claims, damages,
liabilities or expenses (including, without limitation, the payment
of reasonable legal fees and reasonable costs of investigation) to
which ESS and those board members and officers may become subject,
insofar as such loss, claim, damage, liability or expense (or actions
with respect thereto) arises out of or is based on (a) any breach by
GraniteShares Trust, on behalf of the Acquiring Fund, of any of its
representations, warranties, covenants or agreements set forth in
this Agreement or (b) insofar as they relate to the Reorganization,
any act, error, omission, neglect, misstatement, materially
misleading statement, breach of duty or other act wrongfully done or
attempted to be committed by GraniteShares Trust or the members of
GraniteShares Trust's Board of Trustees or its officers prior to the
Closing, provided that such indemnification by GraniteShares Trust is
not (i) in violation of any applicable law or (ii) otherwise
prohibited as a result of any applicable order or decree issued by
any governing regulatory authority or court of competent
jurisdiction.
9.3. ESS, out of the Existing Fund's assets and property (including
any amounts paid to the Existing Fund pursuant to any applicable
liability insurance policies), agrees to indemnify and hold harmless
GraniteShares Trust and the members of GraniteShares Trust's Board of
Trustees and its officers from and against any and all losses,
claims, damages, liabilities or expenses (including, without
limitation, the payment of reasonable legal fees and reasonable costs
of investigation) to which GraniteShares Trust and those board
members and officers may become subject, insofar as such loss, claim,
damage, liability or expense (or actions with respect thereto) arises
out of or is based on (a) any breach by ESS, on behalf of the
Existing Fund, of any of its representations, warranties, covenants
or agreements set forth in this Agreement or (b) insofar as they
relate to the Reorganization, any act, error, omission, neglect,
misstatement, materially misleading statement, breach of duty or
other act wrongfully done or attempted to be committed by ESS or the
members of ESS' Board of Trustees or its officers prior to the
Closing, provided that such indemnification by ESS is not (i) in
violation of any applicable law or (ii) otherwise prohibited as a
result of any applicable order or decree issued by any governing
regulatory authority or court of competent jurisdiction.
10.
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES AND COVENANTS
10.1. Each party agrees that no party has made any representation,
warranty or covenant not set forth herein and that this Agreement
constitutes the entire agreement between the parties. The
representations, warranties and covenants contained in this Agreement
or in any document delivered pursuant hereto or in connection
herewith shall not survive the consummation of the transactions
contemplated hereunder. The covenants to be performed after the
Closing shall survive the Closing. For the avoidance of doubt, the
provisions in Section 9 of this Agreement shall survive the Closing.
11.
TERMINATION
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by mutual agreement of the parties.
12.
AMENDMENTS
This Agreement may be amended, modified or supplemented in a writing
signed by the parties hereto to be bound by such Amendment.
13.
HEADINGS; GOVERNING LAW; COUNTERPARTS; ASSIGNMENT; LIMITATION
OF LIABILITY
13.1. The Article and Section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.2. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware and applicable
federal law, without regard to its principles of conflicts of laws.
13.3. This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of
the other parties. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give any person, firm or
corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of
this Agreement.
13.4. This Agreement may be executed in any number of counterparts,
each of which shall be considered an original.
13.5. It is expressly agreed that the obligations of the parties
hereunder shall not be binding upon any of their respective directors
or trustees, shareholders, nominees, officers, agents, or employees
personally, but shall bind only the property of the Existing Fund or
the Acquiring Fund as provided in ESS' Agreement and Declaration of
Trust or GraniteShares Trust's Agreement and Declaration of Trust,
respectively. The execution and delivery by such officers shall not
be deemed to have been made by any of them individually or to impose
any liability on any of them personally, but shall bind only the
property of such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be approved on behalf of the Acquiring Fund and Existing Fund.
ETF SERIES SOLUTIONS,
on behalf of its series the Master Income ETF
By:
Name:
Xxxxxxx X. Xxxxxxxx
Title:
Vice President and Secretary
GRANITESHARES ETF TRUST,
on behalf of its series the GraniteShares HIPS US High Income ETF
By:
Name:
Xxxxxxx Xxxxx
Title:
President
GRANITESHARES ADVISORS LLC,
solely for the purposes of Section 9.1 of this Agreement
By:
Name:
Xxxxxxx Xxxxx
Title:
CEO
Schedule 7.1(h)
1. Investment Advisory Agreement between ESS, on behalf of the
Existing Fund, and ETC dated December 23, 2014.
2. Investment Sub-Advisory Agreement among ESS, on behalf of the
Existing Fund, ETC, and Penserra dated December 23, 2014.
3. Distribution Agreement among ESS, on behalf the Existing Fund,
Quasar Distributors, LLC, and Exchange Traded Concepts, LLC
dated November 17, 2014.
4. Custody Agreement between ESS, on behalf the Existing Fund, and
U.S. Bank National Association dated May 16, 2012.
5. Fund Accounting Servicing Agreement between ESS, on behalf the
Existing Fund, and U.S. Bancorp Fund Services, LLC dated May 16,
2012.
6. Fund Administration Servicing Agreement between ESS, on behalf
the Existing Fund, and U.S. Bancorp Fund Services, LLC dated May
16, 2012.
7. Transfer Agent Servicing Agreement between ESS, on behalf the
Existing Fund, and U.S. Bancorp Fund Services, LLC dated May 16,
2012.
8. Compliance Services Agreement between the ESS Trust, on behalf
of the Existing Fund, U.S. Bancorp Fund Services, LLC, and Xxxxx
X. Xxxx dated August 17, 2015.
Exhibit 77Q(1)(g)
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