FORM OF PROCURE ETF TRUST II PURCHASING FUND AGREEMENT
Exhibit (h)(v)
FORM OF
This Purchasing Fund Agreement (the
“Agreement”) is made as of the date set forth below
between Procure ETF Trust II (“Trust”)
and _________________________ (the “Purchasing
Fund”).
WHEREAS, Section 12(d)(1)(A) (“Section
12(d)(1)(A)”) of the Investment Company Act of 1940, as
amended (“1940 Act”), limits investment by an investment
company, as defined in the 1940 Act, and affiliates of such
company, in any other investment company that is registered under
the 1940 Act; and
WHEREAS, the Trust is an investment company
registered as such under the 1940 Act; and is organized as a series
fund with multiple separate series (each such series an
“ETF” and collectively the
“ETFs”); and
WHEREAS,
the Purchasing Fund is a registered investment company or otherwise
meets the definition of “investment company” under the
1940 Act; and
WHEREAS,
the Purchasing Fund is not advised or sponsored by the adviser to
the Trust, ProcureAM, LLC, and is not part of the same “group
of investment companies” (as defined in Section
12(d)(1)(G)(ii) of the 0000 Xxx) as the Trust;
WHEREAS, the Securities and Exchange Commission
(“Commission”)
has granted an order (Rel. Nos.
____________ (______________, 2018) (notice) and _______________
(_________________, 2018) (order)) exempting the Trust and certain
investment companies investing in the ETFs of the Trust from the
limits of Section 12(d)(1)(A) (such order, the application
submitted therefor and the notice are collectively referred to as
“Order”); and
WHEREAS, in reliance on the Order, the Purchasing
Fund may acquire shares in the ETFs (“Shares”)
in excess of the limits imposed by Section 12(d)(1)(A);
and
WHEREAS,
pursuant to the conditions set forth in the Order, each Purchasing
Fund must enter into a written agreement with the Trust prior to
acquiring Shares of any ETF in excess of the limits imposed by
Section 12(d)(1)(A);
NOW,
THEREFORE, the Trust and the Purchasing Fund agree as
follows:
1.
Capitalized terms used and not
otherwise defined herein shall have the meanings assigned such
terms in the Order.
2. Capitalized
terms used and defined in this Section shall have the following
meanings:
(a) “Affiliated
Underwriting” means an
offering of securities during the existence of an underwriting or
selling syndicate of which a principal underwriter is an
Underwriting Affiliate;
(b) “ETF Affiliate”
(c) “Investing Management
Company” means a
management company, as defined in Section 4 of the 1940
Act;
(d) “Purchasing Fund
Adviser” means the
Purchasing Fund’s investment adviser;
(e) “Purchasing Fund
Subadviser” means any
subadviser to a Purchasing Fund;
(f) “Purchasing Fund’s
Advisory Group”, consists
of the Purchasing Fund Adviser or Sponsor, as applicable, and any
person controlling, controlled by, or under common control with the
Purchasing Fund Adviser, Sponsor, and any investment company or any
issuer that would be an investment company but for Sections 3(c)(1)
or 3(c)(7) of the 1940 Act that is advised by the Purchasing Fund
Adviser or sponsored by the Purchasing Fund’s Sponsor, or any
person controlling, controlled by, or under common control with the
Purchasing Fund Adviser or Sponsor, as
applicable;
(g)Purchasing Fund
Affiliate” includes the
Purchasing Fund Adviser, Purchasing Fund Subadviser(s), any
Sponsor, promoter and principal underwriter of a Purchasing Fund,
and any person controlling, controlled by, or under common control
with any of these entities;
(h) “Purchasing Fund Subadvisory
Group” consists of any
Purchasing Fund Subadviser, any person controlling, controlled by,
or under common control with such subadviser, and any investment
company or issuer that would be an investment company but for
Sections 3(c)(1) or 3(c)(7) of the 1940 Act (or portion of such
investment company or issuer) advised or sponsored by such
subadviser or any person controlling, controlled by or under common
control with such subadviser; and
(i) “Underwriting
Affiliate” means a
principal underwriter in any underwriting or selling syndicate that
is an officer, director, member of an advisory board, investment
adviser, subadviser, sponsor or employee of the Purchasing Fund, or
a person of which any such officer, director, member of an advisory
board, investment adviser, subadviser, sponsor or employee is an
affiliated person. An Underwriting Affiliate does not include any
person whose relationship to the Trust is covered by Section 10(f)
of the 1940 Act.
3. The
members of a Purchasing Fund’s Advisory Group will not
control (individually or in the aggregate) an ETF within the
meaning of section 2(a)(9) of the Act. The members of a Purchasing
Fund’s Subadvisory Group will not control (individually or in
the aggregate) an ETF within the meaning of section 2(a)(9) of the
Act. If, as a result of a decrease in the outstanding voting
securities of an ETF, the Purchasing Fund’s Advisory Group or
the Purchasing Fund’s Subadvisory Group, each in the
aggregate, becomes a holder of more than 25 percent of the
outstanding voting securities of an ETF, it will vote its Shares of
such ETF in the same proportion as the vote of all other holders of
such ETF’s Shares. This condition does not apply to the
Purchasing Fund’s Subadvisory Group with respect to an ETF
for which the Purchasing Fund’s Subadviser or a person
controlling, controlled by or under common control with the
Purchasing Fund’s Subadviser acts as the investment adviser
within the meaning of section 2(a)(20)(A) of the
Act.
4. No
Purchasing Fund or Purchasing Fund Affiliate will cause any
existing or potential investment by the Purchasing Fund in an ETF
to influence the terms of any services or transactions between the
Purchasing Fund or Purchasing Fund Affiliate and the ETF or a Fund
Affiliate
5. If
the Purchasing Fund is an “Investing Management
Company”, the board of directors or trustees of such
Investing Management Company, including a majority of the
disinterested directors or trustees, will adopt procedures
reasonably designed to ensure that the Purchasing Fund’s
adviser and Purchasing Fund’s subadviser are conducting the
investment program of the Investing Management Company without
taking into account any consideration received by the Investing
Management Company or a Purchasing Fund Affiliate from an ETF or
ETF Affiliate in connection with any services or
transactions.
6. Once
an investment by a Purchasing Fund in the securities of a ETF
exceeds the limits in Section 12(d)(1)(A)(i) of the 1940 Act, the
Board of the Trust, including a majority of the directors or
trustees who are not “interested persons” within the
meaning of Section 2(a)(19) of the 1940 Act (“non-interested
Board members”), will determine that any consideration paid
by the ETF to the Purchasing Fund or a Purchasing Fund Affiliate in
connection with any services or transactions: (i) is fair and
reasonable in relation to the nature and quality of the services
and benefits received by the Fund; (ii) is within the range of
consideration that the ETF would be required to pay to another
unaffiliated entity in connection with the same services or
transactions; and (iii) does not involve overreaching on the part
of any person concerned. This condition does not apply with respect
to any services or transactions between an ETF and its investment
adviser(s), or any person controlling, controlled by or under
common control with such investment adviser(s).
7. The
Purchasing Fund’s adviser, or trustee or sponsor of an
Purchasing Fund’s trust, as applicable, will waive fees
otherwise payable to it by the Purchasing Fund in an amount at
least equal to any compensation (including fees received pursuant
to any plan adopted by a Fund under Rule 12b-1 under the 0000 Xxx)
received from an ETF by the Purchasing Fund’s adviser, or
trustee or sponsor of the Purchasing Fund’s trust, or an
affiliated person of the Purchasing Fund’s adviser, or
trustee or sponsor of the Purchasing Fund’s trust, other than
any advisory fees paid to the Purchasing Fund’s adviser, or
trustee or sponsor of an Purchasing Fund’s trust, or its
affiliated person by the ETF, in connection with the investment by
the Purchasing Fund in the ETF. Any Purchasing Fund’s
subadviser will waive fees otherwise payable to the Purchasing
Fund’s subadviser, directly or indirectly, by the Investing
Management Company in an amount at least equal to any compensation
received from an ETF by the Purchasing Fund’s subadviser, or
an affiliated person of the Purchasing Fund’s sub-adviser,
other than any advisory fees paid to the Purchasing Fund’s
subadviser or its affiliated person by the ETF, in connection with
the investment by the Investing Management Company in the ETF made
at the direction of the Purchasing Fund’s subadviser. In the
event that the Purchasing Fund’s subadviser waives fees, the
benefit of the waiver will be passed through to the Investing
Management Company.
8. No
Purchasing Fund or Purchasing Fund Affiliate (except to the extent
it is acting in its capacity as an investment adviser to an ETF)
will cause an ETF to purchase a security in any Affiliated
Underwriting.
9.
The Board of the Trust, including a
majority of the non-interested Board members, will adopt procedures
reasonably designed to monitor any purchases of securities by the
ETF in an Affiliated Underwriting, once an investment by a
Purchasing Fund in the securities of the ETF exceeds the limit of
Section 12(d)(1)(A)(i) of the 1940 Act, including any purchases
made directly from an Underwriting Affiliate. The Board will review
these purchases periodically, but no less frequently than annually,
to determine whether the purchases were influenced by the
investment by the Purchasing Fund in the ETF. The Board will
consider, among other things: (i) whether the purchases were
consistent with the investment objectives and policies of the ETF;
(ii) how the performance of securities purchased in an Affiliated
Underwriting compares to the performance of comparable securities
purchased during a comparable period of time in underwritings other
than Affiliated Underwritings or to a benchmark such as a
comparable market index; and (iii) whether the amount of securities
purchased by the ETF in Affiliated Underwritings and the amount
purchased directly from an Underwriting Affiliate have changed
significantly from prior years. The Board will take any appropriate
actions based on its review, including, if appropriate, the
institution of procedures designed to ensure that purchases of
securities in Affiliated Underwritings are in the best interest of
shareholders of the ETF.
10.
At the time of its investment in
Shares of an ETF in excess of the limit in Section 12(d)(1)(A)(i)
of the 1940 Act, the Purchasing Fund will notify the ETF of the
investment. At such time, the Purchasing Fund will also transmit to
the ETF a list of the names of each Purchasing Fund Affiliate and
Underwriting Affiliate. The Purchasing Fund will notify the ETF of
any changes to the list of the names as soon as reasonably
practicable after a change occurs.
11.
The Purchasing Fund and the Trust
represent that their respective boards of directors or trustees and
their investment advisers, or trustee and sponsor, as applicable,
understand the terms and conditions of the Order, and agree to
fulfill their responsibilities under the Order.
12. If
the Purchasing Fund is an Investment Management Company, it
represents and warrants to the Trust that, before approving any
advisory contract under Section 15 of the 1940 Act, its board of
directors or trustees, including a majority of the disinterested
directors or trustees, found or will find that the advisory fees
charged under such contract are based on services provided that
will be in addition to, rather than duplicative of, the services
provided under the advisory contract(s) of any ETF in which the
Investing Management Company may invest. These findings and their
basis will be fully recorded in the minute books of the appropriate
Investing Management Company.
13. The
Purchasing Fund agrees that it has sole responsibility under the
Order and this Agreement to monitor the limits of Section
12(d)(1)(A) as they pertain to its acquisition of
Shares.
14.
The Purchasing Fund represents and
warrants to the Trust that, if it is a Management Company, its
investment adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, or is exempt from such
registration.
15. The
Purchasing Fund represents and warrants to the Trust that, if it
purchases Creation Units directly from the Trust, it will do so
only in compliance with the Purchasing Fund’s investment
restrictions and only if so doing is consistent with the investment
policies set forth in the Purchasing Fund’s registration
statement under the Securities Act of 1933.
16. The
Purchasing Fund and the Trust agree that each shall preserve a copy
of this Agreement, the list of Purchasing Fund Affiliates and
Underwriting Affiliates and a copy of the Order for the duration of
the investment and for a period of not less than six (6) years
thereafter, the first two years shall be maintained by the
Purchasing Fund and the Trust in an easily accessible
place.
17. The
Purchasing Fund represents and warrants to the Trust that it
understands and complies with the National Association of
Securities Dealers, Inc. Conduct Rule 2830 and that any sales
charge and/or service fees (other than customary brokerage fees)
charged with respect to shares in the Purchasing Fund will not
exceed the limits applicable to a fund of funds as set forth in
that rule.
18. If
it is acquiring Shares in excess of either (i) the 5% limit of
Section 12(d)(1)(A)(ii) of the 1940 Act or (ii) the 10% limit of
Section 12(d)(1)(A)(iii) of the 1940 Act, the Purchasing Fund
represents and warrants to the Trust, and agrees, that its
prospectus will disclose in “plain English” the fact
that it may invest in exchange-traded funds and the unique
characteristics of a fund that invests in exchange-traded funds,
including but not limited to the expense structure and any
additional expenses of investing in exchange-traded
funds.
19. Any
of the provisions of this Agreement notwithstanding, the Purchasing
Fund represents and warrants to the Trust that it operates, and
will continue to operate, in compliance with the 1940 Act, and the
Commission’s rules and regulations thereunder. The Purchasing
Fund agrees that the Trust is entitled to rely on the
representations contained in this Agreement and that the Trust has
no independent duty to monitor the Purchasing Fund’s
compliance with this Agreement, the Order, the 1940 Act, or the
Commission’s rules and regulations
thereunder.
[Remainder of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as
of the _____ day of _________________, 20 ___.
______________________________
[Name of Purchasing Fund]
By:
____________________________
Name:
__________________________
Title:
____________________________
ACCEPTED:
By:
____________________________
Name:
__________________________
Title:
____________________________
|
|
