ETF SUB-SERVICES AGREEMENT between ETF MANAGERS GROUP LLC and INDEX
Exhibit
(h)(7)
between
ETF MANAGERS GROUP LLC
and
INDEX
|
1
|
APPOINTMENT
AND DELIVERY OF DOCUMENTS
|
1
|
|
2
|
DUTIES
OF GFS
|
2
|
|
3
|
FEES
AND EXPENSES
|
3
|
|
4
|
STANDARD
OF CARE, INDEMNIFICATION AND RELIANCE
|
4
|
|
5
|
REPRESENTATIONS
AND WARRANTIES
|
7
|
|
6
|
CONFIDENTIALITY
|
7
|
|
7
|
PROPRIETARY
INFORMATION
|
8
|
|
8
|
ADDITIONAL
FUNDS AND CLASSES
|
9
|
|
9
|
ASSIGNMENT
AND SUBCONTRACTING
|
9
|
|
10
|
TERM
AND TERMINATION
|
9
|
|
11
|
MISCELLANEOUS
|
10
|
ATTACHED APPENDICES
APPENDIX I
APPENDIX II
APPENDIX III
ETF MANAGERS GROUP LLC
THIS ETF SUB-SERVICES
AGREEMENT (this
“Agreement”) dated the 1th day of February 2019 (the
“Effective Date”), is entered into by and between ETF
Managers Group LLC, a Delaware limited liability company, having
its principal office and place of business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
("EMG"), and GEMINI FUND SERVICES, LLC, a Nebraska limited
liability company, having its principal office and place of
business at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(“GFS”).
WHEREAS, EMG has been engaged by ETF Managers Trust, a
Delaware statutory trust (the “Trust”), to provide fund
administration and fund accounting services for and on behalf of
the Funds (as defined below) pursuant to each of that certain Fund
Administration Servicing Agreement, dated as of July 17, 2018
between the Trust and EMG and that certain Fund Accounting
Servicing Agreement, dated as of July 17, 2018 between the Trust
and EMG; and
WHEREAS, the Trust is an open-end management investment
company registered with the United States Securities and Exchange
Commission (the “SEC”) under the Investment Company Act
of 1940, as amended (the “Investment Company Act”);
and
WHEREAS, the Trust is authorized to issue shares
(“Shares”) in separate series, with each such series
representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Trust offers shares in the series as set
forth on Appendix III
attached hereto (each such series,
together with all other series subsequently established by the
Trust and made subject to this Agreement in accordance with
Section
8, being herein referred to as
a “Fund,” and collectively as the “Funds”);
and
WHEREAS, the EMG desires that GFS perform the services
selected on Appendix III
(collectively the
“Services”) for the Funds and GFS is willing to provide
those services on the terms and conditions set forth in this
Agreement;
NOW
THEREFORE, in consideration of
the promises and mutual covenants contained herein, EMG and GFS
hereby agree as follows:
1.
APPOINTMENT AND DELIVERY OF DOCUMENTS
(a)
EMG, on behalf of each Fund listed in
Appendix III
attached hereto, hereby appoints GFS
to provide the Funds with the Services, for the period and on the
terms set forth in this Agreement. GFS accepts such appointment and
agrees to furnish the Services in return for the compensation as
provided in Section 3 and Appendix III
of this Agreement. A description of
all the Services offered by GFS is set forth on Appendices I –
II.
(b)
In
connection therewith, EMG has delivered to GFS copies
of:
(i)
the Trust's current Agreement and Declaration of Trust and Bylaws
(collectively, the "Organizational Documents");
1
(ii)
the
Trust's Registration Statement and all amendments thereto filed
with the SEC pursuant to the Securities Act of 1933, as amended
(the "Securities Act"), and the Investment Company Act (the
"Registration Statement");
(iii)
the
Trust’s notification of registration under the Investment
Company Act on Form N-8A as filed with the SEC;
(iv)
each
Fund’s listing notice from the applicable securities
exchange;
(v)
the
Trust's current prospectus and statement of additional information
for each Fund (collectively, as currently in effect and as amended
or supplemented, the "Prospectus");
(vi)
if
applicable, each Fund’s current plan of distribution adopted
by the Trust under Rule 12b-1 under the Investment Company Act (the
"Plan");
(vii)
each
Fund’s investment advisory agreement;
()
each
Fund’s underwriting agreement;
(viii)
contact
information for the Trust’s and/or each Fund’s service
providers, including, but not limited to, EMG, the Trust’s
and/or each Fund’s administrator, custodian, transfer agent
and/or index receipt agent, independent auditors, legal counsel,
underwriter, lead market maker, securities exchange where the
Shares will be listed and chief compliance officer;
and
(ix)
procedures
adopted by the Trust in accordance with Rule 17a-7 under the
Investment Company Act with respect to affiliated
transactions.
(c)
EMG shall promptly furnish (or cause to be
furnished) to GFS with all amendments of or supplements to the
items listed in Section 1(b)
above, and shall deliver to GFS a copy
of the resolutions of the Board of Trustees of the Trust (the
"Board") appointing EMG as the Funds’ administrator and
granting EMG the authority to enter into this Agreement with
GFS.
2.
DUTIES OF GFS
GFS’s duties with respect to Sub-Fund
Accounting and Fund Sub-Administration services are detailed
in Appendices I and II
to this Agreement.
(a)
In
order for GFS to perform the Services, EMG shall (or shall cause
the Trust to) (i) cause all service providers to the Trust and/or
each Fund to furnish any and all necessary information to GFS, and
assist GFS as may be required and (ii) ensure that GFS has access
to all records and documents that GFS needs to perform the Services
and that are maintained by the Trust and the Funds or any service
provider to the Trust or any Fund.
(b)
GFS
shall, for all purposes herein, be deemed to be an independent
contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent EMG or the
Trust in any way or otherwise be deemed an agent of EMG or the
Trust.
2
(c)
Whenever,
in the course of performing its duties under this Agreement, GFS
determines,on the basis of information supplied to GFS by EMG or
the Trust, that a violation of applicable law has occurred, or
that, to its knowledge, a possible violation of applicable law may
have occurred, or with the passage of time could occur, GFS shall
promptly notify EMG and the Trust’s chief compliance officer
and legal counsel of such violation.
3.
FEES AND EXPENSES
(a)
Fees.
As compensation for the Services
provided by GFS pursuant to this Agreement,
EMG agrees to pay GFS the fees set forth in
Appendix III
attached hereto. Fees will begin to
accrue with respect to each Fund on the later of the date of this
Agreement or the date GFS begins providing services to such Fund.
For the purpose of determining fees calculated as a function of
such Fund’s assets, the value of the Fund’s assets and
net assets shall be computed as required by its currently effective
Prospectus, generally accepted accounting principles, and
resolutions of the Board. GFS will render, after the close of each
month in which the Services have been furnished, a statement
reflecting all of the charges for such month together with any
unpaid charges from prior months. Services provided for partial
months shall be subject to pro ration.
(b)
Expenses.
In addition to the fees paid
under Section 3(a)
above, EMG agrees to
reimburse GFS
for all reasonable out-of-pocket expenses or advances incurred by
GFS to perform the Services, as well as for any out-of-pocket
expenses incurred by GFS at the request or with the consent of EMG.
For the avoidance of doubt, and without intending to limit
EMG’s reimbursement obligation, EMG agrees to reimburse GFS
for the following expenses to the extent incurred by GFS in the
performance of the Services:
(i)
taxes
(except to the extent relating the income of GFS);
(ii)
interest;
(iii)
brokerage
fees and commissions, if any;
(iv)
fees
for trustees who are not officers, directors, partners, employees
or holders of five percent (5%) or more of the outstanding voting
securities of GFS or the Company’s investment
adviser;
(v)
SEC
fees (including ▇▇▇▇▇ filing fees);
(vi)
state
blue sky registration or qualification fees;
(vii)
licensing
fees for the index on which the Funds are based
(“Index”);
(viii)
securities
exchange listing fees and fees associated with the calculation and
dissemination of the Index and indicative optimized portfolio value
(“IOPV”);
(ix)
advisory
fees;
(x)
charges
of custodians;
(xi)
transfer
agent, dividend disbursing agent and index receipt agent
fees;
(xii)
insurance
premiums;
(xiii)
outside
auditing and legal expenses;
(xiv)
costs
of maintaining Trust existence;
(xv)
costs
attributable to shareholder services, including, without
limitation, telephone and personnel expenses;
(xvi)
costs
of preparing and printing prospectuses for regulatory
purposes;
(xvii)
costs
of shareholders' reports, Trust meetings and related
expenses;
(xviii)
costs
associated with Fund purchase and redemption transactions;
and
3
(xix)
any
extraordinary expenses.
(c)
Fee Changes. On each anniversary date of this Agreement, the
base and/or minimum fees enumerated in Appendix III
attached hereto, may be increased by
the change in the Consumer Price Index for the Northeast region
(the “CPI”) for the twelve-month period ending with the
month preceding such annual anniversary date. Any CPI increases not
charged in any given year may be included in prospective CPI fee
increases in future years. GFS Agrees to provide EMG prior written
notice of any CPI increase.
(d)
Due Date. All fees contemplated under Section 3(a)
above and reimbursement for all
expenses contemplated under Section 3(b)
above are due and payable within ten
(10) days of receipt of an invoice provided by GFS. Any fees or
reimbursements due hereunder and not received by its due date may
be assessed interest at the maximum amount permitted by
law.
(e)
Books and Records.
The accounts, books, records and other
documents (the “Records”) maintained by GFS in
connection with the performance of the Services shall be the
property of the Trust, and shall be surrendered to EMG, at the
expense of EMG, promptly upon request by EMG in the form in which
such Records have been maintained or preserved, provided that all
service fees and expenses charged by GFS in the performance of its
duties hereunder have been fully paid to the satisfaction of GFS.
GFS agrees to maintain a backup set of each Fund’s Records
(which back-up set shall be updated on at least a weekly basis) at
a location other than that where the original Records are stored.
GFS shall assist the Funds’ independent auditors, or, upon
approval of the Funds, any regulatory body, in any requested review
of the Funds’ Records. GFS shall preserve the Records, as
they are required to be maintained and preserved by Rule 31a-1
under the Investment Company Act.
(f)
Post-Engagement
Audit Support Fees. After a de-conversion, GFS may be called upon
to provide support to a Fund’s service providers in
connection with a Fund’s annual audit. Services provided by
GFS to accommodate any request by the Fund for assistance with the
Fund’s annual audit following termination of this Agreement
shall be subject to GFS’s standard hourly rates existing at
the time of the request. EMG agrees to compensate GFS, at
GFS’s standard hourly rates, for accommodating any such
request.
4.
STANDARD OF CARE, INDEMNIFICATION AND RELIANCE
(a)
Indemnification of
GFS. EMG shall indemnify and
hold GFS harmless from and against any and all losses, damages,
costs, charges, reasonable attorney or consultant fees, payments,
expenses and liability arising out of or attributable to
EMG’s refusal or failure to comply with the terms of this
Agreement, breach of any representation or warranty made by EMG
contained in this Agreement, or which arise out of EMG’s lack
of good faith, gross negligence or willful misconduct with respect
to EMG’s performance under or in connection with this
Agreement. EMG shall also indemnify and hold GFS harmless from all
reasonable actions taken by GFS hereunder in good faith without
gross negligence, willful misconduct or reckless disregard of its
duties.
(b)
Indemnification of
EMG. GFS shall indemnify and
hold EMG harmless from and against any and all losses, damages,
costs, charges, reasonable attorney or consultant
fees,
4
payments,
expenses and liability arising out of or attributable to
GFS’s refusal or failure to comply with the terms of this
Agreement, breach of any representation or warranty made by GFS
contained in this Agreement or which arise out of (i) GFS’s
lack of good faith, gross negligence or willful misconduct with
respect to GFS’s performance under or in connection with this
Agreement, or (ii) solely with respect to work performed by GFS to
calculate the net asset value of a Fund, GFS’s ordinary
negligence.
(c)
Reliance.
Except to the extent that GFS may be liable pursuant to
Sections
4(a) or 4(b) above, EMG shall hold GFS harmless and GFS shall
not be liable for any action taken or failure to act in reliance
upon, and shall be entitled to rely upon:
(i)
advice
of EMG, the Trust, the Funds, their officers, independent auditors
or legal counsel;
(ii)
any
oral instruction which it receives and which it, in good faith, has
a reasonable basis to believe was transmitted by the person or
persons authorized by EMG or the Board to give such oral
instruction pursuant to the parties standard operating
practices;
(iii)
any
written instruction or resolution of EMG or the Board, and GFS may
rely upon the genuineness of any such document, copy or facsimile
thereof reasonably believed by GFS to have been validly
executed;
(iv)
any
signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report,
notice, consent, order, or other document reasonably believed by
GFS to be genuine and to have been signed or presented by EMG, the
Trust, or other proper party or parties;
(v)
any
instruction, information, data, records or documents provided to
GFS or its agents or subcontractors furnished (pursuant to
procedures mutually agreed to by GFS and the Trust’s service
providers) by machine readable input, data entry, email, facsimile
or other similar means authorized by the Trust; and
(vi)
any
authorization, instruction, approval, item or set of data, or
information of any kind transmitted to GFS in person or by
telephone, email, facsimile or other electronic means, furnished
and reasonably believed by GFS to be genuine and to have been given
by the proper person or persons. GFS shall not be held to have
notice of any change of authority of any person, until receipt of
written notice thereof from EMG or the Trust.
GFS
shall not be under any duty or obligation to inquire into the
validity or invalidity or authority or lack of authority of any
statement, oral or written instruction, resolution, signature,
request, letter of transmittal, certificate, opinion of counsel,
instrument, report, notice, consent, order, or any other document
or instrument which GFS reasonably believes to be
genuine.
At
any time, GFS may apply to EMG or to any officer of the Trust for
instructions, and may consult with legal counsel to the Trust with
respect to any matter arising in connection with the routine
services to be performed by GFS under this Agreement, and GFS and
its agents or
subcontractors shall not be liable and shall be indemnified by EMG
on behalf of the Trust for any action taken or omitted by it in
reasonable reliance upon such instructions or upon the advice of
such counsel.
5
(d)
Errors of
Others. GFS shall not be liable
for the errors of other service providers to the Trust, except or
unless any GFS action or inaction is a direct cause of the
error.
(e)
Reliance on Electronic
Instructions. If the Trust has
the ability to originate electronic instructions to GFS in order to
(i) effect the transfer or movement of cash or Shares or (ii)
transmit shareholder information or other information, then in such
event GFS shall be entitled to rely on the validity and
authenticity of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in conformity
with security procedures established and agreed upon by GFS and the
Fund’s investment adviser.
(f)
Notification of Claims.
In order that the indemnification
provisions contained in this Section shall apply, upon the
assertion of a claim for which either party may be required to
indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep
the other party advised with respect to all developments concerning
such claim. Notwithstanding the foregoing, the failure of the
indemnitee to timely notify the indemnitor shall not relieve the
indemnitor of its indemnification obligations hereunder except to
the extent that the indemnitor is materially prejudiced by such
failure.
(g)
Defense of
Claims. The party who may be
required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim or to
defend against said claim in its own name or in the name of the
other party. The party seeking indemnification shall in no case
confess any claim or make any compromise in any case in which the
other party may be required to indemnify it except with the other
party’s prior written consent.
(h)
Limitation of GFS’s
Liability. Notwithstanding any
other provision of this Agreement, GFS’s maximum liability to
the other party under this Section arising out of the transactions
contemplated hereby, whether arising in contract, tort (including,
without limitation, negligence) or otherwise, shall not exceed the
direct loss to such other party. IN NO EVENT SHALL GFS BE LIABLE
FOR TRADING LOSSES, LOST REVENUES, SPECIAL, INCIDENTAL, INDIRECT,
CONSEQUENTIAL OR EXEMPLARY DAMAGES OR LOST PROFITS, WHETHER OR NOT
SUCH DAMAGES WERE FORESEEABLE OR GFS WAS ADVISED OF THE POSSIBILITY
THEREOF. THE PARTIES ACKNOWLEDGE THAT THE OTHER PARTS OF THIS
AGREEMENT ARE PREMISED UPON THE LIMITATION STATED IN THIS
SECTION.
(h)
Notwithstanding anything herein to the contrary,
GFS acknowledges and agrees that (i) each Fund represents a
separate pool of assets and liabilities from any other Funds
subject to this Agreement, (ii) the liabilities or obligations of
EMG hereunder on behalf of each Fund are several to the liabilities
or obligations of EMG hereunder on behalf of any other Fund, and
(iii) to the extent GFS is entitled to receive payments in respect
of any Fund under this Agreement pursuant to Section 3, Section 4
or otherwise, GFS acknowledges that
EMG shall look only to the assets of the applicable Fund for such
payment, and that no other Fund nor any of the Trust’s
trustees, officers, employees, agents , or shareholders, whether
past, present or future, shall be liable
therefor.
6
5.
REPRESENTATIONS AND WARRANTIES
(a) Representations of GFS.
GFS represents and warrants to EMG
that:
(i)
it
is a limited liability company duly organized, existing and in good
standing under the laws of the state of Nebraska;
(ii)
it
is empowered under applicable laws and by its organizational
documents to enter into this Agreement and perform its duties under
this Agreement; and
(iii)
it
has access to the necessary facilities, equipment, and personnel to
perform its duties and obligations under this
Agreement.
(b) Representations of EMG.
EMG represents and warrants to GFS
that:
(i)
it
is a limited liability company duly organized, existing and in good
standing under the laws of the state of Delaware;
(ii)
it
is empowered under applicable laws and by its organizational
documents to enter into this Agreement and perform its duties under
this Agreement;
(iii)
it
has access to the necessary facilities, equipment, and personnel to
perform its duties and obligations under this
Agreement;
(iv)
the
Trust is an investment company registered or to-be registered under
the Investment Company Act and will operate in conformance with the
Investment Company Act and all rules and regulations promulgated
thereunder during the term of this Agreement;
(v)
a
registration statement under the Securities Act is or will be
effective and will remain effective, and appropriate state
securities law filings as required, have been or will be made and
will continue to be made, with respect to all Shares of the Fund(s)
being offered for sale; and
(vi)
Each
Fund’s Organizational Documents, Registration Statement and
Prospectus are true and accurate and will remain true and accurate
at all times during the term of this Agreement in conformance with
applicable federal and state securities laws.
6.
CONFIDENTIALITY
GFS
and EMG agree that all books, records, information, and data
pertaining to the business of the other party, the Trust and each
Fund, which are exchanged or received pursuant to the negotiation
or the carrying out of this Agreement shall remain confidential,
and shall not be voluntarily disclosed to any other person, except
that GFS may:
(a)
prepare
or assist in the preparation of periodic reports to shareholders
and regulatory bodies such as the SEC;
7
(b)
provide
information typically supplied in the investment company industry
to companies that track or report price, performance or other
information regarding investment companies; and
(c)
release
such information as permitted or required by law or approved in
writing by EMG or the Trust (as applicable), which approval shall
not be unreasonably withheld and may not be withheld where GFS may
be exposed to civil or criminal liability or proceedings for
failure to release the information, when requested to divulge such
information by duly constituted authorities or when so requested by
EMG, the Trust, or the Trust’s investment adviser (as
applicable).
Except as provided above, in accordance with Title 17, Chapter II,
part 248 of the Code of Federal Regulations (17 CFR 248.1 –
248.30) (“Reg S-P”), GFS will not directly, or
indirectly through an affiliate, disclose any non-public personal
information as defined in Reg S-P, received from EMG, the Trust or
a Fund to any person that is not affiliated with such entity or
with GFS and provided that any such information disclosed to an
affiliate of GFS shall be under the same limitations on
non-disclosure.
Both parties agree to communicate sensitive information via secured
communication channels (i.e., encrypted format).
7.
PROPRIETARY INFORMATION
(a)
Proprietary Information of
GFS. EMG
acknowledges that the databases, computer programs, screen formats,
report formats, interactive design techniques, and documentation
manuals maintained by GFS on databases under the control and
ownership of GFS or a third party constitute copyrighted, trade
secret, or other proprietary information (collectively, “GFS
Proprietary Information”) of substantial value to GFS or the
third party. EMG agrees to treat all GFS Proprietary Information as
proprietary to GFS and further agrees that it shall not divulge any
GFS Proprietary Information to any person or organization except as
may be provided under this Agreement or as may be directed by GFS
or as may be duly requested by regulatory
authorities.
(b)
Proprietary Information of the
Trust. GFS
acknowledges that all information related to shareholders
purchasing or redeeming in-kind furnished to GFS by the Trust or by
a shareholder in connection with this Agreement (collectively,
“Customer Data”) all information regarding the Trust
portfolios, arrangements with brokerage firms and Authorized
Participants (as defined in the Funds’ Prospectus and
Statement of Additional Information), compensation paid to or by
the Trust, trading strategies and all such related information
(collectively, “Trust Proprietary Information”)
constitute proprietary information of substantial value to the
Trust. In no event shall GFS Proprietary Information be deemed
Trust Proprietary Information or Customer Data. GFS agrees to treat
all Trust Proprietary Information and Customer Data as proprietary
to the Trust and further agrees that it shall not divulge any Trust
Proprietary Information or Customer Data to any person or
organization except as may be provided under this Agreement or as
may be directed by the Trust or as may be duly requested by
regulatory authorities.
(d)
Each party shall take reasonable efforts to advise
its employees of their obligations pursuant to this
Section
7. The obligations of
this Section
7 shall survive any earlier
termination of this Agreement.
8
8.
ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or
more series of Shares or one or more classes of Shares after the
effectiveness of this Agreement, such series of Shares or classes
of Shares, as the case may be, shall become classes (or funds)
under this Agreement with necessary changes made to
Appendix
III; provided,
however, that either GFS or EMG may elect not to make any such
series or classes subject to this Agreement.
9.
ASSIGNMENT AND SUBCONTRACTING
(a)
This Agreement shall extend to and shall be
binding upon the parties hereto and their respective successors and
assigns; provided,
however, that this Agreement shall not be assignable by either
party without the prior written consent of the other
party.
(b)
GFS may subcontract any or all of its
responsibilities pursuant to this Agreement to one or more
companies, trusts, firms, individuals or associations, which may or
may not be affiliated persons of GFS and which agree to comply with
the terms of this Agreement; provided,
however, that any such
subcontracting shall not relieve GFS of its responsibilities
hereunder. GFS may pay such persons for their services, but no such
payment will increase fees due from EMG
hereunder.
10.
TERM AND TERMINATION
(a)
Term. This Agreement shall remain in effect for a period
of three (3) years from the Effective Date and shall continue in
effect for successive twelve-month terms, provided
that such continuance is specifically
approved at least annually by EMG and a majority of the
Board.
(b)
Termination. This Agreement may be terminated with respect to
the Trust and/or with respect to any Fund by the Board, by vote of
a majority of the outstanding voting securities of the Trust, or by
GFS at the end of the initial term or any subsequent renewal term
upon not less than ninety (90) days’ advanced written notice;
or upon written notice from either party of a material breach,
provided that a party shall have a thirty (30) day cure period in
which to remedy any claimed material breach. If the party
attempting to cure any claimed material breach is unable to do so
within the allotted thirty (30) day cure period, the parties agree
to submit to arbitration in accordance with Section 12(g)
of this Agreement. Additionally, GFS
may terminate this Agreement with respect to a Fund at any time
following the Board’s determination to liquidate such Fund by
delivering written notice to the Board setting forth the date on
which such termination is to be effective. In the event of any
termination of this Agreement, GFS agrees that it will cooperate to
facilitate the smooth transition of services to a replacement
service provider, if one has been selected by the
Board.
(c)
Reimbursement of Expenses
Incurred by GFS in Effecting Any Termination. If this Agreement is terminated with respect to
a Fund or Funds, GFS shall be entitled to collect from EMG, in
addition to the compensation described under Section 3 of this Agreement, the amount of all of
GFS’s reasonable labor charges and cash disbursements for
services in connection with GFS’s activities in effecting
such termination, including, without
9
limitation,
the labor costs and expenses associated with the de-conversion of
the Trust’s and/or any Fund’s records from GFS’s
computer systems, and the delivery to the Trust and/or its
designees of the Trust’s and/or any Fund’s property,
records, instruments and documents, or any copies thereof.
Subsequent to such termination, for a reasonable fee, GFS will
provide the Trust and/or any Fund with reasonable access to all
Trust and/or Fund documents or records (as applicable) remaining in
its possession.
(d)Survival of
Certain Obligations. The obligations of
Sections 3, 4,
6, 7, 10 and 11
shall
survive
any termination of this Agreement.
11. MISCELLANEOUS
(a)
Amendments. This Agreement may not be amended, or any
provision hereof waived, except in writing signed by the party
against which the enforcement of such amendment or waiver is
sought.
(b)
Governing
Law. This Agreement shall be
construed and the provisions thereof interpreted under and in
accordance with the laws of the state of New
York.
(c)
Entire
Agreement. This Agreement
constitutes the entire agreement between the parties
hereto.
(d)
Counterparts. The parties may execute this Agreement on any
number of counterparts, and all of the counterparts taken together
shall be deemed to constitute one and the same
instrument.
(e)
Severability.
If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not
be affected by such determination, and the rights and obligations
of the parties shall be construed and enforced as if this Agreement
did not contain the particular part, term or provision held to be
illegal or invalid.
(f)
Force Majeure.
Neither party shall be liable for
failure to perform if the failure results from a cause beyond its
control, including, without limitation, fire, electrical,
mechanical, or equipment breakdowns, delays by third party vendors
and/or communications carriers, civil disturbances or disorders,
terrorist acts, strikes, acts of governmental authority or new
governmental restrictions, or acts of God.
(g)
Arbitration.
Any controversy or claim arising out
of or relating to this contract, or the breach thereof, shall be
settled by arbitration in New York according to the Securities
Arbitration Rules of the American Arbitration Association, and
judgment on the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof.
This
arbitration provision shall be enforced and interpreted exclusively
in accordance with applicable federal law, including the Federal
Arbitration Act. Any costs, fees, or taxes involved in enforcing
the award shall be fully assessed against and paid by the party
resisting enforcement of said award. The prevailing party shall
also be entitled to an award of reasonable attorneys’ fees
and costs incurred in connection with the enforcement of this
Agreement.
10
(h)
Headings. Section and paragraph headings in this Agreement
are included for convenience only and are not to be used to
construe or interpret this Agreement.
(i)
Notices. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date
of delivery if delivered personally, (b) on the fifth Business Day
following the date of mailing, if mailed by registered or certified
mail, return receipt requested, postage prepaid to the party to
receive such notice, (c) if dispatched via a nationally recognized
overnight courier service (delivery receipt requested) with charges
paid by the dispatching party, on the later of (i) the first
Business Day following the date of dispatch, or (ii) the scheduled
date of delivery by such service, or (d) on the date sent by
electronic mail if sent during normal business hours of the
recipient during a Business Day, and otherwise on the next Business
Day, if sent after normal business hours of the recipient, provided
that in the case of electronic mail, each notice or other
communication shall be confirmed within one Business Day by
dispatch of a copy of such notice pursuant to one of the other
methods described herein, at the following addresses, or such other
address as a party may designate from time to time by notice in
accordance with this Section.
If to
EMG:
If to GFS:
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Chief Executive Officer ETF Managers Group LLC ▇▇
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Telephone:▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇@▇▇▇▇▇.▇▇▇
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Gemini
Fund Services, LLC
Attn:
Legal Department
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(j)
Safekeeping. GFS shall establish and maintain facilities and
procedures reasonably acceptable
to the Trust for the safekeeping and control of records maintained
by GFS under this Agreement including the preparation and use of
check forms, facsimile, email or other electronic signature
imprinting devices.
(k)
Distinction of
Funds. Notwithstanding any
other provision of this Agreement, the parties agree that the
assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and
that no Fund shall be liable or shall be charged for any debt,
obligation or liability of any other Fund, whether arising under
this Agreement or otherwise.
(l)
Representation of
Signatories. Each of the
undersigned expressly warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party
indicated and that their signature will bind the party indicated to
the terms hereof.
Signature page follows
11
IN WITNESS
WHEREOF, the parties hereto
have caused this Agreement to be executed in their names and on
their behalf by and through their duly authorized persons, as of
the day and year first above written.
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ETF MANAGERS GROUP LLC
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GEMINI FUND SERVICES, LLC
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By:
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, III
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By:
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/s/ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇, III
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Chief Executive Officer
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President
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12
APPENDIX I
ETF Sub-Accounting Services
With respect to each Fund electing Sub-Accounting Services, GFS
shall provide the following services subject to, and in compliance
with, the objectives, policies and limitations set forth in the
Trust’s Registration Statement, the Trust’s
Organizational Documents, applicable laws and regulations,
exemptive orders and resolutions and policies established by the
Trust’s Board:
1)
Timely calculate the net asset value per share with the frequency
prescribed in each Fund's then-current Prospectus, transmit the
Fund's net asset value to the Fund’s listing exchange and
Authorized Participants by the times agreed upon by GFS and the
Trust, and communicate such net asset value to the Trust and its
transfer agent and/or index receipt agent;
2)
Calculate
each item of income, expense, deduction, credit, gain and loss, if
any, as required by the Trust and in conformance with generally
accepted accounting principles ("GAAP"), SEC Regulation S-X (or any
successor regulation) and the Internal Revenue Code of 1986, as
amended (or any successor laws)(the "Code");
3)
Prepare
and maintain on behalf of each Fund, books and records of each
Fund, as required by Rule 31a-1 under the Investment Company Act,
and as such rule or any successor rule, may be amended from time to
time, that are applicable to the fulfillment of GFS’s ETF
Sub-Accounting Services, as well as any other documents necessary
or advisable for compliance with applicable regulations as may be
mutually agreed to between EMG and GFS. Without limiting the
generality of the foregoing, GFS will prepare and maintain the
following records upon receipt of information in proper form from
the Fund or its authorized agents:
a. Cash
receipts journal
b. Cash
disbursements journal
c. Dividend
record
d. Purchase
and sales - portfolio securities journals
e. Subscription
and redemption journals
f. Security
ledgers
g. Broker
ledger
h. General
ledger
i. Daily
expense accruals
j. Daily
income accruals
k. Securities
and monies borrowed or loaned and collateral therefore
l. Foreign
currency journals
m. Trial
balances
4)
Make
such adjustments over such periods as the Trust’s
administrator or sub-administrator deems necessary, and
communicates to GFS in writing, to reflect over-accruals or
under-accruals of estimated expenses or income;
5)
Provide
the Trust and, each investment adviser serving as an investment
adviser for a Fund with daily portfolio valuation, net asset value
calculation and other standard operational reports as requested
from time to time;
6)
Provide
all raw data available from its fund accounting system for the
Fund’s investment adviser, administrator or sub-administrator
to assist in preparation of the following:
a. Semi-annual
financial statements;
b. Annual
form N-CEN and annual tax returns;
c. Financial
data necessary to update the Trust’s Registration Statement;
and
d. Annual
proxy statement.
7)
Provide
facilities to accommodate an annual audit by each Fund’s
independent accountants and, upon approval of the Trust, any audits
or examinations conducted by the SEC or any other governmental or
quasi-governmental entities with jurisdiction;
8)
Transmit
to and receive from each Fund's transfer agent and/or index receipt
agent appropriate data on a daily basis and daily reconcile Shares
outstanding and other data with the transfer agent;
9)
Periodically
reconcile all appropriate data with each Fund's
custodian;
10)
Perform
such other record keeping, reporting and other tasks as may be
specified from time to time in the procedures adopted by the Board
pursuant to mutually acceptable timelines and compensation
agreements; and
11)
Create
each Fund’s daily portfolio composition file
(“PCF”), transmitting the PCF to each Fund and its
Adviser and assist the Fund and its Adviser with inputting the PCF
into the NSCC system and facilitating any other communications
required by the NSCC related to the PCFs.
Fund Accounting Records.
Maintenance of and Access to Records. GFS shall maintain records relating to its
services, such as journals, ledger accounts and other records, as
are required to be maintained under the Investment Company Act and,
specifically, Rule 31a-1 thereunder. The books and records
pertaining to the Trust that are in possession of GFS shall be the
property of the Trust. The Trust, or the Trust's authorized
representatives, shall have access to such books and records at all
times during GFS’s normal business hours. Upon the reasonable
request of the Trust, copies of any such books and records shall be
provided promptly by GFS to the Trust or the Trust's authorized
representatives. In the event the Trust designates a successor that
assumes any of GFS’s obligations hereunder, GFS shall, at the
expense and direction of the Trust, transfer to such successor all
relevant books, records and other data established or maintained by
GFS under this Agreement.
Inspection of Records. In case
of any requests or demands for the inspection of the records of the
Trust maintained by GFS, GFS will endeavor to notify the Trust and
to secure instructions from an authorized officer of the Trust as
to such inspection. GFS shall abide by the Trust's instructions for
granting or denying the inspection; provided, however, that GFS may
grant the inspection without instructions from the Trust if GFS is
advised to disclose by its legal counsel.
All out-of-pocket expenses will be billed as set forth on Appendix
III. GFS may from time to time adopt new procedures, or modify
existing procedures, in order to carry out its ETF Sub-Accounting
Services. Any modification of the ETF Sub-Accounting Services
provided by GFS as set forth in this Appendix I shall be delivered
to EMG in writing.
APPENDIX II
ETF Sub-Administrative Services
With respect to each Fund electing Fund Administrative Services,
GFS shall provide the following services subject to, and in
compliance with the objectives, policies and limitations set forth
in the Trust’s Registration Statement, the Trust’s
Organizational Documents, applicable laws and regulations, and
resolutions and policies established by the Trust’s Board and
directions of EMG:
1)
Monitor
the performance of administrative and professional services
rendered to the Trust by others, including its custodian, transfer
agent, sub-transfer agent, fund accountant, fund sub-accountant,
and dividend disbursing agent as well as legal, auditing,
shareholder servicing and other services performed for the
Trust;
2)
Monitor Fund holdings and operations for
post-trade compliance with the
Prospectus and Statement of Additional Information, SEC statutes,
rules, regulations and policies and pursuant to advice from the
Fund’s independent public accountants and Trust counsel,
monitor Fund holdings for compliance with IRS taxation limitations
and restrictions and applicable Federal Accounting Standards Board
rules, statements and interpretations; provide periodic compliance
reports to each investment adviser or sub-adviser to the Trust, and
assist the Trust, the Adviser and each sub-adviser to the Trust
(collectively referred to as “Advisers”) in preparation
of periodic compliance reports to the Trust, as
applicable;
3)
Prepare
and coordinate the printing of semi-annual and annual financial
statements;
4)
Prepare
selected management reports for performance and compliance analyses
agreed upon by the Trust and GFS from time to time;
5)
In
consultation with legal counsel to the Trust, the investment
adviser, officers of the Trust and other relevant parties, prepare
and disseminate materials for meetings of the Board, including
agendas and selected financial information as agreed upon by the
Trust and GFS from time to time; attend and participate in Board
meetings to the extent requested by the Board; and prepare or cause
to be prepared minutes of the meetings of the Board;
6)
Determine
income and capital gains available for distribution and calculate
distributions required to meet regulatory, income, and excise tax
requirements, to be reviewed by the Trust's independent public
accountants;
7)
Review
the Trust's federal, state, and local tax returns as prepared and
signed by the Trust's independent public accountants;
8)
Prepare
and maintain the Trust's operating expense budget to determine
proper expense accruals to be charged to each Fund in order to
calculate its daily net asset value;
9)
In
consultation with legal counsel for the Trust, assist in and
monitor the preparation, filing, printing and where applicable,
dissemination to shareholders of the following:
a.
amendments
to the Trust’s Registration Statement;
b.
periodic
reports to the Trustees, shareholders and the SEC, including, but
not limited to, annual reports and semi-annual
reports;
c.
notices
pursuant to Rule 24f-2 (as applicable);
d.
proxy
materials; and
e.
reports
to the SEC on Forms N-SAR, N-CEN, N-CSR, N-Q, N-PORT, N-23c-3 and
N-PX (as applicable).
10)
Coordinate
the Trust's audits and examinations by:
a.
assisting
each Fund’s independent public accountants, or, upon approval
of the Trust, any regulatory body or securities exchange, in any
requested review of a Fund’s accounts and
records;
b.
providing
appropriate financial schedules (as requested by a Fund’s
independent public accountants or SEC examiners); and
c.
providing
office facilities as may be required.
11)
Determine,
after consultation with legal counsel for the Trust and the
Fund’s investment adviser, the jurisdictions in which Shares
of the Trust shall be registered or qualified for sale; facilitate,
register, or prepare applicable notice or other filings with
respect to, the Shares with the various state and territories of
the United States and other securities commissions, provided that
all fees for the registration of Shares or for qualifying or
continuing the qualification of the Trust shall be paid by the
Trust;
12)
Monitor
sales of Shares and ensure that the Shares are properly and duly
registered with the SEC;
13)
Coordinate
with the Funds’ service providers to facilitate the setup of
Funds on applicable securities exchanges;
14)
Monitor
sales of Shares and ensure that the Shares are properly and duly
listed with the applicable securities exchanges and that securities
exchange listing requirements are met;
15)
Process
share creations and redemptions with the Funds’ transfer
agent;
16)
Maintain
create/redeem records to the extent they are not otherwise
maintained by other Service Providers;
17)
Arrange
for vendors to provide and post each Fund’s IOPV and other
information required by exemptive orders;
18)
Monitor
the calculation of performance data for dissemination to
information services covering the investment company industry, for
sales literature of the Trust and other appropriate
purposes;
19)
Prepare,
or cause to be prepared, expense and financial reports, including
Fund budgets, expense reports, pro-forma financial statements,
expense and profit/loss projections and fee waiver/expense
reimbursement projections on a periodic basis;
20)
Prepare
authorization for the payment of Trust expenses and pay, from Trust
assets, all bills of the Trust;
21)
Provide
information typically supplied in the investment company industry
to companies that track or report price, performance or other
information with respect to investment companies;
22)
Upon
request, assist each Fund in the evaluation and selection of other
service providers, such as independent public accountants,
printers, ▇▇▇▇▇ providers and proxy solicitors (such parties may be
affiliates of GFS); and
23)
Perform
other services, recordkeeping and assistance relating to the
affairs of the Trust as the Trust may, from time to time,
reasonably request pursuant to mutually acceptable timelines and
compensation agreements.
All out-of-pocket expenses will be billed as set forth on Appendix
III. GFS may from time to time adopt new procedures, or modify
existing procedures, in order to carry out its ETF
Sub-Administrative Services. Any modification of the ETF
Sub-Administrative Services provided by GFS as set forth in this
Appendix II shall be delivered to EMG in writing.
APPENDIX III
LIST OF FUNDS
SERVICES & FEES
This Appendix
III is part of the ETF
Sub-Services Agreement (the “Agreement”), dated
February 1, 2019, between ETF Managers Group LLC
(“EMG”) and Gemini Fund Services, LLC
(“GFS”). Set forth below are the Services elected by
EMG for the Fund(s) identified on this Appendix
II along with the associated
Fees. Capitalized terms used herein that are not otherwise defined
shall have the same meanings ascribed to them in the
Agreement.
COVERED FUNDS
The Fund(s) to be covered under this Agreement
include:
Fund(s)
ETFMG
Alternative Harvest ETF
Funds with the same investment adviser are collectively referred to
as a “Fund Family.”
SELECTED SERVICES and FEES
In consideration of the services described on Appendices I
and II (collectively the
“Services”), EMG shall pay to GFS the following fees
(unless otherwise specified, all basis point fees will be
calculated based upon the average net assets of the Fund for the
previous month):
IN WITNESS WHEREOF, the parties hereto have executed this Appendix
III to the ETF Sub-Services Agreement effective as of February 1,
2019.
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ETF MANAGERS GROUP LLC
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GEMINI FUND SERVICES, LLC
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By:
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, III
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By:
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/s/ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇, III
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▇▇▇▇▇ ▇▇▇▇
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Chief Executive Officer
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President
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The undersigned investment adviser (the “Adviser”)
hereby acknowledges and agrees to the terms of the Agreement and
further acknowledges and agrees that:
(1) GFS
expends substantial time and money, on an ongoing basis, to recruit
and train its employees;
(2) GFS's
business is highly competitive and is marketed throughout the
United States, and (3) if the Adviser were to hire any GFS
employees who are involved in the procurement of the Services under
the Agreement then GFS may suffer lost sales and other
opportunities and would incur substantial expense in hiring and
training replacement(s) for those employees. Accordingly, the
Adviser agrees that it, including its respective affiliates and
subsidiaries, shall not solicit, attempt to induce or otherwise
hire an employee of GFS for so long as this Agreement is in effect
and for a period of two (2) years after termination of this
Agreement, unless expressly agreed upon in writing by both parties.
In the event that this provision is breached by the Adviser, the
Adviser agrees to pay damages to GFS in the amount of two times the
current annual salary of such employee or former employee. For
purposes of this provision, “hire” means to employ as
an employee or to engage as an independent contractor, whether on a
full-time, part-time or temporary basis.
ETF Managers Group
LLC
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By:
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, III
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇, III
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Chief Executive Officer
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