Exhibit 99.(d)(1)
PACIFIC GLOBAL ETF TRUST
MANAGEMENT AGREEMENT
Agreement made the [ ]
st
day of [ ], 2018, between Pacific Global ETF Trust, a Delaware statutory trust (the “
Trust
”), on behalf of each of its series identified on Schedule A hereto (each a “
Fund
,” and collectively, the “
Funds
”), and Pacific Global Advisors LLC, a Delaware limited liability company (the “
Manager
”).
W I T N E S S E T H
WHEREAS,
the Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act); and
WHEREAS
, the Trust desires to retain the Manager to render, or contract to obtain as hereinafter provided, investment advisory services to the Trust and the Funds, and the Trust also desires to avail itself of the facilities available to the Manager with respect to the administration of its day-to-day business affairs, and the Manager is willing to render such investment advisory and administrative services;
NOW, THEREFORE
, the parties agree as follows:
1.
The Trust hereby appoints the Manager to act as manager of the Funds and as administrator of its business affairs for the period and on the terms set forth in this Agreement. The Manager accepts such appointment and agrees to render the services herein described, for the compensation herein provided. Subject to the approval of the Board of Trustees of the Trust, the Manager is authorized to enter into a subadvisory agreement with a subadviser, whether or not affiliated with the Manager (each, a “
Subadviser
”), pursuant to which such Subadviser shall furnish to the relevant Fund the investment advisory services in connection with the management of the Fund (each, a “
Subadvisory Agreement
”). Subject to the approval of the Board of Trustees of the Trust, the Manager is authorized to retain more than one Subadviser for a Fund, and if the Fund has more than one Subadviser, the Manager is authorized to allocate such Fund’s assets among the Subadvisers. The Manager will continue to have responsibility for all investment advisory services furnished pursuant to any Subadvisory Agreement. The Trust and the Manager understand and agree that the Manager may manage the Fund in a “manager-of-managers” style with either a single or multiple subadvisers. To the extent applicable to the Trust, the Manager may pursue a manager-of-managers program pursuant to an exemptive order issued by the Securities and Exchange Commission (SEC). In pursuing a manager-of-managers program it is contemplated that the Manager will, among other things: (i) continually evaluate the performance of each Subadviser to a Fund, if applicable, through quantitative and qualitative analysis and consultations with such Subadviser; (ii) periodically make recommendations to the Board as to whether the contract with one or more Subadvisers should be renewed, modified, or terminated; and (iii) periodically report to the Board regarding the results of its evaluation and monitoring functions. The Trust recognizes that a Subadviser’s services may be terminated or modified pursuant to the “manager-of-managers” process, and that the Manager may appoint a new Subadviser for a Subadviser that is so removed.
2.
Subject to the supervision of the Board of Trustees, the Manager shall administer the Fund’s business affairs and, in connection therewith, shall furnish the Fund with office facilities and with clerical, bookkeeping and recordkeeping services at such office facilities and, subject to Section 1 hereof and any Subadvisory Agreement, the Manager shall manage the investment operations of the Trust and the Funds and the composition of each Fund’s portfolio, including the purchase, retention and disposition thereof, in accordance with such Fund’s investment objectives, policies and restrictions as stated in the relevant Fund’s registration statement, and subject to the following understandings:
(a) The Manager (or a Subadviser under the Manager’s supervision) shall provide supervision of the Fund’s investments, and shall determine from time to time what investments or securities will be purchased, retained, sold or loaned by a Fund, and what portion of the assets will be invested or held uninvested as cash.
(b) The Manager, in the performance of its duties and obligations under this Agreement, shall act in conformity with the Declaration of Trust of the Trust as it may be amended from time to time and the Funds’ registration statement and with the instructions and directions of the Board of Trustees, and will conform to and comply with the requirements of the 1940 Act and all other applicable federal and state laws and regulations. In connection therewith, the Manager shall, among other things, prepare and file (or cause to be prepared and filed) such reports as are, or may in the future be, required by the SEC.
1
(c) The Manager (or the Subadviser under the Manager’s supervision) shall determine the securities and other financial instruments to be purchased or sold by a Fund and will place orders pursuant to its determinations with or through such persons, brokers, dealers or futures commission merchants in conformity with the policy with respect to brokerage as set forth in a Fund’s registration statement or as the Board of Trustees may direct from time to time. In providing a Fund with investment supervision, it is recognized that the Manager (or the Subadviser under the Manager’s supervision) will give primary consideration to securing the most favorable price and efficient execution. Consistent with this policy, the Manager (or Subadviser under the Manager’s supervision) may consider the financial responsibility, research and investment information and other services provided by brokers, dealers or futures commission merchants who may effect or be a party to any such transaction or other transactions to which other clients of the Manager (or Subadviser) may be a party, the size and difficulty in executing an order, and the value of the expected contribution of the broker-dealer to the investment performance of a Fund on a continuing basis. The Manager (or Subadviser) to a Fund each shall have discretion to effect investment transactions for such Fund through broker-dealers (including, to the extent legally permissible, broker-dealers affiliated with the Subadviser(s)) qualified to obtain best execution of such transactions who provide brokerage and/or research services, as such services are defined in Section 28(e) of the Securities Exchange Act, as amended (the 1934 Act), and to cause a Fund to pay any such broker-dealers an amount of commission for effecting a portfolio transaction in excess of the amount of commission another broker-dealer would have charged for effecting that transaction, if the brokerage or research services provided by such broker-dealer, viewed in light of either that particular investment transaction or the overall responsibilities of the Manager (or the Subadviser) with respect to such Fund and other accounts as to which they or it may exercise investment discretion (as such term is defined in Section 3(a)(35) of the 1934 Act), are reasonable in relation to the amount of commission.
On occasions when the Manager (or a Subadviser under the Manager’s supervision) deems the purchase or sale of a security or other financial instrument to be in the best interest of a Fund as well as other clients of the Manager (or the Subadviser), the Manager (or Subadviser), to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, aggregate the securities or other financial instruments to be so sold or purchased in order to obtain the most favorable price or lower brokerage commissions and efficient execution. In such event, allocation of the securities or other financial instruments so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Manager (or the Subadviser) in the manner it considers to be the most equitable and consistent with its fiduciary obligations to the relevant Funds and to such other clients.
(d) The Manager (or the Subadviser under the Manager’s supervision) shall maintain all books and records with respect to the Funds’ portfolio transactions and shall render to the Trust’s Board of Trustees such periodic and special reports as the Board may reasonably request.
(e) The Manager (or the Subadviser under the Manager’s supervision) shall be responsible for the financial and accounting records to be maintained by the Funds (including those being maintained by the Funds’ Custodian).
(f) The Manager (or the Subadviser under the Manager’s supervision) shall provide the Funds’ Custodian on each business day information relating to all transactions concerning the Funds’ assets. The Manager (or the Subadviser under the supervision of the Manager) shall determine and make such modifications to the identity and number of shares of the securities or financial instruments or cash in lieu thereof to be accepted in exchange for creation units of each Fund and the securities or financial instruments or cash in lieu thereof that will be applicable that day to redemption requests received by such Fund and facilitate the appropriate dissemination of such information.
(g) The investment management services of the Manager to the Funds under this Agreement are not to be deemed exclusive, and the Manager shall be free to render similar services to others.
(h) The Manager shall make reasonably available its employees and officers for consultation with any of the Trustees or officers or employees of the Trust with respect to any matter discussed herein, including, without limitation, the valuation of the Funds’ securities.
3.
The Trust has delivered to the Manager copies of each of the following documents and will deliver to it all future amendments and supplements, if any:
2
(a) Declaration of Trust of the Trust;
(b) By-Laws of the Trust (such By-Laws, as in effect on the date hereof and as amended from time to time, are herein called the “By-Laws”);
(c) Certified resolutions of the Board of Trustees of the Trust authorizing the appointment of the Manager and approving the form of this agreement;
(d) Registration Statement under the 1940 Act and the Securities Act of 1933, as amended, on Form N-1A (the Registration Statement), as filed with the SEC relating to the Trust and the Fund and the Fund’s shares of beneficial interest, and all amendments thereto; and
(e) Prospectus and Statement of Additional Information of the Fund.
4.
The Manager shall authorize and permit any of its officers and employees who may be elected as Trustees or officers of the Trust to serve in the capacities in which they are elected. All services to be furnished by the Manager under this Agreement may be furnished through the medium of any such officers or employees of the Manager.
5.
The Manager shall keep the Funds’ books and records required to be maintained by it pursuant to Paragraph 2 hereof. The Manager agrees that all records that it maintains for the Funds are the property of the Funds, and it will surrender promptly to any Fund any such records upon such Fund’s request; provided, however, that the Manager may retain a copy of such records. The Manager further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such records as are required to be maintained by the Manager pursuant to Paragraph 2 hereof.
6.
During the term of this Agreement, the Manager shall bear all fees and expenses, and shall furnish all necessary services, facilities and personnel, in connection with its responsibilities under this Agreement, except such expenses that are assumed by the Fund under Section 7 of this Agreement. In addition, the Manager shall bear the following fees and expenses of the Trust and/or the Funds (as may be required), other than those expenses under Section 7 of this Agreement:
(a) Expenses of any Subadviser of a Fund, the Funds’ transfer agent, registrar, distributor, depository, dividend disbursing agent, securities lending agent, any index calculation, maintenance or dissemination agent, accounting services provider, and the agent responsible for calculating the current value of each Fund’s portfolio positions for dissemination during the business day;
(b) all fees and expenses of the Funds’ custodian bank (the Custodian) that relate to each Fund, including (i) the custodial function and the recordkeeping connected therewith, (ii) preparing and maintaining the general accounting records of the Funds and the provision of any such records to the Manager useful to the Manager in connection with the Manager’s responsibility for the accounting records of the Funds pursuant to Section 31 of the 1940 Act and the rules promulgated thereunder, and (iii) the pricing or valuation of the shares of the Funds, including the cost of any pricing or valuation service or services which may be retained pursuant to the authorization of the Board of Trustees,
(c) Expenses of obtaining quotations for calculating the value of the Funds’ net assets and expenses relating to the computation of each Fund’s net asset value;
(d) Expenses of maintaining each Fund’s tax records;
(e) Recordkeeping fees and expenses for shareholder accounts;
(f) Costs and/or fees, including legal fees, incident to the preparation, printing and distribution of the Funds product descriptions (unless such expenses are paid for pursuant to a Rule 12b-1 distribution plan or related agreement), notices and reports of the Funds to its shareholders and other related communications of the Funds to its shareholders (other than those that are expenses pursuant to Section 7), the expenses of preparing, setting in print, printing and distributing prospectuses and statements of additional information and any supplements thereto (unless such expenses are paid for pursuant to a Rule 12b-1 distribution plan or related agreement), the filing of reports with regulatory bodies, the maintenance of each Fund’s existence and qualification to do business, and the expenses of issuing, redeeming, registering and qualifying for sale, shares with federal and state securities authorities;
(g) Any licensing fees necessary for the operation of the Trust and/or the Funds;
3
(h) Any costs related to the use of any index for which an affiliated person, as defined in Section 2(a)(3) of the 1940 Act, or an affiliated person of an affiliated person, of the Trust or a Fund, of the Manager, any Subadviser, the distributor or promoter of the Funds serves as index provider, as such may be required by the 1940 Act or any exemptive relief relied upon under the 1940 Act;
(i) The Funds’ ordinary legal fees, including the legal fees that arise in the ordinary course of business for a Delaware statutory trust registered as an open-end management investment company or fees that arise in the ordinary course of business in connection with listing Shares of a Fund on a securities exchange;
(j) Fees and expenses of independent accountants for the Funds;
(k) Costs of printing certificates (if any) representing shares of the Funds;
(l) Each Fund’s pro rata portion of the fidelity bond required by Section 17(g) of the 1940 Act, or other insurance premiums;
(m) Association membership dues;
(n) Organizational and offering expenses of the Trust and the Funds, and any other expenses which are capitalized in accordance with generally accepted accounting principles;
(o) the fees and expenses of Trustees who are not “interested persons” of the Trust within the meaning of the 1940 Act; and
(p) the salaries and expenses of all employees of the Trust and the Manager.
7
. During the term of this Agreement, [each Fund assumes and will pay the expenses directly attributable to its operations or its pro-rata portion of Trust level expenses, as the case may be, each as described below]:
(a) Taxes (including, but not limited to, income, excise, stamp, transfer and withholding taxes) and governmental fees, if any, levied against the Fund;
(b) Brokerage fees, commissions and other portfolio transaction expenses incurred for the Fund, including, without limitation, Acquired Fund Fees and Expenses (as such term is defined in Form N-1A as promulgated by the SEC) and expenses of other pooled investment vehicles and expenses relating to creation and redemption transactions;
(c) Costs, including the interest expenses and any loan commitment or other associated fees, of borrowing money;
(d) Expenses incurred pursuant to a Rule 12b-1 distribution plan or related agreement, including distribution fees;
(e) Expenses incident to meetings of the Funds’ shareholders and the associated preparation, filing and mailing of associated notices and proxy statements;
(g) Extraordinary expenses, including extraordinary legal expenses, as may arise including expenses incurred in connection with litigation, investigations, regulatory inquiries, proceedings, other claims and the legal obligations of the Fund to indemnify its Trustees, officers, employees, shareholders, distributors, the Manager, and agents with respect thereto; and
(h) The management fee payable to the Manager under this Agreement.
The payment or assumption by the Manager of any expense of the Trust or the Funds that the Manager is not required by this Agreement to pay or assume shall not obligate the Manager to pay or assume the same or any similar expense of the Trust or the Funds on any subsequent occasion.
8.
For the services provided and the expenses assumed pursuant to this Agreement, each Fund will pay to the Manager as full compensation therefor a fee at the annual rate(s) as described on the attached Schedule A with respect to the average daily net assets of the relevant Fund. This fee will be computed daily, and will be paid to the Manager monthly. The Fund shall not pay any fee or other compensation to the Manager for the services provided and the expenses assumed pursuant to this Agreement.
9
. The Manager shall not be liable for any error of judgment or for any loss suffered by the Funds in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to
4
the receipt of compensation for services (in which case any award of damages shall be limited to the period and the amount set forth in Section 36(b)(3) of the 1940 Act) or loss resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement.
The Funds shall indemnify the Manager and hold it harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlements) incurred by the Manager in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Funds or its security holders) arising out of or otherwise based upon any action actually or allegedly taken or omitted to be taken by the Manager in connection with the performance of any of its duties or obligations under this Agreement; provided, however, that nothing contained herein shall protect or be deemed to protect the Manager against or entitle or be deemed to entitle the Manager to indemnification in respect of any liability to the Funds or its security holders to which the Manager would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of its reckless disregard of their duties and obligations under this Agreement.
10.
This Agreement shall continue in effect for a period of more than two years from the date hereof only so long as such continuance is specifically approved at least annually in conformity with the requirements of the 1940 Act; provided, however, that this Agreement may be terminated with respect to any one Fund at any time, without the payment of any penalty, by the Board of Trustees of the Trust or by vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of a Fund, or by the Manager at any time, without the payment of any penalty, on not more than 60 days’ nor less than 30 days’ written notice to the Fund. This Agreement shall terminate automatically in the event of its assignment (as defined in the 1940 Act).
11.
Nothing in this Agreement shall limit or restrict the right of any officer or employee of the Manager who may also be a Trustee, officer or employee of the Trust to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any business, whether of a similar or dissimilar nature, nor limit or restrict the right of the Manager to engage in any other business or to render services of any kind to any other corporation, firm, individual or association.
12.
Except as otherwise provided herein or authorized by the Board of Trustees of the Trust from time to time, the Manager shall for all purposes herein be deemed to be an independent contractor, and shall have no authority to act for or represent the Funds in any way or otherwise be deemed an agent of the Funds or the Trust.
13
. During the term of this Agreement, the Funds agree to furnish the Manager at its principal office all prospectuses, proxy statements, reports to shareholders, sales literature, or other material prepared for distribution to shareholders of the Funds or the public, which refer in any way to the Manager, prior to use thereof and not to use such material if the Manager reasonably objects in writing within five business days (or such other time as may be mutually agreed) after receipt thereof. In the event of termination of this Agreement, the Funds will continue to furnish to the Manager copies of any of the above-mentioned materials which refer in any way to the Manager. Sales literature may be furnished to the Manager hereunder by first-class or overnight mail, facsimile transmission equipment or hand delivery. The Funds shall furnish or otherwise make available to the Manager such other information relating to the business affairs of the Funds as the Manager at any time, or from time to time, reasonably requests in order to discharge its obligations hereunder.
14
. This Agreement may be amended by mutual consent, but the consent of the Funds must be obtained in conformity with the requirements of the 1940 Act.
15
. Any notice or other communication required to be given pursuant to this Agreement shall be deemed duly given if delivered or mailed by registered mail, postage prepaid:
to the Manager at:
Pacific Global Advisors LLC
840 Newport Center Drive, 7
th
Floor
Newport Beach, California 92660
Attention: Secretary
With a copy to:
Pacific Global Asset Management LLC
840 Newport Center Drive, 7
th
Floor
5
Newport Beach, California 92660
Attention: Legal Counsel
to the Trust at:
Pacific Global ETF Trust
840 Newport Center Drive, 7
th
Floor
Newport Beach, California 92660
Attention: President
16.
This Agreement shall be governed by and construed in accordance with the 1940 Act and the laws of the State of Delaware.
16
. The Trust may use the name or any name including the words “Pacific Global” only for so long as this Agreement or any extension, renewal or amendment hereof remains in effect, including any similar agreement with any organization which shall have succeeded to the Manager’s business as Manager or any extension, renewal or amendment thereof remain in effect. At such time as such an agreement shall no longer be in effect, the Funds and/or the Trust will (to the extent that it lawfully can) cease to use such a name or any other name indicating that it is advised by, managed by or otherwise connected with the Manager, or any organization which shall have so succeeded to such businesses. In no event shall the Trust or the Funds use the name “Pacific Global” if the Manager’s function is transferred or assigned to a company of which Pacific Global Asset Management LLC and/or Pacific Life Insurance Company does not have control.
17.
A copy of the Declaration of Trust of the Trust is on file with the Secretary of State of Delaware.
18
. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act, shall be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC issued pursuant to the 1940 Act or of guidance published by the staff of the SEC. In addition, where the effect of a requirement of the 1940 Act, reflected in any provision of this Agreement, is related by rules, regulation or order of the SEC, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
[Remainder of page intentionally left blank. Signature page follows.]
6
IN WITNESS WHEREOF
, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year above written.
|
|
PACIFIC GLOBAL ETF TRUST
|
|
|
On behalf of each of its series listed on Schedule A hereto
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
|
|
|
PACIFIC GLOBAL ADVISORS LLC
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
7
SCHEDULE A
Effective as of [ ]
To the Management Agreement between
Pacific Global ETF Trust
and
Pacific Global Advisors LLC
|
Fund:
|
|
Management Fee per annum:
|
|
|
Pacific Global US Dividend Yield ETF
|
|
[ ]
|
%
|
|
Pacific Global Enhanced Floating Rate ETF
|
|
[ ]
|
%
|
|
|
PACIFIC GLOBAL ETF TRUST
|
|
|
On behalf of each of its series listed on Schedule A hereto
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
|
|
|
PACIFIC GLOBAL ADVISORS LLC
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
8
Exhibit 99.(d)(2)
PACIFIC GLOBAL ETF
PACIFIC GLOBAL [ ] ETF
SUBADVISORY AGREEMENT
Agreement made as of this [ ] day of [ ], 2018, between Pacific Global Advisors LLC (the “
Manager
”), a Delaware limited liability company, and [
Cadence/PAM
] (the “
Subadviser
”), a Delaware limited liability company.
WHEREAS
, the Manager has entered into a Management Agreement (the “
Management Agreement
”) dated [ ] with Pacific Global ETF Trust, a Delaware statutory trust (the “
Trust
”) and an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “
1940 Act
”), pursuant to which the Manager acts as the manager of the Pacific Global [ ] ETF (the “
Fund
”), a series of the Trust; and,
WHEREAS
, the Manager, acting pursuant to the Management Agreement, desires to retain the Subadviser to provide investment advisory services to the Fund and to manage such portion of the Fund as the Manager shall from time to time direct, and the Subadviser is willing to render such investment advisory services.
NOW, THEREFORE
, the Parties agree as follows:
1.
(a) Subject to the supervision of the Manager and the Board of Trustees of the Trust, the Subadviser shall manage such portion of the Fund’s portfolio as delegated to the Subadviser by the Manager, including the purchase, retention and disposition thereof, in accordance with the Fund’s investment objectives, policies and restrictions as stated in its then current prospectus and statement of additional information (such Prospectus and Statement of Additional Information as currently in effect and as amended or supplemented from time to time, being herein called the “
Prospectus
”), and subject to the following understandings:
(i) The Subadviser shall provide supervision of such portion of the Fund’s investments as the Manager shall direct, and shall determine from time to time what investments and securities will be purchased, retained, sold or loaned by the Fund, and what portion of the assets will be invested or held uninvested as cash or cash equivalents.
(ii) In the performance of its duties and obligations under this Agreement, the Subadviser shall act in conformity with the copies of the Agreement and Declaration of Trust of the Trust, as amended, the By-laws of the Trust, the Prospectus of the Fund, and the Fund’s valuation procedures and any other procedures adopted by the Board applicable to the Fund (and any amendments thereto) as provided to it by the Manager (the “
Fund Documents
”) and with the instructions and directions of the Manager and of the Board of Trustees of the Trust, co-operate with the Manager’s (or its designees’) personnel responsible for monitoring the Fund’s compliance and will conform to, and comply with, the requirements of the 1940 Act, the Internal Revenue Code of 1986, as amended, and all other applicable federal and state laws and regulations. In connection therewith, the Subadviser shall, among other things, prepare and file such reports as are, or may in the future be, required by the Securities and Exchange Commission (the “
Commission
”). The Manager shall provide Subadviser timely with copies of any updated Fund Documents.
(iii) The Subadviser shall determine the securities and other financial instruments to be purchased or sold by such portion of the Fund’s portfolio, as applicable, and may place orders with or through such persons, brokers, dealers or futures commission merchants (including but not limited to any broker, dealer or futures commission merchants affiliated with the Manager or the Subadviser) to carry out the policy with respect to brokerage as set forth in the Fund’s Prospectus or as the Board of Trustees may direct in writing from time to time. In providing the Fund with investment supervision, it is recognized that the Subadviser will give primary consideration to securing the most favorable price and efficient execution. Within the framework of this policy, the Subadviser may consider the financial responsibility, research and investment information and other services provided by brokers, dealers or futures commission merchants who may effect or be a party to any such transaction or other transactions to which the Subadviser’s other clients may be a party. The Manager (or Subadviser) to the Fund each shall have discretion to effect investment transactions for the Fund through broker-dealers (including, to the extent legally permissible, broker-dealers affiliated with the Manager or Subadviser(s)) qualified to obtain best execution of such transactions who provide brokerage and/or research services, as such services are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the 1934 Act), and to cause the Fund to pay any such broker-dealers an amount of commission for effecting a portfolio transaction in excess of the amount of
commission another broker-dealer would have charged for effecting that transaction, if the brokerage or research services provided by such broker-dealer, viewed in light of either that particular investment transaction or the overall responsibilities of the Manager (or the Subadviser) with respect to the Fund and other accounts as to which they or it may exercise investment discretion (as such term is defined in Section 3(a)(35) of the 1934 Act), are reasonable in relation to the amount of commission. Pursuant to the rules promulgated under Section 326 of the USA Patriot Act, broker-dealers are required to obtain, verify and record information that identifies each person who opens an account with them. In accordance therewith, broker-dealers whom the Subadviser selects to execute transactions in the Fund’s account may seek identifying information about the Fund. On occasions when the Subadviser deems the purchase or sale of a security or other financial instrument to be in the best interest of the Fund as well as other clients of the Subadviser, the Subadviser, to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, aggregate the securities or other financial instruments to be sold or purchased. In such event, allocation of the securities or other financial instruments so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Subadviser in the manner the Subadviser considers to be the most equitable and consistent with its fiduciary obligations to the Fund and to such other clients.
(iv) The Subadviser shall maintain all books and records with respect to the Fund’s portfolio transactions effected by it as required by subparagraphs (b)(5), (6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act, and shall render to the Board of Trustees such periodic and special reports as the Trustees may reasonably request. The Subadviser shall make reasonably available its employees and officers for consultation with any of the Trustees or officers or employees of the Fund with respect to any matter discussed herein, including, without limitation, the valuation of the Fund’s securities.
(v) The Subadviser or an affiliate shall provide the Fund’s custodian (the “Custodian”) on each business day with information relating to all transactions concerning the portion of the Fund’s assets it manages, and shall provide the Manager with such information upon request of the Manager.
(vi) The investment management services provided by the Subadviser hereunder are not to be deemed exclusive, and the Subadviser shall be free to render similar services to others. [The Subadviser and Manager understand and agree that if the Manager manages the Fund in a “manager-of-managers” style, the Manager will, among other things, (i) continually evaluate the performance of the Subadviser through quantitative and qualitative analysis and consultations with the Subadviser, (ii) periodically make recommendations to the Trust’s Board as to whether the contract with one or more subadvisers should be renewed, modified, or terminated, and (iii) periodically report to the Trust’s Board regarding the results of its evaluation and monitoring functions. The Subadviser recognizes that its services may be terminated or modified pursuant to this process.]
(vii) The Subadviser acknowledges that the Manager and the Fund intend to rely on Rule 17a-10, Rule 10f-3, Rule 12d3-1 and Rule 17e-1 under the 1940 Act, and the Subadviser hereby agrees that it shall not consult with any other subadviser to the Fund with respect to transactions in securities or other financial instruments for the Fund’s portfolio or any other transactions of Fund assets.
(b) The Subadviser shall authorize and permit any of its directors, officers and employees who may be elected as Trustees or officers of the Fund to serve in the capacities in which they are elected. Services to be furnished by the Subadviser under this Agreement may be furnished through the medium of any of such directors, officers or employees.
(c) The Subadviser shall keep the Fund’s books and records required to be maintained by the Subadviser pursuant to paragraph l(a) hereof and shall timely furnish to the Manager all information relating to the Subadviser’s services hereunder needed by the Manager to keep the other books and records of the Fund required by Rule 31a-1 under the 1940 Act or any successor regulation. The Subadviser agrees that all records which it maintains for the Fund are the property of the Fund, and the Subadviser will surrender promptly to the Fund any of such records upon the Fund’s request; provided, however, that the Subadviser may retain a copy of such records. The Subadviser further agrees to preserve for the periods prescribed by Rule 31a-2 of the Commission under the 1940 Act or any successor regulation any such records as are required to be maintained by it pursuant to paragraph l(a) hereof.
(d) In connection with its duties under this Agreement, the Subadviser agrees to maintain adequate compliance procedures to ensure its compliance with the 1940 Act, the Investment Advisers Act of 1940, as amended (the “
Advisers Act
”), and other applicable state and federal regulations.
(e) The Subadviser shall maintain a written code of ethics (the “
Code of Ethics
”) that it reasonably believes complies with the requirements of Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, a copy of which shall be provided to the Manager and the Fund, and shall institute procedures reasonably necessary to prevent any Access Person (as defined in Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act) from violating its Code of Ethics. The Subadviser shall follow such Code of Ethics in performing its services under this Agreement. Further, the Subadviser represents that it maintains adequate compliance procedures to ensure its compliance with the 1940 Act, the Advisers Act, and other applicable federal and state laws and regulations. In particular, the Subadviser represents that it has policies and procedures regarding the detection and prevention of the misuse of material, non-public information by the Subadviser and its employees as required by the applicable federal securities laws.
(f)The Subadviser shall furnish to the Manager copies of all records prepared in connection with (i) the performance of this Agreement and (ii) the maintenance of compliance procedures pursuant to paragraph l(d) hereof as the Manager may reasonably request.
(g) The Subadviser shall be responsible for the voting of all shareholder proxies with respect to the investments and securities held in the Fund’s portfolio, subject to such reasonable reporting and other requirements as shall be established by the Manager.
(h) The Subadviser acknowledges that it is responsible for evaluating whether market quotations are readily available for the Fund’s portfolio securities, evaluating whether those market quotations are reliable for purposes of valuing the Fund’s portfolio securities, evaluating whether those market quotations are reliable for determining the Fund’s net asset value per share and promptly notifying the Manager upon the occurrence of any significant event with respect to any of the Fund’s portfolio securities in accordance with the requirements of the 1940 Act and any related written guidance from the Commission and the Commission staff. Upon reasonable request from the Manager, the Subadviser (through a qualified person) will assist the valuation committee of the Fund or the Manager in valuing securities of the Fund as may be required from time to time, including making available information of which the Subadviser has knowledge related to the securities being valued.
(i) The Subadviser shall provide the Manager with any information reasonably requested regarding its management of the Fund’s portfolio required for any shareholder report, amended registration statement, or prospectus supplement to be filed by the Fund with the Commission. The Subadviser shall provide the Manager with any reasonable certification, documentation or other information reasonably requested or required by the Manager for purposes of the certifications of shareholder reports by the Fund’s principal financial officer and principal executive officer pursuant to the Sarbanes Oxley Act of 2002 or other law or regulation. The Subadviser shall promptly inform the Fund and the Manager if the Subadviser becomes aware of any information in the Prospectus that is (or will become) materially inaccurate or incomplete.
(j) The Subadviser shall comply with the Fund Documents provided to the Subadviser by the Manager or the Fund. The Subadviser shall notify the Manager as soon as reasonably practicable upon detection of any material breach of such Fund Documents.
(k) The Subadviser shall keep the Fund and the Manager informed of developments relating to its duties as Subadviser of which the Subadviser has, or should have, knowledge that would materially affect the Fund. In this regard, the Subadviser shall provide the Trust, the Manager, and their respective officers with such periodic reports concerning the obligations the Subadviser has assumed under this Agreement as the Fund and the Manager may from time to time reasonably request. Additionally, prior to each Board meeting, the Subadviser shall provide the Manager and the Board with reports regarding the Subadviser’s management of the Fund’s portfolio during the most recently completed quarter, in such form as may be mutually agreed upon by the Subadviser and the Manager. The Subadviser shall certify quarterly to the Fund and the Manager that it and its “Advisory Persons” (as defined in Rule 17j-1 under the 1940 Act) have complied materially with the requirements of Rule 17j-1 under the 1940 Act during the previous quarter or, if not, explain what the Subadviser has done to seek to ensure such compliance in the future. Annually, the Subadviser shall furnish a written report, which complies with the requirements of Rule 17j-1 and Rule 38a-1 under the 1940 Act, concerning the Subadviser’s Code of Ethics and compliance program, respectively, to the Fund and the Manager. Upon written request of the Fund or the Manager with respect to material violations of
the Code of Ethics directly affecting the Fund, the Subadviser shall permit representatives of the Fund or the Manager to examine reports (or summaries of the reports) required to be made by Rule 17j-l(d)(1) relating to enforcement of the Code of Ethics.
2.
The Manager shall continue to have responsibility for all services to be provided to the Fund pursuant to the Management Agreement and, as more particularly discussed above, shall oversee and review the Subadviser’s performance of its duties under this Agreement. The Manager shall provide (or cause the Custodian to provide) timely information to the Subadviser regarding such matters as the composition of assets in the portion of the Fund managed by the Subadviser, cash requirements and cash available for investment in such portion of the Fund, and all other information as may be reasonably necessary for the Subadviser to perform its duties hereunder (including any excerpts of minutes of meetings of the Board of Trustees of the Fund that affect the duties of the Subadviser).
3
. For the services provided pursuant to this Agreement, the Manager shall pay the Subadviser as full compensation therefor, a fee equal to the percentage of the Fund’s average daily net assets of the portion of the Fund managed by the Subadviser as described in the attached Schedule A. Expense caps or fee waivers for the Fund that may be agreed to by the Manager, but not agreed to by the Subadviser, shall not cause a reduction in the amount of the payment to the Subadviser by the Manager.
4.
The Subadviser shall not be liable for any error of judgment or for any loss suffered by the Fund or the Manager in connection with the matters to which this Agreement relates, except a loss resulting from willful misfeasance, bad faith or gross negligence on the Subadviser’s part in the performance of its duties or from its reckless disregard of its obligations and duties under this Agreement; provided, however, that nothing in this Agreement shall be deemed to waive any rights the Manager or the Fund may have against the Subadviser under federal or state securities laws. The Manager shall indemnify the Subadviser, its affiliated persons, its officers, directors and employees, for any liability and expenses, including attorneys’ fees, which may be sustained as a result of the Manager’s willful misfeasance, bad faith, gross negligence, reckless disregard of its duties hereunder or violation of applicable law, including, without limitation, the 1940 Act and federal and state securities laws. The Subadviser shall indemnify the Manager, its affiliated persons, officers, directors and employees, for any liability and expenses, including attorneys’ fees, which may be sustained as a result of the Subadviser’s willful misfeasance, bad faith, gross negligence, or reckless disregard of its duties hereunder or violation of applicable law, including, without limitation, the 1940 Act and federal and state securities laws.
5.
This Agreement shall continue in effect for a period of more than two years from the date hereof only so long as such continuance is specifically approved at least annually in conformity with the requirements of the 1940 Act; provided, however, that this Agreement may be terminated by the Fund at any time, without the payment of any penalty, by the Board or by vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund, or by the Manager or the Subadviser at any time, without the payment of any penalty, on not more than 60 days’ nor less than 30 days’ written notice to the other party. This Agreement shall terminate automatically in the event of its assignment (as defined in the 1940 Act) or upon the termination of the Management Agreement. The Subadviser agrees that it will promptly notify the Fund and the Manager of the occurrence of any event that would result in the assignment (as defined in the 1940 Act) of this Agreement, including, but not limited to, a change of control (as defined in the 1940 Act) of the Subadviser. Any notice or other communication required to be given pursuant to this Agreement shall be deemed duly given if delivered or mailed by registered mail, postage prepaid,
(1) to the Manager at:
Pacific Global Advisors LLC
840 Newport Center Drive, 7
th
Floor
Newport Beach, CA 92660
(2) to the Fund at:
Pacific Global ETF Trust
840 Newport Center Drive, 7
th
Floor
Newport Beach, CA 92660
Attention: President
or (3) to the Subadviser at:
[ ]
6.
Nothing in this Agreement shall limit or restrict the right of any of the Subadviser’s directors, officers or employees who may also be a Trustee, officer or employee of the Fund to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any business, whether of a similar or a dissimilar nature, nor limit or restrict the Subadviser’s right to engage in any other business or to render services of any kind to any other corporation, firm, individual or association.
7.
During the term of this Agreement, the Manager agrees to furnish the Subadviser at its principal office all prospectuses, proxy statements, reports to shareholders, sales literature or other material prepared for distribution to shareholders of the Fund or the public, which refer to the Subadviser in any way, prior to use thereof and not to use such material if the Subadviser reasonably objects in writing five business days (or such other time as may be mutually agreed) after receipt thereof. Sales literature may be furnished to the Subadviser hereunder by first-class or overnight mail, facsimile transmission equipment or hand delivery.
8.
This Agreement may be amended by mutual consent, but the consent of the Fund must be obtained in conformity with the requirements of the 1940 Act.
9.
This Agreement shall be governed by the 1940 Act and the laws of the State of Delaware.
10
. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act, shall be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the Commission issued pursuant to the 1940 Act or of guidance published by the staff of the Commission. In addition, where the effect of a requirement of the 1940 Act, reflected in any provision of this Agreement, is related by rules, regulation or order of the Commission, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
[Remainder of page intentionally left blank. Signature page follows.]
IN WITNESS WHEREOF
, the Parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written.
|
|
PACIFIC GLOBAL ADVISORS LLC
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
|
|
|
[Subadviser]
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
Exhibit 99.(e)(1)
FORM OF ETF DISTRIBUTION AGREEMENT
This Distribution Agreement (the “Agreement”) is made this day of 2018, by and between
Pacific Global ETF Trust
, a Delaware statutory trust (the “Trust”) having its principal place of business at 840 Newport Center Drive, 7th Floor, Newport Beach, CA 92660, and
Foreside Fund Services, LLC
, a Delaware limited liability company (the “Distributor”) having its principal place of business at Three Canal Plaza, Suite 100, Portland, ME 04101.
WHEREAS, the Trust is a registered open-end management investment company organized under the Investment Company Act of 1940, as amended (the “1940 Act”) with separate and distinct series (each series a “Fund” and collectively the “Funds”) registered with the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”);
WHEREAS, the Trust intends to create and redeem shares of beneficial interest (the “Shares”) of each Fund on a continuous basis and list the Shares on one or more national securities exchanges (together, the “Listing Exchanges”);
WHEREAS, the Distributor is registered with the SEC as a broker-dealer under the Securities Exchange Act of 1934, as amended (the “1934 Act”), and is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”);
WHEREAS, the Trust desires to retain the Distributor to (i) act as the principal underwriter of the Funds with respect to the creation and redemption of Creation Units of each Fund, and (ii) hold itself available to review and approve orders for such Creation Units in the manner set forth in the Trust’s Prospectus; and
WHEREAS, the Distributor desires to provide the services described herein to the Trust subject to the terms and conditions set forth below.
NOW THEREFORE, in consideration of the mutual promises and undertakings herein contained, the parties agree as follows:
1.
Appointment
.
The Trust hereby appoints the Distributor to serve as the principal underwriter of the Funds with respect to the creation and redemption of Creation Units of each Fund listed in Exhibit A hereto (as may be amended by the Trust from time to time on written notice to the Distributor) on the terms and for the period set forth in this Agreement and subject to the registration requirements of the federal securities laws and of the laws governing the sale of securities in the various states, and the Distributor hereby accepts such appointment and agrees to act in such capacity hereunder.
2.
Definitions
.
Wherever they are used herein, the following terms have the following respective meanings:
(a)
“Prospectus” means the Prospectus and Statement of Additional Information constituting parts of the Registration Statement of the Trust under the 1933 Act and the 1940 Act as such Prospectus and Statement of Additional Information may be amended or supplemented and filed with the SEC from time to time;
(b)
“Registration Statement” means the registration statement most recently filed from time to time by the Trust with the SEC and effective under the 1933 Act and the 1940 Act, as such registration statement is amended by any amendments thereto at the time in effect;
(c)
All other capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the Registration Statement and the Prospectus.
3.
Duties of the Distributor
(a)
The Distributor agrees to serve as the principal underwriter of the Funds in connection with the review and approval of all Purchase and Redemption Orders of Creation Units of each Fund by Authorized Participants that have executed an Authorized Participant Agreement with the Distributor and Transfer Agent/ Index Receipt Agent. Nothing herein shall affect or limit the right and ability of the Transfer Agent/ Index Receipt Agent to accept Fund Securities, Deposit Securities, and related Cash Components through or outside the Clearing Process, and as provided in and in accordance with the Registration Statement and Prospectus. The Trust acknowledges that the Distributor shall not be obligated to approve any certain number of orders for Creation Units.
(b)
The Distributor agrees to use commercially reasonable efforts to provide the following services to the Trust with respect to the continuous distribution of Creation Units of each Fund: (i) at the request of the Trust, the Distributor shall enter into Authorized Participant Agreements between and among Authorized Participants, the Distributor and the Transfer Agent/Index Receipt Agent, for the purchase and redemption of Creation Units of the Funds, (ii) the Distributor shall approve and maintain copies of confirmations of Creation Unit purchase and redemption order acceptances; (iii) upon request, the Distributor will make available copies of the Prospectus to purchasers of such Creation Units and, upon request, the Statement of Additional Information; and (iv) the Distributor shall maintain telephonic, facsimile and/or access to direct computer communications links with the Transfer Agent.
2
(c)
The Distributor shall ensure that all direct requests to Distributor for Prospectuses, Statements of Additional Information, product descriptions and periodic fund reports, as applicable, are fulfilled.
(d)
The Distributor agrees to make available, at the Trust’s request, one or more members of its staff to attend, either via telephone or in person, Board meetings of the Trust in order to provide information with regard to the Distributor’s services hereunder and for such other purposes as may be requested by the Board of Trustees of the Trust.
(e)
Distributor shall review and approve, prior to use, all Trust marketing materials (“Marketing Materials”) for compliance with SEC and FINRA advertising rules, and will file all Marketing Materials required to filed with FINRA. The Distributor agrees to furnish to the Trust’s investment adviser any comments provided by FINRA with respect to such materials.
(f)
The Distributor shall not offer any Shares and shall not approve any creation or redemption order hereunder if and so long as the effectiveness of the Registration Statement then in effect or any necessary amendments thereto shall be suspended under any of the provisions of the 1933 Act or if and so long as a current prospectus as required by Section 10 of the 1933 Act is not on file with the SEC; provided, however, that nothing contained in this paragraph shall in any way restrict or have any application to or bearing upon the Trust’s obligation to redeem or repurchase any Shares from any shareholder in accordance with provisions of the Prospectus or Registration Statement.
(g)
The Distributor shall work with the Index Receipt Agent to review and approve orders placed by Authorized Participants and transmitted to the Index Receipt Agent.
(h)
The Distributor agrees to maintain, and preserve for the periods prescribed by Rule 31a-2 under the 1940 Act, such records as are required to be maintained by Rule 31a-1(d) under the 1940 Act. The Distributor agrees that all records which it maintains pursuant to the 1940 Act for the Trust shall at all times remain the property of the Trust, shall be readily accessible during normal business hours, and shall be promptly surrendered upon the termination of the Agreement or otherwise on written request; provided, however, that Distributor may retain all such records required to be maintained by Distributor pursuant to applicable FINRA or SEC rules and regulations.
(j)
The Distributor agrees to maintain compliance policies and procedures (a “Compliance Program”) that are reasonably designed to prevent violations of the Federal Securities Laws (as defined in Rule 38a-1 of the 1940 Act) with respect to the Distributor’s services under this Agreement, and to provide any and all information with respect to the Compliance Program, including without limitation, information and certifications with respect to material violations of the Compliance Program and any
3
material deficiencies or changes therein, as may be reasonably requested by the Trust’s Chief Compliance Officer or Board of Trustees.
4.
Duties of the Trust.
(a)
The Trust agrees to create, issue, and redeem Creation Units of each Fund in accordance with the procedures described in the Prospectus. Upon reasonable notice to the Distributor and in accordance with the procedures described in the Prospectus, the Trust reserves the right to reject any order for Creation Units or to stop all receipts of such orders at any time.
(b)
The Trust agrees that it will take all actions necessary to register an indefinite number of Shares under the 1933 Act.
(c)
The Trust will make available to the Distributor such number of copies as Distributor may reasonably request of (i) its then currently effective Prospectus and Statement of Additional Information and product description, (ii) copies of semi-annual reports and annual audited reports of the Trust’s books and accounts made by independent public accountants regularly retained by the Trust, and (iii) such other publicly available information for use in connection with the distribution of Creation Units.
(d)
The Trust shall inform Distributor of any such jurisdictions in which the Trust has filed notice filings for Shares for sale under the securities laws thereof and shall promptly notify the Distributor of any change in this information. The Distributor shall not be liable for damages resulting from the sale of Shares in authorized jurisdictions where the Distributor had no information from the Trust that such sale or sales were unauthorized at the time of such sale or sales.
The Distributor acknowledges and agrees that the Trust reserves the right to suspend sales and Distributor’s authority to review and approve orders for Creation Units on behalf of the Trust. Upon due notice to the Distributor, the Trust shall suspend the Distributor’s authority to review and approve Creation Units if, in the judgment of the Trust, it is in the best interests of the Trust to do so. Suspension will continue for such period as may be determined by the Trust.
(e)
The Trust shall arrange to provide the Listing Exchanges with copies of Prospectuses, Statements of Additional Information, and product descriptions to be provided to purchasers in the secondary market.
(f)
The Trust will make it known that Prospectuses and Statements of Additional Information and product descriptions are available by making sure such disclosures are in all marketing and advertising materials prepared by the Trust.
4
5.
Fees and Expenses.
(a)
The Distributor shall be entitled to no compensation or reimbursement of expenses from the Trust for the services provided by the Distributor pursuant to this Agreement. The Distributor may receive compensation from the Investment Adviser related to its services hereunder or for additional services as may be agreed to between the Investment Adviser and Distributor.
(b)
The Trust shall bear the cost and expenses of: (i) the registration of the Shares for sale under the 1933 Act; and (ii) the registration or qualification of the Shares for sale under the securities laws of the various States.
(c)
The Distributor shall pay (i) all expenses relating to Distributor’s broker-dealer qualification and registration under the 1934 Act; and (ii) the expenses incurred by the Distributor in connection with routine FINRA filing fees.
(d)
Notwithstanding anything in this Agreement to the contrary, the Distributor and its affiliates may receive compensation or reimbursement from the Trust’s Investment Adviser with respect to any services performed under this Agreement, as may be agreed upon by the parties from time to time.
The Trust shall bear any costs associated with printing Prospectuses, Statements of Additional Information and all other such materials.
6.
Indemnification.
(a)
The Trust agrees to indemnify and hold harmless the Distributor, its affiliates and each of their respective directors, officers and employees and agents and any person who controls the Distributor within the meaning of Section 15 of the 1933 Act (any of the Distributor, its officers, employees, agents and directors or such control persons, for purposes of this paragraph, a “Distributor Indemnitee”) against any loss, liability, claim, damages or expense (including the reasonable cost of investigating or defending any alleged loss, liability, claim, damages or expense and reasonable counsel fees incurred in connection therewith) (“Losses”) that a Distributor Indemnitee may incur arising out of or based upon: (i) Distributor serving as distributor for the Trust pursuant to this Agreement; (ii) the allegation of any wrongful act of the Trust or any of its directors, officers, employees or affiliates in connection with its duties and responsibilities in this Agreement; (iii) any claim that the Registration Statement, Prospectus, Statement of Additional Information, product description, shareholder reports, Marketing Materials and advertisements specifically approved by the Trust and Investment Adviser or other information filed or made public by the Trust (as from time to time amended) included an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein (and in the case of the Prospectus, Statement of Additional Information and product description, in light of the circumstances under which they were made) not misleading under the 1933 Act, or any other statute or the common law; (iv) the breach by the Trust of any obligation, representation or warranty contained in this Agreement; or (v) the Trust’s failure to comply in any material respect with applicable securities laws.
5
(b)
The Distributor agrees to indemnify and hold harmless the Trust and each of its Trustees and officers and any person who controls the Trust within the meaning of Section 15 of the 1933 Act (for purposes of this paragraph, the Trust and each of its Trustees and officers and its controlling persons are collectively referred to as the “Trust Indemnitees”) against any Losses arising out of or based upon (i) the allegation of any wrongful act of the Distributor or any of its directors, officers, employees or affiliates in connection with its activities as Distributor pursuant to this Agreement; (ii) the breach of any obligation, representation or warranty contained in this Agreement by the Distributor; (iii) the Distributor’s failure to comply in any material respect with applicable securities laws, including applicable FINRA regulations; or (iv) any allegation that the Registration Statement, Prospectus, Statement of Additional Information, product description, shareholder reports, any information or materials relating to the Funds (as described in section 3(g)) or other information filed or made public by the Trust (as from time to time amended) included an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements not misleading, insofar as such statement or omission was made in reliance upon, and in conformity with information furnished to the Trust, in writing, by the Distributor.
In no case (i) is the indemnification provided by an indemnifying party to be deemed to protect against any liability the indemnified party would otherwise be subject to by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement, or (ii) is the indemnifying party to be liable under this Section with respect to any claim made against any indemnified party unless the indemnified party notifies the indemnifying party in writing of the claim within a reasonable time after the summons or other first written notification giving information of the nature of the claim shall have been served upon the indemnified party (or after the indemnified party shall have received notice of service on any designated agent).
Failure to notify the indemnifying party of any claim shall not relieve the indemnifying party from any liability that it may have to the indemnified party against whom such action is brought, on account of this Section, unless failure or delay to so notify the indemnifying party prejudices the indemnifying party’s ability to defend against such claim. The indemnifying party shall be entitled to participate at its own expense in the defense or, if it so elects, to assume the defense of any suit brought to enforce the claim, but if the indemnifying party elects to assume the defense, the defense shall be conducted by counsel chosen by it and satisfactory to the indemnified party. In the event that indemnifying party elects to assume the defense of any suit and retain counsel, the indemnified party shall bear the fees and expenses of any additional counsel retained by them. If the indemnifying party does not elect to assume the defense of any suit, it will reimburse the indemnified party for the reasonable fees and expenses of any counsel retained by them. The indemnifying party agrees to notify the indemnified party promptly of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the purchase or redemption of any of the Creation Units or the Shares.
6
(c)
No indemnified party shall settle any claim against it for which it intends to seek indemnification from the indemnifying party, under the terms of section 6(a) or 6(b) above, without prior written notice to and consent from the indemnifying party, which consent shall not be unreasonably withheld. No indemnified or indemnifying party shall settle any claim unless the settlement contains a full release of liability with respect to the other party in respect of such action. This section 6 shall survive the termination of this Agreement.
(d)
The Trust acknowledges and agrees that as part of its duties, Distributor will enter into agreements with certain authorized participants (each an “AP” and collectively the “APs”) for the purchase and redemption of Creation Units (each such agreement an “AP Agreement”). The APs may insert and require that Distributor agree to certain provisions in the AP Agreements that contain certain representations, undertakings and indemnification that are not included in the form-of AP Agreement (each such modified AP Agreement a “Non-Standard AP Agreement).
To the extent that Distributor is requested or required to make any such representations mentioned above, the Trust shall indemnify, defend and hold the Distributor Indemnitees free and harmless from and against any and all Losses that any Distributor Indemnitee may incur arising out of or relating to (a) the Distributor’s actions or failures to act pursuant to any Non-Standard AP Agreement; (b) any representations made by the Distributor in any Non-Standard AP Agreement to the extent that the Distributor is not required to make such representations in the form-of AP Agreement; or (c) any indemnification provided by the Distributor under a Non-Standard AP Agreement. In no event shall anything contained herein be so construed as to protect the Distributor Indemnitees against any liability to the Trust or its shareholders to which the Distributor Indemnitees would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of Distributor’s obligations or duties under the Non-Standard AP Agreement or by reason of Distributor’s reckless disregard of its obligations or duties under the Non-Standard AP Agreement.
7.
Representations.
(a)
The Distributor represents and warrants that:
1.
(i) it is duly organized as a Delaware limited liability company and is and at all times will remain duly authorized and licensed under applicable law to carry out its services as contemplated herein; (ii) the execution, delivery and performance of this Agreement are within its power and have been duly authorized by all necessary action; (iii) its entering into this Agreement or providing the services contemplated hereby does not conflict with or constitute a default or require a consent under or breach of any provision of any agreement or document to which the Distributor is a party or by which it is bound; (iv) it is registered as a broker-dealer under the 1934 Act and is a
7
member of FINRA; and (v) it has in place compliance policies and procedures reasonably designed to prevent violations of the Federal Securities Laws as that term is defined in Rule 38a-1 under the 1940 Act.
2.
All activities by the Distributor and its agents and employees in connection with the services provided in this Agreement shall comply with the Registration Statement and Prospectus, the instructions of the Trust, and all applicable laws, rules and regulations including, without limitation, all rules and regulations made or adopted pursuant to the 1940 Act by the SEC or any securities association registered under the 1934 Act, including FINRA and the Listing Exchanges.
(b)
The Distributor and the Trust each individually represent that its anti-money laundering program (“AML Program”), at a minimum, (i) designates a compliance officer to administer and oversee the AML Program, (ii) provides ongoing employee training, (iii) includes an independent audit function to test the effectiveness of the AML Program, (iv) establishes internal policies, procedures, and controls that are tailored to its particular business, (v) provides for the filing of all necessary anti-money laundering reports including, but not limited to, currency transaction reports and suspicious activity reports, and (vi) allows for appropriate regulators to examine its anti-money laundering books and records. Notwithstanding the foregoing, the Trust acknowledges that the Authorized Participants are not “customers” for the purposes of 31 CFR 103.
(c)
The Distributor and the Trust each individually represent and warrant that: (i) it has procedures in place reasonably designed to protect the privacy of non-public personal consumer/customer financial information to the extent required by applicable law, rule and regulation; and (ii) it will comply with all of the applicable terms and provisions of the 1934 Act.
(d)
The Trust represents and warrants that:
1.
(i) it is duly organized as a Delaware statutory trust and is and at all times will remain duly authorized to carry out its obligations as contemplated herein; (ii) it is registered as an investment company under the 1940 Act; (iii) the execution, delivery and performance of this Agreement are within its power and have been duly authorized by all necessary action; (iv) its entering into this Agreement does not conflict with or constitute a default or require a consent under or breach of any provision of any agreement or document to which the Trust is a party or by which it is bound; (v) the Registration Statement and each Fund’s Prospectus have been prepared, and all Marketing Materials shall be prepared, in all materials respects, in conformity with the 1933 Act, the 1940 Act and the rules and regulations of the SEC (the “Rules and Regulations”); and (vi) the Registration Statement and each Fund’s
8
Prospectus contain, and all Marketing Materials shall contain, all statements required to be stated therein in accordance with the 1933 Act, the 1940 Act and the Rules and Regulations; (vii) all statements of fact contained therein, or to be contained in all Marketing Materials, are or will be true and correct in all material respects at the time indicated or the effective date, as the case may be, and none of the Registration Statement, any Fund’s Prospectus, nor any Marketing Materials shall include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of each Fund’s Prospectus in light of the circumstances in which made, not misleading; and (viii) except as otherwise noted in the Registration Statement and Prospectus, the offering price for all Creation Units will be the aggregate net asset value of the Shares per Creation Unit of the relevant Fund, as determined in the manner described in the Registration Statement and Prospectus;
2.
it shall file such amendment or amendments to the Registration Statement and each Fund’s Prospectus as, in the light of future developments, shall, in the opinion of the Trust’s counsel, be necessary in order to have the Registration Statement and each Fund’s Prospectus at all times contain all material facts required to be stated therein or necessary to make the statements therein, in light of the circumstances in which made, not misleading. The Trust shall not file any amendment to the Registration Statement or each Fund’s Prospectus without giving the Distributor reasonable notice thereof in advance, provided that nothing in this Agreement shall in any way limit the Trust’s right to file at any time such amendments to the Registration Statement or any Fund’s Prospectus as the Trust may deem advisable. The Trust will also notify the Distributor in the event of any stop order suspending the effectiveness of the Registration Statement. Notwithstanding the foregoing, the Trust shall not be deemed to make any representation or warranty as to any information or statement provided by the Distributor for inclusion in the Registration Statement or any Fund’s Prospectus; and
3.
upon delivery of Deposit or Fund Securities to an Authorized Participant in connection with a purchase or redemption of Creation Units, the Authorized Participant will acquire good and unencumbered title to such securities, free and clear of all liens, restrictions, charges and encumbrances, and not subject to any adverse claims and that such Fund and Deposit Securities will not be “restricted securities” as such term is used in Rule 144(a)(3)(i) under the 1933 Act.
9
8.
Duration, Termination and Amendment.
(a)
This Agreement shall be effective on the date set forth above, and unless terminated as provided herein, shall continue for two years from its effective date, and thereafter from year to year, provided such continuance is approved annually (i) by vote of a majority of the Trustees or by the vote of a majority of the outstanding voting securities of the Fund and (ii) by the vote of a majority of those Trustees who are not parties to this Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval. This Agreement may be terminated at any time, without the payment of any penalty, as to each Fund (i) by vote of a majority of those Trustees who are not parties to this Agreement or interested persons of any such party or (ii) by vote of a majority of the outstanding voting securities of the Fund, or by the Distributor, on at least sixty (60) days prior written notice. This Agreement shall automatically terminate without the payment of any penalty in the event of its assignment. As used in this paragraph, the terms “vote of a majority of the outstanding voting securities,” “assignment,” “affiliated person” and “interested person” shall have the respective meanings specified in the 1940 Act.
(b)
No provision of this Agreement may be changed, waived, discharged or terminated except by an instrument in writing signed by both parties.
9.
Notice.
Any notice or other communication authorized or required by this Agreement to be given to either party shall be in writing and deemed to have been given when delivered in person or by confirmed facsimile, email, or posted by certified mail, return receipt requested, to the following address (or such other address as a party may specify by written notice to the other):
|
(i)
To Foreside:
|
|
(ii)
If to the Trust:
|
|
Foreside Fund Services, LLC
Three Canal Plaza, Suite 100
Portland, ME 04101
Attn: Legal Department
Telephone: (207) 553-7110
Facsimile: (207) 553-7151
Email:legal@foreside.com
With a copy to:
etp-services@foreside.com
|
|
Pacific Global ETF Trust
840 Newport Center Drive, 7th Floor
Newport Beach, CA 92660
Attn:
Phone:
Fax:
Email:
|
10.
Choice of Law.
This Agreement shall be governed by, and construed in accordance with, the laws of the state of Delaware, without giving effect to the choice of laws provisions thereof.
10
11.
Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
12.
Severability.
If any provisions of this Agreement shall be held or made invalid, in whole or in part, then the other provisions of this Agreement shall remain in force. Invalid provisions shall, in accordance with this Agreement’s intent and purpose, be amended, to the extent legally possible, in order to effectuate the intended results of such invalid provisions.
13.
Insurance.
The Distributor will maintain at its expense an errors and omissions insurance policy adequate to cover services provided by the Distributor hereunder.
14.
Confidentiality.
During the term of this Agreement, the Distributor and the Trust may have access to confidential information relating to such matters as either party’s business, trade secrets, systems, procedures, manuals, products, contracts, personnel, and clients. As used in this Agreement, “Confidential Information” means information belonging to one of the parties that is of value to such party and the disclosure of which could result in a competitive or other disadvantage to such party. Confidential Information includes, without limitation, financial information, proposal and presentations, reports, forecasts, inventions, improvements and other intellectual property; trade secrets; know-how; designs, processes or formulae; software; market or sales information or plans; customer lists; and business plans, prospects and opportunities (such as possible acquisitions or dispositions of businesses or facilities). Confidential Information includes information developed by either party in the course of engaging in the activities provided for in this Agreement, unless: (i) the information is or becomes publicly known through lawful means; (ii) the information is disclosed to the other party without a confidential restriction by a third party who rightfully possesses the information and did not obtain it, either directly or indirectly, from one of the parties, as the case may be, or any of their respective principals, employees, affiliated persons, or affiliated entities. The parties understand and agree that all Confidential Information shall be kept confidential by the other both during and after the term of this Agreement. Each party shall maintain commercially reasonable information security policies and procedures for protecting Confidential Information. The parties further agree that they will not, without the prior written approval by the other party, disclose such Confidential Information, or use such Confidential Information in any way, either during the term of this Agreement or at any time thereafter, except as required in the course of this Agreement and as provided by the other party or as required by law. Upon termination of this Agreement for any reason, or as otherwise requested by the Trust, all Confidential Information held by or on behalf of
11
Trust shall be promptly returned to the Trust, or an authorized officer of the Distributor will certify to the Trust in writing that all such Confidential Information has been destroyed. This section 14 shall survive the termination of this Agreement. Notwithstanding the foregoing, a party may disclose the other’s Confidential Information if (i) required by law, regulation or legal process or if requested by the SEC or other governmental regulatory agency with jurisdiction over the parties hereto or (ii) requested to do so by the other party.
15.
Limitation of Liability.
This Agreement is executed by or on behalf of the Trust with respect to each of the Trust Funds and the obligations hereunder are not binding upon any of the trustees, officers or shareholders of the Trust individually but are binding only upon the Fund to which such obligations pertain and the assets and property of such Fund. Separate and distinct records are maintained for each Fund and the assets associated with any such Fund are held and accounted for separately from the other assets of the Trust, or any other Fund of the Trust. The debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to a particular Fund of the Trust shall be enforceable against the assets of that Fund only, and not against the assets of the Trust generally or any other Fund, and none of the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to the Trust generally or any other Fund shall be enforceable against the assets of that Fund. The Trust’s Agreement and Declaration of Trust is on file with the Trust.
16.
Use of Names; Publicity.
The Trust shall not use the Distributor’s name in any offering material, shareholder report, advertisement or other material relating to the Trust, in a manner not approved by the Distributor in writing prior to such use, such approval not to be unreasonably withheld. The Distributor hereby consents to all uses of its name required by the SEC, any state securities commission, or any federal or state regulatory authority.
The Distributor shall not use the name “ ” in any offering material, shareholder report, advertisement or other material relating to the Distributor, other than for the purpose of merely identifying the Trust as a client of Distributor hereunder, in a manner not approved by the Trust in writing prior to such use; provided, however, that the Trust shall consent to all uses of its name required by the SEC, any state securities commission, or any federal or state regulatory authority; and provided, further, that in no case shall such approval be unreasonably withheld.
The Distributor will not issue any press releases or make any public announcements regarding the existence of this Agreement without the express written
12
consent of the Trust. Neither the Trust nor the Distributor will disclose any of the economic terms of this Agreement, except as may be required by law.
17.
Exclusivity
Nothing herein contained shall prevent the Distributor from entering into similar distribution arrangements or from providing the services contemplated hereunder to other investment companies or investment vehicles.
18.
Governing Language.
This Agreement has been negotiated and executed by the parties in English. In the event any translation of this Agreement is prepared for convenience or any other purpose, the provisions of the English version shall prevail.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the date first set forth above.
|
Foreside Fund Services, LLC
|
Pacific Global ETF Trust
|
|
|
|
|
By:
|
|
|
By:
|
|
|
|
Mark Fairbanks, Vice President
|
|
Name:
|
|
|
|
|
Title:
|
|
13
EXHIBIT A
[please list funds here]
A-
1
Exhibit 99.(g)(1)
FORM OF CUSTODY AGREEMENT
THIS AGREEMENT is made and entered into as of the last date written on the signature block by and between
PACIFIC GLOBAL ETF TRUST
, a Delaware statutory trust (the “Trust”) and
U.S. BANK NATIONAL ASSOCIATION
, a national banking association organized and existing under the laws of the United States of America (the “Custodian”).
WHEREAS, the Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company, and is authorized to issue shares of beneficial interest in separate series, with each such series representing interests in a separate portfolio of securities and other assets;
WHEREAS, the Custodian is a bank having the qualifications prescribed in Section 26(a)(1) of the 1940 Act; and
WHEREAS, the Trust desires to retain the Custodian to act as custodian of the cash and securities of each series of the Trust listed on
Exhibit B
hereto (as amended from time to time) (each a “Fund” and collectively, the “Funds”); and
WHEREAS, the Board of Trustees of the Trust has delegated to the Custodian the responsibilities set forth in Rule 17f-5(c) under the 1940 Act and the Custodian is willing to undertake the responsibilities and serve as the foreign custody manager for the Trust.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have the meanings set forth below unless the context otherwise requires:
1.01
“Authorized Person”
means any Officer or person who has been designated as such by written notice and named in
Exhibit A
and delivered to the Custodian by the Trust, or if the Trust has notified the Custodian in writing that it has an authorized investment manager or other agent, delivered to the Custodian by the Trust’s investment advisor or other agent. Such Officer or person shall continue to be an Authorized Person until such time as the Custodian receives Written Instructions from the Trust or the Trust’s investment advisor or other agent that any such person is no longer an Authorized Person.
1.02
“Board of Trustees”
shall mean the trustees from time to time serving under the Trust’s declaration of trust, as amended from time to time.
1
1.03
“Book-Entry System”
shall mean a federal book-entry system as provided in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFR Part 350, or in such book-entry regulations of federal agencies as are substantially in the form of such Subpart O.
1.04
“Business Day”
shall mean any day recognized as a settlement day by The New York Stock Exchange, Inc. and any other day for which the Trust computes the net asset value of Shares of the Fund.
1.05
“Eligible Foreign Custodian”
has the meaning set forth in Rule 17f-5(a)(1), including a majority-owned or indirect subsidiary of a U.S. Bank (as defined in Rule 17f-5), a bank holding company meeting the requirements of an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate action of the SEC), or a foreign branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of the 1940 Act; the term does not include any Eligible Securities Depository.
1.06
“Eligible Securities Depository”
has the meaning set forth in Rule 17f-7(b)(1) under the 1940 Act.
1.07
“Foreign Securities”
means any investments of a Fund (including foreign currencies) for which the primary market is outside the United States and such cash and cash equivalents as are reasonably necessary to effect such Fund’s transactions in such investments.
1.08
“Fund Custody Account”
shall mean any of the accounts in the name of the Trust, which is provided for in Section 3.2 below.
1.09
“IRS”
shall mean the Internal Revenue Service.
1.10
“FINRA”
shall mean the Financial Industry Regulatory Authority, Inc.
1.11
“Loan”
means any U.S. dollar denominated commercial loan, or participation therein, made by a bank or other financial institution that by its terms provides for payments of principal and/or interest, including discount obligations and payment- in-kind obligations, acquired by any Fund from time to time.
1.12
“Loan Checklist”
means a list delivered to the Custodian in connection with delivery of a Loan to the Custodian that identifies the items contained in the related Loan File.
1.13
“
Loan Documents
” means those documents related to Loans to the extent delivered to the Custodian.
1.14
“Loan File”
means, with respect to each Loan delivered to the Custodian, each of the Loan Documents identified on the related Loan Checklist.
1.15
“
Loan Trade Confirmation
” means a confirmation to the Custodian from the Fund of the Fund’s acquisition of a Loan, and setting forth applicable information with respect to such Loan, which confirmation may be in the form of Schedule A attached hereto and made a part
2
hereof, subject to such changes or additions as may be agreed to by, or in such other form as may be agreed to by, the Custodian and the Fund from time to time
1.16
“Noteless Loan”
means a Loan with respect to which (i) the related loan agreement does not require the obligor to execute and deliver an Underlying Note to evidence the indebtedness created under such Loan and (ii) no Underlying Notes are outstanding with respect to the portion of the Loan transferred to a Fund.
1.17
“Officer”
shall mean the Chairman, President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Trust.
1.18
“Participation”
means an interest in a Loan that is acquired indirectly by way of a participation from a selling institution.
1.19
“SEC”
shall mean the U.S. Securities and Exchange Commission.
1.20
“Securities”
shall include, without limitation, common and preferred stocks, bonds, call options, put options, debentures, notes, bank certificates of deposit, bankers’ acceptances, mortgage-backed securities, loans or other obligations, and any certificates, receipts, warrants or other instruments or documents representing rights to receive, purchase or subscribe for the same, or evidencing or representing any other rights or interests therein, or any similar property or assets that the Custodian or its agents have the facilities to clear and service.
1.21
“Securities Depository”
shall mean The Depository Trust Company and any other clearing agency registered with the SEC under Section 17A of the Securities Exchange Act of 1934, as amended (the “1934 Act”), which acts as a system for the central handling of Securities where all Securities of any particular class or series of an issuer deposited within the system are treated as fungible and may be transferred or pledged by bookkeeping entry without physical delivery of the Securities.
1.22
“Shares”
shall mean, with respect to a Fund, the units of beneficial interest issued by the Trust on account of the Fund.
1.23
“Sub-Custodian”
shall mean and include (i) any branch of a “U.S. Bank,” as that term is defined in Rule 17f-5 under the 1940 Act, and (ii) any “Eligible Foreign Custodian” having a contract with the Custodian which the Custodian has determined will provide reasonable care of assets of the Fund based on the standards specified in Section 3.03 below. Such contract shall be in writing and shall include provisions that provide: (i) for indemnification or insurance arrangements (or any combination of the foregoing) such that the Fund will be adequately protected against the risk of loss of assets held in accordance with such contract; (ii) that the Foreign Securities will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the Sub-Custodian or its creditors except a claim of payment for their safe custody or administration, in the case of cash deposits, liens or rights in favor of creditors of the Sub-Custodian arising under bankruptcy, insolvency, or similar laws; (iii) that beneficial ownership for the Foreign Securities will be freely transferable without the payment of money or value other than for safe custody or administration; (iv) that adequate records will be maintained identifying the assets as belonging to the Fund or as being held by a third party for the benefit of
3
the Fund; (v) that the Fund’s independent public accountants will be given access to those records or confirmation of the contents of those records; and (vi) that the Fund will receive periodic reports with respect to the safekeeping of the Fund’s assets, including, but not limited to, notification of any transfer to or from a Fund’s account or a third party account containing assets held for the benefit of the Fund. Such contract may contain, in lieu of any or all of the provisions specified in (i)-(vi) above, such other provisions that the Custodian determines will provide, in their entirety, the same or a greater level of care and protection for Fund assets as the specified provisions.
1.24
“Underlying Note”
means the one or more promissory notes executed by an obligor evidencing a Loan.
1.25
“Written Instructions”
shall mean (i) written communications actually received by the Custodian and signed by an Authorized Person, (ii) communications by facsimile or Internet electronic e-mail or any other such system from one or more persons reasonably believed by the Custodian to be an Authorized Person.
ARTICLE II.
APPOINTMENT OF CUSTODIAN
2.01
Appointment
. The Trust hereby appoints the Custodian as custodian of all Securities and cash owned by or in the possession of the Fund at any time during the period of this Agreement, on the terms and conditions set forth in this Agreement, and the Custodian hereby accepts such appointment and agrees to perform the services and duties set forth in this Agreement. The Trust hereby delegates to the Custodian, subject to Rule 17f-5(b), the responsibilities with respect to the Fund’s Foreign Securities, and the Custodian hereby accepts such delegation as foreign custody manager with respect to the Fund. The services and duties of the Custodian shall be confined to those matters expressly set forth herein, and no implied duties are assumed by or may be asserted against the Custodian hereunder.
2.02
Documents to be Furnished
. The following documents, including any amendments thereto, will be provided contemporaneously with the execution of the Agreement to the Custodian by the Trust:
(a)
A copy of the Trust’s declaration of trust, certified by the Secretary;
(b)
A copy of the Trust’s bylaws, certified by the Secretary;
(c)
A copy of the resolution of the Board of Trustees of the Trust appointing the Custodian, certified by the Secretary;
(d)
A copy of the current prospectuses of each Fund (the “Prospectus”);
(e)
A certification of the Chairman or the President and the Secretary of the Trust setting forth the names and signatures of the current Officers of the Trust and other Authorized Persons; and
4
(f)
An executed authorization required by the Shareholder Communications Act of 1985, attached hereto as
Exhibit D
.
2.03
Notice of Appointment of Transfer Agent
. The Trust agrees to notify the Custodian in writing of the appointment, termination or change in appointment of any transfer agent of the Fund, except if the Fund appoints an affiliate of the Custodian to serve as transfer agent of the Fund, the Custodian hereby waives the Fund’s obligation to provide such written notice.
ARTICLE III.
CUSTODY OF CASH AND SECURITIES
3.01
Segregation
. All Securities and non-cash property held by the Custodian for the account of the Fund (other than Securities maintained in a Securities Depository, Eligible Securities Depository or Book-Entry System) shall be physically segregated from other Securities and non-cash property in the possession of the Custodian (including the Securities and non-cash property of the other series of the Trust, if applicable) and shall be identified as subject to this Agreement.
3.02
Fund Custody and Cash Accounts
. As to each Fund, the Custodian shall open and maintain in its trust department: (x) a custody account in the name of the Trust coupled with the name of the Fund, subject only to draft or order of the Custodian, in which the Custodian shall enter and carry all Securities (other than Loans), cash and other assets of such Fund which are delivered to it and (y) cash accounts, including any subaccounts, in the name of the Trust coupled with the name of the Fund, subject only to draft or order of the Custodian, in which the Custodian shall enter and carry all principal and interest received with respect to the Loans. The amounts held in the cash in the custody account but shall instead maintain a register (in book-entry form or in such other form as it shall deem necessary or desirable) of such Loans, containing such information as the Fund and the Custodian may reasonably agree. The Custodian shall be authorized to open such additional accounts as may be necessary or convenient for administration of its duties hereunder.
3.03
Appointment of Agents
.
(a)
In its discretion, the Custodian may appoint one or more Sub-Custodians to establish and maintain arrangements with (i) Eligible Securities Depositories or (ii) Eligible Foreign Custodians who are members of the Sub-Custodian’s network to hold Securities and cash of the Fund and to carry out such other provisions of this Agreement as it may determine; provided, however, that the appointment of any such agents and maintenance of any Securities and cash of the Fund shall be at the Custodian’s expense and shall not relieve the Custodian of any of its obligations or liabilities under this Agreement. The Custodian shall be liable for the actions of any Sub-Custodians (regardless of whether assets are maintained in the custody of a Sub-Custodian, a member of its network or an Eligible Securities Depository) appointed by it as if such actions had been done by the Custodian. If, after the initial appointment of Sub-Custodians by the Board of Trustees in connection with this Agreement, the Custodian wishes to appoint other Sub-Custodians to hold
5
property of the Fund, it will so notify the Trust and make the necessary determinations as to any such new Sub-Custodian’s eligibility under Rule 17f-5 under the 1940 Act.
(b)
In performing its delegated responsibilities as foreign custody manager to place or maintain the Fund’s assets with a Sub-Custodian, the Custodian will determine that the Fund’s assets will be subject to reasonable care, based on the standards applicable to custodians in the country in which the Fund’s assets will be held by that Sub-Custodian, after considering all factors relevant to safekeeping of such assets, including, without limitation the factors specified in Rule 17f-5(c)(1).
(c)
The agreement between the Custodian and each Sub-Custodian acting hereunder shall contain the required provisions set forth in Rule 17f-5(c)(2) under the 1940 Act.
(d)
At the end of each calendar quarter, the Custodian shall provide written reports notifying the Board of Trustees of the withdrawal or placement of the Securities and cash of the Fund with a Sub-Custodian and of any material changes in the Fund’s arrangements. Such reports shall include an analysis of the custody risks associated with maintaining assets with any Eligible Securities Depositories. The Custodian shall promptly take such steps as may be required to withdraw assets of the Fund from any Sub-Custodian arrangement that has ceased to meet the requirements of Rule 17f-5 or Rule 17f-7 under the 1940 Act, as applicable.
(e)
With respect to its responsibilities under this Section 3.03, the Custodian hereby warrants to the Trust that it agrees to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of property of the Fund; provided, however, with respect to custody of any Loans, the Custodian’s responsibility shall be limited to the exercise of reasonable care by the Custodian in the physical custody of any such documents delivered to it, and any related instrument, security, credit agreement, assignment agreement and/or other agreements or documents, if any, that may be delivered to it. The Custodian further warrants that the Fund’s assets will be subject to reasonable care if maintained with a Sub-Custodian, after considering all factors relevant to the safekeeping of such assets, including, without limitation: (i) the Sub-Custodian’s practices, procedures, and internal controls for certificated securities (if applicable), its method of keeping custodial records, and its security and data protection practices; (ii) whether the Sub-Custodian has the requisite financial strength to provide reasonable care for Fund assets; (iii) the Sub-Custodian’s general reputation and standing and, in the case of a Securities Depository, the Securities Depository’s operating history and number of participants; and (iv) whether the Fund will have jurisdiction over and be able to enforce judgments against the Sub-Custodian, such as by virtue of the existence of any offices of the Sub-Custodian in the United States or the Sub-Custodian’s consent to service of process in the United States.
(f)
The Custodian shall establish a system or ensure that its Sub-Custodian has established a system to monitor on a continuing basis (i) the appropriateness of maintaining the Fund’s assets with a Sub-Custodian or Eligible Foreign Custodians who are members of a Sub-Custodian’s network; (ii) the performance of the contract governing the Fund’s arrangements with such Sub-Custodian or Eligible Foreign Custodian’s members of a
6
Sub-Custodian’s network; and (iii) the custody risks of maintaining assets with an Eligible Securities Depository. The Custodian must promptly notify the Fund or its investment adviser of any material change in these risks.
(g)
The Custodian shall use commercially reasonable efforts to collect all income and other payments with respect to Foreign Securities to which the Fund shall be entitled and shall credit such income, as collected, to the Trust. In the event that extraordinary measures are required to collect such income, the Trust and Custodian shall consult as to the measures and as to the compensation and expenses of the Custodian relating to such measures.
(h)
Delivery of Assets to Custodian
. The Trust shall deliver, or cause to be delivered, to the Custodian all of the Fund’s Securities, cash and other investment assets, including (i) all payments of income, payments of principal and capital distributions received by the Fund with respect to such Securities, cash or other assets owned by the Fund at any time during the period of this Agreement, and (ii) all cash received by the Fund for the issuance of Shares. With respect to Loans, the Loan Documents may be delivered to the Custodian at the address identified below in Section 15.08. With respect to assets other than Loans, such assets shall be delivered to the Custodian, and at the address identified below in Section 15.08. Except to the extent otherwise expressly provided herein, delivery of Securities to the Custodian shall be in Street Name or other good delivery form. The Custodian shall not be responsible for such Securities, cash or other assets until actually delivered to, and received by it. The Custodian shall not be responsible for such Securities, cash or other assets until actually received by it.
3.04
Securities Depositories and Book-Entry Systems
. The Custodian may deposit and/or maintain Securities (excluding Loans) of the Fund in a Securities Depository or in a Book-Entry System, subject to the following provisions:
(a)
The Custodian, on an on-going basis, shall deposit in a Securities Depository or Book-Entry System all Securities eligible for deposit therein and shall make use of such Securities Depository or Book-Entry System to the extent possible and practical in connection with its performance hereunder, including, without limitation, in connection with settlements of purchases and sales of Securities, loans of Securities, and deliveries and returns of collateral consisting of Securities.
(b)
Securities (other than Loans) of the Fund kept in a Book-Entry System or Securities Depository shall be kept in an account (“Depository Account”) of the Custodian in such Book-Entry System or Securities Depository which includes only assets held by the Custodian as a fiduciary, custodian or otherwise for customers.
(c)
The records of the Custodian with respect to Securities of the Fund maintained in a Book-Entry System or Securities Depository shall, by book-entry, identify such Securities (other than Loans) as belonging to the Fund.
(d)
If Securities purchased by the Fund are to be held in a Book-Entry System or Securities Depository, the Custodian shall pay for such Securities upon (i) receipt of advice from the Book-Entry System or Securities Depository that such Securities have been transferred to
7
the Depository Account, and (ii) the making of an entry on the records of the Custodian to reflect such payment and transfer for the account of the Fund. If Securities sold by the Fund are held in a Book-Entry System or Securities Depository, the Custodian shall transfer such Securities upon (i) receipt of advice from the Book-Entry System or Securities Depository that payment for such Securities has been transferred to the Depository Account, and (ii) the making of an entry on the records of the Custodian to reflect such transfer and payment for the account of the Fund.
(e)
The Custodian shall provide the Trust with copies of any report (obtained by the Custodian from a Book-Entry System or Securities Depository in which Securities of the Fund are kept) on the internal accounting controls and procedures for safeguarding Securities deposited in such Book-Entry System or Securities Depository.
(f)
Notwithstanding anything to the contrary in this Agreement, the Custodian shall be liable to the Trust for any loss or damage to the Fund resulting from (i) the use of a Book-Entry System or Securities Depository by reason of any negligence or willful misconduct on the part of the Custodian or any Sub-Custodian, or (ii) failure of the Custodian or any Sub-Custodian to enforce effectively such rights as it may have against a Book-Entry System or Securities Depository. At its election, the Trust shall be subrogated to the rights of the Custodian with respect to any claim against a Book-Entry System or Securities Depository or any other person from any loss or damage to the Fund arising from the use of such Book-Entry System or Securities Depository, if and to the extent that the Fund has not been made whole for any such loss or damage.
(g)
With respect to its responsibilities under this Section 3.05 and pursuant to Rule 17f-4 under the 1940 Act, the Custodian hereby warrants to the Trust that it agrees to (i) exercise due care in accordance with reasonable commercial standards in discharging its duty as a securities intermediary to obtain and thereafter maintain such assets, (ii) provide, promptly upon request by the Trust, such reports as are available concerning the Custodian’s internal accounting controls and financial strength, and (iii) require any Sub-Custodian to exercise due care in accordance with reasonable commercial standards in discharging its duty as a securities intermediary to obtain and thereafter maintain assets corresponding to the security entitlements of its entitlement holders.
3.05
Disbursement of Moneys from Fund Custody Account
. Upon receipt of Written Instructions, the Custodian shall disburse moneys from the Fund Custody Account but only in the following cases:
(a)
For the purchase of Securities for the Fund but only in accordance with Section 4.01 of this Agreement and only (i) in the case of Securities (other than options on Securities, futures contracts and options on futures contracts), against the delivery to the Custodian (or any Sub-Custodian) of such Securities registered as provided in Section 3.09 below or in proper form for transfer, or if the purchase of such Securities is effected through a Book-Entry System or Securities Depository, in accordance with the conditions set forth in Section 3.05 above; (ii) in the case of options on Securities, against delivery to the Custodian (or any Sub-Custodian) of such receipts as are required by the customs prevailing among dealers in such options; (iii) in the case of futures contracts and options
8
on futures contracts, against delivery to the Custodian (or any Sub-Custodian) of evidence of title thereto in favor of the Fund or any nominee referred to in Section 3.09 below; and (iv) in the case of repurchase or reverse repurchase agreements entered into between the Trust and a bank which is a member of the Federal Reserve System or between the Trust and a primary dealer in U.S. Government securities, against delivery of the purchased Securities either in certificate form or through an entry crediting the Custodian’s account at a Book-Entry System or Securities Depository with such Securities;
(b)
In connection with the conversion, exchange or surrender, as set forth in Section 3.07(f) below, of Securities owned by the Fund;
(c)
For the payment of any dividends or capital gain distributions declared by the Fund;
(d)
In payment of the redemption price of Shares as provided in Section 5.01 below;
(e)
For the payment of any expense or liability incurred by the Fund, including, but not limited to, the following payments for the account of the Fund: interest; taxes; administration, investment advisory, accounting, auditing, transfer agent, custodian, trustee and legal fees; and other operating expenses of the Fund; in all cases, whether or not such expenses are to be in whole or in part capitalized or treated as deferred expenses;
(f)
For transfer in accordance with the provisions of any agreement among the Trust, the Custodian and a broker-dealer registered under the 1934 Act and a member of FINRA, relating to compliance with rules of the Options Clearing Corporation and of any registered national securities exchange (or of any similar organization or organizations) regarding escrow or other arrangements in connection with transactions by the Fund;
(g)
For transfer in accordance with the provisions of any agreement among the Trust, the Custodian and a futures commission merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission and/or any contract market (or any similar organization or organizations) regarding account deposits in connection with transactions by the Fund;
(h)
For the funding of any uncertificated time deposit or other interest-bearing account with any banking institution (including the Custodian), which deposit or account has a term of one year or less; and
(i)
For any other proper purpose, but only upon receipt of Written Instructions, specifying the amount and purpose of such payment, declaring such purpose to be a proper corporate purpose, and naming the person or persons to whom such payment is to be made.
3.06
Delivery of Securities from Fund Custody Account
. Upon receipt of Written Instructions, the Custodian shall release and deliver, or cause the Sub-Custodian to release and deliver, Securities from the Fund Custody Account or Loan Documents but only in the following cases:
(a)
Upon the sale of Securities for the account of the Fund but only against receipt of payment therefor in cash, by certified or cashiers check or bank credit;
9
(b)
In the case of a sale effected through a Book-Entry System or Securities Depository, in accordance with the provisions of Section 3.05 above;
(c)
To an offeror’s depository agent in connection with tender or other similar offers for Securities of the Fund; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian;
(d)
To the issuer thereof or its agent (i) for transfer into the name of the Fund, the Custodian or any Sub-Custodian, or any nominee or nominees of any of the foregoing, or (ii) for exchange for a different number of certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new Securities are to be delivered to the Custodian;
(e)
To the broker selling the Securities, for examination in accordance with the “street delivery” custom;
(f)
For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the issuer of such Securities, or pursuant to provisions for conversion contained in such Securities, or pursuant to any deposit agreement, including surrender or receipt of underlying Securities in connection with the issuance or cancellation of depository receipts; provided that, in any such case, the new Securities and cash, if any, are to be delivered to the Custodian;
(g)
Upon receipt of payment therefor pursuant to any repurchase or reverse repurchase agreement entered into by the Fund;
(h)
In the case of warrants, rights or similar Securities, upon the exercise thereof, provided that, in any such case, the new Securities and cash, if any, are to be delivered to the Custodian;
(i)
For delivery in connection with any loans of Securities of the Fund, but only against receipt of such collateral as the Trust shall have specified to the Custodian in Written Instructions;
(j)
For delivery as security in connection with any borrowings by the Fund requiring a pledge of assets by the Trust, but only against receipt by the Custodian of the amounts borrowed;
(k)
Pursuant to any authorized plan of liquidation, reorganization, merger, consolidation or recapitalization of the Trust;
(l)
For delivery in accordance with the provisions of any agreement among the Trust, the Custodian and a broker-dealer registered under the 1934 Act and a member of FINRA, relating to compliance with the rules of the Options Clearing Corporation and of any registered national securities exchange (or of any similar organization or organizations) regarding escrow or other arrangements in connection with transactions by the Fund;
(m)
For delivery in accordance with the provisions of any agreement among the Trust, the Custodian and a futures commission merchant registered under the Commodity Exchange
10
Act, relating to compliance with the rules of the Commodity Futures Trading Commission and/or any contract market (or any similar organization or organizations) regarding account deposits in connection with transactions by the Fund;
(n)
For any other proper corporate purpose, but only upon receipt of written Instructions, specifying the Securities to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purpose to be a proper corporate purpose, and naming the person or persons to whom delivery of such Securities shall be made; or
(o)
To brokers, clearing banks or other clearing agents for examination or trade execution in accordance with market custom; provided that in any such case the Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Custodian’s own negligence or willful misconduct.
3.07
Actions Not Requiring Written Instructions
. Unless otherwise instructed by the Trust, the Custodian shall with respect to all Securities held for the Fund:
(a)
Subject to Section 9.04 below, collect on a timely basis all income and other payments to which the Fund is entitled either by law or pursuant to custom in the securities business;
(b)
Present for payment and, subject to Section 9.04 below, collect on a timely basis the amount payable upon all Securities which may mature or be called, redeemed, or retired, or otherwise become payable;
(c)
Endorse for collection, in the name of the Fund, checks, drafts and other negotiable instruments;
(d)
Surrender interim receipts or Securities in temporary form for Securities in definitive form;
(e)
Execute, as custodian, any necessary declarations or certificates of ownership under the federal income tax laws or the laws or regulations of any other taxing authority now or hereafter in effect, and prepare and submit reports to the IRS and the Trust at such time, in such manner and containing such information as is prescribed by the IRS;
(f)
Hold for the Fund, either directly or, with respect to Securities held therein, through a Book-Entry System or Securities Depository, all rights and similar Securities issued with respect to Securities of the Fund; and
(g)
In general, and except as otherwise directed in Written Instructions, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with Securities and other assets of the Fund.
3.08
Registration and Transfer of Securities
. All Securities (other than Loans) held for the Fund that are issued or issuable only in bearer form shall be held by the Custodian in that form, provided that any such Securities (other than Loans) shall be held in a Book-Entry System if eligible therefor. All other Securities held for the Fund may be registered in the name of the
11
Fund, the Custodian, a Sub-Custodian or any nominee thereof, or in the name of a Book-Entry System, Securities Depository or any nominee of either thereof. The records of the Custodian with respect to foreign securities of the Fund that are maintained with a Sub-Custodian in an account that is identified as belonging to the Custodian for the benefit of its customers shall identify those securities as belonging to the Fund. The Trust shall furnish to the Custodian appropriate instruments to enable the Custodian to hold or deliver in proper form for transfer, or to register in the name of any of the nominees referred to above or in the name of a Book-Entry System or Securities Depository, any Securities (other than Loans) registered in the name of the Fund.
3.09
Records
.
(a)
The Custodian shall maintain complete and accurate records with respect to Securities, cash or other property held for the Fund, including (i) journals or other records of original entry containing an itemized daily record in detail of all receipts and deliveries of Securities and all receipts and disbursements of cash; (ii) ledgers (or other records) reflecting (A) Securities in transfer, (B) Securities in physical possession, (C) monies and Securities borrowed and monies and Securities loaned (together with a record of the collateral therefor and substitutions of such collateral), (D) dividends and interest received, and (E) dividends receivable and interest receivable; (iii) canceled checks and bank records related thereto; and (iv) all records relating to its activities and obligations under this Agreement. The Custodian shall keep such other books and records of the Fund as the Trust shall reasonably request, or as may be required by the 1940 Act, including, but not limited to, Section 31 of the 1940 Act and Rule 31a-2 promulgated thereunder.
(b)
All such books and records maintained by the Custodian shall (i) be maintained in a form acceptable to the Trust and in compliance with the rules and regulations of the SEC, (ii) be the property of the Trust and at all times during the regular business hours of the Custodian be made available upon request for inspection by duly authorized officers, employees or agents of the Trust and employees or agents of the SEC, and (iii) if required to be maintained by Rule 31a-1 under the 1940 Act, be preserved for the periods prescribed in Rules 31a-1 and 31a-2 under the 1940 Act.
3.10
Fund Reports by Custodian
. The Custodian shall furnish the Trust with a daily activity statement and a summary of all transfers to or from each Fund Custody Account on the day following such transfers. At least monthly, the Custodian shall furnish the Trust with a detailed statement of the Securities and moneys held by the Custodian and the Sub-Custodians for the Fund under this Agreement.
3.11
Other Reports by Custodian
. As the Trust may reasonably request from time to time, the Custodian shall provide the Trust with reports on the internal accounting controls and procedures for safeguarding Securities which are employed by the Custodian or any Sub-Custodian.
3.12
Proxies and Other Materials
. The Custodian shall cause all proxies relating to Securities (excluding Loans) that are not registered in the name of the Fund to be promptly
12
executed by the registered holder of such Securities (excluding Loans), without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Trust such proxies, all proxy soliciting materials and all notices relating to such Securities. With respect to the foreign Securities, the Custodian will use reasonable commercial efforts to facilitate the exercise of voting and other shareholder rights, subject to the laws, regulations and practical constraints that may exist in the country where such securities are issued. The Trust acknowledges that local conditions, including lack of regulation, onerous procedural obligations, lack of notice and other factors may have the effect of severely limiting the ability of the Trust to exercise shareholder rights.
3.13
Information on Corporate Actions
. The Custodian shall promptly deliver to the Trust all information received by the Custodian and pertaining to Securities (excluding Loans) being held by the Fund with respect to optional tender or exchange offers, calls for redemption or purchase, or expiration of rights. If the Trust desires to take action with respect to any tender offer, exchange offer or other similar transaction, the Trust shall notify the Custodian at least three Business Days prior to the date on which the Custodian is to take such action. The Trust will provide or cause to be provided to the Custodian all relevant information for any Security which has unique put/option provisions at least three Business Days prior to the beginning date of the tender period. The Custodian shall have no duty or obligation hereunder to take any action on behalf of the Trust, to communicate on behalf of the Fund, to collect amounts or proceeds in respect of, or otherwise to interact or exercise rights or remedies on behalf of the Trust, with respect to any Loans. All such actions and communications are the responsibility of the Trust.
ARTICLE IV.
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.01
(a) Purchase of Securities
. Promptly upon each purchase of Securities (other than Loans) for the Fund, Written Instructions shall be delivered to the Custodian, specifying (i) the name of the issuer or writer of such Securities, and the title or other description thereof, (ii) the number of shares, principal amount (and accrued interest, if any) or other units purchased, (iii) the date of purchase and settlement, (iv) the purchase price per unit, (v) the total amount payable upon such purchase, and (vi) the name of the person to whom such amount is payable. The Custodian shall upon receipt of such Securities purchased by the Fund pay out of the moneys held for the account of the Fund the total amount specified in such Written Instructions to the person named therein. The Custodian shall not be under any obligation to pay out moneys to cover the cost of a purchase of Securities for the Fund, if in the Fund Custody Account there is insufficient cash available to the Fund for which such purchase was made.
(i) In connection with its acquisition of a Loan or other delivery of a Security constituting a Loan, the Trust shall deliver or cause to be delivered to the Custodian a properly completed Loan Trade Confirmation containing such information in respect of such Loan as the Custodian may reasonably require in order to enable the Custodian to perform its duties hereunder in respect of such Loan on which the Custodian may conclusively rely without further inquiry or investigation, in such form and format as the Custodian
13
reasonably may require, and may, but is not required, deliver to the Custodian the Loan Documents for all Loans, including the Loan Checklist..
(a)
(ii)
Notwithstanding anything herein to the contrary, delivery of Loans acquired by the Fund which constitute Noteless Loans or Participations or which are otherwise not evidenced by a “security” or “instrument” as defined in Section 8-102 and Section 9-102(a)(47) of the UCC, respectively, shall be made by delivery to the Custodian of (i) in the case of a Noteless Loan, a copy of the loan register with respect to such Noteless Loan evidencing registration of such Loan on the books and records of the applicable obligor or bank agent to the name of the Fund (or its nominee) or a copy (which may be a facsimile copy) of an assignment agreement in favor of the Fund as assignee, and (ii) in the case of a Participation, a copy of the related participation agreement. Any duty on the part of the Custodian with respect to the custody of such Loans shall be limited to the exercise of reasonable care by the Custodian in the physical custody of any loan documents including any related instrument, security, credit agreement, assignment agreement and/or other agreements or documents, if any (collectively, “
Financing Documents
”), that may be delivered to it. Nothing herein shall require the Custodian to credit to the Securities Account or to treat as a financial asset (within the meaning of Section 8-102(a)(9) of the UCC) any such Loan or other asset in the nature of a general intangible (as defined in Section 9-102(a)(42) of the UCC) or to “maintain” a sufficient quantity thereof.
(iii)
The Custodian may assume the genuineness of any such Financing Document it may receive and the genuineness and due authority of any signatures appearing thereon, and shall be entitled to assume that each such Financing Document it may receive is what it purports to be. If an original “security” or “instrument” as defined in Section 8-102 and Section 9-102(a)(47) of the UCC, respectively, is or shall be or become available with respect to any Loan to be held by the Custodian under this Agreement, it shall be the sole responsibility of the Trust (or Fund) to make or cause delivery thereof to the Custodian, and the Custodian shall not be under any obligation at any time to determine whether any such original security or instrument has been or is required to be issued or made available in respect of any Loan or to compel or cause delivery thereof to the Custodian.
(iv)
Contemporaneously with the acquisition of any Loan, the Trust may (i) cause the copies of the loan documents evidencing such Loan to be delivered to the Custodian; (ii) if requested by the Custodian, provide to the Custodian an amortization schedule of principal payments and a schedule of the interest payable date(s) identifying the amount and due dates of all scheduled principal and interest payments for such Loan and (iii) a properly completed Loan Trade Confirmation containing such information in respect of such Loan as the Custodian may reasonably require in order to enable the Custodian to perform its duties hereunder in respect of such Loan on which the Custodian may conclusively rely without further inquiry or investigation, in such form and format as the Custodian reasonably may require; (iv) take all actions reasonably necessary for the Fund to acquire good title to such Loan; and (v) take all actions as may be reasonably necessary (including appropriate payment notices and instructions to bank agents or other applicable paying agents) to cause (A) all payments in respect of the Loan to be made to the Custodian and (B) all notices, solicitations and other communications in respect of such
14
Loan to be directed to the Trust. The Custodian shall have no liability for any delay or failure on the part of the Trust to provide necessary information to the Custodian, or for any inaccuracy therein or incompleteness thereof, or for any delay or failure on the part of the Trust to give such effective payment instruction to bank agents and other paying agents, in respect of the Loans. With respect to each such Loan, the Custodian shall be entitled to rely on any information and notices it may receive from time to time from the related bank agent, obligor or similar party with respect to the related Loan Asset, and shall be entitled to update its records (as it may deem necessary or appropriate), or from the Trust or Fund, on the basis of such information or notices received, without any obligation on its part independently to verify, investigate or recalculate such information.
4.02
Liability for Payment in Advance of Receipt of Securities Purchased
. In any and every case where payment for the purchase of Securities for the Fund is made by the Custodian in advance of receipt of the Securities purchased and in the absence of specified Written Instructions to so pay in advance, the Custodian shall be liable to the Fund for such payment.
4.03
Sale of Securities
. Promptly upon each sale of Securities by the Fund, Written Instructions shall be delivered to the Custodian, specifying: (i) the name of the issuer or writer of such Securities, and the title or other description thereof; (ii) the number of shares, principal amount (and accrued interest, if any), or other units sold; (iii) the date of sale and settlement, (iv) the sale price per unit; (v) the total amount payable upon such sale; and (vi) the person to whom such Securities are to be delivered. Upon receipt of the total amount payable to the Fund as specified in such Written Instructions, the Custodian shall deliver such Securities to the person specified in such Written Instructions. Subject to the foregoing, the Custodian may accept payment in such form as shall be satisfactory to it, and may deliver Securities and arrange for payment in accordance with the customs prevailing among dealers in Securities.
4.04
Delivery of Securities Sold
. Notwithstanding Section 4.03 above or any other provision of this Agreement, the Custodian, when instructed to deliver Securities (excluding Loans) against payment, shall be entitled, if in accordance with generally accepted market practice, to deliver such Securities (excluding Loans) prior to actual receipt of final payment therefor. In any such case, the Fund shall bear the risk that final payment for such Securities may not be made or that such Securities may be returned or otherwise held or disposed of by or through the person to whom they were delivered, and the Custodian shall have no liability for any for the foregoing.
4.05
Payment for Securities Sold
. In its sole discretion and from time to time, the Custodian may credit the Fund Custody Account, prior to actual receipt of final payment thereof, with: (i) proceeds from the sale of Securities which it has been instructed to deliver against payment; (ii) proceeds from the redemption of Securities or other assets of the Fund; and (iii) income from cash, Securities or other assets of the Fund. Any such credit shall be conditional upon actual receipt by Custodian of final payment and may be reversed if final payment is not actually received in full. The Custodian may, in its sole discretion and from time to time, permit the Fund to use funds so credited to the Fund Custody Account in anticipation of actual receipt of final payment. Any such funds shall be repayable immediately upon demand made by the Custodian at any time prior to the actual receipt of all final payments in anticipation of which funds were credited to the Fund Custody Account.
15
4.06
Advances by Custodian for Settlement
. The Custodian may, in its sole discretion and from time to time, advance funds to the Trust to facilitate the settlement of a Fund’s transactions in the Fund Custody Account. Any such advance shall be repayable immediately upon demand made by Custodian.
ARTICLE V.
REDEMPTION OF FUND SHARES
5.01
Transfer of Funds
. From such funds as may be available for the purpose in the relevant Fund Custody Account, and upon receipt of Written Instructions specifying that the funds are required to redeem Shares of the Fund, the Custodian shall wire each amount specified in such Written Instructions to or through such bank or broker-dealer as the Trust may designate.
5.02
No Duty Regarding Paying Banks
. Once the Custodian has wired amounts to a bank or broker-dealer pursuant to Section 5.01 above, the Custodian shall not be under any obligation to effect any further payment or distribution by such bank or broker-dealer.
ARTICLE VI.
SEGREGATED ACCOUNTS
6.01
Upon receipt of Written Instructions, the Custodian shall establish and maintain a segregated account or accounts for and on behalf of the Fund, into which account or accounts may be transferred cash and/or Securities, including Securities maintained in a Depository Account:
(a)
in accordance with the provisions of any agreement among the Trust, the Custodian and a broker-dealer registered under the 1934 Act and a member of FINRA (or any futures commission merchant registered under the Commodity Exchange Act), relating to compliance with the rules of the Options Clearing Corporation and of any registered national securities exchange (or the Commodity Futures Trading Commission or any registered contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Fund;
(b)
for purposes of segregating cash or Securities in connection with securities options purchased or written by the Fund or in connection with financial futures contracts (or options thereon) purchased or sold by the Fund;
(c)
which constitute collateral for loans of Securities made by the Fund;
(d)
for purposes of compliance by the Fund with requirements under the 1940 Act for the maintenance of segregated accounts by registered investment companies in connection with reverse repurchase agreements and when-issued, delayed delivery and firm commitment transactions; and
16
(e)
for other proper corporate purposes, but only upon receipt of Written Instructions, setting forth the purpose or purposes of such segregated account and declaring such purposes to be proper corporate purposes.
6.02
Each segregated account established under this Article VI shall be established and maintained for the Fund only. All Written Instructions relating to a segregated account shall specify the Fund.
ARTICLE VII.
COMPENSATION OF CUSTODIAN
7.01
Compensation
. The Custodian shall be compensated for providing the services set forth in this Agreement in accordance with the fee schedule set forth on
Exhibit C
hereto (as amended from time to time). The Custodian shall also be reimbursed for such miscellaneous expenses (e.g., telecommunication charges, postage and delivery charges, and reproduction charges) as are reasonably incurred by the Custodian in performing its duties hereunder. The Trust shall pay all such fees and reimbursable expenses within 30 calendar days following receipt of the billing notice, except for any fee or expense subject to a good faith dispute. The Trust shall notify the Custodian in writing within 30 calendar days following receipt of each invoice if the Trust is disputing any amounts in good faith. The Trust shall pay such disputed amounts within 10 calendar days of the day on which the parties agree to the amount to be paid. With the exception of any fee or expense the Trust is disputing in good faith as set forth above, unpaid invoices shall accrue a finance charge of 1½% per month after the due date. Notwithstanding anything to the contrary, amounts owed by the Trust to the Custodian shall only be paid out of the assets and property of the particular Fund involved.
7.02
Overdrafts
. The Trust is responsible for maintaining an appropriate level of short term cash investments to accommodate cash outflows. The Trust may obtain a formal line of credit for potential overdrafts of its custody account. In the event of an overdraft or in the event the line of credit is insufficient to cover an overdraft, the overdraft amount or the overdraft amount that exceeds the line of credit will be charged in accordance with the fee schedule set forth on Exhibit C hereto (as amended from time to time)
ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES
8.01
Representations and Warranties of the Trust
. The Trust hereby represents and warrants to the Custodian, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
(a)
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
(b)
This Agreement has been duly authorized, executed and delivered by the Trust in accordance with all requisite action and constitutes a valid and legally binding obligation
17
of the Trust, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties; and
(c)
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.
8.02
Representations and Warranties of the Custodian
. The Custodian hereby represents and warrants to the Trust, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
(a)
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
(b)
It is a U.S. Bank as defined in section (a)(7) of Rule 17f-5.
(c)
This Agreement has been duly authorized, executed and delivered by the Custodian in accordance with all requisite action and constitutes a valid and legally binding obligation of the Custodian, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties; and
(d)
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.
ARTICLE IX.
CONCERNING THE CUSTODIAN
9.01
Standard of Care
. The Custodian shall exercise reasonable care in the performance of its duties under this Agreement. The Custodian shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with its duties under this Agreement, except a loss arising out of or relating to the Custodian’s (or a Sub-Custodian’s) refusal or failure to comply with the terms of this Agreement (or any sub-custody agreement) or from its (or a Sub-Custodian’s) bad faith, negligence or willful misconduct in the performance of its duties under this Agreement (or any sub-custody agreement). The Custodian shall be entitled to rely on and may act upon advice of counsel on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. The Custodian shall promptly notify the Trust of any action taken or omitted by the Custodian pursuant to advice of counsel.
18
9.02
Actual Collection Required
. The Custodian shall not be liable for, or considered to be the custodian of, any cash belonging to the Fund or any money represented by a check, draft or other instrument for the payment of money, until the Custodian or its agents actually receive such cash or collect on such instrument.
9.03
No Responsibility for Title, etc.
So long as and to the extent that it is in the exercise of reasonable care, the Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received or delivered by it pursuant to this Agreement.
9.04
Limitation on Duty to Collect
. Custodian shall not be required to enforce collection, by legal means or otherwise, of any money or property due and payable with respect to Securities held for the Fund if such Securities are in default or payment is not made after due demand or presentation.
9.05
Reliance Upon Documents and Instructions
. The Custodian shall be entitled to rely upon any certificate, notice or other instrument in writing received by it and reasonably believed by it to be genuine. The Custodian shall be entitled to rely upon any Written Instructions actually received by it pursuant to this Agreement.
9.06
Cooperation
. The Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the Trust to keep the books of account of the Fund and/or compute the value of the assets of the Fund. The Custodian shall take all such reasonable actions as the Trust may from time to time request to enable the Trust to obtain, from year to year, favorable opinions from the Trust’s independent accountants with respect to the Custodian’s activities hereunder in connection with (i) the preparation of the Trust’s reports on Form N-1A and Form N-CEN and any other reports required by the SEC, and (ii) the fulfillment by the Trust of any other requirements of the SEC.
ARTICLE X.
INDEMNIFICATION
10.01
Indemnification by Trust
. The Trust shall indemnify and hold harmless the Custodian, any Sub-Custodian and any nominee thereof (each, an “Indemnified Party” and collectively, the “Indemnified Parties”) from and against any and all claims, demands, losses, expenses and liabilities of any and every nature (including reasonable attorneys’ fees) that an Indemnified Party may sustain or incur or that may be asserted against an Indemnified Party by any person arising directly or indirectly (i) from the fact that Securities are registered in the name of any such nominee, (ii) from any action taken or omitted to be taken by the Custodian or such Sub-Custodian (a) at the request or direction of or in reliance on the advice of the Trust, or (b) upon Written Instructions, or (iii) from the performance of its obligations under this Agreement or any sub-custody agreement, provided that neither the Custodian nor any such Sub-Custodian shall be indemnified and held harmless from and against any such claim, demand, loss, expense or liability arising out of or relating to its refusal or failure to comply with the terms of this Agreement (or any sub-custody agreement), or from its bad faith, negligence or willful misconduct in the performance of its duties under this Agreement (or any sub-custody agreement). This indemnity shall be a continuing obligation of the Trust, its successors and
19
assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the terms “Custodian” and “Sub-Custodian” shall include their respective directors, officers and employees.
10.02
Indemnification by Custodian. The Custodian shall indemnify and hold harmless the Trust and the applicable Fund from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that the Fund may sustain or incur or that may be asserted against the Fund by any person arising directly or indirectly out of any action taken or omitted to be taken by an Indemnified Party as a result of the Indemnified Party’s refusal or failure to comply with the terms of this Agreement (or any sub-custody agreement), or from its bad faith, negligence or willful misconduct in the performance of its duties under this Agreement (or any sub-custody agreement). This indemnity shall be a continuing obligation of the Custodian, its successors and assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the term “Fund” shall include the Fund’s trustees, officers and employees.
10.03
Security
. If the Custodian advances cash or Securities to the Fund for any purpose, either at the Trust’s request or as otherwise contemplated in this Agreement, or in the event that the Custodian or its nominee incurs, in connection with its performance under this Agreement, any claim, demand, loss, expense or liability (including reasonable attorneys’ fees) (except such as may arise from its or its nominee’s bad faith, negligence or willful misconduct), then, in any such event, any property at any time held for the account of the Fund shall be security therefor, and should the Fund fail promptly to repay or indemnify the Custodian, the Custodian shall be entitled to utilize available cash of such Fund and to dispose of other assets of such Fund to the extent necessary to obtain reimbursement or indemnification.
10.04
Miscellaneous.
(a)
Neither party to this Agreement shall be liable to the other party for consequential, special or punitive damages under any provision of this Agreement.
(b)
The indemnity provisions of this Article shall indefinitely survive the termination and/or assignment of this Agreement.
(c)
In order that the indemnification provisions contained in this Article X shall apply, it is understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee harmless, the indemnitor shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the indemnitee will use all reasonable care to notify the indemnitor promptly concerning any situation that presents or appears likely to present the probability of a claim for indemnification. The indemnitor shall have the option to defend the indemnitee against any claim that may be the subject of this indemnification. In the event that the indemnitor so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over complete defense of the claim, and the indemnitee shall in such situation initiate no further legal or other expenses for which it shall seek indemnification under this Article X. The indemnitee shall in no case confess any claim or make any compromise in any case in which the
20
indemnitor will be asked to indemnify the indemnitee except with the indemnitor’s prior written consent.
ARTICLE XI.
FORCE MAJEURE
Neither the Custodian nor the Trust shall be liable for any failure or delay in performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fires; floods; wars; civil or military disturbances; acts of terrorism; sabotage; strikes; epidemics; riots; power failures; computer failure and any such circumstances beyond its reasonable control as may cause interruption, loss or malfunction of utility, transportation, computer (hardware or software) or telephone communication service; accidents; labor disputes; acts of civil or military authority; governmental actions; or inability to obtain labor, material, equipment or transportation; provided, however, that in the event of a failure or delay, the Custodian (i) shall not discriminate against the Fund in favor of any other customer of the Custodian in making computer time and personnel available to input or process the transactions contemplated by this Agreement, and (ii) shall use its best efforts to ameliorate the effects of any such failure or delay.
ARTICLE XII.
PROPRIETARY AND CONFIDENTIAL INFORMATION
12.01
The Custodian agrees on behalf of itself and its directors, officers, and employees to treat confidentially and as proprietary information of the Trust, all records and other information relative to the Trust and prior, present, or potential shareholders of the Trust (and clients of said shareholders), and not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, except (i) after prior notification to and approval in writing by the Trust, which approval shall not be unreasonably withheld and may not be withheld where the Custodian may be exposed to civil or criminal contempt proceedings for failure to comply, (ii) when requested to divulge such information by duly constituted authorities although the Custodian will promptly report such disclosure to the Trust if disclosure is permitted by applicable law and regulation, or (iii) when so requested by the Trust. Records and other information which have become known to the public through no wrongful act of the Custodian or any of its employees, agents or representatives, and information that was already in the possession of the Custodian prior to receipt thereof from the Trust or its agent, shall not be subject to this paragraph.
12.02
Further, the Custodian will adhere to the privacy policies adopted by the Trust pursuant to Title V of the Gramm-Leach-Bliley Act, as may be modified from time to time. In this regard, the Custodian shall have in place and maintain physical, electronic and procedural safeguards reasonably designed to protect the security, confidentiality and integrity of, and to prevent unauthorized access to or use of, records and information relating to the Trust and its shareholders.
21
ARTICLE XIII.
EFFECTIVE PERIOD; TERMINATION
13.01
Effective Period
. This Agreement shall become effective as of the date first written above and will continue in effect for a period of two (2) years.
13.02
Termination
. This Agreement may be terminated by either party upon giving 90 days prior written notice to the other party or such shorter period as is mutually agreed upon by the parties. Notwithstanding the foregoing, this Agreement may be terminated by any party upon the breach of the other party of any material term of this Agreement if such breach is not cured within 15 days of notice of such breach to the breaching party. In addition, the Trust may, at any time, immediately terminate this Agreement in the event of the appointment of a conservator or receiver for the Custodian by regulatory authorities or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction.
13.03
Early Termination
. In the absence of any material breach of this Agreement, should the Trust elect to terminate this Agreement prior to the end of the initial two (2) year term, the trust agrees to pay the following fees:
a) All monthly fees through the life of the Agreement, including the repayment of any negotiated discounts;
b) All fees associated with converting services to a successor service provider;
c) All fees associated with any record retention and/or tax reporting obligations that may not be eliminated due to the conversion to a successor service provider;
All miscellaneous costs associated with a)-c) above
13.04
Appointment of Successor Custodian
. If a successor custodian shall have been appointed by the Board of Trustees, the Custodian shall, upon receipt of a notice of acceptance by the successor custodian, on such specified date of termination (i) deliver directly to the successor custodian all Securities (other than Securities held in a Book-Entry System or Securities Depository) and cash then owned by the Fund and held by the Custodian as custodian, and (ii) transfer any Securities held in a Book-Entry System or Securities Depository to an account of or for the benefit of the Fund at the successor custodian, provided that the Trust shall have paid to the Custodian all fees, expenses and other amounts to the payment or reimbursement of which it shall then be entitled. In addition, the Custodian shall, at the expense of the Trust, transfer to such successor all relevant books, records, correspondence, and other data established or maintained by the Custodian under this Agreement in a form reasonably acceptable to the Trust (if such form differs from the form in which the Custodian has maintained the same, the Trust shall pay any expenses associated with transferring the data to such form), and will cooperate in the transfer of such duties and responsibilities, including provision for assistance from the Custodian’s personnel in the establishment of books, records, and other data by such successor. Upon such delivery and transfer, the Custodian shall be relieved of all obligations under this Agreement.
22
13.05
Failure to Appoint Successor Custodian
. If a successor custodian is not designated by the Trust on or before the date of termination of this Agreement, then the Custodian shall have the right to deliver to a bank or trust company of its own selection, which bank or trust company (i) is a “bank” as defined in the 1940 Act, and (ii) has aggregate capital, surplus and undivided profits as shown on its most recent published report of not less than $25 million, all Securities, cash and other property held by Custodian under this Agreement and to transfer to an account of or for the Fund at such bank or trust company all Securities of the Fund held in a Book-Entry System or Securities Depository. Upon such delivery and transfer, such bank or trust company shall be the successor custodian under this Agreement and the Custodian shall be relieved of all obligations under this Agreement. In addition, under these circumstances, all books, records and other data of the Trust shall be returned to the Trust.
ARTICLE XIV.
CLASS ACTIONS
The Custodian shall use its best efforts to identify and file claims for the Fund(s) involving any class action litigation that impacts any security the Fund(s) may have held during the class period. The Trust agrees that the Custodian may file such claims on its behalf and understands that it may be waiving and/or releasing certain rights to make claims or otherwise pursue class action defendants who settle their claims. Further, the Trust acknowledges that there is no guarantee these claims will result in any payment or partial payment of potential class action proceeds and that the timing of such payment, if any, is uncertain.
However, the Trust may instruct the Custodian to distribute class action notices and other relevant documentation to the Fund(s) or its designee and, if it so elects, will relieve the Custodian from any and all liability and responsibility for filing class action claims on behalf of the Fund(s).
ARTICLE XV.
MISCELLANEOUS
15.01
Compliance with Laws
. The Trust has and retains primary responsibility for all compliance matters relating to the Fund, including but not limited to compliance with the 1940 Act, the Internal Revenue Code of 1986, the Sarbanes-Oxley Act of 2002, the USA Patriot Act of 2001 and the policies and limitations of the Fund relating to its portfolio investments as set forth in its Prospectus and statement of additional information. The Custodian’s services hereunder shall not relieve the Trust of its responsibilities for assuring such compliance or the Board of Trustee’s oversight responsibility with respect thereto.
15.02
Amendment
. This Agreement may not be amended or modified in any manner except by written agreement executed by the Custodian and the Trust, and authorized or approved by the Board of Trustees.
23
15.03
Assignment
. This Agreement shall extend to and be binding upon the parties hereto and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Trust without the written consent of the Custodian, or by the Custodian without the written consent of the Trust accompanied by the authorization or approval of the Board of Trustees.
15.04
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota, without regard to conflicts of law principles. To the extent that the applicable laws of the State of Minnesota, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the latter shall control, and nothing herein shall be construed in a manner inconsistent with the 1940 Act or any rule or order of the SEC thereunder.
15.05
No Agency Relationship
. Nothing herein contained shall be deemed to authorize or empower either party to act as agent for the other party to this Agreement, or to conduct business in the name, or for the account, of the other party to this Agreement.
15.06
Services Not Exclusive
. Nothing in this Agreement shall limit or restrict the Custodian from providing services to other parties that are similar or identical to some or all of the services provided hereunder.
15.07
Invalidity.
Any provision of this Agreement which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. In such case, the parties shall in good faith modify or substitute such provision consistent with the original intent of the parties.
15.08
Notices
. Any notice required or permitted to be given by either party to the other shall be in writing and shall be deemed to have been given on the date delivered personally or by courier service, or three days after sent by registered or certified mail, postage prepaid, return receipt requested, or on the date sent and confirmed received by facsimile transmission to the other party’s address set forth below:
All notices
to the Custodian shall be sent to:
U.S Bank, N.A.
1555 N. Rivercenter Dr., MK-WI-S302
Milwaukee, WI 53212
Attn: Tom Fuller
Phone: 414-905-6118
Fax: 866-350-5066
With a copy of notices related to Loans or Loan Documents, to
U.S. Bank National Association
24
One Federal Street, 3
rd
Floor
Boston, MA 02110
Ref: [ ]
Attn:
E-mail:
Facsimile No.:
and notice to the Trust shall be sent to:
Pacific Global ETF Trust
840 Newport Center Drive, Suite 700
Newport Beach, CA 92660
Attn: Mr. Josh Schwab, CFA, CPA, Pacific Global Asset Management, LLC
15.09
Multiple Originals
. This Agreement may be executed on two or more counterparts, each of which when so executed shall be deemed an original, but such counterparts shall together constitute but one and the same instrument.
15.10
No Waiver
. No failure by either party hereto to exercise, and no delay by such party in exercising, any right hereunder shall operate as a waiver thereof. The exercise by either party hereto of any right hereunder shall not preclude the exercise of any other right, and the remedies provided herein are cumulative and not exclusive of any remedies provided at law or in equity.
15.11
References to Custodian
. The Trust shall not circulate any printed matter which contains any reference to Custodian without the prior written approval of Custodian, excepting printed matter contained in the Prospectus or statement of additional information for the Fund and such other printed matter as merely identifies Custodian as custodian for the Fund. The Trust shall submit printed matter requiring approval to Custodian in draft form, allowing sufficient time for review by Custodian and its counsel prior to any deadline for printing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts as of the last date written below.
|
PACIFIC GLOBAL ETF TRUST
|
U.S. BANK NATIONAL ASSOCIATION
|
|
|
|
|
|
|
By:
|
|
|
By:
|
|
|
|
|
|
|
|
|
Name:
|
|
|
Name:
|
|
|
|
|
|
|
|
|
Title:
|
|
|
Title:
|
|
|
|
|
|
|
|
|
Date:
|
|
|
Date:
|
|
25
Schedule A to the Custody Agreement
List of Data Elements for Loan Trade Confirmation
Trade Date
Issuer Description
Investment Description
CUSIP/Investment ID
Maturity Date
Coupon Rate
Currency
Quantity
Price
Trade Fees
Accrued Interest
Broker
Comments
26
EXHIBIT A
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons authorized by the Trust to administer the Fund Custody Accounts.
|
Name
|
|
Telephone/Fax Number
|
|
Signature
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
EXHIBIT B
to the Custody Agreement
Separate Series of Pacific Global ETF Trust
Pacific Global US Equity Income ETF
28
EXHIBIT C
to the Custody Agreement
Base Fee for Domestic Custody Services
The following reflects the greater of the basis point fee or annual minimum(1) per fund for any fund where Pacific Global Advisors, LLC acts as Adviser to the fund in the Pacific Global ETF Trust
|
Annual Minimum per Fund(2)
|
|
Basis Points on Trust AUM(2)
|
|
All Funds
|
$1,000
|
|
Balance
|
0.25 bps
|
|
|
|
|
|
|
(1) If the bps fee for the funds in the trust exceeds sum of fund minimums, then bps fee applies for the whole and is allocated pro rata amongst funds based on AUM. If less than the minimum fund fee, then each fund pays the minimum amount.
Once a Fund is operational, should the service agreement be terminated without cause prior to the end of the initial two-year period, the balance of the minimum fees due to USBFS for the remainder of the service agreement’s initial term will become due and payable to USBFS.
In addition to the fees described above, additional fees may be charged to the extent that changes to applicable laws, rules or regulations require additional work or expenses related to services provided (e.g., compliance with new liquidity risk management and reporting requirements).
(2) Subject to annual CPI increase
— All Urban Consumers — U.S. City Average.
Fees are calculated pro rata and billed monthly
29
Domestic Custody Services in addition to the Base Fee
Portfolio Transaction Fees(2)
·
$ 1.00 — Book entry DTC transaction, Federal Reserve transaction, principal paydown
·
$ 7.00 — Repurchase agreement, reverse repurchase agreement, time deposit/CD or other non-depository transaction
·
$ 8.00 — Option/SWAPS/future contract written, exercised or expired
·
$15.00 — Mutual fund trade, Margin Variation Wire and outbound Fed wire
·
$50.00 — Physical security transaction
·
$ 5.00 — Check disbursement (waived if U.S. Bancorp is Administrator)
A transaction is a purchase/sale of a security, free receipt/free delivery, maturity, tender or exchange.
Securities Lending and Money Market Deposit Account (MMDA)
·
Coordinated by USBFS per Board of Trustee approval — Negotiable
Miscellaneous Expenses
All other miscellaneous fees and expenses, including but not limited to the following, will be separately billed as incurred: expenses incurred in the safekeeping, delivery and receipt of securities, shipping, transfer fees, deposit withdrawals at custodian (DWAC) fees, SWIFT charges, negative interest charges and extraordinary expenses based upon complexity.
Additional Services
·
Additional fees apply for global servicing. Fund of Fund expenses quoted separately.
·
$600 per custody sub — account per year (e.g., per sub —adviser, segregated account, etc.)
·
Class Action Services — $25 filing fee per class action per account, plus 2% of gross proceeds, up to a maximum per recovery not to exceed $2,000.
·
No charge for the initial conversion free receipt.
·
Overdrafts — charged to the account at prime interest rate plus 2%, unless a line of credit is in place
Fees are calculated pro rata and billed monthly
In addition to the fees described above, additional fees may be charged to the extent that changes to applicable laws, rules or regulations require additional work or expenses related to services provided (e.g., compliance with new liquidity risk management and reporting requirements).
(2) “Sponsor trades” are defined as any trades put through the Portfolio, on behalf of the Fund by any portfolio manager/sub advisor and their affiliates authorized by the BOT to act on behalf of the Fund, outside of the create/redeem process. Cash-in-Lieu proceeds received as part of the create/redeem process, and their related transactions are
not
considered to be “Sponsor trades.
30
Additional Global Sub-Custodial Services Annual Fee Schedule
Base Fee
A monthly base fee per fund will apply based on the number of foreign securities held. If no global assets are held within a given month, the monthly base charge will not apply for that month.
·
1 — 25 foreign securities — $500
·
25+ foreign securities — $750
·
Euroclear — Eurobonds only. Eurobonds are held in Euroclear at a standard rate, but other types of securities (including but not limited to equities, domestic market debt and mutual funds) will be subject to a surcharge. In addition, certain transactions that are delivered within Euroclear or from a Euroclear account to a third party depository or settlement system, will be subject to a surcharge.
·
For all other markets specified above, surcharges may apply if a security is held outside of the local market.
Plus:
Global Custody Transaction Fees(1)
Global Custody transaction fees associate with Sponsor Trades(2). (See schedule below)
·
A transaction is defined as any purchase/sale, free receipt / free delivery, maturity, tender or exchange of a security.
Global Safekeeping and Transaction Fees
(See schedule below)
Tax Reclamation Services
Miscellaneous Expenses
·
Tax reclaims that have been outstanding for more than 6 (six) months with the client will be charged $50 per claim.
·
Charges incurred by U.S. Bank, N.A. directly or through sub-custodians for account opening fees, local taxes, stamp duties or other local duties and assessments, stock exchange fees, foreign exchange transactions, postage and insurance for shipping, facsimile reporting, extraordinary telecommunications fees, proxy services and other shareholder communications, recurring administration fees, negative interest charges, overdraft charges or other expenses which are unique to a country in which the client or its clients is investing will be passed along as incurred.
·
A surcharge may be added to certain miscellaneous expenses listed herein to cover handling, servicing and other administrative costs associated with the activities giving rise to such expenses. Also, certain expenses are charged at a predetermined flat rate.
·
SWIFT reporting and message fees.
Fees are calculated pro rata and billed monthly
(2)”Sponsor trades” are defined as any trades put through the Portfolio, on behalf of the Fund by any portfolio manager/sub advisor and their affiliates authorized by the BOT to act on behalf of the Fund, outside of the create/redeem process. Cash-in-Lieu proceeds received as part of the create/redeem process, and their related transactions are
not
considered to be “Sponsor trades.”
31
EXHIBIT D
SHAREHOLDER COMMUNICATIONS ACT AUTHORIZATION
PACIFIC GLOBAL ETF TRUST
The Shareholder Communications Act of 1985 requires banks and trust companies to make an effort to permit direct communication between a company which issues securities and the shareholder who votes those securities.
Unless you specifically require us to NOT release your name and address to requesting companies, we are required by law to disclose your name and address.
Your “yes” or “no” to disclosure will apply to all securities U.S. Bank holds for you now and in the future, unless you change your mind and notify us in writing.
|
o
YES
|
|
U.S. Bank is authorized to provide the Trust’s name, address and security position to requesting companies whose stock is owned by the Trust.
|
|
|
|
|
|
o
NO
|
|
U.S. Bank is NOT authorized to provide the Trust’s name, address and security position to requesting companies whose stock is owned by the Trust.
|
PACIFIC GLOBAL ETF TRUST
32
Exhibit 99.(g)(2)
FORM OF FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT
is made and entered into as of the last day written in the signature block below, by and between
PACIFIC GLOBAL ETF TRUST
, a Delaware statutory trust (the “Trust”) and
U.S. BANCORP FUND SERVICES, LLC d/b/a U.S. BANK GLOBAL FUND SERVICES
, a Wisconsin limited liability company (“Fund Services”).
WHEREAS, the Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as an open-end management investment company; and is authorized to issue shares of beneficial interest in separate series, with each such series representing interests in a separate portfolio of securities and other assets;
WHEREAS, Fund Services is, among other things, in the business of providing fund accounting services to investment companies; and
WHEREAS, the Trust desires to retain Fund Services to provide accounting services to each series of the Trust listed on
Exhibit A
attached hereto (as amended from time to time) (each, a “Fund” and collectively, the “Funds”) the services described herein, all as more fully set forth below, and Fund Services desires to provide such services to the Trust and the Funds;
NOW, THEREFORE, in consideration of the mutual promises and mutual covenants herein contained, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
1. Appointment of Fund Services as Fund Accountant
The Trust hereby appoints Fund Services as fund accountant of the Trust for the term of this Agreement to perform the services and duties described herein. Fund Services hereby accepts such appointment and agrees to perform the services and duties set forth in this Agreement. The services and duties of Fund Services shall be confined to those matters expressly set forth herein, and no implied duties are assumed by or may be asserted against Fund Services hereunder.
2. Services and Duties of Fund Services
Fund Services shall provide the following accounting services to the Trust and each Fund:
A.
Portfolio Accounting Services:
1
(1)
Maintain portfolio records on a trade date+1 basis using security trade information communicated from the Fund’s investment adviser.
(2)
For each valuation date, obtain prices from pricing sources approved by the board of trustees of the Trust (the “Board of Trustees”) and apply those prices to the portfolio positions. For those securities where market quotations are not readily available, the Board of Trustees shall approve, in good faith, procedures for determining the fair value for such securities.
(3)
Identify interest and dividend accrual balances as of each valuation date and calculate gross earnings on investments for each accounting period.
(4)
Determine gain/loss on security sales and identify them as short-term or long-term; account for periodic distributions of gains or losses to shareholders and maintain undistributed gain or loss balances as of each valuation date.
(5)
On a daily basis, reconcile cash of the Fund with the Fund’s custodian.
(6)
Transmit a copy of the portfolio valuation to the Fund’s investment adviser daily.
(7)
Review the impact of current day’s activity on a per share basis, and review changes in market value.
B.
Expense Accrual and Payment Services:
(1)
For each valuation date, calculate the expense accrual amounts as directed by the Trust as to methodology, rate or dollar amount.
(2)
Process and record payments for Fund expenses upon receipt of written authorization from the Trust.
(3)
Account for Fund expenditures and maintain expense accrual balances at the level of accounting detail, as agreed upon by Fund Services and the Trust.
(4)
Provide expense accrual and payment reporting.
2
C.
Fund Valuation and Financial Reporting Services:
(1)
Account for Fund share purchases, sales, exchanges, transfers, dividend reinvestments, and other Fund share activity as reported by the Fund’s transfer agent on a timely basis.
(2)
Determine net investment income (earnings) for the Fund as of each valuation date. Account for periodic distributions of earnings to shareholders and maintain undistributed net investment income balances as of each valuation date.
(3)
Maintain a general ledger and other accounts, books, and financial records for the Fund in the form as agreed upon between the parties.
(4)
Determine the net asset value of the Fund according to the accounting policies and procedures set forth in the Fund’s current prospectus.
(5)
Calculate per share net asset value, per share net earnings, and other per share amounts reflective of Fund operations at such time as required by the nature and characteristics of the Fund.
(6)
Communicate to the Trust, at an agreed upon time, the per share net asset value for each valuation date.
(7)
Prepare monthly reports that document the adequacy of accounting detail to support month-end ledger balances.
(8)
Prepare monthly security transactions listings.
D.
Tax Accounting Services:
(1)
Maintain accounting records for the investment portfolio of the Fund to support the tax reporting required for “regulated investment companies” under the Internal Revenue Code of 1986, as amended (the “Code”).
(2)
Maintain tax lot detail for the Fund’s investment portfolio.
(3)
Calculate taxable gain/loss on security sales using the tax lot relief method designated by the Trust.
3
(4)
Provide the necessary financial information to calculate the taxable components of income and capital gains distributions to support tax reporting to the shareholders.
E.
Compliance Control Services:
(1)
Support reporting to regulatory bodies and support financial statement preparation by making the Fund’s accounting records available to the Trust, the Securities and Exchange Commission (the “SEC”), and the independent accountants.
(2)
Maintain accounting records according to the 1940 Act and regulations provided thereunder.
(3)
Perform its duties hereunder in compliance with all applicable laws and regulations and provide any sub-certifications reasonably requested by the Trust in connection with any certification required of the Trust pursuant to the Sarbanes-Oxley Act of 2002 (the “SOX Act”) or any rules or regulations promulgated by the SEC thereunder, provided the same shall not be deemed to change Fund Services’ standard of care as set forth herein.
(4)
Cooperate with the Trust’s independent accountants and take all reasonable action in the performance of its obligations under this Agreement to ensure that the necessary information is made available to such accountants for the expression of their opinion on the Fund’s financial statements without any qualification as to the scope of their examination.
3.
License of Data; Warranty; Termination of Rights
A.
The valuation information and evaluations being provided to the Trust by Fund Services pursuant hereto (collectively, the “Data”) are being licensed, not sold, to the Trust. For the avoidance of doubt, Data does not include information constituting any Fund’s books and records required by the 1940 Act and rules thereunder maintained by Fund Services on behalf of the Trust or provided by Fund Services to the Trust. The Trust has a limited license to use the Data only for purposes necessary to valuing the Trust’s assets and reporting to regulatory bodies (the “License”). The Trust does not have any license nor right to use the Data for purposes beyond the intentions of this Agreement including, but not limited to, resale to other users or use to create any type of historical database. The License is non-transferable and not sub-licensable. The
4
Trust’s right to use the Data cannot be passed to or shared with any other entity.
The Trust acknowledges the proprietary rights that Fund Services and its suppliers have in the Data.
B.
THE TRUST HEREBY ACCEPTS THE DATA AS IS, WHERE IS, WITH NO WARRANTIES, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY OR FITNESS FOR ANY PURPOSE OR ANY OTHER MATTER.
C.
Fund Services may stop supplying some or all Data to the Trust if Fund Services’ suppliers terminate any agreement to provide Data to Fund Services. Also, Fund Services may stop supplying some or all Data to the Trust if Fund Services reasonably believes that the Trust is using the Data in violation of the License, or breaching its duties of confidentiality provided for hereunder, or if any of Fund Services’ suppliers demand that the Data be withheld from the Trust. Fund Services will provide notice to the Trust prior to any termination of provision of Data as soon as reasonably possible.
4.
Pricing of Securities
A.
For each valuation date, Fund Services shall obtain prices from a pricing source recommended by Fund Services and approved by the Board of Trustees and apply those prices to the portfolio positions of the Fund. For those securities where market quotations are not readily available, the Board of Trustees shall approve, in good faith, procedures for determining the fair value for such securities.
If the Trust desires to provide a price that varies from the price provided by the pricing source, the Trust shall promptly notify and supply Fund Services with the price of any such security on each valuation date. All pricing changes made by the Trust will be in writing and must specifically identify the securities to be changed by CUSIP, name of security, new price or rate to be applied, and, if applicable, the time period for which the new price(s) is/are effective.
B.
In the event that the Trust at any time receives Data containing evaluations, rather than market quotations, for certain securities or certain other data related to such securities, the following provisions will apply: (i) evaluated securities are typically complicated financial instruments. There are many methodologies (including computer-based analytical modeling and individual
5
security evaluations) available to generate approximations of the market value of such securities, and there is significant professional disagreement about which method is best. No evaluation method, including those used by Fund Services and its suppliers of pricing data, may consistently generate approximations that correspond to actual “traded” prices of the securities; (ii) methodologies used to provide the pricing portion of certain Data may rely on evaluations; however, the Trust acknowledges that there may be errors or defects in the software, databases, or methodologies generating the evaluations that may cause resultant evaluations to be inappropriate for use in certain applications; and (iii) the Trust assumes all responsibility for edit checking, external verification of evaluations, and ultimately the appropriateness of using Data containing evaluations, regardless of any efforts made by Fund Services and its suppliers in this respect.
5.
Changes in Accounting Procedures
Any resolution passed by the Board of Trustees that affects accounting practices and procedures under this Agreement shall be effective upon written receipt of notice and acceptance by Fund Services.
6.
Changes in Equipment, Systems, Etc.
Fund Services reserves the right to make changes from time to time, as it deems advisable, relating to its systems, programs, rules, operating schedules and equipment, so long as such changes do not adversely affect the services provided to the Trust under this Agreement.
7.
Compensation
Fund Services shall be compensated for providing the services set forth in this Agreement in accordance with the fee schedule set forth on
Exhibit B
attached hereto (as amended from time to time). Fund Services shall also be reimbursed for such miscellaneous expenses (e.g., telecommunication charges, postage and delivery charges, and reproduction charges) as are reasonably incurred by Fund Services in performing its duties hereunder. The Trust shall pay all such fees and reimbursable expenses within thirty (30) calendar days following receipt of the monthly billing notice, except for any fee or expense subject to a good faith dispute. The Trust shall notify Fund Services in writing within thirty (30) calendar days following receipt of each invoice if the Trust is disputing any amounts in good faith. The Trust shall pay such disputed amounts within ten (10) calendar days of the day on which the parties agree to the amount to be paid. With the exception of any fee or expense the Trust is disputing in good faith as set forth above, unpaid invoices shall accrue a finance charge of 1½% per month after the due date. Notwithstanding anything to the contrary,
6
amounts owed by the Trust to Fund Services shall only be paid out of the assets and property of the particular Fund involved.
8.
Representations and Warranties
A.
The Trust hereby represents and warrants to Fund Services, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
(1)
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
(2)
This Agreement has been duly authorized, executed and delivered by the Trust in accordance with all requisite action and constitutes a valid and legally binding obligation of the Trust, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties; and
(3)
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.
B.
Fund Services hereby represents and warrants to the Trust, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
(1)
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
(2)
This Agreement has been duly authorized, executed and delivered by Fund Services in accordance with all requisite action and constitutes a valid and legally binding obligation of Fund Services, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws
7
of general application affecting the rights and remedies of creditors and secured parties; and
(3)
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.
9.
Standard of Care; Indemnification; Limitation of Liability
A.
Fund Services shall exercise reasonable care in the performance of its duties under this Agreement. Neither Fund Services nor its suppliers shall be liable for any error of judgment or mistake of law or for any loss suffered by the Trust or any third party in connection with its duties under this Agreement, including losses resulting from mechanical breakdowns or the failure of communication or power supplies beyond Fund Services’ control, except a loss arising out of or relating to Fund Services’ refusal or failure to comply with the terms of this Agreement or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement. Notwithstanding any other provision of this Agreement, if Fund Services has exercised reasonable care in the performance of its duties under this Agreement, the Trust shall indemnify and hold harmless Fund Services and its suppliers from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that Fund Services or its suppliers may sustain or incur or that may be asserted against Fund Services or its suppliers by any person arising out of or related to (i) any action taken or omitted to be taken by it in performing the services hereunder (ii) in accordance with the foregoing standards, or (iii) in reliance upon any written or oral instruction provided to Fund Services by any duly authorized officer of the Trust, as approved by the Board of Trustees of the Trust, or (iv) the Data, or any information, service, report, analysis or publication derived therefrom, except for any and all claims, demands, losses, expenses, and liabilities arising out of or relating to Fund Services’ refusal or failure to comply with the terms of this Agreement or from its bad faith, negligence or willful misconduct in the performance of its duties under this Agreement. This indemnity shall be a continuing obligation of the Trust, its successors and assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the term “Fund
8
Services” shall include Fund Services’ directors, officers and employees.
The Trust acknowledges that the Data are intended for use as an aid to institutional investors, registered brokers or professionals of similar sophistication in making informed judgments concerning securities. The Trust accepts responsibility for, and acknowledges it exercises its own independent judgment in, its selection of the Data, its selection of the use or intended use of such, and any results obtained. Nothing contained herein shall be deemed to be a waiver of any rights existing under applicable law for the protection of investors.
Fund Services shall indemnify and hold the Trust harmless from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that the Trust may sustain or incur or that may be asserted against the Trust by any person arising out of any action taken or omitted to be taken by Fund Services as a result of Fund Services’ refusal or failure to comply with the terms of this Agreement, or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement. This indemnity shall be a continuing obligation of Fund Services, its successors and assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the term “Trust” shall include the Trust’s trustees, officers and employees.
In the event of a mechanical breakdown or failure of communication or power supplies beyond its control, Fund Services shall take all reasonable steps to minimize service interruptions for any period that such interruption continues. Fund Services will make every reasonable effort to restore any lost or damaged data and correct any errors resulting from such a breakdown at the expense of Fund Services. Fund Services agrees that it shall, at all times, have reasonable business continuity and disaster recovery contingency plans with appropriate parties, making reasonable provision for emergency use of electrical data processing equipment to the extent appropriate equipment is available. Representatives of the Trust shall be entitled to inspect Fund Services’ premises and operating capabilities at any time during regular business hours of Fund Services, upon reasonable notice to Fund Services. Moreover, Fund Services shall provide the Trust, at such times as the Trust may reasonably require, copies of reports rendered by independent accountants on the internal controls and procedures of Fund Services relating to the services provided by Fund Services under this Agreement.
9
Notwithstanding the above, Fund Services reserves the right to reprocess and correct administrative errors at its own expense.
In no case shall either party be liable to the other for (i) any special, indirect or consequential damages, loss of profits or goodwill (even if advised of the possibility of such); (ii) any delay by reason of circumstances beyond its control, including acts of civil or military authority, national emergencies, labor difficulties, fire, mechanical breakdown, flood or catastrophe, acts of God, insurrection, war, riots, or failure beyond its control of transportation or power supply; or (iii) any claim that arose more than one year prior to the institution of suit therefor.
B.
In order that the indemnification provisions contained in this section shall apply, it is understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee harmless, the indemnitor shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the indemnitee will use all reasonable care to notify the indemnitor promptly concerning any situation that presents or appears likely to present the probability of a claim for indemnification. The indemnitor shall have the option to defend the indemnitee against any claim that may be the subject of this indemnification. In the event that the indemnitor so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over complete defense of the claim, and the indemnitee shall in such situation initiate no further legal or other expenses for which it shall seek indemnification under this section. The indemnitee shall in no case confess any claim or make any compromise in any case in which the indemnitor will be asked to indemnify the indemnitee except with the indemnitor’s prior written consent.
C.
The indemnity and defense provisions set forth in this Section 9 shall indefinitely survive the termination and/or assignment of this Agreement.
D.
If Fund Services is acting in another capacity for the Trust pursuant to a separate agreement, nothing herein shall be deemed to relieve Fund Services of any of its obligations in such other capacity.
10
10.
Notification of Error
The Trust will notify Fund Services of any discrepancy between Fund Services and the Trust, including, but not limited to, failing to account for a security position in the Fund’s portfolio, upon the later to occur of: (i) three business days after receipt of any reports rendered by Fund Services to the Trust; (ii) three business days after discovery of any error or omission not covered in the balancing or control procedure; or (iii) three business days after receiving notice from any shareholder regarding any such discrepancy.
11.
Data Necessary to Perform Services
The Trust or its agent shall furnish to Fund Services the data necessary to perform the services described herein at such times and in such form as mutually agreed upon.
12.
Proprietary and Confidential Information
A.
Fund Services agrees on behalf of itself and its directors, officers, and employees to treat confidentially and as proprietary information of the Trust, all records and other information relative to the Trust and prior, present, or potential shareholders of the Trust (and clients of said shareholders), and not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, except (i) after prior notification to and approval in writing by the Trust, which approval shall not be unreasonably withheld and may not be withheld where Fund Services may be exposed to civil or criminal contempt proceedings for failure to comply, (ii) when requested to divulge such information by duly constituted authorities, or (iii) when so requested by the Trust. Records and other information which have become known to the public through no wrongful act of Fund Services or any of its employees, agents or representatives, and information that was already in the possession of Fund Services prior to receipt thereof from the Trust or its agent, shall not be subject to this paragraph.
Further, Fund Services will adhere to the privacy policies adopted by the Trust pursuant to Title V of the Gramm-Leach-Bliley Act, as may be modified from time to time. In this regard, Fund Services shall have in place and maintain physical, electronic and procedural safeguards reasonably designed to protect the security, confidentiality and integrity of, and to prevent unauthorized access to or use of, records and information relating to the Trust and its shareholders.
11
B.
The Trust, on behalf of itself and its trustees, officers, and employees, will maintain the confidential and proprietary nature of the Data and agrees to protect it using the same efforts, but in no case less than reasonable efforts, that it uses to protect its own proprietary and confidential information.
13.
Records
Fund Services shall keep records relating to the services to be performed hereunder in the form and manner, and for such period, as it may deem advisable and is agreeable to the Trust, but not inconsistent with the rules and regulations of appropriate government authorities, in particular, Section 31 of the 1940 Act and the rules thereunder. Fund Services agrees that all such records prepared or maintained by Fund Services relating to the services to be performed by Fund Services hereunder are the property of the Trust and will be preserved, maintained, and made available in accordance with such applicable sections and rules of the 1940 Act and will be promptly surrendered to the Trust or its designee on and in accordance with its request.
14.
Compliance with Laws
The Trust has and retains primary responsibility for all compliance matters relating to the Fund, including but not limited to compliance with the 1940 Act, the Code, the SOX Act, the USA Patriot Act of 2001 and the policies and limitations of the Fund relating to its portfolio investments as set forth in its current prospectus and statement of additional information. Fund Services hereunder shall not relieve the Trust of its responsibilities for assuring such compliance or the Board of Trustee’s oversight responsibility with respect thereto.
15.
Term of Agreement; Amendment
This Agreement shall become effective as of the date first written above and will continue in effect for a period of two (2) years. This Agreement may be terminated by either party upon giving 90 days prior written notice to the other party or such shorter period as is mutually agreed upon by the parties. Subsequent to the end of the two (2) year period, this Agreement continues until one party gives 90 days prior written notice to the other party or such shorter notice period as is mutually agreed upon by the parties. Notwithstanding the foregoing, this Agreement may be terminated by any party upon the breach of the other party of any material term of this Agreement if such breach is not cured within 15 days of notice of such breach to the breaching party. This Agreement may not be amended or modified in any manner except by written agreement executed by Fund Services and the Trust, and authorized or approved by the Board of Trustees.
12
16.
Early Termination
In the absence of any material breach of this Agreement, should the Trust elect to terminate this Agreement prior to the end of the two year term, the Trust agrees to pay the following fees:
a.
all monthly fees through the life of the Agreement, including the repayment of any negotiated discounts;
b.
all fees associated with converting services to successor service provider;
c.
all fees associated with any record retention and/or tax reporting obligations that may not be eliminated due to the conversion to a successor service provider;
d.
all miscellaneous costs associated with a.-c. above
17.
Duties in the Event of Termination
In the event that, in connection with termination, a successor to any of Fund Services’ duties or responsibilities hereunder is designated by the Trust by written notice to Fund Services, Fund Services will promptly, upon such termination and at the expense of the Trust, transfer to such successor all relevant books, records, correspondence and other data established or maintained by Fund Services under this Agreement in a form reasonably acceptable to the Trust (if such form differs from the form in which Fund Services has maintained the same, the Trust shall pay any expenses associated with transferring the data to such form), and will cooperate in the transfer of such duties and responsibilities, including provision for assistance from Fund Services’ personnel in the establishment of books, records and other data by such successor. If no such successor is designated, then such books, records and other data shall be returned to the Trust.
18.
Assignment
This Agreement shall extend to and be binding upon the parties hereto and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Trust without the written consent of Fund Services, or by Fund Services without the written consent of the Trust accompanied by the authorization or approval of the Trust’s Board of Trustees.
19.
Governing Law
This Agreement shall be governed and construed in accordance with the laws of the State of Wisconsin, without regard to conflicts of law principles. To the extent that the applicable laws of the State of
13
Wisconsin, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the latter shall control, and nothing herein shall be construed in a manner inconsistent with the 1940 Act or any rule or order of the SEC thereunder.
20.
No Agency Relationship
Nothing herein contained shall be deemed to authorize or empower either party to act as agent for the other party to this Agreement, or to conduct business in the name, or for the account, of the other party to this Agreement.
21.
Services Not Exclusive
Nothing in this Agreement shall limit or restrict Fund Services from providing services to other parties that are similar or identical to some or all of the services provided hereunder.
22.
Invalidity
Any provision of this Agreement which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. In such case, the parties shall in good faith modify or substitute such provision consistent with the original intent of the parties.
23.
Notices
Any notice required or permitted to be given by either party to the other shall be in writing and shall be deemed to have been given on the date delivered personally or by courier service, or three days after sent by registered or certified mail, postage prepaid, return receipt requested, or on the date sent and confirmed received by facsimile transmission to the other party’s address set forth below:
Notice to Fund Services shall be sent to:
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
Attn: President
14
and notice to the Trust shall be sent to:
Pacific Global ETF Trust
840 Newport Center Drive, Suite 700
Newport Beach, CA 92660
Attn: Mr. Josh Schwab, CFA, CPA, Pacific Global Asset Management, LLC
24.
Multiple Originals
This Agreement may be executed on two or more counterparts, each of which when so executed shall be deemed to be an original, but such counterparts shall together constitute but one and the same instrument.
[SIGNATURES ON THE FOLLOWING PAGE]
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts as of the date last written below.
|
PACIFIC GLOBAL ETF TRUST
|
|
U.S. BANCORP FUND SERVICES, LLC
|
|
|
|
|
|
By:
|
|
|
By:
|
|
|
|
|
|
|
|
|
Name:
|
|
|
Name:
|
|
|
|
|
|
|
|
|
Title:
|
|
|
Title:
|
|
|
|
|
|
|
|
|
Date:
|
|
|
Date:
|
|
16
Exhibit A to the Fund Accounting Servicing Agreement
Separate Series of Pacific Global ETF Trust
Pacific Global US Equity Income ETF
17
Exhibit B to the Fund Accounting Servicing Agreement
Base Fee for Accounting, Administration, Transfer Agent & Account Services at December 2018
The following reflects the greater of the basis point fee or annual minimum(1) per fund for any fund where Pacific Global Advisors, LLC acts as Adviser to the fund in the Pacific Global ETF Trust
|
Annual Minimum per Fund(2)
|
|
Basis Points on Trust AUM(2)
|
|
Funds 1-5
|
$35,000
|
|
First $500m
|
3.75 bps
|
|
Funds 6-10
|
$25,000
|
|
Next $3.5b
|
3.50 bps
|
|
Funds 11+
|
$15,000
|
|
Next $3.5b
|
3.00 bps
|
|
|
|
|
Balance
|
2.50 bps
|
(1) If the bps fee for the funds in the trust exceeds sum of fund minimums, then bps fee applies for the whole and is allocated pro rata amongst funds based on AUM. If less than the minimum fund fee, then each fund pays the minimum amount.
Once a Fund is operational, should the service agreement be terminated without cause prior to the end of the initial two-year period, the balance of the minimum fees due to USBFS for the remainder of the service agreement’s initial term will become due and payable to USBFS.
In addition to the fees described above, additional fees may be charged to the extent that changes to applicable laws, rules or regulations require additional work or expenses related to services provided (e.g., compliance with new liquidity risk management and reporting requirements).
(2) Subject to annual CPI increase
— All Urban Consumers — U.S. City Average.
Fees are calculated pro rata and billed monthly
18
Accounting, Administration, Transfer Agent & Account Services Fee Schedule at December 2018 (in addition to the Base Fee)
Pricing Services
For daily pricing of each securities (estimated 252 pricing days annually)
·
$0.08 — Domestic Equities, Options, ADRs, Foreign Equities, Futures, Forwards, Currency Rates, Mutual Funds, ETFs
·
$0.50 — Domestic Corporates, Domestic Convertibles, Domestic Governments, Domestic Agencies, Mortgage Backed, Municipal Bonds
·
$0.80 — CMOs, Money Market Instruments, Foreign Corporates, Foreign Convertibles, Foreign Governments, Foreign Agencies, Asset Backed, High Yield
·
$0.90 — Interest Rate Swaps, Foreign Currency Swaps, Total Return Swaps, Total Return Bullet Swaps
·
$1.00 — Bank Loans
·
$1.50 — Swaptions
·
$1.50 — Intraday money market funds pricing, up to 3 times per day
·
$3.00 — Credit Default Swaps
·
$500 per Month Manual Security Pricing (>25per day)
NOTE: Prices are based on using U.S. Bancorp primary pricing service which may vary by security type and are subject to change. Use of alternative and/or additional sources may result in additional fees. Pricing vendors may designate certain securities as hard to value or as a non-standard security type, such as CLOs and CDOs, which may result in additional fees. All schedules subject to change depending upon the use of unique security type requiring special pricing or accounting arrangements.
Corporate Action Services
Fee for IDC data used to monitor corporate actions
·
$2.00 per Foreign Equity Security per Month
·
$1.00 per Domestic Equity Security per Month
·
$2.00 per CMOs, Asset Backed, Mortgage Backed Security per Month
Third Party Administrative Data Charges (descriptive data for analytics, reporting and compliance)
·
$1 per security per month for fund administrative
Chief Compliance Officer Support Fee
·
CCO Support annual fee per trust; $3,000 per USBFS service selected (administration, accounting, transfer agent, distributor, custodian)
Chief Compliance Officer Support Fee includes the following services
:
·
Access to all USBFS business line materials via the CCO Portal including business line Critical Procedures, Compliance Controls, Testing of Controls, Annual USBFS CCO Review, SSAE 16 audits of business lines
·
Assist the Fund CCO with quarterly 38a-1 certifications including a review of any changes to critical policies, procedures and controls and compliance events as required under Rule 38a-1 of the Investment Company Act
·
Testing of procedures and controls across all business lines with access to business line managers and subject matter experts
·
Quarterly CCO teleconferences and “Focus Calls” specific to current topics such as cybersecurity
·
CCO forums held periodically throughout the year in major cities
·
Annual client conference which includes CCO roundtable discussions
·
SEC exam support
·
Other items, including sharing of industry best practices across many areas
NOTE: the CCO Support team does NOT serve as the Fund CCO
In addition to the fees described above, additional fees may be charged to the extent that changes to applicable laws, rules or regulations require additional work or expenses related to services provided (e.g., compliance with new liquidity risk management and reporting requirements).
Fees are calculated pro rata and billed monthly
19
Fee Schedule for Supplemental Services for Fund Accounting, Fund Administration & Portfolio Compliance (provided by USBFS upon client need and/ or request) at December 2018
SEC Modernization Requirements
·
Form N-PORT — $12,000 per year, per Fund
·
Form N-CEN — $250 per year, per Fund
Daily Compliance Services
·
Base fee — $20,000 per fund per year
·
Setup — $2,500 per fund group
Section 18 Daily Compliance Testing (for derivatives and leverage)
·
$1,500 set up fee per fund complex
·
$500 per fund per month
Controlled Foreign Corporation (CFC)
·
USBFS Fee Schedule plus $15,000
C- Corp Administrative Services
·
1940 Act C-Corp — USBFS Fee Schedule plus $15,000
·
1933 Act C-Corp — USBFS Fee Schedule plus $25,000
Ongoing Annual Legal Administration Services
Add the following for legal administration services in support of external legal counsel, including annual registration statement update and drafting of supplements
·
$15,000 first fund
·
$5,000 each additional fund up to 5 funds
·
Fees will be negotiated for fund 6+
Section 15(c) Reporting
·
$2,000 per fund per standard reporting package*
·
Additional 15c reporting is subject to additional charges
*Standard reporting packages for annual 15(c) meeting
·
Expense reporting package: 2 peer comparison reports (adviser fee) and (net expense ratio w classes on one report) OR Full 15(c) report
·
Performance reporting package: Peer Comparison Report
·
Standard data source — Morningstar; additional charges will apply for other data services
Miscellaneous Expenses
All other miscellaneous fees and expenses, including but not limited to the following, will be separately billed as incurred
: Portfolio Composition File (PCF) management services, SWIFT processing, customized reporting, third-party data provider costs (including GICS, MSCI, Lipper, etc.), postage, stationary, programming, special reports, proxies, insurance, EDGAR/XBRL filing, retention of records, federal and state regulatory filing fees, expenses related to and including travel to and from Board of Trustee meetings, third party auditing and legal expenses, wash sales reporting (GainsKeeper), tax e-filing, PFIC monitoring, conversion expenses (if necessary), and travel related costs.
Fees are calculated pro rata and billed monthly
20
Exhibit 99.(g)(3)
FORM OF FUND ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT
is made and entered into as of the last day written in the signature block below, by and between
PACIFIC GLOBAL ETF TRUST
, a Delaware statutory trust (the “Trust”) and
U.S. BANCORP FUND SERVICES, LLC d/b/a U.S. BANK GLOBAL FUND SERVICES
, a Wisconsin limited liability company (“Fund Services”).
WHEREAS, the Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company; and is authorized to issue shares of beneficial interest in separate series, with each such series representing interests in a separate portfolio of securities and other assets;
WHEREAS, the Trust desires to retain Fund Services to provide fund administration services to each series of the Trust listed on
Exhibit A
attached hereto (as amended from time to time) (each, a “Fund” and collectively the “Funds”).
NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
1.
Appointment of Fund Services as Fund Administrator
The Trust hereby appoints Fund Services as fund administrator for the term of this Agreement to perform the services and duties described herein. Fund Services hereby accepts such appointment and agrees to perform the services and duties set forth in this Agreement. The services and duties of Fund Services shall be confined to those matters expressly set forth herein, and no implied duties are assumed by or may be asserted against Fund Services hereunder.
2.
Services and Duties of Fund Services
Fund Services shall provide the following administration services to a Fund:
A.
General Fund Management:
(1)
Act as liaison among Fund service providers, including but not exclusive to Adviser, Sub-Adviser, authorized participants, external legal counsel, accounting and audit firms and external compliance consultants.
(2)
Supply:
a.
Office facilities (which may be in a Fund Services office or in an affiliate’s office).
b.
Non-investment-related statistical and research data as requested.
(3)
Coordinate the Trust’s board of trustees’ (the “Board of Trustees” or the “Trustees”) communications, such as:
a.
Prepare meeting agendas and resolutions, with the assistance of Fund counsel and Adviser in-house counsel.
1
b.
Prepare reports for the Board of Trustees based on financial and administrative data.
c.
Assist with the selection of the independent auditor.
d.
Secure and monitor fidelity bond and director and officer liability coverage, and make the necessary Securities and Exchange Commission (the “SEC”) filings relating thereto.
e.
Prepare minutes of meetings of the Board of Trustees and Fund shareholders.
f.
Recommend dividend declarations to the Board of Trustees and prepare and distribute to appropriate parties notices announcing declaration of dividends and other distributions to shareholders.
g.
Attend Board of Trustees meetings and present materials for Trustees’ review at such meetings.
(4)
Audits:
a.
For the annual Fund audit, prepare appropriate schedules and materials. Provide requested information to the independent auditors, and facilitate the audit process.
b.
For SEC, FINRA or other regulatory audits, provide requested information to the SEC or other regulatory agencies and facilitate the audit process.
c.
For all audits, provide office facilities, as needed.
(5)
Assist with overall operations of the Fund.
(6)
Pay Fund expenses upon written authorization from the Trust.
(7)
Keep the Trust’s governing documents, including its charter, bylaws and minute books, but only to the extent such documents are provided to Fund Services by the Trust or its representatives for safe keeping.
B.
Compliance:
(1)
Regulatory Compliance:
a.
Monitor compliance with the 1940 Act requirements, including:
(i)
Asset and diversification tests.
(ii)
Total return and SEC yield calculations.
(iii)
Maintenance of books and records as required by SEC Rules under the 1940 Act (
e.g.
, Rule 31a-3).
(iv)
Code of ethics requirements under Rule 17j-1 for the disinterested Trustees.
b.
Monitor Fund’s compliance with the policies and investment limitations as set forth in its prospectus (the “Prospectus”) and statement of additional information (the “SAI”).
c.
Perform its duties hereunder in compliance with all applicable laws and regulations and provide any sub-certifications reasonably requested by the Trust in connection with (i) any certification required
2
of the Trust pursuant to the Sarbanes-Oxley Act of 2002 (the “SOX Act”) or any rules or regulations promulgated by the SEC thereunder, and (ii) the operation of Fund Services’ compliance program as it relates to the Trust, provided the same shall not be deemed to change Fund Services’ standard of care as set forth herein.
d.
Monitor applicable regulatory and operational service issues, including exchange listing requirements, and update Board of Trustees periodically.
e.
Monitor compliance with regulatory exemptive relief (as applicable) for ETFs.
(2)
SEC Registration and Reporting:
a.
Assist Fund counsel in annual update of the Registration Statement.
b.
Prepare and file annual and semiannual shareholder reports, Form N-CEN, Form N-CSR, Form N-Q filings and Rule 24f-2 notices. As requested by the Trust, prepare and file Form N-PX filings.
c.
Coordinate the printing, filing and mailing of Prospectuses and shareholder reports, and amendments and supplements thereto.
d.
File fidelity bond under Rule 17g-1.
e.
Monitor sales of Fund shares and ensure that such shares are properly registered or qualified, as applicable, with the SEC and the appropriate state authorities.
f.
Assist Fund counsel in preparation of proxy statements and information statements, as requested by the Trust.
g.
Assist Fund counsel with application for exemptive relief, when applicable
(3)
IRS Compliance:
a.
Monitor the Trust’s status as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), including without limitation, review of the following:
(i)
Diversification requirements.
(ii)
Qualifying income requirements.
(iii)
Distribution requirements.
b.
Calculate the required annual excise distribution amounts for the review and approval of Fund management and/or its independent accountant.
C.
Financial Reporting:
(1)
Provide financial data required by the Prospectus and SAI.
(2)
Prepare financial reports for officers, shareholders, tax authorities, performance reporting companies, the Board of Trustees, the SEC, and the independent auditor.
3
(3)
Supervise the Fund’s custodian and fund accountants in the maintenance of the Fund’s general ledger and in the preparation of the Fund’s financial statements, including oversight of expense accruals and payments, the determination of net asset value and the declaration and payment of dividends and other distributions to shareholders.
(4)
Compute total return, expense ratio and portfolio turnover rate of the Fund.
(5)
Monitor expense accruals and make adjustments as necessary; notify the Trust’s management of adjustments expected to materially affect the Fund’s expense ratio.
(6)
Prepare financial statements, which include, without limitation, the following items:
a.
Schedule of Investments.
b.
Statement of Assets and Liabilities.
c.
Statement of Operations.
d.
Statement of Changes in Net Assets.
e.
Statement of Cash Flows (if applicable).
f.
Financial Highlights.
(7)
Pursuant to Rule 31a-1(b)(9) of the 1940 Act, prepare quarterly broker security transaction summaries.
D.
Tax Reporting:
(1) Prepare for the review of the independent accountants and/or Fund Management the federal and state tax returns including, without limitation, Form 1120 RIC and applicable state returns including any necessary schedules. Fund Services will prepare annual Fund federal and state income tax return filings as authorized by and based on the instructions received by Fund Management and/or its independent accountant.
(2) Provide the Fund’s Management and independent accountant with tax reporting information pertaining to the Fund and available to Fund Services as required in a timely manner.
(3) Prepare Fund financial statement tax footnote disclosures for the review and approval of Fund Management and/or its independent accountant.
(4) Prepare and file on behalf of Fund Management Form 1099 MISC Forms for payments to disinterested Directors and other qualifying service providers.
(5) Monitor wash sale losses.
(6) Calculate Qualified Dividend Income (“QDI”) for qualifying Fund Shareholders.
4
(7) Calculate Dividends Received Deduction (“DRD”) for qualifying corporate Fund Shareholders.
3.
Compensation
Fund Services shall be compensated for providing the services set forth in this Agreement in accordance with the fee schedule set forth on
Exhibit C
attached hereto (as amended from time to time). Fund Services shall also be reimbursed for such miscellaneous expenses (e.g., telecommunication charges, postage and delivery charges, and reproduction charges) as are reasonably incurred by Fund Services in performing its duties hereunder. The Trust shall pay all such fees and reimbursable expenses within 30 calendar days following receipt of the monthly billing notice, except for any fee or expense subject to a good faith dispute. The Trust shall notify Fund Services in writing within 30 calendar days following receipt of each invoice if the Trust is disputing any amounts in good faith. The Trust shall pay such disputed amounts within 10 calendar days of the day on which the parties agree to the amount to be paid. With the exception of any fee or expense the Trust is disputing in good faith as set forth above, unpaid invoices shall accrue a finance charge of 1½% per month after the due date. Notwithstanding anything to the contrary, amounts owed by the Trust to Fund Services shall only be paid out of the assets and property of the particular Fund involved.
4.
License of Data; Warranty; Termination of Rights
A.
Fund Services has entered into agreements with MSCI index data services (“MSCI”), Standard & Poor Financial Services LLC (“S&P”) and FactSet Research Systems, Inc. (“FACTSET”) which obligates Fund Services to include a list of required provisions in this Agreement attached hereto as
Exhibit B
. The index data services being provided to the Trust by Fund Services pursuant hereto (collectively, the “Data”) are being licensed, not sold, to the Trust. The provisions in
Exhibit B
shall not have any effect upon the standard of care and liability Fund Services has set forth in Section 6 of this Agreement.
B.
The Trust agrees to indemnify and hold harmless Fund Services, its information providers, and any other third party involved in or related to the making or compiling of the Data, their affiliates and subsidiaries and their respective directors, officers, employees and agents from and against any claims, losses, damages, liabilities, costs and expenses, including reasonable attorneys’ fees and costs, as incurred, arising in and any manner out of the Trust’s or any third party’s use of, or inability to use, the Data or any breach by the Trust of any provision contained in this Agreement. The immediately preceding sentence shall not have any effect upon the standard of care and liability of Fund Services as set forth in Section 6 of this Agreement.
C.
USBFS has entered into agreements with Bloomberg Finance L.P. (“Bloomberg”) to provide data (the “N-PORT Data”) for use in or in connection with the
5
reporting requirements under the Rule, including preparation and filing of Form N-PORT. In connection with the provision of the N-PORT Data, Bloomberg requires certain provisions to be included in the Agreement.
The Trust agrees that it shall (a) comply with all laws, rules and regulations applicable to accessing and using the N-PORT Data, (b) not extract the N-PORT Data from the view-only portal, (c) not use the N-PORT Data for any purpose independent of complying with the requirements of Rule 30b1-9 (which prohibition shall include, for the avoidance of doubt, use in risk reporting or other systems or processes (e.g., systems or processes made available enterprise-wide for the Trust’s internal use)), (d) permit audits of its use of the N-PORT Data by Bloomberg, its affiliates or, at the Trust’s request, a mutually agreed upon third-party auditor (provided that the costs of an audit by a third party shall be borne by the Trust), (e) exculpate Bloomberg, its affiliates and their respective suppliers from any liability or responsibility of any kind relating to the Trust’s receipt or use of the N-PORT Data (including expressly disclaiming all warranties). The Trust further agrees that Bloomberg shall be a third-party beneficiary of the Agreement solely with respect to the foregoing provisions (a) — (e).
5.
Representations and Warranties
A.
The Trust hereby represents and warrants to Fund Services, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
(1)
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
(2)
This Agreement has been duly authorized, executed and delivered by the Trust in accordance with all requisite action and constitutes a valid and legally binding obligation of the Trust, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties; and
(3)
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.
B.
Fund Services hereby represents and warrants to the Trust, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
6
(1)
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
(2)
This Agreement has been duly authorized, executed and delivered by Fund Services in accordance with all requisite action and constitutes a valid and legally binding obligation of Fund Services, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties; and
(3)
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.
6.
Standard of Care; Indemnification; Limitation of Liability
A.
Fund Services shall exercise reasonable care in the performance of its duties under this Agreement. Fund Services shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with its duties under this Agreement, including losses resulting from mechanical breakdowns or the failure of communication or power supplies beyond Fund Services’ control, except a loss arising out of or relating to Fund Services’ refusal or failure to comply with the terms of this Agreement or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement. Notwithstanding any other provision of this Agreement, if Fund Services has exercised reasonable care in the performance of its duties under this Agreement, the Trust shall indemnify and hold harmless Fund Services from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that Fund Services may sustain or incur or that may be asserted against Fund Services by any person arising out of any action taken or omitted to be taken by it in performing the services hereunder (i) in accordance with the foregoing standards, or (ii) in reliance upon any written or oral instruction provided to Fund Services by any duly authorized officer of the Trust, as approved by the Board of Trustees of the Trust, except for any and all claims, demands, losses, expenses, and liabilities arising out of or relating to Fund Services’ refusal or failure to comply with the terms of this Agreement or from its bad faith, negligence or willful misconduct in the performance of its duties under this Agreement. This indemnity shall be a continuing obligation of the Trust, its successors and assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the term “Fund Services” shall include Fund Services’ directors, officers and employees.
7
Each Fund shall indemnify Fund Services against and save Fund Services harmless from any loss, damage or expense, including counsel fees and other costs and expenses of a defense against any claim or liability, arising from any one or more of the following:
Errors in records or instructions, explanations, information, specifications or documentation of any kind, as the case may be, supplied to Fund Services by any third party or by or on behalf of a Fund;
Action or inaction taken or omitted to be taken by Fund Services pursuant to written or oral instructions of the fund or otherwise without negligence or willful misconduct.;
Any action taken or omitted to be taken by Fund Services in good faith in accordance with the advice or opinion of counsel for a Fund or its own counsel;
Any improper use by a Fund or its agents, distributor or investment advisor of any valuations or computations supplied by Fund Services pursuant to this Agreement.
Fund Services shall indemnify and hold the Trust harmless from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that the Trust may sustain or incur or that may be asserted against the Trust by any person arising out of any action taken or omitted to be taken by Fund Services as a result of Fund Services’ refusal or failure to comply with the terms of this Agreement, or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement. This indemnity shall be a continuing obligation of Fund Services, its successors and assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the term “Trust” shall include the Trust’s trustees, officers and employees.
Neither party to this Agreement shall be liable to the other party for consequential, special or punitive damages under any provision of this Agreement.
In the event of a mechanical breakdown or failure of communication or power supplies beyond its control, Fund Services shall take all reasonable steps to minimize service interruptions for any period that such interruption continues. Fund Services will make every reasonable effort to restore any lost or damaged data and correct any errors resulting from such a breakdown at the expense of Fund Services. Fund Services agrees that it shall, at all times, have reasonable contingency plans with appropriate parties, making reasonable provision for emergency use of electrical data processing equipment to the extent appropriate equipment is available. Representatives of the Trust shall be entitled to inspect
8
Fund Services’ premises and operating capabilities at any time during regular business hours of Fund Services, upon reasonable notice to Fund Services. Moreover, Fund Services shall provide the Trust, at such times as the Trust may reasonably require, copies of reports rendered by independent accountants on the internal controls and procedures of Fund Services relating to the services provided by Fund Services under this Agreement.
Notwithstanding the above, Fund Services reserves the right to reprocess and correct administrative errors at its own expense.
B.
In order that the indemnification provisions contained in this section shall apply, it is understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee harmless, the indemnitor shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the indemnitee will use all reasonable care to notify the indemnitor promptly concerning any situation that presents or appears likely to present the probability of a claim for indemnification. The indemnitor shall have the option to defend the indemnitee against any claim that may be the subject of this indemnification. In the event that the indemnitor so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over complete defense of the claim, and the indemnitee shall in such situation initiate no further legal or other expenses for which it shall seek indemnification under this section. The indemnitee shall in no case confess any claim or make any compromise in any case in which the indemnitor will be asked to indemnify the indemnitee except with the indemnitor’s prior written consent.
C.
The indemnity and defense provisions set forth in this Section 6 shall indefinitely survive the termination and/or assignment of this Agreement.
D.
If Fund Services is acting in another capacity for the Trust pursuant to a separate agreement, nothing herein shall be deemed to relieve Fund Services of any of its obligations in such other capacity.
E.
Paid Tax Preparer Disclaimer: In conjunction with the tax services provided to each Fund by Fund Services hereunder, Fund Services shall not be deemed to act as an income tax return preparer for any purpose including as such term is defined under Section 7701(a)(36) of the Internal Revenue Code (“IRC”), or any successor thereof. Any information provided by Fund Services to a Fund for income tax reporting purposes with respect to any item of income, gain, loss, or credit will be performed solely in Fund Services’ administrative capacity. Fund Services shall not be required to determine, and shall not take any position with respect to whether, the reasonable belief standard described in Section 6694 of the IRC has been satisfied with respect to any income tax item. Each Fund, and any appointees thereof, shall have the right to inspect the transaction summaries produced and aggregated by Fund Services, and any supporting documents thereto, in connection with the tax reporting services provided to each Fund by
9
Fund Services. Fund Services shall not be liable for the provision or omission of any tax advice with respect to any information provided by Fund Services to a Fund. The tax information provided by Fund Services shall be pertinent to the data and information made available to us, and is neither derived from nor construed as tax advice.
7.
Data Necessary to Perform Services
The Trust or its agent shall furnish to Fund Services the data necessary to perform the services described herein at such times and in such form as mutually agreed upon.
8.
Proprietary and Confidential Information
Fund Services agrees on behalf of itself and its directors, officers, and employees to treat confidentially and as proprietary information of the Trust, all records and other information relative to the Trust and prior, present, or potential shareholders of the Trust (and clients of said shareholders), and not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, except (i) after prior notification to and approval in writing by the Trust, which approval shall not be unreasonably withheld and may not be withheld where Fund Services may be exposed to civil or criminal contempt proceedings for failure to comply, (ii) when requested to divulge such information by duly constituted authorities, or (iii) when so requested by the Trust. Records and other information which have become known to the public through no wrongful act of Fund Services or any of its employees, agents or representatives, and information that was already in the possession of Fund Services prior to receipt thereof from the Trust or its agent, shall not be subject to this paragraph.
Further, Fund Services will adhere to the privacy policies adopted by the Trust pursuant to Title V of the Gramm-Leach-Bliley Act, as may be modified from time to time. In this regard, Fund Services shall have in place and maintain physical, electronic and procedural safeguards reasonably designed to protect the security, confidentiality and integrity of, and to prevent unauthorized access to or use of, records and information relating to the Trust and its shareholders.
9.
Records
Fund Services shall keep records relating to the services to be performed hereunder in the form and manner, and for such period, as it may deem advisable and is agreeable to the Trust, but not inconsistent with the rules and regulations of appropriate government authorities, in particular, Section 31 of the 1940 Act and the rules thereunder. Fund Services agrees that all such records prepared or maintained by Fund Services relating to the services to be performed by Fund Services hereunder are the property of the Trust and will be preserved, maintained, and made available in accordance with such applicable sections and rules of the 1940 Act and will be promptly surrendered to the Trust or its designee on and in accordance with its request.
10
10.
Compliance with Laws
The Trust has and retains primary responsibility for all compliance matters relating to the Fund, including but not limited to compliance with the 1940 Act, the Code, the SOX Act, the USA Patriot Act of 2001 and the policies and limitations of the Fund relating to its portfolio investments as set forth in its Prospectus and SAI. Fund Services’ services hereunder shall not relieve the Trust of its responsibilities for assuring such compliance or the Board of Trustee’s oversight responsibility with respect thereto.
11.
Term of Agreement; Amendment
This Agreement shall become effective as of the date first written above and will continue in effect for a period of two (2) years. This Agreement may be terminated by either party upon giving 90 days prior written notice to the other party or such shorter period as is mutually agreed upon by the parties. Subsequent to the end of the two (2) year period, this Agreement continues until one party gives 90 days prior written notice to the other party or such shorter period as is mutually agreed upon by the parties. Notwithstanding the foregoing, this Agreement may be terminated by any party upon the breach of the other party of any material term of this Agreement if such breach is not cured within 15 days of notice of such breach to the breaching party. This Agreement may not be amended or modified in any manner except by written agreement executed by Fund Services and the Trust, and authorized or approved by the Board of Trustees.
12.
Early Termination
In the absence of any material breach of this Agreement, should the Trust elect to terminate this Agreement prior to the end of the two year term, the Trust agrees to pay the following fees:
a.
all monthly fees through the life of the Agreement, including the repayment of any negotiated discounts;
b.
all fees associated with converting services to successor service provider;
c.
all fees associated with any record retention and/or tax reporting obligations that may not be eliminated due to the conversion to a successor service provider;
d.
all miscellaneous costs associated with a-c above
13.
Duties in the Event of Termination
In the event that, in connection with termination, a successor to any of Fund Services’ duties or responsibilities hereunder is designated by the Trust by written notice to Fund Services, Fund Services will promptly, upon such termination and at the expense of the Trust, transfer to such successor all relevant books, records, correspondence, and other data established or maintained by Fund Services under this Agreement in a form reasonably acceptable to the Trust (if such form differs from the form in which Fund Services has maintained the same, the Trust shall pay any expenses associated with transferring the data to such form), and will co-operate in the transfer of such duties and responsibilities, including provision for assistance from Fund Services’ personnel in the establishment of books, records,
11
and other data by such successor. If no such successor is designated, then such books, records and other data shall be returned to the Trust.
14.
Assignment
This Agreement shall extend to and be binding upon the parties hereto and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Trust without the written consent of Fund Services, or by Fund Services without the written consent of the Trust accompanied by the authorization or approval of the Trust’s Board of Trustees.
15.
Governing Law
This Agreement shall be governed and construed in accordance with the laws of the State of Wisconsin, without regard to conflicts of law principles. To the extent that the applicable laws of the State of Wisconsin, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the latter shall control, and nothing herein shall be construed in a manner inconsistent with the 1940 Act or any rule or order of the SEC thereunder.
16.
No Agency Relationship
Nothing herein contained shall be deemed to authorize or empower either party to act as agent for the other party to this Agreement, or to conduct business in the name, or for the account, of the other party to this Agreement.
17.
Services Not Exclusive
Nothing in this Agreement shall limit or restrict Fund Services from providing services to other parties that are similar or identical to some or all of the services provided hereunder.
18.
Invalidity
Any provision of this Agreement which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. In such case, the parties shall in good faith modify or substitute such provision consistent with the original intent of the parties.
12
19.
Legal-Related Services
Nothing in this Agreement shall be deemed to appoint Fund Services and its officers, directors and employees as the Fund attorneys, form attorney-client relationships or require the provision of legal advice. The Fund acknowledges that in-house Fund Services attorneys exclusively represent Fund Services and rely on outside counsel retained by the Fund to review all services provided by in-house Fund Services attorneys and to provide independent judgment on the Fund’s behalf. Because no attorney-client relationship exists between in-house Fund Services attorneys and the Fund, any information provided to Fund Services attorneys may not be privileged and may be subject to compulsory disclosure under certain circumstances. Fund Services represents that it will maintain the confidentiality of information disclosed to its in-house attorneys on a best efforts basis.
Fund Services may consult with counsel to the appropriate Fund or its own counsel, at such Fund’s expense, and shall be fully protected with respect to anything done or omitted by it in good faith in accordance with the advice or opinion of such counsel.
20.
Notices
Any notice required or permitted to be given by either party to the other shall be in writing and shall be deemed to have been given on the date delivered personally or by courier service, or three days after sent by registered or certified mail, postage prepaid, return receipt requested, or on the date sent and confirmed received by facsimile transmission to the other party’s address set forth below:
Notice to Fund Services shall be sent to:
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
Attn: President
and notice to the Trust shall be sent to:
Pacific Global ETF Trust
840 Newport Center Drive, Suite 700
Newport Beach, CA 92660
Attn: Mr. Josh Schwab, CFA, CPA, Pacific Global Asset Management, LLC
21.
Multiple Originals
This Agreement may be executed on two or more counterparts, each of which when so executed shall be deemed to be an original, but such counterparts shall together constitute but one and the same instrument.
[SIGNATURES ON THE FOLLOWING PAGE]
13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts as of the date last written below.
|
PACIFIC GLOBAL ETF TRUST
|
U.S. BANCORP FUND SERVICES, LLC
|
|
|
|
|
By:
|
|
|
By:
|
|
|
|
|
|
|
|
|
Name:
|
|
|
Name:
|
|
|
|
|
|
|
|
|
Title:
|
|
|
Title:
|
|
|
|
|
|
|
|
|
Date:
|
|
|
Date:
|
|
14
Exhibit A to the Fund Administration Servicing Agreement
Separate Series of Pacific Global ETF Trust
Pacific Global US Equity Income ETF
15
Exhibit B to the Fund Administration Servicing Agreement
REQUIRED PROVISIONS OF MSCI, S&P and FACTSET
·
The Trust shall represent that it will use the Data solely for internal purposes and will not redistribute the Data in any form or manner to any third party.
·
The Trust shall represent that it will not use or permit anyone else to use the Data in connection with creating, managing, advising, writing, trading, marketing or promoting any securities or financial instruments or products, including, but not limited to, funds, synthetic or derivative securities (e.g., options, warrants, swaps, and futures), whether listed on an exchange or traded over the counter or on a private-placement basis or otherwise or to create any indices (custom or otherwise).
·
The Trust shall represent that it will treat the Data as proprietary to MSCI, S&P and FACTSET. Further, the Trust shall acknowledge that MSCI, S&P and FACTSET are the sole and exclusive owners of the Data and all trade secrets, copyrights, trademarks and other intellectual property rights in or to the Data.
·
The Trust shall represent that it will not (i) copy any component of the Data, (ii) alter, modify or adapt any component of the Data, including, but not limited to, translating, decompiling, disassembling, reverse engineering or creating derivative works, or (iii) make any component of the Data available to any other person or organization (including, without limitation, the Trust’s present and future parents, subsidiaries or affiliates) directly or indirectly, for any of the foregoing or for any other use, including, without limitation, by loan, rental, service bureau, external time sharing or similar arrangement.
·
The Trust shall be obligated to reproduce on all permitted copies of the Data all copyright, proprietary rights and restrictive legends appearing on the Data.
·
The Trust shall acknowledge that it assumes the entire risk of using the Data and shall agree to hold MSCI or S&P or FACTSET harmless from any claims that may arise in connection with any use of the Data by the Trust.
·
The Trust shall acknowledge that MSCI or S&P or FACTSET may, in its sole and absolute discretion and at any time, terminate Fund Services’ right to receive and/or use the Data.
·
The Trust shall acknowledge that MSCI, S&P and FACTSET are third party beneficiaries of the Customer Agreement between S&P, MSCI, FACTSET and Fund Services, entitled to enforce all provisions of such agreement relating to the Data.
THE DATA IS PROVIDED TO THE TRUST ON AN “AS IS” BASIS. FUND SERVICES, ITS INFORMATION PROVIDERS, AND ANY OTHER THIRD PARTY INVOLVED IN OR RELATED TO THE MAKING OR COMPILING OF THE DATA MAKE NO REPRESENTATION OR WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE DATA (OR THE RESULTS TO BE OBTAINED BY THE USE THEREOF). FUND SERVICES, ITS INFORMATION PROVIDERS AND ANY OTHER THIRD PARTY INVOLVED IN OR RELATED TO THE MAKING OR COMPILING OF THE DATA EXPRESSLY DISCLAIM ANY AND ALL IMPLIED WARRANTIES OF ORIGINALITY, ACCURACY, COMPLETENESS, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
16
Exhibit B (continued) to the Fund Administration Servicing Agreement
THE TRUST ASSUMES THE ENTIRE RISK OF ANY USE THE TRUST MAY MAKE OF THE DATA. IN NO EVENT SHALL FUND SERVICES, ITS INFORMATION PROVIDERS OR ANY THIRD PARTY INVOLVED IN OR RELATED TO THE MAKING OR COMPILING OF THE DATA, BE LIABLE TO THE TRUST, OR ANY OTHER THIRD PARTY, FOR ANY DIRECT OR INDIRECT DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, LOST SAVINGS OR OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE INABILITY OF THE TRUST TO USE THE DATA, REGARDLESS OF THE FORM OF ACTION, EVEN IF FUND SERVICES, ANY OF ITS INFORMATION PROVIDERS, OR ANY OTHER THIRD PARTY INVOLVED IN OR RELATED TO THE MAKING OR COMPILING OF THE DATA HAS BEEN ADVISED OF OR OTHERWISE MIGHT HAVE ANTICIPATED THE POSSIBILITY OF SUCH DAMAGES.
17
Exhibit C to the Fund Administration Servicing Agreement
Base Fee for Accounting, Administration, Transfer Agent & Account Services at December 2018
The following reflects the greater of the basis point fee or annual minimum(1) per fund for any fund where Pacific Global Advisors, LLC acts as Adviser to the fund in the Pacific Global ETF Trust
|
Annual Minimum per Fund(2)
|
|
Basis Points on Trust AUM(2)
|
|
Funds 1-5
|
$35,000
|
|
First $500m
|
3.75 bps
|
|
Funds 6-10
|
$25,000
|
|
Next $3.5b
|
3.50 bps
|
|
Funds 11+
|
$15,000
|
|
Next $3.5b
|
3.00 bps
|
|
|
|
|
Balance
|
2.50 bps
|
(1) If the bps fee for the funds in the trust exceeds sum of fund minimums, then bps fee applies for the whole and is allocated pro rata amongst funds based on AUM. If less than the minimum fund fee, then each fund pays the minimum amount.
Once a Fund is operational, should the service agreement be terminated without cause prior to the end of the initial two-year period, the balance of the minimum fees due to USBFS for the remainder of the service agreement’s initial term will become due and payable to USBFS.
In addition to the fees described above, additional fees may be charged to the extent that changes to applicable laws, rules or regulations require additional work or expenses related to services provided (e.g., compliance with new liquidity risk management and reporting requirements).
(2) Subject to annual CPI increase
— All Urban Consumers — U.S. City Average.
Fees are calculated pro rata and billed monthly
18
Accounting, Administration, Transfer Agent & Account Services Fee Schedule at December 2018 (in addition to the Base Fee)
Pricing Services
For daily pricing of each securities (estimated 252 pricing days annually)
·
$0.08 — Domestic Equities, Options, ADRs, Foreign Equities, Futures, Forwards, Currency Rates, Mutual Funds, ETFs
·
$0.50 — Domestic Corporates, Domestic Convertibles, Domestic Governments, Domestic Agencies, Mortgage Backed, Municipal Bonds
·
$0.80 — CMOs, Money Market Instruments, Foreign Corporates, Foreign Convertibles, Foreign Governments, Foreign Agencies, Asset Backed, High Yield
·
$0.90 — Interest Rate Swaps, Foreign Currency Swaps, Total Return Swaps, Total Return Bullet Swaps
·
$1.00 — Bank Loans
·
$1.50 — Swaptions
·
$1.50 — Intraday money market funds pricing, up to 3 times per day
·
$3.00 — Credit Default Swaps
·
$500 per Month Manual Security Pricing (>25per day)
NOTE: Prices are based on using U.S. Bancorp primary pricing service which may vary by security type and are subject to change. Use of alternative and/or additional sources may result in additional fees. Pricing vendors may designate certain securities as hard to value or as a non-standard security type, such as CLOs and CDOs, which may result in additional fees. All schedules subject to change depending upon the use of unique security type requiring special pricing or accounting arrangements.
Corporate Action Services
Fee for IDC data used to monitor corporate actions
·
$2.00 per Foreign Equity Security per Month
·
$1.00 per Domestic Equity Security per Month
·
$2.00 per CMOs, Asset Backed, Mortgage Backed Security per Month
Third Party Administrative Data Charges (descriptive data for analytics, reporting and compliance)
·
$1 per security per month for fund administrative
Chief Compliance Officer Support Fee
·
CCO Support annual fee per trust; $3,000 per USBFS service selected (administration, accounting, transfer agent, distributor, custodian)
Chief Compliance Officer Support Fee includes the following services
:
·
Access to all USBFS business line materials via the CCO Portal including business line Critical Procedures, Compliance Controls, Testing of Controls, Annual USBFS CCO Review, SSAE 16 audits of business lines
·
Assist the Fund CCO with quarterly 38a-1 certifications including a review of any changes to critical policies, procedures and controls and compliance events as required under Rule 38a-1 of the Investment Company Act
·
Testing of procedures and controls across all business lines with access to business line managers and subject matter experts
·
Quarterly CCO teleconferences and “Focus Calls” specific to current topics such as cybersecurity
·
CCO forums held periodically throughout the year in major cities
·
Annual client conference which includes CCO roundtable discussions
·
SEC exam support
·
Other items, including sharing of industry best practices across many areas
NOTE: the CCO Support team does NOT serve as the Fund CCO
In addition to the fees described above, additional fees may be charged to the extent that changes to applicable laws, rules or regulations require additional work or expenses related to services provided (e.g., compliance with new liquidity risk management and reporting requirements).
Fees are calculated pro rata and billed monthly
19
Fee Schedule for Supplemental Services for Fund Accounting, Fund Administration & Portfolio Compliance (provided by USBFS upon client need and/ or request) at December 2018
SEC Modernization Requirements
·
Form N-PORT — $12,000 per year, per Fund
·
Form N-CEN — $250 per year, per Fund
Daily Compliance Services
·
Base fee — $20,000 per fund per year
·
Setup — $2,500 per fund group
Section 18 Daily Compliance Testing (for derivatives and leverage)
·
$1,500 set up fee per fund complex
·
$500 per fund per month
Controlled Foreign Corporation (CFC)
·
USBFS Fee Schedule plus $15,000
C- Corp Administrative Services
·
1940 Act C-Corp — USBFS Fee Schedule plus $15,000
·
1933 Act C-Corp — USBFS Fee Schedule plus $25,000
Ongoing Annual Legal Administration Services
Add the following for legal administration services in support of external legal counsel, including annual registration statement update and drafting of supplements
·
$15,000 first fund
·
$5,000 each additional fund up to 5 funds
·
Fees will be negotiated for fund 6+
Section 15(c) Reporting
·
$2,000 per fund per standard reporting package*
·
Additional 15c reporting is subject to additional charges
*Standard reporting packages for annual 15(c) meeting
·
Expense reporting package: 2 peer comparison reports (adviser fee) and (net expense ratio w classes on one report) OR Full 15(c) report
·
Performance reporting package: Peer Comparison Report
·
Standard data source — Morningstar; additional charges will apply for other data services
Miscellaneous Expenses
All other miscellaneous fees and expenses, including but not limited to the following, will be separately billed as incurred
: Portfolio Composition File (PCF) management services, SWIFT processing, customized reporting, third-party data provider costs (including GICS, MSCI, Lipper, etc.), postage, stationary, programming, special reports, proxies, insurance, EDGAR/XBRL filing, retention of records, federal and state regulatory filing fees, expenses related to and including travel to and from Board of Trustee meetings, third party auditing and legal expenses, wash sales reporting (GainsKeeper), tax e-filing, PFIC monitoring, conversion expenses (if necessary), and travel related costs.
Fees are calculated pro rata and billed monthly
20
Exhibit 99.(g)(4)
FORM OF TRANSFER AGENT SERVICING AGREEMENT
THIS AGREEMENT
is made and entered into as of the last day written in the signature block below, by and between
PACIFIC GLOBAL ETF TRUST
, a Delaware statutory trust (the “Trust”) and
U.S. BANCORP FUND SERVICES, LLC d/b/a U.S. BANK GLOBAL FUND SERVICES
, a Wisconsin limited liability company (“Fund Services”).
WHEREAS,
the Trust is a series trust that consists of multiple series, and is currently comprised of the series listed on Exhibit A attached hereto (each a “Fund” or an “
ETF
Series”). Each Fund issues shares of beneficial interest (“Shares”) for each
ETF
Series. The Shares shall be created and redeemed in bundles called “Creation Units.” The Trust, on behalf of the
ETF
Series, shall create and redeem Shares of each
ETF
Series only in Creation Units principally in kind for portfolio securities of the particular
ETF
Series (“Deposit Securities”), as more fully described in the current prospectus and statement of additional information of the Trust, included in its registration statement on Form N-1A; and as authorized under the Order of Exemption granted by the Securities and Exchange Commission. Only brokers or dealers that are “Authorized Participants” and that have entered into an Authorized Participant Agreement with [Name of Distributor], the Fund’s Distributor (the “Distributor”), acting on behalf of the Trust, shall be authorized to create and redeem Shares in Creation Units from the Trust. The Trust wishes to engage Fund Services to perform certain services on behalf of the Trust with respect to the creation and redemption of Shares, as the Trust’s agent, namely to provide transfer agent services for Shares of each
ETF
Series; and to act as Index Receipt Agent (as such term is defined in the rules of the National Securities Clearing Corporation (“NSCC”)) with respect to the settlement of trade orders with Authorized Participants. The Trust has engaged U.S. Bank, National Association (the “Custodian”) to provide custody services under the terms of a Custody Agreement, as supplemented hereby, for the settlement of Creation Units against Deposit Securities and/or cash that shall be delivered by Authorized Participants in exchange for Shares and the redemption of Shares in Creation Unit size against the delivery of Redemption Securities and/or cash of each
ETF
Series.
WHEREAS, the Trust is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); and
WHEREAS, the Trust will ordinarily issue for purchase and redeem Shares only in aggregations of Shares known as Creation Units (at least 25,000 Shares) principally in kind or in cash;
WHEREAS, The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York (“DTC”), or its nominee Cede & Company, will be the registered owner (the “Shareholder”) of all Shares; and
WHEREAS, the Trust desires to retain Fund Services as its transfer agent, dividend disbursing agent, and agent in connection with certain other activities to each series of the Trust listed on Exhibit A attached hereto (as amended from time to time).
1
NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
1.
Appointment of Fund Services as Transfer Agent
The Trust hereby appoints Fund Services as transfer agent of the Trust on the terms and conditions set forth in this Agreement, and Fund Services hereby accepts such appointment and agrees to perform the services and duties set forth in this Agreement. The services and duties of Fund Services shall be confined to those matters expressly set forth herein, and no implied duties are assumed by or may be asserted against Fund Services hereunder.
2.
Services and Duties of Fund Services
Fund Services shall provide the following transfer agent and dividend disbursing agent services to each Fund:
A. Facilitate purchases and redemption of Creation Units;
B. Prepare and transmit by means of DTC’s book-entry system payments for dividends and distributions on or with respect to the Shares declared by the Trust on behalf of the applicable Fund;
C. Maintain the record of the name and address of the Shareholder and the number of Shares issued by the Trust and held by the Shareholder;
D. Record the issuance of Shares of the Trust and maintain a record of the total number of Shares of the Trust which are outstanding, and, based upon data provided to it by the Trust, the total number of authorized Shares. Fund Services shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares;
E. Prepare and transmit to the Trust and the Trust’s administrator and to any applicable securities exchange (as specified to Fund Services by the Trust) information with respect to purchases and redemptions of Shares;
F. On days that the Trust may accept orders for purchases or redemptions, calculate and transmit to Fund Services and the Trust the number of outstanding Shares;
G. On days that the Trust may accept orders for purchases or redemptions (pursuant to the Participant Agreement), transmit to Fund Services, the Trust and DTC the amount of Shares purchased on such day;
H. Confirm to DTC the number of Shares issued to the Shareholder, as DTC may reasonably request;
2
I. Prepare and deliver other reports, information and documents to DTC as DTC may reasonably request;
J. Extend the voting rights to the Shareholder for extension by DTC to DTC participants and the beneficial owners of Shares in accordance with policies and procedures of DTC for book-entry only securities;
K. Maintain those books and records of the Trust specified by the Trust and agreed upon by Fund Services;
L. Prepare a monthly report of all purchases and redemptions of Shares during such month on a gross transaction basis, and identify on a daily basis the net number of Shares either redeemed or purchased on such business day and with respect to each Authorized Participant purchasing or redeeming Shares, the amount of Shares purchased or redeemed;
M. Receive from the Distributor or from its agent purchase orders from Authorized Participants (as defined in the Authorized Participant Agreement) for Creation Unit Aggregations of Shares received in good form and accepted by or on behalf of the Trust by the Distributor, transmit appropriate trade instructions to the NSCC, if applicable, and pursuant to such orders issue the appropriate number of Shares of the Trust and hold such Shares in the account of the Shareholder for each of the respective Funds;
N. Receive from the Authorized Participants redemption requests, deliver the appropriate documentation thereof to the Trust’s custodian, generate and transmit or cause to be generated and transmitted confirmation of receipt of such redemption requests to the Authorized Participants submitting the same; transmit appropriate trade instructions to the NSCC, if applicable, and redeem the appropriate number of Creation Unit Aggregations of Shares held in the account of the Shareholder for each of the respective Funds; and
O. Confirm the name, U.S. taxpayer identification number and principal place of business of each Authorized Participant.
In addition to the services set forth above, Fund Services shall: perform the customary services of a transfer agent and dividend disbursing agent including, but not limited to, maintaining the account of the Shareholder; and obtaining at the request of the Trust from the Shareholder a list of DTC participants holding interests in the Global Certificate.
Fund Services shall keep records relating to the services to be performed hereunder, in the form and manner required by applicable laws, rules, and regulations under the 1940 Act and to the extent required by Section 31 of the 1940 Act and the rules thereunder (the “Rules”), all such books and records shall be the property of the Trust, will be preserved, maintained and made available in accordance with such Section and
3
Rules, and will be surrendered promptly to the Trust on and in accordance with its request.
3.
Lost Shareholder Due Diligence Searches and Servicing
The Trust hereby acknowledges that Fund Services has an arrangement with an outside vendor to conduct lost shareholder searches required by Rule 17Ad-17 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Costs associated with such searches will be passed through to the Trust as miscellaneous expenses in accordance with the fee schedule set forth on
Exhibit B
attached hereto. If a shareholder remains lost and the shareholder’s account unresolved after completion of the mandatory Rule 17Ad-17 search, the Trust hereby authorizes vendor to enter, at its discretion, into fee sharing arrangements with the lost shareholder (or such lost shareholder’s representative or executor) to conduct a more in-depth search in order to locate the lost shareholder before the shareholder’s assets escheat to the applicable state. The Trust hereby acknowledges that Fund Services is not a party to these arrangements and does not receive any revenue sharing or other fees relating to these arrangements. Furthermore, the Trust hereby acknowledges that vendor may receive up to 35% of the lost shareholder’s assets as compensation for its efforts in locating the lost shareholder.
4.
Anti-Money Laundering and Red Flag Identity Theft Prevention Programs
The Trust acknowledges that it has had an opportunity to review, consider and comment upon the written procedures provided by Fund Services describing various tools used by Fund Services which are designed to promote the detection and reporting of potential money laundering activity and identity theft by monitoring certain aspects of shareholder activity as well as written procedures for verifying a customer’s identity (collectively, the “Procedures”). Further, the Trust and Fund Services have each determined that the Procedures, as part of the Trust’s overall Anti-Money Laundering Program and Red Flag Identity Theft Prevention Program, are reasonably designed to: (i) prevent each Fund from being used for money laundering or the financing of terrorist activities; (ii) prevent identity theft; and (iii) achieve compliance with the applicable provisions of the Bank Secrecy Act, Fair and Accurate Credit Transactions Act of 2003 and the USA Patriot Act of 2001 and the implementing regulations thereunder.
Based on this determination, the Trust hereby instructs and directs Fund Services to implement the Procedures on the Trust’s behalf, as such may be amended or revised from time to time. It is contemplated that these Procedures will be amended from time to time by the parties as additional regulations are adopted and/or regulatory guidance is provided relating to the Trust’s anti-money laundering and identity theft responsibilities.
Fund Services agrees to provide to the Trust:
(a)
Prompt written notification of any transaction or combination of transactions that Fund Services believes, based on the Procedures, evidence money laundering or identity theft activities in connection with the Trust or any Fund shareholder;
4
(b)
Prompt written notification of any customer(s) that Fund Services reasonably believes, based upon the Procedures, to be engaged in money laundering or identity theft activities, provided that the Trust agrees not to communicate this information to the customer;
(c)
Any reports received by Fund Services from any government agency or applicable industry self-regulatory organization pertaining to Fund Services’ Anti-Money Laundering Program or the Red Flag Identity Theft Prevention Program on behalf of the Trust;
(d)
Prompt written notification of any action taken in response to anti-money laundering violations or identity theft activity as described in (a), (b) or (c) immediately above; and
(e)
Certified annual and quarterly reports of its monitoring and customer identification activities pursuant to the Procedures on behalf of the Trust.
The Trust hereby directs, and Fund Services acknowledges, that Fund Services shall (i) permit federal regulators access to such information and records maintained by Fund Services and relating to Fund Services’ implementation of the Procedures, on behalf of the Trust, as they may request, and (ii) permit such federal regulators to inspect Fund Services’ implementation of the Procedures on behalf of the Trust.
5.
Compensation
Fund Services shall be compensated for providing the services set forth in this Agreement in accordance with the fee schedule set forth on Exhibit B attached hereto (as amended from time to time by written request of the parties to this Agreement). Fund Services shall be reimbursed for such miscellaneous expenses (e.g., telecommunication charges, postage and delivery charges, and reproduction charges) as are reasonably incurred by Fund Services in performing its duties hereunder. Fund Services shall also be compensated for any increases in costs due to the adoption of any material new or amended industry, regulatory or other applicable rules. The Trust shall pay all such fees and reimbursable expenses within thirty (30) calendar days following receipt of the monthly billing notice, except for any fee or expense subject to a good faith dispute. The Trust shall notify Fund Services in writing within thirty (30) calendar days following receipt of each invoice if the Trust is disputing any amounts in good faith. The Trust shall pay such disputed amounts within 10 calendar days of the day on which the parties agree to the amount to be paid, if any. Notwithstanding anything to the contrary, amounts owed by the Trust to Fund Services shall only be paid out of the assets and property of the particular Fund involved.
6.
Representations and Warranties
A.
The Trust hereby represents and warrants to Fund Services, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
5
(1)
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
(2)
This Agreement has been duly authorized, executed and delivered by the Trust in accordance with all requisite action and constitutes a valid and legally binding obligation of the Trust, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties;
(3)
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement; and
(4)
A registration statement under the 1940 Act and the Securities Act of 1933, as amended, will be made effective prior to the effective date of this Agreement and will remain effective during the term of this Agreement, and appropriate state securities law filings will be made prior to the effective date of this Agreement and will continue to be made during the term of this Agreement as necessary to enable the Trust to make a continuous public offering of its shares.
B.
Fund Services hereby represents and warrants to the Trust, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
(1)
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
(2)
This Agreement has been duly authorized, executed and delivered by Fund Services in accordance with all requisite action and constitutes a valid and legally binding obligation of Fund Services, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties;
(3)
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there is no statute, rule, regulation, order or judgment binding
6
on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement; and
(4)
It is a registered transfer agent under the Exchange Act.
7.
Standard of Care; Indemnification; Limitation of Liability
A.
Fund Services shall exercise reasonable care in the performance of its duties under this Agreement. Fund Services shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with its duties under this Agreement, including losses resulting from mechanical breakdowns or the failure of communication or power supplies beyond fund Services’ control, except a loss arising out of or relating to Fund Services’ refusal or failure to comply with the terms of this Agreement or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement. Notwithstanding any other provision of this Agreement, if Fund Services has exercised reasonable care in the performance of its duties under this Agreement, the Trust shall indemnify and hold harmless Fund Services from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that Fund Services may sustain or incur or that may be asserted against Fund Services by any person arising out of any action taken or omitted to be taken by it in performing the services hereunder (i) in accordance with the foregoing standards, or (ii) in reliance upon any written or oral instruction provided to Fund Services by any duly authorized officer of the Trust, as approved by the Board of Trustees of the Trust (the “Board of Trustees”), except for any and all claims, demands, losses, expenses, and liabilities arising out of or relating to Fund Services’ refusal or failure to comply with the terms of this Agreement or from its bad faith, negligence or willful misconduct in the performance of its duties under this Agreement. This indemnity shall be a continuing obligation of the Trust, its successors and assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the term “Fund Services” shall include Fund Services’ directors, officers and employees.
Fund Services shall indemnify and hold the Trust harmless from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that the Trust may sustain or incur or that may be asserted against the Trust by any person arising out of any action taken or omitted to be taken by Fund Services as a result of Fund Services’ refusal or failure to comply with the terms of this Agreement, or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement. This indemnity shall be a continuing obligation of Fund Services, its successors and assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the term “Trust” shall include the Trust’s directors, trustees, officers and employees.
7
Neither party to this Agreement shall be liable to the other party for consequential, special or punitive damages under any provision of this Agreement.
In the event of a mechanical breakdown or failure of communication or power supplies beyond its control, Fund Services shall take all reasonable steps to minimize service interruptions for any period that such interruption continues. Fund Services will make every reasonable effort to restore any lost or damaged data and correct any errors resulting from such a breakdown at the expense of Fund Services. Fund Services agrees that it shall, at all times, have reasonable contingency plans with appropriate parties, making reasonable provision for emergency use of electrical data processing equipment to the extent appropriate equipment is available. Representatives of the Trust shall be entitled to inspect Fund Services’ premises and operating capabilities at any time during regular business hours of Fund Services, upon reasonable notice to Fund Services. Moreover, Fund Services shall provide the Trust, at such times as the Trust may reasonably require, copies of reports rendered by independent accountants on the internal controls and procedures of Fund Services relating to the services provided by Fund Services under this Agreement.
Notwithstanding the above, Fund Services reserves the right to reprocess and correct administrative errors at its own expense.
B.
In order that the indemnification provisions contained in this section shall apply, it is understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee harmless, the indemnitor shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the indemnitee will use all reasonable care to notify the indemnitor promptly concerning any situation that presents or appears likely to present the probability of a claim for indemnification. The indemnitor shall have the option to defend the indemnitee against any claim that may be the subject of this indemnification. In the event that the indemnitor so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over complete defense of the claim, and the indemnitee shall in such situation initiate no further legal or other expenses for which it shall seek indemnification under this section. The indemnitee shall in no case confess any claim or make any compromise in any case in which the indemnitor will be asked to indemnify the indemnitee except with the indemnitor’s prior written consent.
C.
The indemnity and defense provisions set forth in this Section 7 shall indefinitely survive the termination and/or assignment of this Agreement.
D.
If Fund Services is acting in another capacity for the Trust pursuant to a separate agreement, nothing herein shall be deemed to relieve Fund Services of any of its obligations in such other capacity.
8
8.
Data Necessary to Perform Services
The Trust or its agent shall furnish to Fund Services the data necessary to perform the services described herein at such times and in such form as mutually agreed upon.
9.
Proprietary and Confidential Information
Fund Services agrees on behalf of itself and its directors, officers, and employees to treat confidentially and as proprietary information of the Trust, all records and other information relative to the Trust and prior, present, or potential shareholders of the Trust (and clients of said shareholders), and not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, except (i) after prior notification to and approval in writing by the Trust, which approval shall not be unreasonably withheld and may not be withheld where Fund Services may be exposed to civil or criminal contempt proceedings for failure to comply, (ii) when requested to divulge such information by duly constituted authorities, or (iii) when so requested by the Trust. Records and other information which have become known to the public through no wrongful act of Fund Services or any of its employees, agents or representatives, and information that was already in the possession of Fund Services prior to receipt thereof from the Trust or its agent, shall not be subject to this paragraph.
Further, Fund Services will adhere to the privacy policies adopted by the Trust pursuant to Title V of the Gramm-Leach-Bliley Act, as may be modified from time to time. In this regard, Fund Services shall have in place and maintain physical, electronic and procedural safeguards reasonably designed to protect the security, confidentiality and integrity of, and to prevent unauthorized access to or use of, records and information relating to the Trust and its shareholders.
10.
Records
Fund Services shall keep records relating to the services to be performed hereunder in the form and manner, and for such period, as it may deem advisable and is agreeable to the Trust, but not inconsistent with the rules and regulations of appropriate government authorities, in particular, Section 31 of the 1940 Act and the rules thereunder. Fund Services agrees that all such records prepared or maintained by Fund Services relating to the services to be performed by Fund Services hereunder are the property of the Trust and will be preserved, maintained, and made available in accordance with such applicable sections and rules of the 1940 Act and will be promptly surrendered to the Trust or its designee on and in accordance with its request.
9
11.
Compliance with Laws
The Trust has and retains primary responsibility for all compliance matters relating to the Fund, including but not limited to compliance with the 1940 Act, the Internal Revenue Code of 1986, the Sarbanes-Oxley Act of 2002, the USA Patriot Act of 2001 and the policies and limitations of the Fund relating to its portfolio investments as set forth in its Prospectus and statement of additional information. Fund Services’ services hereunder shall not relieve the Trust of its responsibilities for assuring such compliance or the Board of Trustee’s oversight responsibility with respect thereto.
12.
Term of Agreement; Amendment
This Agreement shall become effective as of the date first written above and will continue in effect for a period of two (2) years. This Agreement may be terminated by either party upon giving 90 days prior written notice to the other party or such shorter period as is mutually agreed upon by the parties. Subsequent to the end of the two (2) year period, this Agreement continues until one party gives 90 days prior written notice to the other party or such shorter period as is mutually agreed upon by the parties. Notwithstanding the foregoing, this Agreement may be terminated by any party upon the breach of the other party of any material term of this Agreement if such breach is not cured within 15 days of notice of such breach to the breaching party. This Agreement may not be amended or modified in any manner except by written agreement executed by Fund Services and the Trust, and authorized or approved by the Board of Trustees.
13.
Early Termination
In the absence of any material breach of this Agreement, should the Trust elect to terminate this Agreement prior to the end of the two (2) year term, the Trust agrees to pay the following fees:
a.
all monthly fees through the life of the Agreement, including the repayment of any negotiated discounts;
b.
all fees associated with converting services to successor service provider;
c.
all fees associated with any record retention and/or tax reporting obligations that may not be eliminated due to the conversion to a successor service provider;
d.
all miscellaneous costs associated with a-c above
14.
Duties in the Event of Termination
In the event that, in connection with the termination of this Agreement, a successor to any of Fund Services’ duties or responsibilities hereunder is designated by the Trust by written notice to Fund Services, Fund Services will promptly, upon such termination and at the expense of the Trust, transfer to such successor all relevant books, records, correspondence, and other data established or maintained by Fund Services under this Agreement in a form reasonably acceptable to the Trust (if such form differs from the form in which Fund Services has maintained the same, the Trust shall pay any expenses associated with transferring the data to such form), and will cooperate in the transfer of such duties and responsibilities, including provision for assistance from Fund Services’ personnel in the establishment of books, records,
10
and other data by such successor. The Fund shall also be responsible for any fees associated with any record retention and/or tax reporting obligations that may not be eliminated due to the conversion to a successor provider. If no such successor is designated, then such books, records and other data shall be returned to the Trust.
15.
Assignment
This Agreement shall extend to and be binding upon the parties hereto and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Trust without the written consent of Fund Services, or by Fund Services without the written consent of the Trust accompanied by the authorization or approval of the Board of Trustees.
16.
Governing Law
This Agreement shall be governed and construed in accordance with the laws of the State of Wisconsin, without regard to conflicts of law principles. To the extent that the applicable laws of the State of Wisconsin, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the latter shall control, and nothing herein shall be construed in a manner inconsistent with the 1940 Act or any rule or order of the Securities and Exchange Commission thereunder.
17.
No Agency Relationship
Nothing herein contained shall be deemed to authorize or empower either party to act as agent for the other party to this Agreement, or to conduct business in the name, or for the account, of the other party to this Agreement.
18.
Services Not Exclusive
Nothing in this Agreement shall limit or restrict Fund Services from providing services to other parties that are similar or identical to some or all of the services provided hereunder.
19.
Invalidity
Any provision of this Agreement which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. In such case, the parties shall in good faith modify or substitute such provision consistent with the original intent of the parties.
20.
Notices
Any notice required or permitted to be given by either party to the other shall be in writing and shall be deemed to have been given on the date delivered personally or by courier service, or three days after sent by registered or certified mail, postage prepaid, return receipt
11
requested, or on the date sent and confirmed received by facsimile transmission to the other party’s address set forth below:
Notice to Fund Services shall be sent to:
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
Attn: President
and notice to the Trust shall be sent to:
Pacific Global ETF Trust
840 Newport Center Drive, Suite 700
Newport Beach, CA 92660
Attn: Mr. Josh Schwab, CFA, CPA, Pacific Global Asset Management, LLC
21.
Multiple Originals
This Agreement may be executed on two or more counterparts, each of which when so executed shall be deemed to be an original, but such counterparts shall together constitute but one and the same instrument.
[SIGNATURES ON THE FOLLOWING PAGE]
12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts as of the date last written below.
|
PACIFIC GLOBAL ETF TRUST
|
U.S. BANCORP FUND SERVICES, LLC
|
|
|
|
|
By:
|
|
|
By:
|
|
|
|
|
|
|
|
|
Name:
|
|
|
Name:
|
|
|
|
|
|
|
|
|
Title:
|
|
|
Title:
|
|
|
|
|
|
|
|
|
Date:
|
|
|
Date:
|
|
13
Exhibit A to the Transfer Agent Servicing Agreement
Separate Series of Pacific Global ETF Trust
Pacific Global US Equity Income ETF
14
Exhibit B (fees) to Transfer Agent Servicing Agreement
Base Fee for Accounting, Administration, Transfer Agent & Account Services at December 2018
The following reflects the greater of the basis point fee or annual minimum(1) per fund for any fund where Pacific Global Advisors, LLC acts as Adviser to the fund in the Pacific Global ETF Trust
|
Annual Minimum per Fund(2)
|
|
Basis Points on Trust AUM(2)
|
|
Funds 1-5
|
$35,000
|
|
First $500m
|
3.75 bps
|
|
Funds 6-10
|
$25,000
|
|
Next $3.5b
|
3.50 bps
|
|
Funds 11+
|
$15,000
|
|
Next $3.5b
|
3.00 bps
|
|
|
|
|
Balance
|
2.50 bps
|
(1) If the bps fee for the funds in the trust exceeds sum of fund minimums, then bps fee applies for the whole and is allocated pro rata amongst funds based on AUM. If less than the minimum fund fee, then each fund pays the minimum amount.
Once a Fund is operational, should the service agreement be terminated without cause prior to the end of the initial two-year period, the balance of the minimum fees due to USBFS for the remainder of the service agreement’s initial term will become due and payable to USBFS.
In addition to the fees described above, additional fees may be charged to the extent that changes to applicable laws, rules or regulations require additional work or expenses related to services provided (e.g., compliance with new liquidity risk management and reporting requirements).
(2) Subject to annual CPI increase
— All Urban Consumers — U.S. City Average.
Fees are calculated pro rata and billed monthly
15
Accounting, Administration, Transfer Agent & Account Services Fee Schedule at December 2018 (in addition to the Base Fee)
Pricing Services
For daily pricing of each securities (estimated 252 pricing days annually)
·
$0.08 — Domestic Equities, Options, ADRs, Foreign Equities, Futures, Forwards, Currency Rates, Mutual Funds, ETFs
·
$0.50 — Domestic Corporates, Domestic Convertibles, Domestic Governments, Domestic Agencies, Mortgage Backed, Municipal Bonds
·
$0.80 — CMOs, Money Market Instruments, Foreign Corporates, Foreign Convertibles, Foreign Governments, Foreign Agencies, Asset Backed, High Yield
·
$0.90 — Interest Rate Swaps, Foreign Currency Swaps, Total Return Swaps, Total Return Bullet Swaps
·
$1.00 — Bank Loans
·
$1.50 — Swaptions
·
$1.50 — Intraday money market funds pricing, up to 3 times per day
·
$3.00 — Credit Default Swaps
·
$500 per Month Manual Security Pricing (>25per day)
NOTE: Prices are based on using U.S. Bancorp primary pricing service which may vary by security type and are subject to change. Use of alternative and/or additional sources may result in additional fees. Pricing vendors may designate certain securities as hard to value or as a non-standard security type, such as CLOs and CDOs, which may result in additional fees. All schedules subject to change depending upon the use of unique security type requiring special pricing or accounting arrangements.
Corporate Action Services
Fee for IDC data used to monitor corporate actions
·
$2.00 per Foreign Equity Security per Month
·
$1.00 per Domestic Equity Security per Month
·
$2.00 per CMOs, Asset Backed, Mortgage Backed Security per Month
Third Party Administrative Data Charges (descriptive data for analytics, reporting and compliance)
·
$1 per security per month for fund administrative
Chief Compliance Officer Support Fee
·
CCO Support annual fee per trust; $3,000 per USBFS service selected (administration, accounting, transfer agent, distributor, custodian)
Chief Compliance Officer Support Fee includes the following services
:
·
Access to all USBFS business line materials via the CCO Portal including business line Critical Procedures, Compliance Controls, Testing of Controls, Annual USBFS CCO Review, SSAE 16 audits of business lines
·
Assist the Fund CCO with quarterly 38a-1 certifications including a review of any changes to critical policies, procedures and controls and compliance events as required under Rule 38a-1 of the Investment Company Act
·
Testing of procedures and controls across all business lines with access to business line managers and subject matter experts
·
Quarterly CCO teleconferences and “Focus Calls” specific to current topics such as cybersecurity
·
CCO forums held periodically throughout the year in major cities
·
Annual client conference which includes CCO roundtable discussions
·
SEC exam support
·
Other items, including sharing of industry best practices across many areas
NOTE: the CCO Support team does NOT serve as the Fund CCO
In addition to the fees described above, additional fees may be charged to the extent that changes to applicable laws, rules or regulations require additional work or expenses related to services provided (e.g., compliance with new liquidity risk management and reporting requirements).
Fees are calculated pro rata and billed monthly
16
Fee Schedule for Supplemental Services for Fund Accounting, Fund Administration & Portfolio Compliance (provided by USBFS upon client need and/ or request) at December 2018
SEC Modernization Requirements
·
Form N-PORT — $12,000 per year, per Fund
·
Form N-CEN — $250 per year, per Fund
Daily Compliance Services
·
Base fee — $20,000 per fund per year
·
Setup — $2,500 per fund group
Section 18 Daily Compliance Testing (for derivatives and leverage)
·
$1,500 set up fee per fund complex
·
$500 per fund per month
Controlled Foreign Corporation (CFC)
·
USBFS Fee Schedule plus $15,000
C- Corp Administrative Services
·
1940 Act C-Corp — USBFS Fee Schedule plus $15,000
·
1933 Act C-Corp — USBFS Fee Schedule plus $25,000
Ongoing Annual Legal Administration Services
Add the following for legal administration services in support of external legal counsel, including annual registration statement update and drafting of supplements
·
$15,000 first fund
·
$5,000 each additional fund up to 5 funds
·
Fees will be negotiated for fund 6+
Section 15(c) Reporting
·
$2,000 per fund per standard reporting package*
·
Additional 15c reporting is subject to additional charges
*Standard reporting packages for annual 15(c) meeting
·
Expense reporting package: 2 peer comparison reports (adviser fee) and (net expense ratio w classes on one report) OR Full 15(c) report
·
Performance reporting package: Peer Comparison Report
·
Standard data source — Morningstar; additional charges will apply for other data services
Miscellaneous Expenses
All other miscellaneous fees and expenses, including but not limited to the following, will be separately billed as incurred
: Portfolio Composition File (PCF) management services, SWIFT processing, customized reporting, third-party data provider costs (including GICS, MSCI, Lipper, etc.), postage, stationary, programming, special reports, proxies, insurance, EDGAR/XBRL filing, retention of records, federal and state regulatory filing fees, expenses related to and including travel to and from Board of Trustee meetings, third party auditing and legal expenses, wash sales reporting (GainsKeeper), tax e-filing, PFIC monitoring, conversion expenses (if necessary), and travel related costs.
Fees are calculated pro rata and billed monthly
17
Exhibit 99.(h)
FORM OF AUTHORIZED PARTICIPANT AGREEMENT
Pacific Global ETF Trust
This Authorized Participant Agreement (the “Agreement”) is entered into by and between Foreside Fund Services, LLC (the “Distributor”) and (the “Participant”) and is subject to acceptance by [Name of Transfer Agent/Index Receipt Agent] (the “[Transfer Agent/Index Receipt Agent]”), and is further subject to acknowledgement and agreement by
Pacific Global ETF Trust (the “Trust”), a series trust offering a number of portfolios of securities (each a “Fund” and collectively the “Funds”), solely with respect to Sections 4(c) and 12(c) herein. Capitalized terms used but not defined herein are defined in the current prospectus for each Fund as it may be supplemented or amended from time to time, and included in the Trust’s Registration Statement on Form N-1A, as it may be amended from time to time, or otherwise filed with the U.S. Securities and Exchange Commission (“SEC”) (together with such Fund’s Statement of Additional Information incorporated therein, the “Prospectus”).
The Distributor provides services as principal underwriter of the Funds acting on an agency basis in connection with the distribution of shares of beneficial interest of each Fund (the “Shares”). The [Transfer Agent/Index Receipt Agent] has
been retained to provide certain transfer agency services and to be the order taker with respect to the purchase and redemption of Shares.
This Agreement is intended to set forth certain procedures by which the Participant may purchase and/or redeem Creation Units through the Federal Reserve/Treasury Automated Debt Entry System maintained at the Federal Reserve Bank of New York (the “Federal Reserve Book-Entry System”) and the Continuous Net Settlement (“CNS”) clearing processes of National Securities Clearing Corporation (“NSCC”) (as such processes have been enhanced to effect purchases and redemptions of Creation Units, the “CNS Clearing Process”) or, outside of the CNS Clearing Process, the manual process of The Depository Trust Company (“DTC”).
Nothing in this Agreement shall obligate the Participant to create or redeem one or more Creation Units of Shares, to facilitate a creation or redemption through it by a participant client, or to sell or offer to sell the Shares.
The parties agree as follows:
1.
STATUS, REPRESENTATIONS AND WARRANTIES OF PARTICIPANT
(a)
The Participant represents and warrants that it has the ability to transact through the Federal Reserve Book-Entry System and, with respect to orders for the purchase of Creation Units (“Purchase Orders”) or orders for redemption of Creation Units (“Redemption Orders” and, together with Purchase Orders, the “Orders”), (i) through the CNS Clearing Process, because it is a member of NSCC and a participant in the CNS System of NSCC, and/or (ii) outside the CNS Clearing Process, because it is a DTC participant (a “DTC Participant”). Any change in the foregoing status of the Participant shall automatically and immediately terminate this Agreement. The Participant shall give prompt written notice of any such change to the Distributor and the [Transfer Agent/Index Receipt Agent].
The Participant may place Orders either through the CNS Clearing Process or outside the CNS Clearing Process, subject to the procedures for purchase and redemption set forth in the Prospectus and Section 2 of this Agreement.
(b)
The Participant represents and warrants that: (i) it is a broker-dealer registered with the SEC, and it is a member of the Financial Industry Regulatory Authority (“FINRA”), or it is exempt from, or it is otherwise not required to be registered as, a broker-dealer or a member of FINRA; (ii) it is registered and/or licensed to act as a broker or dealer, as required under all applicable laws, rules and regulations in the states or other jurisdictions in which the Participant conducts its activities, or it is otherwise exempt; and (iii) it is a Qualified Institutional Buyer, as defined in Rule 144A under the U.S. Securities Act of 1933, as amended (the “1933 Act”).
The Participant agrees that it will: (i) maintain such registrations, licenses, qualifications, and memberships in good standing and in full force and effect throughout the term of this Agreement; (ii) conform to the FINRA “Conduct Rules” and the securities laws of any jurisdiction in which it sells Shares, directly or indirectly, to the extent such laws, rules and regulations relate to the Participant’s transactions in, and activities with respect to, the Shares; and (iii) not offer or sell Shares of any Fund in any state or jurisdiction where such Shares may not lawfully be offered and/or sold.
Any change in the foregoing status of the Participant shall terminate this Agreement. The Participant shall give prompt written notice of any such change to the Distributor and the [Transfer Agent/Index Receipt Agent].
(c)
In the event Shares are authorized for sale in jurisdictions outside the several states, territories and possessions of the United States and the Participant offers and sells Shares in such jurisdictions and is not otherwise required to be registered or qualified as a broker or dealer, or to be a member of FINRA as set forth above, the Participant nevertheless agrees to observe the applicable laws, rules and regulations of the jurisdiction in which such offer and/or sale is made, to comply with the full disclosure requirements of the Securities Act and the regulations promulgated thereunder, and to conduct its business in accordance with the FINRA Conduct Rules, to the extent the foregoing relates to the Participant’s transactions in, and activities with respect to, the Shares.
(d)
The Participant understands and acknowledges that the method by which Creation Units will be created and traded may raise certain issues under certain interpretations of applicable U.S. federal securities laws. For example, because new Creation Units of Shares may be issued and sold by a Fund on an ongoing basis, a “distribution”, as such term is used in the 1933 Act, may occur at any point. The Participant understands and acknowledges that some activities on its part, depending on the circumstances, may result in it being deemed a participant in a distribution in a manner which could, under certain interpretations of applicable law, render it a statutory underwriter and subject it to the prospectus delivery and liability provisions of the 1933 Act. The Participant also understands and acknowledges that dealers who are not “underwriters,” but who effect transactions in Shares, whether or not participating in the distribution of Shares, are generally required to deliver a prospectus. For the avoidance of doubt, the Participant does not admit to being an underwriter of the Shares.
2.
EXECUTION OF PURCHASE AND REDEMPTION ORDERS
(a)
All Orders must comply with the procedures for Orders set forth in the Prospectus and in this
Agreement, which includes the attachments. The Participant, the Distributor, and the [Transfer Agent/Index Receipt Agent] each agrees to comply with the provisions of the Prospectus, this Agreement, and the laws, rules, and regulations that are applicable to it in its role under this Agreement. If there is a conflict between the terms of the Prospectus and the terms of this Agreement, the terms of the Prospectus control.
(b)
Phone lines used in connection with Orders will be recorded. The Participant hereby consents to the recording of all calls in connection with the Orders, provided that the Participant may reasonably request that the recording party promptly provide to the Participant copies of recordings of any such calls, which have been retained in accordance with the recording party’s usual document retention policy. If a recording party becomes legally compelled to disclose to any third party any recording involving communications with the Participant, to the extent legally permitted to do so, such recording party shall provide the Participant with reasonable advance written notice identifying the recordings to be disclosed, together with copies of such recordings, so that the Participant may seek a protective order or other appropriate remedy with respect to the recordings or waive its right to do so.
(c)
The Participant understands that a Creation Unit generally will not be issued until the requisite cash and/or the designated basket of securities (the “Deposit Securities”), as well as applicable Transaction Fee and taxes are transferred to the Trust on or before the settlement date in accordance with the Prospectus.
3.
AUTHORIZATION OF [TRANSFER AGENT/INDEX RECEIPT AGENT]
Solely with respect to Orders submitted through the CNS Clearing Process, the Participant hereby authorizes the [Transfer Agent/Index Receipt Agent], or its designee, to transmit to the NSCC on behalf of the Participant such instructions, including share and cash amounts as are necessary with respect to the purchase and redemption of Creation Units, and Orders consistent with the instructions and Orders issued by the Participant to the [Transfer Agent/Index Receipt Agent]. The Participant agrees to be bound by the terms of such instructions and Orders as reported by the [Transfer Agent/Index Receipt Agent] or its designee to the NSCC as though such instructions were issued by the Participant directly to the NSCC.
4.
MARKETING MATERIALS AND REPRESENTATIONS.
(a)
The Participant represents and warrants that it will not make any representations concerning a Fund, Creation Units or Shares, other than those consistent with the Prospectus or any Marketing Materials (as defined below) furnished to the Participant by the Distributor.
(b)
The Participant agrees not to furnish, or cause to be furnished by it or its employees, to any person, or to display or publish, any information or materials relating to a Fund or the Shares, including, without limitation, promotional materials and sales literature, advertisements, press releases, announcements, statements, posters, signs or other similar materials (“Marketing Materials”), unless such Marketing Materials: (i) are either furnished to the Participant by the Distributor, or, if prepared by the Participant, are consistent in all material respects with the Prospectus, are approved by the Distributor in writing, and clearly indicate that such Marketing Materials are prepared and distributed by the Participant, and (ii) comply with applicable FINRA Conduct Rules. The Participant shall file all
such Marketing Materials that it prepares with FINRA, if required by applicable laws, rules or regulations.
(c)
The Trust represents and warrants that (i) the Prospectus is effective, no stop order of the SEC or any other federal, state or foreign regulatory authority or self-regulatory authority, with respect thereto has been issued, no proceedings for such purpose have been instituted or, to its knowledge, are being contemplated; (ii) the Prospectus conforms in all material respects to the requirements of all applicable law, and the rules and regulations of the SEC thereunder and does not and will not contain an 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 they were made, not misleading; (iii) the Shares, when issued and delivered against payment of consideration thereof, as provided in this Agreement, will be duly and validly authorized, issued, fully paid and non-assessable and free of statutory and contractual preemptive rights, rights of first refusal and similar rights; (iv) no consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required for the issuance and sale of the Shares, except the registration of the Shares under the 1933 Act; (v) Shares will be listed for trading on a national exchange; (vi) it will not lend Shares pursuant to any securities lending arrangement that would prevent the Trust from settling a Redemption Order when due; (vii) any and all Marketing Materials prepared by the Trust or the Funds’ adviser and provided to the Participant in connection with the offer and sale of Shares shall comply with applicable law, including without limitation, the provisions of the 1933 Act and the rules and regulations thereunder and applicable requirements of FINRA, and will not contain any untrue statement of a material fact related to a Fund or the Shares or omit to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and (viii) it will not name the Participant in the Prospectus, Marketing Materials, or on the Fund’s website without the prior written consent of Participant, unless such naming is required by law, rule, or regulation.
Notwithstanding anything to the contrary in this Agreement, Marketing Materials shall not include (i) written materials of any kind that generally mention a Fund without recommending the Fund (including in connection with a list of products sold through Participant or in the context of asset allocations), (ii) materials prepared and used for the Participant’s internal use only, (iii) brokerage communications, including correspondence and institutional communications, as defined under FINRA rules, prepared by the Participant in the normal course of its business, and (iv) research reports; provided, however, that any such materials prepared by Participant comply with applicable FINRA Conduct Rules and other applicable laws, rules and regulations.
5.
TITLE TO SECURITIES; RESTRICTED SHARES
The Participant represents and warrants on behalf of itself and any party for which it acts that Deposit Securities delivered by it to the custodian and/or any relevant sub-custodian in connection with a Purchase Order will not be “restricted securities,” as such term is used in Rule 144(a)(3)(i) of the 1933 Act, and, at the time of delivery, the Fund will acquire good and unencumbered title to such Deposit Securities, free and clear of all liens, restrictions, charges and encumbrances, and not be subject to any adverse claims.
6.
BALANCING AMOUNT
The Participant hereby agrees that, in connection with a Purchase Order, it will make available on or before the contractual settlement date (the “Contractual Settlement Date”), by means satisfactory to the Trust, and in accordance with the provisions of the Prospectuses, immediately available or same day funds estimated by the Trust to be sufficient to pay the Balancing Amount next determined after acceptance of the Purchase Order, together with the applicable Transaction Fee. Any excess funds will be returned following settlement of the Purchase Order. The Participant agrees to ensure that the Balancing Amount will be received by the issuing Fund in accordance with the terms of the Prospectuses, but in any event on or before the Contractual Settlement Date, and in the event payment of such Balancing Amount has not been made in accordance with the provisions of the Prospectuses or by such Contractual Settlement Date, the Participant agrees in connection with a Purchase Order to pay the amount of the Balancing Amount, plus interest, computed at such reasonable rate as may be specified by the Fund from time to time. The Participant shall be liable to the custodian, any sub-custodian or the Trust for any amounts advanced by the custodian or any sub-custodian in its sole discretion to the Participant for payment of the amounts due and owing for the Balancing Amount. Computation of the Balancing Amount shall exclude any taxes, duties or other fees and expenses payable upon the transfer of beneficial ownership of the Deposit Securities, which shall be the sole responsibility of the Participant and not the Trust.
7.
ROLE OF PARTICIPANT
(a)
Each Party acknowledges and agrees that, for all purposes of this Agreement, the Participant will be deemed to be an independent contractor, and will have no authority to act as agent for the Funds or the Distributor in any matter or in any respect under this Agreement. The Participant agrees to make itself and its employees available, upon reasonable request, during normal business hours to consult with the Funds or the Distributor or their designees concerning the performance of the Participant’s responsibilities under this Agreement.
(b)
The Participant agrees as a DTC Participant and in connection with any purchase or redemption transactions in which it acts on behalf of a third party, that it shall extend to such party all of the rights, and shall be bound by all of the obligations, of a DTC Participant in addition to any obligations that it undertakes hereunder or in accordance with the Prospectuses.
(c)
The Participant represents that from time to time, it may be a beneficial owner of Shares (“Beneficial Owner”). To the extent that it is a Beneficial Owner, the Participant agrees to irrevocably appoint the Distributor as its attorney and proxy with full authorization and power to vote (or abstain from voting) its beneficially owned Shares with no input from the Participant. The Distributor, as attorney and proxy for the Participant hereunder: (i) is hereby given full power of substitution and revocation; (ii) may act through such agents, nominees, or attorneys as it may appoint from time to time; and (iii) may provide voting instructions to such agents, nominees, or substitute attorneys. This irrevocable proxy terminates upon termination of the Agreement.
(d)
The Participant represents and warrants that it has implemented, and agrees to maintain and implement on an on-going basis, an anti-money laundering program reasonably designed to comply with all applicable anti-money laundering laws and regulations, including but not limited to the Bank Secrecy Act of 1970 and the USA PATRIOT Act of 2001, each as amended from time to time, and any
rules adopted thereunder and/or any applicable anti-money laundering laws and regulations of other jurisdictions where Participant conducts business, and any rules adopted thereunder or guidelines issued, administered or enforced by any governmental agency.
8.
AUTHORIZED PERSONS OF THE PARTICIPANT
(a)
Concurrently with the execution of this Agreement, and from time to time thereafter as may be requested by the Funds, the [Transfer Agent/Index Receipt Agent], or the Distributor, the Participant shall deliver to the Funds and the [Transfer Agent/Index Receipt Agent], with copies to the Distributor, a certificate in the format of Attachment A to this Agreement, duly certified by the Participant’s Secretary or other duly authorized officer of Participant, setting forth the names and signatures of all persons authorized by the Participant (each an “Authorized Person”) to give Orders and instructions relating to any activity contemplated by this Agreement on behalf of the Participant. Such certificate may be relied upon by the Distributor, the [Transfer Agent/Index Receipt Agent] and the Funds as conclusive evidence of the facts set forth therein and shall be considered to be in full force and effect until receipt by the Funds, the Distributor, and the [Transfer Agent/Index Receipt Agent] of a superseding certificate or of written notice from the Participant that an individual should be added to, or removed from, the certificate. Whenever the Participant wants to add an Authorized Person, revoke the authority of an Authorized Person, or change or cancel a PIN Number (as defined below), the Participant shall give prompt written notice of such fact to the Funds and the [Transfer Agent/Index Receipt Agent], with a copy to the Distributor, and such notice shall be effective upon receipt by the Funds, the [Transfer Agent/Index Receipt Agent], and the Distributor.
(b)
The [Transfer Agent/Index Receipt Agent] shall issue to each Authorized Person a unique personal identification number (“PIN Number”) by which the Participant and such Authorized Person shall be identified and instructions to the Funds, [Transfer Agent/Index Receipt Agent], and Distributor issued by Participant through the Authorized Person shall be authenticated. The Participant and each Authorized Person shall keep his/her PIN Number confidential and only those Authorized Persons who were issued a PIN Number shall use such PIN Number to identify himself/herself and to submit instructions for Participant, to the Funds, [Transfer Agent/Index Receipt Agent], and Distributor. If an Authorized Person’s PIN Number is changed, the new PIN Number will become effective on a date mutually agreed upon in writing by the Participant and the [Transfer Agent/Index Receipt Agent]. If an Authorized Person’s PIN Number is compromised, the Participant shall contact the [Transfer Agent/Index Receipt Agent] promptly in writing in order for a new one to be issued. Upon receipt of written notice as set forth in paragraph (a) of this section, the [Transfer Agent/Index Receipt Agent] agrees to promptly issue a PIN Number when the Participant adds an Authorized Person and shall promptly cancel a PIN Number when the Participant revoke’s a person’s authority to act for it.
(c)
The [Transfer Agent/Index Receipt Agent] and Distributor shall not have any obligation to verify instructions and Orders given using a PIN Number and shall assume that all instructions and Orders issued to it using an Authorized Person’s PIN Number have been properly placed, unless the [Transfer Agent/Index Receipt Agent] and Distributor have actual knowledge to the contrary because they received from the Participant written notice as set forth in paragraph (a) of this section that such person is no longer authorized to act on behalf of Participant. The Participant agrees that none of the Distributor, the [Transfer Agent/Index Receipt Agent], or the Funds shall be liable, absent gross negligence, bad faith or willful misconduct, for Losses (as defined below) incurred by the Participant as a result of the unauthorized use of an Authorized Person’s PIN Number, unless the [Transfer
Agent/Index Receipt Agent], Distributor, and the Funds previously received from Participant written notice to revoke such Authorized Person’s PIN Number as set forth in paragraph (a) of this section. This paragraph (c) shall survive the termination of this Agreement.
9.
REDEMPTIONS
(a)
The Participant understands and agrees that Redemption Orders may be submitted only on days that the Trust is open for business, as required by Section 22(e) of the 1940 Act.
(b)
The Participant represents and warrants that it will not attempt to place a Redemption Order for the purpose of redeeming any Creation Units unless it first ascertains that it owns outright or has full legal authority and legal and beneficial right to tender for redemption the requisite number of Shares, and that such Shares have not been loaned or pledged to another party and are not the subject of a repurchase agreement, securities lending agreement, or any other agreement that would preclude the delivery of such Shares to the Fund.
(c)
The Participant understands that Shares of any Fund may be redeemed only when one or more Creation Units are held in its account.
(d)
In the event that the Distributor, [Transfer Agent/Index Receipt Agent] and/or the Trust reasonably believes in good faith that a Participant would not be able to deliver the requisite number of Shares to be redeemed as a Creation Unit on the settlement date, the Distributor, [Transfer Agent/Index Receipt Agent] and/or Trust may, without liability, reject the Participant’s Redemption Order.
(e)
In the event that the Participant receives Fund Securities the value of which exceeds the net asset value of the applicable Fund at the time of redemption, the Participant agrees to pay, on the same business day it is notified, or cause the Participant Client to pay, on such day, to the applicable Fund an amount in cash equal to the difference or return such Fund Securities to the Fund, unless the parties otherwise agree.
10.
BENEFICIAL OWNERSHIP
(a)
The Participant represents and warrants that, based upon the number of outstanding Shares of any particular Fund, either (i) it does not, and will not in the future as the result of one or more Purchase Orders, hold for the account of any single Beneficial Owner, or group of related Beneficial Owners, 80 percent or more of the currently outstanding Shares of such Fund, so as to cause the Fund to have a basis in the portfolio securities deposited with the Fund different from the market value of such portfolio securities on the date of such deposit, pursuant to sections 351 and 362 of the Internal Revenue Code of 1986, as amended, or (ii) it is carrying some or all of the Deposit Securities as a dealer and as inventory in connection with its market making activities.
(b)
A Fund, the Distributor, and the [Transfer Agent/Index Receipt Agent] have the right to require, as a condition to the acceptance of a deposit of Deposit Securities, information from the Participant regarding ownership of the Fund Shares by such Participant and its customers, and to rely thereon to the extent necessary to make a determination regarding ownership of 80 percent or more of the Fund’s currently outstanding Fund Shares by a Beneficial Owner.
11.
OBLIGATIONS OF PARTICIPANT
(a)
Pursuant to its obligations under the federal securities laws, the Participant agrees to maintain all books and records of all sales of Shares made by or through it and to furnish copies of such records to the Trust, [Transfer Agent/Index Receipt Agent] and/or the Distributor upon their reasonable request.
(b)
The Participant affirms that it has procedures in place reasonably designed to protect the privacy of non-public personal consumer/customer financial information to the extent required by applicable law, rule and regulation and that it will maintain such procedures throughout the term of this Agreement.
(c)
The Participant represents and warrants that it has taken affirmative steps so that will not be an affiliated person of a Fund, a promoter or principal underwriter of a Fund or an affiliated person of such persons due to ownership of Shares, including through its grant of an irrevocable proxy relating to the Shares to the Distributor.
12.
INDEMNIFICATION
This Section 12 shall survive the termination of this Agreement.
(a)
The Participant hereby agrees to indemnify and hold harmless the Distributor, the Funds, the [Transfer Agent/Index Receipt Agent], their respective subsidiaries, affiliates, directors, trustees, officers, employees, and agents, and each person, if any, who controls such persons within the meaning of Section 15 of the 1933 Act (each a “Participant Indemnified Party”) , from and against any loss, liability, cost, or expense (including reasonable attorneys’ fees) (“Loss”) incurred by such Participant Indemnified Party as a result of (i) any material breach by the Participant of any provision of this Agreement that relates to the Participant; (ii) any material failure on the part of the Participant to perform any of its obligations set forth in this Agreement; (iii) any failure by the Participant to comply with applicable laws, including rules and regulations of self-regulatory organizations in relation to its role as Participant under this Agreement; (iv) actions of such Participant Indemnified Party in reliance upon any instructions reasonably believed by the Distributor and/or the [Transfer Agent/Index Receipt Agent] to be genuine and to have been given by the Participant ; or (v) the Participant’s failure to complete an Order that has been accepted.
(b)
The Distributor hereby agrees to indemnify and hold harmless the Participant, its respective affiliates, directors, partners, members, officers, employees and agents, and each person, if any, who controls such persons within the meaning of Section 15 of the Securities Act (each a “Distributor Indemnified Party”) from and against any Loss incurred by such Distributor Indemnified Party as a result of: (i) any material breach by the Distributor of any provision of this Agreement that relates to the Distributor; (ii) any material failure on the part of the Distributor to perform any of its obligations set forth in this Agreement; or (iii) any failure by the Distributor to comply with applicable laws, rules and regulations, including rules and regulations of SROs, in relation to its role as Distributor.
(c)
The Trust hereby agrees to indemnify and hold harmless the Participant, its respective affiliates, directors, partners, members, officers, employees and agents, and each person, if any, who controls such persons within the meaning of Section 15 of the 1933 Act (each a “Trust Indemnified Party”) from and against any Loss incurred by such Trust Indemnified Party as a result of any material breach by the Trust of its representations in Section 4(c). All Shares represent interests in their underlying series, the
assets and liabilities of which are separate and distinct. Any indemnification provided by the Trust in connection with the Shares shall be limited to the corresponding assets of such series.
13.
LIMITATION OF LIABILITY
This Section 13 shall survive the termination of this Agreement.
(a)
In no event shall any party be liable for any special, indirect, incidental, exemplary, punitive or consequential loss or damage of any kind whatsoever (including but not limited to loss of revenue, loss of actual or anticipated profit, loss of contracts, loss of the use of money, loss of anticipated savings, loss of business, loss of opportunity, loss of market share, loss of goodwill or loss of reputation), even if such parties have been advised of the likelihood of such loss or damage and regardless of the form of action. In no event shall any party be liable for the acts or omissions of DTC, NSCC or any other securities depository or clearing corporation.
(b)
Neither the Distributor, the [Transfer Agent/Index Receipt Agent], nor the Participant shall be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including without limitation: acts of God; earthquakes; fires; floods; wars; civil or military disturbances; terrorism; sabotage; epidemics; riots; interruptions; loss or malfunction of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority or governmental actions.
(c)
The Distributor and the [Transfer Agent/Index Receipt Agent] may conclusively rely upon, and shall be fully protected in acting or refraining from acting upon, any communication authorized under this Agreement and upon any written or oral instruction, notice, request, direction or consent reasonably believed by them to be genuine.
(d)
In the absence of bad faith, gross negligence or willful misconduct on its part, the [Transfer Agent/Index Receipt Agent], whether acting directly or through its agents, affiliates or attorneys, shall not be liable for any action taken, suffered or omitted or for any error of judgment made by it in the performance of its duties hereunder. The [Transfer Agent/Index Receipt Agent] shall not be liable for any error of judgment made in good faith unless in exercising such it shall have been grossly negligent in ascertaining the pertinent facts necessary to make such judgment.
14.
INFORMATION ABOUT DEPOSIT SECURITIES
On each day that the Trust is open for business, through the facilities of the NSCC, the names and amounts of Deposit Securities to be included in the current Fund Deposit for each Fund will be published.
15.
RECEIPT OF PROSPECTUSES BY PARTICIPANT
The Participant acknowledges receipt of the Prospectuses and represents that it has reviewed and understands the terms thereof.
16.
CONSENT TO ELECTRONIC DELIVERY OF PROSPECTUSES
The Distributor will provide to the Participant copies of the Prospectus and any printed supplemental information in reasonable quantities upon request of Participant. The Participant consents to the delivery of the Prospectus electronically at the e-mail address under Participant’s signature. The Participant understands that the current Prospectus and most recent shareholder report for each Fund are available at [website]. The Distributor will notify the Participant when a revised, supplemented or amended Prospectus for any Fund is available and deliver or otherwise make available to the Participant copies of such revised, supplemented or amended Prospectus at such time and in such numbers as to enable the Participant to comply with any obligation it may have to deliver such Prospectus to its customers. As a general matter, the Distributor will make such revised, supplemented or amended Prospectuses available to the Participant no later than its effective date.
The Participant agrees to maintain the e-mail address set forth on the signature page to this Agreement and further agrees to promptly notify the Distributor if its e-mail address changes. The Participant understands that it must have Internet access to electronically access the Prospectuses. The Participant may revoke the consent to electronic delivery of the Prospectuses at any time by providing written notice to the Distributor.
17.
NOTICES
Except as otherwise specifically provided in this Agreement, all notices required or permitted to be given pursuant to this Agreement shall be given in writing and delivered by personal delivery; by Federal Express or other similar delivery service; by registered or certified United States first class mail, return receipt requested; or by facsimile, electronic mail or similar means of same day delivery (with a confirming copy by mail). Unless otherwise notified in writing, all notices to the Fund shall be at the address or telephone or facsimile numbers indicated below the signature of the Distributor. All notices to the Participant, the Distributor, and the [Transfer Agent/Index Receipt Agent] shall be directed to the address or telephone, or facsimile numbers indicated below the signature line of such party.
18.
EFFECTIVENESS, TERMINATION, AND AMENDMENT OF AGREEMENT
(a)
This Agreement shall become effective on the date set forth below and may be terminated at any time by any party upon sixty (60) days’ prior written notice to the other parties, and may be terminated earlier by the Fund, the Participant or the Distributor at any time in the event of a material breach by another party of any provision of this Agreement.
(b)
No party may assign its rights or obligations under this Agreement (in whole or in part) without the prior written consent of the other party, which shall not be unreasonably withheld.
(c)
This Agreement may not be amended except by a writing signed by all the parties hereto. This Agreement is intended to, and shall apply to, each of the current and future Funds of the Trust, such that no amendment shall be required in the event that the Trust creates new Funds or terminates existing Funds, provided, however, that notice shall be provided to the Participant of such creation or termination of Funds.
19.
GOVERNING LAW; ARBITRATION
This Section 19 shall survive the termination of this Agreement.
This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York without regard to the conflicts of laws provisions thereof. The parties irrevocably submit to the personal jurisdiction and service and venue of any New York State or United States Federal court sitting in New York, New York having subject matter jurisdiction, for the purposes of any suit, action or proceeding arising out of or relating to this Agreement.
20. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument.
21. SEVERANCE
If any provision of this Agreement is held by any court or any act, regulation, rule or decision of any other governmental or supra-national body or authority or regulatory or self-regulatory organization to be invalid, illegal or unenforceable for any reason, it shall be invalid, illegal or unenforceable only to the extent so held and shall not affect the validity, legality or enforceability of the other provisions of this Agreement and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein.
22. HEADINGS
Headings and sub-headings are included solely for convenient reference and shall not affect the meaning, construction, operation, or effect of the terms of this Agreement.
23. ENTIRE AGREEMENT
This Agreement, which includes the attachments, supersedes any prior agreement between the parties with respect to the subject matter contained herein and constitutes the entire agreement between the parties regarding the matters contained herein.
[
Signature page follows
]
The duly authorized representatives of the below parties have executed this Agreement, the effective date of which shall be the date of the most recent signature below.
|
Foreside Fund Services, LLC
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
Name: Mark Fairbanks
|
|
|
|
|
|
Title: Vice President
|
|
|
|
|
|
Address: Three Canal Plaza, Suite 100
|
|
|
|
|
|
Portland, Maine 04101
|
|
|
|
|
|
Telephone: 207-553-7100
|
|
|
|
|
|
Facsimile: 207-553-7151
|
|
|
|
|
|
E-mail: etp-services@foreside.com
|
|
|
|
|
|
|
Date:
|
|
|
|
|
|
|
[Name of Participant]
|
|
|
DTC/NSCC Clearing Participant Code:
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
Address:
|
|
|
|
|
|
|
|
Telephone:
|
|
|
|
|
|
|
|
|
|
|
|
|
Facsimile:
|
|
|
|
|
|
|
|
E-mail:
|
|
|
|
|
|
|
|
Date:
|
|
|
|
|
|
|
ACCEPTED BY:
|
|
|
|
|
|
[Name of TA/IRA],
as [Transfer Agent/Index Receipt Agent]
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
Address:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telephone:
|
|
|
|
|
|
|
|
Facsimile:
|
|
|
|
|
|
|
|
E-mail:
|
|
|
|
|
|
|
|
Date:
|
|
|
|
|
|
|
ACKNOWLEDGED AND AGREED, SOLELY WITH RESPECT TO SECTIONS 4(c) and 12(c) HEREOF:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pacific Global ETF Trust
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
Address:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telephone:
|
|
|
|
|
|
|
|
Facsimile:
|
|
|
|
|
|
|
|
E-mail:
|
|
|
|
|
|
|
|
Date:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ATTACHMENT A
AUTHORIZED PERSONS
[Insert AP Form of Certification for Authorized Persons]
Exhibit 99.(p)(1)
PACIFIC GLOBAL ETF TRUST
Code of Ethics
This Code of Ethics (the “Code”) has been adopted by Pacific Global ETF Trust (the “
Trust
” or the “
Funds
”) in compliance with Rule 17j-1 under the Investment Company Act of 1940 (the “
Act
”) (unless specifically identified, Rule 17j-1 is referred to as the “
Rule
”). This Code of Ethics is intended to ensure that all acts, practices and courses of business engaged in by Access Persons (as defined) of the Trust reflect high standards and comply with the requirements of Section 17(j) of the Act and Rule 17j-1 thereunder. Any such Access Person shall not be subject to this Code if such person is subject to another organization’s code of ethics that has been approved by the Board of Trustees of the Trust.
This Code acknowledges the general principles that Access Persons and Advisory Persons (as defined below): (i) owe a fiduciary obligation to the Trust; (ii) have the duty at all times to place the interests of the Trust and their respective shareholders, if any, first; (iii) must conduct all personal securities transactions in such a manner as to avoid any actual or potential conflict of interest or abuse of an individual’s position of trust and responsibility; (iv) should not take inappropriate advantage of their positions in relation to the Trust; (v) must comply with the federal securities laws; and (vi) must safeguard nonpublic information about the Trust and their accounts, securities, instructions and interests.
Independent Trustees
— A Trustee who is not an “interested person” of the Trust shall not be subject to certain code provisions:
Section II. — Pre-Clearance Requirements and Prohibitions
Section III. — Procedures (Reporting Requirements)
Section IV. C. — Certificate of Compliance
Section V. — Code Provisions Only Applicable to Service Providers
Section VI. — Records
I.
Definitions
A.
“
Access Person
” means any director, trustee, officer, general partner, managing member, or advisory person (as defined) of the Trust and any employee who has access to nonpublic information regarding any client’s purchase or sale of securities or nonpublic information regarding the portfolio holdings of any reportable fund (as defined in Rule 204A-1 of the Advisers Act), including the Trust or any affiliated mutual fund, or who is involved in making securities recommendations to clients or who has access to such recommendations that are nonpublic. For the purposes of this code, an Access Person does not include persons employed by Pacific Global Advisors, LLC or Foreside Fund Services, LLC who are subject to securities transaction reporting requirements of their employer’s Code of Ethics if that Code of Ethics complies with Rule 17j-1 under the Act and has been approved by the Board of Trustees of the Trust.
B.
“
Advisory Person
” means (1) any employee of the Trust (or of any company in a control relationship to the Trust) who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a security (as defined) by the Trust, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and (2) any natural person in a control relationship to the Trust who obtains information concerning recommendations made to the Trust with regard to the purchase or sale of a security by the Trust.
C.
“
Beneficial Ownership
” shall be interpreted in the same manner as it would be under Rule 16a-1(a)(2) in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder.
D.
“
Control
” shall have the same meaning as that set forth in Section 2(a)(9) of the Act. Section 2(a)(9) provides that “
control
” generally means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company.
E.
A “
security held or to be acquired
” means: (1) any security which, within the most recent 15 days: (a) is or has been held by the Trust; or (b) is being or has been considered by the Trust for purchase by the Trust; and (2) any option to purchase or sell, and any security convertible into or exchangeable for, a security described in clause (1) above.
F.
An “
initial public offering
” means an offering of securities registered under the Securities Act of 1933, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934.
G.
“
Investment Personnel
” means: (1) any employee of the Trust (or of any company in a control relationship to the Trust) who, in connection with his or her regular functions or duties, makes or participates in making recommendations regarding the purchase or sale of securities by the Trust; and (2) any natural person who controls the Trust and who obtains information concerning recommendations made to the Trust regarding the purchase or sale of securities by the Trust.
H.
A “
limited offering
” means an offering that is exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) or Section 4(6) or pursuant to Rule 504, Rule 505, or Rule 506 under the Securities Act of 1933.
I.
“
Purchase or sale
” for purposes of this Code and each Exhibit or other appendix hereto includes, among other things, the writing of an option to purchase or sell a security.
J.
“
Reportable Fund
” means any registered fund to which the Adviser, or any person controlling, controlled by, or under common control with the Adviser, serves as investment adviser.
K.
“
Reportable Security
” means a Security as defined in Section 2(a)(36) of the Act, except that it shall not include direct obligations of the Government of the United States, bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements, and shares issued by registered open-end investment companies (including money market funds) except shares of the Trust or any other affiliated mutual fund, or such other securities as may be excepted under the provisions of the Rules.
II.
Pre-Clearance Requirements and Prohibitions
A.
Generally
. Rule 17j-1 under the Act makes it unlawful for any affiliated person of the Trust, or any affiliated person of Pacific Global Advisors, LLC, directly or indirectly, in connection with the purchase or sale of a security held or to be acquired by the Trust:
·
To employ any device, scheme or artifice to defraud the Trust;
·
To make to the Trust any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made to the Trust, in light of the circumstances under which they are made, not misleading;
·
To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the Trust; or
·
To engage in any manipulative practice with respect to the Trust.
It is the policy of the Adviser/Sub-adviser and the Trust that no access person shall engage in any act, practice or course of conduct that would violate the provisions of the Rules set forth above.
B.
Initial Public Offerings and Limited Offerings
. No Access Person or Investment Personnel may acquire any direct or indirect beneficial ownership in any securities in an initial public offering or in a limited offering unless the Chief Compliance Officer of the Trust has authorized the transaction in advance. The Chief Compliance Officer of the Adviser is responsible for pre-clearing any trades in such securities by the Trust’s Chief Compliance Officer.
C.
Prohibitions on Personal Trading
1.
Blackout Period Surrounding Rebalancing of Underlying Indexes
. Access Persons are prohibited from trading in personal accounts three days before and three days after a Fund’s Underlying Index rebalances.
2.
Prohibition on Short-Term Profits
. Access Persons may not purchase and sell, or sell and purchase, within any period of 30 calendar days a security, other than an exempt security, if such transaction will result in a profit. If any such transactions occur, the Trust will require any profits from the transactions to be disgorged for donation by the Trust to charity. In applying the 30 calendar day holding period, the Trust will apply the “last-in, first-out” methodology.
3.
Prohibition on Short Sales and Similar Transactions
. Access Persons may not purchase a put option or sell a call option, sell short or otherwise take a short position, either directly or through any beneficial ownership, in any security held by the Funds.
III.
Procedures
A.
Acknowledgment of Receipt
. Each Access Person receiving a copy of this Code and any subsequent amendment thereto, must acknowledge receipt in writing on the form supplied by the Chief Compliance Officer (or his or her delegate) attached as Appendix I and must promptly return the signed form to the Chief Compliance Officer.
B.
Reporting
. In order to provide the Trust with information to enable each of them to determine with reasonable assurance whether the provisions of the Rule, as applicable, are being observed by its Access Persons, each Access Person of the Trust, other than a Trustee of the Trust who is not an “interested person” (as defined in the Act) of the Trust, shall submit the
following reports in the forms attached hereto as Exhibits A-C to the Chief Compliance Officer (or his or her delegate) showing all transactions in Reportable Securities and Reportable Funds in which the person has, or by reason of such transaction acquires, any direct or indirect beneficial ownership:
1.
Initial Holding Report
. Exhibit A shall initially be filed no later than 10 days after a person becomes an Access Person and the information must be current as of a date no more than 45 days prior to the date the person becomes an Access Person. Each holdings report must contain with respect to each Reportable Security and Reportable Fund, at a minimum: (i) the title and type of security, and, as applicable, the exchange ticker symbol or CUSIP number, number of shares, and principal amount of each security in which the Access Person has any direct or indirect beneficial ownership; (ii) the name of any broker, dealer or bank with which the Access Person maintains an account in which any securities are held for the Access Person’s direct or indirect benefit; and (iii) the date the Access Person submits the report.
2.
Quarterly Transaction Reports
. Exhibits B shall be filed no later than 30 days after the end of each calendar quarter, but transactions over which an Access Person had no direct or indirect influence or control need not be reported. No such periodic report needs to be made if the report would duplicate information contained in broker trade confirmations or account statements received by the Trust no later than 30 days after the end of each calendar quarter and/or information contained in the Trust’s records. In addition, transactions effected pursuant to automatic reinvestment plans need not be reported. Quarterly transaction reports must be dated and contain the following information with respect to each transaction in a Reportable Security and Reportable Fund in which the Access Person had, or as a result of the transaction acquired, any direct or indirect beneficial ownership and/or brokerage account established by the Access Person in which he or she held any securities during the quarter: (i) date of the transaction, the title and as applicable the exchange ticker symbol or CUSIP number, interest date and maturity date, number of shares, and principal amount of each Reportable Security involved; (ii) nature of the transaction (i.e., purchase, sale or another type of acquisition or disposition); (iii) the price at which the transaction was effected; (iv) name of broker, dealer or bank with or through whom the transaction was effected; and (v) the date the Access Person submits the report.
3.
Annual Holdings Report
. Exhibit C must be submitted by each Access Person within 45 days after the end of each calendar year with respect to each security held and the information must be current as of a date no more than 45 days prior to the date the report was submitted. The annual holdings report shall contain the same information as the initial holdings report.
4.
Duplicate Brokerage Statements and Trade Confirmations
. Each Access Person shall direct his/her broker to supply to the CCO, on a timely basis, duplicate copies of confirmations of all securities transactions, other than for exempt securities, in which the Access Person has, or by reason of such transaction acquires, any direct or indirect Beneficial Ownership and copies of periodic statements for all securities accounts in which Reportable Securities and Reportable Funds are held.
C.
Chief Compliance Officer of the Trust
. The Chief Compliance Officer of the Trust will submit all required reports to the Chief Compliance Officer of the Adviser.
D.
Notification
. The Chief Compliance Officer (or his or her delegate) shall notify each Access Person of the Trust who may be required to make reports pursuant to this Code that such person is subject to reporting requirements and shall deliver a copy of this Code to each such person.
IV.
Review and Enforcement
A.
Review
.
The Chief Compliance Officer of the Trust (or his or her delegate) shall from time to time review the reported personal securities transactions of Access Persons for compliance with the requirements of this Code. The Chief Compliance Officer of the Adviser will be responsible for reviewing the personal securities transactions of the Trust’s Chief Compliance Officer.
If the Chief Compliance Officer of the Trust (or his or her delegate) determines that a violation of this Code may have occurred, before making a final determination that a material violation has been committed by an individual, the Chief Compliance Officer of the Trust (or his or her delegate) may give such person an opportunity to supply additional information regarding the transaction in question.
B.
Enforcement
.
If the Chief Compliance Officer of the Trust (or his or her delegate) determines that a material violation of this Code has occurred, he or she shall promptly report the violation to the Trustees of the Trust. The Trustees, with the exception of any person whose transaction is under consideration, shall take such actions as they consider appropriate, including imposition of any sanctions that they consider appropriate.
No person shall participate in a determination of whether he or she has committed a violation of this Code or in the imposition of any sanction against himself or herself. If, for example, a securities transaction of the Chief Compliance Officer of the Trust is under consideration, the Chief Compliance Officer of the Adviser, designated for this purpose by the Trustees of the Trust, shall act in all respects in the manner prescribed herein for the Chief Compliance Officer.
C.
Certificate of Compliance.
Each Access Person must certify in writing within 45 days of each year-end in the form attached as Appendix II that he or she has: (a) read this Code, including any amendments thereto, and understood it; (b) complied with this Code’s requirement during the past year; (c) disclosed or reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of this Code and (d) reported all violations of this Code and the federal securities laws to the Chief Compliance Officer.
D.
Reporting to Board
. No less frequently than annually, the Chief Compliance Officer of the Trust shall furnish to the Trust’s Board of Trustees, and the Board must consider, a written report that:
·
Describes any issues arising under the Code or procedures since the last report to the Board of Trustees, including, but not limited to, information about material violations of the Code or procedures and sanctions imposed in response to the material violations; and
·
Certifies that the Trust has adopted procedures reasonably necessary to prevent Access Persons from violating the Code.
V.
Code Provisions Applicable Only to Service Providers.
A.
Code of Ethics
. The provisions of Pacific Global Advisors, LLC and Foreside Fund Services, LLC (collectively, the “Service Providers”) Codes of Ethics are hereby adopted as the Code of Ethics of the Fund applicable to the respective employees of those Service Providers that also serve as officers of the Trust (a “Service Provider Employee”). A violation of a Service Provider’s Code of Ethics by such an employee of a Service Provider shall also constitute a violation of this Code of Ethics. Any amendment or revision of a Service Provider’s Code of Ethics shall be deemed to be an amendment or revision of this Code of Ethics, and any such amendment or revision shall be promptly (within six months) be furnished to the Board of Trustees of the Trust for approval.
B.
Reports
. Service Provider Employees shall file the reports required by their respective employer’s Code of Ethics. Such filings shall be deemed to be filings with the Trust under this Code of Ethics, and shall at all times be available to the Trust.
C.
Annual Issues and Certification Report
. At periodic intervals established by the Board of Trustees of the Trust, but no less frequently than annually, the Compliance Officer of each Service Provider shall provide a written report to the Board of Trustees of the Trust of all issues involving its Service Provider Employees under that Service Provider’s Code of Ethics during such period including, but not limited to, information about material code or procedure violations and sanctions imposed in response to those material violations. Additionally, each Service Provider will provide the Board of Trustees of the Trust a written certification which certifies to the Board of Trustee of the Trust that the Service Provider has adopted procedures reasonably necessary to prevent its access persons from violating its code of ethics.
VI.
Records
The Trust shall maintain records in the manner and to the extent set forth below, which records shall be available for appropriate examination by representatives of the Securities and Exchange Commission.
·
A copy of this Code and any other Code of Ethics which is, or at any time within the past five years has been, in effect shall be preserved in an easily accessible place;
·
A record of any violation of this Code and of any action taken as a result of such violation shall be preserved in an easily accessible place for a period of not less than five years following the end of the fiscal year in which the violation occurs;
·
A copy of each report made pursuant to this Code by an Access Person, including any information provided in lieu of reports, shall be preserved by the Chief Compliance Officer of the Trust for a period of not less than five years from the end of the fiscal year in which it is made, the first two years in an easily accessible place;
·
A list of all persons who are, or within the past five years have been, required to make reports pursuant to this Code, or who are or were responsible for reviewing these reports, shall be maintained in an easily accessible place;
·
A record of any decision, and the reasons supporting the decision, to approve the acquisition of securities by Access Persons, for at least five years after the end of the fiscal year in which the approval is granted;
·
A copy of each report made pursuant to Section IV.D of this Code shall be preserved by the Chief Compliance Officer of the Trust for at least five years after the end of the fiscal year in which it is made, the first two years in an easily accessible place; and
·
The Chief Compliance Officer of the Trust shall preserve a record of any decision, and the reasons supporting the decision, to approve the acquisition by Access Persons of securities under Section II.B of this Code for at least five years after the end of the fiscal year in which the approval is granted, the first two years in an easily accessible place.
VII.
Miscellaneous
A.
Confidentiality
. All reports of securities transactions and any other information filed with the Trust pursuant to this Code shall be treated as confidential, except as regards appropriate examinations by representatives of the Securities and Exchange Commission.
B.
Amendment; Interpretation of Provisions
. The Board of Trustees may from time to time amend this Code or adopt such interpretations of this Code as they deem appropriate.
Adopted: December 11, 2018
Exhibit 99.(p)(2)
Cadence Capital Management LLC
Pacific Asset Management
Pacific Global Advisors LLC
Pacific Life Fund Advisors LLC
Pacific Private Fund Advisors LLC
Investment Advisers’
CODE OF ETHICS
Effective
January 1, 2019
Investment Advisers’
Code of Ethics
TABLE OF CONTENTS
|
I.
|
INTRODUCTION
|
2
|
|
II.
|
WHY AM I SUBJECT TO THE CODE?
|
3
|
|
III.
|
WHO CAN HELP ME WITH QUESTIONS?
|
3
|
|
IV.
|
STATEMENT OF GENERAL PRINCIPLES
|
4
|
|
V.
|
PROTECTION OF NON-PUBLIC INFORMATION
|
5
|
|
|
A.
|
CONFIDENTIAL INFORMATION
|
5
|
|
|
B.
|
MATERIAL NON-PUBLIC INFORMATION
|
5
|
|
|
C.
|
INSIDER TRADING
|
5
|
|
|
D.
|
RESTRICTED LIST
|
6
|
|
|
|
|
|
VI.
|
WHAT SHOULD I DO BEFORE I TRADE A SECURITY?
|
6
|
|
|
A.
|
PRECLEARANCE REQUIREMENTS
|
7
|
|
|
B.
|
TRADING RESTRICTIONS
|
8
|
|
|
C.
|
HOW DO I REQUEST PRECLEARANCE?
|
8
|
|
|
|
|
|
VII.
|
WHAT DO I NEED TO REPORT?
|
9
|
|
|
A.
|
INITIAL REPORTING FOR NEW ACCESS PERSONS
|
9
|
|
|
B.
|
QUARTERLY REPORT OF SECURITIES TRANSACTIONS
|
9
|
|
|
C.
|
ANNUAL REPORT OF SECURITIES HOLDINGS
|
10
|
|
|
D.
|
DISCLOSURE OF REPORTABLE ACCOUNTS
|
10
|
|
|
|
|
|
VIII.
|
WHAT ISN’T SUBJECT TO THE RESTRICTED LIST, PRECLEARANCE AND REPORTING REQUIREMENTS?
|
10
|
|
|
A.
|
EXEMPT SECURITIES
|
10
|
|
|
B.
|
EXEMPT ACCOUNTS
|
11
|
|
|
C.
|
EXEMPT TRANSACTIONS
|
11
|
|
|
|
|
|
IX.
|
STARCOMPLIANCE SYSTEM
|
12
|
|
|
A.
|
MAINTAINING ACCOUNTS WITH APPROVED BROKERS
|
12
|
|
|
B.
|
STARCOMPLIANCE EXCEPTIONS
|
12
|
|
|
|
|
|
X.
|
REPORTING VIOLATIONS OF THE CODE
|
13
|
|
XI.
|
REVIEW AND ENFORCEMENT
|
13
|
|
|
A.
|
REVIEW
|
13
|
|
|
B.
|
ENFORCEMENT
|
13
|
|
|
|
|
|
XII.
|
CONFIDENTIALITY
|
14
|
|
XIII.
|
TRAINING
|
14
|
|
XIV.
|
REVISIONS TO THE CODE
|
14
|
|
APPENDIX 1. GLOSSARY
|
15
|
|
APPENDIX 2. COMPLIANCE CONTACTS
|
20
|
|
APPENDIX 3. APPROVED BROKERS
|
21
|
Effective January 1, 2019
1
I.
INTRODUCTION
Cadence Capital Management LLC (“Cadence”), Pacific Global Advisors LLC (“PGA”), Pacific Asset Management)(1) (“PAM”), Pacific Life Fund Advisors LLC (“PLFA”), and Pacific Private Fund Advisors LLC (“PPFA”) (each an “Adviser’ and collectively, the “Advisers”) are registered investment advisors with the Securities and Exchange Commission (“SEC”) and are regulated by the Investment Advisers Act of 1940, as amended (“Advisers Act”).
Rule 204A-1 of the Advisers Act requires investment advisers to establish, maintain and enforce a written code of ethics, and specifies the minimum requirements to include in the code. The code must set forth standards of conduct expected of advisory personnel and address conflicts that arise from personal trading by advisory personnel.
The Investment Advisers’ Code of Ethics (the “Code”) is designed to meet regulatory requirements(2), and prevent conflicts of interests, or the appearance of such conflicts, with regard to Access Persons of the Advisers owning or engaging in transactions involving
Securities
.
Employees of Pacific Life Insurance Company (“Pacific Life”), including subsidiaries and affiliates, are also subject to Pacific Life’s Code of Business Conduct (see Splash!). The Code supersedes when there is a conflict between a standard established by a Pacific Life Code of Business Conduct policy and a standard established by the Code.
The Code doesn’t attempt to identify all possible scenarios or circumstances that are conflicts of interest. The Code doesn’t ensure literal compliance with each specific provision, and doesn’t necessarily shield you from liability for personal trading or conduct that violates a fiduciary duty to our
Clients
. You are expected to follow the specific rules and the spirit of the Code. Violations of the Code can result in personal sanctions including termination of employment.
Certain words within this Code have specific meanings that can be found in Appendix 1. These words are underlined the first time they appear in the Code. The on-line version of this document has a hyper-link from each of the underlined words to the section of the Glossary where the specific definitions appear.
(1) PAM is a dba of Pacific Life Fund Advisors (“PLFA”). Registration as an investment adviser is at the PLFA level.
(2) The Code has been developed to meet regulatory requirements, including Rule 204A-1 of the Investment Advisers Act of 1940, as amended and Rule 17j-1 of the Investment Company Act of 1940, as amended.
2
II.
WHY AM I SUBJECT TO THE CODE?
You meet one or more of these criteria, making you an “Access Person”:
·
An Officer or employee of an Adviser; and/or
·
A person who:
·
has access to non-public information regarding any Clients’ purchase or sale of Securities, or non-public information regarding the portfolio holdings of any Client Account managed by the Adviser(s); and/or
·
is involved in making Securities recommendations to Clients, or has access to such recommendations that are non-public for the Client Accounts managed by the Adviser(s).
·
An Officer of an affiliated mutual fund(3), and/or
·
A person who
·
makes, participates in, or obtains information regarding Securities transactions in affiliated mutual funds or whose functions relate to making recommendations with respect to affiliated funds transactions; and/or
·
has access to non-public trading or securities holdings information of the affiliated funds.
Access Persons are identified by their role and responsibilities related to each Adviser. Access Persons are full-time, part-time, and temporary employees, as well as consultants and interns who meet the criteria above. A Compliance Officer, in consultation with appropriate management as needed, determines if a person meets the criteria to be deemed an Access Person. Pacific Life’s Corporate Compliance department (“Corporate Compliance”) maintains the Access Person list and periodically reviews the list for completeness. Access Persons are subject to the Code in its entirety unless specifically stated otherwise.
III.
WHO CAN HELP ME WITH QUESTIONS?
Corporate Compliance administers the Code using the StarCompliance system (“StarCompliance”). Certifications and other requirements related to the Code must be submitted in StarCompliance unless otherwise specified in the Code. Administrative or StarCompliance questions should be directed to Corporate Compliance. Questions related to the provisions of the Code should be directed to a member of Pacific Global Asset Management (“PGAM”) Compliance or the applicable advisers
Chief Compliance Officer
(“CCO”). Members of Corporate Compliance and PGAM Compliance are listed in Appendix 2 along with each Advisers CCO and additional compliance contacts.
(3) Affiliated mutual funds include Pacific Select Fund, Pacific Funds and Pacific Global ETFs.
3
IV.
STATEMENT OF GENERAL PRINCIPLES
The Code is based on the principle that you, as an Access Person of the Advisers, owe a fiduciary duty of care, loyalty, honesty, and good faith to act in the best interests of our Clients. The Code sets out standards of conduct to help you avoid potential conflicts of interest that may arise from your actions and your personal Securities transactions.
As a fiduciary to our Clients:
·
you have a duty to place the interests of our Clients before your own interests.
·
you must not take any action in connection with your personal investments that would cause even the appearance of unfairness or impropriety.
·
you must avoid activities, interests and relationships that might interfere or appear to interfere with making decisions in the best interests of our Clients.
The following are general principles governing personal Securities transactions by Access Persons.
You are required to:
·
comply with the Code and avoid any actual or potential conflicts of interest in personal Securities transactions;
·
comply with conditions we apply to your personal Securities transactions;
·
comply with Pacific Life’s Code of Business Conduct; and
·
comply with applicable U.S. federal securities laws, rules, and regulations.
You must not:
·
shadow trades in a
Client Account
by duplicating a Client’s trades;
·
front run a Client Account by trading Securities ahead of a Client;
·
defraud, manipulate, or plan to defraud a Client Account; or
·
trade a Security in a
Personal Account
where you have direct or indirect
Beneficial Ownership
if you have actual knowledge that the same Security is being considered for purchase or sale, or is being purchased or sold for a Client Account(4).
In addition to the above, there are special considerations governing personal Securities transactions by Access Persons who are investment professionals of an Adviser. Investment professionals are portfolio managers, research analysts, traders or others who have responsibility for making either Securities recommendations or investment decisions for Client Accounts.
(4) Access Persons are not required to ask if a Security is being considered, or is being purchased or sold, for a Client Account.
4
Investment professionals must not:
·
take inappropriate advantage of your position by directly or indirectly using information concerning the investments in Client Accounts or influencing the investment decision-making process for Client Accounts for your own benefit.
·
use assets in Client Accounts to affect the market in a way that benefits your Personal Accounts or in a manner that is detrimental to our Client Accounts. This includes causing or recommending a Client to take action or not to take action for your personal benefit.
·
take an investment opportunity away from a Client Account which would have an adverse effect on the Client Account or would benefit your Personal Accounts.
·
mislead a Client Account by making an untrue statement or a material fact or omitting to state a material fact.
·
delay taking appropriate action for a Client Account in order to avoid potential adverse consequences in your Personal Accounts.
·
engage in any manipulative practice with respect to Securities including pricing manipulation.
V.
PROTECTION OF NON-PUBLIC INFORMATION
A.
Confidential Information
As an Access Person, you have access to non-public investment information (“NPII”) of the Advisers which may include Securities recommendations, trades, or holdings. You must not disclose NPII except as required to carry out Securities transactions, or for other valid business reasons, providing appropriate confidentiality agreements have been executed, or for legal or regulatory requirements as permitted by applicable laws.
B.
Material Non-Public Information
While in the possession of material non-public information (“MNPI”) you are prohibited from trading the information for your accounts or on behalf of other accounts, or communicating this information to others, regardless of whether you obtained the information through the scope of your employment or elsewhere.
You must contact a CCO, Law, or PGAM Compliance if you believe you have material non-public information.
C.
Insider Trading
Access Persons are subject to federal securities laws regarding insider trading. Employees of an Adviser or Pacific Life are subject to Pacific Life’s Insider Trading Policy (see Splash!).
5
D.
Restricted List
There are three restricted lists:
·
The PGAM restricted list applies to Access Persons who have a designated workstation or office on the 7th floor of the 840 building.
·
The PLFA restricted list applies to PLFA Access Persons.
·
The Cadence restricted list applies to Cadence’s Access Persons.
Certain Access Persons are not subject to any of the restricted lists.
It is your responsibility to log into StarCompliance to review the issuers on the restricted list that applies to you before you trade.
A Restricted List may include an
Issuer
for a variety of reasons, including but not limited to, the possession of material non-public information.. There is an absolute ban on personal Securities transactions in the Securities of these Issuers when they are present on the list.
If an Issuer is added to a Restricted List after receiving preclearance for a personal Securities transaction, the Access Person can only act on the preclearance if the trade order has already been placed with a broker. The trade order may not be cancelled, nor may it be placed after the Restricted List has been updated. Access Persons will be required to provide proof from the broker of the date and time the order was placed. If you execute a short sale and the Issuer of that Security is subsequently placed on the Restricted List, you may not execute a “cover” transaction in order to close out the position.
VI.
WHAT SHOULD I DO BEFORE I TRADE A SECURITY?
1.
Check the Restricted List in StarCompliance to see if there are restrictions on the Securities of the Issuer.
2.
Not on the Restricted List?
·
Check the preclearance requirements table below to determine if you can trade the Security without preclearance authorization. You may be subject to multiple preclearance requirements depending on the type of Access Person you are.
·
Check the trading restriction requirements table below to determine if you can trade the Security without any additional restrictions. These apply to PGA and Cadence employees only.
6
A.
Preclearance Requirements
|
Access Person Type
|
|
Pre-clearance Requirements
|
|
All Access Persons
|
|
·
Initial Public Offerings (“IPOs”) - Preclearance is required only on the initial offering of the Issuer. Transactions of the Issuer on the secondary market don’t require an additional preclearance approval. Note: Cadence access persons are prohibited from purchasing IPOs.
·
Private Placements - The initial commitment and/or transaction requires preclearance. Additional capital investments such as subsequent subscriptions (including capital calls related to the initial approved investment) do not require additional preclearance approval.
·
Hedge Funds - The initial commitment and/or transaction requires preclearance. Subsequent investments after the initial transaction in the Hedge Fund do not require additional preclearance approval.
·
Initial Coin Offering - The initial commitment and/or transaction requires preclearance. Subsequent investments after the initial transaction in the ICO do not require additional preclearance approval.
|
|
Access Persons who have a designated workstation or office on the 7th floor of the 840 building
|
|
·
Fixed Income Securities - Except for any that are Exempt Securities
·
Grey List Securities — The list is in StarCompliance
|
|
·
PLFA Employees
·
PLFA Investment Committee Members
·
PLFA Conflict Review Committee Members
|
|
·
Transactions in Pacific Funds
·
Transactions in the Pacific Select Fund
|
|
·
PAM Employees
|
|
·
Transactions in Pacific Funds
·
Transactions in the Pacific Select Fund
·
Transactions in the Pacific Asset Enhanced Floating Rate ETF (“PAM ETF”)
|
|
·
PGA Employees
|
|
·
Transactions in Pacific Global US Equity Income ETF (“USDY”)
|
|
·
Cadence Employees
|
|
·
Equity transactions (including ETFs)
·
Transactions in mutual funds sub-advised by Cadence
·
Transactions in Pacific Global US Equity Income ETF (“USDY”)
|
7
B.
Trading Restrictions
|
Access Person Type
|
|
Trading Restrictions
|
|
PGA and Cadence Employees
|
|
·
Securities may not be purchased or sold if, at the time of pre-clearance, you knew or should have known that a Client Account would be trading in the same security or an equivalent Security on the same day.
·
You may not acquire Beneficial Ownership of any securities in an initial public offering.
·
You may not purchase or sell Securities during the period beginning three days before and ending three days after a Client Account trades in the same Security or an equivalent Security. If you pre-clear a Securities transaction prior to a Client Account trading in the same Security, it will not be deemed a violation of this Code unless you knew or should have known that the Client Account would be trading in that Security within three days.
·
You may not profit from the purchase and sale, or sale and purchase, within 30 calendar days, of the same Securities or equivalent Securities (other than Exempt Securities) of which you have Beneficial Ownership. Any such short-term trade must be unwound, or if that is not practical, the profits must be contributed to a charitable organization selected by Cadence.
·
For Mutual Funds where Cadence is the sub-adviser, you may not purchase and sell, or sell and purchase the same Mutual Fund, in any 30-day period, regardless of whether those transactions occurred in a single account or across multiple accounts in which the employee has beneficial interest.
·
You are prohibited from transactions involving puts, calls, straddles, options, and/or short sales unless the security is an Exempt Security or the transaction is approved by Cadence’s CCO.
|
C.
How do I Request Preclearance?
If your proposed transaction requires preclearance, you must obtain approval prior to executing the transaction. If the transaction is approved, the approval is valid for the time period specified with the approval. If you don’t execute the transaction within the time period specified, you must resubmit the request for preclearance and obtain approval prior to executing the transaction.
Complete all information for transactions that require preclearance in StarCompliance. PGAM Compliance reviews the preclearance request in StarCompliance and generally responds no later than the close of the next business day. All pre-clearance approvals are effective until the market close on the day that pre-clearance is given (1:00 P.M. PT, 4:00 P.M ET).
8
Exceptions to preclearance requirements are outlined in Section VIII.
VII.
WHAT DO I NEED TO REPORT?
Complete reporting and certifications required under this section in StarCompliance as further addressed in Section VIII. Exceptions to the reporting requirements are outlined in Section VIII below.
A.
Initial Reporting for New Access Persons
Within 10 business days of becoming an Access Person, you must provide the following reports in StarCompliance:
1.
Initial Certificate of Compliance
The certification states that you have received a copy of and read and understand the Code and, to the best of your knowledge, you have disclosed, reported, or caused to be reported, the information required by the Code.
2.
Initial Securities Holdings and Accounts
Report your accounts including the name of any broker-dealer or bank where you maintain an account in which you hold or trade Securities of which you have Beneficial Ownership.
Report holdings in Securities of which you have Beneficial Ownership. Holdings information must be current as of a date that is no more than 45 calendar days prior to the date of becoming an Access Person.
3.
Pacific Select Fund and Pacific Funds Information Request
Report Pacific Select Fund and Pacific Funds’ investments of which you have Beneficial Ownership.
B.
Quarterly Report of Securities Transactions
Within 30 calendar days of the calendar quarter end you must disclose the following in StarCompliance :
1.
Transactions
Report transactions during the quarter in Securities of which you have Beneficial Ownership.
2.
Changes to Pacific Select Fund and Pacific Funds
Report any changes or new accounts in Pacific Select Fund and Pacific Funds.
9
C.
Annual Report of Securities Holdings
1.
Holdings
Within 30 calendar days of the calendar year end, you must provide holdings in Securities of which you have Beneficial Ownership in StarCompliance. Holdings must be current as of a date that is no more than 45 calendar days prior to the date the report is submitted.
2.
Certification
The certification states that you have received a copy of and read and understand the Code and, to the best of your knowledge, you have disclosed, reported, or caused to be reported, the information required by the Code.
3.
Pacific Select Fund and Pacific Funds
Report Pacific Select Fund and Pacific Funds’ investments of which you have Beneficial Ownership.
D.
Disclosure of Reportable Accounts
1.
New Accounts
You are required to disclose new accounts to Corporate Compliance on a quarterly basis via StarCompliance.
VIII.
WHAT ISN’T SUBJECT TO THE RESTRICTED LIST, PRECLEARANCE, AND REPORTING REQUIREMENTS?
A.
Exempt Securities
These types of securities are not subject to the restricted list, preclearance, or reporting requirements:
·
Direct obligations of the U.S. Government including
U.S. Treasury Securities
and
U.S. Government Agency Securities
·
Bank Certificates of Deposits (“CDs”), bankers’ acceptances, commercial paper, and other high quality
Short Term Debt Instruments
(with a maturity of less than one year), including repurchase agreements
·
Money market funds registered in the United States
·
Open-end
Mutual Funds
(except the Pacific Select Fund, Pacific Funds, and Cadence’s sub-advised Mutual Funds)
·
Certain Access Persons are required to preclear transactions in the Pacific Select Fund and Pacific Funds (see section V, A.2.)
·
Pacific Select Fund and Pacific Funds are reportable (see section VI, A.3., B.3., and C.3.)
10
·
Certain Access Persons are required to preclear transactions and report holdings in Cadence’s sub-advised Mutual Funds (see section VI, A.5)
·
Unit Investment Trusts
invested exclusively in one or more open-end Mutual Funds
B.
Exempt Accounts
These types of accounts are not subject to the restricted list, preclearance, or reporting requirements:
·
Accounts with holdings and transactions in exempt Securities only
·
Accounts in which you have no direct or indirect influence or control, including:
·
Accounts that are blind trusts. A blind trust typically consists of a legal arrangement in which a third party fiduciary, such as a trustee or third-party manager, is given complete discretion to make investment decisions, subject to predetermined account guidelines, on behalf of the trust beneficiary. Beneficiaries of a blind trust have no knowledge of the transactions and holdings of the trust; or
·
Accounts managed by a trustee or third-party manager where the Access Person may provide high-level strategy, including investment objectives and guidelines, but does not direct the third-party to buy or sell specific securities. The Access Person does not exercise investment discretion and does not receive notice of specific transactions prior to execution. The Access Person does receive statements for these accounts.
In order for an account to qualify as being an exempt account, Access Persons are required to:
·
Give consent to the trustee or third-party manager to provide a quarterly statement or letter outlining the relationship to you as the Access Person and confirming you have no influence or control over the account.
·
Provide a certification at least annually, confirming you do not have influence or control over the account.
·
Obtain approval from a
CCO
prior to relying on the exemption.
Exempt Accounts are subject to review by the CCO. The CCO may request, on a sample basis, reports of holdings and/or transactions made in an exempt account.
C.
Exempt Transactions
These types of transactions are not subject to the restricted list, preclearance or reporting requirements:
·
Automatic, non-voluntary transactions such as stock dividends, dividend reinvestments, stock splits, reverse stock split, exercise of rights, merger or consolidation, spin-off or other similar corporate distribution or reorganization generally applicable to all holders of the same class of Securities
·
Tender offer or bond call that is applicable pro-rata to all stockholders or bond holders respectively
11
·
Transactions pursuant to an Automatic Investment Plan including transactions made directly with the Issuer in a direct stock purchase and dividend reinvestment plans (“DRIP”)
·
Any transaction that overrides the pre-set schedule or allocations of the automatic investment plan is subject to the Restricted List and quarterly transaction reporting
·
Transactions reflecting the receipt of employer stock or
Options
by an employee resulting from an Employee Stock Purchase Plan (“ESPP”), Employee Stock Options (“ESO”) granted, or as a form of compensation
·
Any transaction to buy or sell employer stock or exercise Options is subject to the Restricted List and quarterly transaction reporting
IX.
STARCOMPLIANCE SYSTEM
Corporate Compliance uses StarCompliance to administer compliance with personal trading regulations and Securities and transactions reporting requirements in the Code.
You are required to submit a consent form authorizing your broker(s) to send your account information, including all holdings and transactions, to StarCompliance, subject to the Reporting Exceptions in Section VII. You must complete required reporting and certifications using StarCompliance, subject to the StarCompliance Exceptions in Section VIII C.
A.
Maintaining Accounts with Approved Brokers
Generally, Access Persons must maintain accounts with Approved Brokers. The Approved Brokers are listed on Appendix 3 and are subject to change. Exceptions must be approved by PGAM Compliance. Approved Brokers support electronic feeds directly to StarCompliance.
New employees who are Access Persons must maintain their accounts with an Approved Broker. New employees who are Access Persons who have an existing account with a broker not on the Approved Broker list are required to transfer their accounts to an Approved Broker within a specified time period as determined by a Compliance Officer, usually within 90 days.
B.
StarCompliance Exceptions
Certain transactions and holdings are with firms that will not send electronic transaction feeds, including transfer agents and banks. You are responsible for reporting any transactions and holdings required under the Code that are not reflected in StarCompliance to Corporate Compliance.
Under special circumstances, a Compliance Officer may permit an Access Person to submit reporting required under the Code through paper means in lieu of using StarCompliance. Requests must be submitted to PGAM Compliance in writing. All requests will be reviewed by a PGAM Compliance Officer.
12
X.
REPORTING VIOLATIONS OF THE CODE
You are required to report any violations of the Code promptly to a CCO. This duty exists whether the violation or apparent violation is yours or that of another person subject to the Code. Reports of violations other than your own may be made anonymously and confidentially. All such reports will be treated confidentially to the extent permitted by law and investigated promptly and appropriately. Information regarding anonymous reporting can be found on Splash!
Retaliation (e.g., termination, demotion or discrimination) against an Access Person who reports a violation of the Code or who assists or participates with an investigation in good faith is prohibited and constitutes a further violation of this Code. Good faith does not require that you be correct about the occurrence of a suspected activity but it does mean that you must tell the truth, as you know it, about the situation. For any questions relating to the reporting of violations of the Code, please contact a CCO or PGAM Compliance.
XI.
REVIEW AND ENFORCEMENT
A.
Review
A Compliance Officer reviews all Initial and Annual Reports of Securities Holdings and Quarterly Transaction reports to determine if all provisions of the Code have been followed and whether any violation of the Code may have occurred. The review includes checking applicable Securities and transactions against the Restricted List and Clients’ trades, if required preclearance was obtained, and if initial, quarterly, and annual reports had been received by the due date.
B.
Enforcement
1.
Violation Determination
A determination of whether a violation of the Code has occurred will be made by a CCO. Before making a determination of whether a violation of the Code has occurred, the applicable Access Person will have an opportunity to supply additional information regarding the issue in question. Other parties may be consulted as deemed appropriate by the CCO.
If you are uncomfortable with an interpretation, application of the Code, or determination made by a Compliance Officer, you may appeal to your Advisers CCO, Pacific Life’s CCO, or Pacific Life’s General Counsel.
2.
Violation Consequences and Resolution
Once a Compliance Officer has determined that a violation of the Code has occurred, a memo outlining the details of the violation will be provided to appropriate management to notify them of the violation, with a copy to the Access Person and the Adviser’s CCO. In addition, the Access Person may be subject to sanctions and other remedial actions, which may include, among other things,
13
meeting with Compliance staff and/or the CCO, restrictions of personal Securities transactions, fines, disgorgement (including forfeiting any profits or absorbing any losses), suspension (with or without compensation), reassignment, demotion, and/or termination of employment. In certain circumstances, the Access Person will be referred to the appropriate government authorities and may be subject to civil, regulatory, or criminal sanctions.
In determining the applicable sanction or other remedial action, several factors may be considered, including, but not limited to: the severity of the violation, the frequency of the Access Person’s violations, whether any violation caused harm or the potential of harm to our Clients’ interests, the extent that the Access Person profited or benefited from the violation, the Access Person’s efforts to cooperate with the investigation, and the Access Person’s efforts to correct any conduct that led to the violation.
If the CCO determines that a material violation of the Code has occurred, the CCO will use his/her discretion in notifying senior management or the Board. If senior management determines that the material violation may involve a fraudulent, deceptive, or manipulative act, the Adviser will report its findings to the Fund’s Board of Directors or Trustees pursuant to Rule 17j-1.
XII.
CONFIDENTIALITY
All reports and information submitted or obtained pursuant to this Code are treated as confidential; provided, however, that such information may be shared with Management, the Law Department, internal and external auditors, regulators, or other persons as your CCO deems necessary.
XIII.
TRAINING
Periodic training of the Code is required of all Access Persons. You will be notified of scheduled training sessions that you are required to complete.
XIV.
REVISIONS TO THE CODE
From time to time, this Code may be revised and updated. Any material changes to the Code will be reviewed and approved by the CCOs of each Adviser. The new version of the Code will be distributed, or made available, to all Access Persons. Access Persons must submit a certification indicating that he or she has received and has read and understood the amended Code.
14
APPENDIX 1. GLOSSARY
Beneficial Ownership
- You are considered to have Beneficial Ownership of Securities if you have the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the Securities. In addition, you are the beneficial owner of Securities in which an immediate family member has beneficial interest. The following are examples of an indirect interest in Securities:
·
Securities held by members of your immediate family sharing the same household. Immediate family includes any spouse, domestic partner, child, stepchild, grandchild, parent, stepparent, grandparent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and includes any adoptive relationship. (You are presumed to have investment decision-making authority and therefore beneficial interest; however, this presumption may be rebutted by convincing evidence that profits derived from transactions in these Securities will not provide you with any economic benefit.)
·
Your interest as a general partner in Securities held by a general or limited partnership.
·
Your interest as a manager-member in the Securities held by a limited liability company.
You do not have an indirect interest in Securities held by a corporation, partnership, Limited Liability Company, or other entity in which you hold an equity interest, unless you are a controlling equity holder or you have or share investment Control over the Securities held by the entity.
The following circumstances constitute Beneficial Ownership by you of Securities held in or by a trust:
·
Your ownership of Securities as a trustee where either you or members of your immediate family have a vested interest in the principal or income of the trust.
·
Your ownership of a vested beneficial interest in a trust.
·
Your status as a settlor of a trust, unless the consent of all of the beneficiaries is required in order for you to revoke the trust.
Chief Compliance Officer (“CCO”)
- An officer appointed as the Chief Compliance Officer of an entity.
Client / Client Account
- Any account or fund managed by PLFA, PAM, PPFA, PGA or Cadence as investment adviser or sub-adviser. For the purposes of the Code, Client Accounts exclude accounts managed for the General Accounts of Pacific Life or Pacific Life & Annuity Company unless an Investment Management Agreement (“IMA”) is in place between Pacific Life and the Investment Adviser. The underlying Investors in pooled investment vehicles advised by PAM, PPFA or Cadence are not Clients of the Advisers.
15
Closed-end Funds
- A closed end fund is a publicly traded investment company that raises a fixed amount of capital through an Initial Public Offering (“IPO”). The fund is then structured, listed, and traded like a stock on a stock exchange.
Compliance Officer
-The term Compliance Officer includes the CCO or their designees who are empowered to resolve issues and review reports. See Appendix 2 for a list of Compliance Officers.
Control
- When used within the context of Beneficial Ownership (as defined above) refers to the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. Any person who owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting Securities of a company is presumed to control such company.
Cryptocurrency/Digital Currency
- A digital representation of value, which the SEC describes as a decentralized, peer-to-peer virtual currency that is used like money. It can be exchanged for traditional currencies or used to purchase goods or services, usually online. Unlike traditional currencies, virtual currencies operate without central authority or banks and are not backed by any government. Examples include bitcoin and ether.
Equivalent Security
- An equivalent Security of a given Security is (i) a Security issuable upon exercise, conversion, or exchange of the given Security, (ii) a Security exercisable to purchase, convertible into or exchangeable for the given Security, or (iii) a Security otherwise representing an interest in or based on the value of the given Security.
Exchange-traded Fund (“ETF”)
- A Security that tracks an index, a commodity, or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.
Hedge Fund
- An aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short, and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark).
Initial Coin Offering
- Initial coin offerings (also called ICOs or token sales) are used by individuals or entities to raise capital. Virtual coins or tokens are purchased with either traditional currencies or virtual currencies. After they are issued, virtual coins or tokens may be resold to others in a secondary market.
Typically ICO’s will have the characteristics listed below that would classify it as a security and thus making it required for pre-clearance and as an ongoing reporting requirement.
16
A security is being offered where there is:
·
an investment of money
·
in a common enterprise
·
with an expectation of profit derived from the efforts of others.
Initial Public Offering (“IPO”)
- Commonly known as a company’s first sale of stock to the public, IPO is defined as an offering of Securities registered under the Securities Act of 1933, as amended, of an Issuer that was not, immediately before such registration, subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934.
Issuer
- A legal entity that has the power to issue and distribute a Security. Issuers include corporations, municipalities, foreign and domestic governments and their agencies, and investment trusts.
Municipal Bond
- A long-term debt instrument issued by a state or local government. It usually carries a fixed rate of interest, which is paid semiannually.
Municipal Note
- A Short Term Debt Instrument of a state or local government. Most popular are revenue, bond, and tax anticipation notes.
Mutual Fund
- An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in Securities such as stocks, bonds, money market instruments and similar assets. Mutual Funds are operated by money managers, who invest the fund’s capital and attempt to produce capital gains and income for the fund’s investors. A Mutual Fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus. An open-end Mutual Fund is a type of Mutual Fund that does not have restrictions on the amount of shares the fund will issue. If demand is high enough, the fund will continue to issue shares no matter how many investors there are. Open-end funds also buy back shares when investors wish to sell. The majority of Mutual Funds are open-end.
Option
- A contract between a buyer and a seller that gives the buyer the right, but not the obligation, to buy or sell a particular asset at a later day at an agreed upon price. Long Options will be valued at the amount paid (premium) to enter into the transaction. Short Options will be valued at their notional value (number of contracts x contract size x underlying Security price).
Pacific Select Fund/Pacific Funds
- Shares of Pacific Select Fund (purchased via a Pacific Life or Pacific Life & Annuity Company variable annuity contract and/or variable life insurance policy) and shares of Pacific Funds.
Personal Accounts
- Includes any Securities account (held at a broker-dealer, transfer agent, investment advisory firm, bank, or other financial services firm) in which an Access Person has a beneficial interest. This includes any accounts that may be opened in the future that become subject to the Code. Restrictions placed on transactions executed
17
within a Personal Account also pertain to investments held outside of an account over which an Access Person has physical control or possession, such as stock certificates.
Private Placement
-An offering of Securities that is exempt from registration under the Securities Act of 1933, pursuant to Section 4(2), Section 4(6), or Regulation D (Rules 501 through 506). Includes investments in privately held corporations, limited partnerships, limited offering, and tax shelter programs as well as a non-public offering in limited amounts available only to certain investors.
Security
- As defined under section 202(a) (18) of the Advisers Act:
Any note, stock, treasury stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, pre-organization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, Option or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, Option or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a security, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.
Additional Clarifications to the Definition of Security
Securities include shares of closed-end investment companies, Exchange-traded funds, futures contracts, forward contracts, and swaps. Does not include cryptocurrencies or digital currencies.
Short Term Debt Instruments
- Securities with a remaining maturity of 397 calendar days or less that have received a rating in one of the two highest rating categories by a Nationally Recognized Statistical Rating Organization (“NRSRO”)
Unit Investment Trust
- An investment vehicle registered with the SEC that purchases a fixed portfolio of Securities, such as corporate, Municipal or government bonds, mortgage-backed Securities, common stock, or preferred stock. The trust expires when the bonds mature or, in the case of equity funds, at a specified future date.
U.S. Government Agency Securities
- Agency Securities are direct obligations of federal government agencies or government-sponsored enterprises (GSEs). Federal agencies are entities of the Federal Government, such as the Government National Mortgage Association (Ginnie Mae) and the Tennessee Valley Authority (TVA). GSEs are publicly chartered but privately owned and operated entities, such as the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac).
18
U.S. Treasury Securities
- Direct obligations of the U.S. Government issued by the Department of the Treasury. Examples: Treasury bills, Treasury notes, Treasury bonds, Treasury inflation - indexed, and saving bonds.
19
APPENDIX 2. COMPLIANCE CONTACTS
Corporate Compliance
Suzanne LaRoque
James BalbasComplianceServices@PacificLife.com
Pacific Global Asset Management LLC
James Sandoval
Kiaton Ly
Pacific Life Fund Advisers LLC
Sharon Pacheco, Chief Compliance Officer
Michael Clifton
Justin Harris
Pacific Asset Management and Pacific Private Fund Advisers LLC
Carol Rumsey, Chief Compliance Officer
James Sandoval
Kiaton Ly
Pacific Global Advisors LLC and Cadence Capital Management LLC
Kimberly Voss, Chief Compliance Officer
20
APPENDIX 3. APPROVED BROKERS
1.
Ameriprise Financial Services Inc.
2.
Charles Schwab & Co
3.
Chase Investment Services Corp
4.
Citigroup Global Markets
5.
Davenport Company LLC
6.
E*Trade Financial
7.
Edward Jones
8.
Fidelity Investments
9.
Folio Investing
10.
Interactive Brokers
11.
J.P. Morgan Securities
12.
J.P. Morgan Private Bank
13.
Merrill Lynch
14.
Morgan Stanley Smith Barney
15.
Motif Investing
16.
MSW Financial Partners
17.
Options Express
18.
Raymond James
19.
Scott & Stringfellow
20.
Scottrade
21.
Stifel Nicolaus
22.
T. Rowe Price
23.
TD Ameritrade
24.
UBS Financial Services
25.
USAA Investment Management Company
26.
Vanguard Brokerage Services
27.
Wells Fargo Advisors
21
Exhibit 99.(p)(3)
CODE OF ETHICS
|
INTRODUCTION
|
1
|
|
|
|
|
1. STANDARDS OF PROFESSIONAL CONDUCT
|
2
|
|
|
|
|
(a)
|
|
Fiduciary Duties
|
2
|
|
(b)
|
|
Compliance with Laws
|
2
|
|
(c)
|
|
Corporate Culture
|
2
|
|
(d)
|
|
Professional Misconduct
|
3
|
|
(e)
|
|
Disclosure of Conflicts
|
3
|
|
(f)
|
|
Undue Influence
|
3
|
|
(g)
|
|
Confidentiality and Protection of Material Nonpublic Information
|
3
|
|
(h)
|
|
Personal Securities Transactions
|
4
|
|
(i)
|
|
Gifts
|
4
|
|
(j)
|
|
Service on Boards
|
4
|
|
(k)
|
|
Prohibition Against Market Timing
|
4
|
|
|
|
|
|
|
2. WHO IS COVERED BY THIS CODE
|
4
|
|
|
|
|
3. PROHIBITED TRANSACTIONS
|
5
|
|
|
|
|
(a)
|
|
Blackout Period
|
5
|
|
(b)
|
|
Requirement for Pre-clearance
|
5
|
|
(c)
|
|
Fund Officer Prohibition
|
5
|
|
|
|
|
|
|
4. REPORTING REQUIREMENTS OF ACCESS PERSONS
|
6
|
|
|
|
|
(a)
|
|
Reporting
|
6
|
|
(b)
|
|
Exceptions from Reporting Requirement of Section 4
|
6
|
|
(c)
|
|
Initial Holdings Reports
|
6
|
|
(d)
|
|
Quarterly Transaction Reports
|
6
|
|
(e)
|
|
New Account Opening; Quarterly New Account Report
|
7
|
|
(f)
|
|
Annual Holdings Reports
|
7
|
|
(g)
|
|
Alternative Reporting
|
7
|
|
(h)
|
|
Report Qualification
|
8
|
|
(i)
|
|
Providing Access to Account Information
|
8
|
|
(j)
|
|
Confidentiality of Reports
|
8
|
|
|
|
|
|
|
5. ACKNOWLEDGMENT AND CERTIFICATION OF COMPLIANCE
|
8
|
|
|
|
|
6. REPORTING VIOLATIONS
|
8
|
|
|
|
|
7. TRAINING
|
9
|
i
|
8. REVIEW OFFICER
|
9
|
|
|
|
|
(a)
|
|
Duties of Review Officer
|
9
|
|
(b)
|
|
Potential Trade Conflict
|
10
|
|
(c)
|
|
Required Records
|
10
|
|
(d)
|
|
Post-Trade Review Process
|
11
|
|
(e)
|
|
Submission to Fund Board
|
11
|
|
(f)
|
|
Report to the Risk Committee
|
11
|
|
|
|
|
|
|
Appendix A
- Foreside Companies
|
13
|
|
|
|
|
Appendix B
- Definitions
|
14
|
|
|
|
|
Attachment A
— Access Person Acknowledgement
|
16
|
|
|
|
|
Attachment B
— Pre-Clearance Request Form
|
17
|
ii
INTRODUCTION
This Code of Ethics (the “Code”) has been adopted by Foreside Financial Group, LLC (“Foreside”) and each of its affiliated entities and direct or indirect wholly-owned subsidiaries as listed in
Appendix A
(each, a “Company” and collectively, the “Companies”). This Code pertains to the Companies’ distribution services to registered management investment companies or series thereof, as well as those funds for which certain employees of the Companies (or an affiliate thereof) serve as an officer or director of a registered investment company (“Fund Officer”) or have been designated an Access Person by the Review Officer
(1)
(each a “Fund” and as set forth in the List of Access Persons & Reportable Funds). This Code:
1.
establishes standards of professional conduct;
2.
establishes standards and procedures for the detection and prevention of activities by which persons having knowledge of the investments and investment intentions of a Fund may abuse their fiduciary duties to the Fund; and
3.
addresses other types of conflict of interest situations.
Definitions of
underlined
terms are included in
Appendix B.
Each Company, through its President, may impose internal sanctions should
Access Persons
of any Company (as identified on the List of Access Persons & Reportable Funds maintained by the Review Officer) violate these policies or procedures. A registered broker-dealer and its personnel may be subject to various regulatory sanctions, including censure, suspension, fines, expulsion or revocation of registration for violations of securities rules, industry regulations and the Company’s internal policies and procedures. In addition, negative publicity associated with regulatory investigations and private lawsuits can negatively impact and severely damage business reputation.
Furthermore, failure to comply with this Code is a very serious matter and may result in internal disciplinary action being taken. Such action may include, among other things, warnings, reprimands, restrictions on activities and/or suspension or termination of employment. Violations also may result in referral to regulatory, civil or criminal authorities where appropriate.
Should Access Persons require additional information about this Code or have ethics-related questions, please contact the Review Officer, as defined under Section 8 below, directly.
(1)
Each Company is adopting this Code pursuant to Rule 17j-1 with respect to certain funds that it distributes or for which an employee of the Company serves as a Fund Officer or has been designated as an Access Person. Pursuant to the exception noted under Rule 17j-1(c)(3), adopting and approving a Rule 17j-1 code of ethics with respect to a Fund, as well as the Code’s administration, by a principal underwriter is not required unless:
·
the principal underwriter is an affiliated person of the Fund or of the Fund’s adviser, or
·
an officer, director or general partner of the principal underwriter serves as an officer, director or general partner of the Fund or of the Fund’s investment adviser.
A
Fund Officer
is permitted to report as an
Access Person
under this Code with respect to the Funds listed on the List of Access Persons & Reportable Funds maintained by the Review Officer.
1
1.
STANDARDS OF PROFESSIONAL CONDUCT
Each Company forbids any Access Person from engaging in any conduct that is contrary to this Code. Furthermore, certain persons subject to the Code are also subject to other restrictions or requirements that affect their ability to open securities accounts, effect securities transactions, report securities transactions, maintain information and documents in a confidential manner and other matters relating to the proper discharge of their obligations to the Company or to a Fund.
Each Company has always held itself and its employees to the highest ethical standards. Although this Code is only one manifestation of those standards, compliance with its provisions is essential. Each Company adheres to the following standards of professional conduct, as well as those specific policies and procedures discussed throughout this Code:
(a)
Fiduciary Duties
. Each Company and its Access Persons are fiduciaries and at all times shall:
·
act solely for the benefit of the Funds; and
·
place each Fund’s interests above their own.
(b)
Compliance with Laws
. Access Persons shall maintain knowledge of and comply with all applicable federal and state securities laws, rules and regulations, and shall not knowingly participate or assist in any violation of such laws, rules or regulations.
It is unlawful for Access Persons to use any information concerning a
security held or to be acquired
by a Fund, or their ability to influence any investment decisions, for personal gain or in a manner detrimental to the interests of a Fund.
Access Persons shall not, directly or indirectly, in connection with the trading of a Fund’s shares or the purchase or sale of a security held or to be acquired by a Fund for which they are an Access Person:
(i)
employ any device, scheme or artifice to defraud a Fund or engage in any manipulative practice with respect to a Fund;
(ii)
make to a Fund any untrue statement of a material fact or omit to state to a Fund a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading;
(iii)
engage in any act, practice, or course of business that operates or would operate as a fraud or deceit upon a Fund; or
(iv)
engage in any manipulative practice with respect to securities, including price manipulation.
(c)
Corporate Culture
. Access Persons, through their words and actions, shall act with integrity, encourage honest and ethical conduct and adhere to a high standard of business ethics.
2
(d)
Professional Misconduct
. Access Persons shall not engage in any professional conduct involving dishonesty, fraud, deceit or misrepresentation, or commit any act that reflects adversely on their honesty, trustworthiness or professional competence. Access Persons shall not knowingly misrepresent, or cause others to misrepresent, facts about a Company to a Fund, a Fund’s shareholders, regulators or any member of the public. Disclosure in reports and documents should be fair and accurate.
(e)
Disclosure of Conflicts
. As a fiduciary, each Company and Access Person has an affirmative duty of care, loyalty, honesty and good faith to act in the best interests of a Fund. Compliance with this duty can be achieved by trying to avoid conflicts of interest and by fully disclosing all material facts concerning any conflict that does arise with respect to any Fund. Access Persons must try to avoid situations that have even the appearance of conflict or impropriety.
This Code prohibits inappropriate favoritism of one Fund over another that would constitute a breach of fiduciary duty. Access Persons shall support an environment that fosters the ethical resolution of, and appropriate disclosure of, conflicts of interest, and shall comply with any prohibition on activities imposed by a Company if a conflict of interest exists. If any Access Person is (or becomes) aware of a personal interest that is, or might be, in conflict with the interest of a Fund, that Access Person must promptly disclose the situation or transaction and the nature of the conflict to the Review Officer for appropriate consideration.
(f)
Undue Influence
. Access Persons shall not cause or attempt to cause any Fund to purchase, sell or hold any security in a manner calculated to create any personal benefit to them or others whose accounts they hold a beneficial ownership interest (i.e., their spouse or domestic partner, minor children or relatives who reside in the Access Person’s household) or over which they have direct or indirect influence or control.
(g)
Confidentiality and Protection of Material Nonpublic Information.
The term “Material Nonpublic Information” refers to information that is both material information and nonpublic information, and also may be referred to as “Inside Information.” Information is considered to be “Nonpublic Information” unless it has been publicly disclosed, for example, through public filing with a securities regulator, issuance of a press release or the issuance of a prospectus. The term “Material Information” has no specific definition, but, for the purposes of this Code, it shall refer to any information that might have an effect on the market for a security generally or any information that a reasonable person would consider important in a decision to buy, hold or sell a security. Examples of material nonpublic information may include, but are not limited to: sales results; earnings (or loss) estimates (including significant changes to previously released information); dividend actions; strategic plans; new products, discoveries or services; significant personnel changes; acquisition, merger and divestiture plans; liquidity issues; proposed securities offerings; major pending or threatened litigation or potential claims; restructurings and recapitalizations; and the negotiation or termination of major contracts or relationships.
Information concerning the identity of portfolio holdings and financial circumstances of a Fund is confidential. Access Persons are responsible for safeguarding such material nonpublic
information about a Fund, including portfolio recommendations and fund holdings. Except as required in the normal course of carrying out their business responsibilities
and
as permitted by a
3
Fund’s policies and procedures, Access Persons shall not reveal information relating to the investment intentions or activities of any Fund, or securities that are being considered for purchase or sale on behalf of any Fund.
Access Persons in possession of material nonpublic information must maintain the confidentiality of such information, and each Company shall be bound by a Fund’s policies and procedures with regard to disclosure of an investment company’s identity, affairs and portfolio holdings. The obligation to safeguard such Fund information would not preclude Access Persons from providing necessary information to, for example, persons providing services to a Company or a Fund’s account such as brokers, accountants, custodians and fund transfer agents, or in other circumstances when the Fund consents, as long as such disclosure conforms to the Fund’s portfolio holdings disclosure policies and procedures.
In any case, Access Persons shall not:
·
trade based upon inside information, especially where Fund trades are likely to be pending or imminent; or
·
use or share knowledge of any material nonpublic information of a Fund for personal gain or benefit or for the personal gain or benefit of others.
(h)
Personal Securities Transactions
. All personal securities transactions shall be conducted in such a manner as to be consistent with this Code and to avoid any actual or potential conflict of interest or any abuse of any Access Person’s position of trust and responsibility.
(i)
Gifts
. Access Persons shall not accept or provide anything in excess of $100.00 (per individual per year) or any other preferential treatment, in each case as a gift, to or from any broker-dealer or other entity with which a Company or a Fund does business.
(j)
Service on Boards
. Access Persons shall not serve on the boards of trustees (or directors) of publicly traded companies, absent
prior
authorization based upon a determination by the Review Officer that the board service would be consistent with the interests of the Company, a Fund and its shareholders.
(k)
Prohibition Against Market Timing
. Access Persons shall not engage in market timing of shares of
Reportable Funds
(a list of which are provided in the List of Access Persons & Reportable Funds maintained by the Review Officer). For purposes of this section, an Access Person’s trades shall be considered ‘market timing’ if made in violation of any stated policy in the Fund’s prospectus.
2.
WHO IS COVERED BY THIS CODE
All Access Persons, in each case only with respect to the Reportable Funds as listed on the List of Access Persons & Reportable Funds maintained by the Review Officer, shall abide by
this Code. Access Persons are required to comply with specific reporting requirements as set forth in Sections 3 and 4 of this Code.
4
3.
PROHIBITED TRANSACTIONS
(a)
Blackout Period
. Access Persons shall not purchase or sell a
Reportable Security
in an account in their name, or in the name of others in which they hold a beneficial ownership interest or over which they have direct or indirect influence or control, if they had actual knowledge at the time of the transaction that, during the 24 hour period immediately preceding or following the transaction, the security was purchased or sold or was considered for purchase or sale by a Fund.
(b)
Requirement for Pre-clearance
. Access Persons must obtain
prior
written approval from the Review Officer before:
(i)
directly or indirectly acquiring beneficial ownership in securities in an initial public offering for which no public market in the same or similar securities of the issue has previously existed;
(ii)
directly or indirectly acquiring beneficial ownership in securities in a private placement; and
(iii)
directly or indirectly purchasing, selling or acquiring shares of a Reportable Fund for which they are an Access Person.
All requests for pre-clearance of securities transactions must be submitted to the Review Officer for review using the Pre-Clearance Request Form, in the form of
Attachment B
.
In determining whether to pre-clear the transaction, the Review Officer shall consider, among other factors, whether such opportunity is being offered to the Access Person by virtue of his or her position with the Fund or would result in a conflict of interest. Other factors to be considered may include: discussion with the Access Person concerning the reason for the requested transaction and how he or she became aware of the investment; the Access Person’s work role; the size and holding period of the proposed investment; the market capitalization of the issuer; the liquidity of the security; and other relevant factors. The Review Officer granting or denying the request must document the basis for the decision and notify the requesting person whether the trading request is approved or denied.
A pre-clearance request should not be submitted for a transaction that the requesting person does not intend to execute. Pre-clearance trading authorization
is valid
only from the time when approval is granted through the next business day. If the transaction is not executed within this period, an explanation of why the pre-cleared transaction was not completed must be submitted to the Review Officer within five (5) days. With respect to any effected transaction, the Access Person must provide the Review Officer with a transaction report evidencing the transaction consistent with the reporting requirements of Section 4.
(c)
Fund Officer Prohibition
. No Fund Officer shall directly or indirectly seek to obtain information (other than that necessary to accomplish the functions of the office) from any Fund portfolio manager regarding (i) the status of any pending securities transaction for a Fund or (ii) the merits of any securities transaction contemplated by the Fund Officer.
5
4.
REPORTING REQUIREMENTS OF ACCESS PERSONS
(a)
Reporting
. Access Persons must report the information described in this Section with respect to transactions in any
Reportable Security
in which they have, or by reason of such transaction acquire, any direct or indirect
beneficial ownership
. Access Persons must submit the appropriate reports to the Review Officer, unless they are otherwise required by a Fund, pursuant to a Code of Ethics adopted by the Fund, to report to the Fund or another entity.
(b)
Exceptions from Reporting Requirement of Section 4
. Access Persons need not submit:
(i)
any report with respect to securities held in accounts over which the Access Person had no direct or indirect influence or control;
(ii)
a quarterly transaction report with respect to transactions effected pursuant to an automatic investment plan. However, any transaction that overrides the pre-set schedule or allocations of the automatic investment plan must be included in a quarterly transaction report;
(iii)
a quarterly transaction report with respect to transactions effected which were non-volitional on the part of the Access Person, including acquisitions of Reportable Securities by gift or inheritance; or
(iv)
a quarterly transaction report if the report would duplicate information contained in broker trade confirmations or account statements that the Company holds in its records so long as the Company receives the confirmations or statements no later than thirty (30) days after the end of the applicable calendar quarter.
(c)
Initial Holdings Reports
. No later than ten (10) days after a person becomes an Access Person, the person must report the following information:
(i)
the title, type of security, and as applicable the exchange ticker symbol or CUSIP number, number of shares and principal amount of each Reportable Security (whether or not publicly traded) in which the person has any direct or indirect beneficial ownership as of the date the person became an Access Person;
(ii)
the name of any broker, dealer or bank with whom the person maintains an account in which any securities were held for the Access Person’s direct or indirect benefit as of the date the person became an Access Person; and
(iii)
the date that the report is submitted by the Access Person.
The information contained in the initial holdings report must be current as of a date no more than forty-five (45) days prior to the date the person becomes an Access Person.
(d)
Quarterly Transaction Reports
. No later than thirty (30) days after the end of a calendar quarter, each Access Person must submit a quarterly transaction report which includes, at a minimum, the following information with respect to any transaction during the quarter in a Reportable Security (whether or not publicly traded) in which the Access Person had any direct or indirect beneficial ownership:
6
(i)
the date of the transaction, the title, and as applicable the exchange ticker symbol or CUSIP number, the interest rate and maturity date (if applicable), the number of shares and the principal amount of each Reportable Security involved;
(ii)
the nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);
(iii)
the price of the Reportable Security at which the transaction was effected;
(iv)
the name of the broker, dealer or bank with or through which the transaction was effected; and
(v)
the date that the report is submitted.
(e)
New Account Opening; Quarterly New Account Report
. Each Access Person shall provide written notice to the Review Officer
prior
to opening any new account with any entity through which a Reportable Securities (whether or not publicly traded) transaction may be effected for which the Access Person has direct or indirect beneficial ownership.
In addition, no later than thirty (30) days after the end of a calendar quarter, each Access Person must submit a Quarterly New Account Report with respect to any account established by such a person in which any Reportable Securities (whether or not publicly traded) were held during the quarter for the direct or indirect benefit of the Access Person. The Quarterly New Account Report shall cover, at a minimum, all accounts at a broker-dealer, bank or other institution opened during the quarter and provide the following information:
(1)
the name of the broker, dealer or bank with whom the Access Person has established the account;
(2)
the date the account was established; and
(3)
the date that the report is submitted by the Access Person.
(f)
Annual Holdings Reports
. Annually, each Access Person must report the following information (which information must be current as of a date no more than forty-five (45) days before the report is submitted):
(i)
the title, type of security, and as applicable the exchange ticker symbol or CUSIP number, number of shares and principal amount of each Reportable Security (whether or not publicly traded) in which the Access Person had any direct or indirect beneficial ownership;
(ii)
the name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities are held for the Access Person’s direct or indirect benefit; and
(iii)
the date that the report is submitted by the Access Person.
(g)
Alternative Reporting
. The submission to the Review Officer of duplicate broker trade confirmations and account statements on all securities transactions required to be reported under this Section shall satisfy the reporting requirements of Section 4. The annual holdings report may be satisfied by confirming annually, in writing, the accuracy of the information delivered by, or on behalf of, the Access Person to the Review Officer and recording the date of the confirmation.
7
(h)
Report Qualification
. Any report may contain a statement that the report shall not be construed as an admission by the person making the report that he or she has any direct or indirect beneficial ownership in the Reportable Securities to which the report relates.
(i)
Providing Access to Account Information
. Access Persons will promptly:
(i)
provide full access to a Fund, its agents and attorneys to any and all records and documents which a Fund considers relevant to any securities transactions or other matters subject to the Code;
(ii)
cooperate with a Fund, or its agents and attorneys, in investigating any securities transactions or other matter subject to the Code;
(iii)
provide a Fund, its agents and attorneys with an explanation (in writing if requested) of the facts and circumstances surrounding any securities transaction or other matter subject to the Code; and
(iv)
promptly notify the Review Officer or such other individual as a Fund may direct, in writing, from time to time, of any incident of noncompliance with the Code by anyone subject to this Code.
(j)
Confidentiality of Reports
. Transaction and holdings reports will be maintained in confidence, except to the extent necessary to implement and enforce the provisions of this Code or to comply with requests for information from regulatory or government agencies or law enforcement where applicable.
5.
ACKNOWLEDGEMENT AND CERTIFICATION OF COMPLIANCE
Each Access Person is required to acknowledge in writing, initially and annually (in the form of
Attachment A
), that the person has received, read and understands the Code (and in the case of any amendments thereto, shall similarly acknowledge such amendment) and recognizes that he or she is subject to the Code. Further, each such person is required to certify annually that he or she has:
·
read, understood and complied with all the requirements of the Code;
·
disclosed or reported all personal securities transactions pursuant to the requirements of the Code; and
·
not engaged in any prohibited conduct.
If an Access Person is unable to make the above representations, he or she shall report any violations of this Code to the Review Officer.
6.
REPORTING VIOLATIONS
Access Persons shall report any violations of this Code promptly to the Review Officer, unless the violations implicate the Review Officer, in which case the individual shall report the violations to the Chief Risk Officer or Chief Executive Officer of Foreside, as appropriate. Such reports will be confidential, to the extent permitted by law, and investigated promptly and appropriately. Retaliation against an individual who reports a violation is prohibited and constitutes a further violation of this Code.
8
Reported violations of the Code will be investigated and appropriate actions will be taken. Types of reporting that are required include, but are not limited to:
·
Noncompliance with applicable laws, rules and regulations;
·
Fraud or illegal acts involving any aspect of the Company’s business;
·
Material misstatements in regulatory filings, internal books and records, Fund records or reports;
·
Activity that is harmful to a Fund, including Fund shareholders; and
·
Deviations from required controls and procedures that safeguard a Fund or a Company.
Access Persons should seek advice from the Review Officer with respect to any action or transaction that may violate this Code, and refrain from any action or transaction that might lead to the appearance of a violation. Access Persons should promptly report any apparent or suspected violations in addition to actual or known violations of this Code to the Review Officer.
7.
TRAINING
Training with respect to the Code will occur periodically and all Access Persons are required to attend any training sessions or read any applicable materials. Training may include, among other things, (1) periodic orientation or training sessions with new and existing personnel to remind them of their obligations under the Code and/or (2) certifications that Access Persons have read and understood the Code, and require re-certification that they have re-read, understand and have complied with the Code.
8.
REVIEW OFFICER
(a)
Duties of Review Officer
. The President of Foreside has been appointed by the President of each Company as the Review Officer to:
(i)
review all securities transaction and holdings reports and maintain the names of persons responsible for reviewing these reports;
(ii)
identify all persons of each Company who are Access Persons subject to this Code, promptly inform each Access Person of the requirements of this Code and provide them with a copy of the Code and any amendments;
(iii)
compare, on a quarterly basis, all Reportable Securities transactions with each Fund’s completed portfolio transactions to determine whether a Code violation may have occurred;
(iv)
maintain signed acknowledgments and certifications by each Access Person who is then subject to this Code, in the form of
Attachment A
;
(v)
inform all Access Persons of their requirements to obtain prior written approval from the Review Officer prior to directly or indirectly acquiring beneficial ownership of a security in any private placement, initial public offering or Reportable Fund;
(vi)
ensure that Access Persons receive adequate training on the principles and procedures of this Code;
(vii)
review, at least annually, the adequacy of this Code and the effectiveness of its implementation; and
9
(viii)
submit a written report to a Fund’s Board and Foreside’s Risk Committee as described in Section 8(e) and (f), respectively.
The Chief Risk Officer of Foreside shall review any reportable securities transactions of the Review Officer, and shall assume the responsibilities of the Review Officer in his or her absence. The Review Officer may delegate responsibilities described herein to an appropriate Foreside representative.
(b)
Potential Trade Conflict
. When there appears to be a Reportable Securities transaction that conflicts with the Code, the Review Officer shall request a written explanation from the Access Person with regard to the transaction. If, after post-trade review, it is determined that there has been a material violation of the Code, a report will be made by the Review Officer with a recommendation of appropriate action to be taken to the Risk Committee of Foreside, the President of each Company, where applicable, the Chief Compliance Officer of each Company’s Broker-Dealer, where applicable, and a Fund’s Board of Trustees (or Directors), where applicable.
(c)
Required Records
. The Review Officer shall maintain and cause to be maintained:
(i)
a copy of any code of ethics adopted by each Company that is in effect, or at any time within the past five (5) years was in effect, in an easily accessible place;
(ii)
a record of any violation of any code of ethics, and of any action taken as a result of such violation, in an easily accessible place for at least five (5) years after the end of the fiscal year in which the last entry was made on any such report, the first two (2) years in an easily accessible place;
(iii)
a copy of each holdings and transaction report (including duplicate confirmations and statements) made by anyone subject to this Code as required by Section 4 for at least five (5) years after the end of the fiscal year in which the report is made, the first two (2) years in an easily accessible place;
(iv)
a record of all written acknowledgements and certifications by each Access Person who is currently, or within the past five (5) years was, an Access Person(records must be kept for 5 years after individual ceases to be a Access Person under the Code);
(v)
a list of all persons who are currently, or within the past five years were , required to make reports or who were responsible for reviewing these reports pursuant to any code of ethics adopted by each Company, in an easily accessible place;
(vi)
a copy of each written report and certification required pursuant to Section 8(e) of this Code for at least five (5) years after the end of the fiscal year in which it is made, the first two (2) years in an easily accessible place;
(vii)
a record of any decision, and the reasons supporting the decision, approving the acquisition of securities by Access Persons under Section 3(b) of this Code, for at least five (5) years after the end of the fiscal year in which the approval is granted; and
(viii)
a record of any decision, and the reasons supporting the decision, granting an Access Person a waiver from, or exception to, the Code for at least five (5) years after the end of the fiscal year in which the waiver is granted.
10
(d)
Post-Trade Review Process
. Following receipt of trade confirms and statements, transactions will be screened by the Review Officer (or his or her designee) for the following:
(i)
same day trades
: transactions by Access Persons occurring on the same day as the purchase or sale of the same security by a Fund for which they are an Access Person.
(ii)
blackout period trades
: transactions by Access Persons occurring within 24 hours before or after the time as the purchase or sale of the same security by a Fund for which they are an Access Person.
(iii)
fraudulent conduct
: transaction by Access Persons which, within the most recent fifteen (15) days, is or has been held by a Fund or is being or has been considered by a Fund for purchase by a Fund.
(iv)
market timing of Reportable Funds
: transactions by Access Persons that appear to be market timing of Reportable Funds.
(v)
other activities
: transactions which may give the appearance that an Access Person has executed transactions not in accordance with this Code or otherwise reflect patterns of abuse.
(e)
Submission to Fund Board
.
(i)
The Review Officer shall, at a minimum, annually prepare a written report to the Board of Trustees (or Directors) of a Fund listed in the List of Access Persons & Reportable Funds maintained by the Review Officer that:
A.
describes any issues under this Code or its procedures since the last report to the Trustees (or Directors), including, but not limited to, information about material violations of the code or procedures and sanctions imposed in response to the material violations; and
B.
certifies that each Company has adopted procedures reasonably necessary to prevent Access Persons from violating this Code.
(ii)
The Review Officer shall ensure that this Code and any material amendments are submitted to the Board of Trustees (or Directors) for approval for those funds listed in the List of Access Persons & Reportable Funds maintained by the Review Officer.
(f)
Report to the Risk Committee
. The Review Officer shall prepare a written report to the Risk Committee of Foreside (and the President of each Company, where applicable, and the Chief Compliance Officer of each Company’s Broker-Dealer, where applicable) regarding any material issues that arose during the year under the Code, including, but not limited to, material violations of and sanctions under the Code.
11
Adopted:
May 1, 2009
Amended:
October 14, 2009 (updated
Appendix A
)
Amended:
September 29, 2011 (updated
Appendix A
)
Amended:
March 15, 2012 (updated
Appendix A
)
Amended:
April 4, 2012 (updated
Appendix A
)
Amended:
July 5, 2012 (updated
Appendix A
)
Amended:
November 30, 2012 (updated
Appendix A
)
Amended:
December 24, 2013 (updated
Appendix A
)
Amended:
March 26, 2014
Amended:
July 11, 2014 (updated
Appendix A
)
Amended:
June 10, 2015 (updated
Appendix A
)
Amended:
October 16, 2015 (updated
Appendix A
)
Amended:
December 30, 2015
Amended:
April 26, 2016 (updated
Appendix A
)
Amended:
August 1, 2016 (updated
Appendix A
)
Amended:
August 31, 2017 (updated
Appendix A
)
Amended:
December 31, 2017 (updated
Appendix A
)
Amended:
February 28, 2018 (updated
Appendices A and B
)
12
CODE OF ETHICS
APPENDIX A
FORESIDE COMPANIES
The following affiliated entities and direct or indirect wholly-owned subsidiaries of Foreside are subject to the Code of Ethics:
Compass Distributors, LLC
(f/k/a Foreside Securities, LLC)
*
Fairholme Distributors, LLC*
Foreside Associates, LLC*
Foreside Consulting Services, LLC
Foreside Distribution Services, L.P.*
Foreside Distributors, LLC
Foreside Financial Services, LLC
(f/k/a BHIL Distributors, LLC)
*
Foreside Fund Officer Services, LLC
Foreside Fund Partners LLC*
Foreside Fund Services, LLC*
Foreside Funds Distributors LLC*
Foreside Global Services Limited
Foreside Global Services, LLC*
Foreside Investment Services, LLC*
Foreside Management Services, LLC
Funds Distributor, LLC*
IMST Distributors, LLC*
IVA Funds Distributors, LLC*
MGI Funds Distributors, LLC*
Northern Funds Distributors, LLC*
Orbis Investments (U.S.), LLC*
PNC Funds Distributor, LLC*
Sterling Capital Distributors, LLC*
VT Distributors LLC*
* FINRA-registered broker-dealer
The companies listed on this
Appendix A
may be amended from time to time, as required.
13
CODE OF ETHICS
APPENDIX B
DEFINITIONS
(a)
Access Person
:
(i)(1)
of a Company means each director or officer of the Companies who in the ordinary course of business makes, participates in or obtains information regarding the purchase or sale of Reportable Securities for a Fund or whose functions or duties as part of the ordinary course of business relate to the making of any recommendation to a Fund regarding the purchase or sale of Reportable Securities.
(ii)(2)
of a Fund, whereby an employee or agent of a Company serves as an officer of a Fund (“
Fund Officer
”). Such Fund Officer is an Access Person of a Fund and is permitted to report under this Code unless otherwise required by a Fund’s Code of Ethics.
(iii)(3) of a Company includes anyone else specifically designated by the Review Officer.
(b)
Beneficial Owner
shall have the meaning as that set forth in Rule 16a-1(a)(2) under the Securities Exchange Act of 1934, as amended, except that the determination of direct or indirect beneficial ownership shall apply to all Reportable Securities that an Access Person owns or acquires. A beneficial owner of a security is any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares a
direct or indirect pecuniary interest
(the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the subject securities) in a security. An Access Person is presumed to be a beneficial owner of securities that are held by his or her immediate family members sharing the Access Person’s household.
(c)
Indirect pecuniary interest
in a security includes securities held by a person’s immediate family sharing the same household.
Immediate family
means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships).
(d)
Control
means the power to exercise a controlling influence over the management or policies of an entity, unless this power is solely the result of an official position with the company. Ownership of 25% or more of a company’s outstanding voting securities is presumed to give the holder thereof control over the company. This presumption may be rebutted by the Review Officer based upon the facts and circumstances of a given situation.
14
(e)
Purchase or sale
includes, among other things, the writing of an option to purchase or sell a Reportable Security.
(f)
Reportable Fund
(see List of Access Persons & Reportable Funds maintained by the Review Officer) means any fund that triggers the Company’s compliance with a Rule 17j-1 Code of Ethics or any fund for which an employee or agent of the Company serves as a Fund Officer.
(g)
Reportable Security
means any security such as a stock, bond, future, investment contract or any other instrument that is considered a ‘security’ under Section 2(a)(36) of the Investment Company Act of 1940, as amended, except:
(i)
direct obligations of the Government of the United States;
(ii)
bankers’ acceptances and bank certificates of deposits;
(iii)
commercial paper and debt instruments with a maturity at issuance of less than 366 days and that are rated in one of the two highest rating categories by a nationally recognized statistical rating organization;
(iv)
repurchase agreements covering any of the foregoing;
(v)
shares issued by money market mutual funds;
(vi)
shares of SEC registered open-end investment companies (
other than exchange-traded funds or
Reportable Funds
); and
(vii)
shares of unit investment trusts that are invested exclusively in one or more open-end funds, none of which are exchange-traded funds or Reportable Funds.
Included
in the definition of Reportable Security are:
·
Shares of a Reportable Fund;
·
Options on securities, on indexes, and on currencies;
·
All kinds of limited partnerships;
·
Foreign unit trusts, UCITs, SICAVs and foreign mutual funds; and
·
Private investment funds, hedge funds and investment clubs.
(h)
Security held or to be acquired by
the Fund means
(i)
any Reportable Security which, within the most recent fifteen (15) days (x) is or has been held by the applicable Fund or (y) is being or has been considered by the applicable Fund or its investment adviser for purchase by the applicable Fund; and
(ii)
and any option to purchase or sell, and any security convertible into or exchangeable for, a Reportable Security.
15
CODE OF ETHICS
ATTACHMENT A
ACCESS PERSON ACKNOWLEDGMENT
I understand that I am an Access Person subject to the Foreside Code of Ethics (the “Code”) adopted by each Foreside Company. I hereby certify that I have read and understand the current Code, and will comply with it in all respects. In addition, I certify that I have complied with the requirements of the Code, and that I have disclosed or reported all personal securities accounts and transactions required to be disclosed or reported pursuant to the requirements of the Code.
|
|
|
|
|
Signature
|
|
Date
|
|
|
|
|
|
|
|
|
|
Printed Name
|
|
|
This form must be completed and returned to the Risk Management:
Foreside Financial Group, LLC
ATTN: Review Officer (or his or her designee)
Three Canal Plaza, Third Floor
Portland, ME 04101
16
CODE OF ETHICS
ATTACHMENT B
PRE-CLEARANCE REQUEST FORM
As an Access Person subject to the Code of Ethics (the “Code”) adopted by Foreside Financial Group, LLC (“Foreside”), I hereby request approval to purchase an initial public offering, private placement or shares of a Reportable Fund for which I am an Access Person. Pursuant to my request, I provide the following information concerning the security where applicable.
1.
Name of security/investment:
2.
Type of security/interest:
3.
Name of brokerage firm/other entity:
4.
Account number:
5.
Type of transaction (buy/sell/other-specify):
6.
Number of shares/interest:
7.
Price of each security/interest:
8.
Name of firm offering the investment opportunity:
9.
Please describe how you became aware of this investment opportunity:
I understand that it is a violation of the Code to purchase an initial public offering, private placement or shares of a Reportable Fund for which I am an Access Person
without
receiving
prior
written approval from Foreside’s Review Officer. I further understand that (i) any pre-clearance trading authorization is valid only from the time when approval is granted through the next business day and (ii) an explanation of why the pre-cleared transaction was not completed must be submitted to the Review Officer within five (5) days if the transaction is not executed within the period. I also agree to provide the Review Officer with a transaction report evidencing the pre-cleared transaction consistent with the reporting requirements of Section 4. of the Code.
|
|
|
|
|
Signature
|
|
Date
|
|
|
|
|
|
|
|
|
|
Print Name
|
|
Job Title
|
17
To be completed by Foreside’s Review Officer and returned to the Access Person.
Approval request granted:
The following criteria were considered in assessing the Access Person’s pre-clearance request (
use back of page if necessary
):
|
|
|
|
|
Authorized Signature
|
|
Date
|
18
