FOCUSSHARES TRUST AUTHORIZED PARTICIPANT AGREEMENT
Exhibit
(e)(2)
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
JPMorgan Chase Bank, N.A. (the “Index as index receipt agent for the
FocusShares Trust (the “Trust”).
The Index Receipt Agent serves as the
index receipt agent for the Trust and all of its designated series (each a
“ Fund” and collectively, the
“ Funds” ), and is an Index Receipt Agent as
that term is defined in the rules of the National Securities Clearing
Corporation (“ NSCC” ). The Distributor provides services as
principal underwriter of the Funds acting on an agency basis in connection with
the sale and distribution of the class of shares issued by the Funds known as
“ Fund Shares.”
The process by which an investor
purchases and redeems Fund Shares from a Fund is described in detail in the
Trust's applicable current prospectuses and statements of additional
information, as each may be supplemented or amended from time to time (the
“Prospectuses”) that comprise part of the
Trust’ s registration statement, as amended,
on Form N-1A (Securities Act of 1933 Registration No. 333-146327; Investment
Company Act of 1940 Registration No. 811-22128) and the Authorized Participant
Procedures Handbook (“ AP Handbook” ) (hereinafter collectively,
“ Fund Documents” ). The discussion of the purchase and
redemption process in this Agreement is modified as necessary by reference to
the more complete discussions in the Fund Documents. References to the Fund
Documents are to the then current Prospectuses and AP Handbook as each may be
supplemented or amended from time to time. Capitalized terms used herein but not
otherwise defined herein shall have the meanings set forth in the Fund
Documents. In the event of a conflict between this Agreement and the Fund
Documents, the Fund Documents shall control. In the event of a
conflict between the Prospectuses and AP Handbook, the Prospectuses shall
control. Each party to this Agreement agrees to comply with the provisions of
the Fund Documents to the extent applicable to it.
Fund Shares may be purchased or redeemed
directly from the Fund only in aggregations of a specified number, known as a
“ Creation Unit.” The number of Fund Shares
presently constituting a Creation Unit of each Fund is set forth in Annex I.
Creation Units of Fund Shares may be purchased only by or through an entity that
has entered into an Authorized Participant Agreement with the Distributor and is
either a participant in The Depository Trust Company (“ DTC” ) or a broker-dealer or other
participant in the Continuous Net Settlement System (the “ CNSS”) of NSCC.
To purchase a Creation Unit, an
authorized DTC participant or CNSS participant, whether acting for its own
account or on behalf of another party, generally must deliver to the Fund a
designated basket of equity securities (the “ Deposit Securities” ) and an amount of cash computed as
described in the Fund Documents (the “ Balancing Amount” ), plus a purchase transaction fee as
described in the Fund Documents (the “ Transaction Fee” ). The Deposit Securities and the
Balancing Amount together constitute the “ Fund Deposit.” The amount of such
Transaction Fee shall be determined by the Trust or investment adviser to the
Trust in its sole discretion and may be changed from time to
time.
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This Agreement is intended to set forth
the procedures by which the Participant may purchase and/or redeem Creation
Units of Fund Shares (i) through the CNSS clearing processes of NSCC as such
processes have been enhanced to effect purchases and redemptions of Creation
Units, such processes being referred to herein as the “ Clearing Process,” or (ii) outside the Clearing
Process through the DTC systems. The procedures for processing an order to
purchase Fund Shares (a “ Purchase Order” ) and an order to redeem Fund Shares (a
“ Redemption Order” ) are described in the Fund Documents.
All Purchase and Redemption Orders must be made pursuant to the procedures set
forth in the Fund Documents. The Participant may not cancel a Purchase Order or
a Redemption Order after it is placed.
The parties hereto, in consideration of
the premises and of the mutual agreements contained herein, agree as
follows:
1. STATUS OF
PARTICIPANT
(a) The Participant hereby
represents, covenants, and warrants that it is and will continue to be a
participant in DTC (“ DTC Participant” ) so long as this Agreement is in full
force and effect and that, with respect to Purchase Orders or Redemption Orders
placed through the Clearing Process, it is and will continue to be a member of
NSCC and a participant in the CNSS so long as this Agreement is in full force
and effect. The Participant may place Purchase Orders or Redemption Orders
either through the Clearing Process or outside the Clearing Process through the
DTC, subject to the procedures for purchase and redemption referred to in
paragraph 2 and the AP Handbook. If a Participant loses its status as a DTC
Participant or NSCC member, or its eligibility to participate in the CNSS, the
Participant shall promptly notify the Distributor in writing of the change in
status or eligibility. Upon such notice, the Distributor, in its sole
discretion, may terminate this Agreement.
(b) The Participant hereby
represents and warrants that it is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, is qualified to act as a broker or
dealer in the states or other jurisdictions where it transacts business, and is
a member in good standing of the Financial Industry Regulatory Authority (the
“ FINRA” ). The Participant agrees that it will
maintain such registrations, qualifications, and membership in good standing and
in full force and effect throughout the term of this Agreement. The Participant
agrees to comply with all applicable federal laws, the laws of the states or
other jurisdictions concerned, and the rules and regulations promulgated
thereunder, and with the Constitution, By-Laws and Conduct Rules of the FINRA,
and that it will not offer or sell Fund Shares of any Fund in any state or
jurisdiction where such shares may not lawfully be offered and/or
sold.
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(c) If the Participant is
offering and selling Fund Shares of any Fund in jurisdictions outside the
several states, territories and possessions of the United States and is not
otherwise required to be registered or qualified as a broker or dealer, or to be
a member of the FINRA, as set forth above, the Participant nevertheless agrees
to observe the applicable laws of the jurisdiction in which such offer and/or
sale is made, to comply with the full disclosure requirements of the Securities
Act of 1933 as amended (the “ 1933 Act” ) and the regulations promulgated
thereunder, and to conduct its business in accordance with the spirit of the
FINRA Conduct Rules.
(d) The Participant understands
and acknowledges that the proposed method by which Creation Units of Fund Shares
will be created and traded may raise certain issues under applicable securities
laws. For example, because new Creation Units may be issued and sold by the Fund
on an ongoing basis, at used in the 1933 Act, may occur. The Participant
understands and acknowledges that some activities on its part, depending on the
circumstances, may result in its being deemed a participant in the distribution
in a manner that could render it a statutory underwriter and subject it to the
prospectus delivery and liability provisions of the 1933 Act. Whether a person
is an underwriter depends upon all of the facts and circumstances pertaining to
that person’s activities, uncertain of your status.
Neither the Distributor nor the Index Receipt Agent will indemnify the
Participant for any violations of the federal securities laws committed by the
Participant.
2. EXECUTION OF
PURCHASE AND REDEMPTION ORDERS
(a) All Purchase Orders and
Redemption Orders shall be made in accordance with the terms of the Fund
Documents and the procedures as described in the AP Handbook. Each party hereto
agrees to comply with the provisions of such documents to the extent applicable
to it. It is contemplated that the phone lines used in connection with the
purchase and redemption of Creation Units, which includes use by representatives
of the Distributor, Index Receipt Agent or the Trust and any affiliates thereof,
will be recorded, and the Participant hereby consents to the recording of all
calls in connection with the purchase and redemption of Creation Units. The
Funds reserve the right to issue additional or other procedures relating to the
manner of purchasing or redeeming Creation Units, and the Participant agrees to
comply with such procedures as may be issued from time to time, including but
not limited to the Fund Shares cash collateral settlement procedures that are
referenced in the AP Handbook. The Participant acknowledges and agrees on behalf
of itself and any party for which it is acting that a Purchase Order or
Redemption Order shall be irrevocable, and that the Funds (or the Distributor on
behalf of the Funds) reserve the right to reject any Purchase Order or
Redemption Order in accordance with the terms of the Fund Documents. The
Participant agrees that the Distributor and the Trust have and reserve the
right, in their sole discretion without notice, to reject a Purchase Order or
Redemption Order or suspend sales of Fund Shares, in accordance with the terms
of the Fund Documents.
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(b) With respect to any
Redemption Order, the Participant acknowledges and agrees on behalf of itself
and any party for which it is acting to return to a Fund any dividend,
distribution, or other corporate action paid to it or to the party for which it
is acting in respect of any Deposit Security that is transferred to the
Participant or any party for which it is acting that, based on the valuation of
such Deposit Security at the time of transfer, should have been paid to the
Fund. With respect to any Redemption Order, the Participant also acknowledges
and agrees on behalf of itself and any party for which it is acting that a Fund
is entitled to reduce the amount of money or other proceeds due to the
Participant or any party for which it is acting by an amount equal to any
dividend, distribution, or other corporate action to be paid to it or to the
party for which it is acting in respect of any Deposit Security that is
transferred to the Participant or any party for which it is acting that, based
on the valuation of such Deposit Security at the time of transfer, should be
paid to the Fund. With respect to any Purchase Order, each Fund acknowledges and
agrees to return to the Participant or any party for which it is acting any
dividend, distribution, or other corporate action paid to the Fund in respect of
any Deposit Security that is transferred to the Fund that, based on the
valuation of such Deposit Security at the time of transfer, should have been
paid to the Participant or any party for which it is acting.
(c) When making a Redemption
Order, the Participant understands and agrees that in the event Fund Shares are
not transferred to the Fund in accordance with the terms of the Fund Documents,
such Redemption Order may be rejected by the Fund and the Participant will be
solely responsible for all costs and losses and fees incurred by the Fund, the
Index Receipt Agent or the Distributor related to such rejected Redemption
Order.
3. AUTHORIZATION OF
INDEX RECEIPT AGENT
With respect to Purchase Orders or
Redemption Orders processed through the Clearing Process, the Participant hereby
authorizes the Index Receipt Agent to transmit to the NSCC on behalf of the
Participant such instructions, including amounts of the Deposit Securities and
Balancing Amounts as are necessary, consistent with the instructions issued by
the Participant to the Distributor. The Participant agrees to be bound by the
terms of such instructions issued by the Index Receipt Agent and reported to
NSCC as though such instructions were issued by the Participant directly to
NSCC.
4. MARKETING MATERIALS
AND REPRESENTATIONS.
The Participant represents, warrants,
and agrees that it will not make any representations concerning Fund Shares, the
Trust or the Funds, other than those contained in the Funds’ then current Prospectuses or
in any promotional materials or sales literature furnished to the Participant by
the Distributor. The Participant agrees not to furnish or cause to be furnished
to any person or display or publish any information or materials relating to
Fund Shares (including, without limitation, promotional materials and sales
literature, advertisements, press releases, announcements, statements, posters,
signs, or other similar materials), except such information and materials as may
be furnished to the Participant by the Distributor and such other
information and materials as may be approved in writing by the Distributor. The
Participant understands that the Fund will not be advertised or marketed as an
open-end investment company, i.e., as a mutual fund, and that any advertising
materials will prominently disclose that the Fund Shares are not individually
redeemable. In addition, the Participant understands that any advertising
material that addresses redemption of Fund Shares will disclose that Fund Shares
may be tendered for redemption to the issuing Fund only in Creation Units.
Notwithstanding the foregoing, the Participant may without the written approval
of the Distributor prepare and circulate in the regular course of its business
research reports that include information, opinions, or recommendations relating
to Fund Shares (i) for public dissemination, provided that such research reports
compare the relative merits and benefits of Fund Shares with other products and
are not used for purposes of marketing Fund Shares and (ii) for internal use by
the Participant.
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5. TITLE TO SECURITIES;
RESTRICTED SHARES
The Participant represents on behalf of
itself and any party for which it acts that upon delivery of Deposit Securities
to the Custodian, the Fund 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, including without
limitation any restrictions upon the sale or transfer of such securities imposed
by (i) any agreement or arrangement entered into by the Participant or any party
for which it is acting in connection with a Purchase Order; or (ii) any
provision of the 1933 Act, and any regulations thereunder (except that portfolio
securities of issuers other than U.S. issuers shall not be required to have been
registered under the 1933 Act if exempt from such registration), or of the
applicable laws or regulations of any other applicable jurisdiction. In
particular, the Participant represents on behalf of itself and any party for
which it acts that no such securities are “ restricted securities” as such term is used in Rule
144(a)(3)(i) under the 1933 Act.
6. BALANCING
AMOUNT
The Participant hereby agrees that, in
connection with a Purchase Order, whether for itself or any party for which it
acts, it will make available on or before the contractual settlement date (the
“Contractual , by means
satisfactorySettlement to the Trust,Date”) and in accordance with the provisions
of the Fund Documents, 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 purchase
transaction fee. Any excess funds will be returned following settlement of the
Purchase Order. The Participant should
ascertain the applicable deadline for cash transfers by contacting the
operations department of the broker or depositary institution effectuating the
transfer of the Balancing Amount. The Participant hereby agrees to ensure that
the Balancing Amount will be received by the issuing Fund in accordance with the
terms of the Fund Documents, 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 Fund Documents or by such
Contractual Settlement Date, the Participant agrees on behalf of itself
or any party for which it acts 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.
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7. ROLE OF
PARTICIPANT
(a) The Participant
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. The Participant agrees to make itself and its employees available,
upon 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 Fund Documents.
(c) The Participant agrees to
maintain all books and records of all sales of Fund Shares made by or through it
pursuant to its obligations under the federal securities laws and to furnish
copies of such records to the Fund or the Distributor upon the request of the
Fund or the Distributor.
(d) The Participant represents
that from time to time it may be a Beneficial Owner (as that term is defined
Rule 16a-1(a)(2) of the Securities Exchange Act of 1934) of Fund Shares. To the
extent that it is a Beneficial Owner of Fund Shares, the Participant agrees to
irrevocably appoint Distributor as its attorney and proxy with full
authorization and power to vote (or abstain from voting) its beneficially owned
shares. The Distributor intends to vote (or abstain from voting) the
Participant’ s beneficially owned shares in the same
proportion as the votes (or abstentions) of all other shareholders of the Fund
on any matter submitted to the vote of shareholders of the Fund or Trust. The
Distributor, as attorney and proxy for Participant under this Paragraph, (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. Distributor may terminate this irrevocable proxy within sixty (60)
days written notice to the Participant.
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(e) The Participant understands
that under the terms of [applicable Listing Exchange rule], the [Listing
Exchange] requires that members, including Equity Permit Holders and Market
Makers, provide to all purchasers of Fund Shares a written description of the
terms and characteristics of such securities, in a form prepared by the open-end
management investment company issuing such securities, not later than the time a
confirmation of the first transaction in such series is delivered to such
purchaser. In addition, members shall include a written description with any
sales material relating to Fund Shares that is provided to customers or the
public. Any other written materials provided by a member to customers or the
public making specific reference to a Fund of the Trust as an investment vehicle
must include a statement in substantially the following form: “ A circular describing the terms and
characteristics of Fund Shares has been prepared by the Trust and is available
from your broker or the [Listing Exchange]. It is recommended that you obtain
and review such circular before purchasing Fund Shares. In addition, upon
request you may obtain from your broker a prospectus for Fund
Shares.” Such other written materials
provided by a member to customers or the public shall include all other
necessary and appropriate disclosures. A Participant who is a [Listing Exchange]
member carrying an omnibus account for a non-member broker-dealer is required,
if appropriate, to inform such non-member that the execution of an order to
purchase Fund Shares for such omnibus account will be deemed to constitute
agreement by the non-member to make such written description available to its
customers on the same terms as are directly applicable to members under this
Rule.
(f) The Participant further
represents that its anti-money laundering program (“ AML Program” ) is maintained consistent with all
applicable federal laws, rules and regulations, including the USA Patriot Act
and rules promulgated by the SEC, and that its 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) includes a customer identification program consistent with the rules under
section 326 of the USA Patriot Act, (vi) provides for the filing of all
necessary anti-money laundering reports including, but not limited to, currency
transaction reports and suspicious activity reports, (vii) provides for
screening all new and existing customers against reports and suspicious activity
reports, (viii) provides for screening all new and existing customers against
the Office of Foreign Asset Control list and any other government list that is
or becomes required under the USA Patriot Act, and (ix) allows for appropriate
regulators to examine its anti-money laundering books and records. The
Distributor shall verify the identity of each Authorized Participant and
maintain identification verification and transactional records in accordance
with the requirements of applicable laws and regulations aimed at the prevention
and detection of money laundering and/or terrorism
activities.
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 Participant shall deliver to the Funds, with copies to the Index Receipt Agent,
a certificate in a form approved by the Funds (see Annex II hereto), duly
certified as appropriate by the Participant’ s Secretary or other duly authorized
official, setting forth the names and signatures of all persons authorized to
give instructions relating to any activity contemplated hereby or any other
notice, request, or instruction on behalf of the Participant (each an
“ Authorized Person” ). Such certificate may be accepted and
relied upon by the Distributor and the Funds as conclusive evidence of the facts
set forth therein and shall be considered to be in full force and effect until
delivery to the Funds of a superseding certificate. Upon the termination or
revocation of authority of such Authorized Person by the Participant, the
Participant shall give immediate written notice of such fact to the Funds with
copy to the Index Receipt Agent and such notice shall be effective upon receipt
by the Funds.
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(b) The Distributor shall issue
to the Participant a unique personal identification number (“ PIN Number” ) by which the Participant shall be
identified and instructions issued by the Participant hereunder shall be
authenticated. The PIN Number shall be kept confidential and provided to
Authorized Persons only. If the Participant’ s PIN Number is changed, the new PIN
Number will become effective on a date mutually agreed upon by the Participant
and the Distributor. If for some reason, the Participant’ s PIN number is compromised, the
Participant shall contact the Distributor immediately in order for a new one to
be issued.
(c) The Distributor shall
assume that all instructions issued to it using the Participant’ s PIN Number have been properly placed,
unless the Distributor has actual knowledge to the contrary or the Participant
has revoked its PIN Number. The Distributor shall not verify that an Order is
being placed by or on behalf of the Participant. The Participant agrees that the
Distributor, the Index Receipt Agent and the Trust shall not be liable, absent
fraud or willful misconduct, for losses incurred by the Participant as a result
of unauthorized use of the Participant’ s PIN Number, unless the Participant
previously submitted written notice to revoke its PIN
Number.
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 Investment Company Act
of 1940.
(b) The Participant represents,
covenants 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
or its customer, as the case may be, owns outright or has full legal authority
and legal and beneficial right to tender for redemption the requisite number of
Fund Shares, and that such Fund 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 Fund Shares to the Fund.
(c) The Participant understands
that Fund Shares of any Fund may be redeemed only when one or more Creation
Units are held in the account of a single Participant.
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(d) Notwithstanding anything to
the contrary in this Agreement or the Prospectuses, the Participant understands
and agrees that residents of certain countries are entitled to receive only cash
upon redemption of a Creation Unit. Accordingly, the Participant is required to
confirm that any request it submits for an in-kind redemption has not been
submitted on behalf of a Beneficial Owner who is a resident of a country
requiring that all redemptions be made in cash.
10. COMPLIANCE WITH INTERNAL
REVENUE CODE SECTION 351
(a) The Participant represents,
covenants and warrants that, based upon the number of outstanding Fund Shares of
any particular Fund, it does not, and will not in the future, hold for the
account of any single Beneficial Owner, or group of related Beneficial Owners,
80 percent or more of the currently outstanding Fund 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 section 351 of the Internal Revenue Code of 1986, as
amended.
(b) The Participant agrees that
the confirmation relating to any order for one or more Creation Units shall
state as follows: “ Purchaser represents and warrants that,
after giving effect to the purchase of Fund Shares to which this confirmation
relates, it will not hold 80% or more of the outstanding Fund Shares of the
issuing Fund and will not treat such purchase as eligible for tax-free treatment
under Section 351 of the Internal Revenue Code of 1986, as amended. If purchaser
is a dealer, it agrees to deliver similar written confirmations to any person
purchasing from it any of the Fund Shares to which this confirmation
relates.”
(c) A Fund and its Index
Receipt Agent and Distributor shall 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) The Participant agrees to
maintain records of all sales of Fund Shares made by or through it and to
furnish copies of such records to the Trust 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.
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(c) The Participant represents,
covenants and warrants that, during the term of this Agreement, it will not be
an affiliated person of a Fund, a promoter or a principal underwriter of a Fund
or an affiliated person of such persons, except under 2(a)(3)(A) or 2(a)(3)(C)
of the Investment Company Act of 1940, as amended (the “ 1940 Act” ) due to ownership of Fund
Shares.
12. INDEMNIFICATION
Section 12 shall survive the termination
of this Agreement.
(a) The Participant hereby
agrees to indemnify and hold harmless the Distributor, the Funds, the Index
Receipt Agent, their respective subsidiaries,
affiliates, directors, officers, employees, and agents, and each person, if any,
who controls such persons within the meaning of Section 15 of the 1933 Act (each
an “ Indemnified Party” ), from and against any loss,
liability, cost, or expense (including attorneys’ fees) incurred by such
Indemnified Party as a result of (i) any breach by the Participant of any
provision of this Agreement; (ii) any 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; (iv) actions of such Indemnified Party in
reliance upon any instructions issued in accordance with the Fund Documents or
Annex II (as each may be amended from time to time) reasonably believed by the
Distributor and/or the Index Receipt Agent to be genuine and to have been given
by the Participant; or (v) the Participant’ s failure to complete a Purchase Order
or Redemption Order that has been accepted. The Participant understands and
agrees that the Funds as third party beneficiaries to this Agreement are
entitled to proceed directly against the Participant in the event that the
Participant fails to honor any of its obligations under this Agreement that
benefit the Fund. The Distributor shall not be liable to the Participant for any
damages arising out of mistakes or errors in data provided to the Distributor,
or out of interruptions or delays of communications with the Indemnified Parties
who are service providers to the Fund, nor is the Distributor liable for any
action, representation, or solicitation made by the wholesalers of the
Fund.
(b) The Distributor hereby
agrees to indemnify and hold harmless the Participant and the Index Receipt
Agent, their respective subsidiaries, affiliates, directors, officers,
employees, and agents, and each person, if any, who controls such persons within
the meaning of Section 15 of the 1933 Act (each an “ Indemnified Party” ), from and against any loss,
liability, cost, or expense (including attorneys’ fees) incurred by such
Indemnified Party as a result of (i) any breach by the Distributor of any
provision of this Agreement; (ii) any failure on the part of the Distributor to
perform any of its obligations set forth in this Agreement; (iii) any failure by
the Distributor to comply with applicable laws, including rules and regulations
of self-regulatory organizations; or (iv) actions of such Indemnified Party in
reliance upon any representations made in accordance with the Fund Documents and
Annex II (as each may be amended from time to time) reasonably believed by the
Participant to be genuine and to have been given by the
Distributor.
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The Participant shall not be liable to
the Distributor for any damages arising out of mistakes or errors in data
provided to the Participant, or out of interruptions or delays of communications
with the Indemnified Parties who are service providers to the Fund, nor is the
Participant liable for any action, representation, or solicitation made by the
wholesalers of the Fund.
(c) The Funds, the Distributor,
the Index Receipt Agent, or any person who controls such persons within the
meaning of Section 15 of the 1933 Act, shall not be liable to the Participant
for any damages arising from any differences in performance between the Deposit
Securities in a Fund Deposit and the Fund’ s benchmark index.
13. INFORMATION ABOUT DEPOSIT
SECURITIES
The Trust’s investment FocusShares, LLC
(the “ adviser, Advisor”) will make available 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.
14. RECEIPT OF PROSPECTUS BY
PARTICIPANT
The Participant acknowledges receipt of
the Prospectus and represents that it has reviewed that document (including the
Statement of Additional Information incorporated therein) and understands the
terms thereof.
15. CONSENT TO ELECTRONIC
DELIVERY OF PROSPECTUS
The Distributor may deliver
electronically a single prospectus, annual or semi-annual report or other
shareholder information (each, a “ Shareholder Document” ) to persons who have effectively
consented to such electronic delivery. The Distributor will deliver Shareholder
Documents electronically by sending consenting persons an e-mail message
informing them that the applicable Shareholder Document has been posted and is
available on the Fund’ s website, ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, and providing a hypertext link to the
document. The electronic versions of the Shareholder Documents will be in PDF
format and can be downloaded and printed using Adobe
Acrobat.
By signing this Agreement, the
Participant hereby consents to the foregoing electronic delivery of all
Shareholder Documents to the e-mail address set forth on the signature page
attached to this Agreement. The Participant further understands and agrees that
unless such consent is revoked, the Participant can obtain access to the
Shareholder Documents from the Distributor only electronically. The Participant
can revoke the consent to electronic delivery of Shareholder Documents at
anytime by providing written notice to the Distributor. 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 continuous Internet
access to access all Shareholder Documents.
11
16. CONSENT TO RECORDING OF
CONVERSATIONS
By signing this Agreement, the
Participant acknowledges that certain telephone conversations between the
Distributor and the Participant in connection with the placing of orders may be
recorded, and the Participant hereby grants its consent to such
recordings.
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 telex,
telegram, facsimile, 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, facsimile, or telex numbers indicated
below the signature of the Distributor. All notices to the Participant, the
Distributor, and the Index Receipt Agent shall be directed to the address or
telephone, facsimile or telex numbers indicated below the signature line of such
party.
18. EFFECTIVENESS, TERMINATION,
AND AMENDMENT OF AGREEMENT
(a) This Agreement shall become
effective five Business Days after execution and delivery to the Distributor
upon notice by the Distributor to the Authorized Participant. A
“ Business Day” shall mean each day the
Listing Exchange is open for business.
(b) This Agreement may be
terminated at any time by any party upon sixty days’ prior written notice to the
other parties, and may be terminated earlier by the Fund or the Distributor at
any time in the event of a breach by the Participant of any provision of this
Agreement or the procedures described or incorporated herein. This Agreement
will be binding on each party’s successors and assigns, but
the parties agree that neither party can assign its rights and obligations under
this Agreement without the prior written consent of the other
party.
(c) This Agreement may be
amended by the Distributor from time to time without the consent of the
Participant or Index Receipt Agent by the following procedure. The Distributor
will deliver a copy of the amendment to the Participant and the Index Receipt
Agent in accordance with paragraph 17 above. If neither the Participant nor the
Index Receipt Agent objects in writing to the amendment within five days after
its receipt, the amendment will become part of this Agreement in accordance with
its terms.
12
19. TRUST AS THIRD PARTY
BENEFICIARY
The Participant and the Distributor
understand and agree that the Trust as a third party beneficiary to this
Agreement is entitled and intends to proceed directly against the Participant in
the event that the Participant fails to honor any of its obligations pursuant to
this Agreement that benefit the Trust.
20. INCORPORATION BY
REFERENCE
The Participant acknowledges receipt of
the Prospectuses and AP Handbook, represents that it has reviewed such documents
and understands the terms thereof, and further acknowledges that the procedures
contained therein pertaining to the creation and redemption of Creation Units
are incorporated herein by reference.
21. GOVERNING
LAW
This Agreement shall be governed by and
interpreted in accordance with the laws of the State of
Delaware.
22. COUNTERPARTS
This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
[REMAINDER OF THIS PAGE INTENTIONALLY
LEFT BLANK]
13
IN WITNESS WHEREOF, the parties have
caused this Agreement to be executed and delivered as of the day and year
written below.
DATED:__________________________________
Foreside Fund Services,
LLC
By:
__________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
Vice-President
Address: Three ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
[Name of
Participant]
By:
_______________________________________
Name:
________________________________________
Title:
_________________________________________
Address:
______________________________________
Telephone:
____________________________________
Facsimile:
_____________________________________
E-mail:
_______________________________________
ACCEPTED BY:
JPMorgan Chase Bank, N.A., as Index
Receipt Agent
By:
__________________________________________
Name:
________________________________________
Title:
_________________________________________
Address:
______________________________________
______________________________________
Telephone:
____________________________________
Facsimile:
_____________________________________
14
ANNEX
I
CREATION UNIT SIZE
FOR FUND SHARES
Shares
per Creation Unit
|
FOCUS Morningstar US Market Index
ETF
|
50,000
|
|
FOCUS Morningstar Large Cap Index
ETF
|
50,000
|
|
FOCUS Morningstar Mid Cap Index
ETF
|
50,000
|
|
FOCUS Morningstar Small Cap Index
ETF
|
50,000
|
|
FOCUS Morningstar Basic Materials
Index ETF
|
50,000
|
|
FOCUS Morningstar Communications
Services Index ETF
|
50,000
|
|
FOCUS Morningstar Consumer
Cyclical Index ETF
|
50,000
|
|
FOCUS Morningstar Consumer
Defensive Index ETF
|
50,000
|
|
FOCUS Morningstar Energy Index
ETF
|
50,000
|
|
FOCUS Morningstar Financial
Services Index ETF
|
50,000
|
|
FOCUS Morningstar Health Care
Index ETF
|
50,000
|
|
FOCUS Morningstar Industrials
Index ETF
|
50,000
|
|
FOCUS Morningstar Real Estate
Index ETF
|
50,000
|
|
FOCUS Morningstar Technology Index
ETF
|
50,000
|
|
FOCUS Morningstar Utilities Index
ETF
|
50,000
|
15
ANNEX II
FORM OF
CERTIFIED AUTHORIZED PERSONS OF PARTICIPANT
The following are the names, titles and
signatures of all persons (each an “ Authorized Person” ) authorized to give instructions
relating to any activity contemplated by this FocusShares Trust Authorized
Participant Agreement, or any other notices, request or instruction on behalf of
Participant pursuant to this Authorized Participant
Agreement.
For each Authorized
Person:
Name:
Title:
Signature:
E-Mail Address:
Telephone:
Facsimile:
Name:
Title:
Signature:
E-Mail Address:
Telephone:
Facsimile:
The undersigned [name], [title],
[company] does hereby certify that the persons listed above have been duly
elected to the offices set forth beneath their names, that they presently hold
such offices, that they have been duly authorized to act as Authorized Persons
pursuant to the Authorized Participant Agreement by and among Foreside Fund
Services, LLC and [Participant] dated [date] and that their signatures set forth
above are their own true and genuine signatures.
| By:
_________________________
Date:
Name:
Title: [Participant’ s] Secretary or
Other Duly Authorized
Officer
|
16