Exhibit No. EX-99.e.2
REVENUESHARES ETF TRUST
AUTHORIZED PARTICIPANT AGREEMENT
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 The Bank of New York as index
receipt agent for RevenueShares ETF Trust (the "Index Receipt Agent").
The Index Receipt Agent serves as the Index Receipt Agent for RevenueShares ETF
Trust (the "Trust") and all of its designated series (each a "Fund" and
collectively, the "Funds") as set forth in Annex I, 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 "ETF Shares."
The process by which an investor purchases and redeems ETF Shares from a Fund is
described in detail in the Trust's ETF Shares Prospectus and the Statement of
Additional Information incorporated therein (the "Prospectus") that comprise
part of the Trust's registration statement, as amended, on Form N-1A (Investment
Company Act Registration No. 811-21993) and Annex II to this Agreement
(hereinafter collectively, "ETF 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 ETF Documents. References to the ETF
Documents are to the then current Prospectus and Annex II to this Agreement as
each may be supplemented or amended from time to time. Capitalized terms not
otherwise defined herein are used herein as defined in the ETF Documents. In the
event of a conflict between the Prospectus and Annex II to this Agreement, the
Prospectus shall control. Each party to this Agreement agrees to comply with the
provisions of the ETF Documents to the extent applicable to it.
The ETF Shares of a Fund may be purchased or redeemed directly from the Fund
only in aggregations of a specified number, known as a "Creation Unit." The
number of ETF Shares presently constituting a Creation Unit of each Fund is set
forth in Annex I. Creation Units of ETF Shares may be purchased only by or
through an entity that is a participant in The Depository Trust Company ("DTC")
or a broker-dealer or other participant in the Continuous Net Settlement (the
"CNS") System of NSCC and that has entered into an Authorized Participant
Agreement with the Distributor. The Participant agrees to be bound by the terms
of such instructions issued by the Index Receipt Agent and reported to the NSCC
as though such instructions were issued by the Participant directly.
To purchase a Creation Unit, an authorized DTC participant or CNS 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 Prospectus (the
"Balancing Amount"), plus a purchase transaction fee as described in the ETF
Documents (the "Transaction Fee"). The Deposit Securities and the Balancing
Amount together constitute the "Portfolio Deposit." The Balancing Amount and the
Transaction Fee are referred to collectively as the "Cash Component." The amount
of such purchase 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.
This Agreement is intended to set forth the procedures by which the Participant
may purchase and/or redeem Creation Units of ETF Shares (i) through the CNS
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. The
procedures for processing an order to purchase ETF Shares (a "Purchase Order")
and an order to redeem ETF Shares (a "Redemption Order") are described in the
Fund's ETF Documents. All Purchase and Redemption Orders must be made pursuant
to the procedures set forth in Annex II to this Agreement. 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 of Creation Units of ETF Shares of any Fund placed through
the Clearing Process, it is and will continue to be a member of NSCC and a
participant in the CNS System of NSCC so long as this Agreement is in full force
and effect. The Participant may place Purchase Orders or Redemption Orders for
Creation Units either through the Clearing Process or outside the Clearing
Process, subject to the procedures for purchase and redemption referred to in
paragraph 2 and Annex II to this Agreement. If a Participant loses its status as
a DTC Participant or NSCC member, or its eligibility to participate in the CNS
System, this Agreement will automatically terminate and Participant shall
promptly notify the Distributor in writing of the change in status or
eligibility.
(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 ETF Shares of any Fund in any state or
jurisdiction where such shares may not lawfully be offered and/or sold.
(c) If the Participant is offering and selling ETF 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 ETF Shares will be created and traded may raise certain
issues under applicable securities laws. For example, because new Creation Units
of ETF Shares may be issued and sold by the Fund on an ongoing basis, at any
point a "distribution," as such term is 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.
(A xxxxxx discussion of these risks appears in the Prospectus.) Whether a person
is an underwriter depends upon all of the facts and circumstances pertaining to
that person's activities, and you should consult legal counsel if you are
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 ETF Documents. 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 by the ETF Shares' telephone representatives, which
include 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 with these representatives. 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 ETF Shares cash collateral settlement procedures that are
referenced in Annex II to this Agreement. The Participant acknowledges and
agrees on behalf of itself and any party for which it is acting that acceptance
of 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 until the trade is properly released as described in Annex II to
this Agreement. The Participant agrees that the Distributor has and reserves the
right, in its sole discretion without notice, to reject a Purchase Order or
Redemption Order or suspend sales of ETF Shares, at anytime.
(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 Shares are not transferred to the Fund, 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 Cash Components as are necessary,
consistent with the instructions issued by the Participant to the ETF Shares
telephone representative. 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 ETF Shares other than those contained in the Funds'
then current Prospectus 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 ETF 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 ETF
Shares are not individually redeemable. In addition, the Participant understands
that any advertising material that addresses redemption of ETF Shares will
disclose that ETF Shares may be tendered for redemption to the issuing Fund in
Creation Unit aggregations only. 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 ETF Shares (i) for public
dissemination, provided that such research reports compare the relative merits
and benefits of ETF Shares with other products and are not used for purposes of
marketing ETF Shares and (ii) for internal use by the Participant.
5. TITLE TO SECURITIES; RESTRICTED SHARES
The Participant represents on behalf of itself and any party for which it acts
that upon delivery of a portfolio 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. CASH COMPONENT
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 to the issuing
Fund in same day funds for each purchase of ETF Shares an amount of cash
sufficient to pay the Cash Component. Payment of the Cash Component shall be
made through DTC to an account maintained by the Custodian at The Bank of New
York, and shall be provided in same day or immediately available funds on or
before the settlement date ("Contractual Settlement Date"). The Participant
hereby agrees to ensure that the Cash Component will be received by the issuing
Fund on or before the Contractual Settlement Date, and in the event payment of
such Cash Component has not been made 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 Cash Component, 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 and/or the Fund
for any amounts advanced by the Custodian in its sole discretion to the
Participant for payment of the amounts due and owing for the Cash Component.
Computation of the Cash Component 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) 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 Prospectus.
(c) The Participant agrees to maintain all books and records of all sales of ETF
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 of ETF Shares. To the extent that it is a beneficial owner of ETF 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; (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.
(e) The Participant understands that under the terms of NYSE Arca requires that
members, including Equity Permit Holders and Market Makers, provide to all
purchasers of ETF 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
ETF 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 RevenueShares ETF Trust is available from your broker or
NYSE Arca. It is recommended that you obtain and review such circular before
purchasing ETF Shares. In addition, upon request you may obtain from your broker
a prospectus for ETF 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 NYSE Arca member who is 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 ETF 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 affirms that it maintains procedures that are reasonably
designed to safeguard non-public personal consumer/customer financial
information to the extent required by applicable law, rule and regulation.
(g) The Participant further represents that its anti-money laundering program is
maintained consistent with all applicable federal laws, rules and regulations,
including the USA Patriot Act and rules promulgated by the SEC.
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 III 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.
(b) The Funds 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 fund 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 requires by
Section 22(e) of the Investment Company Act of 1940.
(b) The Participant represents and warrants that it will not attempt to place a
Redemption Order for the purpose of redeeming any Creation Unit of ETF Shares of
any Fund 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 the Fund's ETF Shares and to the
entire proceeds of the redemption, and that such ETF 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 ETF Shares to the Fund.
(c) The Participant understands that ETF Shares of any Fund may be redeemed only
when one or more Creation Units of ETF Shares of a Beneficial Owner are held in
the account of a single Participant.
(d) Notwithstanding anything to the contrary in this Agreement or the
Prospectus, the Participant understands and agrees that residents of Australia
and New Zealand, and potentially other countries, are entitled to receive only
cash upon redemption of a Creation Unit of ETF Shares. Accordingly, the
Participant may be 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 and warrants that, based upon the number of
outstanding ETF 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 ETF 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 of ETF Shares of a Fund shall state as follows:
"Purchaser represents and warrants that, after giving effect to the purchase of
ETF Shares to which this confirmation relates, it will not hold 80% or more of
the outstanding ETF 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 ETF 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's ETF 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 ETF Shares by a Beneficial Owner.
11. OBLIGATIONS OF PARTICIPANT
(a) The Participant agrees to maintain records of all sales of 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.
(c) The Participant further represents 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) 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, (vii) 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 (viii) 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.
(d) The Participant represents 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 Shares.
(e) The Participant agrees that it will meet Distributor's written
creditworthiness standards at all times at which it performs activities pursuant
to this Agreement and will inform the Distributor immediately should Participant
not meet such standards. Participant agrees that it will be subject to various
tests performed by Distributor to determine if the Participant is in compliance
with the Distributor's written creditworthiness standards and agrees to comply
with all requests for information in order to permit the Distributor to perform
such tests.
12. INDEMNIFICATION
Note: This paragraph 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 the 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 Annex II or III (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 Annex II and III (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. 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) Neither the Funds, the Distributor, or the Index Receipt Agent, or any
person who controls such persons within the meaning of Section 15 of the 1933
Act, shall be liable to the Participant for any damages arising from any
differences in performance between the Deposit Securities in a Portfolio Deposit
and the Fund's benchmark index.
13. INFORMATION ABOUT DEPOSIT SECURITIES
The Distributor 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 Portfolio 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
As set forth in the Fund 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 (xxx.xxxxxxxxxxxxxxxxx.xxx) 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
only obtain access to the Shareholder Documents from the Distributor
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.
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; 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 Trust 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 parties' 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 14 above.
If neither the Participant or 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.
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 Prospectus and represents that it
has reviewed such document and understands the terms thereof, and further
acknowledges that the procedures contained therein pertaining to the creation
and redemption of Shares 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]
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: Xxxxxxx X. Xxxxxx
Title: Vice President
Address: Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Telex: ______________________________
[Name of Participant]
By:
Name: ________________________________________
Title: _________________________________________
Address: ______________________________________
Telephone: ____________________________________
Facsimile: _____________________________________
Telex: ________________________________________
ACCEPTED BY:
The Bank of New York, as Index Receipt Agent
By:
Name: __________________________
Title: _________________________
Address:
Telephone: _____________________
Facsimile: _____________________
Telex: _________________________
ANNEX I
RevenueShares Large Cap Fund - 50,000 Shares per Creation Unit
Exchange Trading Symbol: RWL
Cusip Number: 000000000
RevenueShares Mid Cap Fund - 50,000 Shares per Creation Unit
Exchange Trading Symbol: RWK
Cusip Number: 000000000
RevenueShares Small Cap Fund - 50,000 Shares per Creation Unit
Exchange Trading Symbol: RWJ
Cusip Number: 000000000
ANNEX II
This document supplements the Trust's Prospectus, and is an attachment to
this Agreement (for purposes of Annex II, the "Trust Participant Agreement")
with respect to the procedures to be used by (i) The Bank of New York (for
purposes of Annex II, where applicable, the "Transfer Agent" or "Custodian") in
processing an order for the creation of Trust Shares and (ii) the Transfer Agent
in processing a request for the redemption of shares issued by the Funds (for
purposes of Annex II, the "Trust Shares"), and (iii) the Participant and the
Transfer Agent in delivering or arranging for the delivery of requisite cash
payments, Portfolio Deposits or Trust Shares, as the case may be, in connection
with the submission of orders for creation or requests for redemption.
A Participant is first required to have signed the Trust Participant
Agreement. Upon acceptance of the Trust Participant Agreement by the Transfer
Agent, the Transfer Agent will assign a personal identification number to each
Authorized Person authorized to act for the Participant. This will allow a
Participant through its Authorized Person(s) to place an order with respect to
Trust Shares.
I. TO PLACE AN ORDER FOR CREATION OR REDEMPTION OF TRUST SHARES
1. Call to Receive a Submission Number. An Authorized Person for the
Participant will call the Trust Telephone Representative at (000) 000-0000 or
4970 not later than the closing time of the regular trading session on The New
York Stock Exchange (the "NYSE Closing Time") (ordinarily 4:00 p.m. New York
time) to receive a Submission Number. In the case of custom orders, the order
must be received by the Transfer Agent no later than 3:00 p.m. ET on the trade
date. Upon verifying the authenticity of the caller (as determined by the use of
the appropriate PIN Number) and the terms of the order for creation or request
for redemption, the Trust Telephone Representative will issue a unique
Submission Number. All orders with respect to the creation or redemption of
Trust Shares are required to be in writing and accompanied by the designated
Submission Number. Incoming telephone calls are queued and will be handled in
the sequence received. Calls placed before the NYSE Closing Time will be
processed even if the call is taken after this cut-off time. ACCORDINGLY, DO NOT
HANG UP AND REDIAL. INCOMING CALLS THAT ARE ATTEMPTED LATER THAN THE NYSE
CLOSING TIME WILL NOT BE ACCEPTED.
2. Assemble the Submission. The Authorized Person submitting an order to
create or a request to redeem shall assemble (a) written instructions regarding
such creation order or redemption request, (b) the designated Submission Number
and (c) transmit such document by facsimile or telex to the Trust Telephone
Representative and the Distributor, as applicable, according to the procedures
set forth below in subsection 3. The document so transmitted is hereinafter
referred to as the "Submission", and the Business Day on which a Submission is
made is hereinafter referred to as the "Transmittal Date". NOTE THAT THE
TELEPHONE CALL IN WHICH THE SUBMISSION NUMBER IS ISSUED INITIATES THE ORDER
PROCESS BUT DOES NOT ALONE CONSTITUTE THE ORDER. AN ORDER OR REQUEST IS ONLY
COMPLETED AND PROCESSED UPON RECEIPT OF THE SUBMISSION.
3. Transmit the Submission. A Submission Number is only valid for a limited
time. The Submission for either creations or redemptions of Trust Shares must be
sent by facsimile or telex to the Trust Telephone Representative, as applicable,
within 15 minutes of the issuance of the Submission Number. In the event that
the Submission is not received within such time period, the Trust Telephone
Representative will attempt to contact the Participant to request immediate
transmission of the Submission.
(a) In the case of a Submission for creation, unless the Submission is
received by the Trust Telephone Representative upon the earlier of within (i) 15
minutes of contact with the Participant or (ii) 45 minutes after the NYSE
Closing Time, the Submission will be deemed invalid.
(b) In the case of a Submission for redemption, unless such Submission is
received by the Trust Telephone Representative within (i) 15 minutes of contact
with the Participant or (ii) 45 minutes after the NYSE Closing Time, whichever
is earlier, such order for redemption contained therein shall be Deemed Received
(as hereinafter defined in Section IV) by the Transfer Agent on the Business Day
following such Transmittal Date in accordance with the procedures set forth in
Section IV(2) and (4) hereof.
4. Await Receipt of Confirmation.
(a) Trust's Clearing Process-Creation Orders. The Transfer Agent shall
issue to the Participating Party a confirmation of acceptance of an order to
create Trust Shares in Creation Unit size aggregations through the Trust's
Clearing Process within 15 minutes of its receipt of a Submission received in
good form. In the event the Participating Party does not receive a timely
confirmation from the Transfer Agent, it should contact the Distributor and the
Trust Telephone Representative at the business numbers indicated.
(b) Trust's Clearing Process-Requests for Redemptions. The Transfer Agent
shall issue to the Participating Party a confirmation of acceptance of a request
to redeem Trust Shares in Creation Unit size aggregations through the Trust's
Clearing Process within 15 minutes of its receipt of a Submission received in
good form. In the event the Participating Party does not receive a timely
confirmation from the Transfer Agent, it should contact the Transfer Agent
directly at the business number indicated.
(c) Outside the Trust's Clearing Process-Creation Orders. The Transfer
Agent shall issue to the DTC Participant an acknowledgment of receipt of an
order to create Trust Shares in Creation Unit size aggregations outside the
Trust's Clearing Process within 15 minutes of its receipt of a Submission
received in good form. In the event the DTC Participant does not receive a
timely acknowledgment from the Transfer Agent, it should contact the Transfer
Agent at the business numbers indicated.
(d) Outside the Trust's Clearing Process-Requests for Redemption. The
Transfer Agent shall issue to the DTC Participant an acknowledgment of receipt
of an order to redeem Trust Shares in Creation Unit size aggregations outside
the Trust's Clearing Process within 15 minutes of its receipt of a Submission
received in good form. In the event the DTC Participant does not receive a
timely acknowledgment from the Transfer Agent, it should contact the Transfer
Agent directly at the business number indicated.
II. PARTICIPANTS' RESPONSIBILITY FOR DELIVERING OR EFFECTING THE DELIVERY OF
REQUISITE PORTFOLIO DEPOSITS OR TRUST SHARES AND CASH PAYMENTS IN
CONNECTION WITH ORDERS FOR CREATION OR REQUESTS FOR REDEMPTION
1. Trust's Clearing Process-Creation Orders. The Participating Party
notified of confirmation of an order to create Trust Shares through the Trust's
Clearing Process shall be required to transfer or arrange for the transfer of
(a) the requisite Deposit Securities (or contracts to purchase such Deposit
Securities expected to be delivered through NSCC by the "regular way" settlement
date) and (b) the Cash Component, if any, to the Transfer Agent by means of the
Trust's Clearing Process so as to be received no later than on the "regular way"
settlement date following the Business Day on which such order is Deemed
Received by the Transfer Agent as set forth below in Section IV.
2. Trust's Clearing Process-Redemption Requests. The Participating Party
notified of confirmation of a request to redeem Trust Shares through the Trust's
Clearing Process shall be required to transfer or arrange for the transfer of
the requisite Trust Shares and the Cash Redemption Amount, if any, to the
Transfer Agent by means of the Trust's Clearing Process so as to be received no
later than on the "regular way" settlement date following the Business Day on
which such order is Deemed Received by the Transfer Agent as set forth below in
Section IV.
3. Outside the Trust's Clearing Process-Creation Orders. The DTC
Participant notified of acknowledgment of an order to create Trust Shares
outside the Trust's Clearing Process shall be required to effect a transfer to
the Transfer Agent of (a) the requisite Deposit Securities through DTC so as to
be received by the Transfer Agent no later than 11:00 a.m. on the next Business
Day immediately following the Business Day on which such order is Deemed
Received by the Distributor as set forth below in Section IV, in such a way as
to replicate the Portfolio Deposit established on the Transmittal Date by the
Transfer Agent and (b) the Cash Component, if any, through the Federal Reserve
Bank wire system so as to be received by the Transfer Agent by 2:00 p.m. on the
next Business Day immediately following the day such order is Deemed Received.
If the Transfer Agent does not receive the Deposit Securities by 11:00 a.m. and
the Cash Component, if any, by 2:00 p.m. on the Business Day immediately
following the day such order is Deemed Received, the creation order contained in
such Submission shall be canceled. Upon written notice to the Transfer Agent,
the DTC Participant may resubmit such canceled order on the following Business
Day using a Portfolio Deposit as newly constituted.
4. Purchase of Creation Unit Aggregations Prior to Receipt of Deposit
Securities. Creation Unit Aggregations may be created in advance of receipt by
the Trust of all or a portion of the applicable Deposit Securities as described
below. In these circumstances, the initial deposit will have a value greater
than the NAV of the Fund Shares on the date the order is placed in proper form
since, in addition to available Deposit Securities, cash must be deposited in an
amount equal to the sum of (i) the Cash Component, plus (ii) 105% of the market
value of the undelivered Deposit Securities (the "Additional Cash Deposit"). The
order shall be deemed to be received on the Business Day on which the order is
placed provided that the order is placed in proper form prior to 4:00 p.m.,
Eastern time, on such date, and federal funds in the appropriate amount are
deposited with the Transfer Agent by 11:00 a.m., Eastern time, the following
Business Day. If the order is not placed in proper form by 4:00 p.m. or federal
funds in the appropriate amount are not received by 11:00 a.m. the next Business
Day, then the order may be deemed to be canceled and the Authorized Participant
shall be liable to the Fund for losses, if any, resulting therefrom. An
additional amount of cash shall be required to be deposited with the Trust,
pending delivery of the missing Deposit Securities to the extent necessary to
maintain the Additional Cash Deposit with the Trust in an amount at least equal
to 105% of the daily marked to market value of the missing Deposit Securities.
5. Outside the Trust's Clearing Process-Redemption Requests. The DTC
Participant notified of acknowledgment of a request to redeem Trust Shares
outside the Trust's Clearing Process shall be required to effect a transfer to
the Transfer Agent (a) the requisite number of Trust Shares through DTC no later
than the NYSE Closing Time on the Business Day on which such order is Deemed
Received by the Transfer Agent and (b) the Cash Redemption Amount, if any,
through the Federal Reserve Bank wire system by no later than 2:00 p.m. on the
next Business Day immediately following the Business Day on which such order is
Deemed Received by the Transfer Agent.
6. Transaction Fee. In connection with the creation or redemption of
Creation Units, the Transfer Agent shall charge, and the Participant agrees to
pay to the Transfer Agent, the Transaction Fee prescribed in the Trust's
Prospectus applicable to (i) creations or redemptions through the Trust's
Clearing Process, or the Transaction Fee and such additional amounts as may be
prescribed pursuant to the Trust's prospectus applicable to creations or
redemptions outside the Trust's Clearing Process and (ii) creations within the
Trust's Clearing Process where the cash equivalent value of one or more Deposit
Securities is being deposited in lieu of the inclusion of such Deposit Security
in the securities portion of the Portfolio Deposit because the Participant is
restricted by regulation or otherwise from investing or engaging in a
transaction in such security. Such Transaction Fee and additional amounts, if
any, shall be included in the calculation of the Cash Component or Cash
Redemption Amount payable or to be received, as the case may be, by the
Participant in connection with the creation or redemption order.
III. CUSTODIAN'S RESPONSIBILITY FOR EFFECTING DELIVERY OF REQUISITE TRUST SHARES
OR SECURITIES AND CASH PAYMENTS IN CONNECTION WITH ORDERS FOR CREATION OR
REQUESTS FOR REDEMPTION.
1. Trust's Clearing Process-Creation Order. After the Transfer Agent has
received notification of a Submission from the Participant for a creation order
for Trust Shares through the Trust's Clearing Process which has been Deemed
Received by the Transfer Agent as set forth below in Section IV, the Transfer
Agent shall initiate procedures to transfer the requisite Trust Shares and the
Cash Component, if any, through the Trust's Clearing Process so as to be
received by the creator no later than on the "regular way" settlement date
following the Business Day on which the Submission is Deemed Received by the
Transfer Agent.
2. Trust's Clearing Process-Redemption Requests. After the Transfer Agent
has received a Submission for a redemption request for Trust Shares through the
Trust's Clearing Process and Deemed Received such submission as set forth below
in Section IV, the Transfer Agent shall initiate procedures to transfer the
requisite securities (or contracts to purchase such securities expected to be
delivered through NSCC by the "regular way" settlement date) and the Cash
Redemption Amount, if any, through the Trust's Clearing Process so as to be
received by the Beneficial Owner no later than on the "regular way" settlement
date following the Business Day on which the Submission is Deemed Received by
the Transfer Agent.
3. Outside the Trust's Clearing Process-Creation Orders. After the Transfer
Agent has received notification of a Submission from the Participant for a
creation order for Trust Shares outside the Trust's Clearing Process which has
been Deemed Received by the Transfer Agent as set forth below in Section IV, the
Transfer Agent shall initiate procedures to transfer the requisite Trust Shares
through DTC and the DTC Participant and the Cash Component, if any, through the
Federal Reserve Bank wire system so as to be received by the creator no later
than on the third (3rd) Business Day following the Business Day on which the
Submission is Deemed Received by the Transfer Agent.
4. Outside the Trust's Clearing Process-Redemption Requests. After the
Transfer Agent has received a Submission for a redemption request for Trust
Shares outside the Trust's Clearing Process and Deemed Received such submission
as set forth below in Section IV, the Transfer Agent shall initiate procedures
to transfer the requisite securities (or contracts to purchase such securities
expected to be delivered within three Business Days) through DTC and the DTC
Participant and the Cash Redemption Amount, if any, through the Federal Reserve
Bank wire system so as to be received by the Beneficial Owner no later than on
the third (3rd) Business Day following the Business Day on which the Submission
is Deemed Received by the Transfer Agent.
IV. PROCEDURES BY WHICH AN ORDER TO CREATE OR A REQUEST TO REDEEM SHALL BE
"DEEMED RECEIVED."
1. Trust's Clearing Process-Creation Orders. An order to create Trust
Shares through the Trust's Clearing Process shall be "Deemed Received" by the
Transfer Agent on the Transmittal Date only if (a) the Submission containing
such order is in proper form and (b) such Submission is received by the Transfer
Agent no later than the time on such Transmittal Date as set forth in Section
I(3)(a) hereof. Orders to create Trust Shares contained in Submissions
transmitted after such time on a Transmittal Date shall be deemed invalid.
2. Trust's Clearing Process-Redemption Requests. A request to redeem Trust
Shares through the Trust's Clearing Process shall be Deemed Received by the
Transfer Agent on the Transmittal Date only if (a) the Submission containing
such request is in proper order and (b) such Submission is received by the
Transfer Agent no later than the time on such Transmittal Date as set forth in
Section I(3)(b) hereof. Requests to redeem Trust Shares contained in Submissions
transmitted after such time on a Transmittal Date shall be "Deemed Received" by
the Trustee on the next Business Day immediately following such Transmittal
Date.
3. Outside the Trust's Clearing Process-Creation Orders. An order to create
Trust Shares outside the Trust's Clearing Process shall be Deemed Received by
the Transfer Agent on the Transmittal Date only if: (a) the Submission
containing such order is in proper form, (b) such Submission is received by the
Transfer Agent no later than the time on such Transmittal Date as set forth in
Section I(3)(a) hereof, (c) the requisite number of Deposit Securities is
transferred through DTC to the account of the Trust no later than 11:00 a.m. on
the Business Day next following the Transmittal Date and (d) the cash equal to
the Cash Component, if any, is transferred via the Federal Reserve Bank wire
system to the account of the Trust by no later than 2:00 p.m. on the Business
Day next following the Transmittal Date. If either the Submission, the requisite
Deposit Securities or the cash equal to the Cash Component is not received by
the Trustee within the time periods set forth above, such order shall be deemed
invalid.
4. Outside the Trust's Clearing Process-Redemption Requests. A request to
redeem Trust Shares outside the Trust's Clearing Process shall be Deemed
Received by the Transfer Agent on the Transmittal Date only if (a) the
Submission containing such request is in proper form, (b) such Submission is
received by the Trust no later than the time as set forth in Section I(3)(b)
hereof, (c) the requisite number of Trust Shares is transferred via DTC to the
account of the Transfer Agent by the NYSE Closing Time on such Transmittal Date
and (d) the Cash Redemption Amount owed to the Trust, if any, is received by the
Transfer Agent no later than 2:00 p.m. of the Business Day next following such
Transmittal Date. If either the Submission, the Trust Shares or cash equal to
the Cash Redemption Amount, if any, is not received by the Trust within the time
periods set forth above, such redemption request shall be Deemed Received by the
Transfer Agent on the Business Day on which both the Submission and the
requisite number of Trust Shares are delivered to the Transfer Agent within the
proper time periods as set forth above; provided that the Cash Redemption
Amount, if any, is then paid on the next Business Day within the time period set
forth above.
5. Ambiguous Instructions. In the event that a Submission contains terms
that differ from the information provided in the telephone call at the time of
issuance of the Submission Number, the Trust Telephone Representative will
attempt to contact the Participant to request confirmation of the terms of the
order. If an Authorized Person confirms the terms as they appear in the
Submission then the Submission will be accepted and processed. If an Authorized
Person contradicts its terms, the Submission will be deemed invalid, and a
corrected Submission must be received by the Transfer Agent, as applicable, not
later than the earlier of (i) within 15 minutes of such contact with the
Participant or (ii) 45 minutes after the NYSE Closing Time. If the Trust
Telephone Representative is not able to contact an Authorized Person, then the
Submission shall be accepted and processed in accordance with its terms
notwithstanding any inconsistency from the terms of the telephone information.
In the event that a Submission contains terms that are illegible, the Submission
will be deemed invalid and the Trust Telephone Representative will attempt to
contact the Participant to request retransmission of the Submission. A corrected
Submission must be received by the Transfer Agent, as applicable, not later than
the earlier of (i) within 15 minutes of such contact with the Participant or
(ii) 45 minutes after the NYSE Closing Time.
6. Suspension or Rejection of an Order. The Distributor or Transfer Agent
reserves the right to suspend a Submission in the event that its acceptance
would appear to result in the Participant or a Beneficial Owner owning 80
percent (80%) or more of all outstanding Trust Shares and if pursuant to Section
351 of the Internal Revenue Code of 1986, as amended, such a circumstance would
result in the Trust having a basis in the securities deposited different from
the market value of such securities on the date of deposit. In such event, the
Distributor or the Trust Telephone Representative will attempt to contact an
Authorized Person for purposes of confirmation of the fact that with respect to
such Participant no Beneficial Owner would own 80 percent (80%) or more of all
outstanding Trust Shares upon execution of the Submission or that such a
circumstance would not result in the Trust having a basis in the securities
deposited different from the market value of such securities on the date of
deposit. In the event that (i) the Distributor or the Trust Telephone
Representative is unable to contact an Authorized Person or (ii) the Participant
fails to transmit an identical Submission containing a representation and
warranty as to such fact, then the Submission shall be deemed invalid.
The Trust reserves the absolute right to reject a creation order
transmitted to it by the Distributor in respect of a Fund if: (i) the order is
not in proper form; (ii) the investor(s), upon obtaining the Fund Shares
ordered, would own 80% or more of the currently outstanding shares of any Fund;
(iii) the Deposit Securities delivered are not as disseminated for that date by
the Custodian, as described above; (iv) acceptance of the Deposit Securities
would have certain adverse tax consequences to the Fund; (v) acceptance of the
Fund Deposit would, in the opinion of counsel, be unlawful; (vi) acceptance of
the Fund Deposit would otherwise, in the discretion of the Trust or the Adviser,
have an adverse effect on the Trust or the rights of beneficial owners; or (vii)
in the event that circumstances outside the control of the Trust, the Transfer
Agent, the Distributor and the Adviser make it for all practical purposes
impossible to process creation orders. Examples of such circumstances include
acts of God; public service or utility problems such as fires, floods, extreme
weather conditions and power outages resulting in telephone, telecopy and
computer failures; market conditions or activities causing trading halts;
systems failures involving computer or other information systems affecting the
Trust, the Adviser, the Distributor, DTC, NSCC, the Transfer Agent, the
Custodian or sub-custodian or any other participant in the creation process, and
similar extraordinary events. The Transfer Agent shall notify immediately a
prospective creator of a Creation Unit and/or the Authorized Participant acting
on behalf of such prospective creator of its rejection of the order of such
person. The Trust, the Custodian, any sub-custodian and the Distributor are
under no duty, however, to give notification of any defects or irregularities in
the delivery of Fund Deposits nor shall any of them incur any liability for the
failure to give any such notification.
V. PROCEDURES SPECIFIC TO CUSTOM BASKETS
The Fund has developed custom creation, redemption and other non-typical
baskets (the "Custom Baskets"). Custom Baskets are intended to allow
Participants to transact in that Fund and other non-standard baskets using the
Custom Basket process. The Custom Basket process allows for cash-in-lieu for
certain securities as well as non-typical baskets and continues to settle
through the standard CNS process at NSCC. It is the responsibility of the
Participant to apply to the NSCC by contacting DTCC Participant Services at
000-000-0000 and the Transfer Agent at 000-000-0000 or 4970 to allow them to
receive Custom Baskets as well as the regular daily standard baskets (the
"Standard Baskets"). To ensure proper tracking of the Fund to its benchmark
index the following guidelines must be followed when transacting Custom Baskets:
1. On or before T-1, the Participant must request a Custom Basket
Application Form from the Transfer Agent by calling 000-000-0000 or 4970 for
creations and redemptions. The Transfer Agent will fax a standard Application
Form (see attached) on which the Participant must identify the securities to be
added to or omitted from the creation or redemption basket (the "Added Issues"
or the "Omitted Issues"). In the case of an Omitted Issue, cash in lieu is
defined as the Net Asset Value of the Fund times the number of units in one
creation block minus the value of the Omitted Issues. Participants will also be
responsible for any costs associated with the conversion of cash into the
Omitted Issues to be purchased. Participants may request that the Custom Basket
be available for creations and redemptions for a one-time transaction, a
specific period or indefinitely. The Transfer Agent will advise the Fund who
will review the Custom Basket request and, if approved, will deliver a
confirmation back to the Transfer Agent and the Participant. In the event
subsequent additions and/or deletions to Added Issues or Omitted Issues are
required to change the custom basket already approved, the Participant is
responsible for completing a new standard form with the Transfer Agent.
2. On trade date minus 1 day, prior to the opening of the NYSE, the Fund
through Transfer Agent will notify NSCC as to the components of the approved
Custom Baskets available that day along with the components of the Standard
Basket. Each Custom Basket will be identified by a separate NSCC assigned
instruction CUSIP.
3. On trade date, the Participant will follow the directions regarding
placing orders outlined in Attachment A. A Participant wishing to create or
redeem a Custom Basket must identify the custom CUSIP on the order form in the
blank provided. Orders received without a custom CUSIP indicated will be
processed as orders for Standard Baskets. Participants placing orders for Custom
Baskets must note that the cut-off-time to create and redeem a Custom Basket
will be 3:00 p.m. New York time. Orders for Custom Baskets will not be processed
if received by the Transfer Agent after 3:00 p.m. New York time. The Participant
may transact on the Standard Basket at any time during the trade date.
IN WITNESS WHEREOF, the Participant acknowledges that he or she has read
the procedures relating to Custom Baskets and agrees to comply with all such
procedures. Failure to comply with the Custom Basket procedures will require the
transaction to be effected in the Standard Basket.
Participant:
By:
Title:
Address:
Telephone:
Facsimile:
Telex:
Date:
VI. TELEPHONE, FACSIMILE, AND TELEX NUMBERS
TRUST TELEPHONE REPRESENTATIVE: TELEPHONE:
FACSIMILE:
TRUSTEE: TELEPHONE:
FACSIMILE:
PARTICIPANT: TELEPHONE:
FACSIMILE:
ANNEX III
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 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:
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
