AUTHORIZED PARTICIPANT AGREEMENT FOR AMERISTOCK ETF TRUST
Exhibit
e(2)
FOR
AMERISTOCK
ETF TRUST
This
Authorized Participant Agreement (the "Agreement") is entered into by and
between ALPS Distributor, Inc. (the "Distributor") and [Insert Entity] (the
"Authorized Participant" or “AP”) and is subject to acceptance
by Xxxxx Brothers Xxxxxxxx & Co. ("BBH ETF Administrator" or the "Transfer
Agent" or the “Custodian”). The Transfer Agent serves as the transfer agent for
the Ameristock ETF Trust (the "Trust” ) and is an Index Receipt Agent as that
term is defined in the rules of the National Securities Clearing Corporation
("NSCC"). The Distributor, the Transfer Agent and the Authorized Participant
acknowledge and agree that the Trust shall be a third party beneficiary of
this
Agreement, and shall receive the benefits contemplated by this Agreement, to
the
extent specified herein. The Distributor has been retained to provide services
as principal underwriter of the Trust acting on an agency basis in connection
with the sale and distribution of shares of beneficial interest, par value
$.001
per share (sometimes referred to as "Shares"), of each
of the separate investment portfolios of the Trust (each such portfolio a “Fund”
and collectively, the “Funds”) named on Annex
I
to this Agreement. As described in the Trust’s Prospectus and Statement of
Additional Information (“SAI”) incorporated therein (collectively, the
"Prospectus") included as part of its registration statement, as amended, on
Form N-1A (No. 333-136721) (“Registration Statement”), Xxxx Holdings LLC and
Xxxx XXX, Inc. own and compile certain indexes of U.S. Treasury securities
that
are each intended to be representative of the performance of the “on-the-run” or
“OTR” U.S. Treasury security of a specific maturity (each an “Index” and
collectively the “Indexes”). Each Fund will be managed to seek results that
correspond generally to the performance of the underlying Index for the Fund
identified in the Prospectus.
As
specified in the Trust’s Prospectus, the Shares of any Fund offered thereby may
be purchased or redeemed only in aggregations of a specified number of Shares
referred to therein and herein as a "Creation Unit". All references to “cash”
shall refer to US Dollars (“USD”). The number of Shares constituting a Creation
Unit of each Fund is set forth in the Prospectus. Creation Units of Shares
may
be purchased only by or through an Authorized Participant that has entered
into
an Authorized Participant Agreement with the Trust and the Distributor. The
Prospectus provides that Creation Units generally will be sold in exchange
for
an in-kind deposit of a designated portfolio of securities (the "Deposit
Securities") and an amount of cash computed as described in the Prospectus
(the
"Cash Component"), plus a purchase “Transaction Fee” as described in the
Prospectus, delivered to the Trust by the Authorized Participant for its own
account or acting on behalf of another party. Together, the Deposit Securities
and the Cash Component constitute the "Creation Deposit", which represents
the
minimum initial and subsequent investment amount for Shares of any Fund of
the
Trust. References to the Prospectus are to the then current Prospectus as it
may
be supplemented or amended from time to time. Capitalized terms not otherwise
defined herein are used herein as defined in the Prospectus.
This
Agreement is intended to set forth certain premises and the procedures by which
the Authorized Participant may purchase and/or redeem Creation Units of Shares
through the manual process of The Depository Trust Company ("DTC") (“DTC
Process”). The procedures for processing an order to purchase Shares (each a
"Purchase Order") and an order to redeem Shares (each a "Redemption Order",
and
together with Purchase Orders, “Orders”) are described in the Trust’s Prospectus
and in Annex
II
to this Agreement. All Purchase and Redemption Orders must be made pursuant
to
the procedures set forth in the Prospectus and Annex
II hereto,
as each may be amended by the Trust from time to time.
An Authorized Participant may not place a Purchase Order before the fifth
(5th)
Business Day (as defined below) following execution and delivery to the
Distributor of this Agreement and notification by the Distributor of the
Authorized Participant's
status. An Authorized Participant may
not cancel a Purchase Order or a Redemption Order after an order is placed
by
the Authorized Participant.
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The
parties hereto in consideration of the premises and of the
mutual
agreements
contained herein agree as follows:
1.
STATUS
OF AUTHORIZED
PARTICIPANT.
(a)
The Authorized Participant hereby
represents, covenants and warrants that with respect to Purchase Orders or
Redemption Orders of Creation Units of Shares of any Fund (i) through the
Continuous Net Settlement (“CNS”) Clearing Process, it is a member of NSCC and
an Authorized Participant in the CNS System of NSCC (as defined in the Fund's
Prospectus, a "Participating Party"), and/or (ii) outside the CNS Clearing
Process, it is a DTC Participant (as defined in the Fund's Prospectus, a "DTC
Participant"). The Authorized Participant may place Purchase Orders or
Redemption Orders for Creation Units either through the CNS Clearing Process
or
outside the CNS Clearing Process, subject to the procedures for purchase and
redemption set forth in this Agreement, the Prospectus and Annex
II
hereto ("Execution of Orders"). Any change in the foregoing status of the
Authorized Participant
shall terminate this Agreement and the Authorized Participant shall
give prompt written notice to the Distributor,
the
Trust and
the Transfer
Agent
of such change.
(b)
The Authorized Participant hereby represents and warrants that, unless the
following paragraph is applicable to it, (i) it is registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended, (ii) is qualified to
act
as a broker or dealer in the states or other jurisdictions where it transacts
business, and (iii) is a member in good standing of the National Association
of
Securities Dealers, Inc. (the "NASD"), and the Authorized 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
Authorized Participant agrees to comply with all applicable United States
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 NASD to the extent the foregoing relates to the
Authorized Participant’s transactions in, and activities with respect to,
Shares, and that it will not offer or sell Shares of any Fund of the Trust
in
any state or jurisdiction where they may not lawfully be offered and/or
sold.
(c)
If the Authorized Participant is offering or selling Shares of any Fund of
the
Trust in jurisdictions outside the several states, territories and possessions
of the United States (“US”) and is not otherwise required to be registered,
qualified, or a member of the NASD as set forth above, the Authorized
Participant nevertheless agrees (i) to observe the applicable laws of the
jurisdiction in which such offer and/or sale is made, (ii) to comply with the
full disclosure requirements of the Securities Act of 1933, as amended (the
"1933 Act") and the regulations promulgated thereunder and (iii) to conduct
its
business in accordance with the spirit of the NASD Conduct Rules to the extent
the foregoing relates to the Authorized Participant’s transactions in, and
activities with respect to, Shares.
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(d)
The
Authorized Participant represents, covenants and warrants that it has
established and presently maintains an anti-money laundering program (the
"Program") reasonably designed to prevent the Authorized Participant from being
used as a conduit for money laundering or other illicit purposes or the
financing of terrorist activities, and to the best of its knowledge the
Authorized Participant is in compliance with the Program and all anti-money
laundering laws, regulations and rules, including applicable provisions of
the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (the "USA PATRIOT
ACT").
(e)
The Authorized Participant understands and acknowledges that the method by
which
Creation Units of Shares will be created and traded may raise certain issues
under applicable securities laws. For example, because new Creation Units of
Shares may be issued and sold by the Trust on an ongoing basis, at any point
a
"distribution", as such term is used in the 1933 Act, may be occurring. The
Authorized Participant understands and acknowledges that some activities
on its part, depending on the circumstances, may result in its being deemed
a
participant
in a distribution in a manner which could render it a statutory underwriter
and
subject it to the prospectus delivery and liability provisions of the 1933
Act.
The Authorized Participant should review the “Continuous Offering” section
of
the SAI and consult with its own counsel in connection with entering into this
Agreement and placing an Order. The Authorized Participant also understands
and
acknowledges that dealers who are not "underwriters" but are participating
in
the distribution of Shares are generally required to deliver a
prospectus.
(f)
The Authorized Participant has the capability to send and receive communications
via authenticated telecommunication facility to and from the Distributor, the
Custodian, and the Authorized Participant’s custodian. The Authorized
Participant shall confirm such capability to the satisfaction of the Distributor
and the Custodian prior to placing its first Order with the Distributor (whether
it is a Purchase Order or a Redemption Order).
2. EXECUTION
OF PURCHASE ORDERS AND REDEMPTION ORDERS.
(a)
All Purchase Orders or Redemption Orders shall be made in accordance with the
terms of the Prospectus and the procedures described in Annex
II
hereto.
The Trust in coordianation with BBH ETF Administrator reserves the right to
issue additional or other procedures relating to the manner of purchasing or
redeeming Creation Units and the Authorized Participant agrees to comply with
such procedures as may be issued from time to time as described in the
Prospectus, upon reasonable notice thereof, including but not limited to the
Cash Collateral Settlement Procedures that are referenced in Annex
II
hereto.
(b)
The Authorized Participant acknowledges and agrees on behalf of itself and
any
party for which it is acting (whether as a customer or otherwise) that delivery
of
a Purchase Order or Redemption Order shall be irrevocable, provided that the
Trust and the Distributor on behalf of the Trust reserves the right to reject
any Purchase Order until the trade is released as "good" as described in
Annex
II
hereto and any Redemption Order that is not in "proper form" as defined in
the
Prospectus.
(c)
With respect to any Redemption Order, the Authorized Participant also
acknowledges and agrees on behalf of itself and any party for which it is acting
(whether as a customer or otherwise) to return to the Trust 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 Authorized 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 Trust. With respect to any Redemption
Order, the Authorized Participant also acknowledges and agrees on behalf of
itself and any party for which it is acting (whether as a customer or otherwise)
that the Trust is entitled to reduce the amount of money or other proceeds
due
to the Authorized 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 Authorized 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, the Transfer
Agent, on behalf of the Trust, acknowledges and agrees to return to the
Authorized Participant or any party for which it is acting any dividend,
distribution or other corporate action paid to the Trust in respect of any
Deposit Security that is transferred to the Trust that, based on the valuation
of such Deposit Security at the time of transfer, should have been paid to
the
Authorized Participant or any party for which it is acting.
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3.
NSCC.
Solely
with respect to Purchase Orders or Redemption Orders effected through the CNS
Clearing Process, the Authorized Participant, as a Participating Party, hereby
authorizes the Transfer Agent to transmit to the NSCC on behalf of the
Authorized Participant such instructions, including amounts of the Deposit
Securities and Cash Component as are necessary, consistent with the instructions
issued by the Authorized Participant to BBH ETF Administrator. The Authorized
Participant agrees to be bound by the terms of such instructions issued by
the
Transfer Agent and reported to NSCC as though such instructions were issued
by
the Authorized Participant directly to NSCC.
4.
PROSPECTUS, MARKETING MATERIALS AND REPRESENTATIONS.
a)
The Distributor will provide to the Authorized Participant copies of the then
current Prospectus and any printed supplemental information, including the
Product Description that may in certain circumstances be provided to investors
in lieu of the Prospectus, in reasonable quantities upon request. The
Distributor represents, warrants and agrees that it will notify the Authorized
Participant when a revised, supplemented or amended Prospectus or Product
Description for any Fund is available and deliver or otherwise make available
to
the Authorized Participant copies of such revised, supplemented or amended
Prospectus or Product Description at such time and in such numbers as to enable
the Authorized Participant to comply with any obligation it may have to deliver
such Prospectus or Product Description to customers. The Distributor will make
any revised, supplemented or amended Prospectus available to the Authorized
Participant
no later than its effective date. The Distributor shall be deemed to have
complied with this Section 4 when the Authorized
Participant
has received
such revised, supplemented or amended Prospectus or Product Description by email
at [insert email address], in printable form, with such number of hard copies
as
to enable the Authorized Participant to comply with any obligation it may have
to deliver such Prospectus or Product Description to customers.
(b)
The Distributor represents and warrants that (i) the Registration Statement
and
the Prospectus contained therein conforms in all respects to the requirements
of
the Securities
Act of 1933, as amended, and the rules and regulations of the Securities and
Exchange Commission (the “SEC”) thereunder and do not and will not, as of the
applicable effective date as to the Registration Statement and any amendment
thereto and as of the applicable filing date as to the Prospectus and any
amendment or supplement thereto, contain an untrue statement of a material
fact
or omit to state a material fact required to be stated therein or necessary
to
make the statements therein not misleading; (ii) the sale and distribution
of
the Shares as contemplated herein will not conflict with or result in a breach
or violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Trust, any Fund or
the
Distributor; and (iii) no consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or body is
required for the issuance and sale of the Shares, except the registration under
the Securities Act of 1933 Act of the Shares.
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(c)
The Authorized Participant represents, warrants and agrees that it will not
make, in connection with any sale or solicitation of a sale of Shares, any
representations concerning Shares other than those consistent with the Trust’s
then current Prospectus or in any promotional materials or sales literature
furnished to the Authorized Participant by the Distributor or the Trust. The
Authorized Participant agrees not to furnish or cause to be furnished to any
person or display or publish any information or materials relating to Shares
except such information and materials as may be furnished to the Authorized
Participant by the Distributor and such other information and materials as
may
be approved in writing by the Distributor. The Authorized Participant
understands that neither the Trust nor any of its Funds may be advertised or
marketed as an open-end fund or as a mutual fund, and that any advertising
materials will prominently disclose that the Shares are not redeemable shares
of
the Trust. In addition, the Authorized Participant understands that any
advertising material that addresses redemptions of Shares, including the
Prospectus, will disclose that the owners of Shares may acquire Shares and
tender Shares for redemption to the Trust in whole Creation Units only.
(d)
Notwithstanding anything to the contrary in this Agreement, the Authorized
Participant and its affiliates may without the written approval of the
Distributor or the Trust prepare and circulate in the regular course of their
business research, reports and other similar materials that include information,
opinions or recommendations relating to Shares, provided that such reports
comply with applicable NASD and SEC rules.
5. TITLE
TO SECURITIES; RESTRICTED SHARES.
The
Authorized 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
in
accordance with the terms of the Prospectus, the Trust 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 restriction upon the sale or transfer of
such
securities imposed by (i) any agreement or arrangement entered into by the
Authorized 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 and (iii) no such securities are "restricted securities"
as such term is used in Rule 144(a)(3)(i) promulgated under the 1933
Act.
6.
CASH
COMPONENT AND FEES.
The
Authorized Participant hereby agrees that as between the Trust and itself or
any
party for which it acts in connection with a Purchase Order for any Fund, it
will make available in same day funds for each purchase of Shares an amount
of
cash sufficient to pay the Cash Component and any other amounts of cash due
to
the Trust in connection with the purchase of any Creation Unit of Shares
(including the purchase Transaction Fee for in-kind and cash purchases and
the
additional variable charge for cash purchases (when, in the sole discretion
of
the Trust, cash purchases are available or specified as described in the
Prospectus)) (the "Cash Amount") which shall be made through DTC to an account
maintained by the Custodian
and shall be provided in same day or immediately available funds on or before
the settlement date in accordance with the Trust’s Prospectus ("Contractual
Settlement Date"). The Authorized Participant hereby agrees to ensure that
the
Cash Amount will be received by the Trust on or before the Contractual
Settlement Date, and in the event payment of such Cash Amount has not been
made
by such Contractual Settlement Date, the Authorized Participant agrees on behalf
of itself or any party for which it acts in connection with a Purchase Order
to
pay the full cash amount, plus interest, computed at such reasonable rate as
may
be specified by the Trust from time to time. The Authorized Participant may
require its customer to enter into a written agreement with the Authorized
Participant with respect to such matters.
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7.
ROLE OF AUTHORIZED
PARTICIPANT.
(a)
The Authorized Participant acknowledges and agrees that for all purposes of
this
Agreement, the Authorized Participant will be deemed to be an independent
contractor, and will have no authority to act as agent for the Trust, any Fund,
the Distributor, the Custodian, or the Authorized Participant’s custodian in any
matter or in any respect. The Authorized Participant agrees
to make itself and its employees available, upon request, during normal business
hours to consult with the Trust, the Distributor, the Custodian,
or the Authorized Participant’s custodian or their designees concerning the
performance of the Authorized Participant's responsibilities under this
Agreement, provided that the Authorized Participant shall be under no obligation
to divulge or otherwise discuss any information that the Authorized Participant
reasonably believes (i) is confidential or proprietary in nature, or (ii) the
disclosure of which to third parties is in violation of any applicable law
or
regulation or otherwise prohibited.
(b)
The
Authorized Participant, as a DTC Participant, agrees that it 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 Authorized Participant agrees (i) subject to any privacy obligations or
other obligations arising under federal or state securities laws it may have
to
its customers, to assist the Distributor in ascertaining certain information
regarding sales of Shares made by or through the Authorized Participant upon
request of the Trust or the Distributor that is necessary for the Trust to
comply with its obligations to distribute information to its shareholders under
applicable state or federal securities laws or (ii) in lieu thereof and at
the
option of the Authorized Participant, the Authorized Participant may undertake
to deliver prospectuses, proxy material, annual and other reports of the Funds
or other similar information that the Funds are obligated to deliver to their
shareholders to the Authorized Participant’s customers that custody Shares with
the Authorized Participant, after receipt from the Funds or the Distributor
of
sufficient quantities to allow mailing thereof to such customers.
(d)
The Distributor agrees that the names and addresses and other information
concerning Authorized Participant’s customers are and shall remain the sole
property of the Authorized Participant, and none of the Distributor, the Trust
or any of their respective affiliates shall use such names, addresses or other
information for any purpose except in connection with the performance of their
duties and responsibilities hereunder and except for servicing and informational
mailings related to the Funds referred to in Section 7(c) of this
Agreement.
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8.
AUTHORIZED PERSONS OF THE AUTHORIZED PARTICIPANT.
Concurrently
with the execution of this Agreement and from time to time thereafter as may
be
requested in writing by the Trust or the Distributor, the Authorized Participant
shall deliver to the Distributor and the Trust, with copies to the Transfer
Agent at the address specified below, executed by a duly authorized person,
a
certificate in a form approved by the Trust (see Annex
III
to this Agreement) 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 Authorized Participant
(each such person an "Authorized Person"). Such certificate may be accepted
and
relied upon by the Distributor and the Trust as conclusive evidence of the
facts
set forth therein and shall be considered to be in full force and effect until
delivery to the Distributor and the Trust of a superseding certificate in a
form
approved by the Trust bearing a subsequent date, or, in connection with the
termination or revocation of authority of an Authorized Person by the Authorized
Participant, until the Authorized Participant gives written notice of such
termination or revocation to the Distributor and the Trust. The Distributor
shall issue to each Authorized Participant a unique personal identification
number ("PIN Number") by which such Authorized Participant shall be identified
and instructions issued by the Authorized Participant hereunder shall be
authenticated. The PIN Number shall be kept confidential and only provided
to
Authorized Persons. If after issuance, an
Authorized
Participant's PIN Number is changed, the new PIN Number will become effective
on
a date mutually agreed upon by the Authorized Participant and the
Distributor.
9.
REDEMPTION.
The
Authorized Participant understands and agrees that Redemption Orders may be
submitted only on days that all of the government securities markets in the
United States, the Custodian, the New York Stock Exchange, and the US stock
exchange where the Shares are principally listed (as specified in the
Prospectus) are open for trading or business (each, a “Business
Day”).
(a)The
Authorized Participant represents and warrants that it will not attempt to
place
a Redemption Order for the purpose of redeeming any Creation Unit of Shares
of
any Fund unless it first determines that it or its customer, as the case may
be,
owns outright or has the authority, right and ability to tender for redemption
the requisite number of Creation Units of Shares of the relevant Fund to be
redeemed and that such Shares have not been loaned or pledged to another party
and are not the subject of a repurchase agreement, securities lending agreement
or any other arrangement that would preclude the delivery of such Shares to
the
Transfer Agent in accordance with the Prospectus or as otherwise required by
the
Trust. The Authorized Participant understands that Shares of any Fund may be
redeemed only when one or more Creation Units of Shares of a Beneficial Owner
are held in the account of a single Authorized Participant.
10.
BENEFICIAL OWNERSHIP.
(a)
The Authorized Participant represents and warrants to the Distributor and the
Trust that (based upon the number of outstanding Shares of each such Fund)
either (i) it does not hold for the account of any single Beneficial Owner
of
Shares of the relevant Fund, 80 percent (80%) or more of the currently
outstanding Shares of such relevant Fund or (ii) if it does hold for the account
of any single Beneficial Owner of Shares of such relevant Fund 80 percent (80%)
or more of the outstanding Shares of such relevant Fund, that such a
circumstance would not 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.
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(b)
The Trust and its Transfer Agent and Distributor may request information from
the Authorized Participant regarding Shares’ ownership of each Fund to the
extent necessary to make a determination regarding ownership of 80 percent
(80%)
or more of the currently outstanding Shares of any Fund by a Beneficial Owner
as
a condition to the acceptance of a deposit of Deposit Securities.
11.
INDEMNIFICATION.
This
section 11 shall
survive the termination of this Agreement.
(a)
The Authorized Participant hereby agrees to indemnify and hold harmless the
Distributor, the Trust, the Transfer 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 "AP
Indemnified Party") from and against any loss, liability, cost and expense
(including attorneys' fees) incurred by such AP Indemnified Party as a result
of
(i) any breach by the Authorized Participant of any provision of this Agreement
that relates to such Authorized Participant; (ii) any failure on the part of
the
Authorized Participant to perform any of its obligations set forth in the
Agreement; (iii) any failure by the Authorized Participant to comply with
applicable laws, including rules and regulations of self-regulatory
organizations, to the extent the foregoing relates to the Authorized
Participant’s transactions in, and activities with respect to, Shares under this
Agreement; or (iv) actions of such AP Indemnified Party in reliance upon any
instructions issued in accordance with Annex II, III or IV hereto (as each
may
be amended from time to time) reasonably believed by the Distributor and/or
the
Transfer Agent to be genuine and to have been given by the Authorized
Participant.
The Authorized 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 Authorized Participant in the event that the
Authorized Participant fails to honor any of its obligations pursuant to this
Agreement that benefit the Trust. The
Authorized Participant shall not be liable to any AP Indemnified Party for
any
damages arising out of mistakes or errors in data provided to the Authorized
Participant, or mistakes or errors by, or out of interruptions or delays of
communications with, the AP Indemnified Parties who are service providers to
the
Trust.
(b)
The
Distributor hereby agrees to indemnify and hold harmless the Authorized
Participant, its 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 a "Distributor Indemnified
Party") from and against any loss, liability, cost and expense (including
attorneys' fees) incurred by such Distributor Indemnified Party as a result
of
(i) any breach by the Distributor of any provision of this Agreement that
relates to the Distributor; (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, to the extent the foregoing relates to the
Distributor’s transactions in, and activities with respect to, Shares; (iv)
actions of such Distributor Indemnified Party in reliance upon any instructions
issued or representations made in accordance with Annex II and III hereto (as
each may be amended from time to time) reasonably believed by the Authorized
Participant to be genuine and to have been given by the Distributor, the Trust
or a Fund, or (v) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement of the Trust as originally filed
with the Securities and Exchange Commission or in any amendment thereof, or
in
any Prospectus or any amendment thereof or supplement thereto, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
connection with the Authorized Participant's acting in its capacity as an
Authorized Participant. The
Distributor shall not be liable to any Distributor Indemnified Party for any
damages arising out of mistakes or errors in data provided to the Distributor,
or mistakes or errors by, or out of interruptions or delays of communications
with, the Distributor Indemnified Parties who are service providers to the
Trust.
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(c)
The term “affiliate” in this Section 11 shall include, with respect to any
person, entity or organization, any other person, entity or organization which
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such person, entity or
organization.
12.
LIMITATION OF LIABILITY.
(a)
The
Distributor and the Transfer Agent undertake to perform such duties and only
such duties as are expressly set forth herein, or expressly incorporated herein
by reference, and no implied covenants or obligations shall be read into this
Agreement against the Distributor or the Transfer Agent.
(b)
In
the absence of bad faith, negligence or willful misconduct on its part, neither
the Distributor, nor the Transfer Agent, whether acting directly or through
agents or attorneys as provided in paragraph (d) below, shall be liable for
any
action taken, suffered or omitted or for any error of judgment made by any
of
them in the performance of their duties hereunder. Neither the Distributor
nor
the Transfer Agent shall be liable for any error of judgment made in good faith
unless the party exercising such shall have been negligent in ascertaining
the
pertinent facts necessary to make such judgment. In no event shall the
Distributor or the Transfer Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profit), even if such parties have been advised of the likelihood of
such loss or damage and regardless of the form of action. In no event shall
the
Distributor or the Transfer Agent be liable for the acts or omissions of DTC,
NSCC or any other securities depository or clearing corporation.
(c)
Neither the Distributor nor the Transfer Agent shall be responsible or liable
for any failure or delay in the performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances
beyond its reasonable control, including without limitation, acts of God;
earthquakes; fires; floods; wars; civil or military disturbances; terrorism;
sabotage; epidemics; riots; interruptions; loss or malfunction of utilities,
computer (hardware or software) or communications service; accidents; labor
disputes; acts of civil or military authority or governmental
actions.
(d)
The
Distributor and the Transfer Agent may conclusively rely upon, and shall be
fully protected in acting or refraining from acting upon, any communication
authorized hereby and upon any written or oral instruction, notice, request,
direction or consent reasonably believed by them to be genuine.
(e)
The
Transfer Agent shall not be required to advance, expend or risk its own funds
or
otherwise incur or become exposed to financial liability in the performance
of
its duties hereunder, except as may be required as a result of its own gross
negligence, willful misconduct or bad faith.
9
(f)
The
provisions of this Section 12 shall not limit the scope of the indemnification
set forth in Section 11(b) herein.
13. TAX
LIABILITY.
To
the extent any payment of any transfer tax, sales or use tax, stamp tax,
recording tax, or any other similar tax or government charge applicable to
the
creation or redemption of any Creation Unit of Shares of any Fund made pursuant
to this Agreement is imposed, the Authorized Participant shall be responsible
for the payment of such tax or government charge regardless of whether or not
such tax or charge is imposed directly on the Authorized Participant. To the
extent the Trust or the Distributor is required by law to pay any such tax
or
charge, the Authorized Participant agrees to promptly indemnify such party
for
any such payment, together with any applicable penalties, additions to tax
or
interest thereon.
14.
INFORMATION ABOUT CREATION DEPOSITS.
The
Authorized Participant understands that the number and names of the designated
portfolio of Deposit Securities to be included in the current Creation Deposit
for each Fund will be made available by NSCC on each Business Day and will
also
be made available on each Business Day through the facilities of the
NSCC.
15.
ACKNOWLEDGMENT.
The
Authorized Participant acknowledges receipt of the Prospectus and represents
that it has reviewed and understands such document.
16.
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 or by postage prepaid registered or certified
United States first class mail, return receipt requested, or by telex, telegram
or facsimile or similar means of same day delivery (with a confirming copy
by
mail). Unless otherwise notified in writing, all notices to the Trust shall
be
at the address or telephone, facsimile or telex numbers as follows:
|
Attn:
|
|||
|
0000
Xxxxxx Xxx Xxxxxxx, Xxxxx 000
|
|||
|
Xxxxxxx,
Xxxxxxxxxx 00000
|
|||
|
Attn:
Xxxxxxxx X. Xxxxxx
|
|||
|
Telephone
No.: (000) 000-0000
|
|||
|
Facsimile
No.: (000) 000-0000
|
All
notices to the Authorized Participant, the Distributor and the Transfer Agent
shall be directed to the address or telephone, facsimile or telex numbers
indicated below the signature line of such party.
17.
EFFECTIVENESS, TERMINATION AND AMENDMENT.
(a)
This Agreement shall become effective five (5) Business Days after execution
and
delivery to the Distributor upon notice by the Distributor to the Authorized
Participant. This Agreement may be terminated at any time by any party upon
sixty (60) days prior written notice to the other parties and may be terminated
earlier by the Trust or the Distributor at any time in the event of a breach
by
the Authorized Participant of any provision of this Agreement or the procedures
described or incorporated herein. This Agreement supersedes any prior such
agreement between or among the parties.
10
(b)
This Agreement may be amended by the Trust or the Distributor from time to
time
by the following procedure. The Trust or the Distributor will mail a copy of
the
amendment to the Authorized Participant and the Trust or Distributor, as
applicable. For purposes of this Agreement, mail will be deemed received by
the
recipient thereof on the fifth (5th) Business Day following the deposit of
such
mail into the U.S. Postal system. If neither the Authorized Participant or
the
other party objects in writing to the amendment within five (5) Business Days
after its receipt, the amendment will become part of this Agreement in
accordance with its terms.
18.
GOVERNING LAW; CONSENT TO JURISDICTION.
This
Agreement and all transactions hereunder shall be governed by and construed
in
accordance with the laws of the State of New York (regardless of the laws that
might otherwise govern under applicable New York conflict of laws principles)
as
to all matters, including matters of validity, construction, effect, performance
and remedies. Each party hereto irrevocably consents to the jurisdiction of
the
courts of the State of New York and of any federal court located in the Borough
of Manhattan in such State in connection with any action, suit or other
proceeding arising out of or relating to this Agreement or any action taken
or
omitted hereunder, and waives any claim of forum non conveniens and any
objections as to laying of venue. Each party further waives personal service
of
any summons, complaint or other process and agrees that service thereof may
be
made by certified or registered mail directed to such party at such party’s
address for purposes of notices hereunder.
Each
party hereto each hereby irrevocably waives any and all rights to trial by
jury
in any legal proceeding arising out of or relating to this
Agreement.
19.
SUCCESSORS AND ASSIGNS.
This
Agreement and all of the provisions hereof shall be binding upon and inure
to
the benefit of the parties and their respective successors and permitted
assigns.
20.
ASSIGNMENT.
Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any party without the prior written consent of the other parties,
which shall not be unreasonably withheld, except that any entity into which
a
party hereto may be merged or converted or with which it may be consolidated
or
any entity resulting from any merger, conversion, or consolidation to which
such
party hereunder shall be a party, or any entity succeeding to all or
substantially all of the business of the party, shall be the successor of the
party under this Agreement with mutual written consent, which consent shall
not
be unreasonably withheld. The party resulting from any such merger, conversion,
consolidation or succession shall notify the other parties hereto of the change.
Any purported assignment in violation of the provisions hereof shall be null
and
void.
21.
INTERPRETATION.
The
article and section headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the parties and shall
not
in any way affect the meaning or interpretation of this Agreement.
11
22.
ENTIRE AGREEMENT.
This
Agreement, along with any other agreement or instrument delivered pursuant
to
this Agreement, supersede all prior agreements and understandings between the
parties with respect to the subject matter hereof.
23.
SEVERANCE.
If
any provision of this Agreement is held by any court or any act, regulation,
rule or decision of any other governmental or supra national body or authority
or regulatory or self-regulatory organization to be invalid, illegal or
unenforceable for any reason, it shall be invalid, illegal or unenforceable
only
to the extent so held and shall not affect the validity, legality or
enforceability of the other provisions of this Agreement so long as this
Agreement as so modified continues to express, without material change, the
original intentions of the parties as to the subject matter of this Agreement
and the deletion of such portion of this Agreement will not substantially impair
the respective benefits, obligations or expectations of the parties to this
Agreement.
24.
OTHER USAGES.
The
following usages shall apply in interpreting this Agreement: (i) references
to a
governmental or quasigovernmental agency, authority or instrumentality shall
also refer to a regulatory body that succeeds to the functions of such agency,
authority or instrumentality; and (ii) “including” means “including, but not
limited to.”
25.
COUNTERPARTS.
This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
[Signature
Page Follows]
12
IN
WITNESS WHEREOF,
the parties have caused this Agreement to be executed and delivered as of the
day and year written below.
DATED:
____________
ALPS
DISTRIBUTORS, INC.
BY:___________________________________
TITLE:________________________________
ADDRESS:
0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx XX 00000
TELEPHONE:
000.000.0000
FACSIMILE:
303.623.7850
TELEX:________________________________
[INSERT
AP DETAILS]
BY:___________________________________
TITLE:________________________________
ATTENTION:
ADDRESS:
TELEPHONE:
With
a
copy to:
ATTENTION:
[Insert Details if applicable]
ADDRESS:
TELEPHONE:
ACCEPTED
BY: XXXXX BROTHERS XXXXXXXX & CO., AS TRANSFER AGENT
BY:__________________________________________
TITLE:_______________________________________
ADDRESS:
00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
TELEPHONE:___________________________________
FACSIMILE:___________________________________
TELEX:_______________________________________
13
ANNEX
I
TO
|
Name
of Fund
|
||
|
Ameristock/Xxxx
1-Year Treasury ETF
|
||
|
Ameristock/Xxxx
2-Year Treasury ETF
|
||
|
Ameristock/Xxxx
5-Year Treasury ETF
|
||
|
Ameristock/Xxxx
10-Year Treasury ETF
|
||
|
Ameristock/Xxxx
20-Year Treasury ETF
|
14
ANNEX
II
TO
FOR
AMERISTOCK TRUST
PROCEDURES
FOR PROCESSING
PURCHASE
ORDERS AND REDEMPTION ORDERS
This
Annex II to the Authorized Participant Agreement supplements the Prospectus
with
respect to the procedures to be used in processing (1) a Purchase Order for
the
purchase of Shares of the Ameristock ETF Trust in Creation Units of each Fund
and (2) a Redemption Order for the redemption of Shares of the Ameristock ETF
Trust in Creation Units of each Fund. Capitalized terms, unless otherwise
defined in this Annex II, have the meanings attributed to them in the Authorized
Participant Agreement or the Prospectus.
An
Authorized Participant is required to have signed the Authorized Participant
Agreement. Upon acceptance of the Agreement and execution thereof by the Trust
and in connection with the initial Purchase Order submitted by the Authorized
Participant, the Distributor will assign a PIN Number to each Authorized Person
authorized to act for an Authorized Participant.
This will allow an Authorized Participant through its Authorized Person(s)
to
place a Purchase Order or Redemption Order with respect to the purchase or
redemption of Creation Units of Shares of the Ameristock ETF Trust.
15
ANNEX
II -- PART A
TO
TO
PLACE A PURCHASE ORDER FOR
CREATION
UNIT(S) OF SHARES OF ONE OR MORE FUNDS OF
1.
PLACING A PURCHASE ORDER.
Purchase
Orders for Creation Units of Shares of the Ameristock ETF Trust may be initiated
only on Business Days. Purchase Orders may only be made in whole Creation Units
of Shares of each Fund.
To
begin a Purchase Order, the Authorized Participant ("AP") must telephone the
Distributor at [insert phone number] or such other number as the Distributor
designates in writing to the AP. This telephone call must be made by an
Authorized Person of the AP not later than the closing time of regular trading
in the government securities markets in the United States which is ordinarily
3:00 p.m. Eastern Time ("Closing Time"). Upon verifying the authenticity of
the
AP (as determined by the use of the appropriate PIN Number), the Distributor
will request that the AP place the Purchase Order. To do so, the AP must provide
the appropriate ticker symbols when referring to each Fund. After the AP has
placed the Purchase Order, the Distributor will read the Purchase Order back
to
the AP. The AP then must affirm that the Purchase Order has been taken correctly
by the Distributor. If the AP affirms that Purchase Order has been taken
correctly, the Distributor will issue a Confirmation Number to the
AP.
PLEASE
NOTE: A PURCHASE ORDER REQUEST IS NOT COMPLETE UNTIL THE CONFIRMATION NUMBER
IS
ISSUED BY THE
DISTRIBUTOR.
AN ORDER MAY NOT BE CANCELED BY THE AP AFTER THE CONFIRMATION NUMBER IS ISSUED.
INCOMING TELEPHONE CALLS ARE QUEUED AND WILL BE HANDLED IN THE SEQUENCE
RECEIVED. CALLS PLACED BEFORE THE CLOSING TIME WILL BY PROCESSED EVEN IF THE
CALL IS ANSWERED BY BBH ETF ADMINISTRATOR AFTER THE CLOSING TIME. ACCORDINGLY,
THE AP SHOULD NOT HANG UP AND REDIAL. INCOMING CALLS THAT ARE RECEIVED AFTER
THE
CLOSING TIME WILL NOT BE ANSWERED BY THE DISTRIBUTOR. ALL TELEPHONE CALLS WILL
BE RECORDED BY THE DISTRIBUTOR.
2.
RECEIPT OF TRADE CONFIRMATION.
Subject
to the conditions that a properly completed telephone Purchase Order has been
placed by the AP (either on its own or its customer’s behalf) not later than the
Closing Time, the Distributor will accept the Purchase Order on behalf of Trust
and the Distributor will confirm in writing to the AP that its Purchase Order
has been accepted by 7:00 p.m. Eastern Standard Time on the Business Day that
the Purchase Order is received.
16
3.
QUALITY ASSURANCE.
After
a Confirmation Number is issued by the Distributor to the AP, the Distributor
will either fax or email a written version of the Purchase Order to the AP.
Upon
receipt, the AP should immediately telephone the Distributor, if the Participant
believes that the Purchase Order has not been taken correctly by the
Distributor. In addition, the Distributor will telephone the AP within 15
minutes of the fax or e-mail to corroborate the Purchase Order
4.
PROCESSING A PURCHASE ORDER.
During
the telephone call, the Distributor will request that the AP state that (i)
the
AP does not own 80% or more of the Shares of any Fund upon execution of the
Purchase Order or (ii) if it does own 80% or more of the Shares of any Fund,
that such a circumstance would not cause such Fund to have a basis in the
Deposited Securities deposited with such Fund different from the market value
of
such Deposited Securities on the date of such deposit, pursuant to section
351
of the Internal Revenue Code of 1986, as amended. If the AP is not able to
so
confirm, the Distributor has the right to not accept the Purchase
Order.
5.
REJECTING OR SUSPENDING PURCHASE ORDERS.
The
Trust or Distributor reserve the absolute right to reject or revoke acceptance
of a Purchase Order if (i) the order is not in proper form as determined by
the
Trust, BBH ETF Administrator or Distributor, (ii) the portfolio of Deposit
Securities delivered is not as specified by Distributor; (iii) acceptance of
the
Deposit Securities would have certain adverse tax consequences to the Trust
or
any Fund; (iv) the acceptance of the Portfolio Deposit would, in the opinion
of
counsel, be unlawful; (v) the acceptance of the Portfolio Deposit would
otherwise, in the discretion of Trust or Adviser, have an adverse effect on
Trust or the rights of beneficial owners of a Fund; or (vi) circumstances
outside the control of Trust, Distributor, Transfer Agent or Adviser make it
for
all practical purposes, in their reasonable judgment, impossible to process
a
Purchase Order. The Trust or the Distributor shall notify the AP of a rejection
or revocation of any Purchase Order. The Trust and Distributor are under no
duty, however, to give notification of any defects or irregularities in the
delivery of Portfolio Deposits nor shall either of them incur any liability
for
the failure to give any such notification.
Except
as provided herein, all Purchase Orders for Creation Units of Shares of the
Trust are irrevocable by the AP. The Trust acknowledges its agreement to return
to the AP or any party for which it is acting any dividend, distribution or
other corporate action paid to the Trust in respect of any Deposit Security
that
is transferred to Trust that, based on the valuation of such Deposit Security
at
the time of transfer, should have been paid to the AP or any party for which
it
is acting.
6.
CONTRACTUAL SETTLEMENT
(1)Except
as provided below, Deposit Securities must be delivered through the Federal
Reserve System to an account maintained at the Custodian on or before the
Contractual Settlement Date (defined below). The AP must also make available
on
or before the Contractual Settlement Date, by means satisfactory to Trust,
immediately available or same day funds estimated by Trust to be sufficient
to
pay the Cash Component 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 issue of the Creation Unit of Shares of
the
Trust. The “Contractual Settlement Date" is the earlier of (i) date upon which
all of the required Deposit Securities, the Cash Component and any other cash
amounts which may be due are delivered to Trust and (ii) trade date plus one
(t
+1) Business Day. Except as provided in the next two paragraphs, a Creation
Unit
of Shares of any Fund will be issued concurrently with the transfer of good
title to the Trust of the portfolio of Deposit Securities through the Federal
Reserve System and the payment of the Cash Component and the purchase
Transaction Fee through the Federal Reserve Bank wire transfer
system.
17
(2)
The Trust reserves the right to permit or require the substitution of an amount
of cash (i.e., a "cash in lieu" amount ) to be added to the Cash Component
to
replace any Deposit Security with respect to any Fund which may not be available
in sufficient quantity for delivery or which may not be eligible for transfer
through the Federal Reserve System. The Trust, subject to the approval of the
Board, may adjust the "Transaction Fee" within the parameters described below
to
protect ongoing shareholders from costs relating to such cash in lieu purchases.
Cash in lieu may also be available if the AP is subject to regulatory, internal
policy or other similar limitations on transacting in the security.
(3)
Any settlement outside the Federal Reserve system may be subject to additional
requirements and fees.
7.
COLLATERAL PROCEDURES
(a)
Create Scenario (in the event that an Authorized Participant (AP) is unable
to
deliver shares in the basket on T+1):
1)
The Custodian will transmit a failed trade report via e-mail to Ameristock
daily
at 12:00 p.m.
2)
Ameristock will review the failed trade report and determine whether collateral
is required from an AP to cover the amount of securities not delivered in the
basket on T+1. (note: the collateral requirement is generally outlined for
the
AP in the AP agreement)
3)
Ameristock will contact the AP and request that cash collateral be sent to
the
Custodian. Wire instructions will be provided.
4)
Ameristock will notify the Custodian to receive in collateral from the AP.
The
fax instruction can be sent to 000-000-0000 or Ameristock can instruct the
receipt using the Custodian's Funds Transfer tool on its website. The Custodian
will need to be provided by Ameristock with the Custodian’s collateral account
number, USD amount, delivering AP and value date. Each fund will have its own
collateral account.
5)
The AP will send the cash collateral to the Custodian’s collateral accounts by
6:00 p.m. on T+1.
6)
Once the AP has delivered the basket security to the Custodian, the failed
trade
will be removed from the failed trade report, the Custodian shall notify
Ameristock of such in writing, and Ameristock will instruct the Custodian to
return the cash collateral to the AP. The fax instruction can be sent to
000-000-0000 or Ameristock can instruct the cash transfer using the Custodian's
Funds Transfer tool on its website.
(b)
Cash in Lieu Procedures (in the event that Ameristock allows an AP to deliver
cash in lieu of a basket security):
Ameristock
would utilize these procedures when a particular AP is unable to deliver one
of
the Treasuries in the basket.
1)
Ameristock instructs the Custodian to cancel the receipt of the Treasury which
is undeliverable. The cancel instruction can either be faxed to the Custodian’s
Trade Processing (617-772-2378) or Ameristock can utilize the Cancel function
within the Custodian's Trades tool on its website to submit the cancel
instruction electronically.
2)
Ameristock will instruct the Custodian to receive in cash in lieu of the
Treasury. Ameristock will either notify the Custodian of the cash amount to
receive via fax (sent to 000-000-0000) or instruct the receipt of cash using
the
Custodian's Funds Transfer tool on our website.
18
8.
CASH PURCHASES
Cash
purchases of Creation Units of Shares may be available or specified for a Fund
in the sole discretion of the Trust and upon reasonable notice to the Custodian.
When cash purchases are available or specified, such purchases shall be effected
in essentially the same manner as in-kind purchases thereof. In the case of
a
cash purchase, the AP must pay the cash equivalent of the Deposit Securities
it
would otherwise be required to provide through an in-kind purchase, plus the
same Cash Component required to be paid by an in-kind purchaser. In addition,
to
offset Trust’s brokerage and other transaction costs associated with using the
cash to purchase the requisite Deposit Securities, the AP must pay a fixed
purchase Transaction Fee, plus an additional variable charge for cash purchases,
which is expressed as a percentage of the value of the Deposit Securities.
The
Transaction Fees for in-kind and cash purchases of Creation Units of Shares
are
described in the Prospectus.
19
ANNEX
II -- PART B
TO
PROCEDURES
TO PLACE A REDEMPTION ORDER FOR
CREATION
UNIT(S) OF SHARES OF ONE OR MORE FUNDS OF
THE
AMERISTOCK ETF TRUST
1.
PLACING A REDEMPTION ORDER
Redemption
Orders for Creation Units of Shares may be initiated only on Business Days.
Redemption Orders may only be made in whole Creation Units of shares of each
Fund. To begin a Redemption Order, the AP must telephone the Distributor at
[insert telephone #]. This telephone call must be made by an Authorized Person
of the AP not later than the closing time of regular trading in the government
securities markets in the United States which is ordinarily 3:00 p.m. Eastern
Standard Time ("Closing Time"). Upon verifying the authenticity of the AP (as
determined by the use of the appropriate PIN Number), the Distributor will
request that the AP place the Redemption Order. To do so, the AP must provide
the appropriate ticker symbols when referring to Fund. After the AP has placed
the Redemption Order, the Distributor will read the Redemption Order back to
the
AP. The AP then must affirm that the Redemption Order has been taken correctly
by the Distributor. If the AP affirms that Redemption Order has been taken
correctly, the Distributor will issue a Confirmation Number to the
AP.
PLEASE
NOTE: A REDEMPTION ORDER REQUEST IS NOT COMPLETE UNTIL THE CONFIRMATION NUMBER
IS ISSUED BY THE
DISTRIBUTOR.
AN ORDER MAY NOT BE CANCELED BY THE AP AFTER THE CONFIRMATION NUMBER IS ISSUED.
INCOMING TELEPHONE CALLS ARE QUEUED AND WILL BE HANDLED IN THE SEQUENCE
RECEIVED. CALLS PLACED BEFORE THE CLOSING TIME WILL BY PROCESSED EVEN IF THE
CALL IS ANSWERED BY THE DISTRIBUTOR AFTER THE CLOSING TIME. ACCORDINGLY, THE
AP
SHOULD NOT HANG UP AND REDIAL. INCOMING CALLS THAT ARE RECEIVED AFTER THE
CLOSING TIME WILL NOT BE ANSWERED BY THE DISTRIBUTOR ALL TELEPHONE CALLS MAY
BE
RECORDED BY TRANSFER AGENT.
2.
RECEIPT OF CONFIRMATION.
Subject
to the conditions that a duly completed Redemption Order is received by the
Distributor from the AP on behalf of itself or another redeeming investor by
the
Closing Time, the Distributor will accept the Redemption Order on behalf of
Trust and Distributor and will confirm in writing to the AP that its Redemption
Order has been accepted by 7:00 p.m. Eastern Standard Time on the Business
Day
the Redemption Order is received.
3.
QUALITY ASSURANCE.
(a)
After a Confirmation Number is issued by the Distributor to the AP, the
Distributor will either fax or email a copy of the Redemption Order to the
AP.
Upon receipt, the AP should immediately telephone the Distributor, if the AP
believes that the Redemption Order has not been taken correctly by the
Distributor. In addition, the Distributor will telephone the AP within 15
minutes of the fax or e-mail to corroborate the Redemption Order.
(b)
In the Redemption Order, the AP will be required to acknowledge its agreement
on
behalf of itself and any party for which it is acting (whether as a customer
or
otherwise) to return to Trust 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 AP 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 to which the Redemption Order relates.
In
the Redemption Order, the AP will also be required to acknowledge its agreement
on behalf of itself and any party for which it is acting (whether as a customer
or otherwise) that Trust is entitled to reduce the amount of money or other
proceeds due to the AP 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 AP 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 to which the Redemption Order relates.
20
4.
TAKING DELIVERY OF DEPOSIT SECURITIES.
The
Deposit Securities constituting in-kind redemption proceeds will be delivered
to
the appropriate account which must be indicated in the AP's Standing Redemption
Instructions. An Authorized Person of the AP may amend the AP's Standing
Redemption Instructions from time to time in writing to the Distributor and
Trust in a form approved by Trust. A redeeming Beneficial Owner or the AP acting
on behalf of such Beneficial Owner must maintain appropriate securities
broker-dealer, bank or other custody arrangements to which account such Deposit
Securities will be delivered. Redemptions of Shares for Deposit Securities
will
be subject to compliance with applicable United States federal and state
securities laws.
5. CONTRACTUAL
SETTLEMENT.
(1)
Except as provided below, the Shares of any Fund must be delivered to a
Depository Trust Company (“DTC”) account maintained at the Custodian on or
before the Contractual Settlement Date (defined below). The Trust will make
available on the Contractual Settlement Date, the Cash Component next determined
after acceptance of the Redemption Order, less the applicable purchase
Transaction Fee. The "Contractual Settlement Date" is the date upon which all
of
the required Shares must be delivered to the Trust and, the Deposit Securities,
Cash Component less any fees are delivered by the Trust to the AP (ordinarily
trade date plus one (t + 1) Business Day).
(2)
The Trust reserves the right to permit or require the substitution of an amount
of cash (i.e., a "cash in lieu" amount ) to be added to the Cash Component
to
replace any Deposit Security with respect to a Fund which may not be available
in sufficient quantity for delivery or which may not be eligible for transfer
through the Federal Reserve System. The Trust, subject to the approval of the
Board, may adjust the Transaction Fee within the parameters described below
to
protect ongoing shareholders from costs relating to such cash in lieu
redemptions. Any settlement outside the Federal Reserve System may subject
to
additional requirements and fees as discussed in the Prospectus. Cash in lieu
may also be available if the AP is subject to regulatory, internal policy or
other similar limitations on transacting in the security
(3)
In the event that the number of Fund Shares is insufficient on the settlement
date for Creation Unit(s) of Shares, the Trust may deliver the Deposit
Securities notwithstanding such deficiency in reliance on the undertaking of
the
AP to deliver the missing Shares as soon
as possible, which undertaking shall be secured by such the AP's delivery and
maintenance of collateral consisting of cash having a value at least equal
to
105% of the value of the missing Shares. The parties hereto agree that the
delivery of such collateral shall be made in accordance with the Cash Collateral
Settlement Procedures, which such procedures shall be provided to the AP by
Distributor upon request. The parties hereto further agree that Trust may
purchase the missing Shares at any time and the AP agrees to accept liability
for any shortfall between the cost to the Trust of purchasing such securities
and the value of the collateral, which may be sold by Trust at such time, and
in
such manner, as Trust may
determine in its sole discretion.
21
6. COLLATERAL
PROCEDURES
If
the AP is unable to deliver to the Custodian the ETF shares for a redeem on
settlement date, the AP should send the Custodian the associated collateral
amount. (See Section 7 of Part A of this Annex II for process to coordinate
collateral with the AP). The Custodian will hold the AP's collateral until
the
ETF shares are received. Once the shares are received, Ameristock will instruct
the Custodian to return the collateral to the AP.
7.
CASH REDEMPTIONS.
Cash
redemptions of Creation Units of Shares may be permitted or required for a
Fund
in the sole discretion of the Trust and upon reasonable notice to the Custodian.
In the event that cash redemptions are permitted or required, proceeds will
be
paid to the AP redeeming Shares on behalf of the redeeming investor as soon
as
practicable after the date of redemption.
8.
STANDING REDEMPTION INSTRUCTIONS.
Annex
IV hereto contains the AP's Standing Redemption Instructions, which includes
information identifying the account(s) into which Deposit Securities of each
Fund and any other redemption proceeds should be delivered by Trust pursuant
to
a Redemption Order.
22
ANNEX
II -- PART C
TO
AUTHORIZED
PARTICIPANT AGREEMENT
FOR
AMERISTOCK ETF TRUST
AMERISTOCK
ETF FUNDS FLOW PROCESS
This
Annex II-Part C supplements the Fund’s Prospectus with respect to the procedures
to be used by the Distributor and Transfer Agent in processing an order for
the
creation or redemption of Shares of any Fund of the Trust.
A.
The AP
is required to have (i) signed an Authorized Participant Agreement for Fund
and
(ii) assigned a personal identification number to each Authorized Person that
the AP has authorized to act for such AP. This will allow an AP through its
Authorized Person(s) to place a creation or redemption order with respect to
Shares of any Fund of the Trust.
B.
The AP
and Distributor shall implement the "Funds Flow Process" as agreed to by the
parties from time to time.
C.
Note
that
trades placed through the DTC may only occur on any day that DTC is open for
business.
FUNDS
FLOW PROCESS
|
ORIGINATOR
|
ACTIVITY
|
|
1.
The AP calls on the Distributor’s recorded number to place a Share
Creation and/or Redemption order. These trades are to be placed by
3:00 PM
EST on any Business Day.
|
1.
The Distributor greets caller.
|
|
2.
AP identifies his/her name, the Institution he/she represents, and
PIN #.
The
AP states the Fund name(s) and relevant ticker symbol(s).
|
2
The
Distributor will confirm the AP’s PIN #.
The
Distributor records the PIN # and the order, and provides the AP
with an
order confirmation number.
The
order confirmation constitutes a binding order, which may only be
reversed
by the Distributor or the Fund.
|
|
3.AP
will Fax a copy of the order form to the Distributor within 15 minutes
from the time the call is made.
The
AP will provide, as a part of the order form, a statement confirming
that
the AP will not be placing trades that would raise the AP’s total holdings
to 80% or more of any Fund so as to cause such Fund to have a basis
in the
Deposited Securities deposited with such Fund different from the
market
value of such Deposited Securities on the date of such
deposit.
The
signed Order Form will be sent as the physical receipt for the AP
that the
order is confirmed.
The
above procedures will be repeated until all orders have been placed
by the
AP.
|
3.
The Distributor will receive a copy of the completed order form from
the
AP Faxed within within 15 minutes from the time the order is placed.
All
orders received from the APs are time stamped by Distributor at the
time
the order is placed
The
Distributor will verify that the appropriate disclaimers have been
made by
the AP and
validate the disclaimer by calculating the AP’s position, including the
subscriptions requested, to the total fund shares outstanding
The
Distributor
will sign the Order Form and the signed
Order Form will be sent as the physical receipt for the AP that the
order
is confirmed.
|
23
|
4.
The
AP receives the fax
The
AP will assume responsibility for an incorrect trade
|
4.
The AP will assume responsibility for an incorrect trade and
contact the Distributor if necessary.
If
trades are corrected,
the Distributor will delete the first trade and reenter the corrected
trade. A second affirmation will be faxed to the AP with all trades
placed
that day. The corrected trade will be coded on the affirmation so
that the
AP can see the correction.
No
corrections will be permitted after 3p.m.
|
|
5.
EXCEPTION - International Settlements
AP’s
must deliver units for redemption orders no later than Trade Date
Plus 1
in order to meet the affirmed order requirements placed the previous
day.
|
|
*
Times
may vary depending on the trade volume from APs.
24
ANNEX
III
TO
AUTHORIZED
PARTICIPANT AGREEMENT
FOR
AMERISTOCK ETF TRUST
FORM
OF CERTIFIED AUTHORIZED PERSONS OF THE AP
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 Agreement or any other notice, request or instruction
on
behalf of the AP pursuant to this Agreement.
Name:
__________________
Title:
__________________
Signature:
__________________
Name:
__________________
Title:
__________________
Signature:
__________________
Name:
__________________
Title:
__________________
Signature:
__________________
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 of this Institution in its capacity
as
an AP pursuant to the Agreement by and among _____________ Trust,
--------------, as Distributor and [name of the AP], dated [date] and that
their
signatures set forth above are their own true and genuine
signatures.
In
Witness Whereof, the undersigned has hereby set his/her hand and the seal of
[company].
Date:
_________________ ___________________
[name, title]
25
ANNEX
IV
TO
AUTHORIZED
PARTICIPANT AGREEMENT
FOR
AMERISTOCK ETF TRUST
THE
AP ACCOUNTS
FOR
DELIVERY OF DEPOSIT SECURITIES
The
accounts into which the Ameristock ETF Trust should deposit the securities
constituting the
Deposit Securities of each Fund upon redemption by the AP are set forth
below:
| Name
of AP: __________________
Account
Name: __________________
Account
Number: __________________
Other
Reference Number: __________________
|
26
