FORM OF AUTHORIZED PARTICIPANT AGREEMENT
Exhibit 99.E2
FORM
OF AUTHORIZED
PARTICIPANT AGREEMENT
THIS AUTHORIZED PARTICIPANT AGREEMENT (this “Agreement”) is entered into by and between SEI
Investments Distribution Co. (“Distributor”) and (the
“Participant”) and is subject to acceptance by FaithShares, Inc. (the “Fund”) and
Xxxxx Brothers Xxxxxxxx & Co as transfer agent (the “Transfer Agent”) for the Fund.
WHEREAS, Distributor serves as the principal underwriter of the Fund in connection with the sale
and distribution of shares of beneficial interest (“Shares”) of each portfolio or series of
the Fund (each, a “Portfolio” and collectively, the “Portfolios”) as set forth on
Exhibit A attached hereto; and
WHEREAS, Transfer Agent serves as the transfer agent for the Fund, and is an Index Receipt Agent as
that term is defined in the rules of the National Securities Clearing Corporation (“NSCC”); and
WHEREAS, the Shares of any Portfolio may be purchased or redeemed only by or through an authorized
participant, such as Participant, who has entered into an authorized participant agreement
substantially in the form hereof.
NOW, THEREFORE, the parties hereto, in consideration of the premises and of the mutual agreements
contained herein, and intending to be legally bound hereby, agree as follows:
ARTICLE 1 DEFINED TERMS
The capitalized terms used in this Agreement are defined as set forth herein. Any capitalized
terms used herein that are not defined shall have the meaning set forth in the Prospectus.
1.01 “1933 Act” means the Securities Act of 1933, as amended.
1.02 “1934 Act” means the Securities Exchange Act of 1934, as amended.
1.03 “1940 Act” means the Investment Company Act of 1940, as amended.
1.04
“AML Program” shall have the meaning set forth in
Section 3.01(iv).
1.05 “Affiliated Person” shall have the meaning given to it by Section 2(a) of the 1940
Act, subject to such exemptions as may be granted by the SEC by any rule, regulation or order.
1.06 “Authorized Person” shall have the meaning set forth in ARTICLE 5.
1.07 “Balancing Amount” will be an amount equal to the differential, if any, between the
total aggregate market value of the Deposit Securities and the NAV per Creation Unit next
determined.
1.08 “Beneficial Owner” shall have the meaning given to it by Rule 16a-1(a)(2) of the 1934
Act.
1.09 “Business Day” shall mean each day the New York Stock Exchange is open for regular
trading and the Trust and the Custodian are open for business.
1.10 “CEA” means the Commodity Exchange Act, as amended.
1.11 “Cash Amount” means the Balancing Amount plus the applicable transaction fee.
1.12 “Cash” shall mean same day funds in United States dollars.
1.13 “CNS Process” means the Continuous Net Settlement clearing processes of NSCC, as such
processes have been enhanced to effect purchases and redemptions of Creation Units.
1.14 “CNS System” means the Continuous Net Settlement clearing processes of NSCC.
1.15 “Code” means the Internal Revenue Code of 1986, as amended.
1.16 “Contractual Settlement Date” means the date as specified in the Prospectus and the
Procedures Handbook upon which delivery of Deposit Securities must be made to the Fund.
1.17 “Creation Unit” shall have the meaning set forth in Section 2.01.
1.18 “Custodian” means the Fund’s custodian, as of the Effective Date, the custodian of
the fund is Xxxxx Brothers Xxxxxxxx & Co.
1.19 “Deposit Securities” means an in-kind deposit of a designated portfolio of equity
securities selected by or on behalf of the Fund.
1.20 “DTC” means The Depository Trust Company.
1.21 “DTC Participant” shall have the meaning set forth in Section 3.01.
1.22 “DTC Process” means the process for effecting purchases orders or redemption requests
of Creation Units through DTC other than through the use of the CNS System.
1.23 “FINRA” means the Financial Industry Regulatory Authority.
1.24
“FinCEN” shall have the meaning set forth in
Section 3.01(iii).
1.25
“Fund Deposit” means the Deposit Securities plus or
minus the “Balancing Amount”.
1.26 “Fund Securities” means in-kind redemption proceeds of a designated portfolio of
equity securities selected by the Adviser.
1.27 “Indemnified Party” shall have the meaning set forth in Section 6.01.
1.28 “Intraday Indicative Value” means the value of the Fund, as calculated and published
by the New York Stock Exchange or any similar exchange or widely recognized industry organization,
throughout the trading day based on the last sale prices of the securities specified for creation
and redemption plus any estimated cash amounts associated with the creation unit, on a per share
basis.
1.29
“Listing Exchange” shall have the meaning set forth in Section 8.01.
1.30
“NAV” shall have the meaning set forth in Section 6.02.
1.31
“OFAC” shall have the meaning set forth in Section 3.01(iii).
1.32
“Orders” shall have the meaning set forth in Section 2.02.
1.33 “Participant Client” means any party on whose behalf the Participant acts in
connection with an Order (whether a customer or otherwise).
1.34
“Participating Party” shall have the meaning set forth in Section 3.01.
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1.35
“PIN Number” shall have the meaning set forth in ARTICLE 5.
1.36
“Procedures Handbook” shall have the meaning set forth in Section 2.02.
1.37 “Prospectus” means the Fund’s then current prospectus and statement of additional
information included in its effective registration statement, as supplemented or amended from time
to time.
1.38
“Purchase Order” shall have the meaning set forth in Section 2.02.
1.39
“Redemption Request” shall have the meaning set forth in Section 2.02.
ARTICLE 2 ORDERS FOR PURCHASE AND REDEMPTION
2.01 Creation Units. The Shares of any Portfolio may be purchased or redeemed only in
aggregations of a specified number of Shares, as stated in the Prospectus, referred to herein as a
“Creation Unit”. The Participant is hereby authorized to purchase and redeem Creation
Units of any Portfolio listed in the Prospectus, which may be revised by the Fund from time to
time.
2.02 Procedures for Orders. The Participant may purchase and/or redeem Creation Units of
Shares through (i) the CNS Process or (ii) the DTC Process. The procedures for placing and
processing an order to purchase Shares (each a “Purchase Order”) and a request to redeem
Shares (each a “Redemption Request”) (as used herein, Purchase Orders and Redemption
Requests are collectively referred to as “Orders”) are described in the Fund’s Prospectus
and in the then current procedures handbook as prepared by the Distributor and made available to
the Participant from time to time (“Procedures Handbook”). All Orders shall be made in
accordance with the terms and procedures set forth in the Prospectus and Procedures Handbook;
provided that in the event of a conflict, the terms and procedures of the Prospectus shall control.
Each party hereto agrees to comply with the provisions of such documents to the extent applicable
to it. The Fund reserves 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.
2.03 NSCC Authorization. Solely with respect to Orders through the CNS Process, the
Participant, hereby authorizes the Transfer Agent to transmit to the NSCC on behalf of the
Participant such instructions, including amounts of the Deposit Securities and the Cash Amount as
are necessary consistent with such Orders. The 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 Participant directly to NSCC.
2.04 Consent to Recording. It is contemplated that the phone lines used by the
Distributor, the Transfer Agent, the Fund or their Affiliated Persons will be recorded, and the
Participant hereby consents to the recording of all calls with any of those parties.
2.05 Irrevocability. The Fund reserves the absolute right to reject any Order. Once
accepted, all Orders are irrevocable.
2.06 Prospectus Delivery. The Participant consents to the delivery of Portfolio
Prospectuses electronically, and understands that unless this consent is revoked, the Participant
can only obtain access to Prospectuses from the Distributor electronically. The Participant
understands that current Prospectuses and all required reports for each applicable Portfolio are
available at the Fund’s website at
______________________. The Participant can revoke
this consent to delivering a Prospectus electronically at any time by calling [1-800-xxx-xxxx]. The
Participant agrees to maintain a valid e-mail address, and further agrees to promptly notify the
Distributor if
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its e-mail address changes. The Participant understands that it must have regular and continuous
Internet access to access all documents relating to a Prospectus.
2.07 Closing Time. The Distributor shall receive all Orders no later than the closing time
of the regular trading session on the applicable stock exchange (the “Closing Time”) (ordinarily
4:00 p.m., Eastern Time) on the date such Order is placed and pursuant to any requirements or
procedures as described in the Prospectus or Procedures Handbook. An Order is considered to have
been received by the Distributor only upon the Distributor’s issuance of a batch number or an
affirmation to the Participant (which is generated by the Distributor’s order processing system
only after all applicable order information is communicated to the Distributor employee taking the
Order and the information has been entered into the Distributor’s proprietary system) as specified
in the Procedures Handbook. Please note that the batch number or affirmation is not an indication
that the Order has been accepted by the Distributor or the Fund, but only an indication that the
Order was properly received prior to the Closing Time on the date on which an Order to purchase
Shares is received by the Distributor. AS THE ORDER ENTRY PROCESS CAN TAKE SEVERAL MINUTES OR
LONGER, DEPENDING ON VOLUME AND THE TYPE OF ORDER INVOLVED, PARTICIPANTS ARE URGED TO PLACE ORDERS
AS EARLY IN THE DAY AS POSSIBLE, AS ORDERS INITIATED NEAR THE APPLICABLE CLOSING TIME MAY NOT BE
PROCESSED IN TIME TO RECEIVE A BATCH NUMBER OR AFFIRMATION AND MAY NOT BE RECEIVED PRIOR TO THE
CLOSING TIME.
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF PARTICIPANT
3.01 Representations, Warranties and Covenants of Participant. The Participant hereby
represents, warrants and covenants the following:
The Participant (i) is and will continue to be a member in good standing of the NSCC so long
as this Agreement is in full force and effect and (ii) with respect to (x) all orders of Creation
Units of Shares of any Portfolio, it is a “DTC Participant,” and (y) any order of Creation
Units of Shares of any Portfolio initiated through the CNS Process, it is a member of NSCC and a
participant in the CNS System of NSCC (a “Participating Party”). If any change in the
foregoing status of the Participant occurs the Participant shall give prompt written notice to the
Distributor and the Fund of such change. Upon such notice, the Distributor, in consultation with
the Fund, may terminate this Agreement.
(i) Unless Section 3.01(ii) applies, the Participant either (i) is registered as a
broker-dealer under the 1934 Act and is a member in good standing of FINRA, or (ii) is exempt from
being, or otherwise is not required to be, licensed as a broker-dealer or a member of FINRA, and in
either case is qualified to act as a broker or dealer in the states or other jurisdictions where
the nature of its business so requires. In connection with the purchase or redemption of Creation
Units and any related offers or sales of Shares, the Participant will maintain any such
registrations, qualifications and membership in good standing and in full force and effect
throughout the term of this Agreement. The Participant will 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 FINRA By-Laws and NASD Conduct Rules (or of comparable FINRA
Conduct Rules, if such NASD Conduct Rules are subsequently renamed, repealed, rescinded, or are
otherwise replaced by FINRA Conduct Rules) if it is a FINRA member, in each case, to the extent
applicable to its role acting as Participant hereunder and will not offer or sell Shares in any
state or jurisdiction where they may not lawfully be offered and/or sold.
(ii) If the Participant is offering or selling Shares in jurisdictions outside the several
states, territories and possessions of the United States and is not otherwise required to be
registered, qualified or a member of FINRA as set forth in Section 3.01(i) above, the
Participant will, in connection with such offers and sales, (i) observe the applicable laws of the
jurisdiction in which such offer and/or sale is made, (ii) comply with the prospectus delivery and
other requirements of
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the 1933 Act, and the regulations promulgated thereunder, and (iii) conduct its business in
accordance with the NASD Conduct Rules (or with comparable FINRA Conduct Rules, if such NASD
Conduct Rules are subsequently renamed, repealed, rescinded, or are otherwise replaced by FINRA
Conduct Rules), to the extent the foregoing relates to the Participant’s transactions in, and
activities with respect to, Shares.
(iii) The Participant is and will continue to be in compliance with all applicable laws and
regulations aimed at the prevention and detection of money laundering and/or the financing of
terrorism activities, including the Bank Secrecy Act, as amended by USA PATRIOT Act; rules and
regulations issued by the U.S. Treasury Department, including the Office of Foreign Asset Control
(“OFAC”), the Financial Crimes and Enforcement Network (“FinCEN”), the SEC and
FINRA.
(iv) The Participant has an anti-money laundering program (“AML Program”), that at
minimum includes, i) an AML compliance officer designated to administer and oversee the AML
Program, ii) ongoing training for appropriate personnel, iii) internal controls and procedures
reasonably designed to prevent and detect suspicious activity monitoring and terrorist financing
activities; iv) procedures to comply with know your customer requirements and to verify the
identity of all customers; v) appropriate record keeping procedures. In addition Customer agrees
to fully cooperate with requests from the government regulators and Distributor for information
relating to customers and/or transactions involving the Fund Shares, as permitted by law, in order
for Distributor to comply with its regulatory requirements. Without in any way limiting the
foregoing, Participant acknowledges that Distributor is authorized to take any action necessary to
restrict distribution activities to the extent necessary to comply with its regulatory obligations
applicable to it.
(v) The Participant acknowledges that in addition to satisfying the prospectus delivery and
disclosure requirements of the 1933 Act, it and any other participant in the distribution of the
Shares purchased by the Participant may have an obligation to comply with the disclosure delivery
requirements under the CEA.
(vi) The Participant will not make, or permit any of its representatives to make, any
representations concerning the Shares or any Indemnified Party other than representations contained
(A) in the then-current Prospectus of the Fund, (B) in printed information approved by the Fund as
information supplemental to such Prospectus or (C) in any promotional materials or sales literature
furnished to the Participant by the Fund.
(vii) The Participant will not furnish or cause to be furnished to any person or display or
publish any information or material relating to the Shares, any Indemnified Person or the Fund that
are not consistent with the Fund’s then current Prospectus.
(viii) The Participant agrees to abide by the terms of the then current click-through
agreement set forth on the applicable website, which terms are hereby incorporated herein.
ARTICLE 4 STATUS OF PARTICIPANT
4.01 General. The Participant acknowledges that (a) the Participant shall have no
authority to act as agent for the Fund or the Distributor in any matter or in any respect; (b) the
Participant will make itself and its employees available, upon reasonable request, during normal
business hours to consult with the Distributors or its designees concerning the performance of the
Participant’s responsibilities under this Agreement; (c) the 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 and (d) the
Participant agrees, subject to any privacy, confidentiality or other obligations it may have to its
customers arising under federal or state securities laws or the applicable rules of any
self-regulatory organization, to assist the Distributor in ascertaining certain information
regarding sales of Shares made by or through the Participant upon request of the Fund or the
Distributor that is necessary for the Fund
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to comply with its obligations to distribute information to its shareholders under applicable state
or federal securities laws; provided that consistent with market practice, the Participant may
undertake to deliver prospectuses, proxy material, annual and other reports of the Fund or other
similar information that the Fund is obligated to deliver to its shareholders to the Participant’s
customers that custody Shares with the Participant, after receipt from the Fund of sufficient
quantities to allow mailing thereof to such customers.
4.02 Treatment as Underwriter. The Participant understands and acknowledges that the
method by which Creation Units 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
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 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 Participant also understands and acknowledges that dealers who are
not “underwriters” but are effecting transactions in Shares, whether or not participating in the
distribution of Shares, are generally required to deliver a prospectus.
4.03 Creditworthiness. The Participant understands that it will be required from time to
time to satisfy certain creditworthiness criteria established and approved by the Fund.
ARTICLE 5 AUTHORIZED PERSONS
Concurrently with the execution of this Agreement and upon request from the Distributor from time
to time thereafter, the Participant shall deliver to the Distributor, with a copy to the Transfer
Agent, notarized and duly certified as appropriate by its secretary or other duly authorized
official, a certificate in the form of Exhibit B setting forth the names and signatures of
all persons authorized to give instructions relating to activity contemplated hereby or by any
other notice, request or instruction given on behalf of the Participant (each, an “Authorized
Person”). The Distributor may accept and rely upon such certificate as conclusive evidence of
the facts set forth therein and shall consider such certificate to be in full force and effect
until the Distributor receives a superseding certificate bearing a subsequent date. Upon the
termination or revocation of authority of any formerly Authorized Person by the Participant, the
Participant shall give immediate written notice of such fact to the Distributor and such notice
shall be effective upon receipt by the Distributor. The Distributor shall issue to each Authorized
Person a unique personal identification number (the “PIN Number”) by which such Authorized
Person shall be identified and by which instructions issued by the Participant hereunder shall be
authenticated. The PIN Number shall be kept confidential by the Participant and shall only be
provided to the Authorized Person. If, after issuance, the Authorized Person’s PIN Number is
changed, the new PIN Number shall become effective on a date mutually agreed upon by the
Participant and the Distributor.
ARTICLE 6 INDEMNIFICATION AND LIMITATION OF LIABILITY
6.01 Indemnification. The Participant hereby agrees to indemnify, defend and hold harmless
the Distributor, the Fund, the Transfer Agent, and each of their respective subsidiaries,
Affiliated Persons, 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 and expense (including attorneys’ fees)
incurred by such Indemnified Party as a result of (i) any breach by the Participant (or an
affiliate of 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 by
Participant reasonably believed by such Indemnified Party to be genuine and to have been given by
the Participant, or (v) (A) any representation by the Participant, its employees or its agents or
other representatives
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about the Shares, any Indemnified Party or the Fund that is not consistent with the Fund’s
Prospectus made in connection with the offer or the solicitation of an offer to buy or sell Shares
and (B) any untrue statement or alleged untrue statement of a material fact contained in any
research reports, marketing material and sales literature related to the Fund or any alleged
omission to state therein a material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent that such statement or omission relates to the
Shares, any Indemnified Party or the Fund, unless, in either case, such representation, statement
or omission was made or included by the Participant at the written direction of the Distributor or
is based upon any omission or alleged omission by the Distributor to state a material fact in
connection with such representation, statement or omission necessary to make such representation,
statement or omission not misleading.
6.02 Limitation of Liability. The Distributor, the Fund and the Transfer Agent shall not
be liable to the Participant for any damages arising out of (i) mistakes or errors in data provided
in connection with Orders except to the extent arising out of data provided by the Distributor;
(ii) mistakes or errors arising out of interruptions or delays of communications with the
Participant, the Transfer Agent, the Fund or the Fund’s adviser, (iii) mistakes or errors of the
Transfer Agent, or (iv) differences in performance between the Fund’s Net Asset Value
(“NAV”), the Intraday Indicative Value, the Deposit Securities, or the underlying index
benchmark of any Portfolio.
ARTICLE 7 CONFIDENTIAL INFORMATION.
7.01 General. Distributor and the Fund (in such capacity, the “Receiving Party”)
acknowledge and agree to maintain the confidentiality of Confidential Information (as hereinafter
defined) provided by Distributor and the Fund (in such capacity, the “Disclosing Party”) in
connection with this Agreement. The Receiving Party shall not disclose or disseminate the
Disclosing Party’s Confidential Information to any Person other than (a) those employees, agents,
contractors, subcontractors and licensees of the Receiving Party, or (b) with respect to
Distributor as a Receiving Party, to those employees, agents, contractors, subcontractors and
licensees of any agent or affiliate, who have a need to know it in order to assist the Receiving
Party in performing its obligations, or to permit the Receiving Party to exercise its rights under
this Agreement. In addition, the Receiving Party (a) shall take all reasonable steps to prevent
unauthorized access to the Disclosing Party’s Confidential Information, and (b) shall not use the
Disclosing Party’s Confidential Information, or authorize other Persons to use the Disclosing
Party’s Confidential Information, for any purposes other than in connection with performing its
obligations or exercising its rights hereunder. As used herein, “reasonable steps” means steps
that a party takes to protect its own, similarly confidential or proprietary information of a
similar nature, which steps shall in no event be less than a reasonable standard of care.
7.02 Definition of Confidential Information. The term “Confidential Information,”
as used herein, shall mean all business strategies, plans and procedures, proprietary information,
methodologies, data and trade secrets, and other confidential information and materials (including,
without limitation, any non-public personal information as defined in Regulation S-P) of the
Disclosing Party, its affiliates, their respective clients or suppliers, or other Persons with whom
they do business, that may be obtained by the Receiving Party from any source or that may be
developed as a result of this Agreement.
7.03 Exclusions. The provisions of this Article 7 respecting Confidential
Information shall not apply to the extent, but only to the extent, that such Confidential
Information: (a) is already known to the Receiving Party free of any restriction at the time it is
obtained from the Disclosing Party, (b) is subsequently learned from an independent third party
free of any restriction and without breach of this Agreement; (c) is or becomes publicly available
through no wrongful act of the Receiving Party or any third party; (d) is independently developed
by or for the Receiving Party without reference to or use of any Confidential Information of the
Disclosing Party; or (e) is required to be disclosed pursuant to an applicable law, rule,
regulation, government requirement or court order, or the rules of any stock exchange (provided,
however, that the Receiving Party
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shall advise the Disclosing Party of such required disclosure promptly upon learning thereof in
order to afford the Disclosing Party a reasonable opportunity to contest, limit and/or assist the
Receiving Party in crafting such disclosure).
7.04 Disclosure of Confidential Information. The Receiving Party shall advise its
employees, agents, contractors, subcontractors and licensees, and shall require its agents and
affiliates to advise their employees, agents, contractors, subcontractors and licensees, of the
Receiving Party’s obligations of confidentiality and non-use under this Article 7, and
shall be responsible for ensuring compliance by its and its affiliates’ employees, agents,
contractors, subcontractors and licensees with such obligations. In addition, the Receiving Party
shall require all persons that are provided access to the Disclosing Party’s Confidential
Information, other than the Receiving Party’s accountants and legal counsel, to execute
confidentiality or non-disclosure agreements containing provisions substantially similar to those
set forth in this Article 7. The Receiving Party shall promptly notify the Disclosing
Party in writing upon learning of any unauthorized disclosure or use of the Disclosing Party’s
Confidential Information by such persons.
7.05 Obligations Upon Termination. Upon the Disclosing Party’s written request following
the termination of this Agreement, the Receiving Party promptly shall return to the Disclosing
Party, or destroy, all Confidential Information of the Disclosing Party provided under or in
connection with this Agreement, including all copies, portions and summaries thereof.
Notwithstanding the foregoing sentence, (a) the Receiving Party may retain one copy of each item of
the Disclosing Party’s Confidential Information for purposes of identifying and establishing its
rights and obligations under this Agreement, for archival or audit purposes and/or to the extent
required by applicable law, and (b) Distributor shall have no obligation to return or destroy
Confidential Information of the Fund that resides in save tapes of Distributor; provided, however,
that in either case all such Confidential Information retained by the Receiving Party shall remain
subject to the provisions of this Article 7 for so long as it is so retained. If requested
by the Disclosing Party, the Receiving Party shall certify in writing its compliance with the
provisions of this paragraph.
ARTICLE 8 ORDERS.
8.01 Listing Exchange. The Participant understands and agrees that an Order may be
submitted only on days that the national securities exchange which is the primary exchange or other
market on which with Shares are traded (the “Listing Exchange”) is open for trading or
business.
8.02 Purchase Orders. Participant agrees that all Purchase Orders will be made in
accordance with the terms and procedures set forth in the Prospectus and Procedures Handbook;
provided that in the event of a conflict, the terms and procedures of the Prospectus shall control.
To effect a purchase of a Creation Unit of a particular Fund, the Participant agrees on behalf of
itself, and any Participant Client, to deliver to the Fund a Fund Deposit plus a purchase
transaction fee as described in the Prospectus and/or the Procedures Handbook. The amount of such
purchase transaction fee shall be determined by the Fund, or the investment adviser to the Fund
(the “Adviser”), in its sole discretion and may be changed from time to time. The Fund Deposit
shall consist of the requisite Deposit Securities plus or minus a Balancing Amount. The Balancing
Amount will be payable to or receivable from the Fund depending on the net asset value of Shares of
the Fund next determined after the Order has been placed. The Fund may permit or require the
substitution of an amount of cash to be added to the Balancing Amount to replace any Deposit
Securities (i.e., “cash in lieu”).
(i) Title to Securities; Restricted Securities. The Participant shall deliver the
Deposit Securities to the Custodian free and clear of all liens, restrictions, charges, duties,
encumbrances and not subject to any adverse claims, including, without limitation, any restriction
upon sale or transfer arising out of (i) any agreement or arrangement entered into by the
Participant or any Participant Client (ii) any provision of the 1933 Act, and any regulations there
under (except that portfolio securities of issuers other than U.S. issuers shall not be required to
have been registered
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under the 1933 Act if exempt from such registration), or the applicable laws or regulations of
any other applicable jurisdiction or (iii) such securities being designated “restricted securities”
as such term is used in Rule 144(a)(3)(i) promulgated under the 1933 Act.
(ii) Corporate Actions. With respect to a Purchase Order of a particular Fund, the
Fund acknowledges and agrees to return to the Participant any dividend, distribution or other
corporate action paid to the Fund in respect of any Deposit Security 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.
8.03 Redemption Request. The Participant understands and agrees that Redemption Requests
may be submitted only on days that the Fund is open for business, as required by Section 22(e) of
the 1940 Act and that Participant will not attempt to place an Order for purchasing or redeeming
any Creation Unit, except as set forth in the Prospectus and Procedures Handbook of the Fund. In
addition, in connection with each Redemption Request, the Participant agrees to ascertain that the
Shares to be redeemed 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 Fund. In addition the Participant agrees that the Fund will acquire good and
unencumbered title to Shares, 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 Shares. The Participant understands and agrees that in the event collateral or
Shares are not transferred to the Transfer Agent as set forth in the Procedures Handbook, the
Redemption Request trade may be broken by the Fund and the Participant will be solely responsible
for all costs incurred by the Fund or the Distributor related to breaking the trade. The
Distributor will only process Redemption Requests upon verification from the Transfer Agent of the
Fund’s receipt of such collateral or shares. The Participant understands that shares may be
redeemed only when one or more Creation Units of Shares of a Beneficial Owner are held in the
account of a single Participant.
(i) Corporate Actions. With respect to any Redemption Request, the
Participant on behalf of itself and any Participant Client acknowledges and agrees to return to
the Fund any dividend, distribution or other corporate action paid to it or a Participant Client
in respect of any Fund Security that is transferred to the Participant or any Participant Client
that, based on the the valuation of such Fund Security at the time of transfer, should have been
paid to the Fund. The Fund is entitled to reduce the amount of proceeds due to the Participant or
any Participant Client by an amount equal to any dividend, distribution or other corporate action
paid to the Participant or the Participant Client in respect of any Fund Security that is
transferred to the Participant or any Participant Client that, based on the valuation of such Fund
Security at the time of transfer, should have been paid to the Fund.
8.04 Beneficial Ownership Limitation. The Participant represents and warrants to the
Distributor and the Trust that, any portfolio securities deposited with the Fund will have an
adjusted tax basis equal to the fair market value of such securities at the time of the
contributions. The Participant agrees and represents that with regards to any order for one or more
Creation Units of Shares of the Fund that, after giving effect to the purchase of Shares, it will
not hold more than eighty percent (80%) or more of the outstanding Shares of the relevant Fund and
that it will not treat such purchase as eligible for tax-free treatment under section 351 of the
Code. The Fund and its Transfer Agent and Distributor may request information from the Participant
regarding Share ownership of each Fund, and to rely thereon to the extent necessary to make a
determination regarding ownership of eighty 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.
9
ARTICLE 9 MISCELLANEOUS
9.01 Termination, and Amendment. This Agreement may be terminated (i) at any time by any
party upon mutual agreement of the parties; (ii) upon thirty days prior written notice by any party
to the other parties or (iii) upon written notice of the Distributor in the event of a breach by
the Participant of any provision of this Agreement or the Procedures Handbook. This Agreement
supersedes any prior such agreement between or among the parties. This Agreement may be amended by
the Fund or the Distributor from time to time without the consent of the Participant or any
Beneficial Owner by mailing a copy of such amendment to the Participant and the Transfer Agent. For
purposes of this Agreement, mail will be deemed received by the Participant on the fifth Business
Day following the deposit of such mail into the U.S. Postal system. If the Participant fails to
object in writing to the amendment within five days after its receipt, the amendment will become
part of this Agreement in accordance with its terms.
9.02 Third Party Beneficiary. The Participant and the Distributor understand and agree
that the Fund and each Portfolio, each 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 Fund or such Portfolio.
9.03 Incorporation by Reference. The Participant acknowledges receipt of the Prospectus
and Procedures Handbook, represents that it has reviewed such documents and understands the terms
thereof, and further acknowledges that the procedures contained therein pertaining to the creation
and redemption of Shares are incorporated herein by reference.
9.04 Notices. All notices provided for or permitted under this Agreement shall be deemed
effective upon receipt, and shall be in writing and (a) delivered personally, (b) sent by
commercial overnight courier with written verification of receipt, or (c) sent by certified or
registered U.S. mail, postage prepaid and return receipt requested, to the party to be notified, at
the address for such party set forth below. Notices to Distributor shall be sent to the attention
of: General Counsel, SEI Investments Distribution Co., 0 Xxxxxxx Xxxxxx Xxxxx, Xxxx, Xxxxxxxxxxxx
00000. Notices to the Participant shall be sent to ______________________. Notices to the
Transfer Agent shall be sent to ______________________.
9.05 Commencement of Trading. The Participant may not submit an Order pursuant to this
Agreement until five Business Days after effectiveness of this Agreement (which shall not take
effect until acknowledged by the Transfer Agent or such earlier date agreed upon between the
Distributor and the Participant.
9.06 Dispute Resolution. Whenever either party desires to institute legal proceedings
against the other concerning this Agreement, it shall first provide written notice to that effect
to such other parties. The party providing such notice shall refrain from instituting said legal
proceedings for a period of thirty days following the date of provision of such notice. During
such period, the parties shall attempt in good faith to amicably resolve their dispute by
negotiation among their executive officers.
9.07 Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania without giving effect to any conflict of laws or
choice of laws rules or principles thereof. To the extent that the applicable laws of the
Commonwealth of Pennsylvania, or any of the provisions of this Agreement, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
9.08 Counterparts. This Agreement may be executed in two or more counterparts, all of
which shall constitute one and the same instrument. Each such counterpart shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart. This Agreement shall be deemed executed by both parties
10
when any one or more counterparts hereof or thereof, individually or taken together, bears the
original or facsimile signatures of each of the parties.
9.09 Force Majeure. No breach of any obligation of a party to this Agreement (other than
obligations to pay amounts owed) will constitute an event of default or breach to the extent it
arises out of a cause, existing or future, that is beyond the control and without negligence of the
party otherwise chargeable with breach or default, including without limitation: work action or
strike; lockout or other labor dispute; flood; war; riot; theft; act of terrorism, earthquake or
natural disaster. Either party desiring to rely upon any of the foregoing as an excuse for default
or breach will, when the cause arises, give to the other party prompt notice of the facts which
constitute such cause; and, when the cause ceases to exist, give prompt notice thereof to the other
party.
9.10 Severability. Any provision of this Agreement that is determined to be invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability in such jurisdiction, without rendering invalid or unenforceable the remaining
provisions of this Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. If a court of competent jurisdiction declares any provision of this Agreement
to be invalid or unenforceable, the parties agree that the court making such determination shall
have the power to reduce the scope, duration, or area of the provision, to delete specific words or
phrases, or to replace the provision with a provision that is valid and enforceable and that comes
closest to expressing the original intention of the parties, and this Agreement shall be
enforceable as so modified.
9.11 Assignment. No party may assign its rights or obligations under this Agreement (in
whole or in part) without the prior written consent of the parties, which shall not be unreasonably
withheld.
[Signature Page Follows]
11
IN WITNESS WHEREOF, the Participant and Distributor have each duly executed this Agreement, as of
the day and year above written.
[Participant] | SEI INVESTMENTS DISTRIBUTION CO. | |||||||||||||
By:
|
By: | |||||||||||||
Name: | Name: | |||||||||||||
Title: | Title: |
ACCEPTED BY:
Xxxxx Brothers and Xxxxxxxx & Co. | FaithShares, Inc. | |||||||||||||
By:
|
By: | |||||||||||||
Name: | Name: | |||||||||||||
Title: | Title: |
12
EXHIBIT
A
PORTFOLIOS
FAITHSHARES BAPTIST VALUES EXCHANGE TRADED FUND
FAITHSHARES CATHOLIC VALUES EXCHANGE TRADED FUND
FAITHSHARES CHRISTIAN VALUES EXCHANGE TRADED FUND
FAITHSHARES LUTHERAN VALUES EXCHANGE TRADED FUND
FAITHSHARES METHODIST VALUES EXCHANGE TRADED FUND
13
EXHIBIT B
FORM OF CERTIFIED AUTHORIZED PERSONS OF AUTHORIZED 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 the
Participant Agreement or any other notice, request or instruction on behalf of the Participant
pursuant to the [Fund Name] Participant Agreement. In addition, SIDCO is requesting that one
authorized trader is designated as the primary contact; this will enable SIDCO to relay information
efficiently to the APs. Please complete and return to SIDCO.
AP Firm Name: ______________________________________________________________________
Desk Name: _________________________________________________________________________
Authorized Persons:
Name (Primary Contact)
|
Phone | |
Signature
|
Email Address | |
Name
|
Phone | |
Signature
|
Email Address | |
Name
|
Phone | |
Signature
|
Email Address |
The
undersigned, ____________________ [name], ____________________ [title] of
____________________
[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 [Fund Name]
Participant Agreement by and between ____________________ [Authorized Participant],
____________________
[Fund Name] and Xxxxx Brothers Xxxxxxxx & Co. as Transfer Agent, dated
____________________, 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] on
the date set forth below.
14
Subscribed and sworn to before me this day of , 20 | By: | |||
Name: | ||||
Title: | ||||
Date: | ||||
15