FOCUSSHARES TRUST ETF DISTRIBUTION AGREEMENT
Exhibit (e)(1)
This
Distribution Agreement (the “Agreement”) is made this __ day of _________ 2010,
by and between FocusShares Trust, a Delaware statutory trust (the “Trust”)
having its principal place of business at 000 Xxxxxx Xxxxxx, Xxxxx X-00,
Xxxxxxxx, XX 00000, and Foreside Fund Services, LLC, a Delaware limited
liability company (the “Distributor”) having its principal place of business at
Three Xxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, XX 00000.
WHEREAS, the Trust is, or will
be, a registered open-end management investment company organized as a series
trust offering a number of portfolios of securities (each a “Fund” and
collectively the “Funds”), having filed with the Securities and Exchange
Commission (the “Commission”) a registration statement on Form N-1A under the
Securities Act of 1933, as amended (the “1933 Act”), and the Investment Company
Act of 1940, as amended (the “1940 Act”);
WHEREAS, the Trust intends to
create and redeem shares of beneficial interest, par value $.001 per Share (the
“Shares”) of each Fund on a continuous basis at their net asset value only in
aggregations constituting a Creation Unit, as such term is defined in the
Registration Statement;
WHEREAS, the Shares of each
Fund will be listed on one or more national securities exchanges (together, the
“Listing Exchanges”);
WHEREAS, the Trust desires to
retain the Distributor to act as the distributor with respect to the issuance
and distribution of Creation Units of each Fund, hold itself available to
receive and process orders for such Creation Units in the manner set forth in
the Trust’s Prospectus, and to enter into arrangements with broker-dealers who
may solicit purchases of Creation Units and with broker-dealers and others to
provide for servicing of shareholder accounts and for distribution assistance,
including broker-dealer and shareholder support;
WHEREAS, the Distributor is a
registered broker-dealer under the Securities Exchange Act of 1934, as amended
(the “1934 Act”) and a member of the Financial Industry Regulatory Authority
(“FINRA”) (the successor organization to the National Association of Securities
Dealers, Inc.); and
WHEREAS, the Distributor
desires to provide the services described herein to the Trust.
NOW, THEREFORE, in
consideration of the mutual promises and undertakings herein contained, the
parties agree as follows:
1. Appointment.
The
Trust hereby appoints the Distributor as the exclusive distributor for Creation
Units of each Fund listed in Exhibit A hereto, as may be amended by the Trust
from time to time on written notice to the Distributor, on the terms and for the
period set forth in this Agreement and subject to the registration requirements
of the federal securities laws and of the laws governing the sale of securities
in the various states, and the Distributor hereby accepts such appointment and
agrees to act in such capacity hereunder.
2. Definitions.
Wherever
they are used herein, the following terms have the following respective
meanings:
(a) “Prospectus”
means the Prospectus and Statement of Additional Information constituting parts
of the Registration Statement of the Trust under the 1933 Act and the 1940 Act
as such Prospectus and Statement of Additional Information may be amended or
supplemented and filed with the Commission from time to time;
(b) “Registration
Statement” means the registration statement most recently filed from time to
time by the Trust with the Commission and effective under the 1933 Act and the
1940 Act, as such registration statement is amended by any amendments thereto at
the time in effect;
(c) All
capitalized terms used but not defined in this Agreement shall have the meanings
ascribed to such terms in the Registration Statement and the
Prospectus.
3. Duties
of the Distributor
(a) The
Distributor agrees to act as agent of the Trust in connection with the receipt
and processing of all orders for purchases and redemptions of Creation Units of
each Fund from DTC Participants or participants in the Continuous Net Settlement
System of the National Securities Clearing Corporation (the “NSCC Participants”)
that have executed a Participant Agreement (the “Authorized Participants”), as
defined in paragraph 3(b) hereof, with the Distributor and Transfer Agent and to
transmit such orders to the Custodian and Transfer Agent in accordance with the
Registration Statement and Prospectus; provided, however, that nothing herein
shall affect or limit the right and ability of the Custodian to accept Deposit
Securities and related Cash Components through or outside the Clearing Process,
and as provided in and in accordance with the Registration Statement and
Prospectus. The Trust acknowledges that the Distributor shall not be
obligated to accept any certain number of orders for Creation Units and nothing
herein contained shall prevent the Distributor from entering into like
distribution arrangements with other investment companies.
(b) The
Distributor agrees to use commercially reasonable efforts to act as agent of the
Trust with respect to the continuous distribution of Creation Units of each Fund
as set forth in the Registration Statement and in accordance with the provisions
thereof. The Distributor further agrees as follows: (i) at the
request of the Trust, the Distributor shall enter into selected or soliciting
dealer participant agreements (“Participant Agreements”) between and among
Authorized Participants, the Distributor and the Transfer Agent, for the
purchase of Creation Units of the Funds, in accordance with the Registration
Statement and Prospectus; (ii) the Distributor shall generate, transmit and
maintain copies of confirmations of Creation Unit purchase and redemption order
acceptances to the purchaser or redeemer (such confirmations will indicate the
time such orders were accepted and will be made available to the Trust promptly
upon request); (iii) the Distributor shall deliver copies of the Prospectus,
included in the Registration Statement, to purchasers of such Creation Units and
upon request the Statement of Additional Information; and (iv) the Distributor
shall maintain telephonic, facsimile and/or access to direct computer
communications links with the Transfer Agent.
(c) The
Distributor agrees to use all reasonable efforts, consistent with its other
business, to secure purchasers of Creation Units through Authorized Participants
in accordance with the procedures set forth in the Prospectus.
(d) All
activities by the Distributor and its agents and employees that are primarily
intended to result in the sale of Creation Units shall comply with the
Registration Statement and Prospectus, the instructions of the Investment
Adviser and the Board of Trustees of the Trust, the Agreement and Declaration of
Trust, and all applicable laws, rules and regulations including, without
limitation, all rules and regulations made or adopted pursuant to the 1940 Act
by the Commission or any securities association registered under the 1934 Act,
including FINRA and the Listing Exchanges.
(e) Except
as otherwise noted in the Registration Statement and Prospectus, the offering
price for all Creation Units will be the aggregate net asset value of the Shares
per Creation Unit of the relevant Fund, as determined in the manner described in
the Registration Statement and Prospectus.
(f) If
and whenever the determination of net asset value is suspended and until such
suspension is terminated, no further orders for Creation Units will be processed
by the Distributor except such unconditional orders as may have been placed with
the Distributor before it had knowledge of the suspension. In
addition, the Trust reserves the right to suspend sales and Distributor’s
authority to process orders for Creation Units on behalf of the Trust, upon due
notice to the Distributor, if, in the judgment of the Trust, it is in the best
interests of the Trust to do so. Suspension will continue for such period as may
be determined by the Trust.
(g) The
Distributor is not authorized by the Trust to give any information or to make
any representations other than those contained in the Registration Statement or
Prospectus or contained in shareholder reports or other material that may be
prepared by or on behalf of the Trust for the Distributor’s use.
The
Distributor shall be entitled to rely on and shall not be responsible in any way
for information provided to it by the Trust and its respective service providers
and shall not be liable or responsible for the errors and omissions of such
service providers, provided that the foregoing shall not be construed to protect
the Distributor against any liability to the Trust or the Trust’s shareholders
to which the Distributor would otherwise be subject by reason of willful
misfeasance, bad faith or negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties under this
Agreement.
(h) The
Distributor shall ensure that all direct requests for Prospectuses, Statements
of Additional Information, product descriptions and periodic fund reports, as
applicable, are fulfilled. In addition, the Distributor shall arrange
to provide the Listing Exchanges with copies of Prospectuses and Statements of
Additional Information and product descriptions to be provided to purchasers in
the secondary market. The Distributor will generally make it known in
the brokerage community that Prospectuses and Statements of Additional
Information and product descriptions are available, including by (i) advising
the Listing Exchanges on behalf of its member firms of the same, (ii) making
such disclosure in all marketing and advertising materials prepared and/or filed
by the Distributor with FINRA, and (iii) as may otherwise be required by the
Commission. The Distributor shall not bear any costs associated with
printing Prospectuses, Statements of Additional Information and all other such
materials.
(i) The
Distributor agrees to make available, at the Trust’s request, one or more
members of its staff to attend Board meetings of the Trust in order to provide
information with regard to the ongoing distribution process and for such other
purposes as may be requested by the Board of Trustees of the Trust.
(j) The
Distributor shall review and approve all sales and marketing materials for
compliance with applicable laws and conditions of any applicable exemptive
order, and file such materials with FINRA as required by the 1933 Act and 1940
Act, and the rules promulgated thereunder. All such sales and
marketing materials must be approved, in writing, by the Distributor prior to
use.
(k) The
Distributor shall not offer any Shares and shall not accept any orders for the
purchase or sale of Shares hereunder if and so long as the effectiveness of the
Registration Statement then in effect or any necessary amendments thereto shall
be suspended under any of the provisions of the 1933 Act or if and so long as a
current prospectus as required by Section 10 of the 1933 Act is not on file with
the Commission; provided, however, that nothing contained in this paragraph
shall in any way restrict or have any application to or bearing upon the Trust’s
obligation to redeem or repurchase any Shares from any shareholder in accordance
with provisions of the Prospectus or Registration Statement.
(l) If
the Trust adopts any distribution and/or shareholder servicing plan(s) pursuant
to Rule 12b-1 under the 1940 Act (the “Plan”), the Distributor shall enter into
selling and/or investor servicing agreements (“Sales and Investor Services
Agreements”) with various broker-dealers and any other financial institution
exempt under federal or state securities laws from registration as a broker or
dealer authorized by the Investment Adviser, consistent with applicable law and
the Registration Statement and Prospectus, to sell Shares and provide services
to shareholders. The Distributor further agrees as follows: (i) the
Distributor shall administer on behalf of the Trust any Plan(s) adopted by the
Trust under rule 12b-1; (ii) the Distributor shall, at its own expense, set up
and maintain a system of recording payments of fees and reimbursement of
expenses disseminated pursuant to this Agreement and other agreements related to
any such Plan(s) and, pursuant to the 1940 Act, report such payment activity to
the Trust at least quarterly; (iii) the Distributor shall receive from the Trust
all distribution and shareholder servicing fees, as applicable, at the rate and
to the extent payable under the terms and conditions set forth in any Plan(s)
adopted by the Trust, applicable to the appropriate class of shares of each
Fund,
as such Plan(s) may be amended from time to time, and subject to any further
limitations on such fees as the Board of Trustees of the Trust may impose; and
(iv) the Distributor shall pay, from the fees received from the Trust pursuant
to any such Plan(s), all fees and make reimbursement of all expenses, pursuant
to and in accordance with such Plan(s) and any and all Sales and Investor
Services Agreements. In no event shall Distributor pay any fees
pursuant to any such Plan(s) until it has received payment of such fees from the
Trust or the Adviser.
(m) The
Distributor shall provide an order processing system pursuant to which the
Authorized Participants may contact the Distributor (or its affiliates) and
place requests to create and redeem Creation Units, including without
limitation: (i) generating and transmitting confirmations of purchase and
redemption order acceptances to purchasers and redeemers of Creation Units; (ii)
providing acknowledgement to Authorized Participants that orders have been
accepted; (iii) rejecting any orders that were not submitted in proper form or
in a timely fashion; (iv) confirming that Authorized Participants will not place
trades that would raise their total holdings to 80% or more of any Fund;
(v) maintain along with the Trust and its Index Receipt Agent the right to
require and rely upon information necessary to determine beneficial share
ownership for purposes of the 80% determination or, in lieu of this, accept a
certification from a Listing Exchange member firm or a member of such other
exchange that the cost basis of the securities so deposited is essentially
identical to their market value at the time of deposit; and (vi) maintaining a
dedicated toll-free line for Authorized Participants to place share creation and
redemption orders.
(n) The
Distributor has as of the date hereof, and shall at all times have and maintain,
net capital of not less than that required by Rule 15c3-1 under the 1934 Act, or
any successor provision thereto. In the event that the net capital of the
Distributor shall fall below that required by Rule 15c3-1(e), or any successor
provision thereto, the Distributor shall promptly provide notice to the Trust
and the Investment Adviser of such event.
(o) The
Distributor agrees to maintain, and preserve for the periods prescribed by Rule
31a-2 under the 1940 Act, such records as are required to be maintained by Rule
31a-1(d) under the 1940 Act.
(p) The
Distributor agrees to maintain compliance policies and procedures (a “Compliance
Program”) that are reasonably designed to prevent violations of the Federal
Securities Laws (as defined in Rule 38a-1 of the 0000 Xxx) with respect to the
Distributor’s services under this Agreement, and to provide any and all
information with respect to the Compliance Program, including without
limitation, information and certifications with respect to material violations
of the Compliance Program and any material deficiencies or changes therein, as
may be reasonably requested by the Trust’s Chief Compliance Officer or Board of
Trustees.
4. Duties
of the Trust.
(a) The
Trust agrees to issue Creation Units of each Fund and to request DTC to record
on its books the ownership of the Shares constituting such Creation Units in
accordance with the book-entry system procedures described in the Prospectus in
such amounts as the Distributor has requested through the Index Receipt Agent in
writing or other means of data transmission, as promptly as practicable after
receipt by the Trust of the requisite Deposit Securities and Cash Component
(together with any fees) and acceptance of such order, upon the terms described
in the Registration Statement. The Trust may reject any order for
Creation Units or stop all receipts of such orders at any time upon reasonable
notice to the Distributor, in accordance with the provisions of the Prospectus
and Statement of Additional Information.
(b) The
Trust agrees that it will take all action necessary to register an indefinite
number of Shares under the 1933 Act. The Trust will make available to
the Distributor such number of copies of its then currently effective Prospectus
and Statement of Additional Information and product description as the
Distributor may reasonably request. The Trust will furnish to the
Distributor copies of semi-annual reports and annual audited reports of the
Trust’s books and accounts made by independent public accountants regularly
retained by the Trust and such other publicly available information that the
Distributor may reasonably request for use in connection with the distribution
of Creation Units. The Trust shall keep the Distributor informed of
the jurisdictions in which the Trust has filed notice filings for Shares for
sale under the securities laws thereof and shall promptly notify the Distributor
of any change in this information. The Distributor shall not be
liable for damages resulting from the sale of Shares in authorized jurisdictions
where the Distributor had no information from the Trust that such sale or sales
were unauthorized at the time of such sale or sales.
5. Fees
and Expenses.
(a) The
Distributor shall be entitled to no compensation or reimbursement of expenses
from the Trust for the services provided by the Distributor pursuant to this
Agreement.
The
Distributor may receive compensation from the Investment Adviser related to its
services hereunder or for additional services as may be agreed to between the
Investment Adviser and Distributor.
(b) The
Trust shall bear the cost and expenses of: (i) the registration of the Shares
for sale under the Securities Act; and (ii) the registration or qualification of
the Shares for sale under the securities laws of the various
States;
(c) The
Distributor shall pay (i) all expenses relating to Distributor’s broker-dealer
qualification and registration under the 1934 Act; and (ii) the expenses
incurred by the Distributor in connection with routine FINRA filing
fees.
(d) Notwithstanding
anything in this Agreement to the contrary, the Distributor and its affiliates
may receive compensation or reimbursement from the Trust and the Investment
Adviser with respect to any services not included under this Agreement, as may
be agreed upon by the parties from time to time.
6. Indemnification.
(a) The
Trust agrees to indemnify and hold harmless the Distributor, its affiliates and
each of their respective directors, officers and employees and agents and any
person who controls the Distributor within the meaning of Section 15 of the 1933
Act (any of the Distributor, its officers, employees, agents and directors or
such control persons, for purposes of this paragraph, a “Distributor
Indemnitee”) against any loss, liability, claim, damages or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
claim, damages or expense and reasonable counsel fees incurred in connection
therewith) arising out of or based upon (i) Distributor serving as Distributor
for the Trust pursuant to this Agreement; (ii) any claim that the Registration
Statement, Prospectus, Statement of Additional Information, product description,
shareholder reports, sales literature and advertisements specifically approved
by the Trust and Investment Adviser or other information filed or made public by
the Trust (as from time to time amended) included an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein (and in the case of the
Prospectus, Statement of Additional Information and product description, in
light of the circumstances under which they were made) not misleading under the
1933 Act, or any other statute or the common law; (iii) the breach by the Trust
of any obligation, representation or warranty contained in this Agreement; or
(iv) the Trust’s failure to comply in any material respect with applicable
securities laws.
The Trust
does not agree to indemnify the Distributor or hold it harmless to the extent
that the statement or omission was made in reliance upon, and in conformity
with, information furnished to the Trust by or on behalf of the
Distributor.
The Trust
will also not indemnify any Distributor Indemnitee with respect to any untrue
statement or omission made in the Registration Statement, Prospectus, Statement
of Additional Information or product description that is subsequently corrected
in such document (or an amendment thereof or supplement thereto) if a copy of
the Prospectus (or such amendment or supplement) was not sent or given to the
person asserting any such loss, liability, claim, damage or expense at or before
the written confirmation to such person in any case where such delivery is
required by the 1933 Act and the Trust had notified the Distributor of the
amendment or supplement prior to the sending of the confirmation. In no case (i)
is the indemnity of the Trust in favor of any Distributor Indemnitee to be
deemed to protect the Distributor Indemnitee against any liability to the Trust
or its shareholders to which the Distributor Indemnitee would otherwise be
subject by reason of willful misfeasance, bad faith or negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations under this Agreement, or (ii) is the Trust to be liable under its
indemnity agreement contained in this Section with respect to any claim made
against any Distributor Indemnitee unless the Distributor Indemnitee shall have
notified the Trust in writing of the claim at its principal offices in Chicago,
Illinois within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall have been
served upon Distributor Indemnitee (or after Distributor Indemnitee shall have
received notice of service on any designated agent).
Failure
to notify the Trust of any claim shall not relieve the Trust from any liability
that it may have to any Distributor Indemnitee against whom such action is
brought unless failure or delay to so notify the Trust prejudices the Trust’s
ability to defend against such claim. The Trust shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any claims, but if the Trust elects to assume the
defense, the defense shall be conducted by counsel chosen by it and satisfactory
to Distributor Indemnitee, defendant or defendants in the suit. In the event the
Trust elects to assume the defense of any suit and retain counsel, Distributor
Indemnitee, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them. If the Trust does not elect
to assume the defense of any suit, it will reimburse the Distributor Indemnitee,
defendant or defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. The Trust agrees to notify the Distributor promptly of
the commencement of any litigation or proceedings against it or any of its
officers or Trustees in connection with the issuance or sale of any of the
Creation Units or the Shares.
(b) The
Distributor agrees to indemnify and hold harmless the Trust and each of its
Trustees and officers and any person who controls the Trust within the meaning
of Section 15 of the 1933 Act (for purposes of this paragraph, the Trust and
each of its Trustees and officers and its controlling persons are collectively
referred to as the “Trust Affiliates”) against any loss, liability, claim,
damages or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, claim, damages or expense and reasonable counsel
fees incurred in connection therewith) arising out of or based upon (i) the
allegation of any wrongful act of the Distributor or any of its directors,
officers, employees or affiliates in connection with its activities as
Distributor pursuant to this Agreement; (ii) the breach of any obligation,
representation or warranty contained in this Agreement by the Distributor; (iii)
the Distributor’s failure to comply in any material respect with applicable
securities laws, including applicable FINRA regulations; or (iv) any allegation
that the Registration Statement, Prospectus, Statement of Additional
Information, product description, shareholder reports, any information or
materials relating to the Funds (as described in section 3(g)) or other
information filed or made public by the Trust (as from time to time amended)
included an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
not misleading, insofar as such statement or omission was made in reliance upon,
and in conformity with information furnished to the Trust by or on behalf of the
Distributor.
In no
case (i) is the indemnity of the Distributor in favor of any Trust Affiliate to
be deemed to protect any Trust Affiliate against any liability to the Trust or
its security holders to which such Trust Affiliate would otherwise be subject by
reason of willful misfeasance, bad faith or negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement, or (ii) is the Distributor to be liable under its
indemnity agreement contained in this Section with respect to any claim made
against any Trust Affiliate unless the Trust Affiliate shall have notified the
Distributor in writing of the claim within a reasonable time after the summons
or other first written notification giving information of the nature of the
claim shall have been served upon the Trust Affiliate (or after the Trust
Affiliate shall have received notice of service on any designated
agent).
Failure
to notify the Distributor of any claim shall not relieve the Distributor from
any liability that it may have to the Trust Affiliate against whom such action
is brought on account of its indemnity agreement contained in this Section
unless failure or delay to so notify the Distributor prejudices the
Distributor’s ability to defend against such claim. The Distributor shall be
entitled to participate at its own expense in the defense or, if it so elects,
to assume the defense of any suit brought to enforce the claim, but if the
Distributor elects to assume the defense, the defense shall be conducted by
counsel chosen by it and satisfactory to the Trust, its officers and Board and
to any controlling person or persons, defendant or defendants in the suit. In
the event that Distributor elects to assume the defense of any suit and retain
counsel, the Trust or controlling person or persons, defendant or defendants in
the suit, shall bear the fees and expenses of any additional counsel retained by
them. If the Distributor does not elect to assume the defense of any suit, it
will reimburse the Trust, its officers and Trustees or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Distributor agrees to notify the
Trust promptly of the commencement of any litigation or proceedings against it
or any of its officers or directors in connection with the issuance or sale of
any of the Creation Units or the Shares.
(c) No
indemnified party shall settle any claim against it for which it intends to seek
indemnification from the indemnifying party, under the terms of section 6(a) or
6(b) above, without prior written notice to and consent from the indemnifying
party, which consent shall not be unreasonably withheld. No
indemnified or indemnifying party shall settle any claim unless the settlement
contains a full release of liability with respect to the other party in respect
of such action. This section 6 shall survive the termination of this
Agreement.
7. Representations.
(a) The
Distributor represents and warrants that (i) it is duly organized as a Delaware
limited liability company and is and at all times will remain duly authorized
and licensed under applicable law to carry out its services as contemplated
herein; (ii) the execution, delivery and performance of this Agreement are
within its power and have been duly authorized by all necessary action; (iii)
its entering into this Agreement or providing the services contemplated hereby
does not conflict with or constitute a default or require a consent under or
breach of any provision of any agreement or document to which the Distributor is
a party or by which it is bound; (iv) it is registered as a broker-dealer under
the 1934 Act and is a member of FINRA; and (v) it has in place compliance
policies and procedures reasonably designed to prevent violations of the Federal
Securities Laws as that term is defined in Rule 38a-1 under the 0000
Xxx.
(b) The
Distributor and the Trust each individually represent that its anti-money
laundering program (“AML Program”), at a minimum, (i) designates a compliance
officer to administer and oversee the AML Program, (ii) provides ongoing
employee training, (iii) includes an independent audit function to test the
effectiveness of the AML Program, (iv) establishes internal policies,
procedures, and controls that are tailored to its particular business,
(v) provides for the filing of all necessary anti-money laundering
reports including, but not limited to, currency transaction reports and
suspicious activity reports, and (vi) allows for appropriate regulators to
examine its anti-money laundering books and records. Notwithstanding the
foregoing, the Trust acknowledges that the Authorized Participants are not
“customers” for the purposes of 31 CFR 103.
(c) The
Distributor and the Trust each individually represent and warrant that: (i) it
has procedures in place reasonably designed to protect the privacy of non-public
personal consumer/customer financial information to the extent required by
applicable law, rule and regulation; (ii) it will comply with all of the
applicable terms and provisions of the 1934 Act; and (iii) the Distributor will
provide certifications to the Trust in order to assist the Trust in complying
with certain rules under the 1940 Act (by way of example only, Rules 30a-2,
30a-3 and 38a-1) and in connection with the filing of certain Forms (by way of
example only, Form N-CSR).
(d) The
Trust represents and warrants that (i) it is duly organized as a Delaware
statutory trust and is and at all times will remain duly authorized to carry out
its obligations as contemplated herein; (ii) it is registered as an investment
company under the 1940 Act; (iii) the execution, delivery and performance of
this Agreement are within its power and have been duly authorized by all
necessary action; (iv) its entering into this Agreement does not conflict with
or constitute a default or require a consent under or breach of any provision of
any agreement or document to which the Trust is a party or by which it is bound;
(v) the Registration Statement and each Fund’s Prospectus have been prepared,
and all sales literature and advertisements approved by the Trust and the
Investment Adviser or other materials prepared by or on behalf of the Trust for
the Distributor’s use (“Sales Literature and Advertisements”) shall be prepared,
in all materials respects, in conformity with the 1933 Act, the 1940 Act and the
rules and regulations of the Commission (the “Rules and Regulations”); and (vi)
the Registration Statement and each Fund’s Prospectus contain, and all Sales
Literature and Advertisements shall contain, all statements required to be
stated therein in accordance with the 1933 Act, the 1940 Act and the Rules and
Regulations; and (vii) all statements of fact contained therein, or to be
contained in all Sales Literature and Advertisements, are or will be true and
correct in all material respects at the time indicated or the effective date, as
the case may be, and none of the Registration Statement, any Fund’s Prospectus,
nor any Sales Literature and Advertisements shall include any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the case of each Fund’s
Prospectus in light of the circumstances in which made, not misleading. The
Trust shall, from time to time, file such amendment or amendments to the
Registration Statement and each Fund’s Prospectus as, in the light of future
developments, shall, in the opinion of the Trust’s counsel, be necessary in
order to have the Registration Statement and each Fund’s Prospectus at all times
contain all material facts required to be stated therein or necessary to make
the statements therein, in the case of each Fund’s Prospectus in light of the
circumstances in which made, not misleading. The Trust shall not file any
amendment to the Registration Statement or each Fund’s Prospectus without giving
the Distributor reasonable notice thereof in advance, provided that nothing in
this Agreement shall in any way limit the Trust’s right to file at any time such
amendments to the Registration Statement or any Fund’s Prospectus as the Trust
may deem advisable. Notwithstanding the foregoing, the Trust shall not be deemed
to make any representation or warranty as to any information or statement
provided by the Distributor for inclusion in the Registration Statement or any
Fund’s Prospectus.
(e) The
Trust represents to the Distributor that the Registration Statement and
Prospectus filed by the Trust with the Commission with respect to the Trust have
been prepared in conformity in all material respects with the requirements of
the 1933 Act, the 1940 Act and the rules and regulations of the Commission
thereunder. The Trust will notify the Distributor promptly of any
amendment to the Registration Statement or supplement to the Prospectus and any
stop order suspending the effectiveness of the Registration Statement; provided,
however, that nothing contained in this Agreement shall in any way limit the
Trust’s right to file at any time such amendments to any Registration Statement
and/or supplements to any Prospectus, of whatever character, as the Trust may
deem advisable, such right being in all respects absolute and
unconditional. The Trust and the Investment Adviser shall not be
responsible in any way for any information, statements or representations given
or made by the Distributor or its representatives or agents other than such
information, statements or representations as are contained in such Prospectus
or Registration Statement or financial reports filed on behalf of the Trust or
in any Sales Literature and Advertisements.
8. Duration,
Termination and Amendment.
(a) This
Agreement shall be effective on the date set forth above, and unless terminated
as provided herein, shall continue for two years from its effective date, and
thereafter from year to year, provided such continuance is approved annually (i)
by vote of a majority of the Trustees or by the vote of a majority of the
outstanding voting securities of the Fund and (ii) by the vote of a majority of
those Trustees who are not parties to this Agreement or interested persons of
any such party cast in person at a meeting called for the purpose of voting on
such approval. This Agreement may be terminated at any time, without the payment
of any penalty, as to each Fund (i) by vote of a majority of those Trustees who
are not parties to this Agreement or interested persons of any such party or
(ii) by vote of a majority of the outstanding voting securities of the Fund, or
by the Distributor, on at least sixty (60) days prior written notice. This
Agreement shall automatically terminate without the payment of any penalty in
the event of its assignment. As used in this paragraph, the terms
“vote of a majority of the outstanding voting securities,” “assignment,”
“affiliated person” and “interested person” shall have the respective meanings
specified in the 1940 Act.
(b) No
provision of this Agreement may be changed, waived, discharged or terminated
except by an instrument in writing signed by the party against which an
enforcement of the change, waiver, discharge or termination is
sought.
9. Notice.
Any
notice or other communication authorized or required by this Agreement to be
given to either party shall be in writing and deemed to have been given when
delivered in person or by confirmed facsimile, or posted by certified mail,
return receipt requested, to the following address (or such other address as a
party may specify by written notice to the other):
If to the
Distributor:
Foreside
Fund Services, LLC
ATTN: Counsel
Three
Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
If to the
Trust:
Attn: Chairman
000
Xxxxxx Xxxxxx, Xxxxx X-00
Xxxxxxxx,
XX 00000
with
a copy to:
Xxxx
Xxxxxxxx
Chief Financial Officer
c/o
Scottrade, Inc.
00000
Xxxxxxxxx Xxxx Xxxxx
Xx.
Xxxxx, XX 00000
10. Choice
of Law
and
Jurisdiction.
This
Agreement shall be governed by, and construed in accordance with, the laws of
the state of New
York, without giving effect to the choice of laws
provisions thereof. Venue
for any
lawsuit or other judicial proceeding relating to or arising from this
Agreement shall
be in any
court of competent jurisdiction located in the County and State of New York.These
courts will have the proper venue for any such lawsuit or judicial proceeding,
and the parties waive any objection to venue or their convenience as a
forum. The parties agree to submit to the jurisdiction of any of the
courts specified and to accept service of process to vest personal jurisdiction
over them in any of these courts.
11. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
12. Severability.
If
any provisions of this Agreement shall be held or made invalid, in whole or in
part, then the other provisions of this Agreement shall remain in force. Invalid
provisions shall, in accordance with this Agreement’s intent and purpose, be
amended, to the extent legally possible, in order to effectuate the intended
results of such invalid provisions.
13. Insurance.
The
Distributor will maintain at its expense an errors and omissions insurance
policy adequate to cover services provided by the Distributor
hereunder.
14. Confidentiality.
During
the term of this Agreement, the Distributor and the Trust may have access to
confidential information relating to such matters as either party’s business,
trade secrets, systems, procedures, manuals, products, contracts, personnel, and
clients. As used in this Agreement, “Confidential Information” means information
belonging to one of the parties that is of value to such party and the
disclosure of which could result in a competitive or other disadvantage to such
party.
Confidential
Information includes, without limitation, financial information, proposal and
presentations, reports, forecasts, inventions, improvements and other
intellectual property; trade secrets; know-how; designs, processes or formulae;
software; market or sales information or plans; customer lists; and business
plans, prospects and opportunities (such as possible acquisitions or
dispositions of businesses or facilities). Confidential Information includes
information developed by either party in the course of engaging in the
activities provided for in this Agreement, unless: (i) the information is or
becomes publicly known through lawful means; (ii) the information is disclosed
to the other party without a confidential restriction by a third party who
rightfully possesses the information and did not obtain it, either directly or
indirectly, from one of the parties, as the case may be, or any of their
respective principals, employees, affiliated persons, or affiliated entities.
The parties understand and agree that all Confidential Information shall be kept
confidential by the other both during and after the term of this Agreement. Each
party shall maintain commercially reasonable information security policies and
procedures for protecting Confidential Information. The parties further agree
that they will not, without the prior written approval by the other party,
disclose such Confidential Information, or use such Confidential Information in
any way, either during the term of this Agreement or at any time thereafter,
except as required in the course of this Agreement and as provided by the other
party or as required by law. Upon termination of this Agreement for any reason,
or as otherwise requested by the Trust, all Confidential Information held by or
on behalf of Trust shall be promptly returned to the Trust, or an authorized
officer of the Distributor will certify to the Trust in writing that all such
Confidential Information has been destroyed. This section 14 shall
survive the termination of this Agreement. Notwithstanding the
foregoing, a party may disclose the other’s Confidential Information if (i)
required by law, regulation or legal process or if requested by the Commission
or other governmental regulatory agency with jurisdiction over the parties
hereto or (ii) requested to do so by the other party; provided that in the event
of (i), the disclosing party shall give the other party reasonable prior notice
of such disclosure to the extent reasonably practicable and shall reasonably
cooperate with the other party (at such other party’s expense) in any efforts to
prevent such disclosure.
15. Limitation
of Liability.
This
Agreement is executed by or on behalf of the Trust with respect to each of the
Funds
and the obligations hereunder are not binding upon any of the trustees, officers
or shareholders of the Trust individually but are binding only upon the Fund to
which such obligations pertain and the assets and property of such
Fund.
Separate
and distinct records are maintained for each Fund and the assets associated with
any such Fund are held and accounted for separately from the other assets of the
Trust, or any other Fund of the Trust. The debts, liabilities, obligations, and
expenses incurred, contracted for, or otherwise existing with respect to a
particular Fund of the Trust shall be enforceable against the assets of that
Fund only, and not against the assets of the Trust generally or any other Fund,
and none of the debts, liabilities, obligations, and expenses incurred,
contracted for, or otherwise existing with respect to the Trust generally or any
other Fund shall be enforceable against the assets of that Fund. The
Trust’s Agreement and Declaration of Trust is on file with the
Trust.
16. Use
of Names; Publicity.
The
Trust shall not use the Distributor’s name in any offering material, shareholder
report, advertisement or other material relating to the Trust, other than for
the purpose of merely identifying and describing the functions of the
Distributor hereunder, in a manner not approved by the Distributor in writing
prior to such use, such approval not to be unreasonably withheld. The
Distributor hereby consents to all uses of its name required by the Commission,
any state securities commission, or any federal or state regulatory
authority.
The
Distributor shall not use the names “FocusShares”
in any offering material, shareholder report, advertisement or other material
relating to the Distributor, other than for the purpose of merely identifying
and describing the functions of the Trust hereunder, in a manner not approved by
the Trust in writing prior to such use; provided, however, that the Trust shall
consent to all uses of its name required by the Commission, any state securities
commission, or any federal or state regulatory authority; and provided, further,
that in no case shall such approval be unreasonably withheld.
The
Distributor will not issue any press releases or make any public announcements
regarding the existence of this Agreement without the express written consent of
the Trust. Neither the Trust nor the Distributor will disclose any of
the economic terms of this Agreement, except as may be required by
law.
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed by their officers
designated below as of the date first set forth above.
By:
____________________
Name:
Title:
FORESIDE
FUND SERVICES, LLC
By:
________________________
Name: Xxxxxxx
X. Xxxxxx
Title: Vice
President
EXHIBIT
A
FOCUS
Morningstar US Market Index ETF
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Morningstar Large Cap Index ETF
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Morningstar Mid Cap Index ETF
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Morningstar Small Cap Index ETF
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Morningstar Basic Materials Index ETF
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Morningstar Communications Services Index ETF
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Morningstar Consumer Cyclical Index ETF
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Morningstar Consumer Defense Index ETF
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Morningstar Energy Index ETF
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Morningstar Financial Services Index ETF
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Morningstar Health Care Index ETF
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Morningstar Industrials Index ETF
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Morningstar Real Estate Index ETF
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Morningstar Technology Index ETF
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Morningstar Utilities Index ETF
