Exhibit A(9)(c)
FORM OF
NASDAQ-100 PARTICIPANT AGREEMENT
This Nasdaq-100 Participant Agreement (this "Agreement") is
entered into between ALPS Mutual Funds Services, Inc. (the "Distributor") and
_ _ _ _ _ _ _ _ _ _ _ (the "Participant") and is subject to acceptance by
The Bank of New York (the "Trustee"). The Trustee serves as the trustee of
the Nasdaq-100 Trust, Series 1 (the "Trust") pursuant to certain Standard
Terms and Conditions of Trust dated as of March 1, 1999 and the Trust
Indenture and Agreement dated March 4, 1999 (collectively, the "Trust
Agreement") and is an Index Receipt Agent as that term is defined in the
rules of the National Securities Clearing Corporation ("NSCC"). The
Distributor has been retained to provide certain services with respect to
acting as principal underwriter of the Trust in connection with the creation
and distribution of Nasdaq-100 Shares. As specified in the Nasdaq-100 Shares
prospectus and the Trust Agreement, Nasdaq-100 Shares may be created or
redeemed only in aggregations of 50,000 Nasdaq-100 Shares, referred to
therein and herein as a "Creation Unit". The Trust Agreement provides that
Creation Units be issued in exchange for a Portfolio Deposit delivered by the
Participant to the Trustee. Capitalized terms not otherwise defined herein
are used herein as defined in the Nasdaq-100 Shares prospectus or the Trust
Agreement.
This Agreement is intended to set forth certain premises and
the procedures by which the Participant may create and/or redeem Creation Units
(i) through the Continuous Net Settlement ("CNS") clearing processes of NSCC as
such processes have been enhanced to effect creations and redemptions of
Creation Units, such processes being referred to herein as the "Nasdaq-100
Clearing Process", or (ii) outside the Nasdaq-100 Clearing Process (i.e.,
through the facilities of the Depository Trust Company ("DTC" )). The parties
hereto in consideration of the premises and of the agreements contained herein
agree as follows:
1. STATUS OF PARTICIPANT. The Participant hereby represents, covenants and
warrants that (i) with respect to orders for the creation or redemption
of Creation Units by means of the Nasdaq-100 Clearing Process, it is a
member of NSCC and a participant in the CNS System of NSCC (as defined
in the Nasdaq-100 Shares prospectus, a "Participating Party"); and (ii)
with respect to orders for the creation or redemption of Creation Units
outside the Nasdaq-100 Clearing Process, it is a DTC Participant (as
defined in the Nasdaq-100 Shares prospectus, a "DTC Participant"). The
Participant may place orders for the creation or redemption of Creation
Units either through the Nasdaq-100 Clearing Process or outside the
Nasdaq-100 Clearing Process, subject to the procedures for creation and
redemption referred to in paragraph 2 of this Agreement ("Execution of
Orders") and the procedures described in Attachment A hereto. Any
change in the foregoing status of the Participant shall terminate this
Agreement, and the Participant shall give immediate notice to the
Distributor and the Trustee of such change.
The Participant further represents that it is a broker-dealer
registered with the Securities and Exchange Commission and a member of
the National Association of Securities Dealers, Inc. (the "NASD") or is
exempt from or otherwise not required to be licensed as a broker-dealer
or a member of the NASD. The Participant is qualified as a broker or
dealer, or otherwise, under all applicable state laws where it is
required to do so in order that Nasdaq-100 Shares may be sold in such
states where the Participant intends to sell Nasdaq-100 Shares. The
Participant agrees to conform to the rules of the NASD (if it is a
member of NASD) and the securities laws of any jurisdiction in which it
sells, directly or indirectly, Nasdaq-100 Shares.
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2. EXECUTION OF ORDERS. All orders for the creation or redemption of
Creation Units shall be handled in accordance with the terms of the
Nasdaq-100 Shares prospectus, the Trust Agreement and the procedures
described in Attachment A to this Agreement. Each party hereto agrees
to comply with the provisions of such documents to the extent
applicable to it. In the event the procedures include the use of
recorded telephone lines, the Participant hereby consents to such use.
The Trustee reserves the right to issue additional or other procedures
relating to the manner of creating or redeeming Creation Units, and the
Participant and the Distributor agree to comply with such procedures as
may be issued from time to time.
3. NSCC. Solely with respect to orders for the creation or redemption of
Creation Units through the Nasdaq-100 Clearing Process, the Participant
as a Participating Party hereby authorizes the Trustee to transmit to
NSCC on behalf of the Participant such instructions, including share
and cash amounts as are necessary with respect to the creation and
redemption of Creation Units consistent with the instructions issued by
the Participant to the Nasdaq-100 telephone representative identified
in Attachment A hereto (the "Nasdaq- 100 Telephone Representative").
The Participant agrees to be bound by the terms of such instructions
issued by the Trustee and reported to NSCC as though such instructions
were issued by the Participant directly to NSCC.
4. ROLE OF PARTICIPANT. The Participant shall have no authority in any
transaction to act as agent of the Distributor, the Trustee or the
Trust. 5. FEES. In connection with the creation or redemption of
Creation Units, the Trustee shall charge, and the Participant agrees to
pay to the Trustee, the Transaction Fee prescribed in the Nasdaq-100
Shares prospectus applicable to creations or redemptions through the
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Nasdaq-100 Clearing Process, or the Transaction Fee and such additional
amounts as may be prescribed pursuant to the Nasdaq-100 Shares
prospectus applicable to (i) creations or redemptions outside the
Nasdaq-100 Clearing Process and (ii) creations within the Nasdaq-100
Clearing Process where the cash equivalent value of one or more Index
Securities is being deposited in lieu of the inclusion of such Index
Security in the securities portion of the Portfolio Deposit because the
Participant is restricted by regulation or otherwise from investing or
engaging in a transaction in such security. The Transaction Fee may be
waived or otherwise adjusted from time to time subject to the
provisions relating thereto and any limitations as prescribed in the
Nasdaq-100 Shares prospectus and the Trust Agreement.
6. AUTHORIZED PERSONS. Concurrently with the execution of this Agreement
and from time to time thereafter, the Participant shall deliver to the
Distributor and the Trustee, duly certified as appropriate by its
secretary or other duly authorized official, a certificate setting
forth the names and signatures of all persons authorized to give
instructions relating to activity contemplated hereby or any other
notice, request or instruction on behalf of the Participant (each, an
"Authorized Person"). Such certificate may be accepted and relied upon
by the Distributor and the Trustee 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 Trustee of a
superseding certificate bearing a subsequent date. The Trustee shall
issue to each Authorized Person a unique personal identification number
("PIN Number") by which such Authorized Person and the Participant
shall be identified and instructions issued by the Participant
hereunder shall be authenticated. Upon the termination or revocation of
authority of such Authorized Person by the Participant, the
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Participant shall give immediate written notice of such fact to the
Distributor and the Trustee and such notice shall be effective upon
receipt by both the Distributor and the Trustee.
7. REDEMPTION. The Participant represents and warrants that it will not
obtain a Submission Number (as defined in Attachment A) from the
Trustee for the purpose of redeeming a Creation Unit unless it first
ascertains that (a) it or its customer, as the case may be, owns
outright the requisite number of Nasdaq-100 Shares to be redeemed and
(b) such Nasdaq-100 Shares have not been loaned or pledged to another
party nor are the subject of a repurchase agreement, securities lending
agreement or such other arrangement which would preclude the delivery
of such shares to the Trustee on a "regular way" basis.
8. BENEFICIAL OWNERSHIP. The Participant represents and warrants to the
Distributor and the Trustee that either (i) it does not hold for the
account of any single Beneficial Owner of Nasdaq-100 Shares, 80 percent
(80%) or more of outstanding Nasdaq-100 Shares or (ii) if it does hold
for the account of any single Beneficial Owner of Nasdaq-100 Shares, 80
percent (80%) or more of outstanding Nasdaq-100 Shares, that such a
circumstance would not cause the Trust to have a basis in the Index
Securities deposited with the Trust different from the market value of
such Index Securities on the date of such deposit, pursuant to Section
351 of the Internal Revenue Code of 1986, as amended. The Trustee shall
have the right to require information from the Participant regarding
Nasdaq- 100 Share ownership and to rely thereon to the extent necessary
to make a determination regarding ownership of 80 percent (80%) or more
of outstanding Nasdaq-100 Shares by a Beneficial Owner as a condition
to the acceptance of a Portfolio Deposit.
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9. INDEMNIFICATION. The Participant hereby agrees to indemnify and hold
harmless the Distributor, the Trustee, Nasdaq-Amex Investment Product
Services, Inc. (the Trust sponsor and a wholly-owned subsidiary of The
Nasdaq Stock Market, Inc., the "Sponsor"), their respective
subsidiaries, affiliates, directors, officers, employees and agents
(each, an "Indemnified Party") from and against any loss, liability,
cost and expense incurred by such Indemnified Party as a result of (i)
any breach by the Participant of its representations and warranties
contained herein or of any provision of this Agreement; or (ii) any
actions of such Indemnified Party in reliance upon any instructions
issued in accordance with Attachment A (as may be amended from time to
time) believed by the Distributor and/or the Trustee to be genuine and
to have been given by the Participant. This paragraph shall survive the
termination of this Agreement.
10. TRUSTEE CAPACITY. The parties acknowledge that the Trustee is acting in
its capacity hereunder as trustee in accordance with and pursuant to
the Trust Agreement and not in its general corporate capacity.
11. ACKNOWLEDGMENT. The Participant acknowledges receipt of the Nasdaq-100
Shares prospectus and represents it has reviewed such document and
understands the terms thereof.
12. 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 as
provided herein). Unless otherwise notified in writing, all notices to
the Trustee shall be given or sent as follows:
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The Bank of New York, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attn: Nasdaq-100. All notices to the Participant and the Distributor
shall be directed to the address or telephone, facsimile or telex
numbers indicated below the signature line of such party.
13. TERMINATION AND AMENDMENT. This Agreement shall become effective in
this form as of the date accepted by the Trustee and may be terminated
at any time by any party upon thirty (30) day prior notice to the other
parties (i) unless earlier terminated by the Trustee in the event of a
breach of this Agreement or the procedures described herein by the
Participant or (ii) in the event that the Trust is terminated pursuant
to the Trust Agreement. This Agreement supersedes any prior agreement
between the parties. This Agreement may be amended by the Trustee
without consent of any Beneficial Owner from time to time by the
following procedure. The Trustee will mail a copy of the amendment to
the Distributor and the Participant. For the purposes of this
Agreement, mail will be deemed received by the recipient thereof on the
third (3rd) day following the deposit of such mail into the U.S. postal
system. If neither the Distributor nor the Participant objects in
writing to the amendment within ten (10) days after its receipt, the
amendment will become part of this Agreement in accordance with its
terms.
14. REPRESENTATIONS REGARDING NASDAQ-100 SHARES. The Participant shall not
make, or permit any representative to make, in connection with any sale
or solicitation of a sale of Nasdaq-100 Shares, any representations
concerning Nasdaq-100 Shares except those contained in the then current
prospectus and in printed information approved by the Distributor and
the Trust as information supplemental to such prospectus. Copies of the
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then current prospectus and any such printed supplemental information
will be supplied by the Distributor to the Participant in reasonable
quantities upon request.
15. COUNTERPARTS. This Agreement may be simultaneously executed in several
counterparts, each of which shall be an original and all shall
constitute but one and the same instrument.
16. SPONSOR AS THIRD PARTY BENEFICIARY. The Sponsor shall be a third-party
beneficiary of this Agreement and is entitled to enforce directly
against the Participant the obligations owed to the Sponsor by the
Participant (including, without limitation, bringing proceedings
against the Participant in the Sponsor's name).
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17. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York without regard to the
conflicts of laws thereof.
ALPS MUTUAL FUNDS SERVICES, INC.
BY:
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NAME: Xxxxxx Xxxxx
TITLE: Executive Vice President
ADDRESS: 000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx XX 00000-0000
TELEPHONE: (000) 000-0000
FACSIMILE: (000) 000-0000
{NAME OF PARTICIPANT}
BY:
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NAME:
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TITLE:
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ADDRESS:
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TELEPHONE:
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FACSIMILE:
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ACCEPTED BY:
THE BANK OF NEW YORK,
AS TRUSTEE
BY:
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NAME: Xxxxxx X. Xxxxxxxx
TITLE: Vice President
ADDRESS: 000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
TELEPHONE: (000) 000-0000
FACSIMILE: (000) 000-0000
DATED:
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ATTACHMENT A
This document supplements the Nasdaq-100 Shares prospectus and
the Trust Agreement, and is an attachment to the Nasdaq-100 Participant
Agreement with respect to the procedures to be used by (i) the Distributor and
the Trustee in processing an order for the creation of Nasdaq-100 Shares and
(ii) the Trustee in processing a request for the redemption of Nasdaq-100
Shares, and (iii) the Participants and the Trustee in delivering or arranging
for the delivery of requisite cash payments, Portfolio Deposits or Nasdaq-100
Shares, as the case may be, in connection with the submission of orders for
creation or requests for redemption.
A Participant is first required to have signed the Nasdaq-100
Participant Agreement. Upon acceptance of the Nasdaq-100 Participant Agreement
by the Trustee, the Trustee will assign a personal identification number to each
Authorized Person authorized to act for the Participant. This will allow a
Participant through its Authorized Person(s) to place an order with respect to
Nasdaq-100 Shares.
I. TO PLACE AN ORDER FOR CREATION OR REDEMPTION OF NASDAQ-100 SHARES
1. CALL TO RECEIVE A SUBMISSION NUMBER. An Authorized Person for the Participant
will call the Nasdaq-100 Telephone Representative at (000) 000-0000 not later
than the closing time of the regular trading session on The Nasdaq Stock Market
(the "Nasdaq Closing Time") (ordinarily 4:00 p.m. New York time) to receive a
Submission Number. Upon verifying the authenticity of the caller (as determined
by the use of the appropriate PIN Number) and the terms of the order for
creation or request for redemption, the Nasdaq-100 Telephone Representative will
issue a unique Submission Number. All orders with respect to the creation or
redemption of Nasdaq-100 Shares are required to be in writing and accompanied by
the designated Submission Number.
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Incoming telephone calls are queued and will be handled in the sequence
received. Calls placed before the Nasdaq Closing Time will be processed even if
the call is taken after this cut-off time.
ACCORDINGLY, DO NOT HANG UP AND REDIAL. INCOMING CALLS THAT ARE
ATTEMPTED LATER THAN THE NASDAQ CLOSING TIME WILL NOT BE ACCEPTED.
2. ASSEMBLE THE SUBMISSION. The Authorized Person submitting an order to create
or a request to redeem shall assemble (a) written instructions regarding such
creation order or redemption request, (b) the designated Submission Number and
(c) the PIN Number in one document and transmit such document by facsimile or
telex to the Nasdaq-100 Telephone Representative and the Distributor, as
applicable, according to the procedures set forth below in subsection 3. The
document so transmitted is hereinafter referred to as the "Submission", and the
Business Day on which a Submission is made is hereinafter referred to as the
"Transmittal Date".
NOTE THAT THE TELEPHONE CALL IN WHICH THE SUBMISSION NUMBER IS
ISSUED INITIATES THE ORDER PROCESS BUT DOES NOT ALONE CONSTITUTE THE
ORDER. AN ORDER OR REQUEST IS ONLY COMPLETED AND PROCESSED UPON
RECEIPT OF THE SUBMISSION.
3. TRANSMIT THE SUBMISSION. A Submission Number is only valid for a limited
time. The Submission for either creations or redemptions of Nasdaq-100 Shares
must be sent by facsimile or telex to the Nasdaq-100 Telephone Representative
and the Distributor, as applicable, within 15 minutes of the issuance of the
Submission Number. In the event that the Submission is not received within such
time period, the Nasdaq-100 Telephone Representative will attempt to contact the
Participant to request immediate transmission of the Submission.
(a) In the case of a Submission for creation, unless the Submission is
received by the Nasdaq-100 Telephone Representative with a copy to the
Distributor upon the earlier of within (i)
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15 minutes of contact with the Participant or (ii) 45 minutes after the Nasdaq
Closing Time, the Submission will be deemed invalid.
(b) In the case of a Submission for redemption, unless such Submission
is received by the Nasdaq-100 Telephone Representative within (i) 15 minutes of
contact with the Participant or (ii) 45 minutes after the Nasdaq Closing Time,
whichever is earlier, such order for redemption contained therein shall be
Deemed Received (as hereinafter defined in Section IV) by the Trustee on the
Business Day following such Transmittal Date in accordance with the procedures
set forth in Section IV(2) and (4) hereof.
4. AWAIT RECEIPT OF CONFIRMATION.
(a) NASDAQ-100 CLEARING PROCESS-CREATION ORDERS. The Distributor shall
issue to both the Participating Party and the Trustee a confirmation of
acceptance of an order to create Nasdaq- 100 Shares in Creation Unit size
aggregations through the Nasdaq-100 Clearing Process within 15 minutes of its
receipt of a Submission received in good form. In the event the Participating
Party does not receive a timely confirmation from the Distributor, it should
contact the Distributor and the Nasdaq-100 Telephone Representative at the
business numbers indicated.
(b) NASDAQ-100 CLEARING PROCESS-REQUESTS FOR REDEMPTIONS. The Trustee
shall issue to the Participating Party a confirmation of acceptance of a request
to redeem Nasdaq-100 Shares in Creation Unit size aggregations through the
Nasdaq-100 Clearing Process within 15 minutes of its receipt of a Submission
received in good form. In the event the Participating Party does not receive a
timely confirmation from the Trustee, it should contact the Trustee directly at
the business number indicated.
(c) OUTSIDE THE NASDAQ-100 CLEARING PROCESS-CREATION ORDERS. The
Distributor shall issue to both the DTC Participant and the Trustee an
acknowledgment of receipt of an order to
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create Nasdaq-100 Shares in Creation Unit size aggregations outside the
Nasdaq-100 Clearing Process within 15 minutes of its receipt of a Submission
received in good form. In the event the DTC Participant does not receive a
timely acknowledgment from the Distributor, it should contact the Distributor
and the Nasdaq-100 Telephone Representative at the business numbers indicated.
(d) OUTSIDE THE NASDAQ-100 CLEARING PROCESS-REQUESTS FOR REDEMPTION.
The Trustee shall issue to the DTC Participant an acknowledgment of receipt of
an order to redeem Nasdaq- 100 Shares in Creation Unit size aggregations outside
the Nasdaq-100 Clearing Process within 15 minutes of its receipt of a Submission
received in good form. In the event the DTC Participant does not receive a
timely acknowledgment from the Trustee, it should contact the Trustee directly
at the business number indicated.
II. PARTICIPANTS' RESPONSIBILITY FOR DELIVERING OR EFFECTING THE DELIVERY
OF REQUISITE PORTFOLIO DEPOSITS OR NASDAQ-100 SHARES AND CASH PAYMENTS
IN CONNECTION WITH ORDERS FOR CREATION OR REQUESTS FOR REDEMPTION
1. NASDAQ-100 CLEARING PROCESS-CREATION ORDERS. The Participating Party notified
of confirmation of an order to create Nasdaq-100 Shares through the Nasdaq-100
Clearing Process shall be required to transfer or arrange for the transfer of
(a) the requisite Index Securities (or contracts to purchase such Index
Securities expected to be delivered through NSCC by the "regular way" settlement
date) and (b) the Cash Component, if any, to the Trustee by means of the
Nasdaq-100 Clearing Process so as to be received no later than on the "regular
way" settlement date following the Business Day on which such order is Deemed
Received by the Distributor as set forth below in Section IV.
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2. NASDAQ-100 CLEARING PROCESS - REDEMPTION REQUESTS. The Participating Party
notified of confirmation of a request to redeem Nasdaq-100 Shares through the
Nasdaq-100 Clearing Process shall be required to transfer or arrange for the
transfer of the requisite Nasdaq-100 Shares and the Cash Redemption Amount, if
any, to the Trustee by means of the Nasdaq-100 Clearing Process so as to be
received no later than on the "regular way" settlement date following the
Business Day on which such order is Deemed Received by the Trustee as set forth
below in Section IV.
3. OUTSIDE THE NASDAQ-100 CLEARING PROCESS - CREATION ORDERS. The DTC
Participant notified of acknowledgment of an order to create Nasdaq-100 Shares
outside the Nasdaq-100 Clearing Process shall be required to effect a transfer
to the Trustee of (a) the requisite Index Securities through DTC so as to be
received by the Trustee no later than 11:00 a.m. on the next Business Day
immediately following the Business Day on which such order is Deemed Received by
the Distributor as set forth below in Section IV, in such a way as to replicate
the Portfolio Deposit established on the Transmittal Date by the Trustee and (b)
the Cash Component, if any, through the Federal Reserve Bank wire system so as
to be received by the Trustee by 1:00 p.m. on the next Business Day immediately
following the day such order is Deemed Received. If the Trustee does not receive
the Index Securities by 11:00 a.m. and the Cash Component, if any, by 1:00 p.m.
on the Business Day immediately following the day such order is Deemed Received,
the creation order contained in such Submission shall be canceled. Upon written
notice to the Distributor and the Nasdaq-100 Telephone Representative, the DTC
Participant may resubmit such canceled order on the following Business Day using
a Portfolio Deposit as newly constituted.
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4. OUTSIDE THE NASDAQ-100 CLEARING PROCESS - REDEMPTION REQUESTS. The DTC
Participant notified of acknowledgment of a request to redeem Nasdaq-100 Shares
outside the Nasdaq-100 Clearing Process shall be required to effect a transfer
to the Trustee of (a) the requisite number of Nasdaq-100 Shares through DTC no
later than the Nasdaq Closing Time on the Business Day on which such order is
Deemed Received by the Trustee and (b) the Cash Redemption Amount, if any,
through the Federal Reserve Bank wire system by no later than 1:00 p.m. on the
next Business Day immediately following the Business Day on which such order is
Deemed Received by the Trustee.
5. TRANSACTION FEE. In connection with the creation or redemption of Creation
Units, the Trustee shall charge, and the Participant agrees to pay to the
Trustee, the Transaction Fee prescribed in the Nasdaq-100 Shares prospectus
applicable to (i) creations or redemptions through the Nasdaq-100 Clearing
Process, or the Transaction Fee and such additional amounts as may be prescribed
pursuant to the Nasdaq-100 Shares prospectus applicable to creations or
redemptions outside the Nasdaq-100 Clearing Process and (ii) creations within
the Nasdaq-100 Clearing Process where the cash equivalent value of one or more
Index Securities is being deposited in lieu of the inclusion of such Index
Security in the securities portion of the Portfolio Deposit because the
Participant is restricted by regulation or otherwise from investing or engaging
in a transaction in such security. Such Transaction Fee and additional amounts,
if any, shall be included in the calculation of the Cash Component or Cash
Redemption Amount payable or to be received, as the case may be, by the
Participant in connection with the creation or redemption order.
III. TRUSTEE'S RESPONSIBILITY FOR EFFECTING DELIVERY OF REQUISITE NASDAQ-100
SHARES OR SECURITIES AND CASH PAYMENTS IN
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CONNECTION WITH ORDERS FOR CREATION OR REQUESTS FOR
REDEMPTION.
1. NASDAQ-100 CLEARING PROCESS - CREATION ORDER. After the Trustee has received
notification of a Submission from the Distributor for a creation order for
Nasdaq-100 Shares through the Nasdaq-100 Clearing Process which has been Deemed
Received by the Distributor as set forth below in Section IV, the Trustee shall
initiate procedures to transfer the requisite Nasdaq-100 Shares and the Cash
Component, if any, through the Nasdaq-100 Clearing Process so as to be received
by the creator no later than on the "regular way" settlement date following the
Business Day on which the Submission is Deemed Received by the Distributor.
2. NASDAQ-100 CLEARING PROCESS - REDEMPTION REQUESTS. After the Trustee has
received a Submission for a redemption request for Nasdaq-100 Shares through the
Nasdaq-100 Clearing Process and Deemed Received such submission as set forth
below in Section IV, the Trustee shall initiate procedures to transfer the
requisite securities (or contracts to purchase such securities expected to be
delivered through NSCC by the "regular way" settlement date) and the Cash
Redemption Amount, if any, through the Nasdaq-100 Clearing Process so as to be
received by the Beneficial Owner no later than on the "regular way" settlement
date following the Business Day on which the Submission is Deemed Received by
the Trustee.
3. OUTSIDE THE NASDAQ-100 CLEARING PROCESS-CREATION ORDERS. After the Trustee
has received notification of a Submission from the Distributor for a creation
order for Nasdaq-100 Shares outside the Nasdaq-100 Clearing Process which has
been Deemed Received by the Distributor as set forth below in Section IV, the
Trustee shall initiate procedures to transfer the requisite Nasdaq-100 Shares
through DTC and the DTC Participants and the Cash Component, if any, through the
Federal Reserve Bank wire system so as to be received by the creator no later
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than on the third (3rd) Business Day following the Business Day on which the
Submission is Deemed Received by the Distributor.
4. OUTSIDE THE NASDAQ-100 CLEARING PROCESS-REDEMPTION REQUESTS. After the
Trustee has received a Submission for a redemption request for Nasdaq-100 Shares
outside the Nasdaq-100 Clearing Process and Deemed Received such submission as
set forth below in Section IV, the Trustee shall initiate procedures to transfer
the requisite securities (or contracts to purchase such securities expected to
be delivered within three Business Days) through DTC and the DTC Participants
and the Cash Redemption Amount, if any, through the Federal Reserve Bank wire
system so as to be received by the Beneficial Owner no later than on the third
(3rd) Business Day following the Business Day on which the Submission is Deemed
Received by the Trustee.
IV. PROCEDURES BY WHICH AN ORDER TO CREATE OR A REQUEST TO REDEEM SHALL BE
"DEEMED RECEIVED."
1. NASDAQ-100 CLEARING PROCESS-CREATION ORDERS. An order to create Nasdaq-100
Shares through the Nasdaq-100 Clearing Process shall be "Deemed Received" by the
Distributor on the Transmittal Date only if (a) the Submission containing such
order is in proper form and (b) such Submission is received by the Distributor
no later than the time on such Transmittal Date as set forth in Section I(3)(a)
hereof. Orders to create Nasdaq-100 Shares contained in Submissions transmitted
after such time on a Transmittal Date shall be deemed invalid.
2. NASDAQ-100 CLEARING PROCESS-REDEMPTION REQUESTS. A request to redeem
Nasdaq-100 Shares through the Nasdaq-100 Clearing Process shall be Deemed
Received by the Trustee on the Transmittal Date only if (a) the Submission
containing such request is in proper order and (b) such Submission is received
by the Trustee no later than the time on such Transmittal Date as set forth in
Section I(3)(b) hereof. Requests to redeem Nasdaq-100 Shares contained in
Submissions
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transmitted after such time on a Transmittal Date shall be "Deemed Received" by
the Trustee on the next Business Day immediately following such Transmittal
Date.
3. OUTSIDE THE NASDAQ-100 CLEARING PROCESS-CREATION ORDERS. An order to create
Nasdaq- 100 Shares outside the Nasdaq-100 Clearing Process shall be Deemed
Received by the Distributor on the Transmittal Date only if: (a) the Submission
containing such order is in proper form, (b) such Submission is received by the
Distributor no later than the time on such Transmittal Date as set forth in
Section I(3)(a) hereof, (c) the requisite number of Index Securities is
transferred through DTC to the account of the Trustee by no later than 11:00
a.m. on the Business Day next following the Transmittal Date and (d) the cash
equal to the Cash Component, if any, is transferred via the Federal Reserve Bank
wire system to the account of the Trustee by no later than 1:00 p.m. on the
Business Day next following the Transmittal Date. If either the Submission, the
requisite Index Securities or the cash equal to the Cash Component is not
received by the Trustee within the time periods set forth above, such order
shall be deemed invalid.
4. OUTSIDE THE NASDAQ-100 CLEARING PROCESS - REDEMPTION REQUESTS. A request to
redeem Nasdaq-100 Shares outside the Nasdaq-100 Clearing Process shall be Deemed
Received by the Trustee on the Transmittal Date only if (a) the Submission
containing such request is in proper form, (b) such Submission is received by
the Trustee no later than the time as set forth in Section I(3)(b) hereof, (c)
the requisite number of Nasdaq-100 Shares is transferred via DTC to the account
of the Trustee by the Nasdaq Closing Time on such Transmittal Date and (d) the
Cash Redemption Amount owed to the Trustee, if any, is received by the Trustee
no later than 1:00 p.m. of the Business Day next following such Transmittal
Date. If either the Submission, the Nasdaq-100 Shares or cash equal to the Cash
Redemption Amount, if any, is not received by the Trustee within the time
periods set forth above, such redemption request shall be Deemed
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Received by the Trustee on the Business Day on which both the Submission and the
requisite number of Nasdaq-100 Shares are delivered to the Trustee within the
proper time periods as set forth above; provided that the Cash Redemption
Amount, if any, is then paid on the next Business Day within the time period set
forth above.
5. AMBIGUOUS INSTRUCTIONS. In the event that a Submission contains terms that
differ from the information provided in the telephone call at the time of
issuance of the Submission Number, the Nasdaq-100 Telephone Representative will
attempt to contact the Participant to request confirmation of the terms of the
order. If an Authorized Person confirms the terms as they appear in the
Submission then the Submission will be accepted and processed. If an Authorized
Person contradicts its terms, the Submission will be deemed invalid, and a
corrected Submission must be received by the Nasdaq-100 Telephone Representative
and the Distributor, as applicable, not later than the earlier of (i) within 15
minutes of such contact with the Participant or (ii) 45 minutes after the Nasdaq
Closing Time. If the Nasdaq-100 Telephone Representative is not able to contact
an Authorized Person, then the Submission shall be accepted and processed in
accordance with its terms notwithstanding any inconsistency from the terms of
the telephone information. In the event that a Submission contains terms that
are illegible, the Submission will be deemed invalid and the Nasdaq-100
Telephone Representative will attempt to contact the Participant to request
retransmission of the Submission. A corrected Submission must be received by the
Nasdaq-100 Telephone Representative, and the Distributor, as applicable, not
later than the earlier of (i) within 15 minutes of such contact with the
Participant or (ii) 45 minutes after the Nasdaq Closing Time.
6. SUSPENSION OR REJECTION OF AN ORDER. The Distributor or Trustee reserves the
right to suspend a Submission in the event that its acceptance would appear to
result in the Participant or
A-10
a Beneficial Owner owning 80 percent (80%) or more of all outstanding Nasdaq-100
Shares and if pursuant to Section 351 of the Internal Revenue Code of 1986, as
amended, such a circumstance would result in the Trust having a basis in the
securities deposited different from the market value of such securities on the
date of deposit. In such event, the Distributor or the Nasdaq-100 Telephone
Representative will attempt to contact an Authorized Person for purposes of
confirmation of the fact that with respect to such Participant no Beneficial
Owner would own 80 percent (80%) or more of all outstanding Nasdaq-100 Shares
upon execution of the Submission or that such a circumstance would not result in
the Trust having a basis in the securities deposited different from the market
value of such securities on the date of deposit. In the event that (i) the
Distributor or the Nasdaq-100 Telephone Representative is unable to contact an
Authorized Person or (ii) the Participant fails to transmit an identical
Submission containing a representation and warranty as to such fact, then the
Submission shall be deemed invalid.
The Trustee further reserves the absolute right to reject a creation
order transmitted to it by the Distributor in respect of any Portfolio Deposit
or any component thereof if (a) the Portfolio Deposit is not in proper form; (b)
acceptance of the Portfolio Deposit would have certain adverse tax consequences;
(c) the acceptance of the Portfolio Deposit would, in the opinion of counsel, be
unlawful; (d) the acceptance of the Portfolio Deposit would otherwise, in the
discretion of the Trustee, have an adverse affect on the Trust or the rights of
Beneficial Owners; or (e) in the event that circumstances outside the control of
the Trustee make it for all practical purposes impossible to process creations
of Nasdaq-100 Shares. The Trustee will provide notice of its reasons for
rejection of a creation order in respect of a Portfolio Deposit or any component
thereof. The Trustee, the Distributor and the Sponsor shall not incur any
liability in connection with any
A-11
notification of defects or irregularities in the delivery of Portfolio Deposits
or any component thereof or in connection with the rejection of a creation
order.
V. TELEPHONE, FACSIMILE, AND TELEX NUMBERS
ALPS MUTUAL FUNDS SERVICES, INC.: TELEPHONE: (000) 000-0000
FACSIMILE: (000) 000-0000
NASDAQ-100 TELEPHONE REPRESENTATIVE: TELEPHONE: (000) 000-0000
FACSIMILE: (000) 000-0000
TRUSTEE: TELEPHONE: (000) 000-0000
FACSIMILE: (000) 000-0000
PARTICIPANT: TELEPHONE:
----------------
FACSIMILE:
----------------
A-12
ATTACHMENT B
(OPTIONAL)
This document supplements the Nasdaq-100 Shares prospectus and
the Trust Agreement, and is an attachment to the Nasdaq-100 Participant
Agreement concerning procedures by which Creation Units may be created in
advance of the receipt by the Trustee of all or a portion of the Portfolio
Deposit relating to such Creation Units through the use of a cash deposit (the
"Cash Collateralization Procedures"). A Participant is first required to have
signed the Nasdaq-100 Participant Agreement, and the provisions and procedures
of the Participant Agreement (including Attachment A thereto) shall apply
equally to creations making use of these Cash Collateralization Procedures,
except to the extent modified or supplemented by the procedures set forth below.
I. PLACING AN ORDER AND THE POSTING OF CASH COLLATERAL
1. PLACING THE ORDER. A Participating Party intending to utilize these
procedures is required to place an order to create Nasdaq 100 Shares in
accordance with Section 1 of Attachment A to the Participant Agreement. Such
orders may be placed only through NSCC using the Nasdaq-100 Clearing Process.
The following additional procedures shall also apply: at the time an Authorized
Person for the Participant calls the Nasdaq-100 Telephone Representative to
place the order, the caller is required to state that the Participant intends to
utilize these Cash Collateralization Procedures. The Submission submitted in
writing by the Participant thereafter shall further state that the Participant
intends to utilize these Cash Collateralization Procedures.
2. CASH COLLATERAL.
(a) POSTING OF CASH COLLATERAL. The Participant shall be required to
post collateral with the Trustee outside of NSCC consisting of cash at least
equal to 115% of the closing value
B-1
(determined by the Trustee in accordance with section I(2)(c) below), on the day
the order to purchase Creation Units is Deemed Received, of the portion of the
Portfolio Deposit not expected to be available in the account of the
Participating Party for delivery to the Trust on the third NSCC Business Day
following placement of such order. For the purposes of determining the
securities for which a cash collateral deposit will be required, the Participant
must submit documentation by no later than 4:30 p.m. on the day the order to
purchase Creation Units is Deemed Received, in a form satisfactory to the
Trustee in its sole discretion, as to securities comprising the Portfolio
Deposit which are currently owned by the Participant and reserved for delivery
to the Trust and/or orders in good form for the purchase of securities
comprising the Portfolio Deposit which are expected to be available for delivery
to the Trust through the Nasdaq- 100 Clearing Process on the third NSCC Business
Day following placement of such order. All securities comprising the Portfolio
Deposit for which such documentation has not been provided in a timely manner
and in a form satisfactory to the Trustee will be presumed not to be available
in the account of the Participating Party for delivery to the Trust on the third
NSCC Business Day and will require a cash collateral deposit. The Participant
must arrange for the transfer of the cash collateral amount so determined
through the Federal Reserve Bank wire system so as to be received by the Trustee
by 11:00 a.m. on the morning of the NSCC Business Day following the day such
order is Deemed Received by the Distributor. If the Trustee does not receive the
required cash amount by the time indicated above, the Trustee shall cancel the
creation order. All moneys received from the Participant shall be held by the
Trustee without interest and without benefit to the Participant in a custodial
account separate and apart from the assets of the Trust until required to be
disbursed in accordance with Section II.(3) and (4) below, and such moneys shall
be segregated by separate recordation on the books and records of the Trustee.
B-2
(b) MARKING-TO-MARKET OF THE CASH COLLATERAL. The cash collateral
amount shall be marked-to-the-market daily by the Trustee only for increases in
value in accordance with the following procedures. On each NSCC Business Day
beginning on the second NSCC Business Day following the day such order is Deemed
Received by the Distributor, the Trustee shall determine the closing value of
each security which is not expected to be delivered by the regular way
settlement date, or has not already been delivered to the Trust on such date, as
the case may be. The Trustee shall aggregate upward movements in the value for
all such securities and notify the Participant by 6:00 p.m. that day of the
aggregate increase in value. The Participant must arrange for the transfer of
such amount through the Federal Reserve Bank wire system so as to be received by
the Trustee by 1:00 p.m. on the following NSCC Business Day. Upward movements in
value for purposes hereof shall be measured solely against the value of each
security established on the day the order to purchase Creation Units is Deemed
Received. In other words, a decrease in the value of a security followed by an
increase in value will not necessarily trigger a xxxx-to-market obligation
unless the value increases above the value of the security established on the
day the order to purchase Creation Units is Deemed Received. The obligation to
xxxx-to market described in this Section shall cease upon the delivery or buy-in
of the last of the securities comprising the Portfolio Deposit.
(c) DETERMINATION OF VALUE. For the purposes of this section, the
closing value of a given security shall be determined by the Trustee in
accordance with the Trust Agreement valuation procedures.
B-3
II. TRUSTEE'S RESPONSIBILITIES FOR EFFECTING DELIVERY OF THE
REQUISITE NASDAQ-100 SHARES, BUYING IN THE MISSING SECURITIES,
AND RETURNING THE CASH COLLATERAL
Under customary NSCC practices, by midnight of the day following the
receipt by NSCC of such order to create Creation Units, NSCC is required to
determine either (1) to guarantee the Participating Party's obligations for
delivery and receipt of securities and cash in connection with the order to
create Creation Units, or (2) in certain circumstances to cease to act on behalf
of the Participating Party with respect to such obligations.
1. NSCC GUARANTEE ESTABLISHED. Provided that the NSCC guarantee is established
in accordance with (1) above, the Trustee will issue the Creation Units ordered
no later than the time required in accordance with the procedures set forth in
Attachment A to the Participant Agreement. If the Trustee does not receive the
requisite securities in the Portfolio Deposit by the end of business on the
third NSCC Business Day following receipt of such order (or such other date as
determined under Rule 15c6-1 of the Securities Exchange Act of 1934, or a
successor provision thereto), the Trustee is required to submit promptly (i.e.,
on the same day if practicable) a notice of intention to buy-in to NSCC with
respect to the missing portion of Portfolio Deposit in conformance with NSCC's
buy-in rules. Two NSCC Business Days following the day on which such notice of
buy-in has been submitted, if all requisite securities in the Portfolio Deposit
have still not been received by the Trustee, the Trustee shall effect a buy-in
of the undelivered Portfolio Deposit in accordance with NSCC's buy-in
procedures.
2. NSCC GUARANTEE NOT ESTABLISHED OR ESTABLISHED IN PART. Alternatively, in
accordance with (2) above, if NSCC, by midnight on the day following receipt by
NSCC of an order by a Participating Party for the purchase of Creation Units,
determines to cease to act on behalf of the
B-4
Participating Party with respect to its delivery and/or receipt obligations of
securities and cash in connection with such order, the Trustee shall act in one
of three ways as described below:
(i) in the case in which NSCC elects not to guarantee the delivery
of the Portfolio Deposit by the Participating Party to the
Trustee and the receipt of Creation Units by the Participating
Party from the Trustee, the Trustee shall deem the order to
purchase Creation Units canceled altogether outside the NSCC
system;
(ii) in the case in which NSCC elects only to guarantee the
delivery of the Portfolio Deposit by the Participating Party
to the Trustee, the Trustee shall deem the order to purchase
Creation Units canceled and return as promptly as practicable
through DTC, against payment through the Federal Reserve Bank
wire system, any securities delivered to the Trustee; or
(iii) in the case where NSCC elects only to guarantee the receipt of
Creation Units by the Participating Party from the Trustee,
the Trustee shall issue the Creation Units ordered no later
than the time required in accordance with the procedures set
forth in Attachment A to the Participant Agreement. The
Trustee shall further be required to buy promptly (i.e., on
the same day, if practicable) the requisite securities in the
Portfolio Deposit utilizing cash received by the Trustee
pursuant to NSCC's rules in connection with its delivery of
Creation Units, together with the 115% cash collateral held
separately by the Trustee, to cover all buy-in costs and
expenses.
3. USE OF CASH COLLATERAL. The Trustee shall utilize the cash collateral
deposited with the Trustee and the cash received by the Trustee pursuant to
NSCC's rules, to cover the costs and expenses (including brokerage commissions)
for buying-in the securities comprising the Portfolio
B-5
Deposit. The Participant shall remain liable for any shortfall between the cost
(including commissions and any other buy-in expenses) of purchasing the
securities comprising the Portfolio Deposit and the collective amounts of cash
collateral deposited with the Trustee and amounts received by the Trustee from
NSCC, in the event that such cash amounts are insufficient to cover such costs
and expenses for whatever reason.
4. RETURN OF CASH COLLATERAL. The Trustee shall return the cash collateral
deposited with the Trustee to the Participant net of commissions and other
buy-in expenses incurred by the Trustee, if any, promptly upon settlement of
delivery of all of the securities in the Portfolio Deposit, or buy-in of all
missing securities in the Portfolio Deposit, or cancellation of the order to
create Creation Units.
III. MISCELLANEOUS
1. INDEMNIFICATION. The Participant hereby agrees to indemnify and hold harmless
each Indemnified Party (as defined in the Participant Agreement) from and
against any loss, liability, cost, and expense incurred by such Indemnified
Party as a result of any actions of such Indemnified Party in reliance upon any
instructions issued in accordance with this Attachment and believed by the
Distributor and/or the Trustee to be genuine and to have been given by the
Participant. This paragraph shall survive the termination of the Participant
Agreement.
B-6
2. REJECTION OF AN ORDER. The Trustee reserves the absolute right to reject
either a creation order transmitted to it, the use of the Cash Collateralization
Procedures, or both, for the reasons set forth in Attachment A to the
Participant Agreement.
ALPS MUTUAL FUNDS SERVICES, INC.
BY:
-----------------------------
TITLE:
-----------------------------
{NAME OF PARTICIPANT}
BY:
-----------------------------
TITLE:
-----------------------------
ACCEPTED BY:
THE BANK OF NEW YORK,
AS TRUSTEE
BY:
------------------------------
TITLE:
------------------------------
DATED:
--------------
B-7
