PARTICIPANT AGREEMENT
MARKET VECTORS ETF TRUST
This Participant Agreement (this "Agreement") is entered into between
Xxx Xxx Securities Corporation (the "Distributor"), ____________________________
(the "Participant") and The Bank of New York (the 'Transfer Agent"), and is
subject to acceptance by Market Vectors ETF Trust (the "Trust"). The Transfer
Agent serves as the Transfer Agent of the Trust and is an Index Receipt Agent as
that term is defined in the rules of the National Securities Clearing
Corporation ("NSCC"). The Distributor, the Transfer Agent and the Participant
acknowledge and agree that the Trust shall be a third-party beneficiary of the
Agreement and shall receive the benefits contemplated by the Agreement to the
extent specified herein. 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 shares of beneficial interest
par value 0.001 per share ("Shares" or "Trust Shares") of the Series of the
Trust (each a "Fund") set forth on Schedule I attached hereto. As specified in
the Trust's Prospectus and Statement of Additional Information incorporated
therein (together, the "Prospectus") included as part of its Registration
Statement as amended on Form N-1A. Trust Shares may be created or redeemed only
in aggregations of 50,000 shares, referred to therein and herein as a "Creation
Unit". Capitalized terms not otherwise defined herein are used herein as defined
in the Trust's Prospectus.
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 "Trust's Clearing
Process", or (ii) outside the Trust's 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 Trust's Clearing Process, it is a
member of NSCC and a participant in the CNS System of NSCC (as defined in the
Trust's prospectus, a "Participating Party"); and (ii) with respect to orders
for the creation or redemption of Creation Units outside the Trust's Clearing
Process, it is a DTC Participant (as defined in the Trust's prospectus, a "DTC
Participant"). The Participant may place orders for the creation or redemption
of Creation Units either through the Trust's Clearing Process or outside the
Trust's Clearing Process, subject to the procedures for creation and redemption
referred to in paragraphs 2 and 3 of this Agreement 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 prompt notice to
the Distributor and the Transfer Agent 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 registered and/or licensed to act as a broker or
dealer, or is otherwise exempt, as required according to all applicable laws of
the state(s) in which the Participant conducts its activities as defined
hereunder. 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 to the extent such
laws, rules and regulations relate to the Participant's transactions in, and
activities with respect to the Trust Shares.
2. EXECUTION OF ORDERS. All orders for the creation or redemption
of Creation Units shall be handled in accordance with the terms of the Trust's
prospectus, and the procedures described in Attachment A to this Agreement. In
the event the procedures include the use of recorded telephone lines,
the Participant hereby consents to such use. (In the event that the Distributor
voluntarily discloses or becomes legally compelled to disclose to any third
party any recording involving communications between the Distributor and the
Participant, the Distributor agrees to provide the Participant with reasonable
notice so that the Participant may seek a protective order or other appropriate
remedy or waive its right to do so. In the event that such protective order or
other remedy is not obtained, or the Participant waives its right to seek such
protective order or remedy, the Distributor agrees to furnish only that portion
of the recorded conversation that according to legal counsel is legally required
and will exercise its best efforts to obtain a protective order or other
reliable assurance that confidential treatment will be accorded the recorded
conversation, provided that the Distributor shall not be required to incur any
expenses in obtaining such treatment without reimbursement by the Participant).
The Trust reserves the right to issue additional or other procedures relating to
the manner of creating or redeeming Creation Units, and the Participant, the
Distributor and the Transfer Agent agree to comply with such procedures as may
be issued from time to time, upon reasonable notice thereof.
3. NSCC. Solely with respect to orders for the creation or
redemption of Creation Units through the Trust's Clearing Process, the
Participant as a Participating Party hereby authorizes the Transfer Agent 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
Trust telephone representative identified in Attachment A hereto (the "Trust
Representative"). The Participant agrees to be bound by the terms of such
instructions issued by the Transfer Agent and reported to NSCC as though such
instructions were issued by the Participant directly to NSCC; provided, however,
that Participant shall not be bound or held liable for, and shall be indemnified
and held harmless by the Transfer Agent from and against any loss, liability,
cost and expense (including reasonable attorneys' fees) incurred by Participant
as a result of, communication errors occurring between the Transfer Agent and
NSCC to the extent that such instructions between the Transfer Agent and NSCC do
not accurately reflect the instructions communicated by the Participant to the
Transfer Agent.
With respect to any order for the creation or redemption of Creation
Units, the Participant acknowledges and agrees on behalf of itself and any party
for which it is acting (regardless of its capacity) to use its best efforts to
return to the Trust any dividend, distribution or other corporate action that is
erroneously paid or credited to the Participant or to the party for which it is
acting in respect of any Deposit Security that is transferred between the
parties that, based on the valuation of such Deposit Security at the time of
transfer, according to industry custom, should have been paid to the Fund. With
respect to any orders for the creation or redemption of Creation Units, the
Participant also acknowledges and agrees on behalf of itself and any party for
which it is acting (regardless of its capacity) that the Transfer Agent is
entitled to reduce the amount of money or other proceeds due to the Participant
or any party for which it is acting by an amount equal to any dividend,
distribution or other corporate action that erroneously is scheduled to be paid
or credited or has been paid or credited to the Participant or to the party for
which it is acting that, based on the valuation of such Deposit Security at the
time of transfer, according to industry custom, should be paid to the Fund. With
respect to any order for the creation or redemption of Creation Units, the Trust
acknowledges and agrees to return to the Participant or any party for which it
is acting any dividend, distribution or other corporate action that is
erroneously paid or credited to the Fund in respect of any Deposit Security that
is transferred between the parties that, based on the valuation of such Deposit
Security at the time of transfer, according to industry custom, should have been
paid to the Participant or any party for which it is acting.
4. DEPOSIT SECURITIES. The Participant understands that the number
and names of the designated portfolio of Deposit Securities and relevant cash
amounts to be included in the current Portfolio Deposit for each Fund will be
made available each day that the New York Stock Exchange (the "NYSE") is open
for trading through the facilities of the National Securities Clearing
Corporation
-2-
("NSCC"). The Participant will not be responsible for errors in the information
relating to the Deposit Securities to be included in the current Portfolio
Deposit to be transmitted through the facilities of the NSCC in connection with
purchase or redemption transactions that are caused by the Trust or the Transfer
Agent.
5. ROLE OF PARTICIPANT. The Participant acknowledges and agrees
that for all purposes of this Agreement, the Participant will be deemed to be an
independent contractor and shall have no authority in any matter or in any
respect to act as agent of the Distributor, the Transfer Agent or the Trust.
(a) In executing this Agreement, the Participant agrees in
connection with any purchase or redemption transactions in which it acts
for a customer or for any other DTC Participant or indirect participant,
or any other beneficial owner of Trust Shares (each a "Beneficial
Owner"), that it shall extend to any such party all of the rights, and
shall be bound by all of the obligations, of a DTC Participant in
addition to any obligations that it undertakes hereunder or in
accordance with the Prospectus.
(b) The Participant agrees (i) subject to any privacy
obligations or other obligations arising under the federal or state
securities laws it may have to its customers, to assist the Distributor
in ascertaining certain information regarding sales of Trust Shares made
by or through Participant upon the request of the Trust or the
Distributor necessary for the Funds to comply with their obligations to
distribute information to its shareholders as may be required from time
to time under applicable state or federal securities laws, or (ii) in
lieu thereof, and at the option of the Participant, the Participant may
undertake to deliver prospectuses, as may be amended or supplemented
from time to time, proxy material, annual and other reports of the Funds
or other similar information that the Funds are obligated to deliver to
their shareholders to the Participant's customers that custody Shares
with the Participant, after receipt from the Funds or the Distributor of
sufficient quantities to allow mailing thereof to such customers. None
of the Distributor, the Trust or any of their respective affiliates
shall use the names and addresses and other information concerning
Participant's customers for any purpose except in connection with the
performance of their duties and responsibilities hereunder and except
for servicing and informational mailings described in this clause (b) of
Section 5, or as may otherwise be required by applicable law.
(c) The Participant affirms that it has procedures in place
reasonably designed to protect the privacy of non-public personal
consumer/customer financial information to the extent required by
applicable law, rule and regulation.
(d) The Participant further represent that its AML Program,
at a minimum, (i) designates a compliance officer to administer and
oversee the AML Program, (ii) provides ongoing employee training, (iii)
includes an independent audit function to test the effectiveness of the
AML Program, (iv) establishes internal policies, procedures, and
controls that are tailored to its particular business, (v) includes a
customer identification program consistent with the rules under sec. 326
of the Act, (vi) provides for the filing of all necessary anti-money
laundering reports including, but not limited to, currency transaction
reports and suspicious activity reports, (vii) provides for screening
all new and existing customers against the Office of Foreign Asset
Control ("OFAC") list and any other government list that is or becomes
required under the Act, and (viii) allows for appropriate regulators to
examine its AML books and records.
-3-
6. PARTICIPANT REPRESENTATIONS.
(a) The Participant represents, warrants and agrees that it
will not make any representations concerning the Funds, the Creation
Units or the Shares other than those consistent with the Trust's then
current Prospectus or any promotional or sales literature furnished to
the Participant by the Distributor or the Trust, or any such materials
permitted by clause (b) of this Section 6.
(b) The Participant agrees not to furnish or cause to be
furnished by Participant or its employees to any person or display or
publish any information or materials relating to the Funds (including,
without limitation, promotional materials and sales literature,
advertisements, press releases, announcements, statements, posters,
signs or other similar materials, but not including any materials
prepared and used for Participant's internal use only or brokerage
communications prepared by Participant in the normal course of its
business and consistent with the Trust's then current prospectus and in
accordance with applicable laws and regulations) ("Marketing
Materials"), except such Marketing Materials as may be furnished to the
Participant by the Distributor or the Trust and such other Marketing
Materials as are consistent with the Trust's then current Prospectus and
have been approved by the Distributor in writing prior to use; provided
that such Marketing Materials clearly indicate that such Marketing
Materials are prepared and distributed by Participant. All Marketing
Materials prepared by the Participant shall be filed with the NASD or
SEC, as applicable, by the Participant, and shall comply with all
applicable rules and regulations of the NASD and SEC.
(c) The Participant understands that the Trust will not be
advertised or marketed as an open-end investment company, i.e., as a
mutual fund, which offers redeemable securities, and that any
advertising materials will prominently disclose that Shares are
redeemable only in Creation Unit size by or through a Participant and on
an in-kind basis as described in the Funds' prospectus. In addition, the
Participant understands that any advertising material that addresses
redemptions of Shares, including the Prospectus, will disclose that the
owners of Shares may acquire Shares and tender Shares for redemption to
the Fund in Creation Unit aggregations only.
(d) Notwithstanding anything to the contrary in this
Agreement, Participant and its affiliates may prepare and circulate in
the regular course of their businesses research reports that include
information, opinions or recommendations relating to Trust Shares (i)
for public dissemination; provided that such research reports compare
the relative merits and benefits of Shares with other products and are
not used for purposes of marketing Shares, and (ii) (ii) for internal
use by the Participant.
7. TITLE TO SECURITIES: RESTRICTED SHARES. The Participant
represents on behalf of itself and any party for which it acts that upon
delivery of a portfolio of Deposit Securities to the Trust's custodian, the
Trust will acquire good and unencumbered title to such securities, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claims, including, without limitation, any restriction upon the sale
or transfer of such securities imposed by (i) any agreement or arrangement
entered into by the Participant or any party for which it is acting in
connection with a transaction to purchase Shares or (ii) any provision of the
1933 Act, and any regulations thereunder (except that portfolio securities of
issuers other than U.S. issuers shall not be required to have been registered
under the 1933 Act if exempt from such registration), or of the applicable laws
or regulations of any other applicable jurisdiction and (iii) no such securities
are "restricted securities" as such term is used in Rule 144(a)(3)(i)
promulgated under the 1933 Act.
-4-
8. FEES. In connection with the creation or redemption of Creation
Units, the Transfer Agent shall charge, and the Participant agrees to pay to the
Transfer Agent, the Transaction Fee prescribed in the Trust's prospectus
applicable to creations or redemptions through the Trust's Clearing Process, or
the Transaction Fee and such additional amounts as may be prescribed pursuant to
the Trust's prospectus applicable to (i) creations or redemptions outside the
Trust's Clearing Process and (ii) creations within the Trust's Clearing Process
where the cash equivalent value of one or more Deposit Securities is being
deposited in lieu of the inclusion of such Deposit Security in the securities
portion of the Portfolio Deposit because the Participant is restricted by
regulation or otherwise from investing or engaging in a transaction in such
security. 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 Prospectus. The Transfer Agent acknowledges and agrees to
provide Participant with adequate notice of any such adjustment in the
Transaction Fee.
9. AUTHORIZED PERSONS. Concurrently with the execution of this
Agreement and as requested in writing from time to time thereafter, the
Participant shall deliver to the Distributor and the Transfer Agent, 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 Transfer Agent as conclusive evidence of the facts set forth therein and
shall be considered to be in full force and effect until receipt by the
Distributor and the Transfer Agent of a superseding certificate bearing a
subsequent date. The Transfer Agent 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 Participant shall
give prompt written notice of such fact to the Distributor and the Transfer
Agent and such notice shall be effective upon receipt by both the Distributor
and the Transfer Agent.
10. REDEMPTION. The Participant represents and warrants that it will
not obtain a Submission Number (as defined in Attachment A) from the Transfer
Agent for the purpose of redeeming a Creation Unit unless it first (a) obtains
an Affirmative Determination (as that term is defined in NASD Rule 3370) prior
to submitting such order that it or its customer, as the case may be, owns
outright or has full legal authority and legal beneficial right to tender for
redemption the requisite number of Trust Shares of any Fund to be redeemed, and
the entire proceeds of the Redemption and (b) such Trust 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 Trust Shares to the Transfer Agent in accordance
with the Prospectus or as otherwise required by the Trust. The Participant will
not be responsible for costs incurred by the Transfer Agent or the Distributor
related to trade breaks where the failure to transfer Shares or collateral is
due to negligence or bad faith of the Transfer Agent or the Distributor, an act
of God or unrelated to any act or omission of the Participant.
11. BENEFICIAL OWNERSHIP. The Participant represents and warrants to
the Distributor, the Transfer Agent and the Trust that it does not hold for the
account of any single Beneficial Owner of Trust Shares, 80 percent (80%) or more
of outstanding Trust Shares so as to cause the Trust to have a basis in the
Deposit Securities deposited with the Trust different from the market value of
such Deposit Securities on the date of such deposit, pursuant to Section 351 of
the Internal Revenue Code of 1986, as amended. The Transfer Agent may request
information from the Participant regarding Trust Share ownership to the extent
necessary to make a determination regarding ownership of 80 percent (80%) or
more of outstanding Trust Shares by a Beneficial Owner as a condition to the
acceptance of a Portfolio Deposit.
-5-
12. INDEMNIFICATION. This Section 12 shall survive the termination
of this Agreement.
(a) The Participant hereby agrees to indemnify and hold
harmless the Distributor in its capacity as principal underwriter, the
Trust, the Transfer Agent, their respective affiliates, directors,
officers, employees and agents, and each person, if any, who controls
such persons within the meaning of Section 15 of the 1933 Act (each an
"Indemnified Party") from and against any loss, liability, cost and
expense (including reasonable attorneys' fees) incurred by such
Indemnified Party as a result of (i) any breach by the Participant of
any provision of this Agreement that directly relates to the
Participant; (ii) any failure on the part of the Participant to perform
any of its obligations set forth in the Agreement; (iii) any failure by
the Participant to comply with applicable laws, including rules and
regulations of self-regulatory organizations in relation to its role as
Participant, except that the Participant shall not be required to
indemnify an Indemnified Party to the extent that such failure was
caused by Participant's adherence to instructions given or
representations made by the Distributor, the Transfer Agent or any
Indemnified Party, as applicable, or; (iv) actions of such Indemnified
Party in reasonable reliance upon any instructions issued by the
Participant or representations made by the Participant in accordance
with Attachment A (as it may be amended from time to time) and
reasonably believed by the Distributor or the Transfer Agent, as
applicable, to be genuine and to have been given by the Participant
except to the extent that the Participant had previously revoked a PIN
Number used in giving such instructions or representations (where
applicable) and such revocation was given by the Participant and
received by the Distributor and the Transfer Agent in accordance with
the terms of Section 9 hereto. The Participant and the Distributor
understand and agree that the Trust is entitled and intends to proceed
directly against the Participant in the event that the Participant fails
to honor any of its obligations pursuant to this Agreement that benefit
the Trust. The foregoing shall not apply to any loss, damage, charge,
liability, cost, expense, cause of action, obligation, judgment or fee
incurred by such Indemnified Party arising out of Indemnified Party's
gross negligence or reckless or willful acts or omissions or the
Indemnified Party's failure to perform any of its obligations or
responsibilities under this Agreement. With respect to (i) through (iii)
above, Indemnified Party's failure to promptly acknowledge Participant's
breach of, failure to perform or failure to comply with, the terms of
this Agreement shall not negate the foregoing indemnification.
(b) The Distributor hereby agrees to indemnify and hold
harmless the Participant, its respective subsidiaries, affiliates,
directors, officers, employees and agents, and each person, if any, who
controls such persons within the meaning of Section 15 of the 1933 Act
(each an "Indemnified Party") from and against any loss, liability, cost
and expense (including reasonable attorneys' fees) incurred by such
Indemnified Party as a result of (i) any breach by the Distributor of
any provision of this Agreement that directly relates to the
Distributor; (ii) any failure on the part of the Distributor to perform
any of its obligations set forth in this Agreement; (iii) any failure by
the Distributor to comply with applicable laws, including rules and
regulations of self-regulatory organizations in relation to its role as
Distributor of the Funds, (iv) any untrue statements or omissions made
in any promotional material or sales literature furnished to the
Participant or otherwise approved in writing by the Trust or the Fund,
(v) actions of such Indemnified Party in reasonable reliance upon any
instructions issued or representations made by the Distributor, the
Trust or the Fund in accordance with Attachment A (as it may be amended
from time to time) reasonably believed by the Participant to be genuine
and to have been given by the Distributor, the Trust or the Fund; or
(vi) any untrue statement or alleged untrue statement of a material fact
contained in the registration statement of the Trust as originally filed
with the Securities and Exchange Commission or in any amendment thereof,
or in any prospectus or any statement of additional information, or any
amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to
-6-
be stated therein or necessary to make the statements therein not
misleading, in connection with the Participant's acting in its capacity
as a Participant. The foregoing shall not apply to any loss, damage,
charge, liability, cost, expense, cause of action, obligation, judgment
or fee incurred by such Indemnified Party arising out of Indemnified
Party's gross negligence or reckless or willful acts or omissions or the
Indemnified Party's failure to perform any of its obligations or
responsibilities under this Agreement. With respect to (i) through (iv)
and (vi) above, Indemnified Party's failure to promptly acknowledge any
omission or untrue statement contained in such promotional material,
sales literature, prospectus or registration statement or Distributor's
breach of, failure to perform or failure to comply with, the terms of
this Agreement shall not negate the foregoing indemnification.
(c) No party to this Agreement shall be liable to the other
party or to any other person for any damages arising out of mistakes or
errors in data provided to such Indemnified Party by a third party, or
out of interruptions or delays of electronic means of communications
with the Indemnified Parties.
13. ACKNOWLEDGMENT. The Participant acknowledges receipt of the
Trust's prospectus and represents it has reviewed such document and understands
the terms thereof.
14. 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 Transfer Agent shall be given
or sent as follows: The Bank of New York, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attn: ETF Services Group. All notices to the Trust shall be given or sent
as follows: Market Vectors ETF Trust, in care of The Bank of New York, 000
Xxxxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000, Attn: ETF Services Group, with a copy
to Xxx Xxx Associates Corporation, 00 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000. All notices to the Participant, the Transfer Agent, and the Distributor
shall be directed to the address or telephone, facsimile or telex numbers
indicated below the signature line of such party, EXCEPT in the case of
communications by the Distributor or Transfer Agent to the Participant during
the order creation or redemption process as detailed in Attachment A to this
Agreement, especially the Distributor's or Transfer Agent's attempt to contact
an Authorized Person of the Participant with respect to, among other things,
ambiguous instructions, the suspension or cancellation of an order as discussed
in Attachment A, Distributor and Transfer Agent agree to contact a
representative of the ETF Trading Desk of the Participant.
15. TERMINATION AND AMENDMENT. This Agreement shall become effective
in this form as of the date accepted by the Transfer Agent and may be terminated
at any time by any party upon thirty (30) days prior notice to the other parties
(i) unless earlier terminated by the Transfer Agent 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 with respect to the
subject matter contained herein. This Agreement may be amended by the Transfer
Agent from time to time by the following procedure. The Transfer Agent 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 upon
the date that appears on a reasonably acceptable proof of receipt. Titles and
section headings are included solely for convenient reference and are not a part
of this Agreement. This Agreement and Attachment A hereto, which is hereby
incorporated herein by reference, constitute the entire agreement between the
parties regarding the matters contained herein and may be amended or modified
only by a written document signed by an authorized representative of each party.
-7-
16. PROSPECTUS. The Distributor will provide to the Participant
copies of the then current prospectus and any printed supplemental information
in reasonable quantities upon request. The Distributor represents, warrants and
agrees that it will notify the Participant when a revised, supplemented or
amended prospectus for any Shares is available and deliver or otherwise make
available to the Participant copies of such revised, supplemented or amended
prospectus at such time and in such numbers as to enable the Participant to
comply with any obligation it may have to deliver such prospectus to customers.
As a general matter, the Distributor will make such revised, supplemented or
amended prospectus available to the Participant no later than its effective
date. The Distributor shall be deemed to have complied with this Section 16 when
the Participant has received such revised, supplemented or amended prospectus by
email at ______________________________, in printable form, with such number of
hard copies as may be agreed from time to time by the parties promptly
thereafter.
17. NO PROMOTION. Each of the Trust, the Distributor and the
Transfer Agent agrees that it will not, without the prior written consent of
Participant in each instance, (i) use in advertising, publicity, or otherwise
the name of Participant or any affiliate of Participant, or any partner or
employee of Participant, nor any trade name, trademark, trade device, service
xxxx, symbol or any abbreviation, contraction or simulation thereof owned by
Participant or its affiliates, or (ii) represent, directly or indirectly, that
any product or any service provided by the Trust, Distributor or Transfer Agent
has been approved or endorsed by Participant. Furthermore, Distributor and
Transfer Agent and Participant agree that they will not, without the prior
written consent of the other two parties in each such instance disclose the
terms of this Agreement, except for use in accordance with this Agreement or to
the parties' respective officers, directors, employees, agents and
representatives for use in accordance with this Agreement or as required by any
applicable law or regulatory body. This provision shall survive termination or
expiration of the Agreement.
18. 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.
19. 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 provisions thereof. The parties irrevocably submit to
the personal jurisdiction and service and venue of any federal or state court
within the State of New York having subject matter jurisdiction, for the purpose
of any action, suit or proceeding arising out of or relating to this Agreement.
20. ASSIGNMENT. Neither party may assign its rights or obligations
under this Agreement (in whole or in part) without the prior written consent of
the other party, which shall not be unreasonably withheld; PROVIDED, that either
party may assign its rights and obligations hereunder (in whole, but not in
part) without such consent to an entity acquiring all, or substantially all of
its assets or business. Notwithstanding the aforementioned termination
provisions, in the event that an entity acquires all or substantially all of
Participant's assets or business, the Distributor or Transfer Agent may elect
within a limited period of time not to exceed thirty (30) days from the date
upon which such acquisition was publicly announced to immediately terminate this
Agreement.
XXX XXX SECURITIES CORPORATION
BY:
--------------------------------
NAME:
--------------------------------
TITLE:
--------------------------------
-8-
ADDRESS:
--------------------------------
TELEPHONE:
--------------------------------
FACSIMILE:
--------------------------------
[----------------------------------------]
BY:
--------------------------------
NAME:
--------------------------------
TITLE:
--------------------------------
ADDRESS:
--------------------------------
--------------------------------
--------------------------------
TELEPHONE:
--------------------------------
FACSIMILE:
--------------------------------
-9-
THE BANK OF NEW YORK,
AS TRANSFER AGENT
BY:
--------------------------------
NAME:
--------------------------------
TITLE:
--------------------------------
ADDRESS: 000 XXXXXXX XXXXXX
--------------------------------
XXX XXXX, XX 00000
--------------------------------
TELEPHONE:
--------------------------------
FACSIMILE:
--------------------------------
DATED:
--------------------------------
MARKET VECTORS ETF TRUST
BY:
--------------------------------
NAME:
--------------------------------
TITLE:
--------------------------------
ADDRESS:
--------------------------------
TELEPHONE:
--------------------------------
FACSIMILE:
--------------------------------
-10-
ATTACHMENT A
------------
This document supplements the Trust's Prospectus, and is an attachment
to the Trust Participant Agreement with respect to the procedures to be used by
(i) the Transfer Agent in processing an order for the creation of Trust Shares
and (ii) the Transfer Agent in processing a request for the redemption of Trust
Shares, and (iii) the Participants and the Transfer Agent in delivering or
arranging for the delivery of requisite cash payments, Portfolio Deposits or
Trust Shares, as the case may be, in connection with the submission of orders
for creation or requests for redemption.
A Participant is first required to have signed the Trust Participant
Agreement. Upon acceptance of the Trust Participant Agreement by the Distributor
and the Transfer Agent will assign a personal identification number to each
Authorized Person authorized to act for the Participant. This will allow a
Participant through its Authorized Person(s) to place an order with respect to
Trust Shares.
I. TO PLACE AN ORDER FOR CREATION OR REDEMPTION OF TRUST SHARES
1. CALL TO RECEIVE A SUBMISSION NUMBER. An Authorized Person for
the Participant will call the Trust Telephone Representative at (212) ________
not later than the closing time of the regular trading session on The New York
Stock Exchange (the "NYSE Closing Time") (ordinarily 4:00 p.m. New York time) to
receive a Submission Number. In the case of custom orders, the order must be
received by the Transfer Agent no later than 3:00 p.m. ET on the trade date.
Upon verifying the authenticity of the caller (as determined by the use of the
appropriate PIN Number) and the terms of the order for creation or request for
redemption, the Trust Telephone Representative will issue a unique Submission
Number. All orders with respect to the creation or redemption of Trust Shares
are required to be in writing and accompanied by the designated Submission
Number. Incoming telephone calls are queued and will be handled in the sequence
received. Calls placed before the NYSE Closing Time will be processed even if
the call is taken after this cut-off time. ACCORDINGLY, DO NOT HANG UP AND
REDIAL. INCOMING CALLS THAT ARE ATTEMPTED LATER THAN THE NYSE CLOSING TIME WILL
NOT BE ACCEPTED.
2. ASSEMBLE THE SUBMISSION. The Authorized Person submitting an
order to create or a request to redeem shall assemble (a) written instructions
regarding such creation order or redemption request, (b) the designated
Submission Number and (c) transmit such document by facsimile or telex to the
Trust Telephone Representative and the Distributor, as applicable, according to
the procedures set forth below in subsection 3. The document so transmitted is
hereinafter referred to as the "Submission", and the Business Day on which a
Submission is made is hereinafter referred to as the "Transmittal Date". NOTE
THAT THE TELEPHONE CALL IN WHICH THE SUBMISSION NUMBER IS ISSUED INITIATES THE
ORDER PROCESS BUT DOES NOT ALONE CONSTITUTE THE ORDER. AN ORDER OR REQUEST IS
ONLY COMPLETED AND PROCESSED UPON RECEIPT OF THE SUBMISSION.
3. TRANSMIT THE SUBMISSION. A Submission Number is only valid for a
limited time. The Submission for either creations or redemptions of Trust Shares
must be sent by facsimile or telex to the Trust Telephone Representative, as
applicable, within 15 minutes of the issuance of the Submission Number. In the
event that the Submission is not received within such time period, the Trust
Telephone Representative will attempt to contact the Participant to request
immediate transmission of the Submission.
-i-
(a) In the case of a Submission for creation, unless the \
Submission is received by the Trust Telephone Representative upon the
earlier of within (i) 15 minutes of contact with the Participant or (ii)
45 minutes after the NYSE Closing Time, the Submission will be deemed
invalid.
(b) In the case of a Submission for redemption, unless such
Submission is received by the Trust Telephone Representative within (i)
15 minutes of contact with the Participant or (ii) 45 minutes after the
NYSE Closing Time, whichever is earlier, such order for redemption
contained therein shall be Deemed Received (as hereinafter defined in
Section IV) by the Transfer Agent on the Business Day following such
Transmittal Date in accordance with the procedures set forth in Section
IV(2) and (4) hereof.
4. AWAIT RECEIPT OF CONFIRMATION.
(a) TRUST'S CLEARING PROCESS-CREATION ORDERS. The Transfer
Agent shall issue to the Participating Party a confirmation of
acceptance of an order to create Trust Shares in Creation Unit size
aggregations through the Trust's Clearing Process within 15 minutes of
its receipt of a Submission received in good form. In the event the
Participating Party does not receive a timely confirmation from the
Transfer Agent, it should contact the Distributor and the Trust
Telephone Representative at the business numbers indicated.
(b) TRUST'S CLEARING PROCESS-REQUESTS FOR REDEMPTIONS. The
Transfer Agent shall issue to the Participating Party a confirmation of
acceptance of a request to redeem Trust Shares in Creation Unit size
aggregations through the Trust's Clearing Process within 15 minutes of
its receipt of a Submission received in good form. In the event the
Participating Party does not receive a timely confirmation from the
Transfer Agent, it should contact the Transfer Agent directly at the
business number indicated.
(c) OUTSIDE THE TRUST'S CLEARING PROCESS-CREATION ORDERS.
The Transfer Agent shall issue to the DTC Participant an acknowledgment
of receipt of an order to create Trust Shares in Creation Unit size
aggregations outside the Trust's Clearing Process within 15 minutes of
its receipt of a Submission received in good form. In the event the DTC
Participant does not receive a timely acknowledgment from the Transfer
Agent, it should contact the Transfer Agent at the business numbers
indicated.
(d) OUTSIDE THE TRUST'S CLEARING PROCESS-REQUESTS FOR
REDEMPTION. The Transfer Agent shall issue to the DTC Participant an
acknowledgment of receipt of an order to redeem Trust Shares in Creation
Unit size aggregations outside the Trust's Clearing Process within 15
minutes of its receipt of a Submission received in good form. In the
event the DTC Participant does not receive a timely acknowledgment from
the Transfer Agent, it should contact the Transfer Agent directly at the
business number indicated.
-ii-
II. PARTICIPANTS' RESPONSIBILITY FOR DELIVERING OR EFFECTING THE DELIVERY OF
REQUISITE PORTFOLIO DEPOSITS OR TRUST SHARES AND CASH PAYMENTS IN
CONNECTION WITH ORDERS FOR CREATION OR REQUESTS FOR REDEMPTION
1. TRUST'S CLEARING PROCESS-CREATION ORDERS. The Participating
Party notified of confirmation of an order to create Trust Shares through the
Trust's Clearing Process shall be required to transfer or arrange for the
transfer of (a) the requisite Deposit Securities (or contracts to purchase such
Deposit Securities expected to be delivered through NSCC by the "regular way"
settlement date) and (b) the Cash Component, if any, to the Transfer Agent by
means of the Trust's Clearing Process so as to be received no later than on the
"regular way" settlement date following the Business Day on which such order is
Deemed Received by the Transfer Agent as set forth below in Section IV.
2. TRUST'S CLEARING PROCESS-REDEMPTION REQUESTS. The Participating
Party notified of confirmation of a request to redeem Trust Shares through the
Trust's Clearing Process shall be required to transfer or arrange for the
transfer of the requisite Trust Shares and the Cash Redemption Amount, if any,
to the Transfer Agent by means of the Trust's Clearing Process so as to be
received no later than on the "regular way" settlement date following the
Business Day on which such order is Deemed Received by the Transfer Agent as set
forth below in Section IV.
3. OUTSIDE THE TRUST'S CLEARING PROCESS-CREATION ORDERS.* The DTC
Participant notified of acknowledgment of an order to create Trust Shares
outside the Trust's Clearing Process shall be required to effect a transfer to
the Transfer Agent of (a) the requisite Deposit Securities through DTC so as to
be received by the Transfer Agent no later than 11:00 a.m. on the next Business
Day immediately following the Business Day on which such order is Deemed
Received by the Distributor as set forth below in Section IV, in such a way as
to replicate the Portfolio Deposit established on the Transmittal Date by the
Transfer Agent and (b) the Cash Component, if any, through the Federal Reserve
Bank wire system so as to be received by the Transfer Agent by 2:00 p.m. on the
next Business Day immediately following the day such order is Deemed Received.
If the Transfer Agent does not receive the Deposit Securities by 11:00 a.m. and
the Cash Component, if any, by 2:00 p.m. on the Business Day immediately
following the day such order is Deemed Received, the creation order contained in
such Submission shall be canceled. Upon written notice to the Transfer Agent,
the DTC Participant may resubmit such canceled order on the following Business
Day using a Portfolio Deposit as newly constituted.
4. PURCHASE OF CREATION UNIT AGGREGATIONS PRIOR TO RECEIPT OF
DEPOSIT SECURITIES. Creation Unit Aggregations may be created in advance of
receipt by the Trust of all or a portion of the applicable Deposit Securities as
described below. In these circumstances, the initial deposit will have a value
greater than the NAV of the Fund Shares on the date the order is placed in
proper form since, in addition to available Deposit Securities, cash must be
deposited in an amount equal to the sum of (i) the Cash Component, plus (ii)
115% [CONFIRM] of the market value of the undelivered Deposit Securities (the
"Additional Cash Deposit"). The order shall be deemed to be received on the
Business Day on which the order is placed provided that the order is placed
proper form prior to 4:00 p.m., Eastern time, on such date and federal
appropriate amount are deposited with the Transfer Agent by 11:00 [CONFIRM]
a.m., Eastern time, the following Business Day. If the order is not placed in
proper form by 4:00 p.m. or federal funds in the appropriate amount are not
received by 11:00 a.m. the next Business Day, then the order may be deemed to be
canceled and the Authorized Participant shall be liable to the Fund for losses,
if any, resulting therefrom. An additional amount of cash shall be required to
be deposited with the Trust, pending delivery of the missing Deposit Securities
to the extent necessary to maintain the Additional Cash Deposit with the Trust
in an amount at least equal to 115% of the daily marked to market value of the
missing Deposit Securities.
----------
* Confirm these deadlines.
-iii-
5. OUTSIDE THE TRUST'S CLEARING PROCESS-REDEMPTION REQUESTS. The
DTC Participant notified of acknowledgment of a request to redeem Trust Shares
outside the Trust's Clearing Process shall be required to effect a transfer to
the Transfer Agent (a) the requisite number of Trust Shares through DTC no later
than the NYSE Closing Time on the Business Day on which such order is Deemed
Received by the Transfer Agent and (b) the Cash Redemption Amount, if any,
through the Federal Reserve Bank wire system by no later than 2:00 p.m. on the
next Business Day immediately following the Business Day on which such order is
Deemed Received by the Transfer Agent.
6. TRANSACTION FEE. In connection with the creation or redemption
of Creation Units, the Transfer Agent shall charge, and the Participant agrees
to pay to the Transfer Agent, the Transaction Fee prescribed in the Trust's
prospectus applicable to (i) creations or redemptions through the Trust's
Clearing Process, or the Transaction Fee and such additional amounts as may be
prescribed pursuant to the Trust's prospectus applicable to creations or
redemptions outside the Trust's Clearing Process and (ii) creations within the
Trust's Clearing Process where the cash equivalent value of one or more Deposit
Securities is being deposited in lieu of the inclusion of such Deposit Security
in the securities portion of the Portfolio Deposit because the Participant is
restricted by regulation or otherwise from investing or engaging in a
transaction in such security. Such Transaction Fee and additional amounts, if
any, shall be included in the calculation of the Cash Component or Cash
Redemption Amount payable or to be received, as the case may be, by the
Participant in connection with the creation or redemption order.
III. CUSTODIAN'S RESPONSIBILITY FOR EFFECTING DELIVERY OF REQUISITE TRUST
SHARES OR SECURITIES AND CASH PAYMENTS IN CONNECTION WITH ORDERS FOR
CREATION OR REQUESTS FOR REDEMPTION
1. TRUST'S CLEARING PROCESS-CREATION ORDER. After the Transfer
Agent has received notification of a Submission from the Participant for a
creation order for Trust Shares through the Trust's Clearing Process which has
been Deemed Received by the Transfer Agent as set forth below in Section IV, the
Transfer Agent shall initiate procedures to transfer the requisite Trust Shares
and the Cash Component, if any, through the Trust's Clearing Process so as to be
received by the creator no later than on the "regular way" settlement date
following the Business Day on which the Submission is Deemed Received by the
Transfer Agent.
2. TRUST'S CLEARING PROCESS-REDEMPTION REQUESTS. After the Transfer
Agent has received a Submission for a redemption request for Trust Shares
through the Trust's Clearing Process and Deemed Received such submission as set
forth below in Section IV, the Transfer Agent shall initiate procedures to
transfer the requisite securities (or contracts to purchase such securities
expected to be delivered through NSCC by the "regular way" settlement date) and
the Cash Redemption Amount, if any, through the Trust's Clearing Process so as
to be received by the Beneficial Owner no later than on the "regular way"
settlement date following the Business Day on which the Submission is Deemed
Received by the Transfer Agent.
3. OUTSIDE THE TRUST'S CLEARING PROCESS-CREATION ORDERS. After the
Transfer Agent has received notification of a Submission from the Participant
for a creation order for Trust Shares outside the Trust's Clearing Process which
has been Deemed Received by the Transfer Agent as set forth below in Section IV,
the Transfer Agent shall initiate procedures to transfer the requisite Trust
Shares through DTC and the DTC Participants and the Cash Component, if any,
through the Federal Reserve Bank wire system so as to be received by the creator
no later than on the third (3rd) Business Day following the Business Day on
which the Submission is Deemed Received by the Transfer Agent.
-iv-
4. OUTSIDE THE TRUST'S CLEARING PROCESS-REDEMPTION REQUESTS. After
the Transfer Agent has received a Submission for a redemption request for Trust
Shares outside the Trust's Clearing Process and Deemed Received such submission
as set forth below in Section IV, the Transfer Agent shall initiate procedures
to transfer the requisite securities (or contracts to purchase such securities
expected to be delivered within three Business Days) through DTC and the DTC
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 Transfer Agent.
IV. PROCEDURES BY WHICH AN ORDER TO CREATE OR A REQUEST TO REDEEM SHALL BE
"DEEMED RECEIVED."
1. TRUST'S CLEARING PROCESS-CREATION ORDERS. An order to create
Trust Shares through the Trust's Clearing Process shall be "Deemed Received" by
the Transfer Agent on the Transmittal Date only if (a) the Submission containing
such order is in proper form and (b) such Submission is received by the Transfer
Agent no later than the time on such Transmittal Date as set forth in Section
I(3)(a) hereof. Orders to create Trust Shares contained in Submissions
transmitted after such time on a Transmittal Date shall be deemed invalid.
2. TRUST'S CLEARING PROCESS-REDEMPTION REQUESTS. A request to
redeem Trust Shares through the Trust's Clearing Process shall be Deemed
Received by the Transfer Agent on the Transmittal Date only if (a) the
Submission containing such request is in proper order and (b) such Submission is
received by the Transfer Agent no later than the time on such Transmittal Date
as set forth in Section I(3)(b) hereof. Requests to redeem Trust Shares
contained in Submissions transmitted after such time on a Transmittal Date shall
be "Deemed Received" by the Trustee on the next Business Day immediately
following such Transmittal Date.
3. OUTSIDE THE TRUST'S CLEARING PROCESS-CREATION ORDERS. An order
to create Trust Shares outside the Trust's Clearing Process shall be Deemed
Received by the Transfer Agent on the Transmittal Date only if: (a) the
Submission containing such order is in proper form, (b) such Submission is
received by the Transfer Agent no later than the time on such Transmittal Date
as set forth in Section I(3)(a) hereof, (c) the requisite number of Deposit
Securities is transferred through DTC to the account of the Trust no later than
11:00 [CONFIRM TIME] a.m. on the Business Day next following the Transmittal
Date and (d) the cash equal to the Cash Component, if any, is transferred via
the Federal Reserve Bank wire system to the account of the Trust by no later
than 2:00 [CONFIRM TIME] p.m. on the Business Day next following the Transmittal
Date. If either the Submission, the site Deposit Securities or the cash equal to
the Cash Component is not received by the Trustee within the time periods set
forth above, such order shall be deemed invalid.
-v-
4. OUTSIDE THE TRUST'S CLEARING PROCESS-REDEMPTION REQUESTS. A
request to redeem Trust Shares outside the Trust's Clearing Process shall be
Deemed Received by the Transfer Agent the Transmittal Date only if (a) the
Submission containing such request is in proper form, (b) such Submission is
received by the Trust no later than the time as set forth in Section I(3)(b)
hereof, (c) the requisite number of Trust Shares is transferred via DTC to the
account of the Transfer Agent by the NYSE Closing Time on such Transmittal Date
and (d) the Cash Redemption Amount owed to the Trust, if any, is received by the
Transfer Agent no later than 2:00 [CONFIRM TIME] p.m. of the Business Day next
following such Transmittal Date. If either the Submission, the Trust Shares or
cash equal to the Cash Redemption Amount, if any, is not received by the Trust
within the time periods set forth above, such redemption request shall be Deemed
Received by the Transfer Agent on the Business Day on which both the Submission
and the requisite number of Trust Shares are delivered to the Transfer Agent
within the proper time periods as set forth above; provided that the Cash
Redemption Amount, if any, is then paid on the next Business Day within the time
period set forth above.
5. AMBIGUOUS INSTRUCTIONS. In the event that a Submission contains
terms that differ from the information provided in the telephone call at the
time of issuance of the Submission Number, the Trust Telephone Representative
will attempt to contact the Participant to request confirmation of the terms of
the order. If an Authorized Person confirms the terms as they appear in the
Submission then the Submission will be accepted and processed. If an Authorized
Person contradicts its terms, the Submission will be deemed invalid, and a
corrected Submission must be received by the Transfer Agent, as applicable, not
later than the earlier of (i) within 15 minutes of such contact with the
Participant or (ii) 45 minutes after the NYSE Closing Time. If the Trust
Telephone Representative is not able to contact an Authorized Person, then the
Submission shall be accepted and processed in accordance with its terms
notwithstanding any inconsistency from the terms of the telephone information.
In the event that a Submission contains terms that are illegible, the Submission
will be deemed invalid and the Trust Telephone Representative will attempt to
contact the Participant to request retransmission of the Submission. A corrected
Submission must be received by the Transfer Agent, as applicable, not later than
the earlier of (i) within 15 minutes of such contact with the Participant or
(ii) 45 minutes after the Nasdaq Closing Time.
6. SUSPENSION OR REJECTION OF AN ORDER. The Distributor or Transfer
Agent reserves the right to suspend a Submission in the event that its
acceptance would appear to result in the Participant or a Beneficial Owner
owning 80 percent (80%) or more of all outstanding Trust Shares and if pursuant
to Section 351 of the Internal Revenue Code of 1986, as amended, such a
circumstance would result in the Trust having a basis in the securities
deposited different from the market value of such securities on the date of
deposit. In such event, the Distributor or the Trust Telephone Representative
will attempt to contact an Authorized Person for purposes of confirmation of the
fact that with respect to such Participant no Beneficial Owner would own 80
percent (80%) or more of all outstanding Trust Shares upon execution of the
Submission or that such a circumstance would not result in the Trust having a
basis in the securities deposited different from the market value of such
securities on the date of deposit. In the event that (i) the Distributor or the
Trust Telephone Representative is unable to contact an Authorized Person or (ii)
the Participant fails to transmit an identical Submission containing a
representation and warranty as to such fact, then the Submission shall be deemed
invalid.
The Trust reserves the absolute right to reject a creation order
transmitted to it by the Distributor in respect of a Fund if: (i) the order is
not in proper form; (ii) the investor(s), upon obtaining the Fund Shares
ordered, would own 80% or more of the currently outstanding shares of any Fund;
(iii) the Deposit Securities delivered are not as disseminated for that date by
the Custodian, as described above; (iv) acceptance of the Deposit Securities
would have certain adverse tax consequences to the Fund; (v) acceptance of the
Fund Deposit would, in the opinion of counsel, be unlawful; (vi) acceptance of
the Fund Deposit would otherwise, in the discretion of the Trust or the Adviser,
have an adverse effect on the Trust
-vi-
or the rights of beneficial owners; or (vii) in the event that circumstances
outside the control of the Trust, the Transfer Agent, the Distributor and the
Adviser make it for all practical purposes impossible to process creation
orders. Examples of such circumstances include acts of God; public service or
utility problems such as fires, floods, extreme weather conditions and power
outages resulting in telephone, telecopy and computer failures; market
conditions or activities causing trading halts; systems failures involving
computer or other information systems affecting the Trust, the Adviser, the
Distributor, DTC, NSCC, the Transfer Agent, the Custodian or sub-custodian or
any other participant in the creation process, and similar extraordinary events.
The Transfer Agent shall notify immediately a prospective creator of a Creation
Unit and/or the Authorized Participant acting on behalf of such prospective
creator of its rejection of the order of such person. The Trust, the Custodian,
any sub-custodian and the Distributor are under no duty, however, to give
notification of any defects or irregularities in the delivery of Fund Deposits
nor shall any of them incur any liability for the failure to give any such
notification.
V. PROCEDURES SPECIFIC TO CUSTOM BASKETS
The Fund has developed custom creation, redemption an on-typical baskets
(the "Custom Baskets"). Custom Baskets are intended to allow Participants is to
transact in that Fund and other non-standard baskets using the Custom Basket
process. The Custom Basket process allows for cash-in-lieu for certain
securities as well as non-typical baskets and continues to settle through the
standard CNS process at NSCC. It is the responsibility of the Participant to
apply to the NSCC by contacting DTCC Participant Services at 212-________ and
the Transfer Agent at 212-________ to allow them to receive Custom Baskets as
well as the regular daily standard baskets (the "Standard Baskets"). To ensure
proper tracking of the Fund to its benchmark index the following guidelines must
be followed when transacting Custom Baskets:
1. On or before T-1, the Participant request a Custom Basket
Application Form from the Transfer Agent by calling 212-________ for creations
and redemptions. The Transfer Agent will fax a standard Application Form (see
attached) on which the Participant must identify the securities to be added to
or omitted from the creation or redemption basket (the "Added Issues" or the
"Omitted Issues"). In the case of an Omitted Issue, cash in lieu is defined as
the Net Asset Value of the Fund times the number of units in one creation block
minus the value of the Omitted Issues. Participants will also be responsible for
any costs associated with the conversion of cash into the Omitted Issues to be
purchased. Participants may request that the Custom Basket be available for
creations and redemptions for a one-time transaction, a specific period or
indefinitely. The Transfer Agent will advise the Fund who will review the Custom
Basket request and, if approved, will deliver a confirmation back to the
Transfer Agent and the Participant. In the event subsequent additions and/or
deletions to Added Issues or Omitted Issues are required to change the custom
basket already approved, the Participant is responsible for completing a new
standard form with the Transfer Agent.
2. On trade date minus 1 day, prior to the opening of the NYSE, the
Fund through Transfer Agent will notify NSCC as to the components of the
approved Custom Baskets available that day along with the components of the
Standard Basket. Each Custom Basket will be identified by a separate NSCC
assigned instruction CUSIP.
3. On trade date, the Participant will follow the directions
regarding placing orders outlined in Attachment A. A Participant wishing to
create or redeem a Custom Basket must identify the custom CUSIP on the order
form in the blank provided. Orders received without a custom CUSIP indicated
will be processed as orders for Standard Baskets. Participants placing orders
for Custom Baskets must note that the cut-off-time to create and redeem a Custom
Basket will be 3:00 p.m. New York time. Orders for Custom Baskets will not be
processed if received by the Transfer Agent after 3:00 p.m. New York time. The
Participant may transact on the Standard Basket at any time during the trade
date.
-17-
IN WITNESS WHEREOF, the Participant acknowledges that he or she has read
the procedures relating to Custom Baskets and agrees to comply with all such
procedures. Failure to comply with the Custom Basket procedures will require the
transaction to be effected in the Standard Basket.
Participant:
------------------------------------
By:
------------------------------------
Title:
------------------------------------
Address:
------------------------------------
Telephone:
------------------------------------
Facsimile:
------------------------------------
Telex:
------------------------------------
Date:
------------------------------------
VI. TELEPHONE, FACSIMILE, AND TELEX NUMBERS
TRUST TELEPHONE REPRESENTATIVE: TELEPHONE:
------------------------------ -----------------------------------
FACSIMILE:
-----------------------------------
TRUSTEE: TELEPHONE:
------- -----------------------------------
FACSIMILE:
-----------------------------------
PARTICIPANT: TELEPHONE:
----------- -----------------------------------
FACSIMILE:
-----------------------------------
-viii-
[-----------------------------------------]
BY:
----------------------------------
NAME:
----------------------------------
TITLE:
----------------------------------
ADDRESS:
----------------------------------
THE BANK OF NEW YORK,
AS TRANSFER AGENT
BY:
----------------------------------
NAME:
----------------------------------
TITLE:
----------------------------------
ADDRESS:
----------------------------------
-ix-
