NETS TRUST FORM OF DISTRIBUTION AGREEMENT
Exhibit (e)(1)
This
Distribution Agreement (the “Agreement”) is made this ___day of _________, 2008, by and
between NETS Trust, a Maryland business trust (the “Trust”) having its principal place of business
at 00 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, XX 00000, and Foreside Fund Services, LLC, a Delaware limited
liability company (the “Distributor”) having its principal place of business at Xxx Xxxxxxxx
Xxxxxx, Xxxxxxxx, XX 00000.
WHEREAS, the Trust is, or will be, a registered open-end management investment company
organized as a series trust offering a number of portfolios of securities (each a “Fund” and
collectively the “Funds”), having filed with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form N-1A under the Securities Act of 1933, as amended
(the “1933 Act”), and the Investment Company Act of 1940, as amended (the “1940 Act”);
WHEREAS, the Trust intends to create and redeem shares of beneficial interest, par value
$.0001 per Share (the “Shares”) of each Fund on a continuous basis at their net asset value only in
aggregations constituting a Creation Unit, as such term is defined in the Registration Statement;
WHEREAS, the Shares of each Fund will be listed on one or more national securities exchanges
(together, the “Listing Exchanges”);
WHEREAS, the Trust desires to retain the Distributor to act as the distributor with respect to
the issuance and distribution of Creation Units of each Fund, hold itself available to receive and
process orders for such Creation Units in the manner set forth in the Trust’s Prospectus, and to
enter into arrangements with broker-dealers who may solicit purchases of Creation Units and with
broker-dealers and others to provide for servicing of shareholder accounts and for distribution
assistance, including broker-dealer and shareholder support;
WHEREAS, the Distributor is a registered broker-dealer under the Securities Exchange Act of
1934, as amended (the “1934 Act”) and a member of the Financial Industry Regulatory Authority
(“FINRA”) (the successor organization to the National Association of Securities Dealers, Inc.); and
WHEREAS, the Distributor desires to provide the services described herein to the Trust.
NOW, THEREFORE, in consideration of the mutual promises and undertakings herein contained, the
parties agree as follows:
| 1. | Appointment. |
The Trust hereby appoints the Distributor as the exclusive distributor for Creation Units of
each Fund listed in Exhibit A hereto, as may be amended by the Trust from time to time on written
notice to the Distributor, on the terms and for the period set forth in this Agreement and subject
to the registration requirements of the federal securities laws and of the laws governing the sale
of securities in the various states, and the Distributor hereby accepts such appointment and agrees
to act in such capacity hereunder.
| 2. | Definitions. |
Wherever they are used herein, the following terms have the following respective meanings:
(a) “Prospectus” means the Prospectus and Statement of Additional Information constituting
parts of the Registration Statement of the Trust under the 1933 Act and the 1940 Act as such
Prospectus and Statement of Additional Information may be amended or supplemented and filed with
the Commission from time to time;
(b) “Registration Statement” means the registration statement most recently filed from time to
time by the Trust with the Commission and effective under the 1933 Act and the 1940 Act, as such
registration statement is amended by any amendments thereto at the time in effect;
(c) All capitalized terms used but not defined in this Agreement shall have the meanings
ascribed to such terms in the Registration Statement and the Prospectus.
| 3. | Duties of the Distributor |
(a) The Distributor agrees to act as agent of the Trust in connection with the receipt and
processing of all orders for purchases and redemptions of Creation Units of each Fund from DTC
Participants or participants in the Continuous Net Settlement System of the National Securities
Clearing Corporation (the “NSCC Participants”) that have executed a Participant Agreement (the
“Authorized Participants”), as defined in paragraph 3(b) hereof, with the Distributor and Transfer
Agent and to transmit such orders to the Custodian and Transfer Agent in accordance with the
Registration Statement and Prospectus; provided, however, that nothing herein shall affect or limit
the right and ability of the Custodian to accept Deposit Securities and related Cash Components
through or outside the Clearing Process, and as provided in and in accordance with the Registration
Statement and Prospectus. The Trust acknowledges that the Distributor shall not be obligated to
accept any certain number of orders for Creation Units; provided, however, that the Distributor
shall accept all orders submitted in proper form unless the Investment Adviser has notified the
Distributor that it is in the best interests of a Fund to suspend sales or redemptions of Creation
Units. Nothing herein contained shall prevent the Distributor from entering into like distribution
arrangements with other investment companies.
2
(b) The Distributor agrees to use commercially reasonable efforts to act as agent of the Trust
with respect to the continuous distribution of Creation Units of each Fund as set forth in the
Registration Statement and in accordance with the provisions thereof. The Distributor further
agrees as follows: (i) at the request of the Trust, the Distributor shall enter into selected or
soliciting dealer participant agreements (“Participant Agreements”) with DTC or NSCC Participants
between and among Authorized Participants, the Distributor and the Transfer Agent, for the purchase
of Creation Units of the Funds, such Participant Agreements to be in the forms as approved by the
Board of Trustees of the Trust, in accordance with the Registration Statement and Prospectus; (ii)
the Distributor shall generate, transmit and maintain copies of confirmations of Creation Unit
purchase and redemption order acceptances to the purchaser or redeemer (such confirmations will
indicate the time such orders were accepted and will be made available to the Trust promptly upon
request); (iii) the Distributor shall deliver copies of the Prospectus, included in the
Registration Statement, to purchasers of such Creation Units and upon request the Statement of
Additional Information; (iv) the Distributor shall maintain telephonic, facsimile and/or access to
direct computer communications links with the Transfer Agent; and (v) the Distributor shall
maintain telephonic, facsimile and/or access to direct computer communication links with the
Custodian. The Distributor shall make available for inspection during normal business hours at its
offices at Two Portland Square, First Floor, Portland, Maine, a list of Authorized Participants.
(c) All activities by the Distributor and its agents and employees that are primarily intended
to result in the sale of Creation Units shall comply with the Registration Statement and
Prospectus, any and all exemptive orders issued to the Trust in connection with the offering of
Fund Shares and Creation Units under this Agreement of which the Distributor has received advanced
notice, the instructions of the Investment Adviser and the Board of Trustees of the Trust, the
Agreement and Declaration of Trust, and all applicable laws, rules and regulations including,
without limitation, all rules and regulations made or adopted pursuant to the 1940 Act by the
Commission or any securities association registered under the 1934 Act, including the FINRA and the
Listing Exchanges.
(d) Except as otherwise noted in the Registration Statement and Prospectus, the offering price
for all Creation Units will be the aggregate net asset value of the Shares per Creation Unit of the
relevant Fund, as determined in the manner described in the Registration Statement and Prospectus.
(e) If and whenever the determination of net asset value is suspended and until such
suspension is terminated, no further orders for Creation Units will be processed by the Distributor
except such unconditional orders as may have been placed with the Distributor before it had
knowledge of the suspension. In addition, the Trust reserves the right to suspend sales and
Distributor’s authority to process orders for Creation Units on behalf of the Trust, upon due
notice to the Distributor, if, in the judgment of the Trust, it
3
is in the best interests of the Trust to do so. Suspension will continue for such period as may be
determined by the Trust.
(f) The Distributor is not authorized by the Trust to give any information or to make any
representations other than those contained in the Registration Statement or Prospectus or contained
in shareholder reports or other material that may be prepared by or on behalf of the Trust for the
Distributor’s use. The Distributor shall be entitled to rely on and shall not be responsible in
any way for information provided to it by the Trust and its respective service providers and shall
not be liable or responsible for the errors and omissions of such service providers, provided that
the foregoing shall not be construed to protect the Distributor against any liability to the Trust
or the Trust’s shareholders to which the Distributor would otherwise be subject by reason of
negligence in the performance of its duties and obligations set forth in section 3(l) of this
Agreement, and by reason of willful misfeasance, bad faith, gross negligence or reckless disregard
in the performance of the remainder of its duties and obligations under this Agreement.
(g) The Distributor shall ensure that all direct requests for Prospectuses, Statements of
Additional Information, product descriptions and periodic fund reports, as applicable, are
fulfilled. In addition, the Distributor shall arrange to provide the Listing Exchanges with copies
of Prospectuses and Statements of Additional Information and product descriptions to be provided to
purchasers in the secondary market. The Distributor will generally make it known in the brokerage
community that Prospectuses and Statements of Additional Information and product descriptions are
available, including by (i) advising the Listing Exchanges on behalf of its member firms of the
same, (ii) making such disclosure in all marketing and advertising materials prepared and/or filed
by the Distributor with the FINRA, and (iii) as may otherwise be required by the Commission. The
Distributor shall consult with the Investment Adviser and the Trust with respect to the production
and printing of Prospectuses to be used in connection with creations by Authorized Participants of
Creation Units. The Distributor shall not bear any costs associated with printing Prospectuses,
Statements of Additional Information and all other such materials.
(h) The Distributor agrees to make available, at the Trust’s request, one or more members of
its staff to attend Board meetings of the Trust in order to provide information with regard to the
ongoing distribution process and for such other purposes as may be requested by the Board of
Trustees of the Trust.
(i) The Distributor shall review and approve all sales and marketing materials for compliance
with applicable laws and conditions of any applicable exemptive order, and file such materials with
the FINRA as required by the 1933 Act and 1940 Act, and the rules promulgated thereunder. All such
sales and marketing materials must be approved, in writing, by the Distributor prior to use, such
approval not to be unreasonably withheld.
(j) The Distributor shall not offer any Shares and shall not accept any orders for the
purchase or sale of Shares hereunder if and so long as the effectiveness of the
4
Registration Statement then in effect or any necessary amendments thereto shall be suspended under
any of the provisions of the 1933 Act or if and so long as a current prospectus as required by
Section 10 of the 1933 Act is not on file with the Commission; provided, however, that nothing
contained in this paragraph shall in any way restrict or have any application to or bearing upon
the Trust’s obligation to redeem or repurchase any Shares from any shareholder in accordance with
provisions of the Prospectus or Registration Statement.
(k) If the Trust adopts any distribution and/or shareholder servicing plan(s) pursuant to Rule
12b-1 under the 1940 Act (the “Plan”), the Distributor shall enter into selling and/or investor
servicing agreements (“Sales and Investor Services Agreements”) with various broker-dealers and any
other financial institution exempt under federal or state securities laws from registration as a
broker or dealer authorized by the Investment Adviser, consistent with applicable law and the
Registration Statement and Prospectus, to sell Shares and provide services to shareholders. The
Distributor further agrees as follows: (i) the Distributor shall administer on behalf of the Trust
any Plan(s) adopted by the Trust under rule 12b-1; (ii) the Distributor shall, at its own expense,
set up and maintain a system of recording payments of fees and reimbursement of expenses
disseminated pursuant to this Agreement and other agreements related to any such Plan(s) and,
pursuant to the 1940 Act, report such payment activity to the Trust at least quarterly; (iii) the
Distributor shall receive from the Trust all distribution and shareholder servicing fees, as
applicable, at the rate and to the extent payable under the terms and conditions set forth in any
Plan(s) adopted by the Trust, applicable to the appropriate class of shares of each Portfolio, as
such Plan(s) may be amended from time to time, and subject to any further limitations on such fees
as the Board of Trustees of the Trust may impose; and (iv) the Distributor shall pay, from the fees
received from the Trust pursuant to any such Plan(s), all fees and make reimbursement of all
expenses, pursuant to and in accordance with such Plan(s) and any and all Sales and Investor
Services Agreements. In no event shall Distributor (i) pay any fees pursuant to any such Plan(s)
until it has received payment of such fees from the Trust or the Adviser or (ii) be entitled to
retain for its own account any amount accrued pursuant to any such Plan(s).
(l) The Distributor shall provide an order processing system pursuant to which the Authorized
Participants may contact the Distributor (or its affiliates) and place requests to create and
redeem Creation Units, including without limitation: (i) generating and transmitting confirmations
of purchase and redemption order acceptances to purchasers and redeemers of Creation Units; (ii)
providing acknowledgement to Authorized Participants that orders have been accepted; (iii)
rejecting any orders that were not submitted in proper form or in a timely fashion; (iv) confirming
that Authorized Participants will not place trades that would raise their total holdings to 80% or
more of any fund; (v) maintain along with the Trust and its Index Receipt Agent the right to
require and rely upon information necessary to determine beneficial share ownership for purposes of
the 80% determination or, in lieu of this, accept a certification from a Listing Exchange member
firm or a member of such other exchange that the cost basis of the securities so deposited is
essentially identical to their market value at the time of deposit;
5
and (vi) maintaining a dedicated toll-free line for Authorized Participants to place share creation
and redemption orders.
(m) The Distributor has as of the date hereof, and shall at all times have and maintain, net
capital of not less than that required by Rule 15c3-1 under the 1934 Act, or any successor
provision thereto. In the event that the net capital of the Distributor shall fall below that
required by Rule 15c3-1, or any successor provision thereto, the Distributor shall promptly provide
notice to the Trust and the Investment Adviser of such event.
(n) The Distributor agrees to maintain, and preserve for the periods prescribed by Rule 31a-2
under the 1940 Act, such records as are required to be maintained by Rule 31a-1(d) under the 0000
Xxx.
(o) The Distributor agrees to maintain compliance policies and procedures (a “Compliance
Program”) that is reasonably designed to prevent violations of the Federal Securities Laws (as
defined in Rule 38a-1 of the 0000 Xxx) with respect to the Distributor’s services under this
Agreement, and to provide any and all information with respect to the Compliance Program, including
without limitation, information and certifications with respect to material violations of the
Compliance Program and any material deficiencies or changes therein, as may be reasonably requested
by the Trust’s Chief Compliance Officer or Board of Trustees.
| 4. | Duties of the Trust. |
(a) The Trust agrees to issue Creation Units of each Fund and to request DTC to record on its
books the ownership of the Shares constituting such Creation Units in accordance with the
book-entry system procedures described in the Prospectus in such amounts as the Distributor has
requested through the Transfer Agent in writing or other means of data transmission, as promptly as
practicable after receipt by the Trust of the requisite Deposit Securities and Cash Component
(together with any fees) and acceptance of such order, upon the terms described in the Registration
Statement. The Trust may reject any order for Creation Units or stop all receipts of such orders
at any time upon reasonable notice to the Distributor, in accordance with the provisions of the
Prospectus and Statement of Additional Information.
(b) The Trust agrees that it will take all action necessary to register an indefinite number
of Shares under the 1933 Act. The Trust will make available to the Distributor such number of
copies of its then currently effective Prospectus and Statement of Additional Information and
product description as the Distributor may reasonably request. The Trust will furnish to the
Distributor copies of semi-annual reports and annual audited reports of the Trust’s books and
accounts made by independent public accountants regularly retained by the Trust and such other
publicly available information that the Distributor may reasonably request for use in connection
with the distribution of Creation Units. The Trust shall keep the Distributor informed of the
jurisdictions in which the Trust has filed notice filings for Shares for sale under the
6
securities laws thereof and shall promptly notify the Distributor of any change in this
information. Upon request by the Trust, the Distributor shall provide the Trust with information
and materials regarding its business to the extent necessary to complete such filings. The
Distributor shall not be liable for damages resulting from the sale of Shares in authorized
jurisdictions where the Distributor had no information from the Trust that such sale or sales were
unauthorized at the time of such sale or sales.
| 5. | Fees and Expenses. |
(a) The Distributor shall be entitled to no compensation or reimbursement of expenses from the
Trust for the services provided by the Distributor pursuant to this Agreement. The Distributor may
receive compensation from the Investment Adviser related to its services hereunder or for
additional services as may be agreed to between the Investment Adviser and Distributor.
(b) The Trust shall bear the cost and expenses of: (i) the registration of the Shares for sale
under the Securities Act; and (ii) the registration or qualification of the Shares for sale under
the securities laws of the various States;
(c) The Distributor shall pay (i) all expenses relating to Distributor’s broker-dealer
qualification and registration under the 1934 Act; (ii) the expenses incurred by the Distributor in
connection with routine FINRA filing fees; and (iii) all other expenses incurred in connection with
the distribution services provided under this Agreement, including office space, equipment, and
personnel as may be necessary or convenient to provide the services.
(d) Notwithstanding anything in this Agreement to the contrary, the Distributor and its
affiliates may receive compensation or reimbursement from the Trust and the Investment Adviser with
respect to any services not included under this Agreement, as may be agreed upon by the parties
from time to time.
| 6. | Indemnification. |
(a) The Trust agrees to indemnify and hold harmless the Distributor, its affiliates and each
of their respective directors, officers and employees and agents and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act (any of the Distributor, its officers,
employees, agents and directors or such control persons, for purposes of this paragraph, a
“Distributor Indemnitee”) against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability, claim, damages or
expense and reasonable counsel fees incurred in connection therewith) arising out of or based upon
(i) any claim that the Registration Statement, Prospectus, Statement of Additional Information,
product description, shareholder reports, sales literature and advertisements specifically approved
by the Trust and Investment Adviser in writing or other information filed or made public by the
Trust (as from time to time amended) included an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
7
to make the statements therein (and in the case of the Prospectus, Statement of Additional
Information and product description, in light of the circumstances under which they were made) not
misleading under the 1933 Act, or any other statute or the common law, (ii) the breach by the Trust
of any obligation, representation or warranty contained in this Agreement or (iii) the Trust’s
failure to comply in any material respect with applicable securities laws.
The Trust does not agree to indemnify the Distributor or hold it harmless to the extent that
the statement or omission was made in reliance upon, and in conformity with, information furnished
to the Trust by or on behalf of the Distributor. The Trust will also not indemnify any Distributor
Indemnitee with respect to any untrue statement or omission made in the Registration Statement,
Prospectus, Statement of Additional Information or product description that is subsequently
corrected in such document (or an amendment thereof or supplement thereto) if a copy of the
Prospectus (or such amendment or supplement) was not sent or given to the person asserting any such
loss, liability, claim, damage or expense at or before the written confirmation to such person in
any case where such delivery is required by the 1933 Act and the Trust had notified the Distributor
of the amendment or supplement prior to the sending of the confirmation. In no case (i) is the
indemnity of the Trust in favor of any Distributor Indemnitee to be deemed to protect the
Distributor Indemnitee against any liability to the Trust or its shareholders to which the
Distributor Indemnitee would otherwise be subject by reason of negligence in the performance of its
duties and obligations set forth in section 3(l) of this Agreement, and by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard in the performance of the remainder
of its duties and obligations under this Agreement, or (ii) is the Trust to be liable under its
indemnity agreement contained in this Section with respect to any claim made against any
Distributor Indemnitee unless the Distributor Indemnitee shall have notified the Trust in writing
of the claim at its principal offices in Chicago, Illinois within a reasonable time after the
summons or other first written notification giving information of the nature of the claim shall
have been served upon Distributor Indemnitee (or after Distributor Indemnitee shall have received
notice of service on any designated agent).
Failure to notify the Trust of any claim shall not relieve the Trust from any liability that
it may have to any Distributor Indemnitee against whom such action is brought otherwise than on
account of its indemnity agreement contained in this Section unless failure or delay to so notify
the Trust prejudices the Trust’s ability to defend against such claim. The Trust shall be entitled
to participate at its own expense in the defense, or, if it so elects, to assume the defense of any
suit brought to enforce any claims, but if the Trust elects to assume the defense, the defense
shall be conducted by counsel chosen by it and satisfactory to Distributor Indemnitee, defendant or
defendants in the suit. In the event the Trust elects to assume the defense of any suit and retain
counsel, Distributor Indemnitee, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them. If the Trust does not elect to assume the
defense of any suit, it will reimburse the Distributor Indemnitee, defendant or defendants in the
suit, for the reasonable fees and expenses of any counsel retained by them. The Trust agrees to
notify the Distributor promptly of the commencement of any
8
litigation or proceedings against it or any of its officers or Trustees in connection with the
issuance or sale of any of the Creation Units or the Shares.
(b) The Distributor agrees to indemnify and hold harmless the Trust and each of its Trustees
and officers and any person who controls the Trust within the meaning of Section 15 of the 1933 Act
(for purposes of this paragraph, the Trust and each of its Trustees and officers and its
controlling persons are collectively referred to as the “Trust Affiliates”) against any loss,
liability, claim, damages or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, claim, damages or expense and reasonable counsel fees incurred in
connection therewith) arising out of or based upon (i) the allegation of any wrongful act of the
Distributor or any of its directors, officers, employees or affiliates, (ii) the breach of any
obligation, representation or warranty contained in this Agreement by the Distributor, (iii) the
Distributor’s failure to comply in any material respect with applicable securities laws, including
applicable FINRA regulations, or (iv) any allegation that the Registration Statement, Prospectus,
Statement of Additional Information, product description, shareholder reports, any information or
materials relating to the Funds (as described in section 3(g)) or other information filed or made
public by the Trust (as from time to time amended) included an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary in order to make the
statements not misleading, insofar as such statement or omission was made in reliance upon, and in
conformity with information furnished to the Trust by or on behalf of the Distributor, it being
understood that the Trust will rely upon certain information provided by the Distributor for use in
the preparation of the Registration Statement, Prospectus, Statement of Additional Information,
product description, shareholder reports or other information relating to the Funds or made public
by the Trust.
In no case (i) is the indemnity of the Distributor in favor of any Trust Affiliate to be
deemed to protect any Trust Affiliate against any liability to the Trust or its security holders to
which such Trust Affiliate would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of its obligations and duties under this
Agreement, or (ii) is the Distributor to be liable under its indemnity agreement contained in this
Section with respect to any claim made against any Trust Affiliate unless the Trust Affiliate shall
have notified the Distributor in writing of the claim within a reasonable time after the summons or
other first written notification giving information of the nature of the claim shall have been
served upon the Trust Affiliate (or after the Trust Affiliate shall have received notice of service
on any designated agent).
Failure to notify the Distributor of any claim shall not relieve the Distributor from any
liability that it may have to the Trust Affiliate against whom such action is brought otherwise
than on account of its indemnity agreement contained in this Section unless failure or delay to so
notify the Distributor prejudices the Distributor’s ability to defend against such claim. The
Distributor shall be entitled to participate at its own expense in the defense or, if it so elects,
to assume the defense of any suit brought to enforce the claim, but if the Distributor elects to
assume the defense, the defense shall be conducted
9
by counsel chosen by it and satisfactory to the Trust, its officers and Board and to any
controlling person or persons, defendant or defendants in the suit. In the event that Distributor
elects to assume the defense of any suit and retain counsel, the Trust or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses of any additional
counsel retained by them. If the Distributor does not elect to assume the defense of any suit, it
will reimburse the Trust, its officers and Trustees or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel retained by them. The
Distributor agrees to notify the Trust promptly of the commencement of any litigation or
proceedings against it or any of its officers or directors in connection with the issuance or sale
of any of the Creation Units or the Shares.
(c) No indemnified party shall settle any claim against it for which it intends to seek
indemnification from the indemnifying party, under the terms of section 6(a) or 6(b) above, without
the prior written notice to and consent from the indemnifying party, which consent shall not be
unreasonably withheld. No indemnified or indemnifying party shall settle any claim unless the
settlement contains a full release of liability with respect to the other party in respect of such
action. This section 6 shall survive the termination of this Agreement.
| 7. | Representations. |
(a) The Distributor represents and warrants that (i) it is duly organized as a Delaware
limited liability company and is and at all times will remain duly authorized and licensed under
applicable law to carry out its services as contemplated herein; (ii) the execution, delivery and
performance of this Agreement are within its power and have been duly authorized by all necessary
action; and (iii) its entering into this Agreement or providing the services contemplated hereby
does not conflict with or constitute a default or require a consent under or breach of any
provision of any agreement or document to which the Distributor is a party or by which it is bound,
including but not limited to any agreement with any Listing Exchange; (iv) it is registered as a
broker-dealer under the 1934 Act and is a member of the FINRA; and (v) it has in place compliance
policies and procedures reasonably designed to prevent violations of the Federal Securities Laws as
that term is defined in Rule 38a-1 under the 0000 Xxx.
(b) To the extent applicable, the Distributor will comply with any requirements set forth in
(i) the 1934 Act Rule 19b-4 relief provided to the Listing Exchanges in connection with the
offering of Fund Shares and Creation Units under this Agreement and with respect to which the
Distributor receives adequate advance notice; (ii) any and all exemptive orders issued to the Trust
in connection with the offering of Fund Shares and Creation Units under this Agreement under the
1940 Act or 1934 Act with respect to which the Distributor receives adequate advance notice; and
(iii) the Registration Statement and Prospectus.
(c) The Distributor represents and warrants that it will comply with the Trust’s portfolio
holdings disclosure policy.
10
(d) The Distributor represents and warrants that it is not an “affiliated person” (as defined
under the 0000 Xxx) with the Listing Exchanges or any underlying index provider for any Fund.
(e) The Distributor and the Trust each individually represent that its anti-money laundering
program (“AML Program”), at a minimum, (i) designates a compliance officer to administer and
oversee the AML Program, (ii) provides ongoing employee training, (iii) includes an independent
audit function to test the effectiveness of the AML Program, (iv) establishes internal policies,
procedures, and controls that are tailored to its particular business, (v) provides for the filing
of all necessary anti-money laundering reports including, but not limited to, currency transaction
reports and suspicious activity reports, and (vi) allows for appropriate regulators to examine its
anti-money laundering books and records. Notwithstanding the foregoing, the Trust acknowledges that
the Authorized Participants are not “customers” for the purposes of 31 CFR 103.
(f) The Distributor and the Trust each individually represent and warrant that: (i) it has
procedures in place reasonably designed to protect the privacy of non-public personal
consumer/customer financial information to the extent required by applicable law, rule and
regulation; (ii) it will comply with all of the applicable terms and provisions of the 1934 Act;
and (iii) it will provide certifications to the Trust in order to assist the Trust in complying
with certain rules under the 1940 Act (by way of example only, Rules 30a-2, 30a-3 and 38a-1) and in
connection with the filing of certain Forms (by way of example only, Form N-CSR).
(g) The Trust represents and warrants that (i) it is duly organized as a Maryland business
trust and is and at all times will remain duly authorized to carry out its obligations as
contemplated herein; (ii) it is, or will be within a reasonable date, registered as an investment
company under the 1940 Act; (iii) the execution, delivery and performance of this Agreement are
within its power and have been duly authorized by all necessary action; (iv) its entering into this
Agreement does not conflict with or constitute a default or require a consent under or breach of
any provision of any agreement or document to which the Trust is a party or by which it is bound;
(v) the Registration Statement and each Fund’s Prospectus have been prepared, and all sales
literature and advertisements specifically approved by the Trust and the Investment Adviser in
writing or other materials prepared by or on behalf of the Trust for the Distributor’s use (“Sales
Literature and Advertisements”) shall be prepared, in all materials respects, in conformity with
the 1933 Act, the 1940 Act and the rules and regulations of the Commission (the “Rules and
Regulations”); (vi) the Registration Statement and each Fund’s Prospectus contain, and all Sales
Literature and Advertisements shall contain, all statements required to be stated therein in
accordance with the 1933 Act, the 1940 Act and the Rules and Regulations; and (vii) all statements
of fact contained therein, or to be contained in all Sales Literature and Advertisements, are or
will be true and correct in all material respects at the time indicated or the effective date, as
the case may be, and none of the Registration Statement, any Fund’s Prospectus, nor any Sales
Literature and
11
Advertisements shall include any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein, in the case of each
Fund’s Prospectus in light of the circumstances in which made, not misleading. The Trust shall,
from time to time, file such amendment or amendments to the Registration Statement and each Fund’s
Prospectus as, in the light of future developments, shall, in the opinion of the Trust’s counsel,
be necessary in order to have the Registration Statement and each Fund’s Prospectus at all times
contain all material facts required to be stated therein or necessary to make the statements
therein, in the case of each Fund’s Prospectus in light of the circumstances in which made, not
misleading. The Trust shall not file any amendment to the Registration Statement or each Fund’s
Prospectus without giving the Distributor reasonable notice thereof in advance, provided that
nothing in this Agreement shall in any way limit the Trust’s right to file at any time such
amendments to the Registration Statement or any Fund’s Prospectus as the Trust may deem advisable.
Notwithstanding the foregoing, the Trust shall not be deemed to make any representation or warranty
as to any information or statement provided by the Distributor for inclusion in the Registration
Statement or any Fund’s Prospectus.
(h) The Trust represents to the Distributor that the Registration Statement and Prospectus
filed by the Trust with the Commission with respect to the Trust have been prepared in conformity
in all material respects with the requirements of the 1933 Act, the 1940 Act and the rules and
regulations of the Commission thereunder. The Trust will notify the Distributor promptly of any
amendment to the Registration Statement or supplement to the Prospectus and any stop order
suspending the effectiveness of the Registration Statement; provided, however, that nothing
contained in this Agreement shall in any way limit the Trust’s right to file at any time such
amendments to any Registration Statement and/or supplements to any Prospectus, of whatever
character, as the Trust may deem advisable, such right being in all respects absolute and
unconditional. The Trust and the Investment Adviser shall not be responsible in any way for any
information, statements or representations given or made by the Distributor or its representatives
or agents other than such information, statements or representations as are contained in such
Prospectus or Registration Statement or financial reports filed on behalf of the Trust or in any
sales literature or advertisements specifically approved by the Trust and the Investment Adviser in
writing or in other materials prepared by or on behalf of the Trust for the Distributor’s use.
| 8. | Duration, Termination and Amendment. |
(a) This Agreement shall be effective on [_________], 2008, and unless terminated as provided
herein, shall continue until _________, [2010] and thereafter from year to year, provided such
continuance is approved annually (i) by vote of a majority of the Trustees or by the vote of a
majority of the outstanding voting securities of the Fund and (ii) by the vote of a majority of
those Trustees who are not parties to this Agreement or interested persons of any such party cast
in person at a meeting called for the purpose of voting on such approval. This Agreement may be
terminated at any time, without the payment of any penalty, as to each Fund (i) by vote of a
majority of those Trustees who are not parties to this Agreement or interested persons of any such
party or (ii) by vote of
12
a majority of the outstanding voting securities of the Fund, on at least sixty (60) days prior
written notice to the Distributor. This Agreement shall automatically terminate without the payment
of any penalty in the event of its assignment. As used in this paragraph, the terms “vote of a
majority of the outstanding voting securities,” “assignment,” “affiliated person” and “interested
person” shall have the respective meanings specified in the 0000 Xxx.
(b) The Distributor agrees to notify the Investment Adviser immediately in the event of its
expulsion or suspension by the FINRA. Expulsion of the Distributor by the FINRA will automatically
terminate this Agreement immediately without notice. Suspension of the Distributor by the FINRA
will terminate this Agreement effective immediately upon written notice of termination to the
Distributor from the Investment Adviser.
(c) No provision of this Agreement may be changed, waived, discharged or terminated except by
an instrument in writing signed by the party against which an enforcement of the change, waiver,
discharge or termination is sought.
| 9. | Notice. |
Any notice or other communication authorized or required by this Agreement to be given to
either party shall be in writing and deemed to have been given when delivered in person or by
confirmed facsimile, or posted by certified mail, return receipt requested, to the following
address (or such other address as a party may specify by written notice to the other):
If to the Distributor:
Foreside Fund Services, LLC
ATTN: Chief Compliance Xxxxxxx
Xxx Xxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
ATTN: Chief Compliance Xxxxxxx
Xxx Xxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Trust:
Xxxxx Xxxxxxxx, Esq.
The Northern Trust Company
Xxxxx Xxxxxxxxxx, X-0
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
The Northern Trust Company
Xxxxx Xxxxxxxxxx, X-0
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
With a copy to:
Xxxxx X. XxXxxxxx
Drinker Xxxxxx & Xxxxx LLP
Xxxxx X. XxXxxxxx
Drinker Xxxxxx & Xxxxx LLP
13
18th and Cherry Streets
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX
00000-0000
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX
00000-0000
| 10. | Choice of Law. |
This Agreement shall be governed by, and construed in accordance with, the laws of the state
of Delaware, without giving effect to the choice of laws provisions thereof.
| 11. | Counterparts. |
This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.
| 12. | Severability. |
If any provisions of this Agreement shall be held or made invalid, in whole or in part, then
the other provisions of this Agreement shall remain in force. Invalid provisions shall, in
accordance with this Agreement’s intent and purpose, be amended, to the extent legally possible, in
order to effectuate the intended results of such invalid provisions.
| 13. | Insurance. |
The Distributor will maintain at its expense an errors and omissions insurance policy adequate
to cover services provided by the Distributor hereunder.
| 14. | Confidentiality. |
During the term of this Agreement, the Distributor and the Trust may have access to
confidential information relating to such matters as either party’s business, trade secrets,
systems, procedures, manuals, products, contracts, personnel, and clients. As used in this
Agreement, “Confidential Information” means information belonging to one of the parties that is of
value to such party and the disclosure of which could result in a competitive or other disadvantage
to such party. Confidential Information includes, without limitation, financial information,
proposal and presentations, reports, forecasts, inventions, improvements and other intellectual
property; trade secrets; know-how; designs, processes or formulae; software; market or sales
information or plans; customer lists; and business plans, prospects and opportunities (such as
possible acquisitions or dispositions of businesses or facilities). Confidential Information
includes information developed by either party in the course of engaging in the activities provided
for in this Agreement, unless: (i) the information is or becomes publicly known through lawful
means; (ii) the information is disclosed to the other party without a confidential restriction by a
third party who rightfully possesses the information and did not obtain it, either directly or
indirectly, from one of the parties, as the case may be, or any of their
14
respective principals, employees, affiliated persons, or affiliated entities. The parties
understand and agree that all Confidential Information shall be kept confidential by the other both
during and after the term of this Agreement. Each party shall maintain commercially reasonable
information security policies and procedures for protecting Confidential Information. The parties
further agree that they will not, without the prior written approval by the other party, disclose
such Confidential Information, or use such Confidential Information in any way, either during the
term of this Agreement or at any time thereafter, except as required in the course of this
Agreement and as provided by the other party or as required by law. Upon termination of this
Agreement for any reason, or as otherwise requested by the Trust, all Confidential Information held
by or on behalf of Trust shall be promptly returned to the Trust, or an authorized officer of the
Distributor will certify to the Trust in writing that all such Confidential Information has been
destroyed. This section 14 shall survive the termination of this Agreement. Notwithstanding the
foregoing, a party may disclose the other’s Confidential Information if (i) required by law,
regulation or legal process or if requested by the Commission or other governmental regulatory
agency with jurisdiction over the parties hereto or (ii) requested to do so by the other party;
provided that in the event of (i), the disclosing party shall give the other party reasonable prior
notice of such disclosure to the extent reasonably practicable and shall reasonably cooperate with
the other party (at such other party’s expense) in any efforts to prevent such disclosure.
| 15. | Limitation of Liability. |
This Agreement is executed by or on behalf of the Trust with respect to each of the Trust
Funds and the obligations hereunder are not binding upon any of the trustees, officers or
shareholders of the Trust individually but are binding only upon the Fund to which such obligations
pertain and the assets and property of such Fund. Separate and distinct records are maintained for
each Fund and the assets associated with any such Fund are held and accounted for separately from
the other assets of the Trust, or any other Fund of the Trust. The debts, liabilities, obligations,
and expenses incurred, contracted for, or otherwise existing with respect to a particular Fund of
the Trust shall be enforceable against the assets of that Fund only, and not against the assets of
the Trust generally or any other Fund, and none of the debts, liabilities, obligations, and
expenses incurred, contracted for, or otherwise existing with respect to the Trust generally or any
other Fund shall be enforceable against the assets of that Fund. The Trust’s Agreement and
Declaration of Trust is on file with the Trust.
| 16. | Use of Names; Publicity. |
The Trust shall not use the Distributor’s name in any offering material, shareholder report,
advertisement or other material relating to the Trust, other than for the purpose of merely
identifying and describing the functions of the Distributor hereunder, in a manner not approved by
the Distributor in writing prior to such use, such approval not to be unreasonably withheld. The
Distributor hereby consents to all uses of its name required by the Commission, any state
securities commission, or any federal or state regulatory authority.
15
The Distributor shall not use the names “NETS” or “Northern” in any offering material,
shareholder report, advertisement or other material relating to the Distributor, other than for the
purpose of merely identifying and describing the functions of the Trust hereunder, in a manner not
approved by the Trust in writing prior to such use; provided, however, that the Trust shall consent
to all uses of its name required by the Commission, any state securities commission, or any federal
or state regulatory authority; and provided, further, that in no case shall such approval be
unreasonably withheld.
The Distributor will not issue any press releases or make any public announcements regarding
the existence of this Agreement without the express written consent of the Trust. Neither the
Trust nor the Distributor will disclose any of the economic terms of this Agreement, except as may
be required by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
officers designated below as of the date first set forth above.
| NETS TRUST |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| FORESIDE FUND SERVICES, LLC |
||||
| By: | ||||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Vice President | |||
16
EXHIBIT A
NETS™ Fund
NETS™ S&P/ASX 200 Index Fund (Australia)
NETS™ BEL 20® Index Fund (Belgium)
NETS™ Hang Seng China Enterprises Index Fund
NETS™ CAC40® Index Fund (France)
NETS™ DAX® Index Fund (Germany)
NETS™ Hang Seng Index Fund (Hong Kong)
NETS™ ISEQ 20® Index Fund (Ireland)
NETS™ TA-25 Index Fund (Israel)
NETS™ S&P/MIB Index Fund (Italy)
NETS™ TOPIX Index Fund (Japan)
NETS™ FTSE Bursa Malaysia 100 Index Fund
NETS™ AEX-index® Fund (The Netherlands)
NETS™ PSI 20® Index Fund (Portugal)
NETS™ RTS Index Fund (Russia)
NETS™ FTSE Singapore Straits Times Index Fund
NETS™ FTSE/JSE Top 40 Index Fund (South Africa)
NETS™ TSEC Taiwan 50 Index Fund
NETS™ FTSE SET 30 Index Fund (Thailand)
NETS™ XXXX 000 Xxxxx Xxxx (Xxxxxx Xxxxxxx)
NETS™ Dow Xxxxx Wilshire 4500 Index Fund
NETS™ Dow Xxxxx Wilshire Global ex-US Index Fund
NETS™ Dow Xxxxx Wilshire Global Total Market Index Fund
NETS™ Tokyo Stock Exchange REIT Index Fund
NETS™ S&P/ASX 200 Index Fund (Australia)
NETS™ BEL 20® Index Fund (Belgium)
NETS™ Hang Seng China Enterprises Index Fund
NETS™ CAC40® Index Fund (France)
NETS™ DAX® Index Fund (Germany)
NETS™ Hang Seng Index Fund (Hong Kong)
NETS™ ISEQ 20® Index Fund (Ireland)
NETS™ TA-25 Index Fund (Israel)
NETS™ S&P/MIB Index Fund (Italy)
NETS™ TOPIX Index Fund (Japan)
NETS™ FTSE Bursa Malaysia 100 Index Fund
NETS™ AEX-index® Fund (The Netherlands)
NETS™ PSI 20® Index Fund (Portugal)
NETS™ RTS Index Fund (Russia)
NETS™ FTSE Singapore Straits Times Index Fund
NETS™ FTSE/JSE Top 40 Index Fund (South Africa)
NETS™ TSEC Taiwan 50 Index Fund
NETS™ FTSE SET 30 Index Fund (Thailand)
NETS™ XXXX 000 Xxxxx Xxxx (Xxxxxx Xxxxxxx)
NETS™ Dow Xxxxx Wilshire 4500 Index Fund
NETS™ Dow Xxxxx Wilshire Global ex-US Index Fund
NETS™ Dow Xxxxx Wilshire Global Total Market Index Fund
NETS™ Tokyo Stock Exchange REIT Index Fund
17
