FRESCO'sm' INDEX SHARES FUNDS
PARTICIPANT AGREEMENT
This Participant Agreement (the "Agreement") is entered into by and among
UBS Global Asset Management (US) Inc. (the "Principal Underwriter"), State
Street Bank and Trust Company ("State Street" or the "Transfer Agent") and
________________________ (the "Participant"). The Transfer Agent serves as the
transfer agent of the Trust. The Principal Underwriter, the Transfer Agent and
the Participant acknowledge and agree that the Trust shall be a third party
beneficiary of this Agreement, and shall receive the benefits contemplated by
this Agreement, to the extent specified herein. The Principal Underwriter has
been retained to provide services as principal underwriter of the Trust acting
on an agency basis in connection with the sale and distribution of shares of
beneficial interest, par value $0.01 per share ("Shares"), of the series of the
Trust (each, a "Fund") named on Schedule I, attached hereto. As specified in the
Trust's Prospectus and Statement of Additional Information incorporated therein
(the "Prospectus") included as part of its registration statement, as amended,
on Form N-1A (No. 811-21145), the Shares of any Fund offered thereby may be
purchased or redeemed only in aggregations of a specified number of Shares
referred to therein and herein as a "Creation Unit". The number of Shares
presently constituting a Creation Unit of each Fund is set forth in Schedule I.
Creation Units of Shares may be purchased only by or through a participant that
has entered into a Participant Agreement with the Principal Underwriter and the
Transfer Agent.
The Prospectus provides that Creation Units generally will be sold in
exchange for an in-kind deposit of a designated portfolio of equity securities
(the "Deposit Securities") and an amount of cash computed as described in the
Prospectus (the "Cash Component"), plus a Creation Transaction Fee as described
in the Prospectus, delivered to the Trust by the Participant for its own account
or acting on behalf of another party. Together, the Deposit Securities and the
Cash Component constitute the "Portfolio Deposit", which represents the minimum
initial and subsequent investment amount for Shares of any Fund. References to
the Prospectus are to the then current Prospectus as it may be supplemented or
amended from time to time. Capitalized terms not otherwise defined herein are
used herein as defined in the Prospectus and the Declaration of Trust of the
Trust (the "Trust Agreement").
This Agreement is intended to set forth certain premises and the procedures
by which the Participant may purchase and/or redeem Creation Units through the
facilities of The Depository Trust Company ("DTC"). The procedures for
processing an order to purchase Shares (each a "Purchase Order") and an order to
redeem Shares (each a "Redemption Order") are described in the Prospectus and in
Attachment A to this Agreement. All Purchase and Redemption Orders must be made
pursuant to the procedures set forth in Attachment A. All Purchase Orders and
Redemption Orders are irrevocable.
The parties hereto in consideration of the premises and of the mutual agreements
contained herein agree as follows:
1. Status of Participant. The Participant hereby represents, covenants and
warrants that it is a DTC Participant (as defined in the Prospectus, a "DTC
Participant"). Any change in the foregoing status of Participant shall
terminate this Agreement and Participant shall give notice to the Principal
Underwriter and the Trust of such change.
The Participant hereby represents and warrants that, unless the following
paragraph is applicable to it, it is registered as a broker-dealer under
the Securities Exchange Act of 1934, as amended, is qualified to act as a
broker or dealer in the states or other jurisdictions where it transacts
business, and is a member in good standing of the National Association of
Securities Dealers, Inc. ("NASD"), and the Participant agrees that it will
maintain such registrations, qualifications, and membership in good
standing and in full force and effect throughout the term of this
Agreement. The Participant agrees to comply with all applicable Federal
laws, the laws of the states or other jurisdictions concerned, and the
rules and regulations promulgated thereunder and with the Constitution,
By-Laws and Conduct Rules of NASD, and that it will not offer or sell
Shares of any Fund in any state or jurisdiction where they may not lawfully
be offered and/or sold.
If the Participant is offering and selling Shares of any Fund in
jurisdictions outside the several states, territories and possessions of
the United States and is not otherwise required to be registered,
qualified, or a member of NASD as set forth above, the Participant
nevertheless agrees to observe the applicable laws of the jurisdiction in
which such offer and/or sale is made, to comply with the full disclosure
requirements of the Securities Act of 1933, as amended (the "1933 Act") and
the regulations promulgated thereunder and to conduct its business in
accordance with the spirit of the NASD Conduct Rules.
The Participant understands and acknowledges that the proposed method by
which Creation Units of Shares will be purchased and traded may raise
certain issues under applicable securities laws. For example, because new
Creation Units of Shares may be issued and sold by the Trust on an ongoing
basis, at any point a "distribution", as such term is used in the 1933 Act,
may occur. The Participant understands and acknowledges that some
activities on its part, depending on the circumstances, may result in its
being deemed a participant in a distribution in a manner which could render
it a statutory underwriter and subject it to the prospectus delivery and
liability provisions of the 1933 Act. The Participant also understands and
acknowledges that dealers who are not "underwriters" but are effecting
transactions in Shares, whether or not participating in the distribution of
Shares, are generally required to deliver a Prospectus.
2. Execution of Purchase and Redemption Orders. All orders for the purchase or
redemption of Creation Units shall be handled by each party hereto in
accordance with the terms of the Prospectus and the procedures described in
Attachment A to this Agreement. Each party hereto agrees to comply with the
provisions of such documents to the extent applicable to it. In the event
the procedures include the use of recorded telephone lines, the Participant
hereby consents to such use. The Trust reserves the right to issue
additional or other procedures relating to the manner of purchasing or
redeeming Creation Units and the Participant, the Principal Underwriter and
the Transfer Agent each agrees to comply with such procedures as may be
issued from time to time, including but not limited to the Fresco'sm' Cash
Collateral Settlement Procedures that are referenced in Attachment A to
this Agreement. The Participant acknowledges and agrees on behalf of itself
and any party for which it is acting (regardless of its capacity) that
delivery of a
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Purchase Order or Redemption Order shall be irrevocable, provided that the
Principal Underwriter and the Transfer Agent, on behalf of the Trust, each
reserve the right to reject any Purchase Order until the trade is released
as "good" as described in Attachment A and any Redemption Order that is not
in "proper form" as defined in the Prospectus.
With respect to any Redemption Order, the Participant also acknowledges and
agrees on behalf of itself and any party for which it is acting (regardless
of its capacity) to return to the Trust any dividend, distribution or other
corporate action paid to it or to the party for which it is acting in
respect of any Deposit Security that is transferred to the Participant or
any party for which it is acting that, based on the valuation of such
Deposit Security at the time of transfer, should have been paid to the
Fund. With respect to any Redemption Order, the Participant also
acknowledges and agrees on behalf of itself and any party for which it is
acting (regardless of its capacity) that the Trust 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 to be paid to it or to the party for which it is
acting in respect of any Deposit Security that is transferred to the
Participant or any party for which it is acting that, based on the
valuation of such Deposit Security at the time of transfer, should be paid
to the Fund. With respect to any Purchase Order, 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 paid to the Trust in
respect of any Deposit Security that is transferred to the Trust that,
based on the valuation of such Deposit Security at the time of transfer,
should have been paid to the Participant or any party for which it is
acting.
3. 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 ("NSCC") and will be made available on the Fresco'sm' Index
Shares professional data website at xxxx://xxx.xxxxxxxxxxxx.xxx (the
"Fresco Professional Data Website"). Procedures for accessing such data are
set forth in Appendix 3 of Attachment A hereto.
4. Role of Participant.
(a) The Participant acknowledges and agrees that for all purposes of this
Agreement, the Participant will be deemed to be an independent contractor,
and will have no authority to act as agent for the Trust or the Principal
Underwriter in any matter or in any respect. The Participant agrees to make
itself and its employees available, upon request, during normal business
hours to consult with the Trust or the Principal Underwriter or their
designees concerning the performance of the Participant's responsibilities
under this Agreement.
(b) 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 Shares (each a "Beneficial Owner"), that it shall
extend to any such party all of the rights, and shall be
3
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.
(c) The Participant agrees to maintain records of all sales of Shares made
by or through it and to furnish copies of such records to the Trust or the
Principal Underwriter upon the request of the Trust or the Principal
Underwriter.
(d) Each of the Trust, the Principal Underwriter and the Participant may
have obligations under the laws and regulations of the United States to
verify the source of funds and identity of investors in accordance with the
USA Patriot Act, and any rules or regulations adopted thereunder
(collectively, the "Patriot Act"). The Participant shall assist the Trust
and the Principal Underwriter in monitoring transactions in accordance with
the Patriot Act. If required by applicable law or regulation, the
Participant shall provide the Trust and the Principal Underwriter with
documentation evidencing the identity of a Beneficial Owner(s) of Shares of
the Funds upon the specific request of the Trust or the Principal
Underwriter when either party is required by a law, court order, or by
administrative or regulatory entity to disclose the identity of the
Beneficial Owner(s).
(e) The Participant affirms that it has procedures in place reasonably
designed to protect the privacy of non-public personal consumer/customer
financial information.
5. Fees. In connection with the purchase or redemption of Creation Units, the
Trust shall charge, and the Participant agrees to pay on behalf of the
investor to the Transfer Agent, the Transaction Fee prescribed in the
Prospectus applicable to purchase or redemption and such additional fee
applicable to purchases or redemptions under circumstances set forth in the
Prospectus. The Transaction Fee may be waived or otherwise adjusted from
time to time subject to the provisions relating thereto as prescribed in
the Prospectus and the Trust Agreement.
6. Authorized Persons. Concurrently with the execution of this Agreement and
from time to time thereafter, the Participant shall deliver to the
Principal Underwriter and the Transfer Agent, duly certified as appropriate
by its secretary or other duly authorized official, a certificate, in the
form set forth in Attachment B, 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 Principal Underwriter 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 delivery to the Principal
Underwriter and the Trust 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. The PIN Number shall be
kept confidential and only provided to Authorized Persons. If after
issuance, a Participant's PIN Number is changed, the new PIN Number will
become effective on a date mutually agreed upon by the Participant and the
Principal Underwriter. Upon the termination or revocation of authority of
such Authorized Person by the Participant, the Participant shall
4
give immediate written notice of such fact to the Principal Underwriter and
the Trust and such notice shall be effective upon receipt by the Principal
Underwriter and the Trust.
7. Participant Representations. 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 contained in the Trust's then
current Prospectus or in any promotional materials or sales literature
furnished to the Participant by the Principal Underwriter. The Participant
agrees not to furnish or cause to be furnished 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), except such information and materials as may
be furnished to the Participant by the Principal Underwriter and such other
information and materials as may be approved in writing by the Principal
Underwriter. 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 individual Shares are not
redeemable units of beneficial interest in a Fund. 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. Notwithstanding the foregoing, the
Participant may without the written approval of the Principal Underwriter
prepare and circulate in the regular course of its business research
reports that include information, opinions or recommendations relating to
the Funds (i) for public dissemination, provided that such research reports
compare the relative merits and benefits of the Funds with other products
and are not used for purposes of marketing the Funds and (ii) for internal
use by the Participant.
8. Sub-custodian Account. The Participant understands and agrees that in the
case of each Fund, the Trust has caused the Trust's custodian, State Street
Bank and Trust Company (the "Custodian") to maintain with the applicable
sub-custodian for such Fund an account in each relevant foreign
jurisdiction, set forth on Attachment C hereto, to which the Participant
shall deliver or cause to be delivered in connection with the purchase of a
Creation Unit the Deposit Securities and any other cash amounts (or the
cash value of all or a part of such securities, in the case of a permitted
or required cash purchase or "cash in lieu" amount) on behalf of itself or
any party for which it is acting (regardless of its capacity), with any
appropriate adjustments as advised by the Trust, in accordance with the
terms and conditions applicable to such account in such jurisdiction.
9. 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 Custodian and/or the relevant
sub-custodian in accordance with the terms of the Prospectus, 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 Purchase Order or (ii)
5
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
0000 Xxx.
10. Cash Component and Fees. The Participant hereby agrees that as between the
Trust and itself or any party for which it acts in connection with a
Purchase Order, it will make available in same day funds for each purchase
of Shares an amount of cash, estimated by the Custodian, sufficient to pay
the Cash Component and any other amounts of cash due to the Trust in
connection with the purchase of any Creation Unit of Shares (including the
Creation Transaction Fee for in-kind and cash purchases and the additional
variable charge for cash purchases (when, in the sole discretion of the
Fund, cash purchases are available or specified)) (the "Cash Amount") which
shall be made via Fed Funds Wire to an account maintained by the Custodian
at State Street Bank and Trust Company, Boston, Massachusetts and shall be
provided in same day or immediately available funds on or before the
Contractual Settlement Date (as defined in Attachment A), and in the event
payment of such Cash Amount has not been made by such Contractual
Settlement Date, the Participant agrees on behalf of itself or any party
for which it acts in connection with a Purchase Order to pay the full cash
amount, plus interest, computed at such reasonable rate as may be specified
by the Trust from time to time. The Participant may require its customer to
enter into an agreement with the Participant with respect to such matters.
The Participant shall be liable to the Custodian and/or the Trust for any
amounts advanced by the Custodian in its sole discretion to the Participant
for payment of the amounts due and owing for the Cash Component, the
Creation Transaction Fee, cash collateral discrepancies and/or the
additional variable charge for cash purchases (when, in the sole discretion
of the Trust, cash purchases are available or specified). Any excess funds
deposited with the Custodian will be returned following settlement or the
issuance of the Creation Unit.
11. Redemption.
(a) The Participant understands and agrees that Redemption Orders may be
submitted only on days that the NYSE is open for trading.
(b) The Participant represents and warrants that it will not obtain a
Designated Order Number (as described in Attachment A) for the purpose of
redeeming a Creation Unit or otherwise attempt to place a Redemption Order
for the purpose of redeeming any Creation Unit of Shares of any Fund unless
it first ascertains that it or its customer, as the case may be, owns
outright or has full legal authority and legal and beneficial right to
tender for redemption the requisite number of Shares of the relevant Fund
to be redeemed and to the entire proceeds of the redemption and that such
Shares have not been loaned or pledged to another party and are not the
subject of a repurchase agreement, securities lending agreement or any
other arrangement that would preclude the delivery of such Shares to the
Transfer Agent in accordance with the Prospectus or as otherwise required
by the Trust. The Participant understands that Shares of any Fund may be
redeemed only
6
when one or more Creation Units of Shares of a Beneficial Owner are held in
the account of a single Participant.
12. Beneficial Ownership. The Participant represents and warrants to the
Principal Underwriter and the Trust that it does not and will not, at the
time of purchase, hold for the account of any single Beneficial Owner of
Shares of any Fund, 80 percent (80%) or more of outstanding Shares of such
Fund such as to cause the Trust to have a basis in the Index Securities
deposited with the Trust different from the market value of such Index
Securities on the date of such deposit, pursuant to Section 351 of the
Internal Revenue Code. The Trust shall have the right to require
information from the Participant regarding Share ownership, and to rely
thereon to the extent necessary to make a determination regarding ownership
of 80 percent (80%) or more of outstanding Shares by a Beneficial Owner as
a condition to the acceptance of a Portfolio Deposit.
13. Indemnification. This paragraph shall survive the termination of this
Agreement.
(a) The Participant hereby agrees to indemnify and hold harmless the
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 attorneys' fees) incurred by such Indemnified
Party as a result of (i) any breach by the Participant of any provision of
this Agreement that 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; or
(iv) actions of such Indemnified Party in reliance upon any instructions
issued in accordance with Attachment A (as may be amended from time to
time) reasonably believed by the Principal Underwriter and the Transfer
Agent, as applicable, to be genuine and to have been given by the
Participant. The Participant and the Principal Underwriter understand and
agree that the Trust as a third party beneficiary to this Agreement is
entitled and intends to proceed directly against the Participant in the
event that the Participant fails to honor any of its obligations pursuant
to this Agreement that benefit the Trust.
(b) The Principal Underwriter 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 attorneys' fees) incurred by such Indemnified Party as a result
of (i) any breach by the Principal Underwriter of any provision of this
Agreement that relates to the Principal Underwriter; (ii) any failure on
the part of the Principal Underwriter to perform any of its obligations set
forth in this Agreement; (iii) any failure by the Principal Underwriter to
comply with applicable laws, including rules and regulations of
self-regulatory organizations; or (iv) actions of such Indemnified Party in
reliance upon any representations made in accordance with Attachment A (as
may be amended from time to
7
time) reasonably believed by the Participant to be genuine and to have been
given by the Principal Underwriter.
(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 [who are service providers to the Trust].
14. Acknowledgment. The Participant acknowledges receipt of the Prospectus and
represents it has reviewed such document and understands the terms thereof.
15. 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). All
notices to the Participant, the Principal Underwriter and the Transfer
Agent shall be directed to the address or telephone, facsimile or telex
numbers indicated below the signature line of such party.
16. Termination and Amendment. This Agreement shall become effective in this
form as of the date accepted by the Principal Underwriter and the Transfer
Agent and may be terminated at any time by any party upon thirty days prior
notice to the other parties (i) unless earlier terminated 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 such agreement
between the parties. This Agreement may be amended from time to time by the
following procedure. The party initiating the amendment will mail a copy of
the amendment to the other parties to this Agreement. For the purposes of
this Agreement, mail will be deemed received by the recipient thereof on
the third (3rd) day following the deposit of such mail into the U.S. postal
system. If neither of the other parties to the Agreement objects in writing
to the amendment within ten (10) days after its receipt, the amendment will
become part of this Agreement in accordance with its terms.
17. 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.
18. 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.
* * * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the _____ day of ___________ , 200__.
8
UBS GLOBAL ASSET MANAGEMENT (US) INC.,
AS PRINCIPAL UNDERWRITER
BY:
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TITLE:
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ADDRESS:
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TELEPHONE:
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FACSIMILE:
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TELEX:
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[NAME OF PARTICIPANT]
BY:
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TITLE:
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ADDRESS:
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TELEPHONE:
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FACSIMILE:
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TELEX:
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STATE STREET AND TRUST COMPANY,
AS TRANSFER AGENT
BY:
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TITLE:
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ADDRESS
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TELEPHONE:
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FACSIMILE:
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TELEX:
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9
SCHEDULE I
Fund Shares in Creation Unit
---- -----------------------
Fresco'sm' Dow Xxxxx STOXX 50'sm' Fund 50,000
Fresco'sm' Dow Xxxxx EURO STOXX 50'sm' Fund 50,000
ATTACHMENT A
This document supplements the Prospectus and the Declaration of Trust with
respect to the procedures to be used by (i) the Principal Underwriter in
processing an order for the purchase of Creation Units of the Funds and (ii) the
Transfer Agent in processing an order for redemption of Creation Units. To
accommodate Participants with restricted securities in the standard basket, the
Transfer Agent has developed custom creation and redemption baskets. For a
Participant to transact in a custom basket, the Participant must acknowledge the
additional procedures described in Appendix 1 relating to custom baskets.
A Participant is required to have signed the Participant Agreement. Upon
acceptance of the Participant Agreement by the Principal Underwriter and the
Transfer Agent, 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
a Fund.
TO PLACE AN ORDER FOR PURCHASE OR REDEMPTION OF CREATION UNITS
1. Call to Receive a Designated Order Number. An Authorized Person for the
Participant will call the Fresco'sm' Index Shares telephone representative
at 888-500-6008 not later than the closing time of the regular trading
session on the NYSE (the "NYSE Closing Time") (ordinarily 4:00 p.m. New
York time) to receive a "Designated Order Number".
Upon verifying the authenticity of the caller (as determined by the use of
the appropriate PIN Number) and the terms of the order, the Fresco'sm'
Index Shares telephone representative will issue a Designated Order Number.
All orders with respect to the purchase or redemption of Fund Shares are
required to be submitted in writing, on Appendix 2 hereto, and accompanied
by the Designated Order 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.
NOTE THAT THE TELEPHONE CALL IN WHICH THE DESIGNATED ORDER NUMBER IS ISSUED
INITIATES THE ORDER PROCESS BUT DOES NOT ALONE CONSTITUTE THE ORDER. AN
ORDER IS ONLY COMPLETED AND PROCESSED UPON RECEIPT OF WRITTEN INSTRUCTIONS
CONTAINING THE DESIGNATED ORDER NUMBER AND PIN NUMBER AND TRANSMITTED BY
FACSIMILE OR TELEX (the "Order").
2. Place the Order. A Designated Order Number is only valid for a limited
time. The Order for purchase or redemption of Creation Units must be sent
by facsimile or telex to the Fresco'sm' Index Shares telephone
representative within 20 minutes (or reasonable time) of the issuance of
the Designated Order Number. In the event that the Order is not received
within such time period, the Fresco'sm' Index Shares telephone
representative will attempt to contact the Participant to request immediate
transmission of the Order. Unless the
Order is received by the Fresco'sm' Index Shares telephone representative
upon the earlier of (i) within 15 minutes of contact with the Participant
or (ii) 45 minutes after the NYSE Closing Time, the order will be deemed
invalid.
3. Placing an Order.
(a) Confirms. The Transfer Agent shall issue a confirmation of acceptance
of the Purchase or Redemption Order within 15 minutes of its receipt of a
Purchase or Redemption Order received in "proper form" (as defined in the
Prospectus). In the event that the Participant does not receive a timely
confirmation from the Transfer Agent, the Participant should contact the
telephone representative at the telephone number indicated herein.
(b) Purchase Orders. The Participant understands and acknowledges that the
Trust or the Principal Underwriter each has the right to reject or suspend
a Purchase Order if (i) the portfolio of Deposit Securities delivered is
not as specified by the Principal Underwriter; (ii) acceptance of the
Deposit Securities would have certain adverse tax consequences to the Trust
or a Fund; (iii) the acceptance of the Portfolio Deposit would, in the
opinion of counsel to the Trust, be unlawful; (iv) the acceptance of the
Portfolio Deposit would otherwise, in the discretion of Trust or Advisor,
have an adverse effect on the Trust or the rights of Beneficial Owners of a
Fund; or (v) circumstances outside the control of Trust, Principal
Underwriter or Advisor make it for all practical purposes impossible to
process a Purchase Order. The Transfer Agent shall notify Participant of
the rejection of any Purchase Order. None of the Trust, the Principal
Underwriter or the Transfer Agent are under any duty, however, to give
notification of any defects or irregularities in the delivery of Portfolio
Deposits nor shall any of them incur any liability for the failure to give
any such notification.
(c) Redemption Orders. The Participant and the Transfer Agent each
acknowledge that a Redemption Order cannot be placed until the Participant
has first given notice to the Transfer Agent of its intention to place a
Redemption Order. The Participant understands and acknowledges that the
Redemption Order may be rejected by the Trust or the Transfer Agent, with
all costs incurred by the Trust, Principal Underwriter or Transfer Agent
related to the failed trade to be paid by the Participant, unless the
Participant has transferred to the Trust the Creation Unit to be redeemed
or the requisite amount of cash collateral in connection with such
Redemption Order and the Transfer Agent has verified receipt of such
Creation Unit or collateral by 2:00 p.m. New York time on the Business Day
following the day on which the Participant submitted the Redemption Order.
4. Ambiguous Instructions. In the event that an Order contains terms that
differ from the information provided in the telephone call at the time of
issuance of the Designated Order Number, the Fresco'sm' Index Shares
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 Order then the order will be accepted and
processed. If an Authorized Person contradicts its terms, the Order will be
deemed invalid and a corrected Order must be received by the Fresco'sm'
Index Shares telephone
A-2
representative 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 Fresco'sm' Index Shares telephone representative is not able
to contact an Authorized Person, then the Order shall be accepted and
processed in accordance with its terms notwithstanding any inconsistency
from the terms of the telephone information. In the event that an Order
contains terms that are illegible, as determined in the sole discretion of
the Principal Underwriter and/or the Transfer Agent, the Order will be
deemed invalid and the Fresco'sm' Index Shares telephone representative
will attempt to contact the Participant to request retransmission of the
Order. A corrected Order must be received by the Fresco'sm' Index Shares
telephone representative 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.
5. Processing an Order. The Principal Underwriter reserves the right to
suspend a Purchase Order 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 Shares of any Fund. In such event, the Fresco'sm'
Index Shares 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 Shares of any Fund upon execution of the Purchase Order. In the
event that (i) the telephone representative is unable to contact an
Authorized Person or (ii) the Participant fails to transmit an identical
Purchase Order containing a representation and warranty as to such fact,
then the Purchase Order shall be deemed invalid.
6. T+1 Confirmation. On the morning of T + 1, the Participant will receive, in
electronic form, a confirmation of the Deposit Securities, or in the case
of a redemption, the Fund Securities and the final Cash Component.
7. Contractual Settlement.
(a) Purchase Orders. Deposit Securities must be delivered to an account
maintained at the applicable local sub-custodian of the Trust on or before
2:00 p.m., New York time, on the Contractual Settlement Date (defined
below). Participant must also make available on or before the Contractual
Settlement Date, by means satisfactory to the Trust, immediately available
or same day funds estimated by the Trust to be sufficient to pay the Cash
Component next determined after acceptance of the Purchase Order, together
with the applicable Creation Transaction Fee (as described in the
Prospectus). Any excess funds will be returned following settlement of the
issue of the Creation Unit of Shares. The "Contractual Settlement Date" is
the earlier of (i) the date upon which all of the required Deposit
Securities, the Cash Component and any other cash amounts which may be due
are delivered to the Trust and (ii) the latest day for settlement on the
customary settlement cycle in the jurisdiction where any of the securities
of the relevant Fund are customarily traded.
A Creation Unit of Shares will not be issued until the transfer of good
title to the Trust of the portfolio of Deposit Securities and the payment
of the Cash Component and the Creation Transaction Fee have been completed.
When the sub-custodian confirms to the
A-3
Custodian that the required securities included in the Portfolio Deposit
(or, when permitted in the sole discretion of the Trust, the cash value
thereof) have been delivered to the account of the relevant sub-custodian,
the Custodian shall notify the Principal Underwriter, and the Trust will
issue and cause the delivery of the Creation Unit of Shares via DTC.
(b) Purchase of Creation Units Prior to Receipt of Deposit Securities.
Creation Units of Funds may be purchased 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 net asset value of the 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) 125% of the market value of the undelivered Deposit
Securities (the "Additional Cash Deposit"). 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 125%
of the daily marked to market value of the missing Deposit Securities. The
Trust may buy the missing Deposit Securities at any time, and Participants
will be liable to the Trust for the costs incurred by the Trust in
connection with any such purchases. These costs will be deemed to include
the amount by which the actual purchase price of the Deposit Securities
exceeds the market value of such Deposit Securities on the day the Purchase
Order was deemed received by the Principal Underwriter plus the brokerage
and related transaction costs associated with such purchases. The Trust
will return any unused portion of the Additional Cash Deposit once all of
the missing Deposit Securities have been properly received by the custodian
or purchased by the Trust and deposited into the Trust. In addition, a
Creation Transaction Fee of $3,000 (as defined in the Prospectus) will be
charged in all cases plus an additional fee of up to four times the
Creation Transaction Fee may be charged in certain cases as described in
the Statement of Additional Information. The delivery of Creation Units of
Funds so created will occur no later than the third Business Day following
the day on which the Purchase Order is deemed received by the Principal
Underwriter.
(c) Redemption Orders. Deliveries of in-kind redemption proceeds generally
will be made within three Business Days. Due to holidays in certain
countries, delivery to redeeming Participants may take longer than three
Business Days after the day on which the Transfer Agent receives the
Participant's Redemption Order in proper form. A redeeming Participant must
maintain appropriate securities broker-dealer, bank or other custody
arrangements to which account such in-kind redemption proceeds will be
delivered. Redemptions of Creation Units of Shares for Deposit Securities
will be subject to compliance with applicable U.S. federal and state
securities laws.
A-4
APPENDIX 1--Procedures Specific to Custom Baskets
To accommodate Participants with restricted securities in the standard
basket of Deposit Securities, custom creation and redemption baskets (the
"Custom Baskets") are available. Custom Baskets are intended to allow
Participants with restricted issues in a Fund, to transact in such Fund using
the Custom Basket process. The Custom Basket process substitutes cash-in-lieu
for the restricted securities. To ensure proper tracking of the Funds to each of
the Funds, the following guidelines must be followed when transacting Custom
Baskets:
1. On or before 11:00 a.m. New York time on T-1, the Participant must request
a Custom Basket from the Transfer Agent by calling 0-000-000-0000. The
Transfer Agent will fax a standard form on which the Participant must
identify the restricted securities to be omitted from the creation or
redemption basket. At this time, the Participant is limited to substituting
cash-in-lieu only for restricted issues. Participants may request that the
Custom Basket be available for purchases and redemptions for a one-time
transaction, a specific period of time or indefinitely. The Transfer Agent
(in conjunction with the Advisor or its delegate) will review the Custom
Basket request and, if approved, will notify the Participant of such
approval by 4:00 p.m., New York time. In the event subsequent additions
and/or deletions to restricted 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, prior to the opening of the NYSE, the Transfer Agent will
notify the Trust 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 custom basket identifier and
will be made available to the Participant via the Fresco Professional Data
Website (xxxx://xxx.xxxxxxxxxxxx.xxx).
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 basket identifier on the order
form in the space provided. Orders received without a custom basket
identifier 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 11:00 a.m. New York time. Orders for
Custom Baskets will not be processed if received by the Transfer Agent
after 11:00 a.m. New York time. The Participant must transact on the
Standard Basket for orders received after 11:00 a.m. New York time.
A-5
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 Standard Basket.
PARTICIPANT:
-----------------------------
BY:
-----------------------------
TITLE:
-----------------------------
ADDRESS:
-----------------------------
TELEPHONE:
-----------------------------
FACSIMILE:
-----------------------------
TELEX:
-----------------------------
Date:
----------------------------
A-6
APPENDIX 2--Order Form
UBS GLOBAL ASSET MANAGEMENT, Principal Underwriter
STATE STREET BANK AND TRUST COMPANY, Transfer Agent
--------------------------------------------------------------------------------
CREATION / REDEMPTION ORDER FORM
Fresco'sm' Index Shares Funds
CONTACT INFORMATION FOR ORDER EXECUTION:
Telephone Number: x0 000 000-0000
Facsimile Number: x0 000 000-0000
--------------------------------------------------------------------------------
To be completed by the Authorized Participant:
Date: ______________________ Time: _______________EST
Broker's Name: __________________________ Firm's Name: _______________________
Authorized Participant Number: __________ PIN Number: ________________________
Telephone Number: _______________________ Fax Number: ________________________
------------------------------------------------------------------------------------------------------------------------------
Sub-Fund Creation Redemption No. of No. of Units Designated Order Custom Basket
Units Written In Words Number Identifier
------------------------------------------------------------------------------------------------------------------------------
Fresco'sm' Dow Xxxxx EURO STOXX 50'sm' Fund* [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------
Fresco'sm' Dow Xxxxx STOXX 50'sm' Fund* [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------
* One Unit = 50,000 Fresco shares
An order received and approved without a Custom Basket Identifier will be
executed as a Standard Basket Instruction.
Authorization:
------------------------------------------
Signature of Authorised Person
A-7
UBS GLOBAL ASSET MANAGEMENT, Principal Underwriter
STATE STREET BANK AND TRUST, Transfer Agent
--------------------------------------------------------------------------------
Information to be provided by PRINCIPAL UNDERWRITER OR TRANSFER AGENT:
-----------------------------------------------------
Date Time
--------------------------------------------------------------------------------
PHONE CALL RECEIVED
--------------------------------------------------------------------------------
Fax received
--------------------------------------------------------------------------------
Trade Date
--------------------------------------------------------------------------------
Settlement Date
--------------------------------------------------------------------------------
Status of the Order:
[ ] Accepted by the Principal Underwriter (in the case of creations) or the
Transfer Agent (in the case of redemptions)
[ ] Declined for the following reason:
-----------------------------------------
------------------------------------------------------------------
---------------------------------
Authorized Signature
Fresco is a Service Xxxx of UBS AG. Dow Xxxxx STOXX 50 and Dow Xxxxx Euro STOXX
50 are Service Marks of STOXX LTD.
A-8
Appendix 3 - Data Format and Communications
Professional Data Files
Participants can access the professional data files (described below)
(collectively, the "Data Files") via the Fresco Professional Data Website
(xxxx://xxx.xxxxxxxxxxxx.xxx/xxxxxxxxxxxx-xxxx). The Data Files are generated in
a standard layout. Participants, however, will have the option to request a
specific layout of the Data Files (provided that the data elements are a part of
the standard file). Any such special requests must be defined jointly by the
Participant and the Principal Underwriter.
Data Files
[ ] Basket Composition File - used for trading purposes
[ ] Order Forms - Used for Creation/Redemption
[ ] Calendars - Trade Date and Settlement Date calendars
[ ] T+1 Confirmation - By email only
These Data Files will be stored in three formats:
[ ] CSV formatted files
[ ] HTML formatted files
[ ] Raw ASCII data in a record oriented file (original data)
Data File Retrieval
The Data Files can be retrieved from the Professional Data Server in 3 ways:
[ ] By using an FTP client to a predefined server (using a login to select the
main directory). The download of all Data Files can be automated by using
real scripts or input redirection. Access for FTP download must be defined
in the AP Configuration File set forth below.
[ ] By using an internet browser and following the links in the Index page of
the Fresco Professional Data Website. Each Data File must be selected
separately by clicking on its link and then downloaded. The Data Files also
will be archived and made available as a ZIP file.
[ ] By Email. The T+1 Confirmation File, a file unique to each Participant,
will not be put on the data server. These files will be sent to each
Participant via email. A password protected FTP or HTML folder option will
be made available at a later date.
A-9
---------------------------------------------------------------------------------------------------------
AP Configuration File
---------------------------------------------------------------------------------------------------------
AP Identification
---------------------------------------------------------------------------------------------------------
Broker Number = DTC Participation Number
---------------------------------------------------------------------------------------------------------
Short Name = Broker's short name, used for all AP specific files
---------------------------------------------------------------------------------------------------------
Full Name = Brokers full name, used in the T+1 data
---------------------------------------------------------------------------------------------------------
T+1 Confirmation File
---------------------------------------------------------------------------------------------------------
Email = Address where the T+1 files will be emailed to, Separate
addresses by ;
---------------------------------------------------------------------------------------------------------
Password = Password for the ZIP archive, if not defined, the
archive will not be password protected
---------------------------------------------------------------------------------------------------------
Fresco Data FRESCO specific contact information, can be used in AP
specific HTML pages of professional data
---------------------------------------------------------------------------------------------------------
Contact = Name of the contact person
---------------------------------------------------------------------------------------------------------
Street = FRESCO specific address/street of AP
---------------------------------------------------------------------------------------------------------
City = FRESCO specific address/city of AP
---------------------------------------------------------------------------------------------------------
State = FRESCO specific address/Country Code (US State) of AP
---------------------------------------------------------------------------------------------------------
Zip Code = FRESCO specific address/Postal Code (US zip code) of AP
---------------------------------------------------------------------------------------------------------
WWW = FRESCO specific Web/HTML homepage of AP
---------------------------------------------------------------------------------------------------------
Mail = FRESCO specific email address of AP
---------------------------------------------------------------------------------------------------------
Phone = FRESCO specific phone number of AP
---------------------------------------------------------------------------------------------------------
Fax = FRESCO specific fax number of AP
---------------------------------------------------------------------------------------------------------
Mirror Data Information for mirroring professional data in the AP's
intranet
---------------------------------------------------------------------------------------------------------
Upload Host = Hostname, where the data must be uploaded to (FTP
protocol)
---------------------------------------------------------------------------------------------------------
Upload Username = FTP Login username for uploading data
---------------------------------------------------------------------------------------------------------
Upload Password = FTP Login password for uploading data
---------------------------------------------------------------------------------------------------------
Upload HTML Root Path = Root path to upload HTML pages
---------------------------------------------------------------------------------------------------------
Upload FTP Root Path = Root path to upload data downloadable by FTP
---------------------------------------------------------------------------------------------------------
Upload HTTP Root Path = Root path to upload data downloadable by HTTP. If
omitted, a link between the HTTP and the FTP
downloadable directories must exist to enable HTTP
download
---------------------------------------------------------------------------------------------------------
HTTP Download Host = Hostname from where the HTTP/HTML data can be retrieved
---------------------------------------------------------------------------------------------------------
HTTP Pages Rootpath = Rootpath for HTML pages of professional data
---------------------------------------------------------------------------------------------------------
HTTP Download Rootpath = Rootpath for HTTP downloadable professional data
---------------------------------------------------------------------------------------------------------
FTP Download Host = Hostname from the FTP data can be downloaded
---------------------------------------------------------------------------------------------------------
FTP Download Rootpath = Rootpath for FTP downloadable data
---------------------------------------------------------------------------------------------------------
A-10
ATTACHMENT B
The following individuals are Authorized Persons pursuant to Section 6 of
the Participant Agreement between UBS Global Asset Management (US) Inc., as
Principal Underwriter for the Trust, State Street Bank and Trust Company, as
Transfer Agent for the Trust, and [NAME OF PARTICIPANT]:
--------------------------------------------------------------------------------
NAME SPECIMEN SIGNATURE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[ ]
By:
--------------------------------
Date:
-------------------------------
B-1
ATTACHMENT C
The sub-custodian accounts into which a Participant should deposit the
securities constituting the Deposit Securities of each Fund and the Cash
Component, as applicable, are set forth below:
Fresco'sm' Dow Xxxxx STOXX 50'sm' Fund
Account Name:
Account Number
Other Reference Number:
Fresco'sm' Dow Xxxxx EURO STOXX 50'sm' Fund
Account Name:
Account Number
Other Reference Number:
C-1
