Exhibit 10.1

 

DISTRIBUTION SERVICES AGREEMENT

Registered Commodity Pools

 

This Distribution Services Agreement (the "Agreement") is made this 27th day of
December 2012, by and among each Delaware statutory trust set forth on Exhibit A
attached hereto (each a "Fund" and collectively, the "Funds"), each having its
principal place of business at 1 Penn Plaza, 36th Floor, New York, NY 10119,
Esposito Securities, LLC, a Texas limited liability company (the "Distributor"),
having its principal place of business at 300 Crescent Court, Suite 650, Dallas,
TX 75201, and Factor Capital Management, LLC, a Delaware limited liability
company (the "Managing Owner"), with its principal place of business at 1 Penn
Plaza, 36th Floor, New York, NY 10119. This Agreement shall not become effective
until January 1, 2013.

 

WHEREAS, the Managing Owner serves as the sole managing owner and commodity pool
operator of each Fund;

 

WHEREAS, the Managing Owner, on behalf of each Fund, has filed, or will file,
with the Securities and Exchange Commission (the "SEC") a registration statement
on Form S-l under the Securities Act of 1933, as amended (the "1933 Act");

 

WHEREAS, each Fund has engaged the Managing Owner to serve as its commodity pool
operator; the Managing Owner is registered with the Commodity Futures Trading
Commission (the "CFTC") as a commodity pool operator, is a member of the
National Futures Association ("NFA"), and is subject to the Commodity Exchange
Act, as amended (the "CEA"),and all of the relevant rules and regulations
promulgated thereunder (collectively, the "Commodities Rules");

 

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");

 

WHEREAS, each Fund desires to retain the Distributor to act as the distributor
of such Fund and to perform the services described herein and such additional
services as may be agreed to from time to time; and

 

WHEREAS, the Distributor desires to provide the services described herein to the

Funds.

 

NOW, THEREFORE, in consideration of the mutual promises and undertakings herein
contained, the parties agree as follows:

 

1.Appointment.

 

The Managing Owner, on behalf of each Fund, hereby appoints the Distributor as
the exclusive distributor of each Fund listed in Exhibit A hereto, as it may be
amended from time to time in accordance with this Agreement, 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 meanings:

 

(a)"Prospectus" means the prospectus which constitutes part of the Registration
Statement(s) of each Fund under the 1933 Act as such Prospectus may be amended
or supplemented and filed with the SEC from time to time.

 

(b)"Registration Statement" means the registration statement most recently filed
from time to time by each Fund with the SEC and effective under the 1933 Act, as
such registration statement(s) 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 each Fund and to work with each
Fund's transfer agent (the "Transfer Agent") in connection with the receipt and
processing of all orders for purchases and redemptions of common units of
beneficial interest of each Fund ("Shares") in aggregations of 100,000 Shares
("Baskets") 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 Funds and the
Managing Owner. The Funds acknowledge that the Distributor shall be obligated to
accept all orders for Baskets subject to the terms and conditions of the
applicable Participant Agreement and guidelines established by the Managing
Owner from time to time. Nothing herein contained shall prevent the Distributor
from entering into like distribution service arrangements with other exchange
traded funds.    

(b)The Distributor agrees to use commercially reasonable efforts to act as agent
of each Fund with respect to the continuous distribution of Baskets of each Fund
as set forth in each Registration Statement and in accordance with the
provisions thereof. The Distributor further agrees as follows: (i) at the
request of the Managing Owner, the Distributor shall coordinate with counsel to
the Managing Owner and negotiate participant agreements ("Participant
Agreements") between and among Authorized Participants, the Funds and the
Managing Owner, for transactions in Baskets of the Funds, in accordance with the
Registration Statement and Prospectus; (ii) the Distributor shall generate,
transmit and maintain copies of confirmations of Basket 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 Managing Owner promptly upon request and in no case, less
frequently than daily as provided under section 3(j)(vii)); (iii) the
Distributor shall make available copies of the Prospectus to Authorized
Participants who have purchased Baskets in accordance with the Participant
Agreements; (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 a list of Authorized Participants for each Fund
and shall make such list available to the public upon request.

 

(c)The Managing Owner, on behalf of each Fund, reserves the right to suspend the
right of redemption, or postpone the redemption settlement date, (1) for any
period during which the NYSE, ARCA or any exchange on which a Fund's assets are
regularly traded is closed other than for customary weekend or holiday closings,
or trading is suspended or restricted, (2) for any period during which an
emergency exists as a result of which the delivery, disposal or evaluation of a
Fund's assets is not reasonably practicable, or (3) for such other period as the
Managing Owner determines to be necessary for the protection of the
Shareholders. The Managing Owner may suspend the Distributor's authority to
process orders for Baskets on behalf of any Fund in accordance with the
Participant Agreement upon notice to the Distributor.

 

(d)The Distributor is not authorized by the Managing Owner or any Fund 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 a Fund (and with the
assistance of the Distributor, as applicable) 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 Managing Owner with respect to any Fund
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
Managing Owner or a Fund or the Funds' shareholders to which the Distributor
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.

 

(e)The Distributor shall ensure that all direct requests by Authorized
Participants for Prospectuses, product descriptions and periodic fund reports,
as applicable, are fulfilled. The Distributor will generally make it known in
the brokerage community that Prospectuses and product descriptions are
available, including by (i) advising the any exchange on which each Fund's
Shares are listed on behalf of its member firms of the same, (ii) making such
disclosure in all marketing and advertising materials prepared and/or filed by
the Distributor with FINRA, and (iii) as may be

 

  

 

otherwise required by the SEC. The Distributor shall not bear any costs
associated with printing Prospectuses and all other such materials.

 

(f)The Distributor shall communicate Fund requirements and operational events to
Authorized Participants.

 

(g)The Distributor agrees to make available, at the Managing Owner's request,
one or more members of its staff to attend meetings of the Board of Managers of
the Managing Owner in order to provide information with regard to the ongoing
distribution process and for such other purposes as may be requested by the
Managing Owner.

 

(h)The Distributor shall review and approve all sales and marketing materials
for compliance with applicable securities laws and regulations, and file such
materials with FINRA, as required under the 1933 Act, and the rules promulgated
thereunder. Notwithstanding the foregoing, the Distributor shall not be
responsible for the compliance of sales and marketing materials with the CEA,
NFA, or the Commodities Rules. The Managing Owner shall be responsible for
ensuring that all sales and marketing materials have been reviewed for
compliance with the CEA and the Commodities Rules and filed with the CFTC or
NFA, if applicable.

 

(i)The Distributor shall provide training to employees of the Managing Owner
with respect to the marketing material review process for which the Distributor
is responsible, the SEC and FINRA regulations, and the applicability of these
regulations as they relate to sales and marketing materials. Such training shall
be provided onsite if requested by the Managing Owner, provided that the
Managing Owner pay all reasonable travel expenses associated therewith.

 

(j)The Distributor shall provide a system pursuant to which the Authorized
Participants may contact the Distributor (or its affiliates) and place requests
to create and redeem Baskets in accordance with the Participant Agreements,
including without limitation: (i) generating and transmitting confirmations of
purchase and redemption order acceptances to purchasers and redeemers of
Baskets; (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) maintaining a toll-free line for Authorized
Participants to place share creation and redemption orders; (v) transmitting
creation and redemption records and restricted files to the Managing Owner
daily; and (vi) reconciling Shares daily.

 

4.Duties of Each Fund.

 

(a)The Managing Owner, on behalf of each Fund, agrees that it will take all
reasonable action necessary to monitor available Shares registered by each Fund
and to register additional Shares of a Fund pursuant to the 1933 Act as may be
required from time

 

  

 

to time. The Managing Owner will make available to the Distributor such number
of copies of each Fund's then currently effective Prospectus and product
description as the Distributor may reasonably request. The Managing Owner will
furnish to the Distributor copies of annual audited reports of each Fund made by
independent public accountants regularly retained by the Funds and such other
publicly available information that the Distributor may reasonably request for
use in connection with the distribution of Baskets. The Managing Owner shall
keep the Distributor informed of the jurisdictions in which it has filed notice
filings for Shares for sale on behalf of each Fund under the securities laws
thereof and shall promptly notify the Distributor of any change in this
information. The Distributor shall not be liable for damages resulting from the
sale of Shares in authorized jurisdictions where the Distributor had no
information from the Managing Owner 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 receive compensation from each Fund
related to its services hereunder or for additional services as may be agreed to
between the Managing Owner, on behalf of each Fund, and the Distributor, in
accordance with the Fee Schedule attached hereto as Exhibit B;

 

(b)Each Fund shall bear the cost and expenses of: (i) the registration of Shares
for sale under the Securities Act; and (ii) the registration or qualification of
the Shares for sale under the securities laws and/or the costs related to the
filing of DDOCs pursuant to the Commodities Rules, as applicable;

 

(c)The Distributor shall pay (i) all expenses relating to Distributor's
broker/dealer qualification and registration under the 1934 Act; and (ii) the
expenses incurred by the Distributor in connection with routine FINRA filing
fees;

 

(d)Notwithstanding anything in this Agreement to the contrary, the Distributor
and its affiliates may receive compensation or reimbursement from the applicable
Funds with respect to any services not included under this Agreement, as may be
agreed upon by the parties from time to time; and

 

(e)The payments to the Distributor under this Agreement and under any other
agreement between the Distributor or any of its affiliates and the Funds or the
Managing Owner with respect to the Funds, will not, in the aggregate, exceed
5.0% of the aggregate dollar amount of the offering (in a dollar amount equal to
the amount disclosed on Schedule C of the aggregate amount registered on the
Registration Statement on Form S-1 or Form S-3, as applicable, in respect of
each Fund). Schedule C will be amended from time-to-time in the event that
additional amounts of Shares are registered. Each Fund will advise the
Distributor if the payments described hereunder must be limited, when combined
with selling commissions charged by other FINRA members and other payments that
would

 

  

 

constitute underwriting compensation as defined in FINRA Rule 2310, in order to
comply with the 10% limitation on total underwriters' compensation pursuant to
FINRA Rule 2310.

 

(f)The Managing Owner shall provide to the Distributor on an on-going basis
information sufficient to enable Distributor to ensure compliance with FINRA
Rule 2310, including calculations of underwriting compensation and total
offering and operating expenses.

 

6.Indemnification.

 

(a)Subject to the limitations set forth in Section 14 and in the immediately
following paragraph below, each Fund 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) the
Distributor providing services to a Fund pursuant to this Agreement; (ii) any
claim that the Registration Statement, Prospectus, product description,
shareholder reports, sales literature and advertisements specifically approved
by each Fund and the Managing Owner or other information filed or made public by
any Fund (as from time to time amended) included an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein (and in the case of the
Prospectus and product description, in light of the circumstances under which
they were made) not misleading under the 1933 Act, or any other statute or the
common law; (iii) the breach by a Fund of any obligation, representation or
warranty contained in this Agreement; or (iv) a Fund's failure to comply in any
material respect with applicable securities or commodities laws.

 

Each Fund 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 Funds by or on behalf of the
Distributor. Each Fund will also not indemnify any Distributor Indemnitee with
respect to any untrue statement or omission made in the Registration Statement,
Prospectus 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 applicable Fund 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 Funds in favor of any

 

  

 

Distributor Indemnitee to be deemed to protect the Distributor Indemnitee
against any liability to the Funds or their respective shareholders to which the
Distributor Indemnitee would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations under this Agreement, or
(ii) are the Funds to be liable under the indemnity agreement contained in this
Section with respect to any claim made against any Distributor Indemnitee unless
the Distributor Indemnitee shall have pursuant to Section 9 notified the
applicable Fund in writing of the claim at its principal offices in New York,
New York 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 Funds of any claim shall not relieve the applicable Fund
from any liability that it may have to any Distributor Indemnitee against whom
such action is brought unless failure or delay to so notify the applicable Fund
prejudices such Fund's ability to defend against such claim. The Funds shall be
entitled to participate at their own expense in the defense, or, if they so
elect, to assume the defense of any suit brought to enforce any claims, but if
the Funds elect to assume the defense, the defense shall be conducted by counsel
chosen by the Funds and satisfactory to Distributor Indemnitee, defendant or
defendants in the suit. In the event the Funds elect 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 Funds do not elect to assume the defense of any suit, they will
reimburse the Distributor Indemnitee, defendant or defendants in the suit, for
the reasonable fees and expenses of any counsel retained by them. The Funds
agree to notify the Distributor promptly of the commencement of any litigation
or proceedings against them or any of their officers or the Managing Owner in
connection with the issuance or sale of any of the Baskets or the Shares.

 

(b)The Distributor agrees to indemnify and hold harmless the Funds, the Managing
Owner and each of their managers and officers and any person who controls the
Funds within the meaning of Section 15 of the 1933 Act (for purposes of this
Section, the Funds, the Managing Owner and each of their managers and officers
and their controlling persons are collectively referred to as the "Trust
Affiliates") against any loss, liability, claim, damages or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
claim, damages or expense and reasonable counsel fees incurred in connection
therewith) arising out of or based upon (i) the allegation of any wrongful act
of the Distributor or any of its directors, officers, employees or affiliates in
connection with its activities as Distributor pursuant to this Agreement; (ii)
the breach of any obligation, representation or warranty contained in this
Agreement by the Distributor; (iii) the Distributor's failure to comply in any
material respect with applicable securities laws, including applicable FINRA
regulations; or (iv) any allegation that the Registration Statement, Prospectus,
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 Funds (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 Funds by or on behalf of the
Distributor.

 

In no case (i) is the indemnity of the Distributor in favor of any Trust
Affiliate to be deemed to protect any Trust Affiliate against any liability to
the Funds or its security holders to which such Trust Affiliate would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Distributor to be
liable under its indemnity agreement contained in this Section with respect to
any claim made against any Trust Affiliate unless the Trust Affiliate shall have
notified the Distributor in writing of the claim within a reasonable time after
the summons or other first written notification giving information of the nature
of the claim shall have been served upon the Trust Affiliate (or after the Trust
Affiliate shall have received notice of service on any designated agent).

 

Failure to notify the Distributor of any claim shall not relieve the Distributor
from any liability that it may have to the Trust Affiliate against whom such
action is brought on account of its indemnity agreement contained in this
Section unless failure or delay to so notify the Distributor prejudices the
Distributor's ability to defend against such claim. The Distributor shall be
entitled to participate at its own expense in the defense or, if it so elects,
to assume the defense of any suit brought to enforce the claim, but if the
Distributor elects to assume the defense, the defense shall be conducted by
counsel chosen by it and satisfactory to the Funds, the Managing Owner and the
Trust Affiliates, 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 Funds 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 Funds, the Managing Owner,
their officers and managers 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 Managing Owner and the
Funds promptly of the commencement of any litigation or proceedings against it
or any of its officers or directors in connection with the issuance or sale of
any of the Creation Units or the Shares.

 

(c)No indemnified party shall settle any claim against it for which it intends
to seek indemnification from the indemnifying party, under the terms of section
6(a) or 6(b) above, without prior written notice to and consent from the
indemnifying party, which consent shall not be unreasonably withheld. No
indemnified or indemnifying party shall settle any claim unless the settlement
contains a full

 

  

 

release of liability with respect to the other party in respect of such action.
This section 6 shall survive the termination of this Agreement.

 

7.Representations.

 

(a)The Distributor represents and warrants that (i) it is duly organized as a
Delaware limited liability company and is and at all times will remain duly
authorized and licensed under applicable law to carry out its services as
contemplated herein; (ii) the execution, delivery and performance of this
Agreement are within its power and have been duly authorized by all necessary
action; (iii) its entering into this Agreement or providing the services
contemplated hereby does not conflict with or constitute a default or require a
consent under or breach of any provision of any agreement or document to which
the Distributor is a party or by which it is bound; (iv) it is registered as a
broker-dealer under the 1934 Act and is a member of FINRA, (v) it is in material
compliance with all laws, rules and regulations applicable to it, including but
not limited to the rules and regulations promulgated by FINRA; and (vi) shall as
promptly as possible notify the Managing Owner should the representations and
warranties under this Section 7(a) are no longer be true during the term of this
Agreement;

 

(b)The Distributor acknowledges that it is a financial institution subject to
the USA Patriot Act of 2001 and the Bank Secrecy Act (collectively, the "AML
Acts"), which require, among other things, that financial institutions adopt
compliance programs to guard against money laundering. The Distributor
represents and warrants that it is in compliance with and will continue to
comply with the AML Acts and applicable regulations in all relevant respects.
The Distributor agrees that it will take such further steps, and cooperate with
the other as may be reasonably necessary, to facilitate compliance with the AML
Acts, including but not limited to the provision of copies of its written
procedures, policies and controls related thereto ("AML Operations").
Notwithstanding the foregoing, it is expressly understood and agreed that
neither the Managing Owner nor any of its directors, officers, employees or
agents, on its own behalf or on behalf of the Funds, shall have access to any of
Distributor's AML Operations, books or records pertaining to other clients or
services of Distributor.

 

(c)The Distributor and the Managing Owner, on behalf of each Fund, each
individually represent and warrant that it has in place and will maintain
physical, electronic and procedural safeguards reasonably designed to protect
the security, confidentiality and integrity of, and to prevent unauthorized
access to or use of, records and information relating to consumers and customers
of the Funds. The Managing Owner, on behalf of the Funds, further represents to
the Distributor that it has adopted a statement of its privacy policies and
practices as required by Securities and Exchange Commission Regulation S-P and
agrees to provide to the Distributor a copy of that statement annually.

 

  

 

(d)Each Fund, individually represents and warrants that (i) it is duly organized
as a Delaware statutory trust and is and at all times will remain duly
authorized to carry out its obligations as contemplated herein; (ii) the
execution, delivery and performance of this Agreement are within its power and
have been duly authorized by all necessary action; (iii) its entering into this
Agreement 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 such Fund
is a party or by which it is bound; (iv) the Managing Owner is duly registered
with the NFA as a Commodity Pool Operator and the Managing Owner will ensure
compliance by each Fund with the CEA and all of the relevant Commodities Rules;
(v) it possesses, licenses or has other rights to use all patents, patent
applications, trademarks and service marks, trademark and service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets,
technology, know-how and other intellectual property (collectively,
"Intellectual Property") necessary for or used in the conduct of the Fund's
business and for the offer, issuance, distribution and sale of the Shares in
accordance with the terms of the Prospectus and this Agreement, and such
Intellectual Property does not and will not breach or infringe the terms of any
Intellectual Property owned, held or licensed by any third party; (vi) the
Registration Statements and each Fund's Prospectus have been prepared, and all
sales literature and advertisements ("Sales Literature and Advertisements")
approved by the Managing Owner with respect to the Funds or other materials
prepared by or on behalf of the Funds shall be prepared, in all material
respects, in conformity with the CEA, the Commodities Rules, the 1933 Act and
the rules and regulations of the SEC (the "SEC Rules and Regulations"); (vii)
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 CEA, the Commodities Rules, the 1933 Act,
the SEC Rules and Regulations, and FINRA Rules and Regulations; and (viii) all
statements of fact contained therein, or to be contained in all Sales Literature
and Advertisements, are or will be true and correct in all material respects at
the time indicated or the effective date, as the case may be, and none of the
Registration Statement, any Fund's Prospectus, nor any Sales Literature and
Advertisements shall include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the case of each Fund's Prospectus in light of the
circumstances in which made, not misleading. Each Fund 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
counsel to the Managing Owner, 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. Each Fund shall not file any amendment to the Registration
Statement or each Fund's Prospectus without giving the Distributor reasonable
notice thereof in advance and the Managing Owner shall promptly notify the
Distributor of any stop order suspending the effectiveness of the Registration
Statement; provided that nothing in this Agreement shall in any way limit the
Funds' right to file at any time such amendments to the Registration

 

  

 

Statement or any Fund's Prospectus as the Managing Owner may deem advisable.
Notwithstanding the foregoing, the Funds 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.

 

8.Duration, Termination and Amendment.

 

(a)This Agreement shall be effective on January 1, 2013, and unless terminated
as provided herein, shall continue for one year from its effective date, and
hereafter from year to year, provided such continuance is approved annually by
the Managing Owner.

 

This Agreement may be terminated at any time, without the payment of any
penalty, as to each individual Fund by the Managing Owner or by the Distributor,
on sixty (60) days' prior written notice. This Agreement shall automatically
terminate without the payment of any penalty in the event of its assignment.

 

(b)No provision of this Agreement may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against which
an enforcement of the change, waiver, discharge or termination is sought.

 

9.Notice.

 

Any notice or other communication authorized or required by this Agreement to be
given to either party shall be in writing and deemed to have been given when
delivered in person or by confirmed facsimile, or posted by certified mail,
return receipt requested, to the following address (or such other address as a
party may specify by written notice to the other):

 

If to the Distributor:

Esposito Securities, LLC

ATTN: Legal/Compliance

300 Crescent Court Suite 650

Dallas, TX 75201

Telephone: (214) 855-2150

Facsimile: (214) 855-2160

 

If to the Managing Owner:

Factor Capital Management, LLC

1 Penn Plaza

36th Floor

New York, NY 1011 9

Telephone: (212) 786-7482

Facsimile: (917) 522-9729

 

 

  

 

If to a Fund:

[Name of applicable Fund]

c/o Factor Capital Management, LLC

1 Penn Plaza

36th Floor

New York, NY 10119

Telephone: (212) 786-7482

Facsimile: (917) 522-9729

 

 

10.Choice of Law.

 

This Agreement shall be governed by, and construed in accordance with, the law
of the

State of Texas, 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.Confidentiality.

 

During the term of this Agreement, the Distributor and the Managing Owner, on
its own behalf and on behalf of each Fund, may have access to confidential
information relating to such matters as either party's business, trade secrets,
systems, procedures, manuals, products, contracts, personnel, and clients. As
used in this Agreement, "Confidential Information" means information belonging
to one of the parties that is of value to such party and the disclosure of which
could result in a competitive or other disadvantage to such party.

 

Confidential Information includes, without limitation, financial information,
proposal and presentations, reports, forecasts, inventions, improvements and
other intellectual property; trade secrets; know-how; designs, processes or
formulae; software; market or sales information or plans; customer lists; and
business plans, prospects and opportunities (such as possible acquisitions or
dispositions of businesses or facilities). Confidential Information includes
information developed by either party in the course of engaging in the
activities provided for in this Agreement, unless: (i) the information is or
becomes publicly known through lawful means; (ii) the information is disclosed
to the other party without a confidential restriction by a third party who
rightfully possesses the information and did not obtain it, either directly or
indirectly, from one of the parties, as the case may

 

  

 

be, or any of their respective principals, employees, affiliated persons, or
affiliated entities. The parties understand and agree that all Confidential
Information shall be kept confidential by the other both during and after the
term of this Agreement. Each party shall maintain commercially reasonable
information security policies and procedures for protecting Confidential
Information. The parties further agree that they will not, without the prior
written approval by the other party, disclose such Confidential Information, or
use such Confidential Information in any way, either during the term of this
Agreement or at any time thereafter, except as required in the course of this
Agreement and as provided by the other party or as required by law. Upon
termination of this Agreement for any reason, or as otherwise requested by the
Managing Owner, all Confidential Information held by or on behalf of Managing
Owner or any Fund shall be promptly returned to the Managing Owner, or an
authorized officer of the Distributor will certify to the Managing Owner in
writing that all such Confidential Information has been destroyed. This section
13 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 SEC, the
CFTC, FINRA 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.

 

14.Limitation of Liability.

 

This Agreement is executed by or on behalf of each Fund and the obligations
hereunder are not binding upon any of the trustees, officers or shareholders of
a Fund individually but are binding only upon each 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 any
other Fund. The debts, liabilities, obligations, and expenses incurred,
contracted for, or otherwise existing with respect to a particular Fund shall be
enforceable against the assets of that Fund only, and not against the assets of
any other Fund, and none of the debts, liabilities, obligations, and expenses
incurred, contracted for, or otherwise existing with respect to any other Fund
shall be enforceable against the assets of that Fund. Each Fund's Amended and
Restated Trust Declaration, as may be amended form time to time, is on file with
the Managing Owner.

 

15.Use of names; Publicity.

 

The Funds shall not use the Distributor's name, or any trade or service mark
owned by or licensed to the Distributor, in any offering material, shareholder
report, advertisement or other material relating to the Funds, 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 FINRA, the
SEC, the CFTC, any state securities commission, or any federal or state
regulatory authority.

 

The Distributor or its affiliates shall not use the name of any Fund or the name
of the Managing Owner, or any trade or service mark owned by or licensed to the
Managing Owner or any Fund 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 Funds
hereunder, in a manner not approved by the Managing Owner in writing prior to
such use, provided that in no case shall such approval be unreasonably withheld.
The Managing Owner and each Fund hereby consent to all uses of its name required
by FINRA, the SEC, the CFTC or any state securities commission, or any federal
or state regulatory authority.

 

The Distributor will not issue any press releases or make any public
announcements regarding the existence of this Agreement without the express
prior written consent of the Managing Owner. None of the Managing Owner, the
Funds or 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.

 

FACTOR CAPITAL MANAGEMENT, LLC, as

Managing Owner of each of the Funds set forth on Exhibit A

BY: /s/ Samuel Masucci Name: Samuel Masucci Title: Chief Executive Officer

 

 

  

 

FACTOR CAPITAL MANAGEMENT, LLC

BY: /s/ Samuel Masucci Name: Samuel Masucci Title: Chief Executive Officer

 

ESPOSITO SECURITIES, LLC

BY: /s/ William Martin Name: William Martin Title: Chief Compliance Officer

 

 

  

 

EXHIBIT A

FactorShares 2X: S&P500 Bull / TBond Bear

FactorShares 2X: TBond Bull / S&P500 Bear

FactorShares 2X: S&P500 Bull / USD Bear

FactorShares 2X: Oil Bull / S&P500 Bear

FactorShares 2X: Gold Bull / S&P500 Bear

 

 
 

 

EXHIBIT B

 

Fee Schedule

 

Annual Fees

 

Distribution Base Fee*

1-5 Funds $25,000 in total for all Funds 1-10 Funds $45,000 in total for all
Funds 1-15 Funds $60,000 in total for all Funds

 

 

BPS Fee**

$0-$2 Billion .75 basis Points (.00075) $2B - $10 Billion .50 basis points
(.00050) $10 Billion + .25 basis points (.00025)

 

* Per Annum, calculated and payable 1/12 on a monthly basis.

** BPS Fee subject to a $1,800 per fund monthly minimum.

*** If Rep Requires Outside Account Review.

 

Out-Of-Pocket and Related Expenses

The Adviser shall also reimburse Distributor for reasonable out-of-pocket and
ancillary expenses incurred in the provision of services pursuant to this
Agreement, including but not limited to the following: communications; postage
and delivery services; record storage and retention; reproduction; reasonable
travel expenses incurred in connection with the provision of the services
pursuant to the Distribution Agreement; and any other expenses incurred in
connection with the provision of the services pursuant to this Agreement.

 

 

  

 

EXHIBIT C

 

Pursuant to Section 5(e)

 

The payments to the Distributor under Section 5 and under any other agreement
between the Distributor or any of its affiliates and the Funds or the Managing
Owner with respect to the Funds, will not, in the aggregate, exceed 5.0% of the
aggregate dollar amount of the offering (an amount equal to $5,000,000 of the
$100,000,000 Shares registered on the Registration Statement on Form S-1
(333-164754) in respect of FactorShares S&P 2X: S&P500 Bull / TBond Bear).

 

The payments to the Distributor under Section 5 and under any other agreement
between the Distributor or any of its affiliates and the Funds or the Managing
Owner with respect to the Funds, will not, in the aggregate, exceed 5.0% of the
aggregate dollar amount of the offering (an amount equal to $5,000,000 of the
$100,000,000 Shares registered on the Registration Statement on Form S-1
(333-164758) in respect of FactorShares S&P 2X: TBond Bull / S&P500 Bear).

 

The payments to the Distributor under Section 5 and under any other agreement
between the Distributor or any of its affiliates and the Funds or the Managing
Owner with respect to the Funds, will not, in the aggregate, exceed 5.0% of the
aggregate dollar amount of the offering (an amount equal to $5,000,000 of the
$100,000,000 Shares registered on the Registration Statement on Form S-1
(333-164757) in respect of FactorShares S&P 2X: S&P500 Bull / USD Bear).

 

The payments to the Distributor under Section 5 and under any other agreement
between the Distributor or any of its affiliates and the Funds or the Managing
Owner with respect to the Funds, will not, in the aggregate, exceed 5.0% of the
aggregate dollar amount of the offering (an amount equal to $5,000,000 of the
$100,000,000 Shares registered on the Registration Statement on Form S-1
(333-164756) in respect of FactorShares S&P 2X: Oil Bull / S&P500 Bear).

 

The payments to the Distributor under Section 5 and under any other agreement
between the Distributor or any of its affiliates and the Funds or the Managing
Owner with respect to the Funds, will not, in the aggregate, exceed 5.0% of the
aggregate dollar amount of the offering (an amount equal to $5,000,000 of the
$100,000,000 Shares registered on the Registration Statement on Form S-1
(333-164755) in respect of FactorShares S&P 2X: Gold Bull / S&P500 Bear).