EXHIBIT 1.1
FORM OF
DB COMMODITY INDEX TRACKING FUND
PARTICIPANT AGREEMENT
This DB Commodity Index Tracking Fund Participant Agreement (the
"Agreement"), dated as of ________, is entered into by and among __________
(the "Authorized Participant"), DB Commodity Index Tracking Fund, a Delaware
statutory trust (the "Trust"), and DB Commodity Services LLC, a Delaware
limited liability company, as managing owner of the Trust (the "Managing
Owner").
SUMMARY
As provided in the Declaration of Trust and Trust Agreement of the Trust
(the "Trust Agreement") and described in the Prospectus (defined below), units
of fractional undivided beneficial interest in and ownership of the Trust (the
"Shares") may be created or redeemed by the Managing Owner for an Authorized
Participant in aggregations of two hundred thousand (200,000) Shares (each
aggregation, a "Basket"). Baskets are offered only pursuant to the
registration statement of the Trust on Form S-1, as amended (Registration No.:
333-______), as declared effective by the Securities and Exchange Commission
("SEC") and as the same may be amended from time to time thereafter
(collectively, the "Registration Statement") together with the prospectus of
the Trust (the "Prospectus") included therein. Under the Trust Agreement, the
Managing Owner is authorized to issue Baskets to, and redeem Baskets from,
Authorized Participants, only through the facilities of the Depository Trust
Company ("DTC"), or a successor depository, and only in exchange for cash.
This Agreement sets forth the specific procedures by which an Authorized
Participant may create or redeem Baskets.
Because new Shares can be created and issued on an ongoing basis, at any
point during the life of the Trust, a "distribution," as such term is used in
the Securities Act of 1933, as amended ("1933 Act"), may be occurring. The
Authorized Participant is cautioned that some of its activities may result in
its being deemed a participant in a distribution in a manner which would
render it a statutory underwriter and subject it to the prospectus-delivery
and liability provisions of the 1933 Act. The Authorized Participant should
review the "Plan of Distribution" portion of the Prospectus and consult with
its own counsel in connection with entering into this Agreement and submitting
a Purchase Order Subscription Agreement (defined below).
Capitalized terms used but not defined in this Agreement shall have the
meanings assigned to such terms in the Trust Agreement. To the extent there is
a conflict between any provision of this Agreement and the provisions of the
Trust Agreement, the provisions of the Trust Agreement shall control.
To give effect to the foregoing premises and in consideration of the
mutual covenants and agreements set forth below, the parties hereto agree as
follows:
Section 1. Order Placement. To place orders for the Managing Owner to
create or redeem one or more Baskets, Authorized Participants must follow the
procedures for creation and redemption referred to in Section 3 of this
Agreement and the procedures described in
Attachment A hereto (the "Procedures"), as each may be amended, modified or
supplemented from time to time.
Section 2. Status of Authorized Participant. The Authorized Participant
represents and warrants and covenants the following:
(a) The Authorized Participant is a participant of DTC (as such a
participant, a "DTC Participant"). If the Authorized Participant ceases to be
a DTC Participant, the Authorized Participant shall give immediate notice to
the Managing Owner of such event, and this Agreement shall terminate
immediately as of the date the Authorized Participant ceased to be a DTC
Participant.
(b) Unless Section 2(c) applies, the Authorized Participant either (i)
is registered as a broker-dealer under the Securities Exchange Act of 1934, as
amended ("1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"), or (ii) is exempt from
being, or otherwise is not required to be, licensed as a broker-dealer or a
member of the NASD, and in either case is qualified to act as a broker or
dealer in the states or other jurisdictions where the nature of its business
so requires. The Authorized Participant will maintain any such registrations,
qualifications and membership in good standing and in full force and effect
throughout the term of this Agreement. The Authorized Participant will 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 the NASD (if it is a
NASD member), and will not offer or sell Shares in any state or jurisdiction
where they may not lawfully be offered and/or sold.
(c) If the Authorized Participant is offering or selling Shares 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 the NASD as set forth in Section 2(b) above, the Authorized
Participant will (i) observe the applicable laws of the jurisdiction in which
such offer and/or sale is made, (ii) comply with the full disclosure
requirements of the 1933 Act, and the regulations promulgated thereunder, and
(iii) conduct its business in accordance with the spirit of the NASD Conduct
Rules.
(d) The Authorized Participant is in compliance with the money
laundering and related provisions of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001 (the "USA PATRIOT Act"), and the regulations promulgated thereunder,
if the Authorized Participant is subject to the requirements of the USA
PATRIOT Act.
Section 3. Orders. (a) All orders to create or redeem Baskets shall be
made in accordance with the terms of the Trust Agreement, this Agreement and
the Procedures. Each party will comply with such foregoing terms and
procedures to the extent applicable to it. The Authorized Participant hereby
consents to the use of recorded telephone lines whether or not such use is
reflected in the Procedures. The Managing Owner may issue additional or other
procedures from time to time relating to the manner of creating or redeeming
Baskets which are not related to the Procedures, and the Authorized
Participant will comply with such procedures.
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(b) The Authorized Participant acknowledges and agrees on behalf of
itself and any party for which it is acting (whether such party is a customer
or otherwise) that each order to create a Basket (a "Purchase Order
Subscription Agreement") and each order to redeem a Basket (a "Redemption
Order", and each Purchase Order Subscription Agreement and Redemption Order,
an "Order") may not be revoked by the Authorized Participant upon its delivery
to the Managing Owner. A form of Purchase Order Subscription Agreement is
attached hereto as Exhibit B and a form of Redemption Order is attached hereto
as Exhibit C.
(c) The Managing Owner shall have the absolute right, but shall have no
obligation, to reject any Purchase Order Subscription Agreement or Creation
Basket Capital Contribution (i) determined by the Managing Owner not to be in
proper form; (ii) that the Managing Owner has determined would have adverse
tax consequences to the Trust or to the Beneficial Owners; (iii) the
acceptance or receipt of which would, in the opinion of counsel to the
Managing Owner be unlawful; or (iv) if circumstances outside the control of
the Managing Owner make it for all practical purposes not feasible to process
creations of Creation Baskets. The Managing Owner shall not be liable to any
person by reason of the rejection of any Purchase Order Subscription Agreement
or Creation Basket Capital Contribution.
(d) The Managing Owner shall reject any Redemption Order the fulfillment
of which its counsel advises may be illegal under applicable laws and
regulations, and the Managing Owner shall have no liability to any person for
rejecting a Redemption Order in such circumstances.
(e) The Managing Owner may, in its discretion, suspend the right of
redemption, or postpone the applicable Redemption Settlement Time, (i) for any
period during which the American Stock Exchange is closed other than for
customary weekend or holiday closings, or trading is suspended or restricted;
(ii) for any period during which an emergency exists as a result of which
delivery, disposal or evaluation of the Trust's assets is not reasonably
practicable; or (iii) for such other period as the Managing Owner determines
to be necessary for the protection of the Beneficial Owners. The Managing
Owner is not liable to any person or in any way for any loss or damages that
may result from any such suspension or postponement.
Section 4. Fees. In connection with each Order by an Authorized
Participant to create or redeem one or more Baskets, the Managing Owner shall
charge, and the Authorized Participant shall pay from its DTC account to the
Managing Owner, the Transaction Fee prescribed in the Trust Agreement
applicable to such creation or redemption. The initial Transaction Fee shall
be two thousand dollars ($2,000). The Transaction Fee may be adjusted from
time to time as set forth in the Trust Agreement and Prospectus. As described
in the Procedures, in the case of a Redemption Order that is held open until
4:00 p.m. on the Redemption Order Date (the "Redemption Settlement Time"), for
each day (whether or not a Business Day) the Redemption Order is held open,
the Authorized Participant will be charged by the Managing Owner the greater
of (i) $[300] and (ii) $[30] times the number of Redemption Baskets covered by
the Redemption Order.
Section 5. Authorized Persons. Concurrently with the execution of this
Agreement and from time to time thereafter, the Authorized Participant shall
deliver to the Managing Owner notarized and duly certified as appropriate by
its secretary or other duly authorized official, a
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certificate in the form of Exhibit A setting forth the names and signatures of
all persons authorized to give instructions relating to activity contemplated
hereby or by any other notice, request or instruction given on behalf of the
Authorized Participant (each, an "Authorized Person"). The Managing Owner may
accept and rely upon such certificate as conclusive evidence of the facts set
forth therein and shall consider such certificate to be in full force and
effect until the Managing Owner receives a superseding certificate bearing a
subsequent date. Upon the termination or revocation of authority of any
Authorized Person by the Authorized Participant, the Authorized Participant
shall give immediate written notice of such fact to the Managing Owner and
such notice shall be effective upon receipt by the Managing Owner. The
Managing Owner shall issue to each Authorized Person a unique personal
identification number (the "PIN Number") by which such Authorized Person shall
be identified and by which instructions issued by the Authorized Participant
hereunder shall be authenticated. The PIN Number shall be kept confidential by
the Authorized Participant and shall only be provided to the Authorized
Person. If, after issuance, the Authorized Person's PIN Number is changed, the
new PIN Number shall become effective on a date mutually agreed upon by the
Authorized Participant and the Managing Owner.
Section 6. Redemption. The Authorized Participant represents and
warrants that it will not obtain an Order Number (as described in the
Procedures) from the Managing Owner for the purpose of redeeming a Basket
unless it first ascertains that (i) 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 Baskets to be redeemed and to receive the entire
proceeds of the redemption, and (ii) such Baskets 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 which would preclude the
delivery of such Baskets to the Managing Owner the third Business Day
following the Redemption Order Date.
Section 7. Role of Authorized Participant. (a) The Authorized
Participant acknowledges that, for all purposes of this Agreement and the
Trust Agreement, the Authorized Participant is and shall be deemed to be an
independent contractor and has and shall have no authority to act as agent for
the Trust or the Managing Owner in any matter or in any respect.
(b) The Authorized Participant will make itself and its employees
available, upon request, during normal business hours to consult with the
Managing Owner or its designees concerning the performance of the Authorized
Participant's responsibilities under this Agreement.
(c) With respect to any creation or redemption transaction made by the
Authorized Participant pursuant to this Agreement for the benefit of any
customer or any other DTC Participant or Indirect Participant, or any other
Beneficial Owner, the Authorized Participant shall extend to any such party
all of the rights, and shall be bound by all of the obligations, of a DTC
Participant in addition to any obligations that it undertakes hereunder or in
accordance with the Trust Agreement.
(d) The Authorized Participant will maintain records of all sales of
Shares made by or through it and will furnish copies of such records to the
Managing Owner upon the reasonable request of the Managing Owner.
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Section 8. Indemnification.
(a) The Authorized Participant hereby indemnifies and holds harmless the
Trust and the Managing Owner, their respective direct or indirect affiliates
(as defined below) and their respective directors, trustees, managing owners,
partners, members, managers, officers, employees and agents (each, an "AP
Indemnified Party") from and against any losses, liabilities, damages, costs
and expenses (including attorney's fees and the reasonable cost of
investigation) incurred by such AP Indemnified Party as a result of or in
connection with: (i) any breach by the Authorized Participant of any
provisions of this Agreement, including its representations, warranties and
covenants; (ii) any failure on the part of the Authorized Participant to
perform any of its obligations set forth in this Agreement; (iii) any failure
by the Authorized Participant to comply with applicable laws and the rules and
regulations of self-regulatory organizations; (iv) any actions of such AP
Indemnified Party in reliance upon any instructions issued in accordance with
the Procedures believed by the AP Indemnified Party to be genuine and to have
been given by the Authorized Participant; or (v) (A) any representation by the
Authorized Participant, its employees or its agents or other representatives
about the Shares, any AP Indemnified Party or the Trust that is not consistent
with the Trust's then-current Prospectus made in connection with the offer or
the solicitation of an offer to buy or sell Shares and (B) any untrue
statement or alleged untrue statement of a material fact contained in any
research reports, marketing material and sales literature described in Section
12(b) or any alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading to
the extent that such statement or omission relates to the Shares, any AP
Indemnified Party or the Trust, unless, in either case, such representation,
statement or omission was made or included by the Authorized Participant at
the written direction of the Managing Owner or is based upon any omission or
alleged omission by the Managing Owner to state a material fact in connection
with such representation, statement or omission necessary to make such
representation, statement or omission not misleading.
(b) The Managing Owner hereby agrees to indemnify and hold harmless the
Authorized 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, a "Managing
Owner Indemnified Party") from and against any losses, liabilities, damages,
costs and expenses (including attorneys' fees and the reasonable cost of
investigation) incurred by such Managing Owner Indemnified Party as a result
of (i) any breach by the Managing Owner of any provision of this Agreement
that relates to the Managing Owner; (ii) any failure on the part of the
Managing Owner to perform any obligation of the Managing Owner set forth in
this Agreement; (iii) any failure by the Managing Owner to comply with
applicable laws; or (iv) any untrue statement or alleged untrue statement of a
material fact contained in the registration statement of the Trust as
originally filed with the SEC or in any amendment thereof, or in any
prospectus, or in any amendment thereof or supplement thereto, or arising out
of or based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except those statements in the Registration Statement or the
Prospectus based on information furnished in writing by or on behalf of the
Authorized Participant expressly for use in the Registration Statement or the
Prospectus.
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(c) This Section 8 shall not apply to the extent any such losses,
liabilities, damages, costs and expenses are incurred as a result or in
connection with any gross negligence, bad faith or willful misconduct on the
part of the AP Indemnified Party or the Managing Owner Indemnified Party, as
the case may be. The term "affiliate" in this Section 8 shall include, with
respect to any person, entity or organization, any other person, entity or
organization which directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such person, entity
or organization.
(d) If the indemnification provided for in this Section 8 is unavailable
to an indemnified party under Sections 8(a) or 8(b) or insufficient to hold an
indemnified party harmless in respect of any losses, liabilities, damages,
costs and expenses referred to therein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, liabilities, damages, costs and expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Managing Owner and the Trust, on the one hand, and by the Authorized
Participant, on the other hand, from the services provided hereunder or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Managing Owner and the Trust, on the one hand, and of the Authorized
Participant, on the other hand, in connection with, to the extent applicable,
the statements or omissions which resulted in such losses, liabilities,
damages, costs and expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Managing Owner and the
Trust, on the one hand, and the Authorized Participant, on the other hand,
shall be deemed to be in the same respective proportions as the amount of cash
transferred to the Trust under this Agreement on the one hand (expressed in
dollars) bears to the amount of economic benefit received by the Authorized
Participant in connection with this Agreement on the other hand. To the extent
applicable, the relative fault of the Managing Owner on the one hand and of
the Authorized Participant on the other shall be determined by reference to,
among other things, whether the untrue statement or alleged untrue statement
of a material fact or omission or alleged omission relates to information
supplied by the Managing Owner or by the Authorized Participant and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, liabilities, damages, costs and expenses
referred to in this Section 8(d) shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating, preparing to defend or defending any action, suit or proceeding
(each a "Proceeding") related to such losses, liabilities, damages, costs and
expenses.
(e) The Managing Owner and the Authorized Participant agree that it
would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in
Section 8(d) above. The Authorized Participant shall not be required to
contribute any amount in excess of the amount by which the total price at
which the Shares created by the Authorized Participant and distributed to the
public exceeds the amount of any damage which the Authorized Participant has
otherwise been required to pay by reason of such untrue statement or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇
▇▇▇) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
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(f) The indemnity and contribution agreements contained in this Section
8 shall remain in full force and effect regardless of any investigation made
by or on behalf of the Authorized Participant, its partners, stockholders,
members, directors, officers, employees and or any person (including each
partner, stockholder, member, director, officer or employee of such person)
who controls the Authorized Participant within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, or by or on behalf of the Managing
Owner, its partners, stockholders, members, managers, directors, officers,
employees or any person who controls the Managing Owner within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, and shall survive
any termination of this Agreement. The Managing Owner and the Authorized
Participant agree promptly to notify each other of the commencement of any
Proceeding against it and, in the case of the Managing Owner, against any of
the Managing Owner's officers or directors, in connection with the issuance
and sale of the Shares or in connection with the Registration Statement or the
Prospectus.
Section 9. (a) Limitation of Liability. Neither the Managing Owner nor
the Authorized Participant shall be liable to each other or to any other
person, including any party claiming by, through or on behalf of the
Authorized Participant, for any losses, liabilities, damages, costs or
expenses arising out of any mistake or error in data or other information
provided to any of them by each other or any other person or out of any
interruption or delay in the electronic means of communications used by them.
(b) Tax Liability. The Authorized Participant shall be responsible for
the payment of any transfer tax, sales or use tax, stamp tax, recording tax,
value added tax and any other similar tax or government charge applicable to
the creation or redemption of any Basket made pursuant to this Agreement,
regardless of whether or not such tax or charge is imposed directly on the
Authorized Participant. To the extent the Managing Owner or the Trust is
required by law to pay any such tax or charge, the Authorized Participant
agrees to promptly indemnify such party for any such payment, together with
any applicable penalties, additions to tax or interest thereon.
Section 10. Acknowledgment. The Authorized Participant acknowledges
receipt of a (i) copy of the Trust Agreement and (ii) the current Prospectus
of the Trust and represents that it has reviewed and understands such
documents.
Section 11. Effectiveness and Termination. Upon the execution of this
Agreement by the parties hereto, this Agreement shall become effective in this
form as of the date first set forth above, and may be terminated at any time
by any party upon thirty (30) days prior written notice to the other parties
unless earlier terminated: (i) in accordance with Section 2(a); (ii) upon
notice to the Authorized Participant by the Managing Owner in the event of a
breach by the Authorized Participant of this Agreement or the procedures
described or incorporated herein; (iii) immediately in the circumstances
described in Section 20(j); or (iv) at such time as the Trust is terminated
pursuant to the Trust Agreement.
Section 12. Marketing Materials; Representations Regarding Shares;
Identification in Registration Statement.
(a) The Authorized Participant represents, warrants and covenants that
(i), without the written consent of the Managing Owner, the Authorized
Participant will not make, or permit
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any of its representatives to make, any representations concerning the Shares
or any AP Indemnified Party other than representations contained (A) in the
then-current Prospectus of the Trust, (B) in printed information approved by
the Managing Owner as information supplemental to such Prospectus or (C) in
any promotional materials or sales literature furnished to the Authorized
Participant by the Managing Owner, and (ii) the Authorized Participant will
not furnish or cause to be furnished to any person or display or publish any
information or material relating to the Shares, any AP Indemnified Person or
the Trust that are not consistent with the Trust's then current Prospectus.
Copies of the then current Prospectus of the Trust and any such printed
supplemental information will be supplied by the Managing Owner to the
Authorized Participant in reasonable quantities upon request.
(b) Notwithstanding the foregoing, the Authorized Participant may
without the written approval of the Managing Owner prepare and circulate in
the regular course of its business research reports, marketing material and
sales literature that includes information, opinions or recommendations
relating to the Shares (i) for public dissemination, provided that such
research reports, marketing material or sales literature compare the relative
merits and benefits of Shares with other products; and (ii) for internal use
by the Authorized Participant. The Authorized Participant will file all such
research reports, marketing material and sales literature related to the
Shares with the NASD to the extent required by the NASD Conduct Rules.
(c) The Authorized Participant hereby agrees that for the term of this
Agreement the Managing Owner may deliver the then-current Prospectus, and any
supplements or amendments thereto or recirculation thereof, to the Authorized
Participant in Portable Document Format ("PDF") via electronic mail in lieu of
delivering the Prospectus in paper form. The Authorized Participant may revoke
the foregoing agreement at any time by delivering written notice to the
Managing Owner and, whether or not such agreement is in effect, the Authorized
Participant may, at any time, request reasonable quantities of the Prospectus,
and any supplements or amendments thereto or recirculation thereof, in paper
form from the Managing Owner. The Authorized Participant acknowledges that it
has the capability to access, view, save and print material provided to it in
PDF and that it will incur no appreciable extra costs by receiving the
Prospectus in PDF instead of in paper form. The Managing Owner will when
requested by the Authorized Participant make available at no cost the software
and technical assistance necessary to allow the Authorized Participant to
access, view and print the PDF version of the Prospectus.
(d) For as long as this Agreement is effective, the Authorized
Participant agrees to be identified as an authorized participant of the Trust
(i) in the section of the Prospectus included within the Registration
Statement entitled "Creation and Redemption of Shares" and in any other
section as may be required by the SEC and (ii) on the Trust's website. Upon
the termination of this Agreement, (i) during the period prior to when the
Managing Owner qualifies and in its sole discretion elects to file on Form
S-3, the Managing Owner will remove such identification from the Prospectus in
the amendment of the Registration Statement next occurring after the date of
the termination of this Agreement and, during the period after when the
Managing Owner qualifies and in its sole discretion elects to file on Form
S-3, the Managing Owner will promptly file a current report on Form 8-K
indicating the withdrawal of the Authorized Participant as an authorized
participant of the Trust and (ii) the Managing Owner will promptly update the
Trust's
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website to remove any identification of the Authorized Participant as an
authorized participant of the Trust.
Section 13. Certain Covenants of the Managing Owner. The Managing Owner,
on its own behalf and as sponsor of the Trust, covenants and agrees:
(a) to advise the Authorized Participant promptly of the happening of
any event during the term of this Agreement which could require the making of
any change in the Prospectus then being used so that the Prospectus would not
include an untrue statement of material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading, and, during such time, to prepare
and furnish, at the expense of the Trust, to the Authorized Participant
promptly such amendments or supplements to such Prospectus as may be necessary
to reflect any such change;
(b) to furnish to the Authorized Participant, at each time (i) the
Registration Statement or the Prospectus is amended or supplemented by the
filing of a post-effective amendment, (ii) a new Registration Statement is
filed to register additional Shares in reliance on Rule 429, and (iii) there
is financial information incorporated by reference into the Registration
Statement or the Prospectus, an opinion of either (x) Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇ LLP, counsel for the Managing Owner, or (y) special Delaware counsel for
the Managing Owner addressed to the Authorized Participant and dated such
dates in form and substance satisfactory to the Authorized Participant,
stating that:
1. the Trust is validly existing as a statutory trust under the
Delaware Statutory Trust Act, as described in the Registration
Statement and the Prospectus, and has all power and authority to
issue and deliver the Shares as contemplated therein and to
execute and deliver this Agreement;
2. the Managing Owner has been duly formed and is validly existing as
a limited liability company in good standing under the laws of the
State of Delaware, with full power and authority to conduct its
business as described in the Registration Statement and the
Prospectus and to execute and deliver this Agreement;
3. the Managing Owner is duly qualified and is in good standing in
each jurisdiction where the conduct of its business requires such
qualification;
4. this Agreement has been duly authorized, executed and delivered by
the Managing Owner;
5. the Shares issuable by the Trust as described in the Registration
Statement, when issued in accordance with the terms of the Trust
Agreement as described in the Registration Statement, will have
been duly authorized and validly issued and fully paid and
non-assessable;
6. the Shares conform to the description thereof contained in the
Registration Statement and the Prospectus;
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7. the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial information
contained therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the 1933 Act;
8. the Registration Statement has become effective under the 1933 Act
and, to such counsel's knowledge, no stop order proceedings with
respect thereto are pending or threatened under the 1933 Act and
any required filing of the Prospectus and any supplement thereto
pursuant to Rule 424 under the 1933 Act has been made in the
manner and within the time period required by such Rule 424;
9. no approval, authorization, consent or order of or filing with any
federal, or Delaware governmental or regulatory commission, board,
body, authority or agency is required in connection with the
issuance and sale of the Shares and consummation by the Trust and
the Managing Owner of the transactions contemplated in the
Prospectus other than registration of the Shares under the 1933
Act (except such counsel need express no opinion as to any
necessary qualification under the state securities or blue sky
laws of any state or the laws of any jurisdictions outside the
United States);
10. the execution, delivery and performance of this Agreement by the
Managing Owner, the issuance and delivery of the Shares by the
Trust and the consummation by the Managing Owner on behalf of the
Trust of the transactions contemplated hereby do not and will not
conflict with, result in any breach or violation of or constitute
a default under (nor constitute any event which with notice, lapse
of time or both would result in any breach or violation of or
constitute a default under) the limited liability company
agreement of the Managing Owner or the Trust Agreement, or any
indenture, mortgage, deed of trust, bank loan or credit agreement
or other evidence of indebtedness, or any license, lease, contract
or other agreement or instrument known to such counsel (based on a
certificate of an officer of the Managing Owner) to which the
Managing Owner or the Trust is a party or by which the Managing
Owner or the Trust or any of their respective properties may be
bound or affected, or any federal, or Delaware law, regulation or
rule or any decree, judgment or order applicable to the Managing
Owner or the Trust (based, in the case of any decree, judgment or
order, on a certificate of an officer of the Managing Owner);
11. to such counsel's knowledge, neither the Managing Owner nor the
Trust is in breach or violation of or in default under (nor has
any event occurred which with notice, lapse of time, or both would
result in any breach or violation of, or constitute a default
under) their respective constitutive documents, or any federal or
Delaware law, regulation or rule applicable to the Managing Owner
or the Trust;
12. to such counsel's knowledge, there are no affiliate transactions,
off-balance sheet transactions, contracts, licenses, agreements,
leases or documents of a character which are required to be
described in the Registration Statement or the Prospectus
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or to be filed as an exhibit to the Registration Statement which
have not been so described or filed;
13. to such counsel's knowledge, there are no actions, suits, claims,
investigations or proceedings pending, or threatened to which the
Managing Owner is or would be a party or to which any of its
properties is or would be subject at law or in equity, before or
by any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency which are required to
be described in the Registration Statement or the Prospectus but
are not so described;
14. the Trust is not and, after giving effect to the offering and sale
of the Shares, will not be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
15. the information in the Registration Statement and the Prospectus
under the headings "Risk Factors--Competing claims over ownership
of intellectual property rights related to the Fund could
adversely affect the Fund and an investment in the Shares,"
"Description of the Shares," "United States Federal Tax
Consequences," and "Description of the Trust Agreement" insofar as
such statements constitute a summary of documents or matters of
law are accurate in all material respects and present fairly the
information required to be shown.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Managing Owner,
representatives of the independent public accountants of the Trust and
representatives of the Authorized Participant at which the contents of the
Registration Statement and the Prospectus were discussed and, although such
counsel is not passing upon and does not assume responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (except as and to the extent stated
in subparagraphs (6) and (15) above), on the basis of the foregoing nothing
has come to the attention of such counsel that causes them to believe that the
Registration Statement or any amendment thereto at the time such Registration
Statement or amendment became effective contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or that
the Prospectus or any supplement thereto at the date of such Prospectus or
such supplement, and at the time of purchase of the Shares by the Authorized
Participant hereunder, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading (it being understood that such counsel need express
no opinion with respect to the financial statements and schedules and other
financial information included in the Registration Statement or the
Prospectus);
(c) to cause [name of accountants] to deliver, at each time (i) the
Registration Statement or the Prospectus is amended or supplemented by the
filing of a post-effective amendment, (ii) a new Registration Statement is
filed to register additional Shares in reliance on Rule 429, and (iii) there
is financial information incorporated by reference into the Registration
Statement or the Prospectus, letters dated such dates and addressed to the
Authorized Participant, containing statements and information of the type
ordinarily included in accountants' letters to
11
underwriters with respect to the financial statements and other financial
information contained in or incorporated by reference into the Registration
Statement and the Prospectus;
(d) to deliver to the Authorized Participant, at each time (i) the
Registration Statement or the Prospectus is amended or supplemented by the
filing of a post-effective amendment, (ii) a new Registration Statement is
filed to register additional Shares in reliance on Rule 429, and (iii) there
is financial information incorporated by reference into the Registration
Statement or the Prospectus, a certification by a duly authorized officer of
the Managing Owner in the form attached hereto as Exhibit D.
In addition, any certificate signed by any officer of the Managing Owner
and delivered to the Authorized Participant or counsel for the Authorized
Participant pursuant hereto shall be deemed to be a representation and
warranty by the Managing Owner as to matters covered thereby to the Authorized
Participant;
(e) to cause the Trust to file a post-effective amendment to the
Registration Statement no less frequently than once per calendar quarter on or
about the same time that the Trust files a quarterly or annual report pursuant
to Section 13 or 15(d) of the 1934 Act (including the information contained in
such report), until such time as the Trust's reports filed pursuant to Section
13 or 15(d) of the 1934 Act are incorporated by reference in the Registration
Statement.
Section 14. Third Party Beneficiaries. Each AP Indemnified Party, to the
extent it is not a party to this Agreement, is a third-party beneficiary of
this Agreement (each, a "Third Party Beneficiary") and may proceed directly
against the Authorized Participant (including by bringing proceedings against
the Authorized Participant in its own name) to enforce any obligation of the
Authorized Participant under this Agreement which directly or indirectly
benefits such Third Party Beneficiary.
Section 15. Force Majeure. No party to this Agreement shall incur any
liability for any delay in performance, or for the non-performance, of any of
its obligations under this Agreement by reason of any cause beyond its
reasonable control. This includes any act of God or war or terrorism, any
breakdown, malfunction or failure of transmission in connection with or other
unavailability of any wire, communication or computer facilities, any
transport, port, or airport disruption, industrial action, acts and
regulations and rules of any governmental or supra national bodies or
authorities or regulatory or self-regulatory organization or failure of any
such body, authority or organization for any reason, to perform its
obligations.
Section 16. Ambiguous Instructions. If a Purchase Order Subscription
Agreement or a Redemption Order otherwise in good form contains order terms
that differ from the information provided in the telephone call at the time of
issuance of the applicable order number, the Managing Owner will attempt to
contact one of the Authorized Persons of the Authorized 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 the Order terms, the Order will
be deemed invalid, and a corrected Order must be received by the Managing
Owner, as the case may be, not later than the earlier of: (i) within 15
minutes of such contact with the Authorized Person; or (ii) 45 minutes after
the Order Cut-Off Time (as described in the Procedures). If the Managing Owner
is not able to
12
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, the Order will be deemed invalid and the Managing Owner will
attempt to contact one of the Authorized Persons of the Authorized Participant
to request retransmission of the Order. A corrected Order must be received by
the Managing Owner not later than the earlier of (i) within 15 minutes of such
contact with the Authorized Person or (ii) 45 minutes after the Order Cut-Off
Time, as the case may be.
Section 17. Miscellaneous.
(a) Amendment and Modification. This Agreement, the Procedures attached
as Attachment A and the Exhibits hereto may be amended, modified or
supplemented by the Trust and the Managing Owner, without consent of any
Beneficial Owner or Authorized Participant from time to time by the following
procedure. After the amendment, modification or supplement has been agreed to,
the Managing Owner will mail a copy of the proposed amendment, modification or
supplement to the Authorized Participant. For the purposes of this Agreement,
mail will be deemed received by the recipient thereof on the third (3rd) day
following the deposit of such mail into the United States postal system.
Within ten (10) calendar days after its deemed receipt, the amendment,
modification or supplement will become part of this Agreement, the Attachments
or the Exhibits, as the case may be, in accordance with its terms. If at any
time there is any material amendment, modification or supplement of any DB
Commodity Index Tracking Fund Participant Agreement (other than this
Agreement), the Managing Owner will promptly mail a copy of such amendment,
modification or supplement to the Authorized Participant.
(b) Waiver of Compliance. Any failure of any of the parties to comply
with any obligation, covenant, agreement or condition herein may be waived by
the party entitled to the benefits thereof only by a written instrument signed
by the party granting such waiver, but any such written waiver, or the failure
to insist upon strict compliance with any obligation, covenant, agreement or
condition herein, shall not operate as a waiver of, or estoppel with respect
to, any subsequent or other failure.
(c) 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, by postage prepaid
registered or certified United States first class mail, return receipt
requested, by nationally recognized overnight courier (delivery confirmation
received) or by telex, telegram or telephonic facsimile or similar means of
same day delivery (transmission confirmation received), with a confirming copy
regular mail, postage prepaid. For avoidance of doubt, notices may not be
given or transmitted by electronic mail. Unless otherwise notified in writing,
all notices to the Trust shall be given or sent to the Managing Owner. All
notices shall be directed to the address or telephone or facsimile numbers
indicated below the signature line of the parties on the signature page
hereof.
(d) Successors and Assigns. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
13
(e) Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any party without the prior
written consent of the other parties, except that any entity into which a
party hereto may be merged or converted or with which it may be consolidated
or any entity resulting from any merger, conversion, or consolidation to which
such party hereunder shall be a party, or any entity succeeding to all or
substantially all of the business of the party, shall be the successor of the
party under this Agreement. The party resulting from any such merger,
conversion, consolidation or succession shall notify the other parties hereto
of the change. Any purported assignment in violation of the provisions hereof
shall be null and void. Notwithstanding the foregoing, this Agreement shall be
automatically assigned to any successor trustee or Managing Owner at such time
such successor qualifies as a successor trustee or Managing Owner under the
terms of the Trust Agreement.
(f) Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
(regardless of the laws that might otherwise govern under applicable Delaware
conflict of laws principles) as to all matters, including matters of validity,
construction, effect, performance and remedies. Each party hereto irrevocably
consents to the jurisdiction of the courts of the State of New York and of any
federal court located in the Borough of Manhattan in such State in connection
with any action, suit or other proceeding arising out of or relating to this
Agreement or any action taken or omitted hereunder, and waives any claim of
forum non conveniens and any objections as to laying of venue. Each party
further waives personal service of any summons, complaint or other process and
agrees that service thereof may be made by certified or registered mail
directed to such party at such party's address for purposes of notices
hereunder.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement, and it shall not be necessary in making proof of
this Agreement as to any party hereto to produce or account for more than one
such counterpart executed and delivered by such party.
(h) Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
(i) Entire Agreement. This Agreement and the Trust Agreement, along with
any other agreement or instrument delivered pursuant to this Agreement and the
Trust Agreement, supersede all prior agreements and understandings between the
parties with respect to the subject matter hereof, provided, however, that the
Authorized Participant shall not be deemed by this provision to be a party to
the Trust Agreement.
(j) Severance. If any provision of this Agreement is held by any court or
any act, regulation, rule or decision of any other governmental or supra
national body or authority or regulatory or self-regulatory organization to be
invalid, illegal or unenforceable for any reason, it shall be invalid, illegal
or unenforceable only to the extent so held and shall not affect the validity,
legality or enforceability of the other provisions of this Agreement and this
Agreement will be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein, unless the Managing Owner
determines in its discretion that the provision of this
14
Agreement that was held invalid, illegal or unenforceable does affect the
validity, legality or enforceability of one or more other provisions of this
Agreement, and that this Agreement should not be continued without the
provision that was held invalid, illegal or unenforceable, and in that case,
upon the Managing Owner's notification of the trustee of such a determination,
this Agreement shall immediately terminate and the Managing Owner will so
notify the Authorized Participant immediately.
(k) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
(l) Survival. Sections 8 (Indemnification) and 14 (Third Party
Beneficiaries) hereof shall survive the termination of this Agreement.
(m) Other Usages. The following usages shall apply in interpreting this
Agreement: (i) references to a governmental or quasigovernmental agency,
authority or instrumentality shall also refer to a regulatory body that
succeeds to the functions of such agency, authority or instrumentality; and
(ii) "including" means "including, but not limited to."
[Signature Page Follows]
15
IN WITNESS WHEREOF, the Authorized Participant and the Managing Owner,
on behalf of the Trust, have caused this Agreement to be executed by their
duly authorized representatives as of the date first set forth above.
DB Commodity Services LLC
Managing Owner of the DB Commodity Index
Tracking Fund [Name of Authorized Participant]
By: By:
----------------------- -------------------------
Name: Name:
----------------------- -------------------------
Title: Title:
----------------------- -------------------------
Address: Address:
----------------------- -------------------------
Telephone: Telephone:
----------------------- -------------------------
Facsimile: Facsimile:
----------------------- --------------------------
DB Commodity Index Tracking Fund
By DB Commodity Services LLC,
as Managing Owner of
DB Commodity Index Tracking Fund
By:
--------------------
Name:
--------------------
Title:
--------------------
Address:
--------------------
Telephone:
--------------------
Facsimile:
--------------------
16
EXHIBIT A
DB COMMODITY INDEX TRACKING FUND
FORM OF CERTIFIED AUTHORIZED PERSONS OF AUTHORIZED PARTICIPANT
The following are the names, titles and signatures of all persons (each
an "Authorized Person") authorized to give instructions relating to any
activity contemplated by the Participant Agreement or any other notice,
request or instruction on behalf of the Authorized Participant pursuant to the
DB Commodity Index Tracking Fund Participant Agreement.
Authorized Participant: _______________________
Name: Name:
------------------------------- --------------------------
Title: Title:
------------------------------ --------------------------
Signature: Signature:
-------------------------- --------------------------
Name: Name:
------------------------------- --------------------------
Title: Title:
------------------------------ --------------------------
Signature: Signature:
-------------------------- ---------------------------
The undersigned, [name], [title] of [company], does hereby certify that
the persons listed above have been duly elected to the offices set forth
beneath their names, that they presently hold such offices, that they have
been duly authorized to act as Authorized Persons pursuant to the DB Commodity
Index Tracking Fund Participant Agreement by and between [name of Authorized
Participant], DB Commodity Index Tracking Fund and DB Commodity Services LLC,
dated [date], and that their signatures set forth above are their own true and
genuine signatures.
In Witness Whereof, the undersigned has hereby set his/her hand and the
seal of [company] on the date set forth below.
Subscribed and sworn to before me By:
this ___ day of _______, 20__ --------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date:
------------------------------------- --------------------------------
Notary Public
A-1
EXHIBIT B
DB COMMODITY INDEX TRACKING FUND
FORM OF PURCHASE ORDER SUBSCRIPTION AGREEMENT
Authorized Participant:_______________________________
Date: _______________________________
Submission
Number: _______________________________
PIN Number: _______________________________
Number of Shares to be Issued: _______________________________
All Purchase Order Subscription Agreements are subject to the terms and
conditions of the Declaration of Trust and Trust Agreement (the "Trust
Agreement") of DB Commodity Index Tracking Fund (the "Trust") as currently in
effect and the DB Commodity Index Tracking Fund Participant Agreement among
the Authorized Participant, the Trust and the Managing Owner named therein.
All representations and warranties of the Authorized Participant set forth in
such DB Commodity Index Tracking Fund Participant Agreement are incorporated
herein by reference. Capitalized terms used but not defined herein have the
meaning given in the Trust Agreement.
The undersigned understands that by submitting this Purchase Order and
Subscription Agreement he/she is making the representations and warranties set
forth in Annex A to this Purchase Order Subscription Agreement and is also
granting an irrevocable Power of Attorney.
The undersigned understands that its DTC account will be charged the
Transaction Fee as set forth in the currently effective copy of the
Prospectus.
The undersigned does hereby certify as of the date set forth below that he/she
is an Authorized Person under the DB Commodity Index Tracking Fund Participant
Agreement and that he/she is authorized to deliver this Purchase Order
Subscription Agreements to the Managing Owner on behalf of the Authorized
Participant.
[NAME OF AUTHORIZED PARTICIPANT]
Date: By:
------------------- -----------------------------
Name:
Accepted by Title:
DB Commodity Index Tracking Fund
By: DB Commodity Service LLC, as manager owner
By:
--------------------------------------------
Name:
Title:
B-1
ANNEX TO EXHIBIT B
TO
PURCHASE ORDER SUBSCRIPTION AGREEMENT
PURCHASER'S REPRESENTATIONS AND WARRANTIES AND
POWER OF ATTORNEY
1. CFTC Registration Status. The Authorized Participant either is not
required to be registered with the Commodity Futures Trading Commission
("CFTC") or to be a member of the National Futures Association ("NFA"), or, if
required to be so registered, is duly registered with the CFTC and is a member
in good standing of the NFA. The Authorized Participant agrees to supply the
Managing Owner with such information as the Managing Owner may reasonably
request in order to verify the foregoing representation. Certain entities
which acquire Shares may, as a result, themselves become "commodity pools"
within the intent of applicable CFTC and NFA rules, and their sponsors,
accordingly, will be required to register as "commodity pool operators."
2. Disclosure Document. The Authorized Participant has received the
Trust's Prospectus which constitutes its Commodity Futures Trading Commission
("CFTC") Disclosure Document.
3. Monthly Report. If trading for the Trust has commenced, the Authorized
Participant has received a copy of its most recent monthly report as required
by the CFTC.
4. Power of Attorney. In connection with the the Authorized Participant's
acceptance of an interest in the Trust, the Authorized Participant does hereby
irrevocably constitute and appoint the Managing Owner, and its successors and
assigns, as its true and lawful Attorney-in-Fact, with full power of
substitution, in my name, place and ▇▇▇▇▇, in the execution, acknowledgment,
filing and publishing of Trust documents, including, but not limited to, the
following: (i) Any certificates and other instruments, including but not
limited to, any applications for authority to do business and amendments
thereto, which the Managing Owner deems appropriate to qualify or continue the
Trust as a business or statutory trust in the jurisdictions in which the Trust
may conduct business, so long as such qualifications and continuations are in
accordance with the terms of the Declaration of Trust and Trust Agreement of
the Trust (the "Trust Agreement") or any amendment hereto, or which may be
required to be filed by the Trust or the Shareholders under the laws of any
jurisdiction; (ii) Any instrument which may be required to be filed by the
Trust under the laws of any state or by any governmental agency, or which the
Managing Owner deems advisable to file; and (iii) The Trust Agreement and any
documents which may be required to effect an amendment to the Trust Agreement
approved under the terms of the Trust Agreement, and the continuation of the
Trust, the admission of the signer of the Power of Attorney as a Limited Owner
or of others as additional or substituted Limited Owners, or the termination
of the Trust, provided such continuation, admission or termination is in
accordance with the terms of the Trust Agreement. The Power of Attorney
granted hereby shall be deemed to be coupled with an interest and shall be
irrevocable and shall survive, and shall not be affected by, the Authorized
Participant's subsequent insolvency or dissolution or any delivery by the
Authorized Participant of an assignment of the whole or any portion of the
Authorized Participant's Units.
B-2
EXHIBIT C
DB COMMODITY INDEX TRACKING FUND
FORM OF REDEMPTION ORDER
Authorized Participant:_______________________________
Date: _______________________________
Submission
Number: _______________________________
PIN Number: _______________________________
Number of Shares to be Issued: _______________________________
All Redemption Orders are subject to the terms and conditions of the
Declaration of Trust and Trust Agreement of DB Commodity Index Tracking Fund
(the "Trust") as currently in effect and the DB Commodity Index Tracking Fund
Participant Agreement among the Authorized Participant, the Trust and the
Managing Owner named therein. All representations and warranties of the
Authorized Participant set forth in such DB Commodity Index Tracking Fund
Participant Agreement are incorporated herein by reference.
The undersigned understands that its DTC account will be charged the
Transaction Fee as set forth in the currently effective copy of the
Prospectus.
The undersigned does hereby certify as of the date set forth below that he/she
is an Authorized Person under the DB Commodity Index Tracking Fund Participant
Agreement and that he/she is authorized to deliver this Redemption Order to
the Managing Owner on behalf of the Authorized Participant.
[NAME OF AUTHORIZED PARTICIPANT]
Date: By:
------------------- ----------------------------------
Name:
Title:
C-1
EXHIBIT D
DB COMMODITY INDEX TRACKING FUND
DB COMMODITY SERVICES LLC
OFFICER'S CERTIFICATE
The undersigned, a duly authorized officer of DB Commodity Services LLC,
a Delaware limited liability company (the "Managing Owner") of the DB
Commodity Index Tracking Fund (the "Trust"), and pursuant to Section 13(d) of
the DB Commodity Index Tracking Fund Participant Agreement (the "Agreement"),
dated as of __________, by and between the Managing Owner and __________ (the
"Authorized Participant"), hereby certifies that:
1. Each of the following representations and warranties of the
Managing Owner is true and correct in all material respects as of
the date hereof:
(a) the Prospectus does not contain an 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 light of the circumstances under which they were
made, not misleading; the Registration Statement complies in
all material respects with the requirements of the 1933 Act
and the Prospectus complies in all material respects with
the requirements of the 1933 Act and any statutes,
regulations, contracts or other documents that are required
to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration
Statement have been so described or filed; the conditions to
the use of Form S-1 or S-3, if applicable, have been
satisfied; the Registration Statement does not contain an
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 not misleading and the
Prospectus does not contain an 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 light of the circumstances under which they were
made, not misleading; provided, however, that the Managing
Owner makes no warranty or representation with respect to
any statement contained in the Registration Statement or any
Prospectus in reliance upon and in conformity with
information concerning the Authorized Participant and
furnished in writing by or on behalf of the Authorized
Participant to the Managing Owner expressly for use in the
Registration Statement or such Prospectus; and neither the
Managing Owner nor any person known to the Managing Owner
acting on behalf of the Trust has distributed nor will
distribute any offering material other than the Registration
Statement or the Prospectus;
(b) the Trust has been duly formed and is validly existing as an
investment trust under the laws of the State of Delaware, as
described in the Registration Statement and the Prospectus,
and the Declaration of Trust
D-1
and Trust Agreement (the "Trust Agreement") authorizes the
Managing Owner to issue and deliver the Shares to the
Authorized Participant hereunder as contemplated in the
Registration Statement and the Prospectus;
(c) the Managing Owner has been duly organized and is validly
existing as a limited liability company in good standing
under the laws of the State of Delaware, with full power and
authority to conduct its business as described in the
Registration Statement and the Prospectus, and has all
requisite power and authority to execute and deliver this
Agreement;
(d) the Managing Owner is duly qualified and is in good standing
in each jurisdiction where the conduct of its business
requires such qualification; and the Trust is not required
to so qualify in any jurisdiction;
(e) complete and correct copies of the Trust Agreement, and any
and all amendments thereto, have been delivered to the
Authorized Participant, and no changes thereto have been
made;
(f) the outstanding Shares have been duly and validly issued and
are fully paid and non-assessable and free of statutory and
contractual preemptive rights, rights of first refusal and
similar rights;
(g) the Shares conform in all material respects to the
description thereof contained in the Registration Statement
and the Prospectus and the holders of the Shares will not be
subject to personal liability by reason of being such
holders;
(h) the Agreement has been duly authorized, executed and
delivered by the Trust and the Managing Owner and
constitutes the valid and binding obligations of the Trust
and the Managing Owner, enforceable against the Trust and
the Managing Owner in accordance with its terms;
(i) neither the Managing Owner nor the Trust is in breach or
violation of or in default under (nor has any event occurred
which with notice, lapse of time or both would result in any
breach or violation of, constitute a default under or give
the holder of any indebtedness (or a person acting on such
holder's behalf) the right to require the repurchase,
redemption or repayment of all or a part of such
indebtedness under) its respective constitutive documents,
or any indenture, mortgage, deed of trust, bank loan or
credit agreement or other evidence of indebtedness, or any
license, lease, contract or other agreement or instrument to
which the Managing Owner or the Trust is a party or by which
any of them or any of their properties may be bound or
affected, and the execution, delivery and performance of
this Agreement, the issuance and sale of Shares to the
Authorized Participant hereunder and the consummation of the
transactions contemplated hereby does not conflict with,
result in any
D-2
breach or violation of or constitute a default under (nor
constitute any event which with notice, lapse of time or
both would result in any breach or violation of or
constitute a default under), respectively, the limited
liability company agreement of the Managing Owner or the
Trust Agreement, or any indenture, mortgage, deed of trust,
bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other
agreement or instrument to which the Managing Owner or the
Trust is a party or by which, respectively, the Managing
Owner or the Trust or any of their respective properties may
be bound or affected, or any federal, state, local or
foreign law, regulation or rule or any decree, judgment or
order applicable to the Managing Owner or the Trust;
(j) no approval, authorization, consent or order of or filing
with any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency is
required in connection with the issuance and sale of Shares
to the Authorized Participant hereunder or the consummation
by the Managing Owner or the Trust of the transactions
contemplated hereunder other than registration of the Shares
under the 1933 Act, which has been effected, and any
necessary qualification under the securities laws of the
various jurisdictions in which the Shares are being offered
or under the rules and regulations of the National
Association of Securities Dealers (the "NASD");
(k) except as set forth in the Registration Statement and the
Prospectus (i) no person has the right, contractual or
otherwise, to cause the Trust to issue or sell to it any
Shares or other equity interests of the Trust, and (ii) no
person has the right to act as an underwriter or as a
financial advisor to the Trust in connection with the offer
and sale of the Shares, in the case of each of the foregoing
clauses (i), and (ii), whether as a result of the filing or
effectiveness of the Registration Statement or the sale of
the Shares as contemplated thereby or otherwise; no person
has the right, contractual or otherwise, to cause the
Managing Owner on behalf of the Trust or the Trust to
register under the 1933 Act any other equity interests of
the Trust, or to include any such shares or interests in the
Registration Statement or the offering contemplated thereby,
whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares as
contemplated thereby or otherwise;
(l) each of the Managing Owner and the Trust has all necessary
licenses, authorizations, consents and approvals and has
made all necessary filings required under any federal,
state, local or foreign law, regulation or rule, and has
obtained all necessary authorizations, consents and
approvals from other persons, in order to conduct its
respective business; neither the Managing Owner nor the
Trust is in violation of, or in default under, or has
received notice of any proceedings relating to revocation or
modification of, any such license, authorization, consent or
approval or
D-3
any federal, state, local or foreign law, regulation or rule
or any decree, order or judgment applicable to the Managing
Owner or the Trust;
(m) all legal or governmental proceedings, affiliate
transactions, off-balance sheet transactions, contracts,
licenses, agreements, leases or documents of a character
required to be described in the Registration Statement or
the Prospectus or to be filed as exhibits to the
Registration Statement have been so described or filed as
required;
(n) except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits, claims,
investigations or proceedings pending or threatened or
contemplated to which the Managing Owner or the Trust, or
any of the Managing Owner's directors or officers, is or
would be a party or of which any of their respective
properties are or would be subject at law or in equity,
before or by any federal, state, local or foreign
governmental or regulatory commission, board, body,
authority or agency;
(o) [Name of Accountants], whose report on the audited financial
statements of the Trust is filed with the SEC as part of the
Registration Statement and the Prospectus, are independent
public accountants as required by the 1933 Act;
(p) the audited financial statement(s) included in the
Prospectus, together with the related notes and schedules,
presents fairly the financial position of the Trust as of
the date indicated and has been prepared in compliance with
the requirements of the 1933 Act and in conformity with
generally accepted accounting principles; there are no
financial statements (historical or pro forma) that are
required to be included in the Registration Statement and
the Prospectus that are not included as required; and the
Trust does not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet
obligations), not disclosed in the Registration Statement
and the Prospectus;
(q) subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus,
there has not been (i) any material adverse change, or any
development involving a prospective material adverse change
affecting the Managing Owner or the Trust, (ii) any
transaction which is material to the Managing Owner or the
Trust taken as a whole, (iii) any obligation, direct or
contingent (including any off-balance sheet obligations),
incurred by the Managing Owner or the Trust, which is
material to the Trust, (iv) any change in the Shares
purchased by the Authorized Participant or outstanding
indebtedness of the Managing Owner or the Trust or (v) any
dividend or distribution of any kind declared, paid or made
on such Shares;
D-4
(r) the Trust is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company"
as such term is defined in the Investment Company Act;
(s) except as set forth in the Registration Statement and the
Prospectus, the Managing Owner and the Trust own, or have
obtained valid and enforceable licenses for, or other rights
to use, the inventions, patent applications, patents,
trademarks (both registered and unregistered), tradenames,
copyrights, trade secrets and other proprietary information
described in the Registration Statement and the Prospectus
as being owned or licensed by them or which are necessary
for the conduct of their respective businesses,
(collectively, "Intellectual Property"); (i) to the
knowledge of the Managing Owner or the Trust, there are no
third parties who have or will be able to establish rights
to any Intellectual Property, except for the ownership
rights of the owners of the Intellectual Property which is
licensed to the Managing Owner or the Trust; (ii) to the
knowledge of the Managing Owner or the Trust, there is no
infringement by third parties of any Intellectual Property;
(iii) there is no pending or, to the knowledge of the
Managing Owner or the Trust, threatened action, suit,
proceeding or claim by others challenging the Managing
Owner's or the Trust's rights in or to any Intellectual
Property, and the Managing Owner and the Trust are unaware
of any facts which could form a reasonable basis for any
such claim; (iv) there is no pending or, to the knowledge of
the Managing Owner or the Trust, threatened action, suit,
proceeding or claim by others challenging the validity or
scope of any Intellectual Property, and the Managing Owner
and the Trust are unaware of any facts which could form a
reasonable basis for any such claim; (v) there is no pending
or, to the knowledge of the Managing Owner or the Trust,
threatened action, suit, proceeding or claim by others that
the Managing Owner or the Trust infringes or otherwise
violates any patent, trademark, copyright, trade secret or
other proprietary rights of others, and the Managing Owner
and the Trust are unaware of any facts which could form a
reasonable basis for any such claim; and (vi) to the
knowledge of the Managing Owner or the Trust, there is no
patent or patent application that contains claims that
interfere with the issued or pending claims of any of the
Intellectual Property;
(t) all tax returns required to be filed by the Trust have been
filed, and all taxes and other assessments of a similar
nature (whether imposed directly or through withholding)
including any interest, additions to tax or penalties
applicable thereto due or claimed to be due from such
entities have been paid; and no tax returns or tax payments
are due with respect to the Trust as of the date of this
Agreement;
(u) neither the Managing Owner nor the Trust has sent or
received any communication regarding termination of, or
intent not to renew, any of the contracts or agreements
referred to or described in, or filed as an exhibit
D-5
to, the Registration Statement, and no such termination or
non-renewal has been threatened by the Managing Owner or the
Trust or any other party to any such contract or agreement;
(v) with respect to its activities on behalf of the Trust, as
provided for in the Trust Agreement, the Managing Owner
maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with the Trust
Agreement and the Managing Owner's duties thereunder; (ii)
transactions with respect to the Trust are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and
to maintain accountability for assets; and (iii) assets are
held for the Trust in accordance with the Trust Agreement;
(w) on behalf of the Trust, the Managing Owner has established
and maintains disclosure controls and procedures (as such
term is defined in Rule 13a-14 and 15d-14 under the 1934
Act, giving effect to the rules and regulations, and SEC
staff interpretations (whether or not public), thereunder));
such disclosure controls and procedures are designed to
ensure that material information relating to the Trust, is
made known to the Managing Owner, and such disclosure
controls and procedures are effective to perform the
functions for which they were established; on behalf of the
Trust, the Managing Owner has been advised of: (i) any
significant deficiencies in the design or operation of
internal controls which could adversely affect the Trust's
ability to record, process, summarize, and report financial
data; and (ii) any fraud, whether or not material, that
involves management or other employees who have a role in
the Trust's internal controls; any material weaknesses in
internal controls have been identified for the Trust's
auditors;
(x) any statistical and market-related data included in the
Registration Statement and the Prospectus are based on or
derived from sources that the Managing Owner believes to be
reliable and accurate, and the Managing Owner has obtained
the written consent to the use of such data from such
sources to the extent required; and
(y) neither the Managing Owner, nor any of the Managing Owner's
directors, members, managers, officers, affiliates or
controlling persons nor the Trustee has taken, directly or
indirectly, any action designed, or which has constituted or
might reasonably be expected to cause or result in, under
the 1934 Act or otherwise, the stabilization or manipulation
of the price of any security or asset of the Trust to
facilitate the sale or resale of the Shares; and there are
no affiliations or associations between any member of the
NASD and any of the Managing Owner's officers, directors or
5% or greater security holders, except as set forth in the
Registration Statement and the Prospectus.
D-6
For purposes hereof, the term "Registration Statement" shall
mean the Registration Statement as amended or supplemented
from time to time to the date hereof and the term
"Prospectus" shall mean the Prospectus as amended or
supplemented from time to time to the date hereof.
2. Each of the obligations of the Managing Owner to be performed by
it on or before the date hereof pursuant to the terms of the
Agreement, and each of the provisions thereof to be complied with
by the Managing Owner on or before the date hereof, has been duly
performed and complied with in all material respects.
Capitalized terms used, but not defined herein shall have the meanings
assigned to such terms in the Agreement.
[SIGNATURE PAGE TO FOLLOW]
D-7
IN WITNESS WHEREOF, I have hereunto, on behalf of the Managing Owner,
subscribed my name this _____ day of _________.
By: ________________________
Name:
Title:
I, _______________, in my capacity as [title], hereby certify that
_______________ is the duly elected [title] of the Managing Owner, and that
the signature set forth immediately above is [his/her] genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand as of the date first set forth
above.
By: ________________________
Name:
Title:
D-8
FORM OF
DB COMMODITY INDEX TRACKING FUND
PARTICIPANT AGREEMENT
ATTACHMENT A
DB COMMODITY INDEX TRACKING FUND PROCEDURES
CREATION AND REDEMPTION OF DB COMMODITY INDEX TRACKING FUND SHARES
Scope of Procedures and Overview
These procedures (the "Procedures") describe the processes by which one or
more Baskets of DB Commodity Index Tracking Fund shares (the "Shares")
issuable by DB Commodity Index Tracking Fund (the "Trust"), may be purchased
or, once Shares have been issued, redeemed by an Authorized Participant (a
"Participant"). Shares may be created or redeemed only in blocks of 200,000
Shares (each such block, a "Basket").
Capitalized terms used in these Procedures without further definition have the
meanings assigned to them in the Amended and Restated Declaration of Trust and
Trust Agreement of the Trust (the "Trust Agreement"), dated as of ____________
2005, between Wilmington Trust Company, as trustee of the Trust (the
"Trustee") DB Commodity Services LLC, as managing owner (the "Managing Owner")
and the Unitholders party thereto from time to time or the Participant
Agreement entered into by each Participant with the Trust and the Managing
Owner.
For purposes of these Procedures, a "Business Day" means a day other than
Saturday, Sunday or other day when banks and/or securities exchanges in the
City of New York or the City of Wilmington are authorized or obligated by law
or executive order to close.
"Order Cut-Off Time" means 10:00 am, New York time, on each Business Day.
Baskets are issued pursuant to the Prospectus, which will be delivered by the
Managing Owner to each Participant prior to its execution of the Participant
Agreement, and are issued and redeemed in accordance with the Trust Agreement
and the Participant Agreement. Baskets may be issued and redeemed on any
Business Day by the Managing Owner in exchange for the Creation Basket Capital
Contribution, which the Managing Owner receives from Participants or
Redemption Distributions to Participants, in each case on behalf of the Trust.
Participants will be required to pay a nonrefundable per order transaction fee
of $2,000 to the Managing Owner (the "Transaction Fee").
Each Participant is responsible for ensuring that the Creation Basket Capital
Contribution it intends to transfer to the Trust in exchange for Creation
Baskets is available for transfer to the Trust in the manner and at the times
described in these Procedures.
Upon acceptance of the Participant Agreement by the Managing Owner, the
Managing Owner will assign a personal identification number (a "PIN number")
to each Authorized Person authorized to act for the Participant. This will
allow the Participant through its Authorized
Person(s) to place Purchase Order Subscription Agreement(s) or Redemption
Order(s) for Baskets.
Important Notes:
o Any Order is subject to rejection by the Managing Owner for the
reasons set forth in the Trust Agreement or the Participant
Agreement.
o All Orders are subject to the provisions of the Trust Agreement and
the Participant Agreement relating to unclear or ambiguous
instructions.
CREATION PROCESS
An order to purchase one or more Creation Baskets placed by a Participant with
the Managing Owner bythe Order Cut-Off Time on a Business Day (such day,
"Purchase Order Subscription Date") results in the issuance and delivery of
Creation Baskets at or shortly after the opening time of the Exchange on the
Business Day immediately following the Purchase Order Subscription Date if the
Managing Owner has received:
o for its own account, the Transaction Fee, and
o for the account of the Trust the Creation Basket Capital Contribution
due from the Participant submitting the Purchase Order Subscription
Agreement.
CREATION PROCEDURES
1. By the Order Cut-Off Time (10:00 a.m. N.Y. time) on the Purchase
Order Subscription Date, an Authorized Person of the Participant
calls the Managing Owner at (___) ___-____ to notify the Managing
Owner that the Participant wishes to place a Purchase Order and
Subscription Agreement with the Managing Owner to create an
identified number of Creation Baskets and to request that the
Managing Owner provide an order number (an "Order Number"). The
Authorized Person provides a PIN number as identification to the
Managing Owner. The Managing Owner provides the Participant with
an Order Number for the Participant's Purchase Order and
Subscription Agreement. The Participant then completes and faxes
to the Managing Owner the Purchase Order Subscription Agreement
included as Exhibit B to the Participant Agreement. The Purchase
Order Subscription Agreement must be completed and also include
the Authorized Person's signature, the number of Creation Baskets
being purchased, and the Order Number previously provided by the
Managing Owner.
2. If the Managing Owner has not received the Purchase Order
Subscription Agreement from the Participant within 15 minutes
after the Managing Owner receives the phone call from the
Participant referenced in item (1) above, the Managing Owner
places a phone call to the Participant to enquire about the status
of the Order. If the Participant does not fax the Purchase Order
Subscription Agreement to the Managing Owner within 15 minutes
after the Managing Owner's phone call, the Participant's Order is
cancelled. The Managing Owner
2
will then notify the Participant that the Order has been cancelled
via telephone call.
3. If the Managing Owner has received the Participant's Purchase
Order and Subscription Agreement on time in accordance with the
preceding timing rules, then by 11:30 a.m. N.Y. time the Managing
Owner returns to the Participant a copy of the Purchase Order and
Subscription Agreement submitted, marking it "Accepted." The
Managing Owner also indicates on the Purchase Order Subscription
Agreement the amount of cash necessary for the Creation Basket
Capital Contribution, and provides details of the method of
payment required for the Creation Basket Capital Contribution.
4. If the Managing Owner rejects a Purchase Order Subscription
Agreement pursuant to the Trust Agreement or the Participant
Agreement, the Managing Owner will notify the Participant whose
Purchase Order Subscription Agreement was rejected.
5. At the opening time of the Exchange on the Business Day
immediately following the Purchase Order Subscription Date the
Managing Owner authorizes the creation and issuance of the
Creation Baskets ordered by each Participant on the Purchase
Order Subscription Date for which the Managing Owner has received
confirmation of receipt of (A) for its own account, the
Transaction Fee, and (B) for the account of the Trust the
Creation Basket Capital Contribution due from the Participant
submitting the Purchase Order Subscription Agreement.
6. The Managing Owner will cause the Trust to deposit the Creation
Basket with the Depository in accordance with the Depository's
customary procedures, for the credit of the account of the
Participant that placed the Purchase Order Subscription Agreement.
[Redemption Process Follows on Next Page]
3
REDEMPTION PROCESS
An order to redeem one or more Redemption Baskets placed by a
Participant with the Managing Owner by the Order Cut-off Time on a
Business Day (such day, "Redemption Order Date") results in the
following taking place by the opening of trading on the Exchange on
the Business Day immediately following the Redemption Order Date (the
"Redemption Settlement Time"):
o if the Trustee's account at the Depository has by the Redemption
Settlement Time been credited with the Redemption Baskets being
tendered for redemption and the Managing Owner has by such time
received the Transaction Fee, the Managing Owner shall deliver the
Redemption Distribution through the Depository to the account of
the Participant as recorded on the book entry system of the
Depository.
REDEMPTION PROCEDURES
1. By the Order Cut-off Time (10:00 a.m. N.Y. time), an Authorized
Person of the Participant calls the Managing Owner at (___)
___-____ to notify the Managing Owner that the Participant wishes
to place a Redemption Order with the Managing Owner to redeem an
identified number of Redemption Baskets and to request that the
Managing Owner provide an Order Number. The Authorized Person
provides a PIN number as identification to the Managing Owner.
The Managing Owner provides the Participant with an Order Number
for the Participant's Redemption Order Form. The Participant
then completes and faxes to the Managing Owner the Redemption
Order Form included as Exhibit C to the Participant Agreement.
The Redemption Order Form must include the Authorized Person's
signature, the number of Redemption Baskets redeemed, and the
Order Number previously provided by the Managing Owner.
2. If the Managing Owner has not received the Redemption Order Form
from the Participant within 15 minutes after the Managing Owner
receives the phone call from the Participant referenced in item
(1) above, the Managing Owner places a phone call to the
Participant to enquire about the status of the Order. If the
Participant does not fax the Redemption Order Form to the
Managing Owner within 15 minutes after the Managing Owner's phone
call, the Participant's Order is cancelled. The Managing Owner
will then notify the Participant that the Order has been
cancelled via telephone call.
3. If the Managing Owner has received the Participant's Redemption
Order Form on time in accordance with the preceding timing rules,
then by [11:30] a.m. N.Y. time the Managing Owner returns to the
Participant a copy of the Redemption Order Form submitted,
marking it "Affirmed." The Managing Owner also indicates on the
Redemption Order Form the amount of cash to be delivered in the
Redemption Distribution, and provides details of the method of
payment of the cash Redemption Distribution.
4
4. If the Managing Owner rejects a Redemption Order pursuant to the
Trust Agreement or the Participant Agreement, the Managing Owner
will notify the Participant whose Redemption Order was rejected
and the amount of cash contained in the rejected Redemption Order.
5. By the "Redemption Settlement Time", if the Managing Owner's
account at the Depository has by 9:00 a.m. New York time on such
day been credited with the Redemption Baskets being tendered for
redemption and the Managing Owner has by such time received the
Transaction Fee, the Managing Owner shall deliver the Redemption
Distribution through the Depository to the account of the
Participant as recorded on the book entry system of the
Depository.
6. If by the Redemption Settlement Time the Managing Owner has not
received from a redeeming Participant all Redemption Baskets
comprising the Redemption Order, the Trustee will (i) settle the
Redemption Order to the extent of whole Redemption Baskets
received from the Participant and (ii) keep the redeeming
Participant's Redemption Order open until 9:00 a.m. New York time
on the first Business Day following the Redemption Settlement
Date as to the balance of the Redemption Order (such balance, the
"Suspended Redemption Order"). [For each day (whether or not a
Business Day) the Redemption Order is held open, the Participant
will be charged by the Trustee the greater of $300 or $30 times
the number of Redemption Baskets included in the Suspended
Redemption Order.]
7. If the Redemption Basket(s) comprising the Suspended Redemption
Order are credited to Trustee's account at the Depository by 9:00
a.m. New York time on such following Business Day, the Redemption
Distribution with respect to the Suspended Redemption Order shall
be paid in the manner provided in item (5) above.
8. If by such Redemption Settlement Time the Trustee has not
received from the redeeming Participant all Redemption Baskets
comprising the Suspended Redemption Order, the Managing Owner
will settle the Suspended Redemption Order to the extent of whole
Redemption Baskets then received and any balance of the Suspended
Redemption will be cancelled. Notwithstanding the foregoing,
when and under such conditions as the Managing Owner may from
time to time determine, the Managing Owner shall be authorized to
deliver the Redemption Distribution notwithstanding that a
Redemption Basket has not been credited to the Trust's account at
the Depository if the Participant has collateralized its
obligation to deliver the Redemption Basket on such terms as the
Managing Owner may, in its sole discretion, from time to time
agree.
5