EX-99.A4.1
SUBLICENSE AGREEMENT
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(MidCap SPDRs to Sponsor of MidCap SPDRs Trust)
This Sublicense Agreement is entered into as of this 1st day of November,
2005 (this "Sublicense Agreement"), by and among PDR SERVICES LLC (formerly PDR
Services Corporation), a Delaware limited liability company ("Sublicensee"), in
its capacity as sponsor of the Standard & Poor's Depositary Receipts ("SPDR")
Trust, Series 1, a unit investment trust registered under the Investment Company
Act of 1940 and organized under the laws of the State of New York (the "MidCap
SPDRs Trust"), STATE STREET GLOBAL MARKETS, LLC, a Delaware limited liability
company ("Licensee"), and STANDARD & POOR'S, a division of The XxXxxx-Xxxx
Companies, Inc., a New York corporation ("S&P").
W I T N E S S E T H:
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WHEREAS, pursuant to that certain License Agreement dated as of September
19, 1994, as amended (the "Original License Agreement"), and as further amended
and restated by Licensee and S&P on the date hereof (the "Restated License
Agreement"), S&P has granted Licensee a license to use the S&P Marks (as defined
in the Restated License Agreement) in connection with the issuance, exchange
trading, marketing and/or promotion of the specific Product described in
Appendix A attached hereto and incorporated herein;
WHEREAS, in connection with the sponsorship of the MidCap SPDRs Trust,
Sublicensee wishes to use and refer to the S&P Marks;
WHEREAS, Licensee, Sublicensee and the American Stock Exchange LLC, a
Delaware limited liability company ("AMEX"), have entered into (a) a Principal
Agreement, dated as of August 31, 2005 regarding, among other things, the
assignment of the License Agreement to Licensee and (b) a Marketing Agreement,
dated as of the date hereof (the "Marketing Agreement") regarding, among other
things, the appointment of Licensee as the exclusive marketing agent of the
MidCap SPDRs Trust; and
WHEREAS, all capitalized and undefined terms used herein have the meanings
assigned to them in the Restated License Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, pursuant to Section 1(e) of the
Restated License Agreement, the parties hereto agree as follows:
1. Subject to the terms and conditions of the License Agreement, Licensee
hereby grants to Sublicensee a non-exclusive and non-transferable sublicense
(which shall not be further sublicensable by Sublicensee) to use the S&P Marks
for the term of the Restated License Agreement solely in connection with the
exercise of its rights and the performance of its duties as sponsor of the
MidCap SPDRs Trust.
2. This Sublicense Agreement shall terminate upon (a) a material breach by
Sublicensee of this Sublicense Agreement which remains uncured after Sublicensee
has received notice from Licensee or S&P in accordance with the notice and cure
periods provided in Section 6 below, (b) a material breach by Sublicensee or
AMEX of the Marketing Agreement which remains uncured after fifteen days from
the date on which Sublicensee or AMEX, as the case may be, receives written
notice of breach from Licensee, (c) Sublicensee no longer being sponsor of the
MidCap SPDRs Trust or (d) termination or expiration of the Restated License
Agreement.
3. Sublicensee acknowledges that it has received and read a copy of the
Restated License Agreement. Sublicensee, on behalf of the MidCap SPDRs Trust,
agrees to be bound by all of the provisions therein imposing any obligations on
the Licensee but does not assume the obligations contained therein, except
Sublicensee does hereby assume (a) those obligations contained in Subsection
3(a) (payment to S&P of License Fees) and (b) the obligations in those
provisions of Subsection 1(b) that require Licensee to fund some or all the
Litigation Costs incurred by S&P in connection with S&P's initiation of
litigation against any securities market that is using the Exclusive S&P Marks
to trade a product similar to the Product and (c) the indemnification
obligations in Subsection 10(a)) insofar as such obligations arise out of or
relate to the Product to be
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issued by the MidCap SPDRs Trust and described in Appendix A hereto, provided,
however, that for (a) (b) and (c), Sublicensee shall not be required to make any
payments whatsoever under this Sublicense Agreement or the Restated License
Agreement that are not reimbursable by the MidCap SPDRs Trust pursuant to the
respective exemptive order from the U.S. Securities and Exchange Commission
granting relief, among other things, from Section 26(a)(2)(c) of the Investment
Company Act of 1940, as amended.
4. Sublicensee, on behalf of the MidCap SPDRs Trust, agrees that its
obligations under the Restated License Agreement pursuant to Section 3 hereof
are as a principal and shall be unaffected by any defense or claim that Licensee
may have against S&P.
5. This Sublicense Agreement shall be construed in accordance with the laws
of New York State without giving effect to the principles of conflicts of laws.
6. In the event of a material breach of this Sublicense Agreement by
Sublicensee, before the Sublicense Agreement may be terminated in accordance
with Section 2(a) hereof, Sublicensee shall first have received both an Initial
Notice and a Final Notice and the notice period commencing upon receipt of the
Final Notice shall have expired. For purposes of this Sublicense Agreement, an
"Initial Notice" shall mean a written notice sent to Sublicensee in accordance
with the provisions of Section 7 hereof which shall specify the nature of the
alleged breach and will notify the Sublicensee that it has 15 days from receipt
of the Initial Notice to cure such breach; and a "Final Notice" shall mean a
written notice sent to Sublicensee in accordance with the provisions of Section
7 hereof notifying Sublicensee that the breach specified in the Initial Notice
has not been cured, and will notify Sublicensee that it has 15 days from receipt
of the Final Notice to cure such breach.
7. All notices and other communications under this Sublicense shall be (i)
in writing, (ii) delivered by hand (with receipt confirmed in writing), by
registered or certified mail (return receipt requested), or by facsimile
transmission (with receipt
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confirmed in writing), to the address or facsimile number, with respect to the
Sublicensee, as set forth below, with respect to the Licensee and Dow Xxxxx, as
set forth in the Restated License Agreement, or to such other address or
facsimile number as the parties shall specify by a written notice to the others,
and (iii) deemed given upon receipt.
If to PDR Services LLC, to:
Corporate Secretary
American Stock Exchange LLC
00 Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
with copies to:
Xxxx Xxxxxxx, Chairman and Chief Executive Officer
American Stock Exchange LLC
00 Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Xxxxxx X. Xxxxxxxx
Xxxxxxxx, Wittenstein & Xxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Sublicense
Agreement as of the date first set forth above.
PDR SERVICES LLC
By: /s/ Xxxxxxxx X. Xxxxx
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Name: Xxxxxxxx X. Xxxxx
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Its: Senior Vice President
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STATE STREET GLOBAL MARKETS, LLC
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
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Its: Vice President
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STANDARD & POOR'S, a division of The
XxXXXX-XXXX COMPANIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
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Its: Managing Director, Index Services
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[Signature page to MidCap SPDRs Sublicense Agreement]
APPENDIX A TO SUBLICENSE AGREEMENT
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PRODUCT DESCRIPTION
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Standard & Poor's MidCap Depositary Receipts ("MidCap SPDRs")
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1. Description of a MidCap SPDR
A MidCap SPDR is a security which gives the holder (buyer) an undivided
interest in a portfolio of securities held by a Trustee Bank as an open-ended
Unit Investment Trust which is traded on a national securities market. MidCap
SPDRs are currently traded on the American Stock Exchange ("Exchange") in a
manner similar to that of ordinary listed equity securities and may be purchased
or sold at any time during the Exchange trading day. The trading symbol for
MidCap SPDRs is MDY. The sponsor of the MidCap SPDR Trust is PDR Services LLC, a
wholly-owned subsidiary of the American Stock Exchange LLC. The Trustee Bank for
MidCap SPDRs is The Bank of New York. The distributor for MidCap SPDRs is ALPs
Distributors, Inc., a registered broker-dealer.
2. Underlying Index
The Standard and Poor's MidCap 400 Stock Price Index - the S&P MidCap 400 -
serves as the model for the underlying portfolio of stocks held by the Trustee
Bank. The S&P MidCap 400 is a broad-market index of 400 midcap stocks. The
composition and weighting of securities held in the underlying stock portfolio
closely mirror that of the S&P MidCap 400, following specific investment rules
as set forth in the Prospectus.
Accordingly, the price of a MidCap SPDR on the Exchange is expected to
closely track the price levels of the S&P MidCap 400 over time.
3. Dividends
A MidCap SPDR holder receives a quarterly "Dividend Equivalent Amount" of
cash corresponding to the cash dividends which accrue to the S&P MidCap 400
stocks in the underlying portfolio, less Trust expenses.
4. MidCap SPDR Creation
MidCap SPDRs are created on Exchange trading days in "Creation Unit" block
sizes of 25,000 by the deposit of a portfolio of stocks together with a
specified cash amount, as described below in the section entitled "Creation
Xxxx".
0. MidCap SPDR Redemption
MidCap SPDRs may be redeemed on Exchange trading days in "Creation Unit"
block sizes of 25,000 in exchange for the same portfolio of stocks and cash that
correspond to MidCap SPDR creations.
6. Creation Unit
A "Creation Unit" is a block of 25,000 MidCap SPDRs which corresponds to a
basket of securities designated by the Trustee to closely approximate the
composition and weighting of the S&P MidCap 400 on the day of the request for
creation, together with a specified Total Cash Amount Per Creation Unit. This
specified Total Cash Amount Per Creation Unit includes:
(1) the "Dividend Equivalent Amount" reflecting the accrued dividends of
the stocks on deposit with the Trustee, ordinarily accrued for stocks with
ex-dividend dates from the third Friday in March, June, September, and December
through and including
the day of the request for creation or redemption, less accrued Trust expenses
over the same period, plus (2) an adjusting dollar amount which assures that the
total market value of the stock plus cash in the Creation Unit equals the Net
Asset Value of the Trust per Creation Unit outstanding at the market close on
the day of the request for creation or redemption.
7. Dividend Equivalent Amount
The Dividend Equivalent Amount is the cash amount to be paid by the Trustee
for each MidCap SPDR outstanding on MidCap SPDR record date. It includes a
proportional amount of cash corresponding to the regular cash dividends (less
accrued Trust expenses) for the stocks on deposit with the Trustee which have
gone ex-dividend during each quarterly accrual period beginning on the third
Friday of March, June, September and December. A portion of the Dividend
Equivalent Amount may be characterized as a return of capital to reflect cash
amounts deposited through creations.
8. Trading Unit
MidCap SPDRs trade on the American Stock Exchange in round lots of 100,
with odd-lot trading permitted.
9. Price Quotations
MidCap SPDR prices are quoted in dollars in decimal format.
10. Dividend Settlement
The ex-dividend date for the quarterly dividend equivalent payment for
MidCap SPDRs is the third Friday of March, June, September, and December.
Dividend
Equivalent Amounts will ordinarily be paid quarterly on the last business day in
April, July, October, and January to all MidCap SPDR holders of record as of the
fourth business day following the most recent ex-dividend date.
11. Creation/Redemption Procedures with the Trustee
The shares of component stocks in a Creation Unit will be determined by The
Bank of New York as Trustee on the evening preceding each trading day. Orders
requesting the creation or redemption of 25,000 MidCap SPDRs or multiples
thereof for the underlying basket of stock plus cash must be given before 4:00
p.m. NY time on any trading day following designated procedures which will be
available from the Trust sponsor.
12. Position Limits
There are no position limits on MidCap SPDRs.
13. Customer Margin
It is anticipated that MidCap SPDRs will be treated as equity securities
for margin purposes following the first 30 days in the customer's account.
14. Trading Hours on the American Stock Exchange
9:30 a.m. to 4:15 p.m. NY time, and available for the After-Hours Trading
Facility.
15. Trading System
Specialist/Registered Trader.
16. Clearing
MidCap SPDRs are Exchange-traded equity securities cleared through the
National Securities Clearing Corporation (NSCC).
17. Settlement
MidCap SPDR trades, as well as MidCap SPDR creation or redemption requests,
settle in three business days. MidCap SPDRs are non-certificated (book entry
only) equity securities held at The Depository Trust Company.
18. Product Description
Exchange Rule 1000, Commentary .01 requires delivery of a product
description to each customer purchasing MidCap SPDRs not later than the time a
confirmation of the first transaction is delivered to the purchaser.
