Exhibit 9(f)
LICENSE AGREEMENT
-----------------
LICENSE AGREEMENT effective as of February 23, 1996, ("Effective
Date") by and between Pacific Stock Exchange Incorporated ("PSE"), a
Delaware Corporation having an office at 000 Xxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, and Principal Preservation Portfolios, Inc., a Maryland
corporation having principal offices at 000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx,
Xxxxxxxxx 00000 ("Principal Preservation"). Principal Preservation is a
registered investment company under the Investment Company Act of 1940,
and intends to create a mutual fund called the PSE Technology Index
Portfolio ("Portfolio").
WHEREAS, the PSE compiles, calculates, maintains, and owns rights in
and to a composite stock index known as the PSE Technology Index and to
the proprietary data collected and maintained in connection with such
index (such rights and data being hereinafter individually and
collectively referred to as the "PSE Tech"); and
WHEREAS, the PSE uses in commerce and owns trade name and servicemark
rights to the designations "Pacific Stock Exchange" and "Pacific Stock
Exchange Technology Index" in connection with the PSE Tech (such rights
being individually and collectively referred to as the "PSE Marks"); and
WHEREAS, Principal Preservation has determined that the PSE Tech is a
representative index in tracking the stock market performance of the
stocks included in the PSE Tech and wishes to utilize the PSE Tech in
connection with the organization and operation of a mutual fund that will
approximately parallel the composition of the PSE Tech Index and
WHEREAS, Principal Preservation wishes to use the PSE Marks for
disclosure under federal and state securities laws to indicate that the
PSE is the source of the PSE Tech and otherwise as provided herein,
subject to prior review and approval by the PSE as hereinafter set forth;
and
WHEREAS, Principal Preservation wishes to obtain the PSE's
authorization to use the PSE Marks and PSE Tech in connection with its
mutual fund under the following terms and conditions.
NOW, THEREFORE, it is agreed as follows:
1.Grant of License.
----------------
(a) Subject to the terms and conditions of this agreement, the PSE
hereby grants to Principal Preservation a nontransferable, non-exclusive
license to use and refer to the PSE Tech and PSE Marks in the United
States in registration statements, state securities filings and
prospectuses in connection with the offering and promotion of the
Portfolio, and in other offering and promotional material in connection
with the Portfolio. Upon reasonable prior request, PSE may review any and
all materials prepared or used by Principal Preservation, its distributor,
or other agents or representatives of Principal Preservation in connection
with the Portfolio for purposes of ensuring Principal Preservation's
compliance with this agreement. PSE may withhold approval of the use of
PSE Marks in connection with the registration or promotion of the
Portfolio, but approval shall not be unreasonably withheld by the PSE.
(b) The Portfolio prospectus shall state in language acceptable to
counsel for the PSE that the fund is not sponsored, endorsed, sold or
promoted by the PSE; that the PSE makes no representation or warranty,
implied or express, to the purchasers of shares in the Portfolio, or any
member of the public regarding the advisability of investing in index
funds generally or in the Portfolio particularly or the ability of the PSE
Tech to track general stock market performance; that PSE's only
relationship to Principal Preservation is the licensing of the PSE Marks
and PSE Tech, the latter of which is determined, composed and calculated
by the PSE without regard to the Portfolio.
(c) Principal Preservation agrees that the Portfolio shall not be
offered to investors for purchase unless and until Principal Preservation
has received all regulatory approvals, interpretations and exemptions
which, in its opinion, are necessary or desirable.
(d) Principal Preservation acknowledges that the PSE Tech and PSE
Marks are the exclusive property of the PSE, and that the PSE Tech and its
compilation and composition and changes thereof are in the exclusive
control and exclusive discretion of the PSE.
(e) Except as otherwise specifically provided therein, this
Agreement shall not transfer to Principal Preservation any right to, or
interest in, the PSE Marks or PSE Tech, or in any copyright, trademark or
proprietary rights pertaining thereto.
2.Term. This Agreement shall become effective upon the Effective
----
Date and shall unless and until terminated in accordance with Paragraph 4
thereafter remain in full force and effect for an initial period of three
(3) years, and at Principal Preservation's option, be automatically
renewed for a successive three year period. Such options shall be
executed by written notice to PSE at least four months prior to the
expiration of the original three year term.
3.Licensee Fees.
-------------
(a) 1. Subject to Paragraph 3(a)2, Principal Preservation shall
also pay the PSE a license fee according to the following schedule:
(i) Monthly Average Net Asset Value Annual License Fee to PSE
------------------------------- -------------------------
of the Portfolio:
----------------
o $0 to $50,000,000.00 $1,000.00
(fifty million dollars)
(ii) Monthly Average Net Asset Value Monthly License Fee to PSE
------------------------------- --------------------------
of the Portfolio:
----------------
o $50,000,000.00 to $100,000,000.00 0.01% of average net assets
of the
(fifty million dollars to one Portfolio for preceding month
(i.e.
hundred million dollars) $75,000,000.00 x 0.01%/12 =
$625.00)
o Over $100,000,000.00 0.015% of average net assets
of the
(one hundred million dollars) Portfolio for preceding month
(i.e.
$200,000,000.00 x 0.015%/12 =
$2,500.00).
2. Regardless of the average net asset value of the Portfolio,
Principal Preservation shall pay the PSE the Annual License Fee of
$1,000.00 (as specified in Paragraph 3(a)(1)(i) above), in advance, on an
annual basis on the anniversary date of the Effective Date of the
Agreement. The first payment representing the first year of this contract
will be payable upon the signing of this Agreement. In addition, in any
calendar year during the term of this Agreement that the Portfolio's
average net asset value equals or exceeds fifty million dollars, Principal
Preservation shall pay to PSE the Monthly License Fee (as specified in
Paragraph 3(a)(1)(ii) above), on a pro rata basis.
(b) Principal Preservation shall provide the PSE with full
documentation in support of Principal Preservation's calculation of the
license fees paid to the PSE by Principal Preservation under Paragraph
3(a). The PSE shall have the right, in its discretion, to inspect and
audit Principal Preservation's records, upon advance written request to
Principal Preservation during normal business hours, to verify the
accuracy of the license fee calculations performed by Principal
Preservation.
4.Termination.
-----------
(a) In the case of material beach of any of the terms and conditions
of this Agreement by either party, the other party may terminate this
Agreement by giving thirty (30) days prior written notice, and the
Agreement shall be terminated if the breaching party shall not have
corrected such material breach within the notice period.
(b) The PSE shall have the right, in its sole discretion, to cease
compilation and publication of the PSE Tech and, in such event, to
terminate this Agreement, provided, however, that the PSE does not replace
the PSE Tech or substitute another PSE index to track the performance of
the technology sector of the stock market. In the event that the PSE
intends to discontinue the PSE Tech, the PSE shall give Principal
Preservation at least one (1) year's written notice prior to such
discontinuance, which notice shall specify whether a replacement or
substitute index will be available. In such event, Principal Preservation
shall have the option to use such new index under this Agreement provided
Principal Preservation exercises its option hereunder within sixty (6)0
days of receiving written notice from the PSE respecting the replacement
index. Unless Principal Preservation exercises such option, Principal
Preservation's obligations to make any further license fee payments to the
PSE hereunder with respect to the discontinued PSE Tech shall terminate as
of the effective date of the termination of the PSE Tech.
5.Rights Upon Termination. Upon termination of this Agreement as
-----------------------
provided in Paragraph 4, Principal Preservation shall not use the PSE
Marks or the PSE Tech in connection with any fund it may create or
sponsor.
6.PSE Obligations.
---------------
(a) Employees of the PSE who are directly responsible for changes in
the components of the PSE Tech shall be expressly prohibited by the PSE
from directly or indirectly purchasing or beneficially owning any interest
in the Portfolio.
(b) In accordance with the limitations set forth in Paragraph 1(b)
herein, the PSE shall not and is in no way obliged to engage in any
marketing or promotional activities in connection with the sale of the
Portfolio or in making any representation or statement in connection with
the sale by Principal Preservation, its distributor, or other agents or
representatives of the Portfolio to the fund holders or prospective fund
holders.
7.Principal Preservation Obligations.
----------------------------------
(a) Principal Preservation shall use all reasonable efforts to
protect the goodwill and reputation of the PSE and of the PSE Marks in
connection with its use under this Agreement, including allowing the PSE
to review and approval all advertisements, brochures, promotional and
information materials prepared or used by Principal Preservation referring
to the PSE, the PSE Tech, or the PSE Marks.
(b) Principal Preservation shall file the first Portfolio prospectus
with the SEC within two hundred and seventy (270) days of the Effective
Date of this Agreement, or the license granted by this Agreement shall be
null and void. Principal Preservation shall also send a copy of the
prospectus filed with the SEC within a week of filing with the SEC.
Principal Preservation shall use its best efforts promptly to register the
Portfolio and to have it made effective by the SEC. Delay by the SEC in
granting approval to Principal Preservation respecting the initial
prospectus shall not be grounds for termination of this Agreement;
provided, however, that in the event any delay extends beyond six (6)
months from the filing date and such prospectus has not been made
effective, the license granted by this Agreement shall be null and void,
unless extended by written agreement of both parties hereto. Principal
Preservation agrees to commence offering the Portfolio to investors no
more than three (3) months after the prospectus is made effective by the
SEC.
(c) Principal Preservation shall use the PSE Marks and PSE Tech in
compliance with the terms and conditions of this Agreement, and shall
ensure that the PSE's rights in the PSE Marks and PSE Tech are in no way
diminished or jeopardized, and to ensure that the public is not misled as
to such rights.
0.Xxxxxxxxxx of Value of License.
------------------------------
(a) During the term of this Agreement, the PSE shall use its best
efforts to obtain and to maintain in full force and effect all federal and
state registrations of the PSE Marks, and shall at the PSE's expense and
sole discretion exercise PSE's common law and statutory rights against any
infringements of the PSE Marks, copyrights or other proprietary rights
insofar as such infringements conflict with or impair Principal
Preservation's rights and privileges hereunder.
(b) In the event that the PSE is informed by Principal Preservation
or otherwise learns that a third-party intends to market, or is marketing
to the public an unlicensed index fund based upon the PSE Tech in
violation of rights of Principal Preservation and the PSE in the PSE Tech
and/or PSE Marks, the PSE shall use reasonable efforts to prevent and/or
stop any such unlicensed third-party to cease offering such a fund.
(c) Principal Preservation shall reasonably cooperate with the PSE
in the maintenance of PSE's rights and registrations to the PSE Marks,
including any reasonable proprietary notices required by the PSE, and
shall do such acts and execute such instruments as are reasonably
necessary and appropriate to such purposes.
9.Proprietary Right. Principal Preservation acknowledges that the
-----------------
PSE Tech is selected, arranged and prepared by the PSE through the
application of methods and standards of judgement and used and developed
through the expenditure of considerable work, time and money by the PSE.
Principal Preservation also acknowledges that the PSE Marks and PSE Tech
are valuable assets of the PSE and, therefore, with respect to such
information which is received by Principal Preservation pursuant to this
Agreement, Principal Preservation shall take such security measures as it
takes to protect its own proprietary data, provided such actions are
reasonable, to prevent any use other than as authorized herein.
10.Warranties; Disclaimers.
-----------------------
(a) The PSE represents and warrants that the PSE is the owner of, or
has the right to license Principal Preservation to use, the PSE Marks and
PSE Tech, as provided herein.
(b) The PSE shall promptly correct, or instruct its agent, to
correct any mathematical errors made in the PSE's computation of the PSE
Tech which are brought to the PSE's attention by Principal Preservation,
provided that nothing in the Paragraph 10(b) shall give Principal
Preservation the right to exercise any judgment or require any changes
with respect to the methods of composing, calculating or determining the
PSE Tech.
(c) The PSE shall obtain information for inclusion in or for use in
the calculation of the PSE Tech from sources which the PSE considers
reliable, but the PSE does not guarantee the accuracy and/or the
completeness of the PSE Tech or any data included therein. THE PSE MAKES
NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY PRINCIPAL
PRESERVATION, OWNERS OF THE PORTFOLIO, ANY PERSON OR ANY ENTITY FROM THE
USE OF THE PSE TECH OR ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE
USE LICENSED HEREUNDER, OR FOR ANY OTHER USE. THE PSE MAKE NO EXPRESS OR
IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL SUCH WARRANTIES, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE FOR USE WITH RESPECT
TO THE PSE TECH OR ANY DATA INCLUDED THEREIN. The Portfolio's
prospectuses filed with the SEC hereunder shall expressly include the
disclaimer language contained in the Paragraph 10(c).
(d) Neither party shall have any liability for lost profits or
consequential damages arising out of this Agreement.
(e) The provisions of this Paragraph 10 shall survive any
termination of this Agreement.
11.Force Majeure. Neither the PSE nor Principal Preservation shall
-------------
bear any responsibility or liability for any losses arising out of any
delay in or interruption of their respective performance of their
obligations under this Agreement due to any act of God, act of
governmental authority, act of the public enemy or due to war, riot, fire,
flood, civil commotion, insurrection, labor difficulty (including, without
limitation, any strike or other work stoppage or slow down), severe or
adverse weather conditions or other cause beyond the reasonable control of
the party so affected.
12.Investment Advisor. Principal Preservation intends to retain a
------------------
registered investment advisor to manage the Portfolio. The initial
investment advisor to the Portfolio will be Xxxxxxx Asset Management, Inc.
("ZAMI"). Principal Preservation will promptly notify PSE in the event
that there is a change in the Portfolio's investment advisor. Principal
Preservation hereby directs PSE to provide daily information regarding the
PSE Tech to ZAMI at the following address:
Notice to ZAMI: Xxxxxxx Asset Management, Inc.
--------------
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
----
13.Other Matters.
-------------
(a) This Agreement is solely and exclusively between the parties as
presently constituted and shall not be assigned or transferred by either
party, without the prior written consent of the other party, and any
attempt to so assign or transfer this Agreement, without such written
consent shall be null and void.
(b) This Agreement constitutes the entire agreement of the parties
hereto with respect to its subject matter and may be amended or modified
only by a writing signed by duly authorized officers of both parties.
This Agreement supersedes all previous agreements between the parties with
respect to the subject matter of this Agreement. There are no oral or
written collateral representations, agreements, or understandings except
as provided herein.
(c) No breach, default, or threatened breach of this Agreement by
either party shall relieve the other party of its obligations of
liabilities under this Agreement with respect to the protection of the
property or proprietary nature of any property which is the subject of
this Agreement.
(d) All notices and other communications under this Agreement shall
be in writing and shall be deemed given when delivered by hand or five (5)
days after mailing, postage prepaid, by registered or certified mail,
return receipt requested, to the below address or which addresses as
either party shall specify by a written notice to the other.
Notice to the PSE: Pacific Stock Exchange Incorporated
-----------------
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxx
----
Notice to Principal Preservation: Principal Preservation Portfolios, Inc.
--------------------------------
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
----
(e) This Agreement shall be interpreted, construed and enforced in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
Pacific Stock Exchange Incorporation
By:---------------------------------
Title:------------------------------
Principal Preservation Portfolios,
Inc.
By:--------------------------------
Title:-----------------------------
