CONFIDENTIAL
AMENDMENT NO. 6 TO LICENSE AGREEMENT
This Amendment No. 6 ("Amendment") to the License Agreement, dated September
8, 1998, between Dow Xxxxx & Company, Inc. ("Dow Xxxxx") and Xxx Xxxxxx Funds
Inc. ("Licensee" or "Xxx Xxxxxx") (the "License Agreement"), as amended by
Amendment No. 1 dated December 1, 1999, Amendment No. 2 dated February 1, 2000,
Amendment No. 3 dated September 8, 2003, Amendment No. 4 dated May 19, 2005 and
Amendment No. 5 dated March 7, 2006, is made as of November 15, 2007 (the
"Amendment No. 6 Effective Date") by and between Dow Xxxxx and Licensee.
WHEREAS, the License Agreement grants a license to Licensee to use certain
proprietary Indexes and related Dow Xxxxx Marks in connection with the issuance,
trading, marketing and promotion of Products;
WHEREAS, in addition to the Products authorized for use under the License
Agreement, the Licensee also wishes to issue, sell, market and promote certain
Products based on one or more of the Strategies identified on Schedule A hereto
(each a "DJLC Strategy") using the Dow Xxxxx Large Cap Growth Index or the Dow
Xxxxx Large Cap Value Index (the "DJLC Indexes"), and to use the related Dow
Xxxxx proprietary service marks associated with such indexes in connection
therewith; and
WHEREAS, the Licensee and Dow Xxxxx have agreed to amend the License
Agreement to permit Licensee's issuance, sale, marketing and promotion of
Products based on one or more DJLC Strategies, and to use Dow Xxxxx' proprietary
service marks in connection therewith on the terms provided herein and in the
License Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein and in the License Agreement, it is agreed as
follows:
1. Subject to the terms and conditions of the License Agreement, Dow
Xxxxx hereby grants to Licensee a further non-transferable,
non-exclusive license to use the Dow Xxxxx Large Cap Growth Index, and
to use and refer to the service marks "Dow JonesSM" and "Dow Xxxxx
Large Cap Growth IndexSM" (collectively, the "Dow Xxxxx Large Cap
Growth Index Marks"), in connection with the issuance, sale, marketing
and promotion of Products based on one or more DJLC Strategies to
indicate that Dow Xxxxx is the source of the DJLC Indexes and as may
otherwise be required by applicable laws, rules, regulations, court
orders or under the License Agreement.
2. Subject to the terms and conditions of the License Agreement, Dow
Xxxxx hereby grants to Licensee a further non-transferable,
non-exclusive license to use the Dow Xxxxx Large Cap Value Index, and
to use and refer to the service marks "Dow JonesSM" and "Dow Xxxxx
Large Cap Value IndexSM" (collectively, the "Dow Xxxxx Large Cap Value
Index Marks"), in connection with the issuance, sale, marketing and
promotion of Products based on one or more DJLC Strategies to indicate
that Dow Xxxxx is the source of the DJLC Indexes and as may otherwise
be required by applicable laws, rules, regulations, court orders or
under the License Agreement.
3. DJLC Index Data: (a) Dow Xxxxx shall use commercially reasonable
efforts to provide the data identified in Schedule C hereto (the "DJLC
Index Data") to Licensee at the address specified in the License
Agreement and the number of individual users set forth in Schedule C.
Licensee agrees that it shall use the DJLC Index Data solely for
internal purposes (i.e., by Licensee's employees) solely in connection
with the license granted in Sections 1 and 2 of this Amendment, except
that Licensee may report the values of Indexes in periodic reports to
Licensee's customers so long as such reports are not provided in
connection with any information vending or commercial publishing
activity carried on by Licensee or any of its affiliates. Except as
otherwise expressly provided herein, Licensee shall not reproduce or
further transmit or distribute the DJLC Index Data for commercial
purposes in any type of format or by any means, including but not
limited to the Internet, Intranet or other type of network. Further,
except as expressly provided in this Amendment, Licensee shall not use
the DJLC Index Data to create any indexes.
(b) CUSIP DATA. Licensee agrees and acknowledges that it has been informed
that the CUSIP Service, or any portion thereof that may be included in the DJLC
Index Data being provided to Licensee in connection herewith, is and shall
remain valuable intellectual property owned by, or licensed to, CUSIP Service
Bureau, Standard & Poor's ("CSB") and the American Bankers Association ("ABA"),
and that no proprietary rights are being transferred to Licensee in such
materials or in any of the information contained therein under this Agreement.
Unless Licensee has a separate, written and effective agreement with Standard &
Poor's for any CUSIP Service data included in the DJLC Index Data, Licensee
agrees that Licensee shall not publish or distribute in any medium the CUSIP
Service or any information contained therein, or any portion thereof that may be
included in the DJLC Index Data being provided to Licensee in connection
herewith. NEITHER CSB, ABA NOR ANY OF THEIR AFFILIATES MAKE ANY WARRANTIES,
EXPRESS OR IMPLIED, AS TO THE ACCURACY, ADEQUACY OR COMPLETENESS OF ANY OF THE
INFORMATION CONTAINED IN THE CUSIP SERVICE OR THE CUSIP DATABASE, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE. IN NO EVENT SHALL THE CSB, ABA OR ANY OF THEIR
AFFILIATES PURSUANT TO ANY CAUSE OF ACTION HAVE ANY LIABILITY FOR ANY ERRORS OR
OMISSIONS IN THE CUSIP DATABASE NOR SHALL THEY BE LIABLE FOR ANY DAMAGES,
WHETHER DIRECT OR INDIRECT, SPECIAL OR CONSEQUENTIAL RESULTING THEREFROM.
Licensee acknowledges that it may be required to obtain a license from CSB in
connection with the receipt of the CUSIP Service (or any portion thereof) in the
DJLC Index Data. Licensee shall be individually liable to CSB for any fees
imposed by CSB in connection with the receipt by Licensee of data from the CUSIP
Service in connection herewith.
(c) Dow Xxxxx will give Licensee reasonable prior written notice of, and
Licensee will be solely responsible to obtain and maintain, at its own cost, all
consents and licenses and make all filings necessary to receive and/or use the
DJLC Index Data, including consents of applicable Sources (e.g., the London
Stock Exchange with respect to SEDOL data) and shall certify to Dow Xxxxx in
writing receipt of the same upon Dow Xxxxx' request. Licensee shall indemnify
and hold harmless Dow Xxxxx, its affiliates and their respective officers,
directors and employees (each, a "Dow Xxxxx Indemnified Party") from and against
any Losses (defined in Section 9(a) of the Agreement) resulting from or arising
out of a third-party claim resulting from failure of Licensee to secure such
consents or licenses.
4. Except as otherwise expressly provided herein, all terms and
conditions in the License Agreement that apply to the Dow Xxxxx
Industrial Average shall apply equally to the DJLC Indexes.
5. Except as otherwise expressly provided herein, all terms and
conditions in the License Agreement that apply to the Dow Xxxxx Marks
shall apply equally to the Dow Xxxxx Large Cap Growth Index Marks and
the Dow Xxxxx Large Cap Value Index Marks.
6. Except as otherwise expressly provided herein, all terms and
conditions of the License Agreement that apply to the Products shall
apply equally to the Products based on one or more of the DJLC
Strategies.
7. Section 9(a) shall be amended to insert "or (v) a DJLC Strategy" after
"or (iv) an Additional Index Strategy".
8. In consideration of the license granted under this Amendment, Licensee
shall pay to Dow Xxxxx the license fees set forth on Schedule B
attached hereto.
9. For the avoidance of doubt, (a) none of the Products authorized under
the License Agreement (as amended) may be listed for trading on an
Organized Securities Market. "Organized Securities Market" shall mean
a U.S. national securities exchange, an automated quotation or other
electronic trading system, a foreign securities exchange or any other
domestic or foreign securities market determined by Dow Xxxxx in its
reasonable judgment to constitute an Organized Securities Market; and
(b) the name of each of the Products shall be subject to Dow Xxxxx'
prior written approval.
10. Except as otherwise specified herein, all capitalized terms used in
this Amendment shall have the meaning ascribed to them in the License
Agreement. Except as expressly amended hereby, all provisions in the
License Agreement shall continue to remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 6 to
the License Agreement to be executed as of the date first set forth above.
DOW XXXXX & COMPANY, INC.
By: _________________________
Name: Xxxxxxx Xxxxxxxxxx
Title: President, Dow Xxxxx Indexes
Date:
XXX XXXXXX FUNDS INC.
By: __________________________
Name:
Title:
Date:
SCHEDULE A
"DJLC Strategy" shall mean the Dow Xxxxx Large Cap Growth Strategy and the
Dow Xxxxx Large Cap Value Strategy.
"Dow Xxxxx Large Cap Growth Strategy" means:
The strategy uses an enhanced index strategy to select a portfolio of 20
stocks from the Dow Xxxxx Large Cap Growth Index (the "DJLCGI"). Beginning with
the stocks in the DJLCGI, the strategy excludes the bottom 20% of stocks based
on market capitalization. The strategy then ranks each remaining company in the
DJLCGI from highest to lowest based on the following strategy screens:
o Price/Sales to Five-Year Average - Current price/sales ratio divided
by median price/sales ratio over past 60 months,
o Price/Free Cash Flow Ratio - Stock price divided by pershare free cash
flow over past four quarters. Free cash flow represents the net change
in cash from all items classified in the operating activities section
on a statement of cash flows, minus capital spending and cash
dividends,
o Price/Earnings Ratio - Stock price divided by earnings per share from
operations over past four quarters,
o Total Return for the Past Six Months - The percentage return on a
stock over most recent six months, reflecting dividends and change in
stock price,
o Long-Term Expected Profit Growth - The simple average of analysts'
estimates for five-year growth in earnings per share, and
o EPS Revisions Current Quarter - The net percentage of positive
profit-estimate revisions. First, the number of earnings estimates for
the next fiscal quarter that have been decreased from the prior month
are subtracted from the number that have been increased. Next, that
result is divided by the total number of earnings estimates for the
quarter.
The strategy assigns each stock a rank score for each of these categories
with the lowest score being 1 and the highest score being the total number of
stocks in the DJLCGI. The strategy ranks the remaining stocks by total score and
selects the top 20 stocks, provided that no more than 8 of the stocks in the
initial portfolio are selected from any single economic sector (as defined by
Dow Xxxxx). If two stocks are assigned the same total score, the stock with the
higher score for Total Return for the Past Six Months is ranked higher. In
addition, a stock will be excluded and such stock will be replaced with the
stock with the next highest total score if, based on publicly available
information as of the selection date, the company is the target of an announced
business acquisition which the Sponsor expects will close within six months of
the date of the prospectus.
"Dow Xxxxx Large Cap Value Strategy" means:
The strategy uses an enhanced index strategy to select a portfolio of 20
stocks from the Dow Xxxxx Large Cap Value Index (the "DJLCVI"). Beginning with
the stocks in the DJLCVI, the strategy excludes the bottom 20% of stocks based
on market capitalization. The strategy then ranks each remaining company in the
DJLCVI from highest to lowest based on the following strategy screens:
o Dividend Yield - The indicated annual dividend divided by the current
stock price,
o Price/Book Value Ratio - Stock price divided by current book value per
share,
o Price/Sales Ratio - Stock price divided by pershare sales over most
recent four quarters,
o Total Return for the Past Six Months - The percentage return on a
stock over most recent six months, reflecting dividends and change in
stock price,
o Long-Term Expected Profit Growth - The simple average of analysts'
estimates for five-year growth in earnings per share, and
o EPS Revisions Current Quarter - The net percentage of positive
profit-estimate revisions. First, the number of earnings estimates for
the next fiscal quarter that have been decreased from the prior month
are subtracted from the number that have been increased. Next, that
result is divided by the total number of earnings estimates for the
quarter.
The strategy assigns each stock a rank score for each of these categories
with the lowest score being 1 and the highest score being the total number of
stocks in the DJLCVI. The strategy ranks the remaining stocks by total score and
selects the top 20 stocks, provided that no more than 8 of the stocks in the
initial portfolio are selected from any single economic sector (as defined by
Dow Xxxxx). If two stocks are assigned the same total score, the stock with the
higher score for Total Return for the Past Six Months is ranked higher. In
addition, a stock will be excluded and such stock will be replaced with the
stock with the next highest total score if, based on publicly available
information as of the selection date, the company is the target of an announced
business acquisition which the Sponsor expects will close within six months of
the date of the prospectus.
SCHEDULE B
LICENSE FEES
Licensee shall pay license fees in accordance with the following with respect
to the DJLC Indexes:
Upon signing this Amendment No. 6 and, during the Term, on each anniversary
of the Amendment No. 6 Effective Date, the Licensee will pay to Dow Xxxxx a flat
annual minimum payment of $15,000 in respect of the twelve-month period
commencing on the Amendment No. 6 Effective Date or the anniversary thereof, as
the case may be (each, a "DJLC Annual Minimum Payment").
In addition, during each Year (defined below) of the Term, the Licensee will
provide to Dow Xxxxx a written report (each, a "DJLC Quarterly Report"), within
10 days after the end of each Quarter (as defined below), which sets forth (i)
the asset balance for each Product based on each of the DJLC Indexes (broken
down by Index) at such Quarter-end, and (ii) a calculation of the DJLC Rolling
Average Asset Balance (defined below) at such Quarter-end.
Within 10 days after each Quarter-end during each Year of the Term, the
Licensee will pay (each, a "DJLC Quarterly Payment") to the Dow Xxxxx affiliate
designated by Dow Xxxxx an amount equal to one-quarter of the DJLC Basis Point
Amount (defined below); provided, however, that, in each year of the Term,
Licensee shall be entitled to apply a credit in an amount equal to the DJLC
Annual Minimum Payment against the aggregate of the DJLC Quarterly Payments for
that year until such credit is depleted. Licensee shall send the DJLC Quarterly
Report to Dow Xxxxx by fax/email and/or regular mail to (609)
000-0000/xxxx@xxx.xxxxxxxx.xxx/Xxx Xxxxx & Company, X.X. Xxx 000, Xxxxxxxxx, XX
00000 Attn: Xxxxxxx Xxxxxxxxxx, respectively.
All amounts will be paid in cash and will be non-refundable. All amounts are
stated in US Dollars (at the applicable exchange rate prevailing at the time
payment is due, as published in the Wall Street Journal). All amounts are stated
net of any withholding taxes (i.e., the amount stated is the amount to be
received by Dow Xxxxx after payment of any withholding taxes).
The terms hereof shall be deemed "Confidential Information" for purposes of
Section 7(b) of the Agreement.
Definitions:
"DJLC Basis Point Amount" means, at any time during a Year, an amount equal
to two basis points (.0002) on the DJLC Rolling Average Asset Balance.
"DJLC Rolling Average Asset Balance" means, at any Quarter-end during a Year,
the average assets in the Products based on the DJLC Indexes in the aggregate
for the Quarter then ended, calculated by adding the month-end asset balances
for such Products for such months in the Quarter and dividing the result by the
number three (i.e., the number of months in the Quarter).
"Quarter" means, with respect to any Year, the three-month period commencing
on the first day of such Year, and each succeeding three-month period during
such Year.
"Year" means a twelve-month period commencing on the Amendment No. 6
Effective Date or on any anniversary of the Amendment No. 6 Effective Date.
SCHEDULE C
DJLC INDEX DATA
Upon execution of this Amendment No. 6 and payment of the fees required under
Schedule B, Dow Xxxxx will make data consisting of the following available via
email and Dow Xxxxx' FTP Site delivery:
1) One-time delivery up front:
- A list of component stocks (the "Components") of the DJLC
Indexes;
- Weightings of the Components;
- Divisors of such DJLC Indexes.
2) On a daily basis:
- Closing DJLC Index values on a price-return basis.
3) On a monthly basis:
- List of Components as of month-end;
- Component weightings as of month-end;
- Component float-adjusted market capitalization as of month-end;
- Industry group classifications for the Components as of
month-end.
4) From time to time as appropriate:
- Notice of corporate actions.
Authorized Number of Users to Access DJLC Index Data: Up to five (5) natural
persons. The initial individual users under this Schedule C shall include:
Xxxx Xxxxxxx
VK Unit Trusts
0 Xxxxxxxx Xxxxx
Xxx Xxxxx Xxxxxxx, Xxx 00000
XXXX.XXXXXXX@XXXXXXXXX.XXX
Licensee may add or substitute users from time to time, subject to the limits
set forth herein, by notifying Dow Xxxxx of the above information with respect
to such additional users.
