EXHIBIT (H)(3)
MARKETING AGREEMENT
This Marketing Agreement (the "Agreement") is made and entered into as of
this __ day of August, 2006, by and between Archipelago Holdings, Inc.
("Archipelago"), a Delaware corporation, and X.X. Xxxxxxx and Company ("X.X.
Xxxxxxx"), a Wisconsin Corporation. The Exchange Traded Trust ("Trust"), a
Delaware statutory trust, is a party hereto with respect to Sections 1, 4, 12,
16 and 19 only.
WHEREAS, the Trust currently has one existing series, the NYSE Arca Tech
100 ETF (the "ETF"), and has adopted a Distribution Plan with respect to the ETF
and any future series designated by the Trust (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act"),
which Plan authorizes payments to finance activities which are intended to
result in the sale of the shares of beneficial interest of the ETF (the
"Shares") and the sale of the shares of beneficial interest of all series of
shares of the Trust designated in the future;
WHEREAS, the Trust has appointed X.X. Xxxxxxx as the distributor of the
Shares of the ETF, pursuant to a distribution agreement (the "Distribution
Agreement"), which authorizes X.X. Xxxxxxx to use appropriate efforts to promote
the ETF;
WHEREAS, Archipelago: (i) operates NYSE Arca, L.L.C. (the "NYSE Arca
Marketplace"(R)), which comprise an all-electronic stock exchange that
facilitates trading in equity securities, exchange-traded funds and other
exchange-listed securities; and (ii) compiles, calculates, maintains and owns
the NYSE Arca Tech 100 Index (formerly the PSE/PCX Technology Index and the
ArcaEx Tech 100 Index) ("Index") either directly or through a wholly owned
subsidiary;
WHEREAS, the ETF, through its replication strategy, intends to
substantially replicate the performance of the Index, and Archipelago and the
Trust have entered into a license agreement (the "License Agreement") under
which Archipelago grants to the Trust a license to use and refer to the Index in
connection with the ETF;
WHEREAS, the Trust has authorized X.X. Xxxxxxx under the terms of the
Distribution Agreement to enter into this Marketing Agreement to assist the
Trust and X.X. Xxxxxxx in their efforts to promote the ETF during the period of
this Agreement; and
WHEREAS, X.X. Xxxxxxx and Archipelago desire to enter into this Agreement
under which Archipelago will provide certain marketing services for the ETF.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
(collectively, the "Parties" and each individually a "Party") agree as follows:
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1. Term of Agreement. The term of this Agreement shall commence on the
date hereof (the "Effective Date") and shall continue for a period of one year
("Initial Term"), unless terminated as provided in Section 16. Thereafter, this
Agreement shall continue in effect from year to year, subject to the termination
provisions and all other terms and conditions hereof, so long as such
continuance is specifically approved at least annually by (i) a vote of the
majority of the trustees of the Trust and (ii) a vote of the majority of the
trustees of the Trust who are not "interested persons" of the Trust (as the term
is defined in the 0000 Xxx) and who have no direct or indirect financial
interest in the operation of the Plan, in this Agreement or in any agreement
related to the Plan (the "Independent Trustees") by a vote cast in person at a
meeting called for the purpose of voting on such approval (each such one year
period after the Initial Term and the Initial Term are individually referred to
as a "Term").
2. Marketing Program.
(a) Duties of Archipelago: Subject to the terms and conditions contained
herein, Archipelago shall develop, with the advice and consent of X.X. Xxxxxxx
and/or its agent or representative, a marketing plan designed to advertise,
promote and increase public awareness of the Index and the ETF within the
financial services industry and investing public ("Marketing Plan"). The
Marketing Plan shall include, but not be limited to, branding, promotional
activities, development and production of marketing materials, collateral and
media campaigns using any format agreed to by the Parties (i.e., electronic
media, print media, Internet, etc.) and hosting a web-site for the ETF
(collectively, "Marketing Materials"). Archipelago shall assist with the
execution of the Marketing Plan and shall promote the ETF in accordance with the
Marketing Plan through implementation of marketing and advertising activities
undertaken by Archipelago. In addition, Archipelago will, on an ongoing basis,
provide marketing support reasonably requested by X.X. Xxxxxxx and reasonably
necessary to broaden the distribution of the Shares of the ETF. Archipelago
shall make expenditures of at least $500,000 during the first year after the
date on which the ETF commences trading on the NYSE Arca Marketplace on
marketing and advertising activities directly related to the promotion of the
ETF. Notwithstanding the foregoing, Archipelago shall have no obligation to
establish or maintain a formal marketing or sales organization to satisfy its
obligations with respect to its obligations hereunder. Upon the reasonable
request of X.X. Xxxxxxx, Archipelago will provide X.X. Xxxxxxx or its agents or
representatives with Marketing Materials as are necessary and be responsible for
the costs associated with providing such Marketing Materials, as well as provide
reasonable support for X.X. Xxxxxxx'x educational efforts with respect to the
ETF.
All activities by Archipelago and its agents and employees pursuant to
this Agreement shall comply with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or adopted
pursuant to the 1940 Act by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange Act of 1934, as
amended.
(b) Duties of X.X. Xxxxxxx: X.X. Xxxxxxx will, among other things, oversee
and arrange for: (i) the preparation of all general shareholder communications,
including shareholder reports, with the advice and consent of Archipelago only
for purposes of providing branding or marketing content ("Shareholder
Communications"); (ii) the compilation of the ETF's records and financial
statements; and (iii) the registration and qualification of the ETF shares, to
be sold in creation units, under federal and state law. Subject to the
Confidentiality requirements provided in Section 7, the Privacy requirements
provided in Section 8 and the other applicable requirements provided in the
policies and procedures of the ETF, X.X. Xxxxxxx shall furnish (or cause other
service providers to furnish) Archipelago with all Shareholder Communications,
financial and performance information relating to the ETF and all other
evaluations, information or analyses relating to the ETF as Archipelago may
request from time to time or as X.X. Xxxxxxx may xxxx to be desirable. X.X.
Xxxxxxx will be responsible for obtaining all necessary and required regulatory
and government approvals, including approvals from the National Association of
Securities Dealers, for any and all Shareholder Communications and/or Marketing
Materials.
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(c) Duties of the Parties: Each Party shall designate one individual that
shall have primary responsibility for maintaining communications between the
Parties which relate to the development and implementation of the Marketing Plan
and for resolution of any issues that may arise relating to marketing or
advertising for the ETF. In the event of a dispute arising in connection with
this Agreement, each Party agrees that their respective representatives will
negotiate in good faith to resolve such dispute.
3. Representations and Warranties. Each Party represents to the other
that: (a) it is duly organized, validly existing and in good standing under the
laws of the state of its organization, and has all requisite power and authority
to operate and carry on its business as it is now being conducted; (b) the
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly and validly authorized by all
necessary action and constitutes its valid and legally binding obligation
enforceable in accordance with its terms; and (c) neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) conflict with or result in a violation, breach or termination of
or default under (or would result in a violation, breach, termination or default
with the giving of notice or passage of time or both) any of the terms,
conditions or provisions of its organizational documents or any agreement,
instrument or obligation to which it is a party or by which an of its properties
or assets may be bound or affected, or (ii) result in the violation of any
order, writ, injunction, decree, statute, rule or regulation applicable to its,
or its properties or assets.
4. Marketing Fee. Subject to the limitations below, within 15 days of the
last day of every month, the Trust will reimburse Archipelago for out-of-pocket
expenses incurred by Archipelago during the previous month at an annual rate of
up to 0.08% of the ETF's average daily net assets for that month, calculated as
of the last day of that month ("Marketing Fee"). Notwithstanding the foregoing,
Archipelago will waive and forever relinquish its right to receive payment of
any Marketing Fee until the sooner to occur of: (a) the ETF's assets reaching
$60 million; or (b) 365 days after the date on which the ETF commences trading
on the NYSE Arca Marketplace ("Waiver Period").
5. Trademarks. Except as specified in this Agreement, neither Party will
publish or use any advertising, sales promotions, press releases or other
publicity which use the other Party's name, logo, trademarks or service marks
without the prior written approval of such Party. All Shareholder Communications
created by and distributed by X.X. Xxxxxxx (or any of its agents or
representatives) shall display the Index xxxx and logo in accordance with the
License Agreement and as directed by Archipelago. Notwithstanding the foregoing,
Archipelago shall retain all right, title and interest in and to the Index xxxx.
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6. Indemnification.
(a) Indemnification of X.X. Xxxxxxx. Archipelago agrees to indemnify and
hold harmless X.X. Xxxxxxx and each of its directors, officers, employees,
agents and each person, if any, who controls X.X. Xxxxxxx against any losses,
claims, damages or liabilities to which X.X. Xxxxxxx may become subject, insofar
as such losses, claims, damages, liabilities, or expense (or actions in respect
thereof) (i) arise out of or are based upon the actions of Archipelago or (ii)
result from a breach of a material provision of this Agreement by Archipelago.
Archipelago will reimburse any legal or other expenses reasonably incurred by
X.X. Xxxxxxx or any such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that Archipelago will not be liable for indemnification hereunder to the extent
that any such loss, claim, damage or liability arises out of or is based upon
the gross negligence or willful misconduct of X.X. Xxxxxxx, its respective
directors, officers, employees, agents or any controlling person in performing
their obligations under this Agreement.
(b) Indemnification of Archipelago. X.X. Xxxxxxx agrees to indemnify and
hold harmless Archipelago and each of its directors, officers, employees, agents
and each person, if any, who controls Archipelago against any losses, claims,
damages or liabilities to which Archipelago may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) (i) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the ETF's registration statement or sales literature
of the ETF prepared or approved in writing by X.X. Xxxxxxx or arise out of, or
are based upon, the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except to the extent such untrue statement or omission is the
result of information provided by or statements made by Archipelago, or (ii)
result from a breach of a material provision of this Agreement by X.X. Xxxxxxx.
X.X. Xxxxxxx will reimburse any legal or other expenses reasonably incurred by
Archipelago or any such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that X.X. Xxxxxxx will not be liable for indemnification hereunder to the extent
that any such loss, claim, damage or liability arises out of or is based upon
the gross negligence or willful misconduct of Archipelago, its respective
directors, officers, employees, agents or any controlling person in performing
their obligations under this Agreement.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of an action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability that it may
have to any indemnified party otherwise under this Section. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
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7. Confidentiality.
(a) Information. The Parties acknowledge that each Party and its officers,
employees, agents, affiliates and representatives (collectively,
"Representatives") may have access to certain confidential and proprietary
information of the other Party and its subsidiaries in connection with this
Agreement (collectively, the "Information"). The Parties hereby acknowledge and
agree that they will, and will cause all of their Representatives to, take all
commercially reasonable precautions necessary to safeguard the confidentiality
of the Information, including: (i) those precautions required under this
Section; (ii) those taken by the Party and its Representative to protect their
respective confidential information; and (iii) those precautions which the other
Party may reasonably request from time to time.
(b) Use and Disclosure. The Parties agree that they will, and will cause
all of their Representatives to, use the Information solely to perform its
obligations under this Agreement and not to disclose any Information to any
third person or entity without the prior written consent of the other Party,
provided that, the other Party may disclose Information in accordance with
applicable laws, regulations or court orders if notification is provided prior
to such disclosure and such disclosure is limited to those matters required by
such laws, regulations or court orders to be disclosed. Each Party shall not,
and shall cause their Representatives not to: (i) use any Information in a
manner that would violate any federal or state securities laws, including,
without limitation, Rule 10b-5 of the Securities Exchange Act of 1934, as
amended; or (ii) deface any confidentiality or proprietary notice that the Party
may have affixed to items of Information disclosed to the other Party.
(c) Unauthorized Use or Disclosure. Each Party acknowledges that any
unauthorized use or disclosure of the Information by the other Party or any
Representative will cause irreparable damage to the Party. If an unauthorized
use or disclosure occurs as a result of the negligence or misconduct of a Party
or any of their Representatives, the Party will take, at its expense, all steps
which are necessary to recover the Information and to prevent its subsequent
unauthorized use or dissemination, including availing itself or actions for
seizure and injunctive relief. If the Party fails to take these steps in a
timely and adequate manner, the harmed Party may take them at the violating
Party's expense. The Parties agree that the covenants contained in this Section
are reasonably necessary to protect and preserve each Party's interests and
that, in addition to all of the remedies provided at law or in equity, each
Party shall be entitled to a temporary restraining order and a permanent
injunction to prevent a breach of any such covenants. If the harmed Party should
seek injunctive relief hereunder, the violating Party hereby waives any
requirement that the harmed Party provide proof of the economic value of any
Information or post a bond or any other form of security.
8. Privacy. The Parties agree to abide by the provisions of the Financial
Services Modernization Act of 1999 (Xxxxx-Xxxxx-Xxxxxx Act), including
regulations of the SEC and U.S. Department of Treasury adopted thereunder, and
with any and all other applicable state privacy laws, rules and regulations, and
to restrict access to nonpublic personal information of shareholders of the ETF
to those employees who have a need to know the information to fulfill the
respective obligations of the Parties to this Agreement and otherwise to fulfill
the intents and purposes of this Agreement. The Parties agree to implement and
maintain appropriate reasonable measures that comply with federal and state
regulations designed to safeguard nonpublic personal information of shareholders
of the ETF and otherwise to ensure their security and the confidentiality of
that information.
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In accordance with Regulation S-P, the Parties hereto will not disclose
any non-public personal information, as defined in Regulation S-P, regarding any
shareholder, provided, however, that the Parties may disclose such information
to any Party as necessary in the ordinary course of business to carry out the
purposes for which such information was disclosed to the Parties, or as may be
required by law. Both Parties agree to use reasonable precautions to protect and
prevent the unintentional disclosure of such non-public personal information.
9. Survival. Notwithstanding the termination of this Agreement for any
reason, the provisions of Sections 6, 7, 8 and 10 shall remain in full force and
effect.
10. Governing Law. This Agreement and all amendments, modifications,
alterations or supplements hereto, and the rights of the Parties hereunder,
shall be governed by and construed in accordance with the laws of the State of
Wisconsin, without giving effect to any choice or conflict of law provision or
rule that would cause the application of the laws of any jurisdiction other than
the State of Wisconsin.
11. Entire Agreement. The provisions of the Distribution Agreement between
the Trust and X.X. Xxxxxxx is so far as they relate to the Plan, are
incorporated herein by reference. This Agreement, the Distribution Agreement and
the License Agreement contain the sole and entire agreement between the Parties
with respect only to the subject matter hereof and supersede all prior
discussions and agreements between the Parties with respect to the subject
matter hereof.
12. Notices. Any notice given pursuant to this Agreement shall be
effective only if in writing and sent by (i) nationally-recognized overnight
service, or (ii) hand delivery, addressed as set forth below; receipt shall be
deemed to occur on the earlier of the date of actual receipt or receipt by the
sender of confirmation that the delivery was completed or that the addressee has
refused to accept such delivery or has changed its address without giving notice
of such change as set forth herein.
If to Archipelago:
Archipelago Holdings, Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X.X. X'Xxxx
If to X.X. Xxxxxxx:
X.X. Xxxxxxx and Company
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxxxx, General Counsel
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and to:
Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxxx Xxx.
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
If to the Trust:
The Exchange Traded Trust
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, President
or such other address as may hereafter be designated by like notice.
13. Commercially Reasonable. The Parties agree to use commercially
reasonable efforts in the performance of this Agreement.
14. Waiver. No delay or omission by either Party hereto in exercising any
right or power occurring upon any noncompliance or default by the other Party
with respect to any of the terms of this Agreement shall impair any such right
or power or be construed to be a waiver thereof. A waiver by either Party hereto
of any of the covenants, conditions, or agreements to be performed by the other
Party shall not be construed to be a waiver of any succeeding breach thereof or
of any other covenant, condition, or agreement contained in this Agreement.
15. Amendment and Assignment. This Agreement may not be amended except as
permitted by the 1940 Act and, in all cases, may only be modified or amended if
agreed to by the Parties in writing. This Agreement shall automatically and
immediately terminate in the event of its assignment, as defined under the 1940
Act.
16. Termination. This Agreement may be terminated by either Party, without
the payment of any penalty, on not more than upon 60 days nor less than 30 days
prior notice in writing to the other Party provided, that in the case of
termination by X.X. Xxxxxxx such action shall have been authorized by resolution
of a majority of the Independent Trustees of the Trust, or by vote of a majority
of the outstanding voting securities of the Trust. Notwithstanding the
foregoing, Archipelago may not terminate this Agreement prior to the completion
of the Waiver Period provided in Section 4.
17. Headings The Section headings contained in this Agreement are solely
for convenience of reference and shall not affect the meaning or interpretation
of this Agreement or of any term or provision hereof.
18. Severability. If any provision of this Agreement is held to be
unenforceable, this holding will not affect the validity of the other provisions
of this Agreement.
19. Independent Parties. Archipelago, X.X. Xxxxxxx and Trust are
independent parties. Nothing in this Agreement will be construed to make any of
those parties an agent, partner, employee, or legal representative of the other
parties. None of the parties will have nor represent itself to have any
authority to bind to make any agreement, representation or warranty or to incur
any liability on behalf of the other parties.
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20. No Third Party Beneficiaries. This Agreement shall be binding upon and
inure solely to the benefit of each Party hereto and nothing in this Agreement
is intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
21. Cumulative Remedies. No right or remedy herein conferred on or
reserved to either Party is intended to be exclusive of any other remedy or
right, and each and every right or remedy shall be cumulative and in addition to
any right or remedy given hereunder or now hereafter existing at law or in
equity or by statute.
22. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which taken together shall be
deemed one agreement.
[Signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
ARCHIPELAGO HOLDINGS, INC.
By: ___________________________________
Name: ________________________________
Title: _________________________________
X.X. XXXXXXX AND COMPANY
By: ___________________________________
Name: ________________________________
Title: _________________________________
THE EXCHANGE TRADED TRUST
(with respect to Sections
1, 4, 12, 16 and 19 only)
By: ___________________________________
Name: ________________________________
Title: _________________________________
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