Exhibit 10.35
THIRD AMENDED AND RESTATED
CBOT/CERES LICENSE AGREEMENT
This Agreement ("Agreement")is entered as of 10/th/ day of July, 2002, by
and between Board of Trade of the City of Chicago, Inc. (hereinafter referred to
as ("CBOT(R)"), a non-stock, not-for-profit Delaware corporation, and Ceres
Trading Limited partnership, a Delaware limited partnership ("Ceres").
RECITALS
WHEREAS, CBOT is the successor of Board of Trade of the City of Chicago, a
voluntary membership association created by special act of the Illinois
legislature, and is a designated contract market pursuant to Section 7 of the
Commodity Exchange Act, 7 U.S.C. (S)1 et seq., for the trading of futures and
options on futures contracts on various agricultural commodities, financial
instruments, securities indexes and precious metals; and
WHEREAS, Ceres was formed by the CBOT and the CBOT's members to facilitate
the electronic trading of CBOT contracts;
WHEREAS, the CBOT's members have from time to time by ballot vote approved
the electronic trading of certain CBOT contracts during certain hours;
WHEREAS, Ceres was the licensee of certain electronic trading software (the
"Eurex 2.0 Software") pursuant to a certain Software License Agreement dated
October 1, 1999, and the owner of various modifications to the Eurex 2.0
Software ("Modifications"), pursuant to a Software License Agreement dated
October 1, 1999, and a Confirmation of Rights Agreement dated July 27, 2000
(such Eurex 2.0 Software and the Modifications being hereinafter referred to as
the "a/c/e Software"), and entered into certain agreements to provide for the
implementation, operation and development of an electronic trading system (the
"a/c/e System") utilizing the a/c/e Software, and Ceres desires to license the
a/c/e Software (including a sublicense of the Eurex 2.0 Software) to CBOT and to
provide CBOT with various services so as to enable CBOT products to be traded
electronically on the a/c/e system;
WHEREAS, pursuant to a Reorganization Agreement dated July 10, 2002, Ceres
has relinquished its rights in the a/c/e Software and has entered into a Non-
Exclusive Software License Agreement dated July 10, 2002, to use certain
portions of the Eurex Software (the "Programs") in connection with the CBOT's
electronic market, and Ceres has also entered into certain new agreements
regarding the operation and maintenance of the CBOT's electronic market; and
WHEREAS, the parties have agreed that, in consideration of the foregoing,
Ceres shall be paid a transaction fee for each contract that is traded
electronically in accordance with the terms described herein.
NOW THEREFORE, in consideration of the premises, mutual covenants and
agreements herein contained, and for other good and valuable consideration, the
parties agree as follows:
SECTION 1 - AGREEMENT & TERM
1.1 Agreement. Ceres agrees to enter into the license as set forth herein
and during the term of this Agreement, to provide the Facility Management
Services and other services described herein, and CBOT agrees to enter into the
license as set forth herein and during the term of this Agreement, to procure
such Facility Management Services and other services, all on the terms and
conditions herein contained.
1.2 Term. The term of this Agreement shall commence upon the date above
written (the "Effective Date"), and except as expressly set forth herein, shall
continue until terminated by either party on not less than sixty (60) days prior
written notice to the other (the "Expiration Date").
SECTION 2 - FACILITY MANAGEMENT SERVICES
2.1 Facility Management Services to be Performed by Ceres. During the term
of this Agreement, Ceres shall process, store and make available CBOT Data
(defined as bids, offers, and prices at which contracts are transacted through
the electronic market including volume information) in conformance with the
provisions of this Agreement and otherwise provide CBOT and its membership with
the services described in this Section 2.
2.2 Ceres System Availability. Ceres shall process CBOT's Data on the
electronic market in accordance with the terms of this Agreement and provide
online capacity to CBOT, its members and members' customers during such hours as
CBOT reasonably requests. If so requested by CBOT and for the additional charges
as agreed to by the parties, Ceres shall provide the CBOT with online capacity
24 hours a day seven days a week. Ceres shall deliver reports and other output
to CBOT within the time periods specified by CBOT.
2.3 Availability of CBOT Communication Facilities. CBOT will provide the
CBOT Communication Facilities during the term of this Agreement, and shall
maintain and operate such facilities so as to minimize the possibility of
interruption of the use of those facilities.
2.4 Compliance with Requirements of Regulatory Authorities. CBOT shall
keep itself fully advised of regulatory requirements applicable to the operation
of the electronic market and the data processed thereon and shall advise Ceres
to maintain the
electronic market, including without limitation, all system programs, so as to
comply with all requirements of regulatory authorities, including, but not
limited to, reporting, record maintenance, computer security, disclosure and
audit requirements.
2.5 Record Protection and Retention. Ceres shall create and maintain on
computer readable media archival copies of all of CBOT's Data maintained on the
electronic market. Such archival copies shall be created on a daily basis so
that, at any point in time, CBOT's active data can be recreated through the
close of business on the prior business day. Such archival copies shall be
stored at a secure, fireproof site and maintained in accordance with standard
record retention requirements, but in no event for any less time than required
by the Regulatory Authorities.
2.6 System Documentation. Ceres shall maintain documentation of and for
the electronic market, including but not limited to providing CBOT with user
manuals, object code for system programs, flow charts and the necessary
narrative to permit reasonably competent programmers, conversant in the language
in which the system programs are written, to maintain and modify such programs.
Ceres shall keep all documentation current to reflect all changes made in the
electronic market. CBOT is granted the right to copy the documentation as may be
necessary to support CBOT's use of the System program.
2.7 System Support. Ceres agrees to provide on-going support for the
electronic market at CBOT's request and to support CBOT in servicing CBOT
members and member firms.
SECTION 3 - LICENSE
3.1. Grant of License. Ceres hereby grants to CBOT a sublicense to use the
Programs subject to the rights of the Licensors under the Non-
Exclusive Software License Agreement attached as Exhibit I.
3.2. System Documentation. To the extent permitted by the Non-Exclusive
Software License Agreement, Ceres shall provide CBOT with (a) copies of the
Programs in object code format together with user and maintenance documentation
therefor (including, without limitation, user, operator and maintenance manuals,
flow charts, narratives and any other documentation necessary to use the
Programs); and (b) Ceres shall provide CBOT with updates to such object code and
documentation to reflect all changes made in the Programs and to keep such
materials current.
SECTION 4 - CBOT DATA
4.1 CBOT Data. CBOT shall also retain exclusive ownership and control over
CBOT Data and the sole right to distribute such CBOT Data to third parties.
Ceres hereby acknowledges that CBOT Data shall constitute valuable property of
the CBOT not within the public domain.
SECTION 5 - LICENSE FEES
5.1 Ceres shall charge CBOT a fee for each contract that is traded
electronically in accordance with the terms described in Exhibit II hereto.
5.2 CBOT shall remit to Ceres all payments to which Ceres is entitled
pursuant to this Section 5 monthly by the last day of the month, together with
an accounting of such funds
5.3 Ceres shall reimburse the CBOT for all expenses incurred by CBOT in
maintaining and operating the electronic market, including but not limited to
all labor and materials.
SECTION 6 - CONFIDENTIALITY
6.1 Ceres' Obligation of Confidentiality Ceres acknowledges that CBOT
Proprietary Data is, shall be and shall remain the sole and exclusive property
of CBOT and constitutes valuable property of CBOT. The term "CBOT Proprietary
Data" includes any material or information relating to the research,
development, trade secrets and business operations and affairs of CBOT which has
been marked, or which is declared to be confidential in writing prior to its
oral disclosure. Ceres agrees to treat CBOT Proprietary Data in the manner
herein prescribed and to take such additional steps as are reasonably necessary
to protect the confidentiality of such data and CBOT's proprietary interests
therein, including but not limited to, the following:
(a) Except as expressly permitted by CBOT in writing, Ceres shall use CBOT
Proprietary Data only for purposes of providing services to CBOT in the manner
specified by this Agreement and shall not make any copies of, reproduce,
disclose, sell, assign, sublicense, or transfer, in whole or in part, any CBOT
Proprietary Data.
(b) Ceres shall place on any CBOT Proprietary Data created for CBOT by
Ceres proprietary markings as CBOT may reasonably require from time to time and
duplicate on any copies made of CBOT Proprietary Data all copyright notices and
proprietary markings contained thereon and shall place on all documentation
therefor CBOT's copyright notice.
(c) Except as specifically permitted by CBOT in writing, Ceres shall
disclose CBOT Proprietary Data in confidence only to those of its employees and
agents required to have knowledge of the same for the purpose for which it is
intended and to no other person.
(d) Ceres shall cause its employees and agents having access to CBOT
Proprietary Data to protect CBOT Proprietary Data in a manner consistent with
the terms of this Agreement, and Ceres shall be responsible to CBOT for any
injury caused by the misappropriation or wrongful disclosure by a Ceres employee
or agent of CBOT Proprietary Data.
(e) Without limiting any other provision hereof, Ceres shall use no less
care to protect CBOT Proprietary Data as it uses to protect its own proprietary
data, and shall promptly report to CBOT any conduct by Ceres' present or former
employees or agents of which Ceres becomes aware relating to CBOT's Proprietary
Data inconsistent with this Agreement or CBOT's proprietary interests therein,
and take such reasonable steps as may be required to terminate such conduct.
(f) Immediately upon the termination of this Agreement, the discontinuance
of Ceres' Facility Management Services by Ceres or Ceres' receipt of written
demand from CBOT, Ceres shall (i) return to CBOT, or, at CBOT's election
destroy, all CBOT Proprietary Data in Ceres' possession or control, including
but not limited to all CBOT Proprietary Data in the possession or control of
Ceres' employees and agents, and (ii) provide a sworn affidavit from its general
partner attesting that, to the best of Ceres' knowledge, after due
investigation, such action has been taken and completed.
6.2 CBOT Obligation for Confidentiality. CBOT acknowledges that Ceres
Proprietary Data, including but not limited to the Programs, is any material or
information relating to the research, development, trade secrets and business
operations and affairs of Ceres which has been marked or which is declared to be
confidential in writing prior to its disclosure, shall be and shall remain the
sole and exclusive property of Ceres and constitute valuable proprietary
information of Ceres. CBOT agrees to treat the Ceres Proprietary Data in the
manner herein prescribed and to take such additional steps as are reasonably
necessary to protect the confidentiality of Ceres Proprietary Data and Ceres
proprietary interests therein, including, but not by way of limitation, the
following:
(a) CBOT shall use Ceres Proprietary Data only for the purposes authorized
by this Agreement and shall not make any copies of, reproduce, or disclose,
sell, assign, sublicense, or transfer, in whole or in part, any of such
materials except to the extent authorized herein or otherwise permitted in
writing by Ceres.
(b) CBOT shall duplicate on any copies made of Ceres Proprietary Data all
copyright notices and proprietary markings contained thereon.
(c) CBOT shall disclose Ceres Proprietary Data in confidence only to its
employees, and agents, and CBOT members required to have knowledge of the same
for the purpose for which it is intended and to no other person.
(d) CBOT shall use the same care to protect Ceres Proprietary Data as
it uses to protect its own proprietary data and shall promptly report to Ceres
any conduct by CBOT's present or former employees or agents of which CBOT
becomes aware relating to Ceres Proprietary Data inconsistent with this
Agreement or Ceres' proprietary interests therein, and take such reasonable
steps as may be required to terminate such conduct.
6.3 Mutual Indemnifications. Each party shall be responsible for, and
shall indemnify the other and hold it harmless from and against any loss,
damage, or expense
(including, without limitation, any loss, damage, or expense related to
enforcement by the party of its property rights against third parties and
reasonable attorneys' fees) incurred by the other as a result of any failure by
the party, its employees or agents to maintain the confidentiality of the
proprietary rights of the other party disclosed in connection with this
Agreement and described above, in the manner herein provided, without regard to
whether such employees or agents are acting under or contrary to the parties
instructions or their contractual, employment or agency relationship with the
party has been terminated.
6.4 Record Maintenance. Each party shall maintain and make available to
the other party upon reasonable notice adequate records to demonstrate
compliance with this Section 6.
6.5 Acknowledgement of Irreparable Injury. Each party hereby acknowledges
that use of the other party's proprietary Data in a manner contrary to the
provisions of this Agreement would cause the other party irreparable harm for
which money damages could not make the injured party whole, and hereby consents,
to the full extent that it is able to do so, to any order entered by any court
of competent jurisdiction prohibiting it from such violation of this Agreement.
6.6 Materials Not Considered Confidential. Notwithstanding any other
provision in this Agreement to the contrary, information and data presently in
the public domain or which subsequently enters the public domain other than
through violation of this Agreement shall not be subject to any restrictions
under this Agreement, nor shall either party have any liability to the other for
the use or disclosure thereof. The party asserting the applicability of this
Section 6.6 will have the burden of proof with respect thereto.
SECTION 7 - MISCELLANEOUS
7.l Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which taken together
shall constitute one single agreement between the parties hereto.
7.2 Headings. The Section headings used herein are for reference and
convenience only and shall not enter into the interpretation hereof.
7.3 Relationship of Parties. Ceres, in furnishing services to CBOT, is
providing Facilities Management Services only as an independent contractor.
Ceres does not undertake by this Agreement or otherwise to perform any
obligation of CBOT, whether regulatory or contractual. Ceres has the sole right
and obligation to supervise, manage, contract, direct, procure, perform or cause
to be performed, all work to be performed by Ceres hereunder unless otherwise
provided herein. Ceres may employ subcontractors, including CBOT/Eurex Alliance,
L.L.C., Deutsche Borse AG and Deutsche Borse Systems AG, to provide any of the
services covered by this Agreement.
7.4 Approvals, Consents, etc. Where any approval, acceptance or consent by
either party is required by any provision of this Agreement, such action shall
not be unreasonably delayed or withheld.
7.5 Force Majeure. Ceres shall be excused from performance hereunder for
any period Ceres is prevented from performing any services pursuant hereto, in
whole or in part, as a result of an act of God, war, civil disturbance, or other
cause beyond its reasonable control, including shortages or fluctuations in
electrical power, heat, light or air conditioning, and such non-performance
shall not be a default hereunder or a ground for termination hereof so long as
the same is temporary in nature and does not unreasonably interfere with CBOT's
business and operations.
7.6 Severability. If any provision of this Agreement is declared or found
to be illegal, unenforceable or void, then both parties shall be relieved of all
obligations arising under such provision, but if such provision does not relate
to the payments to be made to Ceres by CBOT and if the remainder of this
Agreement shall not be materially affected by such declaration or finding, then
each provision not so affected shall be enforced to the extent permitted by law.
7.7 Attorneys' Fees. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the provisions of this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it may be entitled.
7.8 Waiver. No delay or omission by either party hereto to exercise any
right with respect to this Agreement shall impair any such right or be construed
to be a waiver thereof. A waiver by either of the parties hereto of any of the
agreements to be performed by the other or any breach thereof shall not be
construed to be a waiver of any succeeding breach thereof or of any other
agreement herein contained. All remedies provided for in this Agreement shall be
cumulative and in addition to and not in lieu of any other remedies available to
either party at law, in equity or otherwise.
7.9 Choice of Law and Jurisdiction. This Agreement shall be governed by
the internal laws and not the choice of law provisions of the State of Illinois.
Any suit arising out of a dispute arising concerning this Agreement may only be
brought in a state or federal court sitting in Chicago, Illinois and the parties
agree that no other court shall have jurisdiction or venue.
7.10 Entire Agreement. This Agreement, together with each Exhibit attached
hereto, constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and shall supercede in its
entirety the CBOT/Ceres License Agreement between the parties dated
October 22, 1992, the Amended and Restated CBOT/Ceres License
Agreement dated
May 15, 1998, and the Second Amended and Restated CBOT/Ceres License
Agreement dated August 25, 2000. No change, waiver or discharge hereof
shall be valid unless in writing and executed by the party against
whom such change, waiver or discharge is sought to be enforced.
7.11 The parties acknowledge that they are in the process of reorganizing.
In connection with this reorganization, Ceres may assign its rights
and obligations under this Agreement to CBOT or Electronic Chicago
Board of Trade, Inc.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above:
BOARD OF TRADE OF THE CERES TRADING LIMITED
CITY OF CHICAGO, INC. PARTNERSHIP
By: /s/ Xxxxx X. Xxxxxx By Electronic Chicago Board of trade
-------------------- Inc., Its Managing General Partner
Xxxxx X. Xxxxxx
Its President and Chief Executive Officer By: /s/ Xxxxx X. Xxxxxx
--------------------
Xxxxx X. Xxxxxx
Its President and Chief Executive
Officer
EXHIBIT II
LICENSE FEES
CBOT shall pay to Ceres the following fees for each purchase and each sale of a
CBOT futures or option contract (i.e., per side) transacted through the CBOT
electronic market:
(A) Transaction-Based Fee
No. Account Type Fees/Annual Volume
----- -------------- --------------------
*50,000/50,000-150,000/**150,000
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1. Individual Member initiating and executing trades for his own
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account.
Individual Member initiating and executing trades for the
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proprietary account of a member firm. (Select either account $ .20 / $ .18 / $ .15
type 1.b. or 3.b)
Joint account between individual members or an individual
member and a member firm, where a member is initiating and
--------------
executing the trades.
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Individual member's account where another individual member is
initiating and executing trades for the account or another
------------------------
member is executing trades that were initiated by the
individual member.
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2. Delegate initiating and executing for trades his own account. $ .20 / $ .18 / $ .15
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3. Proprietary account traded by a non-member or delegate that $ .35 / $ .30 / $ .25
meets the definition of CBOT Regulation 450.02C.
Individual Member initiating and executing trades for the
------------------------
proprietary account of a member firm. (Select either account
type 1.b or 3.b.)
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4. An account that does not meet the definition of CBOT Agricultural
Regulation 450.02C. ------------
$ 1.50 / $1.50 / $1.50
Any account of a non-member or an account where a non-member
has ownership participation. Financial
---------
$ 1.25 / $ .95 / $ .70
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5. Proprietary account of an e-cbot member firm. Agricultural
------------
$ .50 / $ .45 / $ .40
Financial
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$ .50 / $ .45 / $ .40
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* Less than
** Greater than
2
(B) Mini-Sized Contract Fee
Contract Member Delegate Non-Member
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Mini-Sized Dow $2 & $5 $.05* $.45* $1.00
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Mini-Sized N.Y. Gold $.05 $.25 $ .50
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Mini-Sized N.Y. Silver $.05 $.25 $ .50
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Mini-Sized 30 - Year Bond $.15 $.25 $ .50
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Mini-Sized 10 - Year Note $.15 $.25 $ .50
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Mini-Sized Eurodollars $.15 $.25 $ .50
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(C) Surcharges
Member Delegate Non-Member
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Dow Xxxxx Contracts* $.20 $.20 $ .20***
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Muni Bond Contracts $ .20
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Delegate $.15
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X-Fund $7.00
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* Between June 1, 2002, and December 31, 2002, the $.20 surcharge for Dow
Xxxxx contracts is waived for Members & Delegates.
Definitions and Clarifications
Volume Discount -Trade transactions executed in open auction are not counted for
the purpose of calculating the volume discount. For give-up transactions, the
volume is credited to the account that ultimately receives the trade. Non-trade
transactions: Exchange for physical transactions, option exercises, option
assignments, option expirations, futures from deliveries, futures from
assignments and futures from exercises are not included in volume discounts.
Effective October 1, 2002 the Transaction-Based Fee for Full and Associate
Members and Membership Interest Holders trading their own account or for member
firm proprietary account
3
will be reduced to $.15 / $.13 / $.10. This rate change applies to account types
1a, 1b, 1c, 1d, and 2.
The Transaction-Based Fee will be assessed at the customer rate for transactions
made by CBOT delegates and Full Members trading on the CBOE.
The term "member firm's account" shall refer only to those commodity futures or
commodity options trading accounts that are wholly owned by and held in the name
of the member firm. The term "member firm" shall refer only to a firm
registered with the Exchange pursuant to Regulation 230.02. For an account to
qualify as a member firm proprietary account delegates and individuals who are
non -members with respect to the contracts being traded, who initiate and/or
enter trades on behalf of the proprietary account must meet the following
requirements:
may not provide trading capital for the account; and
may not have responsibility for downside risk of trading losses or
responsibility to provide capital based on losses; and
individuals other than delegates must be issued a W-2 (or comparable
documentation in jurisdictions other than the United States), and must be
included in the firm's payroll tax records; and
may not contribute subordinated debt, unless the individual is a partner or
shareholder of the member firm; and
gross trading profits and losses must be reported in the firm's income; and
the time period for which a trader is evaluated (for the determination of the
percentage of trading profits) may not exceed a twelve-month period and may not
carry over the firm's fiscal year-end.
Joint Account - The Transaction-Based Fee applicable to any account that is
owned by more than one member or non-member shall be the highest fee required
of any of the account's participants, with the exception of joint accounts or
proprietary accounts between a member firm and an individual member. (See
Account Type #1). Any account where losses and/or profits are shared that
does not meet the description of Account Type # 1 or of a Proprietary Account
as defined in Regulation 450.02C will be considered a joint account.
