EXHIBIT (H)(9)
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SECOND AMENDMENT TO LICENSE AGREEMENT
GRANT OF EXCLUSIVITY
THIS SECOND AMENDMENT TO LICENSE AGREEMENT (the "Amendment"), dated January
1, 2004, amends that certain License Agreement, dated as of February 23, 1996,
as amended by the First Amendment to License Agreement (the "License
Agreement"), by and between the Pacific Exchange, Inc. ("PSE") and North Track
Funds, successor in interest to Principal Preservation Portfolios, Inc. ("North
Track"), on behalf of its series known as the PSE Tech 100 Index Portfolio.
WITNESSETH
WHEREAS, North Track and PSE wish to further amend the License Agreement
to, among other things, make the license granted by PSE to North Track in the
License Agreement exclusive until the end of the term of the License Agreement,
including, at North Track's option, the three (3) year renewal period that would
extend the License Agreement term through February 28, 2008.
AGREEMENT
NOW, THEREFORE, in consideration for the mutual promises and covenants of
the parties set forth herein and in the License Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which the parties
hereto acknowledge, the parties hereto agree as follows:
1. Definition of Terms. Except as specifically defined otherwise in this
Amendment, capitalized terms used herein shall have the meanings defined for
them in the License Agreement.
2. Grant of Exclusive License. PSE agrees that, until the end of the term
of the License Agreement as set forth in the First Amendment to license
Agreement in Section 2 (the "Exclusive Period"), the license granted to North
Track in the License Agreement shall be exclusive to North Track, meaning that,
during the Exclusive Period, PSE will not grant any license or any other
authority for any other person or party to use and refer to the PSE Tech and PSE
Marks or any other stock index trade names and service marks that PSE may
compile, establish or maintain that could be considered confusingly similar to
the PSE Tech or PSE Marks when used in connection with the organization,
establishment, registration, marketing, promotion or offer or sale of the shares
of (or any other interest(s) in) any mutual fund, investment company or other
pooled investment vehicle which is modeled after, or seeks to replicate or track
the performance results of, the PSE Technology Index. PSE represents and
warrants to North Track that, as of the date of this Agreement, PSE has not
granted any such license or authority to any person other than North Track, and
has no contractual, legal or other obligation to do so.
The parties acknowledge that the license granted to North Track in the
License Agreement applies only to mutual fund, investment company, or other
pooled investment vehicles modeled after, or seeking to replicate or track the
performance results of the PSE Technology Index, and not to annuities, other
futures products or other non-mutual fund, non-investment company, or non-pooled
investment vehicle products modeled after, or seeking to replicate or track the
performance results of the PSE Technology Index which PSE may develop and
license to other third parties now or in the future.
The parties acknowledge and agree that the restrictive covenant set forth
in the first paragraph of this Section 2 of this Amendment is not intended to,
and shall not be deemed to, restrict or otherwise limit PSE's authority to
license or otherwise authorize an unregistered private investment fund or an
"Exchange Traded Fund" (as defined below) that is modeled after, or seeks to
replicate or track the performance results of, the PSE Technology Index to use
the PSE Tech and PSE Marks in connection with their organization, establishment,
registration, marketing, promotion and offer and sale of their shares.
For purposes of this Amendment, "Exchange Traded Fund" means any closed-end
unit investment trust or similar pooled investment vehicle; (a) which seeks to
replicate or track the performance results of the PSE Technology Index; and (b)
the shares or other interests of which are traded on a registered securities
exchange.
3. Additional License Fee for Exclusivity. As consideration for the
exclusivity of the license during the Exclusive Period, North Track agrees that
an exclusive license fee (the "Exclusivity Fee") shall be paid in addition to
the license fee provided in Section 3 of the First Amendment to License
Agreement. The amount of the Exclusivity Fee is based on a percentage of the
assets of the Portfolio for the year, however the Exclusivity Fee will be paid
in quarterly installments and calculated based on the Quarterly Average Net
Asset Value of the assets of the Portfolio for the preceding quarter. The
Quarterly Average Net Asset Value shall be calculated by averaging the daily
ending balances for each business day of the quarter. The Exclusivity Fee shall
be calculated as follows:
o North Track will pay PSE a quarterly Exclusivity Fee of $5,000 if
the Quarterly Average Net Asset Value of the Portfolio does not
exceed $100,000,000;
o if the Quarterly Average Net Asset Value of the Portfolio is
greater than $100,000,000 but less than $750,000,000, North Track
will pay PSE a quarterly installment of the Exclusivity Fee equal
to 0.02% of average net assets of the PSE Tech 100 Index
Portfolio. Therefore, if, for a given month the Quarterly Average
Net Asset Value of the Portfolio is $600,000,000, North Track
will pay PSE a quarterly installment of the Exclusivity Fee of
$30,000 ($600,000,000 x 0.0002/4);
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o if the Quarterly Average Net Asset Value of the Portfolio is
greater than $750,000,000 but less than $5,000,000,000, North
Track will pay PSE a quarterly installment of the Exclusivity Fee
equal to 0.02% of $750,000,000, plus 0.015% of average net assets
of the PSE Tech 100 Index Portfolio in excess of $750,000,000.
Therefore, If the Quarterly Average Net Asset Value of the
Portfolio is $1,000,000,000, North Track will pay PSE a quarterly
installment of the Exclusivity Fee of $46,875 ($750,000,000 x
0.0002/4 plus $250,000,00 x 0.00015/4); or
o if the Quarterly Average Net Asset Value of the Portfolio is
greater than $5,000,000,000, North Track will pay PSE a quarterly
installment of the Exclusivity Fee equal to $196,875 (0.02% of
$750,000,000/4 plus 0.015% $4,250,000,000/4), plus 0.01% of
the assets in excess of $5,000,000,000. Therefore, If the
Quarterly Average Net Asset Value of the Portfolio is
$6,000,000,000, North Track will pay PSE a quarterly installment
of the Exclusivity Fee of $221,875 ($196,875 plus $1,000,000,000
x 0.0001/4).
4. Enforcement of Proprietary Rights. If PSE fails, within ninety (90) days
following written notice from North Track, to fulfill its obligations under
Section 8 of the License Agreement with respect to any third party's
unauthorized use of PSE Tech or the PSE Marks or any confusingly similar stock
index trade names or service marks, then North Track shall have the right to
recover from PSE the Exclusivity Fee theretofore paid by North Track pursuant to
the License Agreement and this Amendment for all periods beginning after the
date of this Amendment, and from and after the expiration of such ninety (90)
day period, the license granted to North Track under the License Agreement
automatically shall convert to a license free of the Exclusivity Fee for so long
as the unauthorized third-party use continues. If such unauthorized third party
use terminates, the Exclusivity Fee will be reinstated 90 days after such
termination of third party use, provided that no unauthorized use of the PSE
Tech or PSE Marks occur during such continuous period.
5. Communication of Composition and Price of Index. PSE certifies that Dow
Xxxxx & Company, Inc. ("Dow Xxxxx") [PSE to confirm name], as PSE's agent,
presently is the sole and official source of communications and information
regarding the composition of the PSE Index, changes in that composition, and
prices of stocks included in the PSE Index, and as such [Dow Xxxxx]'s
publication and other notification of the composition of the PSE Index and of
the price of stocks included in the PSE Index shall be binding and official. If
PSE ever appoints a replacement for [Dow Xxxxx] in this role, PSE shall provide
North Track with at least thirty (30) days advanced written notice of the
pending change and the identity of the new agent. PSE represents that North
Track may rely on any such communication from the Official Compiler as the
official composition and price of the PSE Index at the time of any such
communication.
3
All communications from the Official Compiler to North Track regarding the
composition or prices of the PSE Index shall be given by internet access e-mail
and directed to:
Xx. Xxxxxx Xxxxxxx
Director of Equities
xxxxxxxx@xxxxxxx.xxx
and
Xx. Xxxxxx Xxxxxx
Portfolio Manager
xxxxxxx@xxxxxxx.xxx
and
Xx. Xxxxxxx Xxxxxxxx
Equity Analyst
xxxxxxxxx@xxxxxxx.xxx
6. Notices. Other than the items noted in Section 5 above, all other
communications and notices to be given by either party to the other under the
License Agreement or this Amendment shall be in writing and shall be deemed
given three (3) business days following deposit in U.S. First Class Registered
or Certified Mail, Return Receipt Requested, or the next business day following
delivery to a national overnight express commercial courier, or upon receipt
when sent by facsimile (if thereafter confirmed by mail or overnight express
delivery), and addressed or otherwise directed to the appropriate party as
follows, unless or until a party provides notice of a change pursuant to this
provision:
If to North Track: North Track Funds
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx, President and
Chief Executive Officer
Facsimile: (000) 000-0000
If to PSE: Pacific Exchange, Inc.
000 Xxxxxxx Xx.,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxx
Facsimile: (000) 000-0000
With a copy to Xxxxxxx Xxxx
General Counsel
Pacific Exchange, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
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7. Effect on License Agreement. Except as explicitly provided in the
foregoing, this Amendment does not amend or otherwise affect the terms and
conditions of the License Agreement, all of which shall remain in full force and
effect in accordance with, and subject to, the terms thereof.
* * *
IN WITNESS WHEREOF, each of the parties has caused this
Amendment to be executed on its behalf by its duly authorized officer on the
date and year written above.
NORTH TRACK FUNDS
By:
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Xxxxx Xxxxxxxx, President and
Chief Executive Officer
PACIFIC EXCHANGE, INC.
By:
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Name:
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Its:
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