EXHIBIT (H)(13)
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AMENDMENT NO. 1 TO
LICENSE AGREEMENT
This Amendment No. 1 to the License Agreement dated April 16, 2001
between Dow Xxxxx & Company, Inc. ("Dow Xxxxx") and North Track Funds, Inc. (the
"Licensee") (the "License Agreement"), is made this January 1, 2004 (the
"Amendment Effective Date") by and between Dow Xxxxx and the Licensee.
WHEREAS, Licensee would like access to use indexes in addition to what
is currently licensed under the License Agreement, and Dow Xxxxx is willing to
license such indexes;
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and in the License Agreement, it is agreed as follows:
1. Dow Xxxxx' obligations set forth in this Amendment shall commence as
of January 1, 2004.
2. The Dow Xxxxx Equity Income 100 Index shall be added to the
definition of Indexes set forth in the first "Whereas" clause of the License
Agreement.
3. "Dow Xxxxx Equity Income 100 Index" shall be added to the definition
of Dow Xxxxx Marks set forth in the second "Whereas" clause of the License
Agreement.
4. Notwithstanding anything to the contrary herein, Licensee may
terminate this Agreement with respect to one or more Indexes upon ninety (90)
days' written notice to Dow Xxxxx.
5. Schedule A to the License Agreement shall be deleted in its entirety
and replaced with the Replacement Schedule A attached to this Amendment.
6. Schedule B to the License Agreement shall be deleted in its entirety
and replaced with the Replacement Schedule B attached to this Amendment.
7. Except as expressly modified hereby, all other provisions in the
License Agreement shall remain in full force and effect. Except as otherwise
specified, all terms used in this Amendment shall have the meaning ascribed to
them in the License Agreement.
EXHIBIT (H)(13)
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to the License Agreement to be executed as of the date first set forth above.
DOW XXXXX & COMPANY, INC.
By:
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: President, Dow Xxxxx Indexes
Date:
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NORTH TRACK FUNDS, INC.
By:
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Name: Xxxxx X. Xxxxxxxx
Title: President
Date:
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EXHIBIT (H)(13)
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REPLACEMENT SCHEDULE A
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PRODUCTS AUTHORIZED FOR ISSUANCE BY LICENSEE
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1. An investment fund ("Funds") (i) that is an investment company registered
under the Investment Company Act of 1940, (ii) whose investment objective is to
replicate the performance of any of the Indexes (except that Licensee may engage
in the practice of overweighting/underweighting the components of the Index and
may engage in the strategy involving investment in shares of exchange-traded
funds), and (ii) that is not traded or listed on an Organized Securities Markets
(as defined below) (e.g., is not exchange traded, electronically or otherwise).
"Organized Securities Market" shall mean a U.S. national securities exchange, an
automated quotation or other electronic trading system of a U.S.-registered
securities association, 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.
The name of the Funds shall be subject to Dow Jones's prior written consent. In
that regard, Dow Xxxxx hereby consents to the names of the following two Funds:
North Track Dow Xxxxx US Health Care 100 Plus Fund and North Track Dow Xxxxx US
Financial 100 Plus Fund.
And/or
2. Any of the following Structured Products based on the Dow Xxxxx Equity
Income 100 Index:
A. Over-the-Counter (OTC) Options (non-exchange traded) that have the
following characteristics:
The Options will be customized over-the-counter put and call options whose terms
shall be subject to negotiation between the parties;
The Options will not be issued by or cleared by the Options Clearing Corporation
or a similar entity; and
The Options will not be traded on an Organized Securities Market. As used in
this Schedule;
B. OTC Privately Placed Debt Obligations ("Privately Placed Debt"), including
notes, bonds, debentures, guaranteed investment contracts, and commercial paper
(whether or not evidenced by a certificate or instrument) where the principal
of, or interest payable on, such debt obligations, or both, is linked to one or
more of the Indexes. Such debt obligations shall be privately placed, and will
not be traded on an Organized Securities Market.
EXHIBIT (H)(13)
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C. OTC Swaps Agreements ("Swaps") which involve the exchange of cash flows,
one or more of which are linked to one or more of the Indexes; provided,
however, that the Swaps (1) have individually tailored terms; (2) do not involve
exchange-style offset; (3) do not involve a clearing organization or margin
system; (4) are undertaken in conjunction with a line of business; (5) are not
marketed to the public; and (6) are entered into and terminated (whether by
sale, assignment, otherwise) based upon private negotiations.
D. Publicly Offered Debt Obligations
(i) North American, which shall be the same instruments described in the
first sentence of B above, except that such instruments shall be permitted to be
listed and traded on any Organized Securities Market in North America. As used
in this Schedule, "North America" shall mean the United States, Canada, Mexico,
the Caribbean Islands and Bermuda.
(ii) Non-North American, which shall be the same instruments described in the
first sentence of B above, except that such instruments shall be permitted to be
listed and traded on any Organized Securities Market outside North America.
E. Indexed Warrants - Indexed instruments that, in exchange only for the
payment to or on behalf of the issuer of a non-refundable cash premium, give the
holder the limited right to acquire from the issuer either a fixed quantity of
indexed underlying securities against payment of a stated exercise price, or an
amount of cash representing the value of the index above or below a stated
level, until a stated expiration date. Indexed Warrants shall not include put or
call options that are issued or cleared by the Options Clearing Corporation or a
similar entity or that involve issuance of a new option each time there is a
trade in which an option is acquired by a holder.
(i) North American and South American, i.e., Warrants which may be listed or
traded on any Organized Securities Market in North America or South America, but
excluding those Warrants having a term to maturity of twenty-four (24) months or
less at the time of original issuance.
(ii) Non-North or South American, i.e., Warrants which may be listed or
traded on any Organized Securities Market outside North America or South America
regardless of term to maturity at the time of issuance, but, in the case of any
Warrant to be traded during hours which overlap with the hours 9:30 a.m. to 4:15
p.m. Eastern Time, such Warrant may be listed only on any Organized Securities
Market in continental Europe, the United Kingdom or Ireland.
F. Institutional Certificates of Deposit, i.e., where the principal of, or
interest payable on, such Deposits, or both, is linked in whole or in part to
one or more of the Indexes. Such Deposits shall be privately placed and offered
exclusively to "accredited investors" (as that term is defined in Rule 501(a) of
Regulation D under the Securities Act of 1933, as amended) in denominations of
an amount equal to not less than $25,000 (or the equivalent in another
currency).
EXHIBIT (H)(13)
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G. Retail Certificates of Deposit, i.e., where the principal of, or interest
payable on, such Deposits, or both, is linked in whole or in part to one or more
of the Indexes. Such Deposits shall be offered in denominations of an amount
equal to not less than $1000 (or the equivalent in another currency).
H. Index Participation Certificate, i.e., shall be a Publicly-Offered Debt
Obligation, where the principal of, or interest payable on, such Certificates,
or both, is linked in whole or in part, to the performance of an Index. The
Index Participation Certificate may have an open-end maturity date, but in no
event shall the Certificate constitute an investment fund or have more than one
market maker.
I. Guaranteed "Fund", i.e., shall be a structured product, where the
principal of such product is guaranteed, and the interest payable on such
product is linked, in whole or in part, to the performance of an Index. The
product has a fixed maturity date.
o In no event may any Product constitute a futures contract or an option on a
futures contract as determined by Dow Xxxxx in its reasonable judgment
EXHIBIT (H)(13)
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REPLACEMENT
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SCHEDULE B
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LICENSE FEES
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Licensee shall pay license fees in accordance with the following:
l. A one-time Set Up Fee in the amount of US$15,000 with respect to the Dow
Xxxxx Equity Income 100 Index ("DJEI 100"), shall be paid on January 1, 2004;
and
2. An annual license fee with respect to the DJEI 100 equal to the greater of
(A) US$15,000 (the "Fixed Annual DJEI 100 Fee") and (B) (0.0002) X total assets
under management and notional value of Products in the aggregate based on or
benchmarked against the DJEI Index up to and including $250 million and
(0.00015) X total assets under management and notional value of Products in the
aggregate based on or benchmarked against the DJEI Index over $250 million
("Adjustable DJEI 100 License Fee"). The Fixed Annual DJEI 100 Fee shall be
payable in quarterly installments in arrears together with the General Annual
Minimum Payment (defined below). At the end of each Year (defined below),
Licensee shall pay the difference between the Adjustable DJEI 100 License Fee
and the Fixed Annual DJEI Fee for such Year; and
3. During the Term, in each Year, the Licensee will also pay to Dow Xxxxx a
flat annual minimum payment of $32,500 in respect of the twelve-month period
commencing on such anniversary date (each, an "General Annual Minimum Payment"),
which shall be payable in equal installments quarterly in arrears; and
4. During each Year of the Term, the Licensee will provide to Dow Xxxxx a
written report (each, a "Monthly Report"), within 10 days after each month-end,
which sets forth (i) the asset balance for each Fund at such month-end, and (ii)
a calculation of the Rolling Average Asset Balance (defined below) at such
month-end. Within 10 days after each Quarter-end (defined below) during each
Year of the Term, the Licensee will pay (each, a "Quarterly Payment") to the Dow
Xxxxx affiliate designated by Dow Xxxxx an amount equal to one-quarter of the
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
General Annual Minimum Payment against the aggregate of the Quarterly Payments
for that year until such credit is depleted. Licensee shall send the Monthly
Report to Dow Xxxxx by fax/email and/or regular mail to (609) 520 -
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 U.S. 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 this Agreement.
EXHIBIT (H)(13)
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Definitions:
"Basis Point Amount" means, at any time during a Year, an amount equal to two
basis points (.0002) on the then Rolling Average Asset Balance (or any portion
thereof) up to and including $250 million and 1.5 basis points on then Rolling
Average Asset Balance (or any portion thereof) above $250 million.
"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.
"Rolling Average Asset Balance" means, at any Quarter-end during a Year, the
average assets in the Funds (except Funds based on the DJEI Index) in the
aggregate for the Quarter then ended, calculated by adding the month-end asset
balances for the Funds for such Quarter and dividing the result by three (i.e.,
the number of months in the Quarter).
"Year" means a twelve-month period commencing on the Commencement Date or on any
anniversary of the Commencement Date.
