LICENSE AGREEMENT
EXHIBIT
(H)(12)
This
License Agreement (the "Agreement") is made and entered into as of
April 28, 2006 (the "Commencement Date"), by and between Archipelago
Holdings, Inc. ("ARCA"), a Delaware corporation, having an office at 000 X.
Xxxxxx Xx., Xxxxxxx, Xxxxxxxx 00000 and North Track Funds, Inc. (the
"LICENSEE"), having an office at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx
00000.
WHEREAS,
ARCA compiles, calculates, maintains and owns rights in and to the NYSE Arca
Tech 100 Index as a price-weighted index and to the proprietary data therein
contained (such rights being hereinafter individually and collectively referred
to as the "Index.");
WHEREAS,
ARCA uses in commerce and owns or has rights to trade name and trademark rights
to the designations "Archipelago®", "ARCA®", "ARCAEX®", "NYSE®", "NYSE ARCA
(SM)" and "NYSE Arca Tech 100 (SM)" in connection with the Index (all the
foregoing rights being hereinafter individually and collectively referred to
as
the "ARCA Marks.");
WHEREAS,
the Index was previously known as the ArcaEx Tech 100 Index (the "Former
Name");
WHEREAS,
the North Track ArcaEx Tech 100 Index Fund (the "Product") is a series of
open-ended investment companies that the LICENSEE seeks to replicate the
performance of the Index;
WHEREAS,
LICENSEE wishes to use the Index and the ARCA Marks in connection with the
marketing and/or promotion of the Product and in connection with making
disclosure about the Product under applicable laws, rules and regulations in
order to describe the Product and indicate that ARCA is the source of the Index;
WHEREAS,
LICENSEE wishes to obtain ARCA's authorization to use the Index and the ARCA
Marks in connection with the Product pursuant to the terms and conditions
hereinafter set forth;
WHEREAS,
ARCA and LICENSEE are parties to a license agreement dated February 23, 1996
and
related amendments by and between Archipelago Holdings, Inc., a successor in
interest to Pacific Stock Exchange, Inc., and North Track Funds, Inc., a
successor in interest to Principal Preservation Portfolio, Inc., (the "Former
License Agreement") in which ARCA granted LICENSEE a license in certain rights
to the Index under its Former Name; and
WHEREAS,
ARCA and LICENSEE wish to replace the Former License Agreement with this
Agreement;
NOW,
THEREFORE, the parties hereto agree as follows:
1. Replacement
of License Agreement.
Upon
execution of this Agreement by LICENSEE and ARCA, but subject to Section 3
hereof, the parties agree that the Former License Agreement shall be superseded
and replaced with this Agreement, and the Former License Agreement shall be
deemed terminated.
2. Grant
of Exclusive License.
(a) Subject
to the terms and conditions of this Agreement, ARCA hereby grants to LICENSEE
a
nontransferable license: (i) on an exclusive basis to use the Index,
including without limitation all copyright and other proprietary rights embodied
therein, solely as the basis of a mutual fund to replicate the performance
of
the Index and solely to the extent that the Product is a series of an open-end
investment company; and (ii) on a non-exclusive basis to use and refer to
the ARCA Marks in connection with the marketing and promotion of the Product
and
in connection with making such disclosure about the Product as LICENSEE deems
necessary or desirable under any applicable laws, rules or regulations. LICENSEE
understands and agrees that references to the ARCA Marks shall be limited to
the
extent necessary to explain what the Index is . For avoidance of doubt, the
foregoing license shall permit LICENSEE to use and refer to the ARCA Marks
in
LICENSEE's general marketing materials.
(b) The
license granted by ARCA to LICENSEE pursuant to this Agreement shall include,
subject to the terms and conditions of this Agreement, the grant to use the
Index under any future names of the Index.
However,
if the Index name is changed, ARCA shall provide LICENSEE with notice at least
thirty (30) days prior to the change.
(c) It
is
expressly agreed and understood by LICENSEE that no rights to use the Index
or
the ARCA Marks are granted hereunder other than those specifically described
and
expressly granted herein.
(d) LICENSEE
shall incorporate the name of the Index into the name of the
Product.
(e) LICENSEE
shall not be required to obtain any additional licenses with the respect to
the
Product.
(f) LICENSEE
agrees that its marketing materials will not be critical of or cast in a
negative light ARCA, the Index, or the ARCA Marks.
3. Name
of Index.
(a) Within
forty five (45) days of the execution of this Agreement, LICENSEE agrees to:
(i) change, or cause the name of the Product to change to the "NYSE Arca
Tech 100 Index Fund;" (ii) make, give or obtain all required or necessary
regulatory filings, notices or approvals regarding such name change;
(iii) cease using the Former Name or any trademarks or service marks
relating to the Former Name in conjunction with the Index or the Product; and
(iv) no longer use or circulate any written materials, including marketing
materials, regulatory filings and documentation referring to the Index or the
Product (collectively "Documents"), employing the Former Name. Notwithstanding
the foregoing, it is expressly understood that, after the execution of this
Agreement and for no more than 90 days, LICENSEE may use such Documents as
it
currently holds in its inventory in connection with the Product until it can
obtain replacement Documents for the Product that use the name "NYSE Arca Tech
100 Index" rather than the Former Name, provided
that,
all
such Documents must clearly and conspicuously indicate (and wherever else as
may
be required by any applicable laws, rules or regulations) that the name of
the
Index has changed to the "NYSE Arca Tech 100 Index" and the name of the Product
has changed to the "NYSE Arca Tech 100 Index Fund." LICENSEE undertakes to
use
commercially reasonable efforts to promptly obtain such replacement Documents
upon execution of this Agreement.
(b) LICENSEE
agrees that should ARCA change the name of the Index during the term of this
Agreement, LICENSEE shall be obligated to take the steps described in part
(a)
of this Section 3, subject to the conditions set forth in part (a) of this
Section 3, to reflect such name change, so long as ARCA provides LICENSEE
with notice at least thirty (30) days prior to the change.
4. Term.
This
Agreement shall remain in effect until terminated.
5. License
Fees.
(a) LICENSEE
shall pay to ARCA the license fees ("License Fees") specified in Exhibit B
attached hereto and made a part hereof.
(b) During
the term of this Agreement and for a period of one (1) year after its
termination, ARCA or its agent shall have the right, during normal business
hours and upon reasonable notice to LICENSEE, to audit on a confidential basis
the relevant books and records of LICENSEE to determine that License Fees have
been accurately determined. The costs of such audit shall be borne by ARCA
unless it is determined that ARCA has been underpaid by the greater of five
percent (5%) or $10,000; in such case, costs of the audit shall be paid by
LICENSEE.
6. Termination.
(a) At
any
time during the term of this Agreement through December 31, 2008, either party
may give the other party one (1) year's prior written notice of termination
with
or without cause. Thereafter at any time during the term of this Agreement,
either party may give the other party one hundred and eighty (180) days prior
written notice of termination with or without cause.
(b)
ARCA
may
terminate the exclusive license grant set forth in Section 1(a) upon ninety
(90) days written notice to Licensee in the event that the value of the mutual
fund assets of the Product decline below $100MM. In addition in the event that
the value of the mutual fund assets of the Product decline below $100MM,
LICENSEE may terminate this Agreement provided that they are also terminating
the Product and not offering the same investors an alternative index within
180
days of termination.
(c) At
any
time during the term of this Agreement, either party may give the other sixty
(60) days' prior written notice of termination if a party believes in good
faith
that material damage or harm is occurring to the reputation or goodwill of
that
party by reason of its continued performance hereunder, and such notice shall
be
effective on the date specified therein of such termination, unless the
non-terminating party shall correct the condition causing such damage or harm
within the notice period.
(d) In
the
case of breach of any of the material terms or conditions of this Agreement
by
either party, the other party may terminate this Agreement by giving sixty
(60)
days' prior written notice of its intent to terminate unless the breaching
party
shall correct such breach within the notice period.
(e) ARCA
may
terminate this Agreement upon sixty (60) days' prior written notice to LICENSEE
if (i) ARCA is informed of the final adoption of any legislation or
regulation or the issuance of any interpretation that in ARCA's reasonable
judgment materially impairs ARCA's ability to license and provide the NYSE
Arca
Tech 100 Index and ARCA Marks under this Agreement in connection with the
Product; or (ii) any litigation or regulatory proceeding regarding the
Product is commenced and ARCA reasonably believes that such litigation or
proceeding would have a material and adverse effect upon the ARCA Marks and
NYSE
Arca Tech 100 Index or upon the ability of ARCA to perform under this
Agreement.
(f) ARCA
shall have the right, in its sole discretion, to cease compilation and
publication of the Index and, in such event, to terminate this Agreement,
provided, however, that ARCA does not replace the Index or substitute another
ARCA index to track the performance of the technology sector of the stock market
in a substantially similar manner to the current Index. In the event that ARCA
intends to discontinue the Index, ARCA shall give LICENSEE at least one (1)
year's written notice prior to such discontinuance through December 31, 2008
and
one hundred and eighty (180) days notice thereafter, which notice shall specify
whether a replacement or substitute index will be available. In such event,
LICENSEE shall have the option to use such new or substituted index under this
Agreement provided LICENSEE exercises its option hereunder within sixty (60)
days of receiving written notice from ARCA regarding the replacement or
substitute index. Unless LICENSEE exercises such option, LICENSEE's obligations
to make any further license fee payments to ARCA hereunder with respect to
the
discontinued Index shall terminate as of the effective date of the termination
of the Index.
(g) Upon
termination of this Agreement, LICENSEE shall cease marketing and selling the
Product, shall cease to use the Index, the Index name and the ARCA Marks in
connection therewith.
7. ARCA's
Obligations.
(a) ARCA
is
no way obliged to engage in any marketing or promotional activities in
connection with the Index or the Product or in making any representation or
statement to investors or prospective investors in connection with the promotion
by LICENSEE of the Product.
(b) ARCA
agrees to provide reasonable support for LICENSEE's development and educational
efforts with respect to the Product by responding in a timely fashion to any
requests for information by LICENSEE regarding the Index and/or the ARCA
Marks.
(d) ARCA
or
its agent shall calculate and disseminate the Index at least once each fifteen
(15) seconds on each business day the New York Stock Exchange is open for
business in accordance with its current procedures, which procedures may be
modified by ARCA.
(e) ARCA
shall promptly correct or instruct its agent to correct any mathematical errors
made in the computations of the Index which are brought to ARCA's attention
by
LICENSEE. Nothing in this Section 7 shall give LICENSEE the right to
exercise any judgment or require any changes with respect to ARCA's methods
of
composing, calculating or determining the Index or be deemed a modification
of
the provisions of Section 10 of this Agreement. ARCA absolutely reserves
all rights to change the composition of the stocks making up the Index, and
to
change the methods by which the Index is computed. During the term of this
Agreement, ARCA will make prompt announcements of any changes it makes in the
stocks included in the Index and any change it makes in the method of
calculating the Index.
8. Informational
Materials Review.
LICENSEE
shall use its best reasonable efforts to protect the goodwill and reputation
of
ARCA and of the ARCA Marks in connection with their use of such Marks under
this
Agreement. LICENSEE shall submit to ARCA for its review all advertisements,
brochures and promotional and any other similar informational materials relating
to the Product that in any way use or refer to ARCA, the NYSE Arca Tech 100
Index or the ARCA Marks (the "Informational Materials"). ARCA's approval shall
be required only with respect to the use of and description of ARCA, the ARCA
Marks, and the NYSE Arca Tech 100 Index in any Informational Material. Approval
shall not be required for use of the ARCA Marks that would otherwise be
permitted by law. Further, LICENSEE shall submit to ARCA for its records a
copy
of all SEC filings, prospectuses, and registration statements. LICENSEE shall
use the ARCA Marks in accordance with the applicable ARCA guidelines provided
to
LICENSEE in writing. Once Informational Materials have been approved by ARCA,
subsequent Informational Materials which do not alter the use or description
of
ARCA, ARCA Marks or the NYSE Arca Tech 100 Index need not be submitted for
review and approval by ARCA.
9. Protection
of Value of License.
(a) During
the term of this Agreement, ARCA or its affiliates shall use its best efforts
to
maintain in full force and effect all federal and state registrations of the
ARCA Marks. ARCA or its affiliates shall, at their own expense and sole
discretion, exercise their common law and statutory rights against infringement
of the ARCA Marks, copyrights and other proprietary rights insofar as such
infringement conflicts with or impairs LICENSEE'S rights and privileges
hereunder.
(b) LICENSEE
shall cooperate with ARCA and its affiliates in the maintenance of such rights
and registrations and shall take such actions and execute such instruments
as
ARCA or its affiliates may from time to time reasonably request, including
the
use by LICENSEE of the following proprietary notice when referring to the Index
or the ARCA Marks in any Informational Material relating to the
Product:
"Archipelago®",
"ARCA®", "ARCAEX®", "NYSE®", "NYSE ARCA(SM)" and "NYSE Arca Tech 100 (SM) are
trademarks of the NYSE Group, Inc. and Archipelago Holdings, Inc. and have
been
licensed for use by the__________________. The Product is not sponsored,
endorsed, sold or promoted by Archipelago Holdings, Inc. or by NYSE Group,
Inc.
Neither Archipelago Holdings, Inc. nor NYSE Group, Inc. make any representation
or warranty regarding the Product or the ability of the NYSE Arca Tech 100
Index
to track general stock market performance."
or
such
similar language as may be approved in advance in writing by ARCA.
(c) In
the
event that ARCA is informed by LICENSEE or otherwise learns that a third-party
intends to market, or is marketing to the public, an unlicensed index fund
based
upon the Index in violation of the rights of LICENSEE and ARCA in the Index
and/or the ARCA Marks, ARCA shall use reasonable efforts to prevent and/or
stop
any such unlicensed third-party from offering such fund.
10. Proprietary
Rights.
(a) LICENSEE
acknowledges that the Index is selected, coordinated, arranged and prepared
by
ARCA through the application of methods and standards of judgment used and
developed through the expenditure of considerable work, time and money by ARCA.
LICENSEE also acknowledges that the Index and the ARCA Marks are the exclusive
property of ARCA and its affiliates, that ARCA and its affiliates have and
retain all proprietary rights therein (including, but not limited to trademarks
and copyrights) and that the Index and its compilation and composition and
changes therein are in the control and discretion of ARCA.
(b) ARCA
and
its affiliates reserve all rights with respect to the Index and the ARCA Marks
except those expressly licensed to LICENSEE hereunder.
(c) Each
party shall treat as confidential and shall not disclose or transmit to any
third party any documentation or other written materials that are marked as
"Confidential and Proprietary" by the providing party ("Confidential
Information"). Each party shall abide by the provisions of the Financial
Services Modernization Act of 1999 (Xxxxx-Xxxxx-Xxxxxx Act) and Regulation
S-P,
including regulations of the SEC and the U.S. Department of Treasury adopted
thereunder, and with any other applicable state privacy laws or rules or
regulations. Confidential Information shall not include (i) any information
that is or becomes available to the public or to the receiving party hereunder
from sources other than the providing party (provided that such source is not
subject to a confidentially agreement with regard to such information) or
(ii) any information that is independently developed by the receiving party
without use of or reference to information from the providing party.
Notwithstanding the foregoing, either party may reveal Confidential Information
to any regulatory agency or court of competent jurisdiction if such information
to be disclosed is (a) approved in writing by the other party for
disclosure or (b) required by law, regulatory agency or court order to be
disclosed by a party, provided, if permitted by law, that prior written notice
of such required disclosure is given to the other party and provided further
that the providing party shall cooperate with the other party to limit the
extent of such disclosure. The provisions of this Section 9(c) shall
survive any termination of this Agreement.
11. Warranties;
Disclaimers.
(a) ARCA
represents and warrants that it is the owner of rights granted to LICENSEE
herein and that the license granted herein shall not infringe any trademark,
copyright or other proprietary right of any person not a party to this
Agreement.
(b) LICENSEE
agrees expressly to be bound by and, furthermore, to include all of the
following disclaimers and limitations in any contracts executed or renewed
with
selling Dealers and all legal filings, shareholder reports, and white papers
relating to the Product and upon reasonable request, to furnish a copy (copies)
thereof to ARCA:
"The
Product is not sponsored, endorsed, sold or promoted by Archipelago Holdings,
Inc. ("ARCA"). ARCA makes no representation or warranty regarding the
advisability of investing in securities generally, in the Product particularly,
or the ability of the NYSE Arca Tech 100 Index to track general stock market
performance.
ARCA
MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT
TO THE NYSE ARCA TECH 100 INDEX OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL
ARCA HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL
DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES."
Any
changes in the foregoing disclaimers and limitations must be approved in advance
in writing by an authorized officer of ARCA.
(c) Each
party represents and warrants to the other that it has the authority to enter
into this Agreement according to its terms and its performance does not violate
any laws, regulations or agreements applicable to it.
(d) LICENSEE
represents and warrants to ARCA that the Product shall at all times comply
with
the description in Exhibit A. If the description of the Product provided in
Exhibit A shall change, LICENSEE shall provide ARCA with written notice of
such
change and a description of such change at least forty five (45) days prior
to
such change.
(e) LICENSEE
represents and warrants to ARCA that the Product shall not violate any
applicable law, including but not limited to banking, commodities and securities
laws.
(f) LICENSEE
shall use its commercially reasonable efforts to protect the goodwill and
reputation of ARCA and of the ARCA Marks in connection with their use of the
ARCA Marks under this Agreement.
(f) Neither
party shall have any liability for lost profits or indirect, punitive, special,
or consequential damages arising out of this Agreement, even if notified of
the
possibility of such damages. Without diminishing the disclaimers and limitations
set forth in Subsection 11(b), in no event shall the cumulative liability of
either party to the other under this Agreement exceed the greater of three
times
the average annual license fees actually paid to ARCA hereunder or $2 million
dollars.
(g) The
provisions of this Section 11 shall survive any termination of this
Agreement.
12. Indemnification.
(a) LICENSEE
shall indemnify and hold harmless ARCA its affiliates and their officers,
directors, employees and agents against any and all judgments, damages, costs
or
losses of any kind (including reasonable attorneys' and experts' fees) as a
result of any third party claim, action, or proceeding that arises out of or
relates to (i) any breach by LICENSEE or its agent of any of its
obligations, representations or warranties under this Agreement, except insofar
as it relates to a material breach by ARCA of its obligations, representations
or warranties hereunder, or (ii) the Product, except insofar as the claim,
action or proceeding relates to the Index or the ARCA Marks as licensed
hereunder; provided, however, in any case that (a) ARCA notifies LICENSEE
promptly of any such claim, action, or proceeding; and (b) ARCA grants
LICENSEE control of its defense and/or settlement; and (c) ARCA cooperates
with LICENSEE in defense thereof. LICENSEE shall periodically reimburse ARCA
for
its reasonable expenses incurred under this Section 12(a). ARCA shall have
the right, at its own expense, to participate in the defense of any claim,
action or proceeding against which it is indemnified hereunder; provided,
however, it shall have no right to control the defense, consent to judgment,
or
agree to settle any such claim, action, or proceeding, without the written
consent of LICENSEE without waiving the indemnity hereunder. LICENSEE, in the
defense of any such claim, action, or proceeding, except with the written
consent of ARCA, shall not consent to entry of any judgment or enter into any
settlement which either (x) does not include, as an unconditional term, the
grant by the claimant to ARCA of a release of all liabilities in respect of
such
claims or (y) otherwise adversely affects the rights of ARCA. This
provision shall survive the termination or expiration of this
Agreement.
(b) ARCA
shall indemnify and hold harmless LICENSEE, its affiliates and their officers,
directors, employees and agents against any and all judgments, damages, costs
or
losses of any kind (including reasonable attorneys' and experts' fees) as a
result of any third party claim, action, or proceeding that arises out of or
relates to any breach by ARCA or its agent of any of its obligations,
representations or warranties under this Agreement, except insofar as it relates
to a material breach by LICENSEE of its obligations, representations or
warranties hereunder, provided, however, in any case that (a) LICENSEE
notifies ARCA promptly of any such claim, action, or proceeding; and
(b) LICENSEE grants ARCA control of its defense and/or settlement; and
(c) LICENSEE cooperates with ARCA in the defense thereof. ARCA shall
periodically reimburse LICENSEE for its reasonable expenses incurred under
this
Section 12(b). LICENSEE shall have the right, at their own expense, to
participate in the defense of any claim, action, or proceeding against which
it
is indemnified hereunder; provided, however, it shall have no right to control
the defense, consent to judgment, or agree to settle any such claim, action,
or
proceeding without the written consent of ARCA without waiving the indemnity
hereunder. ARCA, in the defense of any such claim, action, or proceeding, except
with the written consent of LICENSEE, shall not consent to entry of any judgment
or enter into any settlement which either (x) does not include, as an
unconditional term, the grant by the claimant to LICENSEE of a release of all
liabilities in respect of such claims or (y) otherwise adversely affects
the rights of LICENSEE. This provision shall survive the termination or
expiration of this Agreement.
13. Suspension
of Performance.
Neither
ARCA nor LICENSEE shall bear responsibility or liability for any losses arising
out of any delay in or interruptions of their respective performance of their
obligations under this Agreement due to any act of God, act or governmental
authority, act of the public enemy or due to war, the outbreak of hostilities,
riot, fire, flood, civil commotion, insurrection, labor difficulty (including,
without limitation, any strike, or other work stoppage or slow down), severe
or
adverse weather conditions, communications line failure, or other similar cause
beyond the reasonable control of the party so affected.
14. Other
Matters.
(a) The
Agreement is solely and exclusively between the parties hereto and shall not
be
assigned or transferred by either party, without prior written consent of the
other party, and any attempt to so assign or transfer this Agreement without
such written consent shall be null and void.
(b) This
Agreement constitutes the entire agreement of the parties hereto with respect
to
its subject matter and may be amended or modified only by a writing signed
by
duly authorized officers of both parties. This Agreement supersedes all previous
Agreements between the parties with respect to the subject matter of this
Agreement. There are no oral or written collateral representations, agreements,
or understandings except as provided herein.
(c) No
breach, default, or threatened breach of this Agreement by either party shall
relieve the other party of its obligations or liabilities under this Agreement
with respect to the protection of the property or proprietary nature of any
property which is the subject of this Agreement.
(d) All
notices and other communications under this Agreement shall be (i) in
writing and (ii) delivered by hand, by registered or certified mail, return
receipt requested, or by facsimile transmission, to the address or facsimile
number set forth below or such address or facsimile number as either party
shall
specify by a written notice to the other. Notice shall be deemed given upon
receipt when delivered by hand or facsimile or five days after mailing as
described above.
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Notice
to ARCA:
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NYSE
Group, Inc.
|
|
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00
Xxxxx Xxxxxx
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||
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Xxx
Xxxx, XX 00000
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||
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Attention:
Xxxx Xxxxxxx
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Notice
to LICENSEE:
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North
Track Funds, Inc.
|
|
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000
Xxxx Xxxxxxxxx Xxxxxx
|
||
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Xxxxxxxxx,
XX 00000
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||
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Attention:
Xxxxx Xxxxxxxx, President and
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||
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Chief
Executive Officer
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||
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Facsimile:
_______________
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||
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and
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Xxxxxxx
& Xxxxx LLP
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000
Xxxx Xxxxxxxxx Xxxxxx
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Xxxxxxxxx,
XX 00000
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Attention:
Xxxxxx X. Xxxxxxxx
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(e) This
Agreement shall be interpreted, construed and enforced in accordance with the
laws of the State of New York.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the
date first set forth above.
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ARCHIPELAGO
HOLDINGS, INC.
By:
/s/
Xxxx
Xxxxxxx
Name: Xxxx
Xxxxxxx
(Please
Print)
Title: Vice
President
NORTH
TRACK FUNDS, INC.
By: /s/
Xxxxx X.
Xxxxxxxx
Name: Xxxxx
X.
Xxxxxxxx
(Please
Print)
Title: President
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EXHIBIT
A
Description
of the Product
The
Product seeks a total return, before operating expenses of the Product are
deducted, that replicates the total return of the Index. The Product seeks
to
achieve its objective primarily by investing in substantially all of the
component securities included in the Index in approximately the same proportions
as they are represented in the Index. However, the Product is not required
to
invest its assets so as to meet any specified coefficient of correlation to
the
Index. The Product will maintain at least 90% of its net assets in the
securities that comprise the Index, except that the percentage of its assets
so
invested (and in any event for a period of not more than five trading days)
may
temporarily fall below the 90% xxxx if the Product receives cash inflows that
it
cannot invest immediately in securities that replicate the Index.
From
time
to time, up to 5% of the Product's total assets may be held in cash, cash
equivalents or certain short-term, fixed-income securities. These investments
will not perform the same as the Index. In order to achieve performance that
more closely replicates the performance of the Index, the Product may invest
up
to 10% of its total assets in exchange-traded index futures contracts and index
options. The Product is more specifically described in the currently effective
Product prospectus.
EXHIBIT
B
License
Fees
LICENSEE
shall pay ARCA Quarterly License Fees as follows:
At
any
time during the term of the agreement, if average daily net assets of the
Product for the calendar quarter are under $100 million, a minimum fee of
$11,250 per quarter is due and payable..
For
the
period from the effective date of this agreement, through December 31, 2008,
the
fees shall be:
If
average daily net assets of the Product for the calendar quarter are greater
than $100 million, but less than $750 million, a fee based on an annual rate
of
four (4) basis points (0.04%) of that quarter's average net assets of the
Product.
If
average daily net assets of the Product for the calendar quarter are greater
than $750 million, but less than $5 billion, a fee based on an annual rate
of
four (4) basis points (0.04%) of $750 million, plus three (3) basis points
(0.03%) of that quarter's average net assets of the Product in excess of $750
million.
If
average daily net assets of Product for the calendar quarter are greater than
$5
billion, a fee based on an annual rate of four (4) basis points (0.04%) of
$750
million, plus three (3) basis points (0.03%) of $4.25 billion, plus two (2)
basis points of that quarter's average net assets of the Product in excess
of $5
billion.
For
the
period of December 31, 2008 through the termination date the fees shall be:
If
average daily net assets of the Product for the calendar quarter are greater
than $100 million, a fee based on an annual rate of four (4) basis points
(0.04%) of that quarter's average net assets of the Product.
The
License Fees shall be paid to ARCA within thirty (30) days after the close
of
each calendar quarter in which they are incurred; each such payment shall be
accompanied by a statement setting forth the basis for its calculation.
