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EXHIBIT NO. (9)
LICENSE AGREEMENT
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EXHIBIT 9
LICENSE AGREEMENT
LICENSE AGREEMENT, dated as of November 28, 1995 (the "Commencement
Date") by and between STANDARD & POOR'S, a division of The XxXxxx-Xxxx
Companies, Inc. ("S&P"), a New York corporation, having an office at 00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and Schwab Capital Trust ("Licensee"),a
Massachusetts business trust having an office at 000 Xxxxxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, XX 00000.
WHEREAS, S&P compiles, calculates, maintains and owns rights in and to
the S&P 500 Composite Stock Price Index and to the proprietary data therein
contained (such rights being hereinafter individually and collectively referred
to as the "S&P 500 Index"); and
WHEREAS, S&P uses in commerce and has trade name and trademark rights
to the designations "Standard & Poor's(R)", "S&P(R)", "Standard & Poor's 500",
"S&P 500(R)" and "500", in connection with the S&P 500 Index (such rights being
hereinafter individually and collectively referred to as the "S&P Marks"); and
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S&P 500 STND. FORM LICENSE AGREEMENT [PUBLIC FUNDS] (PUBFNDS.500)
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WHEREAS, Licensee wishes to use the S&P 500 Index as a component of the
product or products described in Exhibit A attached hereto and made a part
hereof (individually and collectively referred to as the "Product"); and
WHEREAS, Licensee wishes to use the S&P Marks in connection with the
marketing and/or promotion of the Product and in connection with making
disclosure about the Product under applicable law, rules and regulations in
order to indicate that S&P is the source of the S&P 500 Index; and
WHEREAS, Licensee wishes to obtain S&P's authorization to use the S&P
500 Index and the S&P Marks in connection with the Product pursuant to the terms
and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of License.
(a) Subject to the terms and conditions of this Agreement, S&P
hereby grants to Licensee a non-transferable, non-exclusive license (i) to use
the S&P 500 Index as a component of the Product to be marketed and/or promoted
by Licensee and (ii) to use and refer to the S&P Marks in connection with the
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distribution, marketing and promotion of the Product (including in the name of
the Product) and in connection with making such disclosure about the Product as
Licensee deems necessary or desirable under any applicable law, rules,
regulations or provisions of this Agreement, but, in each case, only to the
extent necessary to indicate the source of the S&P 500 Index. It is expressly
agreed and understood by Licensee that no rights to use the S&P 500 Index and
the S&P Marks are granted hereunder other than those specifically described and
expressly granted herein.
(b) S&P agrees that no person or entity (other than the
Licensee) shall need to obtain a license from S&P with respect to the Product.
2. Term.
The term of this Agreement shall commence on the Commencement
Date and shall continue in effect thereafter until it is terminated in
accordance with its terms.
3. License Fees.
(a) Licensee shall pay to S&P the license fees ("License
Fees") specified and provide the data called for in Exhibit B, attached hereto
and made a part hereof.
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(b) During the term of this Agreement and for a period of one
(1) year after its termination, S&P 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 S&P unless
it determines that it has been underpaid by five percent (5%) or more; in such
case, costs of the audit shall be paid by Licensee.
4. Termination.
(a) At any time during the term of this Agreement, either
party may give the other party sixty (60) days prior written notice of
termination if the terminating 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 other party shall correct
the condition causing such damage or harm within the notice period.
(b) 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
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written notice of its intent to terminate, and such notice shall be effective on
the date specified therein for such termination unless the breaching party shall
correct such breach within the notice period.
(c) S&P shall have the right, in its sole discretion, to cease
compilation and publication of the S&P 500 Index and, in such event, to
terminate this Agreement if S&P does not offer a replacement or substitute
index. In the event that S&P intends to discontinue the S&P 500 Index, S&P shall
give Licensee at least one (1) year's written notice prior to such
discontinuance, which notice shall specify whether a replacement or substitute
index will be made available. Licensee shall have the option hereunder within
sixty (60) days after receiving such written notice from S&P to notify S&P in
writing of its intent to use the replacement or substitute index, if any, under
the terms of this Agreement. In the event that Licensee does not exercise such
option or no substitute or replacement index is made available, this Agreement
shall be terminated as of the date specified in the S&P notice and the License
Fees to the date of such termination shall be computed as provided in Subsection
4(f).
(d) Licensee may terminate this Agreement upon ninety (90)
days prior written notice to S&P if (i) Licensee is informed of the final
adoption of any legislation or regulation or the
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issuance of any interpretation that in Licensee's reasonable judgment materially
impairs Licensee's ability to market and/or promote the Product; (ii) any
material litigation or regulatory proceeding regarding the Product is threatened
or commenced; or (iii) Licensee elects to terminate the public offering or other
distribution of the Product, as may be applicable. In such event the License
Fees to the date of such termination shall be computed as provided in Subsection
4(f).
(e) S&P may terminate this Agreement upon ninety (90) days (or
upon such lesser period of time if required pursuant to a court order) prior
written notice to Licensee if (i) S&P is informed of the final adoption of any
legislation or regulation or the issuance of any interpretation that in S&P's
reasonable judgment materially impairs S&P's ability to license and provide the
S&P 500 Index and S&P Marks under this Agreement in connection with such
Product; or (ii) any litigation or proceeding is threatened or commenced and S&P
reasonably believes that such litigation or proceeding would have a material and
adverse effect upon the S&P Marks and/or the S&P 500 Index or upon the ability
of S&P to perform under this Agreement. In such event the License Fees to the
date of such termination shall be computed as provided in Subsection 4(f).
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(f) In the event of termination of this Agreement as provided
in Subsections 4(a), (b), (c), (d) or (e), the License Fees to the date of such
termination shall be computed by prorating the amount of the applicable annual
License Fees shown in Exhibit B on the basis of the number of elapsed days in
the current term. Any excess License Fees amount paid by Licensee for the
current term shall be refunded by S&P.
(g) Upon termination of this Agreement, Licensee shall cease
to use the S&P 500 Index and the S&P Marks in connection with the Product;
provided that Licensee may continue to utilize any previously printed materials
which contain the S&P Marks for a period of ninety (90) days following such
termination.
5. S&P's Obligations.
(a) It is the policy of S&P to prohibit its employees who are
directly responsible for changes in the components of the S&P 500 Index from
purchasing or beneficially owning any interest in the Product and S&P believes
that its employees comply with such policy. Licensee shall have no
responsibility for ensuring that such S&P employees comply with such S&P policy
and shall have no duty to inquire whether any purchasers or sellers of the
Product are such S&P employees. S&P shall have no liability to the Licensee with
respect to its employees' adherence or failure
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to adhere to such policy.
(b) S&P shall not and is in no way obliged to engage in any
marketing or promotional activities in connection with the Product or in making
any representation or statement to investors or prospective investors in
connection with the promotion by Licensee of the Product.
(c) S&P agrees to provide reasonable support for Licensee's
development and educational efforts with respect to the Product as follows: (i)
S&P shall provide Licensee, upon request but subject to any agreements of
confidentiality with respect thereto, copies of the results of any marketing
research conducted by or on behalf of S&P with respect to the S&P 500 Index; and
(ii) S&P shall respond in a timely fashion to any reasonable requests for
information by Licensee regarding the S&P 500 Index.
(d) S&P or its agent shall calculate and disseminate the S&P
500 Index at least once each fifteen (15) seconds in accordance with its current
procedures, which procedures may be modified by S&P.
(e) S&P shall promptly correct or instruct its agent to
correct any mathematical errors made in S&P's computations of
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the S&P 500 Index which are brought to S&P's attention by Licensee, provided
that nothing in this Section 5 shall give Licensee the right to exercise any
judgment or require any changes with respect to S&P's method of composing,
calculating or determining the S&P 500 Index; and, provided further, that
nothing herein shall be deemed to modify the provisions of Section 9 of this
Agreement.
6. Informational Materials Review.
Licensee shall use its best efforts to protect the goodwill
and reputation of S&P and of the S&P Marks in connection with its use of the S&P
Marks under this Agreement. Licensee shall submit to S&P for its review and
approval all informational materials pertaining to and to be used in connection
with the Product, including, where applicable, all prospectuses, plans,
registration statements, advertisements, brochures and promotional and any other
similar informational materials (including documents required to be filed with
governmental or regulatory agencies) that in any way use or refer to S&P, the
S&P 500 Index, or the S&P Marks (the "Informational Materials"). S&P's approval
shall be required with respect to the use of and description of S&P, the S&P
Marks and the S&P 500 Index and shall
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not be unreasonably withheld or delayed by S&P. Specifically, S&P shall notify
Licensee, by facsimile transmission in accordance with Subsection 12(d) hereof,
of its approval or disapproval of any Informational Materials within twenty-four
(24) hours (excluding Saturday, Sunday and New York Stock Exchange Holidays)
following receipt thereof from Licensee. Any disapproval shall state S&P's
reasons therefor. Any failure by S&P to respond within such twenty-four (24)
hour period shall be deemed to constitute a waiver of S&P's right to review such
Informational Materials. Informational Materials shall be addressed to S&P, c/o
Xxxxxxx Xxxxxxxx, Director-International Indices - Index Services, at the
address specified in Subsection 12(d) or via Fax--Fax#:212/000-0000. Once
Informational Materials have been approved by S&P, subsequent Informational
Materials which do not alter the use or description of S&P, the S&P Marks or the
S&P 500 Index need not be submitted for review and approval by S&P.
7. Protection of Value of License.
(a) During the term of this Agreement, S&P shall use its best
efforts to maintain in full force and effect federal registrations for "Standard
& Poor's(R)", "S&P(R)", and "S&P 500(R)". S&P shall at S&P's own expense and
sole discretion exercise S&P's common law and statutory rights against
infringement of the S&P Marks, copyrights and other proprietary rights.
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(b) Licensee shall cooperate with S&P in the maintenance of
such rights and registrations and shall take such actions and execute such
instruments as S&P may from time to time reasonably request, and shall use the
following notice when referring to the S&P 500 Index or the S&P Marks in any
Informational Material:
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard &
Poor's 500", and "500" are trademarks of The XxXxxx-Xxxx
Companies, Inc. and have been licensed for use by Schwab
Capital Trust. The Product is not sponsored, endorsed, sold or
promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the
Product.
or such similar language as may be approved in advance by S&P, it being
understood that such notice need only refer to the specific S&P Marks referred
to in the Informational Material.
8. Proprietary Rights.
(a) Licensee acknowledges that the S&P 500 Index is selected,
coordinated, arranged and prepared by S&P through the application of methods and
standards of judgment used and developed through the expenditure of considerable
work, time and money by S&P. Licensee also acknowledges that the S&P 500 Index
and the S&P Marks are the exclusive property of S&P, that S&P has and retains
all proprietary
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rights therein (including, but not limited to trademarks and copyrights) and
that the S&P 500 Index and its compilation and composition and changes therein
are in the control and discretion of S&P.
(b) S&P reserves all rights with respect to the S&P 500 Index
and the S&P 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"). Confidential Information shall not include
(i) any information that is 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 confidentiality 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
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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
Subsection 8(c) shall survive any termination of this Agreement for a period of
five (5) years from disclosure by either party to the other of the last item of
such Confidential Information.
9. Warranties; Disclaimers.
(a) S&P represents and warrants that S&P has the right to
grant the rights granted to Licensee herein and that, subject to the terms and
conditions of this Agreement, 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 itself by and
furthermore to include all of the following disclaimers and limitations in each
prospectus relating to the Product and upon request to furnish a copy thereof to
S&P:
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The Product is not sponsored, endorsed, sold or promoted by
Standard & Poor's ("S&P"). S&P makes no representation or warranty, express or
implied, to the owners of the Product or any member of the public regarding the
advisability of investing in securities generally or in the Product particularly
or the ability of the S&P 500 Index to track general stock market performance.
S&P's only relationship to the Licensee is the licensing of certain trademarks
and trade names of S&P and of the S&P 500 Index which is determined, composed
and calculated by S&P without regard to the Licensee or the Product. S&P has no
obligation to take the needs of the Licensee or the owners of the Product into
consideration in determining, composing or calculating the S&P 500 Index. S&P is
not responsible for and has not participated in the determination of the prices
and amount of the Product or the timing of the issuance or sale of the Product
or in the determination or calculation of the equation by which the Product is
to be converted into cash. S&P has no obligation or liability in connection with
the administration, marketing or trading of the Product.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF
THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY
FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY,
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EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE
PRODUCT, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY
DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P 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 S&P.
(c) Each party represents and warrants to the other that it
has the authority to enter into this Agreement according to its terms and that
its performance does not violate any laws, regulations or agreements applicable
to it.
(d) Licensee represents and warrants to S&P that the Product
shall at all times comply with the description in
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Exhibit A.
(e) Licensee represents and warrants to S&P that the Product
shall not violate any material applicable law, which violation has or can be
expected to have a material adverse effect on S&P, including but not limited to
any material banking, commodities and securities laws.
(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 9(b), or the
indemnification obligations of either party under Subsections 10 (a) or 10 (b),
in no event shall the cumulative liability of either party exceed the average
annual License Fees actually paid to S&P hereunder.
(g) Use of any marks by Licensee in connection with its
Product (including in the name of such Product) which are not the S&P Marks is
at Licensee's sole risk.
(h) The provisions of this Section 9 shall survive
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any termination of this Agreement.
10. Indemnification.
(a) Licensee shall indemnify and hold harmless S&P, 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 claim, action or proceeding
that arises out of or relates to (a) any breach by Licensee of its
representations or warranties under this Agreement, or (b) the Product;
provided, however, that S&P notifies Licensee promptly of any such claim, action
or proceeding. Licensee shall periodically reimburse S&P for its reasonable
expenses incurred under this Subsection 10(a). S&P 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 S&P, shall not consent
to entry of any judgment or enter into any settlement which either (a) does not
include, as an
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unconditional term, the grant by the claimant to S&P of a release of all
liabilities in respect of such claims or (b) otherwise adversely affects the
rights of S&P. This provision shall survive the termination or expiration of
this Agreement.
(b) S&P 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 claim, action, or proceeding
that arises out of or relates to any breach by S&P of its representations or
warranties under this Agreement; provided, however, that (a) Licensee notifies
S&P promptly of any such claim, action or proceeding; (b) Licensee grants S&P
control of its defense and/or settlement; and (c) Licensee cooperates with S&P
in the defense thereof. S&P shall periodically reimburse Licensee for its
reasonable expenses incurred under this Subsection 10(b). Licensee 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
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written consent of S&P without waiving the indemnity hereunder. S&P, 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 (a) 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 (b) otherwise adversely affects the rights of Licensee. This
provision shall survive the termination or expiration of this Agreement.
11. Suspension of Performance.
Neither S&P 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 of governmental authority, act of the public enemy or due to war,
the outbreak or escalation 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.
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12. Other Matters.
(a) This Agreement is solely and exclusively between the
parties hereto and shall not be assigned or transferred by either party, without
the 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.
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(d) Except as set forth in Section 6 hereof with respect to
Informational Materials, all notices and other communications under this
Agreement shall be (i) in writing, (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 and (iii) deemed
given upon receipt.
Notice to S&P: Standard & Poor's
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
Senior Vice President
Equity Information
Services
Fax #:(000) 000-0000
Notice to Licensee: Schwab Capital Trust
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxx
Senior Vice President
and Secretary
Fax #:(000) 000-0000
(e) This Agreement shall be interpreted, construed and
enforced in accordance with the laws of the State of New York.
(f) Each party agrees that in connection with any
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legal action or proceeding arising with respect to this Agreement, they will
bring such action or proceeding only in the United States District Court for the
Southern District of New York or in the Supreme Court of the State of New York
in and for the First Judicial Department and each party agrees to submit to the
jurisdiction of such court and venue in such court and to waive any claim that
such court is an inconvenient forum.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first set forth above.
SCHWAB CAPITAL TRUST STANDARD & POOR'S,
A division of
The XxXxxx-Xxxx Companies,Inc.
BY:/s/ Xxxxxxx X. Xxxx BY:/s/ Xxxxxxx Xxxxxxx
------------------- ---------------------------
TITLE:Senior Vice President TITLE:Vice President and
--------------------- ------------------
General Manager
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EXHIBIT A
Product
Product: The Schwab S&P 500 Index Fund, (the "Product") is a publicly offered
mutual fund whose investment objective is to track the price and yield
performance of publicly-traded common stocks of companies as
represented by the S&P 500 Index.
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EXHIBIT B
LICENSE FEES
Licensee shall pay S&P License Fees computed as follows:
The annual License Fees shall be the greater of $10,000 (the "Minimum Annual
Fee") or 1 basis point (.0001) of the average daily net assets of the Product
computed quarterly. The Minimum Annual Fee shall be payable on the Commencement
Date. Amounts in excess of the Minimum Annual Fee shall be paid to S&P 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. For the first year of this Agreement, the annual
License Fees for the Product shall not exceed $50,000 (the "Maximum Annual
Fee"); thereafter, the Maximum Annual Fee shall be increased annually on each
anniversary of the Commencement Date by the amount of the increase (if any) in
the Consumer Price Index ("CPI") for Urban Consumers, All Items, as issued by
the Bureau of Labor Statistics, U.S. Department of Labor, over the prior twelve
month period.
