LICENSE AGREEMENT
LICENSE AGREEMENT, dated as of May 14, 2001 (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 Xxxxx Xxxxxx, Xxx Xxxx,
XX 00000-0000, and The Advisors' Inner Circle Fund - Toews S&P 500 Hedged Index
Fund ("Licensee"), a Massachusetts Business Trust having an office at Xxx
Xxxxxxx Xxxxxx Xxxxx, Xxxx, 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 begin 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)", "S&P 500(R)", "Standard &
Poor's 500" 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
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
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 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 make a part hereof.
(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
data 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 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 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; (iii) Licensee
elects to terminate the public offering or other distribution of the Product, as
may be applicable; or (iv) Licensee elects to cease using the S&P 500 Index as a
component of the Product and to cease using the S&P Marks in connection with the
marketing and/or promotion of or disclosure about the Product. 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; of (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).
(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 License
Fees shown in Exhibit B on the basis of the number of elapsed days in the
current term.
(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'; provided further that Licensee may keep and use records of any
previously printed or filed material, which contain the S&P Marks, as required
by any law or regulation and may refer to the Product's use of the S&P 500 Index
and the S&P Marks in a historical sense for purposes such as calculating,
disclosing, describing or advertising the Product's past performance or previous
name or investment objective, strategies, restrictions or risks during the term
of this Agreement.
5. S&P's Obligation.
(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 investors 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 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 the S&P 500 Index
which are brought to S&P's computations of 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, application forms, contracts, videos, internet sites,
electronic commerce, 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 not be unreasonably withheld or delayed by
S&P. Specifically, S&P shall notify Licensee of its approval or disapproval of
any Informational Materials within forty-eight (48) hours (excluding Saturday,
Sunday and New York Stock Exchange Holidays) following receipt thereof from
licensee. Any disapproval shall indicate S&P's reasons therefor. Any failure by
S&P to respond within such forty-eight (48) 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 Xxxxxx Xxxxxxxxxx
Xxxxxxx, Specialist - Index Licensing/Marketing, Equity Index Services, at the
address specified in Subsection 12(d). Informational Materials may be submitted
via facsimile (to 000-000-0000 or 000-000-0000) if they are less than 20 pages
and legible after transmission. 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.
(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 The Advisors' Inner Circle Fund
- Toews S&P 500 Hedged Index Fund. 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 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 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 the license granted
herein shall not infringe any trademark, copyright or other proprietary right
of any person not a party to this Agreement.
(b) S&P further warrants and represents to Licensee that the
S&P Marks and the S&P 500 Index are the exclusive property of S&P, that S&P
has and retains all proprietary rights therein (including, but not limited to
trademarks and copyrights), that the S&P 500 Index and its compilation and
composition and changes therein are in the control and direction of S&P, and
that the S&P 500 Index and S&P Marks do not infringe the rights of any third
party.
(c) Licensee agrees expressly to be bound itself by and
furthermore to include all of the following disclaimers and limitations in
each prospectus or each Statement of Additional Information ("SAI") relating
to the Product, provided the SAI is incorporated by reference into the
prospectus and the prospectus contains disclosure regarding the S&P 500 Index
that conforms to the notice in Subsection 7(b), including a cross reference to
the SAI disclosure. Licensee shall furnish a copy of the prospectus and, if
applicable, the SAI to S&P:
The Product is not sponsored, endorsed, sold or promoted by
Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc. ("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 trace 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,
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 OR SUCH
DAMAGES.
Any changes in the foregoing disclaimers and limitations must
be approved in advance in writing by an authorized officer of S&P.
(d) 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.
(e) Licensee represents and warrants to S&P that the Product
shall at all times comply with the description in Exhibit A.
(f) Licensee represents and warrants to S&P that the Product
shall not violate any applicable law, including but not limited to banking,
commodities and securities laws.
(g) 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((C) in
no event shall the cumulative liability of S&P to Licensee exceed the average
annual License Fees actually paid to the S&P hereunder and except with respect
to Licensee's indemnification obligations to S&P Subsection 10(a), in no event
shall the cumulative liability of Licensee to S&P under this Agreement exceed
two hundred fifty thousand dollars ($250,000).
(h) 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.
(i) The provisions of this Section 9 shall survive 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) this Agreement, except insofar as it
relates to a breach by S&P of its representations or warranties hereunder, 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 thereunder;
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 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 (a) this Agreement, except insofar as it
relates to any breach by Licensee of its representations or warranties
hereunder, or (b) the Product; 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, 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.
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 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) Licensee is a business trust organized under Massachusetts
law and under a Declaration of Trust, to which reference is hereby made and a
copy of which is on file at the office for the Secretary of Commonwealth of
Massachusetts and elsewhere as required by law, and to any and all amendments
thereto so filed or hereafter filed. S&P acknowledges that the obligations of
Licensee entered into in the name or on behalf thereof by any of the Trustees,
officers, employees or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, officers, employees,
agents or shareholders of Licensee personally, but bind only the assets of
Licensee. S&P acknowledges that in dealing with any separate series or
portfolio of Licensee, it must look solely to the assets of Licensee belonging
to such series or portfolio for the enforcement of any claims against
Licensee.
(d) 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.
(e) 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 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxxx
Managing Director
Index Services
Fax #:(000) 000-0000
Notice to Licensee: The Advisors Inner Circle Fund
c/o SEI Investments
Xxx Xxxxxxx Xxxxxx Xxxxx
Xxxx, XX. 00000
Attn: Xxxxxxx X. Xxxxxxx, Xx.
Fax #: 000-000-0000
Tel #: 000-000-0000
(f) This Agreement shall be interpreted, construed and
enforced in accordance with the laws of the State of New York.
(g) Each party agrees that in connection with any 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.
THE ADVISORS' INNER CIRCLE FUND
TOEWS S&P 500 HEDGED INDEX FUND STANDARD & POOR'S
a division of
The XxXxxx-Xxxx Companies, Inc.
BY: /s/ Xxxxxxx X. Xxxxxxx BY: /s/ Xxxxxx X. Xxxxxxxx
-------------------------- ---------------------------
Xxxxxxx X. Xxxxxxx Xxxxxx X. Shakotlco
VP Managing Director
EXHIBIT A
PRODUCT DESCRIPTION
Product: The Advisors' Inner Circle Fund - Toews S&P 500 Hedged Index Fund
(the "Product") is a separate series of The Advisors' Inner Circle Fund
(Trust), a mutual fund family that offers different classes of shares in
separate investment Portfolios.
The Fund invests primarily in equity securities of large companies that make
up the S&P 500 and derivative instruments that attempt to track the
performance of the S&P 500, such as index options and futures contracts,
options on futures contracts, swaps, and exchange-traded index securities,
such as Standard & Poor's Depositary Receipts. The Fund combines this
index-based strategy with the tactical use of hedging techniques to seek
returns that provide S&P 500 exposure, and seek to provide protection from
downturns in the index. These two disciplines are designed to complement each
other in creating a portfolio designed to provide investors with exposure to
periods of sustained positive performance of the S&P 500, and protection from
periods of negative index performance. Notwithstanding these strategies, there
is no assurance that the Fund's investment performance will equal or exceed
that of the S&P 500 and may actually underperform the S&P 500.
The Product specifically excludes shares or any other security, financial
instrument or investment representing an ownership interest in the Product
that can be purchased, sold or otherwise traded on a Secondary Market
Facility.
As used herein, the term Secondary Market Facility means any entity or
organization that is: (1) subject to regulation as an exchange under
applicable laws, rules or regulations of the country or jurisdiction in which
such entity has a physical presence; or (2) a broker-dealer or other entity or
organization that acts in an exchange-like capacity by virtue of it, as
principal or agent, acting on a regular basis as an intermediary between
buyers and sellers of financial instruments of any type.
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 one 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 and each-one year anniversary thereof. 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.
The parties agree that the terms upon which License Fees are calculated
pursuant to this Exhibit B shall be considered "Confidential Information" for
purposes of Subsection 8(c)of this Agreement.
