Index License Agreement

 

1.

Defined Terms. – As used in this Agreement, the following terms shall have the following meanings (such definitions to be equally applicable to both the singular and the plural forms of the terms defined):

 

(a)

“Licensed Intellectual Property” is defined in the first recital above, but shall include the components listed above both as they are initially described in Schedule A and as they may be updated from time to time as provided in Section 2(b) below; and

 

(b)

“Licensed Product” shall mean (i) an exchange-traded fund (the “Fund”) whose investment objective is to track the performance of the Tradition Coal Index, and (ii) the provision of investment management and related services to the Fund.

 

2.

Intellectual Property License Grant.

 

(a)

In consideration of receipt of the License Fee, and subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee a limited, personal, non-transferable, non-assignable (except as specifically provided in Section 14 below), indivisible, exclusive, perpetual (unless terminated as provided herein), worldwide license to use the Licensed Intellectual Property, as the Licensed Intellectual Property is initially described in Schedule A and updated from time to time as provided in Section 2(b) below.  Under the terms of this License Agreement, Licensee may use the Licensed Intellectual Property only in its capacity as the managing owner of the Fund.  For the avoidance of doubt, this includes the right to use the name of the Index in Fund-related promotional and disclosure materials and in the Fund’s name (and to permit the Fund to do so), to use the Index formula as the basis for the Fund’s investment portfolio, and all other means of using the Licensed Intellectual Property as reasonably appropriate in connection with the management, operation, promotion, marketing and legal compliance activities of the Fund.

 

(b)

The license rights granted herein shall also include any improvements or modifications to the Licensed Intellectual Property that may be developed by or for Licensor after the Effective Date.  Licensor and Licensee, by mutual agreement, may update, revise or amend the Index and the methodology by which it is calculated (“Index Updates”) from time to time after the Effective Date.  All such Index Updates are within the scope of this license grant.

 

(c)

This license constitutes a license of intellectual property under Section 365(n) of the United States Bankruptcy Code.

 

3.

Books and Records.

 

(a)

In order that the License Fee may be verified by Licensor, Licensee agrees to ensure that full, complete and accurate books and records shall be kept, at its sole cost and expense, relating to the determination of the License Fees, for a period of five (5) years following any such determination and calculation of the License Fees. The acceptance by Licensor of any statement or payment shall be without prejudice to any of Licensor’s rights or remedies and shall not bar Licensor from thereafter disputing the accuracy of any payment or statement and Licensee will remain fully liable for any balance due under this Agreement.

 

(b)

It is agreed that the books and records of Licensee may be audited from time to time, but not more than once in each calendar year and on at least fourteen (14) days’ prior notice, during the term of this Agreement and thereafter during the relevant five (5) year time period described in Section 3(a), by an independent certified public accounting firm appointed by Licensor and reasonably acceptable to Licensee, to the extent necessary to verify the accuracy of the aforementioned statements and payments, subject to prior execution by such accounting firm of a non-disclosure agreement reasonably satisfactory to Licensee.  Such inspection shall be completed at Licensor’s own expense, provided that if any discrepancy or error exceeding three percent (3%) of the money actually due is found in connection with the computation, the cost of such inspection shall be borne by Licensee.

 

4.

Tax.  All costs, such as stamp duties, taxes, and other similar levies originating from or in connection with the conclusion of this Agreement shall be borne by Licensee.  However, in the event that the government of a country imposes any income taxes on payments hereunder by Licensee to Licensor and requires Licensee to withhold such tax from such payments, Licensee may deduct such tax from such payments.  In such event, Licensee shall promptly furnish Licensor with tax receipts issued by appropriate tax authorities so as to enable Licensor to support a claim for credit against income taxes which may be payable by Licensor.

 

5.

Certain Obligations of Licensor.  Licensor covenants and agrees that so long as this license is in effect it will perform the following obligations:

 

(a)

establishment, maintenance, publication (if deemed necessary) and operational support of the Index and ongoing index administration, including reviewing the Index as published or otherwise disseminated for conformity to the then-applicable Index methodology;

 

(b)

providing and using reasonable efforts to adequately maintain protection for the Licensed Intellectual Property as against the same becoming generic or being infringed by third parties; and

 

(c)

providing Licensee and the Fund with such information as may be requested by any regulatory authority with respect to the Licensor and its role with respect to the Fund, and cooperating with Licensee and the Fund in good faith to respond to comments from any regulatory authority.

 

6.

Protection of Licensed Intellectual Property Rights.

 

(a)

Licensee agrees to cooperate with Licensor’s reasonable efforts to protect its rights in the Licensed Intellectual Property regarding the promotion, advertising or commercialization of any of the Licensed Products, including notice to Licensee’s clients that Licensee’s use of the Licensed Intellectual Property in connection with the Licensed Products is under a license from Licensor.

 

(b)

Licensee agrees that any Licensed Products sold, offered or marketed shall comply in all material respects with all applicable federal, state and local laws.

 

(c)

Subject to the rights of Licensee hereunder, Licensor may, in its discretion, take any and all actions which it deems necessary to protect its rights under the Licensed Intellectual Property.  Such action shall be taken at Licensor’s sole expense, and Licensee agrees to cooperate with and assist Licensor at Licensor’s expense as required to obtain such protection.

 

(d)

Licensee agrees, at Licensor’s expense, to assist Licensor to the extent necessary to protect any of Licensor’s rights in the Licensed Intellectual Property against infringement by third parties, and Licensor, if it so desires, may commence or prosecute any claims or suits in its own name or in the name of Licensee or join Licensee as a party thereto.  Licensee shall notify Licensor in writing if it becomes aware of any actual or potential infringement of any of the Licensed Intellectual Property, and Licensor shall have the sole right to determine whether or not Licensor will take any action on account of any such infringements.  Licensee shall not institute any suit or take any action on account of any such infringements or imitations without first obtaining the written consent of Licensor to do so; however, in the event Licensor fails to respond promptly so as not to prejudice Licensee’s rights or otherwise elects not to prosecute such infringement, then Licensee may without the consent of Licensor proceed to prosecute such infringement at its own expense and shall be entitled to retain all damages and fees awarded in an such litigation.  In any such action by Licensee, Licensor shall fully cooperate with Licensee and Licensee shall be deemed to have a power of attorney from Licensor, coupled with an interest, to prosecute such action in either its own name or in both Licensor’s and Licensee’s names if required by applicable law.  No settlement, consent judgment or other voluntary final disposition of a suit being prosecuted by a Party under this Section 6(d) may be entered into without the consent of the other Party if such settlement, consent judgment or other voluntary final disposition would alter, derogate or diminish such other Party’s rights under the Agreement or otherwise materially adversely affect such other Party, which consent shall not be unreasonably withheld or delayed.

 

(e)

Licensee shall:

 

7.

Warranties.  

 

(a)

Licensor represents and warrants that:

 

(b)

EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO LICENSOR’S OBLIGATIONS IN SECTION 5 HEREOF, LICENSOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY ANY PERSON OR ENTITY FROM THE USE OF THE INDEX, TRADING BASED ON THE INDEX, OR ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE FUND, OR FOR ANY OTHER USE. LICENSOR EXPRESSLY DISCLAIMS ALL WARRANTIES AND CONDITIONS, EXPRESS, STATUTORY, OR IMPLIED, EXCEPT AS SET FORTH IN THIS AGREEMENT.  EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT, LICENSOR HEREBY EXPRESSLY DISCLAIMS ALL EXPRESS OR IMPLIED WARRANTIES AND CONDITIONS OF MERCHANTABILITY, TITLE, OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE INDEX(ES) OR ANY DATA INCLUDED THEREIN.

 

(c)

Licensee represents and warrants that Licensee has the full power and authority to enter into and perform this Agreement, and, to the best of its knowledge, there is no contract, agreement, or understanding with any other person, firm or corporation that would interfere with the obligations assumed by Licensee hereunder.

 

8.

Indemnification.

 

(a)

By Licensor.  Licensor shall indemnify, defend and hold harmless Licensee, its employees, officers, directors, stockholders, members, partners, successors and assigns (the “Licensee Indemnitees”) from and against any and all losses, damages, costs and expenses, including the legal and expert fees and expenses incident thereto (collectively, “Damages”), arising from any third-party suit, claim or demand (each a “Claim”) (i) based upon any alleged infringement of the rights of third parties by any of the Licensed Intellectual Property; or (ii) arising out of a breach or alleged breach of any covenant, warranty or representation made by Licensor in this Agreement.

 

(b)

By Licensee.  Licensee agrees to indemnify, defend and hold harmless Licensor, its employees, officers, directors, stockholders, successors and assigns (the “Licensor Indemnitees”), from and against any and all Damages arising from any Claim (i) based upon any breach or alleged breach of any covenant, warranty or representation made by Licensee in this Agreement, or (ii) other than with respect to information provided by Licensor or its agent to Licensee regarding Licensor, the Index, the data contained therein, the Index methodology or any other similar information, based upon any documents produced by Licensor relating to the Fund (including, without limitation, any prospectus disclosure document or shareholder report of the Fund) or Licensee’s management of the Fund.

 

(c)

Notice.  Each Party seeking indemnification (each an “Indemnified Party”) shall give prompt notice of any Claim of which it becomes aware to the other Party if indemnification under this Section 8 is sought; however, a failure or delay in giving such notice shall not relieve an indemnifying party (each, an “Indemnifying Party”) of its indemnification obligations unless such failure or delay actually prejudices the indemnifying party’s rights or ability to defend such Claim and then only to the extent of such actual prejudice.

 

(d)

Procedure.

 

9.

Ownership of Licensed Intellectual Property. Licensee acknowledges that, as between the Parties, Licensor is the sole owner of all right, title and interest in the Licensed Intellectual Property, and that Licensee has and will hereby acquire no rights in the Licensed Intellectual Property other than the specific and limited license rights granted herein. 

 

10.

Term.  The term of this Agreement shall be perpetual unless terminated as provided herein.     

 

11.

Termination.

 

(a)

This Agreement shall be automatically and immediately terminated by Licensor (a) upon assignment of this Agreement by Licensee without the prior written consent of Licensor (other than an assignment permitted under Section 14 of this Agreement), and (b) if there is an execution by Licensee of an assignment of the Licensed Intellectual Property for the benefit of creditors of Licensee.

 

(b)

If Licensee materially breaches any of the other terms and conditions of this Agreement, including without limitation, Sections 3, 4 and 6, Licensor may, at its option, terminate this Agreement on thirty (30) days’ prior written notice to Licensee.  If Licensee, within that time, shall have cured the alleged breach or, if such breach cannot reasonably be corrected or remedied within thirty (30) days, then if Licensee has commenced curing said default within said period and is diligently pursuing completion of same, Licensor shall be deemed to have rescinded its notice of termination.

 

12.

Effect of Termination.  Upon and after the expiration or termination of this Agreement, all rights granted to Licensee hereunder shall forthwith, immediately and automatically revert to Licensor, and Licensee shall immediately cease any further use of the Licensed Intellectual Property, or make any further direct or indirect reference to any of the Licensed Intellectual Property, in connection with any of Licensee’s products and/or business, including, without limitation, the Licensed Products.

 

13.

Confidentiality.  The Parties each agree to keep confidential and not to use or disclose any information transmitted to or obtained by the other Party, its business or products, which either Party identifies as being proprietary or confidential, or which, by the nature of the circumstances surrounding the disclosure, ought in good faith to be treated as proprietary or confidential.

 

14.

Assignment.  The benefit of this Agreement shall be personal to Licensee, who shall not, without the prior written consent of Licensor, assign the same, nor part with any of its rights or obligations hereunder, in respect to any of the Licensed Intellectual Property, except as follows:  Licensee may assign this License to a purchaser of all or substantially all of the assets of Licensee, to a successor investment manager of the Fund, to a successor of Licensee by merger, or in connection with the sale of a controlling interest in Licensee.

 

15.

General.

 

(a)

This Agreement shall be governed by and construed under and enforced in accordance with the laws of the State of Delaware.

 

(b)

The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

(c)

This Agreement constitutes the entire agreement between the Parties with respect to the Licensed Intellectual Property and supersedes all prior negotiations, proposals, commitments, writings, advertisements, publications, contracts and understandings of any nature whatsoever concerning the subject matter herein and therein.

 

(d)

If a court of competent jurisdiction holds any portion of this Agreement invalid, the Parties agree that such invalidity shall not affect the validity of the remaining portions of this Agreement, and further agree to substitute for the invalid provision a valid provision that most closely approximates the economic effect and the Parties’ intent of the invalid provision.

 

(e)

Except as provided in Section 2, this Agreement may be amended, modified, superseded or canceled and the terms or covenants hereof may be waived, only by a written instrument executed by all the Parties, or, in case of a waiver, by the Party waiving compliance.

 

(f)

The failure of any Party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same.  No waiver by either Party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach or a waiver of the breach of any other term or covenant contained in this Agreement.

 

(g)

The Parties are independent contractors.  Neither this Agreement nor the performance by the Parties of their respective obligations hereunder, will create an association, partnership, joint venture, or any relationship of principal and agent, master and servant or employer and employee, between the Parties.  Neither Party shall have the right, power or authority (whether express or implied) to act, make any representation, assume any duty or obligation on behalf of, or bind the other Party.

 

(h)

All notices, requests, waivers, consents and other communications hereunder shall be in writing and shall be properly given if personally delivered,  mailed by U.S. certified mail with return receipt, transmitted by recognized overnight courier (such as FedEx), faxed (with confirmation of receipt), or e-mailed (with confirmation of receipt) as follows:

 

(i)

The provisions of Sections 8, 9, 13 and 15 shall survive any termination or rescission of this Agreement.

 

(j)

This Agreement may be executed in counterparts by the Parties, with each such counterpart then being considered one and the same and both of which shall constitute one and the same agreement.

 

(k)

Nothing contained in this Agreement shall be deemed to convey any ownership interest in a Party to the other Party, including, without limitation, any right to (i) control or influence the management, policies or operations of the other Party, (ii) select, approve or appoint officers or directors of the other Party, or (iii) approve or prevent any corporate action or change in control of the other Party.   During the term of this Agreement, no officer or director of a Party (or of any person controlling, controlled by or under common control with such Party) shall serve as an officer or director of the other Party (or of any person controlling, controlled by or under common control with such other Party).  Each Party hereby acknowledges and agrees that it does not own or control the other Party, and it is not owned or controlled by the other Party.  For purposes of this Agreement, the term “control” (including “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person through the ownership of securities or by contract.  Without limiting the generality of the foregoing, control of the right to vote ten percent (10%) or more of all voting securities of a Person or beneficial ownership of ten percent (10%) or more of the outstanding equity interests in such Person shall be deemed to be control.  “Person,” as used herein, shall mean any individual, corporation, business trust, unincorporated organization or association, partnership, joint venture, limited liability company, unlimited liability company, governmental authority or any other form of entity.

 

16.

Disclosure Document; Prospectus Notice.   During the term of this Agreement, Licensee agrees to use its reasonable best efforts to prominently disclose (a) the statement in Schedule B-1 in Fund sales literature, and (b) the statement in Schedule B-2 in each Fund disclosure document filed with the Commodities Futures Trading Commission (the “CFTC”) and Fund prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”).  Licensee further agrees to use its reasonable best efforts to incorporate any changes suggested by Licensor to the statements in Schedules B-1 or B-2, as Licensee deems appropriate in light of relevant circumstances.