EXHIBIT 2.2
Xxx Xxxxxx Funds Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, 0X 60181-5555
Standard & Poor's Investment Advisory Services, LLC
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Managing Director - Portfolio Advisory Services
AGREEMENT
This Agreement (the "Agreement") is entered into as of January __, 2009 (the
"Effective Date") by and between Standard & Poor's Investment Advisory Services,
LLC ("SPIAS") a Delaware limited liability corporation and Xxx Xxxxxx Funds Inc.
("Xxx Xxxxxx").
WHEREAS, Xxx Xxxxxx, on behalf of one or more series of the S&P Dividend
Sustainability Portfolio (the "Fund"), hereby engages SPIAS in connection with
Xxx Xxxxxx'x sponsorship and supervision of the Fund. The Fund is a series of
unit investment trusts that invest in stocks of domestic companies derived from
the Standard & Poor's 500 Dividend Aristocrats Index, as further described in
the attached registration statement on Form S-6, as filed with the U.S.
Securities and Exchange Commission.
Accordingly, Xxx Xxxxxx, on behalf of the Fund, hereby agrees with SPIAS as
follows:
1. Limited License to Use Standard & Poor's Trademarks.
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SPIAS hereby grants Xxx Xxxxxx, subject to the terms of this Agreement,
a non- transferable, non-exclusive limited license to use and refer to the
trademarks "Standard & Poor's", "S&P", "S&P 500", "Standard & Poor's 500", "S&P
500 Dividend Aristocrats Index" and "Standard & Poor's 500 Dividend Aristocrats
Index" (the "Trademarks") in connection with the marketing, promotion and
distribution of the Fund, all as more fully described in Section __ hereof. Such
limited license shall continue until the later to occur of the termination of
this Agreement or the termination date of the last existing series of the Fund.
No rights to use the Trademarks are granted hereunder other than as specifically
described and expressly granted herein.
2. Selection of Portfolio Securities.
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In addition to the license to use the Trademarks, subject to the terms
of this Agreement, SPIAS hereby agrees to provide Xxx Xxxxxx with the following
services. During the period commencing on the date hereof and ending on the
Termination Date (as defined in Section 14 hereof), Xxx Xxxxxx shall provide
SPIAS with reasonable advance notice of the filing of each registration
statement (inclusive of any post-effective amendments) pertaining to a Fund
("Registration Statement") and, subject to the foregoing, SPIAS will provide to
Xxx Xxxxxx within ten (10) days of Xxx Xxxxxx'x request all of the information
necessary to identify those securities that fit within the parameters described
in Exhibit A in connection with each Fund (the "Identified Securities"),
including, but not limited to, Standard & Poor's 500 Dividend Aristocrats Index,
Senior Debt/Asset Ratios, Quality Rankings and dividend coverage metrics. Xxx
Xxxxxx shall cause some or all of the Identified Securities, in its sole
discretion, to be deposited in the related Fund's portfolio (the "Portfolio
Securities"). SPIAS shall have no responsibility for depositing or taking any
other action regarding the securities deposited into the Fund. Xxx Xxxxxx shall
be responsible for the selection of Portfolio Securities from the list of
Identified Securities, based upon all information available to Xxx Xxxxxx,
including, among other factors, market capitalization and liquidity
considerations.
3. Provision of Information.
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SPIAS will provide Xxx Xxxxxx with information reasonably requested by
Xxx Xxxxxx about research and selection of the Identified Securities and SPIAS'
analysis of trading and liquidity of the Identified Securities for use by Xxx
Xxxxxx in reviewing the Portfolio Securities and in preparing updated prospectus
disclosure and marketing materials for the Fund. SPIAS will also provide Xxx
Xxxxxx with information reasonably requested by Xxx Xxxxxx about SPIAS' business
and operations for such purposes. SPIAS also agree to review and comment upon
disclosure in the Registration Statement referred to in Section 16 hereof.
4. Portfolio Maintenance.
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SPIAS shall have no obligation to provide ongoing research with regard
to the Portfolio Securities. Xxx Xxxxxx or such other party designated in the
applicable trust indenture shall determine, in conformity with the applicable
trust indenture, in its discretion and based upon all information available to
it, whether, in the best interests of the Fund's unitholders, to retain, sell,
redeem, liquidate or dispose of a particular security. It is anticipated that,
once chosen, securities (in varying amounts, but proportionate to each other as
reflected on the initial date of deposit) will be held for the life of that
series of the Fund.
5. License Fees.
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Xxx Xxxxxx, on behalf of the Fund, hereby agrees to pay SPIAS, as
consideration for the services provided under Section __ of this Agreement, a
license fee with respect to each series of the Fund. Such annual fee shall equal
a total of fifteen basis points (.0015) of the aggregate net asset value of the
applicable series of the Fund as of the end of the initial offering period of
such series of the Fund multiplied by the S&P Securities Ratio (the "Fee"). The
term "S&P Securities Ratio" shall mean the aggregate value of the Portfolio
Securities in the initial portfolio of the applicable series of the Fund divided
by the aggregate value of all securities in the initial portfolio of such series
of the Fund at the time of creation of such series.
The Fee due SPIAS hereunder shall be paid within thirty (30) days after
the close of each calendar quarter in which it is incurred and will be based on
the average daily net assets of all series of the Fund as determined as of the
end of each calendar quarter; each such payment shall be accompanied by a
statement setting forth the basis for its calculation. If in any calendar year,
the total Fee that was paid to SPIAS with respect to all series does not at
least equal $20,000 (the "Minimum Annual Fee"), any shortfall shall be paid to
SPIAS by January 31 of the following year; provided, however, that no Minimum
Annual Fee shall be paid in any calendar year in which no series of the Fund
were in existence during such year. The Minimum Annual Fee shall be prorated in
the year that this Agreement is executed and in the year that this Agreement
terminates to give effect to the number of days in which this Agreement was in
effect during such year.
This Section 5 shall survive any termination of this Agreement
6. Consultation; Expenses.
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At Xxx Xxxxxx'x request, SPIAS will endeavor to make reasonably
available certain of its equity analysts to meet with representatives of Xxx
Xxxxxx, solely for purposes of consulting and advising Xxx Xxxxxx regarding the
methodologies used by SPIAS to select the Identified Securities. With the prior
consent of SPIAS, which consent will not be unreasonably withheld, Xxx Xxxxxx
may permit third parties associated with the operation, management or marketing
of the Fund to participate in these consultations. Each party hereto shall be
responsible for all of its own expenses incurred in connection with this
Agreement; provided, that in the event that a representative of SPIAS incurs
travel expenses (i.e., transportation, hotel, meals) in connection with the
above-described activities, Xxx Xxxxxx shall reimburse SPIAS for all such
reasonable expenses. It is understood that the only information that SPIAS shall
be required to supply in connection with Xxx Xxxxxx'x sponsorship of the Fund is
the information referred to in Section __ hereof.
7. No Agency.
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The parties acknowledge that except as otherwise expressly provided
herein or authorized by Xxx Xxxxxx, SPIAS shall have no authority to act for or
represent Xxx Xxxxxx or the Fund or the Fund's sponsors or underwriters in any
way or otherwise be deemed the agent of any of them. Neither Xxx Xxxxxx nor the
Fund are partners or joint venturers with SPIAS and nothing herein shall be
construed so as to make them partners or joint ventures or impose any liability
as such on any one of them or SPIAS.
8. Publicity.
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SPIAS shall not use the name "Xxx Xxxxxx" in any publicity release,
written communication with the media or advertising without the prior written
consent of Xxx Xxxxxx such consent not to be unreasonably withheld; provided,
however, that SPIAS may refer to SPIAS' relationship with respect to the Fund in
advertising brochures and certain publications, subject to prior review and
approval of the specific language by Xxx Xxxxxx, such approval not to be
unreasonably withheld or delayed, and provided further that SPIAS may refer to
Xxx Xxxxxx in connection with the Fund as part of general descriptions by SPIAS
of SPIAS or SPIAS' corporate parent's business at securities analysts' meetings
and similar forums. SPIAS agree in addition not to make any public disclosure
about the Fund without the prior written consent of Xxx Xxxxxx.
Xxx Xxxxxx shall protect the goodwill and reputation of SPIAS and the
Trademarks in connection with its marketing, promotion and distribution of the
Fund. Xxx Xxxxxx shall submit to SPIAS for its review and approval all
informational materials relating to the Fund that refer to SPIAS or the
Trademarks (e.g., all prospectuses, registration statements, advertisements,
brochures and other similar materials including documents required to be filed
with governmental or regulatory agencies); provided, however, that documents
previously approved by SPIAS as to which statistical information has simply been
updated need not be resubmitted to SPIAS.
Xxx Xxxxxx shall use the following notice, in substantially the form
set forth below, when referring to the Trademarks in any prospectus,
registration statement, advertisement, brochure or other similar public
information material relating to the Fund:
"`S&P 500', `Standard & Poor's 500', `S&P 500 Dividend Aristocrats
Index' and `Standard & Poor's 500 Dividend Aristocrats Index', `Standard &
Poor's' and `S&P' are trademarks of Standard & Poor's Financial Services LLC and
have been licensed for use by Xxx Xxxxxx Funds Inc. and [the series of the
Fund]. [The Fund] is not sponsored, managed, sold or promoted by SPIAS."
The foregoing notice need only refer to those Trademarks that are
actually used in the relevant informational materials.
9. Confidentiality.
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Each party hereto agrees to receive and maintain as confidential all
Confidential Information (as defined below) received from the party providing
such information (the "protected party") in connection with this Agreement and
the Fund and that it shall not use or disclose such information for its benefit
or the benefit of any of its other clients. It is expressly understood that all
Confidential Information furnished by a party pursuant to this Agreement remains
the property of that party and that all such information and copies thereof will
be returned to such party upon request. Each party shall restrict circulation
and communications of Confidential Information within its organization to only
those persons and only to the extent necessary to provide the services under
this Agreement.
Each party understands and acknowledges that the Confidential
Information has been developed or obtained by the protected party by the
investment of significant time, effort and expense, and that the Confidential
Information is a valuable, special and unique asset of the protected party which
provides the protected party with a competitive advantage. Therefore, the
Confidential Information shall be used only for the contemplated purpose and
shall not be used for any other purpose whatsoever. The Confidential Information
shall not be disclosed to any person or entity without the prior written consent
of the protected party.
If a party shall disclose or threaten to disclose Confidential
Information in violation of this Agreement, the protected party may seek an
injunction in the appropriate forum to restrain such other party from disclosing
the Confidential Information. The protected party shall not be prohibited by
this provision from pursuing other remedies, including a claim for losses and
damages.
For purposes of this Section 9, the term "Confidential Information"
means any non-public information or material which is proprietary, whether or
not owned or developed by the party, which is not (i) in the public domain, (ii)
already known by the receiving party at the time of its disclosure, or (iii)
independently developed by the receiving party; and which is obtained by any
direct or indirect contact by one party with the other. Confidential Information
includes, without limitation, the terms of this Agreement, including the license
fee formula specified in Section __ hereof (which, for avoidance of doubt Xxx
Xxxxxx specifically agrees not to include in any Registration Statement unless
specifically requested by the SEC or other regulatory body), business records
and plans, trade secrets, technical information, product design information,
computer programs and listings of either party furnished to the other. This
Section __ shall survive any termination of this Agreement.
10. Proprietary Rights.
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Xxx Xxxxxx acknowledges that the Trademarks, and the information
provided by SPIAS to Xxx Xxxxxx under this Agreement including, but not limited
to, Standard & Poor's 500 Dividend Aristocrats Index, S&P Senior Debt Ratios,
S&P Quality Rankings and SPIAS dividend coverage metrics are (i) selected,
developed and created by Standard & Poor's Financial Services LLC through the
application of methods and standards of judgment used and developed through the
expenditure of considerable work, time and money by Standard & Poor's Financial
Services LLC and (ii) are the exclusive property of Standard & Poor's Financial
Services LLC and (iii) that Standard & Poor's Financial Services LLC has and
retains all proprietary rights therein (including, but not limited to trademarks
and copyrights).
11. Limited Liability.
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SPIAS shall not be liable to Xxx Xxxxxx, the Fund or any unitholders of
the Fund for any loss or damage hereunder resulting from SPIAS' actions or
omissions to act or otherwise; provided, however, that the foregoing shall not
be effective to the extent not permitted by law. SPIAS MAKES NO WARRANTY,
EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY XXX XXXXXX, INVESTORS IN THE
FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE IDENTIFIED SECURITIES.
SPIAS EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE. Neither Xxx Xxxxxx nor SPIAS shall have any liability
to the other or to any third party for lost profits or indirect, punitive,
special or consequential damages (including lost profits) arising out of this
Agreement, even if advised of the possibility of such damages. This Section 11
shall survive any termination of this Agreement.
12. Assignment: Sale of Business.
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Neither party to this Agreement shall assign this Agreement without the
other party's consent, except that an assignment to an affiliate shall be
permitted solely upon written notice to the other party. In the event of the
sale of substantially all of the business or assets of either party, the other
party may, in its sole discretion, after reasonable time to conduct a thorough
due diligence investigation of the proposed purchaser, consent to the assignment
of this Agreement to such purchaser.
13. Amendment.
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No provision of this Agreement may be amended or waived except by an
instrument in writing executed by the parties hereto.
14. Termination.
------------
This Agreement shall continue in full force and effect until the
earliest to occur of the following (the "Termination Date"): (i) termination by
Xxx Xxxxxx by giving 30 days' prior written notice to SPIAS, to take effect
subsequent to the date that is one year from the date hereof; (ii) termination
by SPIAS by giving 30 days' prior written notice to Xxx Xxxxxx, to take effect
subsequent to the date that is one year from the date hereof; or (iii)
termination by either party at any time, upon 30 days' written notice, in the
event of the other party's willful misconduct, bad faith or negligence in the
performance of its duties, or by reason of the other party's disregard of its
obligations and duties hereunder, or if, in a party's reasonable judgment, its
professional reputation is materially damaged as a result of wrongdoing or
alleged wrongdoing by the other party's directors, officers or employees in any
matter unrelated to this Agreement. On the Termination Date, any fees due to
SPIAS under Section __ shall be prorated and shall he payable in full.
Following the Termination Date, no new series of the Fund shall be
sponsored by Xxx Xxxxxx and SPIAS shall receive all fees as they become due with
respect to all then existing series of the Fund, in accordance with Section 5
hereof. All then existing series of the Fund shall continue to be supervised by
Xxx Xxxxxx and shall remain in existence until terminated pursuant to the
applicable trust agreement. Following the Termination Date and the termination
of the last outstanding series of the Fund, each of the parties hereto shall
return to the other party all Confidential Information in its possession. This
Section 14 shall survive any termination of this Agreement.
15. Indemnification.
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Xxx Xxxxxx shall indemnify and hold harmless SPIAS, SPIAS' affiliates
and each of SPIAS' and SPIAS' affiliates' officers, employees and agents
harmless from and against any and all liability, costs and expenses (including
reasonable attorneys' fees) arising out of (i) any actual or alleged inaccuracy
or omission in any prospectus, registration statement or supplement thereto
relating to the Fund or any advertising or promotional material generated by the
Fund or Xxx Xxxxxx, (ii) any breach by Xxx Xxxxxx of any representation,
warranty, covenant or agreement contained in this Agreement, (iii) any violation
or alleged violation by Xxx Xxxxxx of any law or regulation applicable to the
Fund or to this Agreement, or (iv) the Fund; except in connection with the
circumstances described in items (i), (ii) or (iii) of the next paragraph and
subject to the last paragraph of this Section 15.
SPIAS shall indemnify and hold harmless Xxx Xxxxxx, its affiliates and
each of their officers, directors, employees and agents from and against any and
all liability, costs and expenses (including reasonable attorneys' fees) arising
out of (i) any actual or alleged inaccuracy or omission in any prospectus or
supplement thereto, registration statement of the Fund or annual post-effective
amendment updating the information in such registration statement or any
advertising or promotional material generated by the Fund or Xxx Xxxxxx, but in
each case only to the extent that the inaccuracy or omission or alleged
inaccuracy or omission was made in reliance upon and in conformity with written
information SPIAS have furnished to Xxx Xxxxxx hereunder, (ii) any breach by
SPIAS of any representation, warranty, covenant or agreement contained in this
Agreement or (iii) any violation or alleged violation by SPIAS of any law or
regulation applicable to the Fund or to this Agreement, except to the extent
such liability results from Xxx Xxxxxx'x breach of this Agreement.
A party's indemnification obligation hereunder shall be subject to the
party entitled to indemnification (i) providing it with prompt written notice of
any claim, action or proceeding giving rise to such indemnification obligation
and (ii) granting it the option of control of the defense and/or settlement of
such claim, action or proceeding. This Section 15 shall survive any termination
of this Agreement.
16. Standard & Poor's Review of Registration Statement.
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SPIAS hereby acknowledges that it has reviewed and had an opportunity
to comment upon those provisions of the Registration Statement, as amended,
specifically referring to or describing SPIAS. For purposes of the foregoing, a
draft of the Registration Statement is attached hereto as Exhibit B. SPIAS
hereby affirms that such provisions of the Registration Statement contain no
untrue statement of a material fact nor omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
17. Representations and Warranties.
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(a) SPIAS hereby represents and warrants to Xxx Xxxxxx as follows:
(1) (i) SPIAS is a subsidiary of The XxXxxx-Xxxx Companies, Inc. and
all corporate action by SPIAS and its officers, directors and
stockholders necessary for the authorization, execution and
delivery of this Agreement has been taken; and (ii) this
Agreement constitutes a valid and legally binding obligation of
SPIAS enforceable in accordance with its terms; and
(2) no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any
federal, state, local or foreign governmental authority is
required by SPIAS or The XxXxxx-Xxxx Companies, Inc. in
connection with the consummation of the transactions contemplated
by this Agreement.
(b) Xxx Xxxxxx hereby represents and warrants to SPIAS as follows:
(1) this Agreement constitutes a valid and legally binding obligation
of Xxx Xxxxxx, enforceable in accordance with its terms; all
corporate action by Xxx Xxxxxx and its officers, directors and
stockholders necessary for the authorization, execution and
delivery of this Agreement has been taken; and
(2) in its role as sponsor, it will endeavor to act so that the Fund
shall at all times comply with the description set forth in the
Registration Statement; the Fund shall not violate any applicable
law, including but not limited to banking, commodities and
securities laws.
18. Entire Agreement: Governing Law.
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This Agreement incorporates the entire understanding of the parties and
supersedes all previous agreements with respect to the subject matter hereof,
and shall be governed by and construed in accordance with the laws of the State
of New York.
19. Notices.
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All notices and other written communications specified herein shall be
in writing (which term shall at the option of the notifying party include fax)
and shall be (i) personally delivered, (ii) transmitted by first class mail,
postage prepaid, or (iii) transmitted by fax (with confirmation by first class
mail, postage prepaid) to the parties as follows:
If to SPIAS: Standard & Poor's Investment Advisory Services, LLC
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention:
Managing Director - Portfolio Services
Fax: (000) 000-0000
With a copy to: The XxXxxx-Xxxx Companies, Inc.
1221 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: Associate Genera1 Counsel
Fax: (__)_____-________
If to Xxx Xxxxxx: Xxx Xxxxxx Funds Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
With a copy to: Office of the General Counsel
Xxx Xxxxxx Funds Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000-0000
Fax: (__)_____-________
20. Severability.
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The illegality, invalidity or unenforceability of any provision of this
Agreement under the law of any jurisdiction shall not affect its legality,
validity or enforceability under the law of any other jurisdiction nor the
legality, validity or enforceability of any other provision hereof.
21. Counterparts.
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This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures were upon
the same instrument.
22. Form ADV Part II.
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Concurrently with the execution of this Agreement, Xxx Xxxxxx hereby
acknowledges receipt of Part II of SPIAS' Form ADV, as amended by SPIAS from
time to time, and as attached hereto as Exhibit C, also confirms having read and
understood the sections setting forth the various procedures and understanding
and conflicts of interest relating to Xxx Xxxxxx'x relationship to SPIAS and
SPIAS' relationship with its affiliates.
If the foregoing is in accordance with your understanding, kindly sign
and return the enclosed copy of this letter whereupon it shall become a binding
agreement between us.
Very truly yours,
XXX XXXXXX FUNDS INC,
By:
Name:
Title:
Agreed and accepted:
STANDARD & POOR'S INVESTMENT ADVISORY SERVICES, LLC
By:
Name:
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Title: Managing Director - Portfolio Advisory Services
EXHIBIT A
DIVIDEND SUSTAINABILITY PORTFOLIO METHODOLOGY
Beginning with the S&P 500 Dividend Aristocrats Index, the Xxx Xxxxxx
selects the composition of the Fund by: (1) eliminating companies with a share
price below $5 at time of selection; (2) identifying companies with an S&P
Senior Debt Ratio of BBB or higher and companies with an S&P Quality Ranking of
B or higher; (3) further selecting companies based on factors including market
capitalization, earnings over the previous 12 months, debt-to-equity, and cash
and equivalents; and (4) ranking the remaining companies by Standard & Poor's
dividend coverage metric. Dividend coverage is a proprietary cash-flow,
sector-specific metric calculated by Standard & Poor's and licensed for use by
the Xxx Xxxxxx and the Fund.
EXHIBIT B
Registration Statement
EXHIBIT C
Form ADV
[Part II and Schedule of F of Form ADV for Standard & Poor's Investment
Advisory Services LLC.]
