Exhibit 2.2
AGREEMENT FOR LICENSE OF STOCK SELECTION PROCESS
THIS AGREEMENT is made by and between The Prudential Insurance Company of
America (Prudential), organized under the laws of the State of New Jersey, with
a place of business at 000 Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000-0000, and Xxx
Xxxxxx Funds Inc. (Licensee), whose principal offices are located at 0 Xxxxxxxx
Xxxxx, X.X. Xxx 000, Xxxxxxxx Xxxxxxx, XX 00000.
WHEREAS, Prudential (as assignee) possesses certain rights in a
computer-implemented method and system for selecting stock equities for
inclusion in a strategic investment portfolio including identifying stocks
making up a preselected index and analyzing the stocks for market capitalization
and sales, according to predetermined criteria selected according to the
investment strategy which results in a sorted list of accepted stocks as more
fully described on Attachment I (the "Invention"); and
WHEREAS, Licensee desires to use and Prudential desires to license the right
to use the Inventions as a basis of the unit investment of trusts or other
products described in Attachment II. (Derivative Products to be traded,
sponsored, marketed and distributed on a public basis by Licensee or its
authorized affiliates) and to describe the Invention solely in materials
relating or referring to the Derivative Products; and
WHEREAS, Licensee is legally authorized to sponsor and distribute such
Derivative Products, and each Derivative Product will be sponsored and
distributed as legally required under applicable law;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
conditions herein contained, Licenses and Prudential, intending to be legally
bound, agree as follows:
Section 1. Term and Life of Agreement.
Section 1.1. The Term of this Agreement for a particular Derivative Product
is that stated for that Derivative product in Attachment II; thereafter, the
Term of this Agreement shall renew for subsequent one-year terms, unless either
party gives Notice to the other at least 90 days before the end of the present
Term, or otherwise terminates the Term of this Agreement as provided herein.
Section 1.2. The Life of this Agreement for a particular Derivative Product
is that stated for Derivative Product in Attachment II.
Section 2. Scope of License. Prudential hereby grants Licensee an exclusive,
non-transferable and non-sub-licensable (except as provided herein) license to
use the Invention as a basis or component of the Derivative Products which are
established by Licensee during the Term of this Agreement; provided, however,
that Prudential retains the right to use the Invention in its own derivative
products which may be distributed in any and all distribution channels.
Prudential further grants Licensee the right to use the Invention (and
descriptions thereof) solely in materials referring or relating to the
Derivative Products during the Life of this Agreement. No license is granted to
use the Invention for any other use, including as part of a news service or for
collateral products, without the advance written Consent of Prudential. During
the Life of this Agreement, no further consent of Prudential need be obtained
for use of the Invention by any syndicator or underwriter of a Derivative
Product offering, or for any secondary or other vessel of that Derivative
Product, provided such secondary or other resale, syndication, or underwriting
is legal under applicable law.
Section 3. Fees. Licensee shall pay Prudential the fees specified in
Attachment II (Fees), in immediately available United States funds. All Fees are
to be paid on a quarterly basis and are due within 30 days of the end of each
quarter. The payments shall be delivered to Prudential Securities, Inc.,
Attention: Xxxxxxx Xxxxxxx, U.I.T. Unit.
Section 4. Protection of Marks. Prudential will use reasonable efforts to
maintain and protect the value of its Invention.
Section 5. Sub-Licensees. Licensee may only sub-license the use of the
Invention by its subsidiaries or affiliates. However, Licensee shall assume all
responsibility for, and will hold harmless and indemnity Prudential against, any
action or inaction by a sub-licensee as if such action or inaction were that of
the Licensee.
Section 6. Indemnification. Prudential has filed a patent application with
respect to the Invention in the United States. In the United States, Prudential
warrants and represents that it has the right to grant the rights to use the
Invention specified in this Agreement and that the Licensee shall not infringe
any copyright, trademark, or service xxxx (Intellectual Property right) of any
third party. Prudential will defend, indemnify, and hold harmless (Indemnify)
Licensee (including its and its sub-licensee's shareholders, officers,
directors, employees, and agents) against any and all claims, demands, actions,
suits, or proceedings (Disputes) asserting that the Invention infringes any
Intellectual Property right as defined above of any third party and Prudential
will pay the third party the total amount of any award, judgment, or settlement
(including all damages however designated) awarded to such third party resulting
from the dispute to the extent caused by the failure of Prudential's warranty.
Section 7. Confidentiality. Each party shall protect information declared by
the other to be Confidential, or proprietary, including but not limited to the
computer-implemented method and system for selecting stock equities which is the
subject matter of this license. In fulfilling its confidentiality obligations,
each party shall use a reasonable standard of care, at least the same standard
of care which it uses to protect its own similar confidential or proprietary
information. All confidential or proprietary information must be conspicuously
marked Proprietary or Confidential. Information revealed orally becomes subject
to protection when related to marked written materials or when designated as
Proprietary or Confidential as long as the designation is confirmed in writing
within 10 calendar days of the designation. Either party may disclose
information to the extent demanded by a court, revealed to a government agency
with regulatory jurisdiction over the party, or in the party's regulatory
responsibilities over its members, associated persons, issuers, or others under
the Exchange Act of 1934, or similar applicable law. The obligation of
non-discourse shall not extend to: (1) information which is then already in the
possession of the party while not under a duty of non-disclosure; (2)
information which is generally known or revealed to the public or within the
applicable industry; (3) information which is revealed to the party by a third
party--unless the party knows that such third party is under a duty of
non-disclosure; or (4) information which that party develops independently of
the disclosure. Each copy, including its storage media, shall be marked with all
notices which appear on the original. The obligation of non-disclosure shall
survive for a period of three years from the date of disclosure.
Section 8. Survival of Provisions. The terms of this Agreement shall apply to
any rights that survive through the Life of this Agreement, the cancellation,
termination, or rescission of this Agreement--namely, Confidentiality,
Indemnification, and any warranties.
Section 9. Cancellation.
Section 9.1. Either party may elect, without prejudice to any other rights or
remedies, to terminate the Term of this Agreement, upon 30 days' notice with an
opportunity to cure within the stated period, if the other party has failed to
perform any material obligations under this Agreement.
Section 9.2. Either party may elect, without prejudice to any other rights or
remedies, to terminate the Term of this Agreement without notice, if a petition
in bankruptcy has been filed by or against the other party or the other party
has made an assignment for the benefit of creditors, or a receiver has been
appointed for the other party or any substantial portion of other party's
property, or the other party's or its officers or directors takes action
approving or makes an application for any of the above.
Section 9.3. Either party may elect, without prejudice to any other rights or
remedies, to terminate the Term of this Agreement with 30 days' Notice (or in
the event of an emergency, with such Notice as is practicable), if either
party's ability to perform its obligations under this Agreement is substantially
impaired by any new statute or new rule, regulation, order, opinion, judgment,
or injunction of the Securities and Exchange Commission (SEC), a court, an
arbitration panel, or governmental body or Self-Regulatory Organization with
jurisdiction over the party.
Section 10. Subsequent Parties; Limited Relationship. The Agreement shall
inure to the benefit of and shall be binding upon the parties hereto and their
respective permitted successors, or assigns. Licensee shall not assign this
Agreement (including by operation of law) without the written consent of
Prudential. Nothing in this Agreement, express or implied, is intended to or
shall (a) confer on any person other than the parties hereto, or their
respective permitted successors or assigns, any rights or remedies under or by
reason of this Agreement; (b) constitute the parties hereto as partners or
participants in a joint venture; or (c) appoint one party the agent of the
other.
Section 11. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, and supersedes
all prior negotiations, communications, writings, and understandings.
Section 12. Governing Law. This Agreement shall be deemed to have been made
in the United States, State of New York, and shall be construed and enforced in
accordance with, and the validity and performance hereof shall be governed by,
the laws of the State of New York, without reference to principles of conflicts
of laws thereof. The parties consent to submit to the jurisdiction of the courts
for or in the State of New York in connection with any action or proceeding
instituted relating to this Agreement.
Section 13. Authorization. This Agreement shall not be binding upon a party
unless executed by an authorized officer of that party. Licensee and Prudential,
and the persons executing this Agreement represent that such persons are duly
authorized by all necessary and appropriate corporate and other action to
execute the Agreement on behalf of Prudential or Licensee.
Section 14. Headings. Section Headings are included for convenience only and
are not to be used to construe or interpret this Agreement.
Section 15. Notices. All notices, invoices, and other communications required
to be given in writing under this Agreement shall be directed to the persons
identified in subsections (a) and (b) below and shall be deemed to have been
duly given upon actual receipt by the parties, or upon constructive receipt if
sent by certified mail, return receipt requested (as of the date of signature or
of first refusal of the return receipt), or by any other delivery method which
obtains a signed delivery receipt, addressed to the persons named below to the
following addresses or to such other address as any party hereto shall hereafter
specify by written notice to the other party or parties hereto:
(a) if to Licensee:
Name: Xxxxxx Xxxxxxx
Title: Vice President
Address: 0 Xxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx Xxxxxxx, XX 00000-0000
Telephone Number: (000) 000-0000
With, in the event of notices of Dispute or default, a required copy to:
Xxx Xxxxxx Funds Inc.
0 Xxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx Xxxxxxx, XX 00000-0000
Attn: Office of General Counsel
(b) if to Prudential:
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Address: Prudential Securities Incorporated
14th Floor, Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone Number: (000) 000-0000
With, in the event of notices of Dispute or default or termination, a
required copy to:
Name: Xxxxxxx Xxxxxxxxx
Title: Assistant General Counsel
Address: The Prudential Insurance Company of America
0 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Section 16. Amendment, Waiver, and Severability. Except as otherwise provided
herein, no provision of this Agreement may be amended, modified, or waived,
unless by an instrument in writing executed by a duly authorized officer of the
party against whom enforcement of such amendment, modification, or waiver is
sought (Consent).
Section 16.1. No failure on the part of Prudential or Licensee to exercise,
no delay in exercising, and no course of dealing with respect to any right,
power, or privilege under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power, or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege under this Agreement.
Section 16.2. If any of the provisions of this Agreement, or application
thereof to any person or circumstance, shall to any extent be held invalid or
unenforceable, the remainder of this Agreement, or the application of such terms
or provisions to persons or circumstances other than those as to which they are
held invalid or unenforceable, shall not be affected thereby and each such term
and provision of this Agreement shall be valid and enforceable in the fullest
extent permitted by law.
Section 17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and such counterparts
together shall constitute but one and the same instrument.
Section 18. Schedule of Attachments. The following Attachments are referred
to in this Agreement and are incorporated as if set forth in full herein. In the
event of a conflict between the Attachments and this Agreement, the Attachments
shall govern:
Attachment I Description of Invention
Attachment II Definition of Derivative Products and Prices
[This Space Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers.
XXX XXXXXX FUNDS INC. (Licensee)
By:
Name:________________________________________________
Title:_______________________________________________
Authorized Officer
Date:________________________________________________
Executed this ____ day of __________, 19__, for and on behalf of:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA (Prudential)
By:
Name:________________________________________________
Title:_______________________________________________
Authorized Officer
ATTACHMENT I
DESCRIPTION OF INVENTION
The Invention is a computer-implemented method for creating a portfolio of
equity stocks, comprising the steps of determining the composition of a
predetermined broad-based stock index by accessing a database and creating a
list of the stocks making up the index, obtaining from the database for each
stock in the index, data relating to at least market capitalization and sales of
the company issuing the stock, creating an acceptable stock list by at least
eliminating from the index list stocks having a market capitalization below a
predetermined value, and sorting the acceptable list of stocks by sales and
placing into said portfolio, until a predetermined number of stocks are reached,
a stock having the highest sales of the remaining list.
The Invention further contemplates that the predetermined value of the market
capitalization is the top twenty percent of the broad-based stock index, and
further that the broad-based stock index is the Nasdaq-100 Index.
ATTACHMENT II
DEFINITION OF DERIVATIVE PRODUCTS AND PRICES
DESCRIPTION OF PRODUCT(S)
Each Derivative Product(s) will be called The Nasdaq Strategic 10 Trust, as
described in the attached brochure. Each Derivative Product will utilize a
strategy based on the Invention to determine the stocks in the Derivative
Product. Each of the Derivative Product(s) are intended to be in the primary
offering period for three months. At this time, the Licensee intends to offer a
subsequent Derivative product every three months.
The sponsor intends to offer new series of these Derivative Products
indefinitely.
The term, life and effective date of this Agreement with respect to any
Derivative Product shall be three years from the date such Derivative Product is
created.
FEES
The Licensee agrees to pay Prudential, on behalf of all applicable Derivative
Product(s), an aggregate quarterly amount equal to 2.0 basis points on assets
held in each Derivative Product, such payments to be made within 30 days
following the end of each calendar quarter.
