AGREEMENT
THIS AGREEMENT, made as of this 20th day of July, 2007, by and between
Stanford Group Company ("Stanford"), a Texas corporation, and Xxx Xxxxxx Funds
Inc. ("Xxx Xxxxxx"), a Delaware corporation.
WITNESSETH:
WHEREAS, Stanford is an investment adviser registered under the
Investment Advisers Act of 1940, as amended (the "Advisers Act");
WHEREAS, Xxx Xxxxxx sponsors, underwrites and distributes a wide array
of unit investment trusts ("UITs");
WHEREAS, Xxx Xxxxxx desires to establish one or more UITs that will
each initially invest a portion of its assets in securities selected by Stanford
in accordance with the securities selection criteria set forth in Exhibit A
attached hereto (the "Trusts");
WHEREAS, Xxx Xxxxxx further desires the services of Stanford in
advising and consulting with Xxx Xxxxxx with respect to securities selection in
accordance with the description of the securities selection criteria set forth
in Exhibit A attached hereto, and the investment concerns and strategies of
Stanford;
Whereas, Stanford is willing to provide the aforesaid services to Xxx
Xxxxxx under the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Identification of Consultation on Securities. (a) During the term of
this Agreement, Xxx Xxxxxx shall provide Stanford with reasonable advance notice
of the filing of each registration statement (inclusive of any post-effective
amendments) pertaining to a Trust ("Registration Statement") and, subject to the
foregoing, Stanford will provide to Xxx Xxxxxx within ten (10) days of Xxx
Xxxxxx'x written request a list of all securities that fit within the parameters
described in Exhibit A in connection with each Trust (the "Identified
Securities"). Such Identified Securities will be deposited in the related
Trust's portfolio (the "Portfolio Securities"); provided, however, that Xxx
Xxxxxx reserves the right to modify the initial Portfolio Securities based upon
all information available to it, including, among other factors, market
capitalization and liquidity considerations, subject to the prior approval of
Stanford, which approval will not be unreasonably withheld.
(b) Stanford will provide Xxx Xxxxxx with information reasonably
requested by Xxx Xxxxxx about the Portfolio Securities for use by Xxx Xxxxxx in
preparing updated prospectus disclosure and marketing materials for the Trusts.
Stanford also agrees to review and comment upon disclosure in the Registration
Statement referred to in Section 12 hereof.
(c) Stanford shall periodically consult with and advise Xxx Xxxxxx
regarding the securities or methodologies used to identify those securities for
inclusion in any Trust at a time and place mutually agreed upon by the parties.
With the prior consent of Stanford, which consent will not be unreasonably
withheld, Xxx Xxxxxx may permit others to participate in these consultations.
2. Stanford's Services Unique. Stanford and Xxx Xxxxxx agree that the
services to be performed by Stanford as set forth herein are unique and may not
be performed by anyone other than Stanford.
3. Fees. For the services to be performed hereunder, Xxx Xxxxxx, on
behalf of each Trust, agrees that each Trust shall pay Stanford a fee equal to
fifteen basis points (0.15%) of the net asset value of such Trust as of the end
of the initial offering period of such Trust multiplied by the Stanford
Securities Ratio. The term "Stanford Securities Ratio" shall mean the aggregate
value of the Portfolio Securities in the initial portfolio of a Trust divided by
the aggregate value of all securities in the initial portfolio of such Trust at
the time of creation of the trust. Such fee shall be paid by the trustee of each
Trust to Stanford within thirty (30) days following the end of the initial
offering period of such Trust.
4. Term. Subject to Section 8, the term of this Agreement shall
commence and continue as described in this Section. The term of this Agreement
shall commence as of the date set forth above (the "Effective Date") and shall
remain in full force and effect until the fifth (5th) anniversary of the
Effective Date, unless this Agreement is terminated earlier as provided herein
(such term being referred to as the "Initial Term"). At the end of the Initial
Term, this Agreement shall automatically renew for successive one-year periods
unless a party terminates the Agreement by providing the other party a written
notice to that effect ninety (90) days prior to the end of the then-current
term.
5. Exclusivity and Right of First Refusal. (a) Stanford covenants and
agrees that during the term of this Agreement, neither Stanford, nor anyone
acting on its behalf, shall be associated or involved with any unit investment
trust sponsor, distributor or seller in the creation, marketing or sale of any
non-exchange traded unit investment trust based on the selection criteria set
forth in Exhibit A within the United States other than the Trusts. Nothing
contained herein shall limit the right of Stanford to sponsor, create, market or
promote any investment company (as defined in Section 3(a)(1) of the Investment
Company Act of 1940, as amended, disregarding the provisions of Sections 3(b)
and 3(c) thereof), other than a unit investment trust.
(b) Stanford covenants and agrees that, during the Term of this
Agreement, neither Stanford nor anyone acting on its behalf shall be associated
or involved with anyone in connection with the creation, administration,
management, marketing or sale of any unit investment trust within the United
States unless Stanford shall have first promptly delivered a bona fide written
offer to Xxx Xxxxxx to act as sponsor, depositor, adviser, promoter, underwriter
or distributor of such a unit investment trust and Xxx Xxxxxx shall have failed
to provide a written acceptance of such offer to Stanford within 30 days after
receipt of such offer.
6. Assignment. Neither of the parties hereto may assign (including
within the meaning of the Advisers Act) its respective rights and obligations
under this Agreement without the prior written consent of the other.
7. Relationship of the Parties. The parties understand and agree that
this Agreement shall not be deemed to create any partnership or joint venture
between Xxx Xxxxxx and Stanford, and that any services performed hereunder by
Stanford shall be as an independent contractor and not as an employee or agent
of Xxx Xxxxxx or any Trust. Stanford shall have no authority whatsoever to bind
Xxx Xxxxxx or any Trust on any agreement or obligation and Stanford agrees that
Stanford shall not hold itself out as an employee or agent of Xxx Xxxxxx or any
Trust.
8. Termination. (a) Stanford may terminate this Agreement immediately
upon a material breach of any representation, warranty or covenant of Xxx Xxxxxx
that is not remedied within ten (10) business days after written notice.
(b) Xxx Xxxxxx may terminate this Agreement immediately upon a material
breach of any representation, warranty or covenant of Stanford that is not
remedied within ten (10) business days after written notice thereof.
(c) Stanford and Xxx Xxxxxx may terminate this Agreement at any time
upon the execution by all parties of a written agreement to that effect.
(d) Any termination under Section 8(a) or (b) shall not limit any other
remedies for breach the non-breaching party may have at law or in equity.
Notwithstanding any provision of this Agreement to the contrary, termination of
this Agreement shall not constitute termination of any Trust.
9. Confidentiality. (a) The parties agree that certain material and
information which has or may come into the possession or knowledge of each in
connection with this Agreement or the performance hereof (e.g., proprietary
business information (including, without limitation, the names and addresses or
other personal information of customers, distributors, information providers and
suppliers)), consists of confidential and proprietary data whose disclosure to
or use by third parties would be damaging. In addition, the parties may
reasonably designate, by notice in writing delivered to the other parties, other
information as being confidential or a trade secret.
(b) All such proprietary or confidential information of each party
hereto shall be kept secret by the other party to the degree it keeps secret its
own confidential or proprietary information. Such information belonging to a
party shall not be disclosed by the other party to its employees, officers,
agents, service providers or affiliates, except on a need-to-know basis, but may
be disclosed by such other party to State, Federal, or other governmental
agencies, authorities or courts as required by law or regulation, or upon their
order or request provided prompt notice of such order or request is given by
such party to the party to which such information belongs, if such notice is
legally permitted.
(c) No information that would otherwise be proprietary or confidential
for purposes of this Agreement pursuant to subsections (a) or (b) above shall be
subject to the restrictions on disclosure imposed by this Section in the event
and to the extent that (i) such information is in, or becomes part of, the
public domain otherwise than through the fault of a party to which such
information does not belong, (ii) such information was known to such party prior
to the execution of this Agreement, or (iii) such information was revealed to
such party by a third person, and which the receiving party reasonably believes
has been obtained by such third person not in violation of any existing
confidentiality or non-disclosure agreement.
(d) Each party acknowledges and agrees that a breach of this Section 9
would cause a permanent and irreparable damage for which money damages would be
an inadequate remedy. Therefore, each party shall be entitled to seek equitable
relief (including injunction and specific performance) in the event of any
breach of the provisions of this Section 9, in addition to all other remedies
available to such party at law or in equity.
(e) The covenants set forth in this Section 9 shall survive the
termination of this Agreement.
10. Covenants. During the period of this Agreement and for as long as
any of the Trusts remains outstanding, each of the parties agree to:
(a) comply with all codes, regulations and laws applicable to the
performance of its obligations under this Agreement and obtain or have obtained
all necessary permits, licenses and other authorizations necessary for such
performance and maintain its business reputation and good standing;
(b) take such other actions as the other party hereto may reasonably
request to more effectively carry out its obligations under this Agreement; and
(c) do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations, including, but not by way of limitation,
obtaining all consents, approvals, and authorizations, required of such party in
connection with the consummation of the transactions contemplated by this
Agreement. No party shall take any action that would be expected to result in
any of its representations and warranties set forth in this Agreement being or
becoming untrue in any material respect.
In addition, Stanford may not refer to Xxx Xxxxxx or any affiliates in
any kind of communications, whether oral, written or electronic, or otherwise,
and whether in a piece published by Stanford or in response to questions of the
media or others, without Xxx Xxxxxx'x prior written consent, except that
Stanford may describe the services provided under this Agreement to the extent
that such services are described in any registration statement or other publicly
available materials produced by Xxx Xxxxxx.
11. Indemnification. (a) By Xxx Xxxxxx. In the event any claim is
brought by any third party against Stanford or any of its affiliates that
relates to, arises out of or is based upon the performance by Xxx Xxxxxx of its
obligations hereunder, or the failure of Xxx Xxxxxx, or any of Xxx Xxxxxx'x
affiliates, as the case may be, to comply with any law, rule or regulation
relating to the Trusts, or use of the Stanford Property by the Trusts, Xxx
Xxxxxx, or any of Xxx Xxxxxx'x affiliates, Stanford or any of its affiliates
shall promptly notify Xxx Xxxxxx and Xxx Xxxxxx shall defend such claim at Xxx
Xxxxxx'x expense and under Xxx Xxxxxx'x control. Xxx Xxxxxx shall indemnify and
hold harmless Stanford or any of its affiliates against any judgment, liability,
loss, cost or damage (including litigation costs and reasonable attorneys' fees)
arising from or related to such claim whether or not such claim is successful.
Stanford or any of its affiliates shall have the right, at their expense, to
participate in the defense of such claim through counsel of their own choosing;
provided, however, that Xxx Xxxxxx shall not be required to pay any settlement
amount that it has not approved in advance. Notwithstanding the above, Neither
Stanford nor any of its affiliates shall be entitled to indemnification
hereunder to the extent that the judgment, liability, loss, cost or damage
arising from a claim for which indemnification is sought hereunder results
directly or indirectly from the gross negligence or willful misconduct of
Stanford or any of its affiliates.
(b) By Stanford. In the event any claim is brought by any third party
against Xxx Xxxxxx, any of the Trusts, or any of Xxx Xxxxxx'x affiliates that
relates to, arises out of or is based upon the performance by Stanford of its
obligations hereunder, or the failure of Stanford to comply with any law, rule
or regulation, Xxx Xxxxxx, the Trusts, or Xxx Xxxxxx'x affiliates, as the case
may be, shall promptly notify Stanford and Stanford shall defend such claim at
its expense and under its control. Stanford shall indemnify and hold harmless
Xxx Xxxxxx, the Trusts, and Xxx Xxxxxx'x affiliates against any judgment,
liability, loss, cost or damage (including litigation costs and reasonable
attorneys' fees) arising from or related to such claim, whether or not such
claim is successful. Xxx Xxxxxx, the Trusts, or Xxx Xxxxxx'x affiliates, as the
case may be, shall have the right, at their expense, to participate in the
defense of such claim through counsel of their own choosing; provided, however,
Stanford shall not be required to pay any settlement amount that it has not
approved in advance. Notwithstanding the above, neither Xxx Xxxxxx, the Trusts,
nor any of Xxx Xxxxxx'x affiliates shall be entitled to indemnification
hereunder to the extent that the judgment, liability, loss, cost or damage
arising from a claim for which indemnification is sought hereunder results
directly or indirectly from the gross negligence or willful misconduct of Xxx
Xxxxxx, the Trusts, or Xxx Xxxxxx'x affiliates.
(c) The indemnifications set forth in this Section 11 shall survive the
termination of this Agreement for any cause whatsoever.
12. Review of Registration Statement. Stanford 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
Stanford and the securities selection process.
13. Governing Law. This Agreement shall be interpreted, construed and
enforced in accordance with the laws of the State of New York without reference
to or inclusion of the principles of choice of law or conflicts of law of that
jurisdiction. It is the intent of the parties that the substantive law of the
State of New York govern this Agreement and not the law of any other
jurisdiction incorporated through choice of law or conflicts of law principles.
14. Waiver of Breach. The failure of a party to require the performance
of any term of this Agreement or the waiver of a party of any breach hereunder
shall not prevent a subsequent enforcement of such term nor be deemed a waiver
of any subsequent breach.
15. Scope of Agreement. This document constitutes the entire Agreement
of the parties with respect to the subject matter hereof, supersedes all prior
oral or written agreements with respect to the subject matter hereof, and can be
amended only by a writing executed by all of the parties.
16. Notices. All notices from any party to the other pursuant to this
Agreement shall be in writing or by facsimile transmission and shall be sent to
the following addresses, or to such addresses as the parties hereto may be
notified in writing from time to time:
If to Stanford:
Stanford Group Company
0000 Xxxxxxxxxx
Xxxxxxx, XX 00000
If to Xxx Xxxxxx:
0 Xxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx Xxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxx
With copy to :
Xxx Xxxxxx Funds Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Office of the General Counsel
Notices shall be deemed given upon receipt via certified mail,
overnight courier, or hand delivery.
17. Severability. In the event that any provision of this Agreement or
application hereof to any person or in any circumstances shall be determined to
be invalid, unlawful, or unenforceable to any extent, the remainder of this
Agreement, and the application of any provision to persons or circumstances
other than those as to which it is determined to be unlawful, invalid or
enforceable, shall not be affected thereby, and each remaining provision of this
Agreement shall continue to be valid and may be enforced to the fullest extent
permitted by law.
18. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed by a duly authorized representative thereof as of the
date first above written.
XXX XXXXXX FUNDS INC.
By:________________________________
Name: _____________________________
Title: ______________________________
STANFORD GROUP COMPANY
By:_______________________________
Name: ____________________________
Title:______________________________
EXHIBIT A
Each Trust will invest a portion, but not all, of its initial portfolio in
stocks of companies diversified in the foreign and domestic water sector,
including, but not limited to, water and wastewater equipment/treatment
companies, water utilities, infrastructure companies and infrastructure services
firms, and water rights/water resources companies.
