EXHIBIT 2.2
AGREEMENT
THIS AGREEMENT, made as of this 20th day of May, 2003, by Xxxxx &
Steers Capital Management Inc. ("C&S") a New York corporation, and Xxx Xxxxxx
Funds Inc. ("Xxx Xxxxxx"), a Delaware corporation.
WITNESSETH:
WHEREAS, C&S is a registered investment adviser 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 substantially all of its assets in securities selected by
C&S in accordance with the securities selection criteria set forth in Exhibit A
attached hereto (the "Trusts").
WHEREAS, Xxx Xxxxxx further desires the services of C&S 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 C&S's investment concerns and strategies;
WHEREAS, Xxx Xxxxxx, on behalf of the Trusts, desires the services of
C&S to act as Supervisor, as defined by the trust indenture governing a
particular Trust, in connection with the Trusts; and
WHEREAS, C&S 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 Securities. (a) During the period commencing on
the date hereof and ending on the Termination Date (as defined in Section 5
hereof), Xxx Xxxxxx shall provide C&S 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, C&S 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
C&S, which approval will not be unreasonably withheld.
(b) C&S 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
Trust(s). C&S also agrees to review and comment upon disclosure in the
Registration Statement referred to in Section 13 hereof.
(c) C&S 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 C&S, which consent will not be
unreasonably withheld, Xxx Xxxxxx may permit others to participate in these
consultations.
2. Supervision. C&S shall act as Supervisor, as defined by the trust
agreement governing the particular Trust, in accordance with such trust
agreement. The terms of the trust agreement applicable to the Supervisor are
incorporated herein by reference. In the event that any provision in this
Agreement conflicts in any way with the trust agreement governing a particular
Trust, the provisions of the trust agreement in respect thereof shall control.
3. C&S' Services Unique. C&S and Xxx Xxxxxx agree that the services
to be performed by C&S to the Trusts as set forth in Sections 1 and 2 herein are
unique and may not be performed by anyone other than C&S.
4. Fees. (a) For the services to be performed pursuant to Section 1,
Xxx Xxxxxx, on behalf of each Trust, agrees that each Trust shall pay C&S a fee
equal to seventeen and one-half basis points (0.175%) of the aggregate
Evaluation Price of all assets comprising such UIT as of the end of the primary
offering period of each Trust (the "Portfolio Consultant Fee"). Such fee shall
be paid by the trustee of the particular Trust to C&S within fifteen (15) days
following the end of the primary offering period of such Trust. "Evaluation
Price" as used in this Section 4 shall mean the "current net asset value" as
defined in the Investment Company Act of 1940, as amended.
(b) For the services to be performed pursuant to Section 2, Xxx
Xxxxxx, on behalf of each Trust, agrees that each Trust shall pay C&S in
accordance with the terms of the trust agreement governing such Trust (the
"Supervisor Fee").
5. Term. Subject to the provisions of Section 10, the term of this
Agreement shall be the earlier of five (5) years from the date first above
written or until all of the Trusts are liquidated and their legal existences
terminated ("Termination Date"). In this connection, Xxx Xxxxxx agrees that it
will not originate any Trust beyond the fifth anniversary of the date first
above written.
6. Exclusivity and Right of First Refusal. (a) C&S covenants and agrees
that, for three (3) years from the date first above written, neither C&S, nor
anyone acting on its behalf, shall be associated or involved with any UIT
sponsor, distributor or seller in the creation, marketing or sale of any
non-exchange traded UIT selected using parameters substantially similar to those
described in Exhibit A within the United States other than the Trusts.
(b) C&S covenants and agrees that, for three (3) years from the date
first above written, neither C&S, nor anyone acting on its behalf, shall be
associated or involved with any UIT sponsor, distributor or seller in the
creation, marketing or sale of any non-exchange-traded UIT within the
United States other than the Trusts in connection with the creation,
marketing or promotion of any non-exchange-traded UIT within the United
States other than the Trusts unless C&S shall have first promptly delivered
a bona fide written offer to Xxx Xxxxxx to act as sponsor, depositor,
promoter, underwriter or distributor of such a UIT and Xxx Xxxxxx shall
have failed to provide a written acceptance of such offer to C&S within 15
days after receipt of such offer. The preceding sentence shall not limit
the provisions of either the immediately preceding Section 6(a) of this
Agreement or section 7 of that certain agreement between C&S and Xxx Xxxxxx
dated October 22, 2001, entitled "Exclusivity".
(c) Nothing contained herein shall limit the right of C&S 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 UIT.
7. Assignment. None of the parties hereto may assign (including within
the meaning of the Investment Advisers Act of 1940, as amended) its respective
rights and obligations under this Agreement without the prior written consent
of the others.
8. 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 C&S, and that the services performed hereunder by C&S
shall be as an independent contractor and not as an employee or agent of Xxx
Xxxxxx. C&S shall have no authority whatsoever to bind Xxx Xxxxxx on any
agreement or obligation and C&S agrees that C&S shall not hold itself out as an
employee or agent of Xxx Xxxxxx.
9. Termination. (a) C&S 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 C&S that is
not remedied within ten (10) business days after written notice thereof.
(c) C&S and Xxx Xxxxxx may terminate this Agreement at any time upon
the execution by all parties of a written agreement to that effect.
Any termination under Section 9(a) or (b) shall not limit any other
remedies for breach the non-breaching parties 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.
10. 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 customer, 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 every other party to the degree it keeps
secret its own confidential or proprietary information. Such information
belonging to any party shall not be disclosed by another 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 other 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
10 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 10, in addition
to all other remedies available to such party at law or in equity.
(e) The covenants set forth in this Section 10 shall survive the
termination of this Agreement.
11. 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 parties 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, C&S 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 C&S piece or in response to questions of the media or
others, without Xxx Xxxxxx'x prior written consent.
12. Indemnification. (a) In the event any claim is brought by any third
party against C&S 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, C&S 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 C&S
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. C&S 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, C&S shall not 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
negligence or willful misconduct of C&S, or C&S actions or inactions in
connection with its role as Supervisor.
(b) 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 C&S of their
respective obligations hereunder, or the failure of C&S 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 C&S and C&S shall
defend such claim at its expense and under its control. C&S 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, C&S 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
negligence or willful misconduct of Xxx Xxxxxx, the Trusts, or Xxx Xxxxxx'x
affiliates.
(c) The indemnifications set forth in this Section 12 shall survive
the termination of this Agreement for any cause whatsoever.
13. C&S's Review of Registration Statement. C&S 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
C&S and the securities selection process. For purposes of the foregoing, a draft
of the Registration Statement is attached hereto as Exhibit B.
14. Arbitration and Governing Law. (a) Any dispute, controversy or
difference which may arise among the parties hereto out of or in connection with
this Agreement or any agreement entered into among the parties pursuant to this
Agreement or any breach hereof or thereof shall, if possible, be settled by
mutual consultation in good faith between senior executive officers of the
parties having requisite decision making authority. Such mutual consultation
shall take place as soon as practicable after the receipt by one party of a
written notice from another party describing the dispute, controversy or
difference between them. Except as provided in Section 10, in the event that the
dispute is not resolved to the satisfaction of such parties by such consultation
within 90 days of the written notice given to one party pursuant to this Section
14(a), either party to the dispute may initiate the arbitration procedure set
forth in Section 14(b) of this Agreement. Such arbitration shall be the
exclusive method for resolving any such unresolved disputes.
(b) Subject to Section 14(a), all disputes arising in connection with
this Agreement that are not resolved as contemplated by Section 14(a),
shall be finally settled under the Rules of the American Arbitration
Association (the "Rules") by one or more arbitrators appointed in
accordance with the said Rules. Such arbitration shall be held in Chicago,
Illinois in accordance with the Rules.
(c) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Illinois.
(d) An arbitration award rendered shall be final and binding upon the
parties hereto. The amount of the costs of any such arbitration and by whom
they shall be paid will be determined as part of the arbitration. Judgment
upon such arbitration award may be entered in any court having jurisdiction
over the parties or their assets.
15. Waiver of Breach. The failure of any party to require the
performance of any term of this Agreement or the waiver of any party of any
breach hereunder shall not prevent a subsequent enforcement of such term nor be
deemed a waiver of any subsequent breach.
16. 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, and can be amended only by a writing executed by
all of the parties.
17. 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 C&S:
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx XxXxxxx
With copy to Office of General Counsel
If to Xxx Xxxxxx:
0 Xxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx Xxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxx
With copy to Office of General Counsel
Notices shall be deemed given upon receipt via certified mail,
overnight courier, or hand delivery.
18. 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.
19. Conflicts. In the event that any provision in this Agreement
conflicts in any way with the trust agreement governing a particular Trust, the
provisions of the trust agreement in respect thereof shall control.
20. Counterparts. This Agreement may be executed in two or more
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____________________________________________________
XXXXX & STEERS CAPITAL MANAGEMENT INC.
By
Name_____________________________________________________
Title____________________________________________________
EXHIBIT A
DESCRIPTION OF SECURITY SELECTION CRITERIA
The selection of preferred securities is based on both fundamental
factors and relative value comparisons. Xxxxx & Steers uses a proprietary
selection model to screen for relative value among over one thousand securities.
Since preferred securities typically are subordinated instruments, Xxxxx &
Steers carefully weighs both issuer credit fundamentals and security standing
within the corporate and capital structure. In addition, security
diversification by issuer and industry is also accorded a key role in portfolio
construction.
Xxxxx & Steers' selection process is based on both fundamental factors
and relative value comparisons. The firm utilizes both "top-down" and
"bottom-up" processes to uncover value.
Xxxxx & Steers implements macroeconomic and sector views to make
"top-down" judgments as to likely relative performance of securities within
particular industry sectors. We form our views by assessing such factors as
economic indicators, earnings trends, sector fundamentals, security supply and
demand, regulatory issues, and U.S. and global events.
From an individual security, or "bottom-up" perspective, we place
primary emphasis on fundamental credit quality. Xxxxx & Steers closely monitors
earnings, revenue, capitalization and other trends. And since preferred
securities typically are subordinated instruments, we also carefully weigh
individual security standing within each issuer's corporate and capital
structure. Xxxxx & Steers utilizes a proprietary electronic model that allows
the firm simultaneously to sort for value among hundreds of issues. Xxxxx &
Steers' model also adjusts for issuer call features and other structural
factors, in addition to liquidity and other market factors.
The portfolio construction process incorporates broader issues, such as
diversification by issuer and industry, a focus on call protection, and credit
quality and liquidity.
EXHIBIT B
REGISTRATION STATEMENT
Attached
