AGREEMENT
THIS AGREEMENT, made as of this 15th day of October, 2003, by and among
Xxxxxx Xxxxxxx, Jr. ("Birinyi"), an individual, and Birinyi Associates, Inc.
("BAI"), a Connecticut corporation, and Xxx Xxxxxx Funds Inc. ("Xxx Xxxxxx"), a
Delaware corporation.
W I T N E S S E T H:
WHEREAS, BAI is a registered investment adviser under the Investment Advisers
Act of 1940, as amended (the "Advisers Act") and Birinyi is a "supervised
person" of an investment adviser within the meaning of Section 203A(b) of the
Advisers Act; and
WHEREAS, all proprietary rights to the service marks "Birinyi" and "Xxxxxx
Xxxxxxx" are owned by Birinyi and BAI; and
WHEREAS, Xxx Xxxxxx sponsors, underwrites and distributes a wide array of
unit investment trusts ("UITs"); and
WHEREAS, Xxx Xxxxxx desires to establish one or more UITs that will each
initially invest substantially all of its assets in securities selected by
Birinyi in accordance with the securities selection criteria set forth in
Exhibit A attached hereto (the "Birinyi UITs").
WHEREAS, Xxx Xxxxxx, on behalf of the Birinyi UITs, desires to license the
name "Birinyi" for use in connection with the Birinyi UITs; and
WHEREAS, Xxx Xxxxxx further desires the services of Birinyi and BAI 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 Birinyi's investment concerns and strategies;
and
WHEREAS, Birinyi and BAI are willing to license the name "Birinyi" to Xxx
Xxxxxx and the Birinyi UITs solely for use in connection with the Birinyi UITs,
and Birinyi and BAI are 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. Grant of License. (a) Subject to the terms and conditions of this
Agreement, Birinyi and BAI hereby grant to Xxx Xxxxxx and the Birinyi UITs, a
license to use and refer within the United States to the service marks "Birinyi"
and "Xxxxxx Xxxxxxx" (collectively, the "Birinyi Property") solely in connection
with the Birinyi UITs, in such manner as may be deemed to be appropriate by Xxx
Xxxxxx, subject to the prior approval of Birinyi and BAI, which approval shall
not be unreasonably withheld.
(b) Each of Birinyi and BAI covenants and agrees that no person or
entity other than Xxx Xxxxxx shall need to obtain any other license with respect
to the Birinyi Property in connection with the initial sale of the Birinyi UITs
or subsequent resales of the Birinyi UITs in the secondary market.
(c) Each of Birinyi and BAI represents and warrants that they own all
proprietary rights in and to the Birinyi Property for use in connection with the
creation and distribution of unit investment trusts and in connection with the
provision of investment advisory services and have the right to license the same
to Xxx Xxxxxx and the Birinyi UITs pursuant to this Agreement.
(d) Except as otherwise specifically provided herein, Birinyi and BAI
reserve all rights to the Birinyi Property, and this Agreement shall not be
construed to transfer to Xxx Xxxxxx any ownership right to, or equity interest
in, any of the Birinyi Property.
2. 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 Birinyi and BAI with reasonable advance notice
of the filing of each registration statement on Form S-6 pertaining to a Birinyi
UIT ("Registration Statement") and, subject to the foregoing, Birinyi and BAI
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 Birinyi UIT (the "Identified Securities"). Such list of
Identified Securities will be deposited in the related Birinyi UIT's portfolio
(the "Portfolio Securities"); provided 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 Birinyi and BAI, which approval
will not be unreasonably withheld.
(b) Birinyi and BAI will provide Xxx Xxxxxx with information reasonably
requested by Xxx Xxxxxx about Birinyi, BAI and the Portfolio Securities for use
by Xxx Xxxxxx in preparing updated prospectus disclosure and marketing materials
for the Birinyi UITs. Birinyi and BAI also agree to review and comment upon
disclosure in the Registration Statement referred to in Section 14 hereof.
(c) Neither Birinyi nor BAI shall have any obligation to provide
ongoing research with regard to the Portfolio Securities. Xxx Xxxxxx or such
other party designated by the trust agreement governing a particular Birinyi UIT
shall determine, in its sole discretion and based upon all information available
to it, whether, in the interest of a particular Birinyi UIT, to retain, sell,
redeem, liquidate or dispose of a particular Portfolio Security. It is
anticipated that, once chosen, the Portfolio Securities (in varying amounts, but
proportionate to each other as reflected on the initial date of deposit) will be
held for the life of the related Birinyi UIT.
(d) Birinyi and BAI will provide general advice to and will consult
with Xxx Xxxxxx with respect to the investment principles, concerns and
strategies of Birinyi and BAI. Birinyi and BAI shall also periodically consult
with and advise Xxx Xxxxxx regarding the securities or methodologies used to
identify those securities for inclusion in any Birinyi UIT at a time and place
mutually agreed upon by the parties. With the prior consent of Birinyi and BAI,
which consent will not be unreasonably withheld, Xxx Xxxxxx may permit others to
participate in these consultations.
(e) Each of Birinyi and BAI covenants and agrees that he or it will not
describe Xxx Xxxxxx'x services or recommend or specifically endorse Xxx Xxxxxx
or its investment products. Further, each of Birinyi and BAI covenants and
agrees that he or it will not, except to the extent incident to the conduct of
BAI's business (i) recommend or endorse specific securities (except, in the case
of Birinyi, where no compensation is paid to Birinyi in connection therewith);
(ii) become involved in any financial services offered by Xxx Xxxxxx or any
other broker-dealer, including (A) opening, maintaining, administering, or
closing customer brokerage accounts with Xxx Xxxxxx or any other broker-dealer;
(B) soliciting, processing, or facilitating securities transactions relating to
customer brokerage accounts with Xxx Xxxxxx or any other broker-dealer; (C)
extending credit to any customer for the purpose of purchasing securities
through, or carrying securities with, Xxx Xxxxxx or any other broker-dealer; (D)
answering customer inquiries or engaging in negotiations involving brokerage
accounts or securities transactions; (E) accepting customer securities orders,
selecting among broker-dealers or routing orders to markets for execution; (F)
handling funds or securities of customers of Xxx Xxxxxx or any other
broker-dealer, or effecting clearance or settlement of customer securities
trades; or (G) resolving or attempting to resolve any problems, discrepancies,
or disputes involving customer accounts of Xxx Xxxxxx or any other broker-dealer
or related transactions; provided, however, that nothing herein shall be deemed
to govern or limit Birinyi's or BAI's actions with respect to parties other than
Xxx Xxxxxx except when such actions relate to, or could reasonably be deemed to
relate to, Xxx Xxxxxx or the Birinyi UITs.
(f) Each of Birinyi and BAI represents and warrants that neither it nor
any of its officers, directors or employees (i) is subject to an order of the
SEC issued under section 15(b) of the Securities Exchange Act of 1934 ("Exchange
Act"), (ii) has been convicted within the previous ten years of any felony or
misdemeanor involving conduct described in section 15(b)(4) of the Exchange Act,
(iii) has been found by the SEC to have engaged, or has been convicted of
engaging, in any of the conduct specified in paragraphs (B), (D) or (E) of
section 15(b)(4) of the Exchange Act, or (iv) has been the subject of an order,
judgment or decree described in section 15(b)(4)(C) of the Exchange Act. This
representation shall survive the termination of this Agreement for so long as
Xxx Xxxxxx is obligated to make payments to the Birinyi or BAI hereunder.
(g) Xxx Xxxxxx shall reimburse BAI and Birinyi for all appropriate and
reasonable out-of-pocket travel expenses incurred by BAI and Birinyi in the
performance of the services for which receipts or other documentary evidence is
submitted.
4. Birinyi Services Unique. BAI, Birinyi and Xxx Xxxxxx agree that
the services to be performed by Birinyi on behalf of BAI set forth in Section 2
herein are unique and may not be performed by anyone other than Birinyi.
5. Fees. (a) For the license granted pursuant to Section 1, Xxx
Xxxxxx, on behalf of each Birinyi UIT, agrees that each Birinyi UIT shall pay
BAI a fee equal to five basis points (0.05%) of the aggregate Evaluation Price
of all assets comprising such Birinyi UIT as of the end of the primary offering
period of such Birinyi UIT (the "License Fee"). Such fee shall be paid by the
trustee of a Birinyi UIT to BAI within fifteen (15) days following the end of
the primary offering period of such Birinyi UIT. "Evaluation Price" as used in
this Section 5 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 Birinyi UIT, agrees that each Birinyi UIT shall pay BAI a fee
equal to ten basis points (0.10%) of the aggregate Evaluation Price of all
assets comprising such UIT as of the end of the primary offering period of such
Birinyi UIT (the "Portfolio Consultant Fee"). Such fee shall be paid by the
trustee of a Birinyi UIT to BAI within fifteen (15) days following the end of
the primary offering period of such Birinyi UIT.
(c) Notwithstanding the foregoing, in the event the aggregate fees
earned by BAI pursuant to subsections (a) and (b) above with respect to the
first Birinyi UIT offered to the public in reliance on this Agreement do not
reach $50,000, Xxx Xxxxxx hereby agrees to pay BAI an amount equal to the
difference between $50,000 and the aggregate fees earned by BAI pursuant to
subsections (a) and (b) above with respect to such Birinyi UIT.
6. Term. Subject to the provisions of Section 10, the term of this
Agreement shall be the earlier of three (3) years from the date first above
written or until all of the Birinyi UITs are liquidated and their legal
existences terminated ("Termination Date"). In this connection, Xxx Xxxxxx
agrees that it will not deposit any Birinyi UIT beyond the third anniversary of
the date first above written.
7. Exclusivity. Each of Birinyi and BAI covenants and agrees that, for
three (3) years from the date first above written, neither Birinyi nor BAI, or
anyone acting on behalf of any of the aforesaid parties shall take any action to
market or promote any UIT within the United States other than the Birinyi UITs
or shall permit the use of any of the Birinyi Property in connection with the
creation, marketing or promotion of any UIT within the United States other than
the Birinyi UITs. Nothing contained herein shall limit the right of Birinyi or
BAI 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.
8. Assignment. None of the parties hereto may assign (including within
the meaning of the Investment Advisers Act of 1940, as amended) his or its
respective rights and obligations under this Agreement without the prior written
consent of the others.
9. Relationship of the Parties. The parties understand and agree that
this Agreement shall not be deemed to create any partnership between Xxx Xxxxxx
and any of Birinyi or BAI, and that the services performed hereunder by Birinyi
shall be as an independent contractor and not as an employee or agent of Xxx
Xxxxxx. Birinyi shall have no authority whatsoever to bind Xxx Xxxxxx on any
agreement or obligation and agrees that neither Birinyi nor any other employee
or agent of BAI shall hold itself or himself out as an employee or agent of Xxx
Xxxxxx.
10. Termination. (a) Either of Birinyi or BAI 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 Birinyi or BAI that is not
remedied within ten (10) business days after written notice thereof.
(c) Birinyi, BAI 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 10(a) or 10(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 Birinyi
UIT or any license granted hereunder to any Birinyi UIT then in existence.
11. 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 of
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 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 11
would cause a permanent and irreparable damage for which money damages would be
an inadequate remedy. Therefore, each party shall be entitled to equitable
relief (including injunction and specific performance) in the event of any
breach of the provisions of this Section 11, in addition to all other remedies
available to such party at law or in equity.
(e) The covenants set forth in this Section 11 shall survive the
termination of this Agreement for any cause whatsoever and shall continue until
the later of (i) the third anniversary of the date of this Agreement or (ii) the
second anniversary of the date of liquidation and termination of the legal
existence of all of the Birinyi UITs.
12. Covenants. During the period of this Agreement and for as long as
any of the Birinyi UITs 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;
(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.
13. Indemnification. (a) By Xxx Xxxxxx. In the event any claim is
brought by any third party against Birinyi or BAI 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, any of the Birinyi UITs or any of Xxx Xxxxxx'x
affiliates, as the case may be, to comply with any law, rule or regulation,
Birinyi or BAI, as the case may be, 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 Birinyi and BAI 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. Birinyi or BAI, 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, that Xxx Xxxxxx shall not be
required to pay any settlement amount that it has not approved in advance.
Notwithstanding the above, neither Birinyi nor BAI 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
Birinyi or BAI.
(b) By Birinyi or BAI. In the event any claim is brought by any third
party against Xxx Xxxxxx, any of the Birinyi UITs, or any of Xxx Xxxxxx'x
affiliates that relates to, arises out of or is based upon the performance by
Birinyi or BAI, as the case may be, of their respective obligations hereunder,
or the failure of Birinyi or BAI, as the case may be, to comply with any law,
rule or regulation, Xxx Xxxxxx, the Birinyi UITs, or Xxx Xxxxxx'x affiliates, as
the case may be, shall promptly notify Birinyi or BAI, as the case may be, and
the party so notified shall defend such claim at its expense and under its
control. Birinyi and BAI, jointly and severally, shall indemnify and hold
harmless Xxx Xxxxxx, the Birinyi UITs, 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 Birinyi UITs, 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, that neither of Birinyi or BAI shall be required to pay any
settlement amount that it has not approved in advance. Notwithstanding the
above, neither Xxx Xxxxxx, the Birinyi UITs, 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 Birinyi UITs, or Xxx Xxxxxx'x affiliates.
(c) Survival. The indemnifications set forth in this Section 13 shall
survive the termination of this Agreement for any cause whatsoever.
14. Birinyi and BAI's Review of Registration Statement. Birinyi and BAI
hereby acknowledge that he and it have reviewed and had an opportunity to
comment upon those provisions of the Registration Statement, as amended,
specifically referring to or describing BAI, Birinyi and his stock selection
process. For purposes of the foregoing, a draft of the Registration Statement is
attached hereto as Exhibit X. Xxx Xxxxxx, upon and by the filing of each
Registration Statement related to a particular Birinyi UIT, hereby affirms that
such provisions of a particular Registration Statement contain no untrue
statement of a material fact nor omits 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.
15. 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 Paragraph 11, 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 Paragraph 15(a), either party to the dispute may initiate the arbitration
procedure set forth in Paragraph 15(b) of this Agreement. Such arbitration shall
be the exclusive method for resolving any such unresolved disputes.
(b) Subject to Paragraph 15(a), all disputes arising in connection with
this Agreement that are not resolved as contemplated by Paragraph 15(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 New York, New York 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 New York.
(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.
16. 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.
17. 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.
18. Notices. All notices from any party to the others 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 Birinyi or BAI:
00 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Jr.
With copy to:
Xxxx Xxxxx & Xxxxxxx LLP
0 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx III
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.
19. 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.
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:___________________________________________________
--------------------------------------------------------------------------------
XXXXXX XXXXXXX, JR.
BIRINYI ASSOCIATES, INC.
By:
Name:____________________________________________________
Title:___________________________________________________
EXHIBIT A
DESCRIPTION OF STOCK SELECTION CRITERIA
The process of stock selection employed by Xxxxxx Xxxxxxx and Birinyi
Associates is based on money flow analysis of individual stock trades, commonly
known as "ticker tape reading". Although this approach is one of the oldest
forms of market analysis. Birinyi uses modern technology to read the stock
exchange ticker tape. By discriminating between upticks and downticks and
analyzing every single transaction, the computer can highlight those situations
where investors are quietly buying or selling but in such a way as to not
necessarily disturb the price which would alert traders to the fact that buying
(or selling) is present. The thesis is that the market discounts significant
future events and hence the idea of tape reading or money flows attempts to
discern those situations where the market itself - by reflecting the activity of
investors - is anticipating future, positive developments.
EXHIBIT B
REGISTRATION STATEMENT
Attached
