Exhibit 2.2
AGREEMENT
THIS AGREEMENT, made as of this 14th day of September, 2006, by and
between Horizon Investment Services, LLC ("Horizon"), an Indiana limited
liability company, and Xxx Xxxxxx Funds Inc. ("Xxx Xxxxxx"), a Delaware
corporation.
WITNESSETH:
WHEREAS, Horizon 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 all or a portion of its assets in securities selected by
Horizon in accordance with the securities selection criteria set forth in
Exhibit A attached hereto (the "Trusts");
WHEREAS, Xxx Xxxxxx further desires the services of Horizon 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
Horizon; and
WHEREAS, Horizon 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 term of this Agreement,
Xxx Xxxxxx shall provide Horizon 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,
Horizon 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 Horizon, which approval will
not be unreasonably withheld.
(b) Horizon 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.
Horizon also agrees to review and comment upon disclosure in the Registration
Statement referred to in Section 12 hereof.
(c) Horizon 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 Horizon, which consent will not be unreasonably
withheld, Xxx Xxxxxx may permit others to participate in these consultations.
3. Horizon' Services Unique. Horizon and Xxx Xxxxxx agree that the
services to be performed by Horizon as set forth herein are unique and may not
be performed by anyone other than Horizon.
4. Fees. For the services to be performed hereunder, Xxx Xxxxxx, on
behalf of each Trust, agrees that each Trust shall pay Horizon a fee equal to
ten basis points (0.10%) of the net asset value of such Trust as of the end of
the initial offering period of such Trust. Such fee shall be paid by the trustee
of each Trust to Horizon 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) Horizon covenants and
agrees that during the term of this Agreement, but in no case less than five (5)
years from the Effective Date, neither Horizon, 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 Horizon 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) Horizon covenants and agrees that, during the Term of this
Agreement, neither Horizon 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 Horizon 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 Horizon within 15 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 Horizon, and that any services performed hereunder by
Horizon shall be as an independent contractor and not as an employee or agent of
Xxx Xxxxxx or any Trust. Horizon shall have no authority whatsoever to bind Xxx
Xxxxxx or any Trust on any agreement or obligation and Horizon agrees that
Horizon shall not hold itself out as an employee or agent of Xxx Xxxxxx or any
Trust.
8. Termination. (a) Horizon 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 Horizon that is not
remedied within ten (10) business days after written notice thereof.
(c) Horizon 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, Horizon 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 Horizon or in response to questions of the
media or others, without Xxx Xxxxxx'x prior written consent, except that Horizon
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 Horizon 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, Horizon 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 Horizon 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. Horizon 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, Horizon 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 gross negligence or willful misconduct
of Horizon.
(b) By Horizon. 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 Horizon of its
obligations hereunder, or the failure of Horizon 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 Horizon and Horizon shall defend such claim at its
expense and under its control. Horizon 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, Horizon 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. Horizon 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
Horizon 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 Horizon:
Horizon Investment Services, LLC
0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxxx
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.
0000 Xxxxxx xx xxx Xxxxxxxx
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: ______________________________
HORIZON INVESTMENT SERVICES, LLC
By:_______________________________
Name: ____________________________
Title:______________________________
EXHIBIT A
The portfolio of each Trust will primarily consist of securities issued
by companies headquartered, organized or doing business in Brazil, Russia, India
or China selected by Horizon based on such factors as may be reasonably
requested by Xxx Xxxxxx, including, but not limited to, whether the securities
trade in the United States, diversification among countries, diversification
among sectors, market capitalization, historical trading volume and rankings of
securities based on the following factors:
o Total Return for the Past Six Months - The percentage return on a
stock over most recent six months, reflecting dividends and change in
stock price.
o Total Return for the Past Twelve Months - The percentage return on a
stock over most recent twelve months, reflecting dividends and change
in stock price.
o Price/Book Value Ratio - Stock price divided by current book value per
share.
o One-Year Earnings Growth - The difference between operating earnings
per share in the most recent four quarters divided by operating
earnings per share in the four quarters one year earlier, expressed as
a percentage.
o Price/Earnings Ratio - Stock price divided by earnings per share from
operations over past four quarters.
