Exhibit (h)(2)
FORM OF SELLING GROUP AGREEMENT
Selling Group Agreement
Xxxxxxx Distributors, Inc.
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Dear Financial Services Firm:
As principal underwriter and distributor, we invite you to join a
Selling Group for the distribution of units of the funds identified on Schedule
A hereto (each herein called a "Fund"), as Schedule A may be amended from time
to time, but only in those states or jurisdictions in which the units of the
Fund may legally be offered for sale. As exclusive agent of the Fund, we offer
to sell to you units of the Fund on the following terms:
1. In all sales of these units to the public you shall act as dealer
for your own account, and in no transaction shall you have any authority to act
as agent for the issuer, for us or for any other member of the Selling Group.
2. Orders received from you will be accepted by us only at the public
offering price applicable to each order, as established by the Fund's then
currently effective prospectus ("Prospectus"), subject to a discount, commission
or other concession, if any, as provided in the Prospectus. Upon receipt from
you of any order to purchase units of the Fund, we shall confirm to you in
writing or by wire to be followed by a confirmation in writing. Additional
instructions may be forwarded to you from time to time. All orders are subject
to acceptance or rejection by us in our sole discretion.
3. You may offer and sell units to your customers only at the public
offering price determined in the manner described in the Prospectus. The public
offering price is the net asset value per share as provided in the applicable
Prospectus plus, if applicable, a sales charge from which you shall receive a
discount as provided in the Prospectus, except with respect to units sold during
the initial offering period, as defined in the Prospectus, which shall be
offered and sold at the price set forth therein. You shall receive a sales
commission, if applicable, equal to a percentage of the amount invested as
provided in the Prospectus. You shall receive a distribution fee and/or services
fee, if applicable, as provided in the Prospectus, which fee shall be payable
with respect to such assets, for such periods and at such intervals as are from
time to time specified by us and the Fund. The discounts or other concessions to
which you may be entitled in connection with sales to your customers pursuant to
any special features of the Fund (such as cumulative discounts, letters of
intent, etc., the terms of which shall be as described in the Prospectus and
related forms) shall be in accordance with the terms of such features. Our
liability to you with respect to the payment of any distribution and/or service
fee is limited to the
proceeds received by us from the Fund under any distribution or service plan
with respect to any class of units of the Fund, and you waive any right you may
have to payment of any such fee until we are in receipt of the proceeds from the
Fund that are attributable to investments in the Fund by your customers.
4. By accepting this agreement, you agree:
(a) To purchase units only from us or from your customers.
(b) That you will purchase units from us only to cover purchase
orders already received from your customers, or for your own bona fide
investments.
(c) That you will not purchase units from your customers at a price
lower than the applicable repurchase price, as applicable, established by or for
the Fund. You may, however, sell units for the account of your customer to the
Fund, or to us as agent for the Fund, at the applicable repurchase price
currently quoted by or for the Fund and charge your customer a fair fee for
handling the transaction.
(d) That you will not withhold placing with us orders received from
your customers so as to profit yourself as a result of such withholding.
5. We will not accept from you any conditional orders for units.
6. If any units confirmed to you under the terms of this agreement are
repurchased by the Fund or by us as agent for the Fund, or are tendered for
repurchase, within seven business days after the date of confirmation of the
original purchase order, you shall forthwith refund to us the full discount,
commission, finder's fee or other concession, if any, allowed or paid to you on
such units.
7. Payment for units ordered from us shall be in New York clearing
house funds and must be received by the Fund's designated agent within seven
days after our acceptance of your order (or such shorter time period as may be
required by applicable regulations). If such payment is not received, we reserve
the right, without notice, forthwith to cancel the sale or, at our option, to
sell the units ordered back to the Fund, in which case we may hold you
responsible for any loss, including loss of profit suffered by us as a result of
your failure to make such payment.
8. Units sold to you hereunder shall be available in negotiable form
for delivery against payment, unless other instructions have been given.
9. All sales will be made subject to our receipt of units from the
Fund. We reserve the right, in our discretion, without notice, to suspend sales
or withdraw the offering of units entirely. Upon our direction, we reserve the
right to modify, cancel or change the terms of this agreement, upon 15 days'
prior written notice to you. Also, the sales charges, discounts,
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commissions or other concessions, and fees of any kind provided for hereunder
are subject to change at any time by the Fund and upon our direction.
10. All communications to us should be sent to the following address:
Xxxxxxx Distributors, Inc., 000 Xxxxx Xxxxxxxxx Xxxxx, Xxxxxxx, XX 00000. Any
notice to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.
11. This agreement will be governed by the laws of the State of New
York without reference to the choice of law principles thereof. The courts of
the State of New York are to have non-exclusive jurisdiction to settle any
disputes which may arise out of or in connection with this agreement and
accordingly any legal action or proceedings arising out of or in connection with
this agreement ("Proceedings") may be brought in such courts. You hereby
irrevocably submit to the jurisdiction of the courts of the State of New York
and hereby waive any objection to Proceedings in such courts, whether on the
grounds that the Proceedings have been brought in an inconvenient forum or
otherwise. This agreement is subject to the Prospectus from time to time in
effect, and, in the event of a conflict, the terms of the Prospectus shall
control.
12. References herein to the "Prospectus" shall mean the prospectus and
statement of additional information of the Fund as from time to time in effect.
Any changes, modifications or additions reflected in any such Prospectus shall
be effective on the date of such Prospectus (or supplement thereto) unless
specified otherwise.
13. This agreement is subject to the Additional Stipulations and
Conditions appended hereto, all of which are a part of this agreement.
Xxxxxxx Distributors, Inc.
By:__________________________________
Authorized Signature
Title: ______________________________
________________________________________________________________________________
PLEASE COMPLETE THE INFORMATION BELOW:
ACCEPTED AND CONFIRMED BY THE UNDERSIGNED FINANCIAL SERVICES FIRM
_________________________________ __________________________________________
Printed Firm Name Address
_________________________________ __________________________________________
Authorized Signature Area Code and Telephone Number
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_________________________________ __________________________________________
Name and Title Area Code and Facsimile Number
_____________________
Dated:
ADDITIONAL STIPULATIONS AND CONDITIONS
14. No person is authorized to make any representations concerning
units of the Fund except those contained in the Prospectus and in printed
information subsequently issued by the Fund or by us as information supplemental
to the Prospectus. If you wish to use your own advertising with respect to the
Fund, all such advertising must be approved by us or by the Fund prior to use.
You shall be responsible for any required filing of such advertising.
15. Your acceptance of this agreement constitutes a representation (i)
that you are a registered security dealer and a member in good standing of the
National Association of Securities Dealers, Inc. and that you agree to comply
with all state and federal laws, rules and regulations applicable to
transactions hereunder and to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., or (ii) if you are offering and selling
units of the Fund only in jurisdictions outside of the several states,
territories and possessions of the United States and are not otherwise required
to be a member of the National Association of Securities Dealers, Inc., that you
nevertheless agree to conduct your business in accordance with the spirit of the
Conduct Rules of the National Association of Securities Dealers, Inc., and to
observe the laws and regulations of the applicable jurisdiction. You likewise
agree that you will not offer to sell units of the Fund in any state or other
jurisdiction in which it may not lawfully be offered for sale. You agree that
you shall deliver a Prospectus to each of your customers who purchases units of
the Fund prior to or accompanied by confirmation of each such purchase, copies
of which shall be supplied to you in reasonable quantity upon your request.
16. You shall make available an account for each of your customers
through the Fund and shall provide such office space and equipment, telephone
facilities, personnel and literature distribution as is necessary or appropriate
for providing information and services to your customer. Such services and
assistance may include, but not be limited to, the provision of personal,
continuing services to your customers who are investors in the Fund ("members"),
establishment and maintenance of member accounts and records, receiving,
aggregating and processing purchase and repurchase transactions, maintaining
retirement plan accounts and providing and maintaining retirement plan records,
communicating periodically with members and providing information and responding
to questions about the Fund, the units, the availability of units in any
continuous offering, and repurchase offers, and handling correspondence from
members about their accounts, acting as the sole unit-holder of record and
nominee for members, obtaining and maintaining certifications with respect to
investor qualifications and unit transfer restrictions, assisting the Fund or
any agent of the Fund in monitoring or enforcing the investor qualification
requirements and unit transfer restrictions, providing beneficial owners with
account statements, processing distribution payments, issuing members reports
and transaction
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confirmations, providing subaccounting services for units held beneficially,
forwarding member communications to beneficial owners, receiving, tabulating and
transmitting proxies executed by beneficial owners, general account
administration activities, and such other services as may be agreed upon from
time to time and as may be permitted by applicable statute, rule, or regulation.
You agree to release, indemnify and hold harmless the Fund, us and our
representatives and agents, from any and all direct or indirect liabilities or
losses resulting from requests, directions, actions or inactions of or by you,
your officers, employees or agents regarding the purchase, repurchase or
transfer of registration of units of the Fund for accounts of you, your
customers and other members or from any unauthorized or improper use of any
on-line computer facilities. You shall prepare such periodic reports as shall
reasonably be requested by us. You shall immediately inform the Fund or us of
all written complaints received by you from Fund members relating to the
maintenance of their accounts and shall promptly answer all such complaints and
other similar correspondence. You shall provide the Fund and us on a timely
basis with such information as may be required to complete various regulatory
forms.
17. With respect to each Fund designated in Schedule A as being subject
to this paragraph, you acknowledge and agree that each of your customers on
whose behalf you purchase units of the Fund will be an (i) investor who is an
"Eligible Investor" as that term is defined in the Registration Statement, and
(ii) obtain and comply with any investor certification requirements set forth in
the Fund's Registration Statement and maintain on file a validly executed
investor certification with respect to each such customer's status as an
"Eligible Investor." You shall assist us or the Fund as is necessary in the
monitoring and enforcement of the Fund's unit ownership qualification
requirements and unit transfer restrictions, including providing copies of
member certifications or other documentation as may be necessary to determine
the status of members.
18. As a result of the necessity to compute the amount of any early
withdrawal charge due with respect to the repurchase of units, if applicable,
you may not hold units of the Fund imposing such a charge in an account
registered in your name or in the name of your nominee for the benefit of
certain of your customers except with our prior written consent. Except as
otherwise permitted by us, units of the Fund owned by a member must be in a
separately identifiable account for such member.
19. Each Fund may be divided into one or more classes of units, certain
of which may only be available to investment advisory clients of ours. Future
classes of units may be offered at net asset value and may or may not have an
initial sales charge, an early withdrawal charge, an asset-based services fee,
and/or a conversion feature. Please see each Fund's Prospectus for a more
complete description of a particular Fund's classes of units available and the
distinctions between the classes of units. This agreement shall apply to any
present or future classes of units permitted to be sold by you.
It is important to investors not only to choose a Fund appropriate for
their investment objectives, but also to choose the appropriate share class,
when available, based on the amount invested and the expected duration of the
investment. To assist investors in these decisions, we
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may institute policies with respect to orders for units of the Fund that would
apply to each broker/dealer that distributes units of the Fund, and would became
a part of this agreement upon inclusion in the Prospectus.
Appropriate supervisory personnel within your organization must ensure
that all employees receiving investor inquiries about the purchase of units of
the Fund make any required suitability determination with respect to the
prospective investment and advise the investor of the available pricing
structures offered by the Fund if applicable and the impact of choosing one
method over another, including breakpoints and the availability, if any, of
letters of intent, combined purchases and cumulative discounts. In some
instances it may be appropriate for a supervisory person to discuss a purchase
with the investor.
20. Units of the Fund may be subject to significant transfer
restrictions, as set forth in the Prospectus. These may include, but are not
limited to, restrictions prohibiting the transfer of units to individuals who
are not "Eligible Investors" as defined in the Prospectus, and prohibiting the
transfer of units to individuals who would not hold the units through an
intermediary that has entered into a selling group agreement with us or our
delegate. You acknowledge and agree that you will effect transfer of units of a
Fund only in compliance with such transfer restrictions.
21. This agreement shall be in substitution of any prior selling group
agreement between you and us regarding these units. The payment of related
distribution and/or services fees, if any, shall be subject to the distribution
and/or services plans adopted by the Fund with respect to each class of units.
22. Schedule A hereto may be amended from time to time, effective upon
mailing of such amended Schedule to you. Your acceptance of the amended Schedule
is deemed with respect to a particular Fund upon placement by you of an order
for units of that Fund.
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SCHEDULE A
Schedule designating the investment companies with respect to which
this Agreement relates.
DB Hedge Strategies Fund LLC*
_________________
* Units of this Fund may only be purchased by "Eligible Investors" as set
forth in paragraph 17 of this agreement and are subject to transfer
restrictions.
