Exhibit (h)(1)
DISTRIBUTION AGREEMENT
This AGREEMENT, dated this the ___ day of April, 2004, between Generation Hedge
Strategies Fund LLC, a limited liability company organized under the laws of the
State of Delaware (the "Fund"), and CAPITAL INVESTMENT GROUP, INC., a North
Carolina corporation (the "Distributor").
WITNESSETH:
WHEREAS, the Fund is engaged in business as an closed-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Fund is authorized to issue shares of beneficial interest
("Shares") according to its offering documents ("Offering Document")
representing interests in the Fund; and
WHEREAS, the Fund offers the Shares of the Fund and has registered the Shares
under the Securities Act of 1933, as amended (the "1933 Act"), pursuant to a
registration statement on Form N-2 (the "Registration Statement"), including a
prospectus (the "Prospectus"); and
WHEREAS, Distributor has agreed to act as distributor of the Shares of the Fund
for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Fund hereby appoints Distributor its exclusive agent for the
distribution of the Shares of the Fund in jurisdictions wherein such
Shares may be legally offered for sale; provided, however, that the
Fund in its absolute discretion may issue Shares of the Fund in
connection with (i) the payment or reinvestment of dividends or
distributions; (ii) any merger or consolidation of the Fund with any
other investment company or trust or any personal holding company, or
the acquisition of the assets of any such entity or another fund of the
Fund; or (iii) any offer of exchange permitted by Section 11 of the
1940 Act, or any other applicable provision.
(b) Distributor hereby accepts such appointment as exclusive agent for
the distribution of the Shares of the Fund and agrees that it will sell
the Shares as agent for the Fund at prices determined as hereinafter
provided and on the terms hereinafter set forth, all according to
applicable federal and state laws and regulations and to the Articles
of Organization ("Articles").
(c) Distributor may sell Shares of the Fund to or through qualified
securities dealers or others. Distributor will require each dealer or
other such party to conform to the provisions hereof, the Registration
Statement and the Prospectus, and applicable law; and neither
Distributor nor any such dealers or others shall withhold the placing
of purchase orders for Shares so as to make a profit thereby.
(d) Distributor shall order Shares of the Fund from the Fund only to
the extent that it shall have received purchase orders therefor.
Distributor will not make, or authorize any dealers or others to make:
(i) any short sales of Shares; or (ii) any sales of Shares to any
director or officer of the Fund or to any officer or director of
Distributor or of any corporation or association furnishing investment
advisory, managerial or supervisory services to the Fund, or to any
such corporation or association, unless such sales are made in
accordance with the then current Prospectus.
(e) Distributor is not authorized by the Fund to give any information
or make any representations regarding the Shares of any Fund, except
such information or representations as are contained in the
Registration Statement or in the current Prospectus or in
advertisements and sales literature prepared by or on behalf of the
Fund for Distributor's use.
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(f) Notwithstanding any provision hereof, the Fund may terminate,
suspend or withdraw the offering of Shares of the Fund whenever, in its
sole discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Fund Shares sold under this Agreement
shall be sold at the public offering price per Share in effect at the
time of the sale, as described in the then current Prospectus of the
Fund. The excess, if any, of the public offering price over the net
asset value of the Shares sold by Distributor as agent shall be
retained by Distributor as a commission for its services hereunder. Out
of such commission Distributor may allow commissions or concessions to
dealers and may allow them to others in its discretion in such amounts
as Distributor shall determine from time to time. Except as may be
otherwise determined by Distributor from time to time, such commissions
or concessions shall be uniform to all dealers. At no time shall the
Fund receive less than the full net asset value of the Shares,
determined in the manner set forth in the then current Prospectus.
3. Furnishing of Information. The Fund shall furnish to Distributor
copies of any information, financial statements and other documents
that Distributor may reasonably request for use in connection with the
sale of Shares of the Fund under this Agreement. The Fund shall also
make available a sufficient number of copies of the Fund's current
Prospectus for use by the Distributor.
4. Fees and Expenses.
(a) The Fund will pay or cause to be paid to the Distributor for
services provided and expenses assumed by the Distributor the fee of
$5000.00 per annum. Such fee shall be paid to the Distributor in
monthly installments.
(b) The Fund will also pay or cause to be paid the following expenses:
(i) preparation, printing and distribution to shareholders of the
Prospectus; (ii) preparation, printing and distribution of reports and
other communications to shareholders; (iii) registration of the Shares
under the federal securities laws; (iv) qualification of the Shares for
sale in certain states; (v) qualification of the Fund as a dealer or
broker under state law as well as qualification of the Fund as an
entity authorized to do business in certain states; (vi) maintaining
facilities for the issue and transfer of Shares; (vii) supplying
information, prices and other data to be furnished by the Fund under
this Agreement; (viii) certain taxes applicable to the sale or delivery
of the Shares or certificates therefore, and (ix) such other
compensation to the Distributor as the directors of the Fund may
authorize, from time to time, in their sole discretion.
(c) Except to the extent such expenses are borne by the Fund,
Distributor will pay or cause to be paid the following expenses: (i)
payments to sales representatives of the Distributor and to securities
dealers and others in respect of the sale of Shares of the Fund; (ii)
payment of compensation to and expenses of employees of the Distributor
and any of its affiliates to the extent they engage in or support
distribution of Fund's Shares or render shareholder support services
not otherwise provided by the Fund's transfer agent, administrator, or
custodian, including, but not limited to, answering routine inquiries
regarding a Fund, processing shareholder transactions, and providing
such other shareholder services as the Fund may reasonably request;
(iii) formulation and implementation of marketing and promotional
activities, including, but not limited to, direct mail promotions and
television, radio, newspaper, magazine and other mass media
advertising; (iv) preparation, printing and distribution of sales
literature and of Prospectuses and reports of the Fund for recipients
other than existing shareholders of a Fund; and (v) obtaining such
information, analyses and reports with respect to marketing and
promotional activities as the Fund may, from time to time, reasonably
request.
5. Repurchase of Shares. Distributor as agent and for the account of
the Fund may repurchase Shares of the Fund offered for resale to it.
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6. Indemnification by the Fund. In absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of Distributor, the Fund agrees to indemnify
Distributor and its officers and partners against any and all claims,
demands, liabilities and expenses that Distributor may incur under the
1933 Act, or common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in the
Registration Statement or any Prospectus or in any advertisements or
sales literature prepared by or on behalf of the Fund for Distributor's
use, or any omission to state a material fact therein, the omission of
which makes any statement contained therein misleading, unless such
statement or omission was made in reliance upon and in conformity with
information furnished to the Fund in connection therewith by or on
behalf of Distributor. Nothing herein contained shall require the Fund
to take any action contrary to any provision of its Agreement and
Articles or any applicable statute or regulation.
7. Indemnification by Distributor. Distributor agrees to indemnify the
Fund and its officers and directors against any and all claims,
demands, liabilities and expenses which the Fund may incur under the
1933 Act, or common law or otherwise, arising out of or based upon (i)
any alleged untrue statement of a material fact contained in the
Registration Statement or any Prospectus or in any advertisements or
sales literature prepared by or on behalf of the Distributor regarding
the Fund for Distributor's use, or any omission to state a material
fact therein, the omission of which makes any statement contained
therein misleading, if such statement or omission was made in reliance
upon and in conformity with information furnished to the Fund in
connection therewith by or on behalf of Distributor; or (ii) any act or
deed of Distributor or its sales representatives, or securities dealers
and others authorized to sell Fund Shares hereunder, or their sales
representatives, that has not been authorized by the Fund in any
Prospectus or by this Agreement.
8. Term and Termination.
(a) This Agreement shall become effective upon the commencement of
operations of each Fund as set forth in the attached appendix. Unless
terminated as herein provided, with respect to the Fund, this Agreement
shall continue in effect for two years from the date of the Fund's
commencement of operations and, with respect to the Fund, shall
continue in full force and effect for successive periods of one year
thereafter, but only so long as each such continuance is approved (i)
by either the directors of the Fund or by vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of the Fund
and, in either event, (ii) by vote of a majority of the directors of
the Fund who are not parties to this Agreement or interested persons
(as defined in the 0000 Xxx) of any such party and who have no direct
or indirect financial interest in this Agreement ("Independent
Directors"), cast at a meeting called for the purpose of voting on such
approval.
(b) With respect to the Fund, this Agreement may be terminated at any
time without the payment of any penalty by vote of the directors of the
Fund or a majority of the Independent Directors or by vote of a
majority of the outstanding voting securities (as defined in the 0000
Xxx) of the Fund or by Distributor, on sixty days' written notice to
the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Subcontract. The Distributor may, at its expense and with the
approval of the directors of the Fund, appoint another firm or company
as its sub-distributor or agent. The Distributor shall not, however, be
relieved of any of its obligations under this Agreement by the
appointment of such sub-distributor or agent.
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10. Limitation of Liability. The obligations of the Fund hereunder
shall not be binding upon any of the directors, officers or
shareholders of the Fund personally, but shall bind only the assets and
property of the Fund. The term "Fund" means and refers to the directors
from time to time serving under the Agreement and Articles of the Fund.
The execution and delivery of this Agreement has been authorized by the
directors of the Fund, and this Agreement has been signed on behalf of
the Fund by an authorized officer of the Fund, acting as such and not
individually, and neither such authorization by such directors of the
Fund nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the assets and property
of the Fund as provided in the Agreement and Articles of the Fund.
11. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Distributor hereby agrees that all
records which it maintains for the Fund are the property of the Fund
and further agrees to surrender promptly to the Fund any of such
records upon the Fund's request.
12. Notices. Notices of any kind to be given to the Fund hereunder by
the Distributor shall be in writing and shall be duly given if mailed
or delivered to the Generation Hedge Strategies Fund LLC, 000 Xxxxxxx
Xxxxxx, Xxxxxxxxx, XX 00000, or to such other address or to such
individual as shall be so specified by the Fund to the Distributor.
Notices of any kind to be given to the Distributor hereunder by the
Fund shall be in writing and shall be duly given if mailed or delivered
to the Capital Investment Group, Inc., X.X. Xxx 0000, Xxxxx Xxxxx, XX
00000, or at such other address or to such individual as shall be so
specified by the Distributor to the Fund. Notices shall be effective
upon delivery.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
GENERATION HEDGE STRATEGIES FUND LLC
Attest:
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Name:
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Title: By:
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Name:
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Title: President
CAPITAL INVESTMENT GROUP, INC.
Attest:
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Name:
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Title: By:
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Name:
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Title:
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APPENDIX A
Dated as of April __, 2004
Date Fund commenced operations:
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