MASTER SELLING AND SHAREHOLDER SERVICING AGREEMENT
[ ___________, 2009]
Ladies and Gentlemen:
The undersigned distributor (the "Distributor" or "us" or "we"), which
is a member firm of the Financial Industry Regulatory Authority, Inc. ("FINRA,"
formerly the National Association of Securities Dealers, Inc.), has an agreement
with each of the funds listed in Annex A, as may be amended from time to time
(each a "Fund" and together, the "Funds"), pursuant to which it acts as a
distributor for the sale of shares of beneficial interest in the Funds
("Shares").
This Master Selling and Shareholder Servicing Agreement (the
"Agreement"), dated as of [________] and effective upon its approval by a
majority of the independent directors or trustees of the Fund or Funds (as
applicable) at an in-person meeting of the board of directors or trustees, shall
be applicable to any offering of Shares pursuant to a registration statement
filed under the Securities Act of 1933, as amended (the "Securities Act"). A
Fund may elect to offer and sell Shares on a delayed or continuous basis in
reliance on Rule 415 under Securities Act. The terms and conditions of the
Agreement shall also be applicable to any such delayed or continuous offering of
Shares.
We have delivered or will deliver to the undersigned broker-dealer (the
"Selling Agent" or "you"), for delivery to prospective purchasers of Shares,
copies of the Funds' prospectus, as amended or supplemented from time to time
(the "Prospectus"), including the Funds' required form of investor certification
(the "Investor Certification"), and other relevant written information approved
and furnished by the Funds for use by prospective purchasers in connection with
their purchase of Shares (collectively, the "Offering Documents").
We hereby appoint you as a Selling Agent with respect to the offering
of Shares, and you hereby accept such appointment, expressly upon the following
terms and conditions of the Agreement:
1. Non-Exclusive Appointment. You agree on a non-exclusive basis to use
reasonable efforts to solicit and receive offers to purchase Shares in
accordance with the terms and conditions set forth in this Agreement and the
Offering Documents. Nothing in this Agreement shall limit our right to make
other arrangements with respect to the Shares with any person, including the
appointment of other distributors or selling dealers.
2. Limitation on Activities as Selling Agent; Blue Sky. You agree to
solicit and receive offers to purchase Shares: (a) only in the jurisdictions in
which you and your
employees maintain all licenses and registrations necessary under applicable law
and regulations (including the rules of FINRA) to provide the services required
to be provided by you under this Agreement; and (b) only to U.S. persons in
states where notifications regarding the Shares have been duly filed or where no
such notifications are required or otherwise in compliance with applicable state
securities or Blue Sky laws.
We agree to inform you as to the states in which notifications of the
intention to sell Shares have been duly filed or where no such notification is
required, but we assume no responsibility or obligation as to your right to sell
Shares in any jurisdiction.
3. Qualified Investors.
(a) You will only: (i) solicit offers to purchase Shares from persons
who certify that they have a net worth of more than $1.5 million (or in the case
of an individual, a joint net worth with their spouse of more than $1.5 million)
("Qualified Investors"); and (ii) submit completed Investor Certifications to us
or another agent of the Funds on behalf of prospective investors who you have
determined, after reasonable inquiry, to be Qualified Investors.
(b) You agree that: (i) you have implemented procedures designed to
enable you to form a reasonable belief that a prospective investor is a
Qualified Investor; (ii) you will keep records (and make them available to us
promptly upon request) of the information you relied on in concluding that a
prospective investor in a Fund is a Qualified Investor; and (iii) you will
cooperate with the Securities and Exchange Commission ("SEC") in the event of
any audit or examination of the Qualified Investor status of your clients with
respect to the Shares.
(c) You understand that Shares will be subject to transfer restrictions
that permit transfers only to persons who are Qualified Investors and agree to
provide a certification to that effect. You agree that: (i) you will not make
any transfers of Shares to any of your clients unless you believe that the
client is a Qualified Investor; (ii) you have implemented procedures designed to
enable you to form a reasonable belief that any transferee of Shares who is a
client is a Qualified Investor; (iii) you will only make transfers of Shares to
an account with a broker or dealer that has entered into a selling agreement
with us; and (iv) confirmations of any transfer will include a statement
regarding the transfer restrictions applicable to the Shares.
4. Processing of Orders. Orders for Shares received from you will be
accepted through us only at the public offering price applicable to each order,
as set forth in the Prospectus. The procedure relating to the handling of orders
shall be subject to the terms of this Agreement and instructions that we or the
Funds shall forward from time to time to you. All orders are subject to
acceptance or rejection, in whole or in part, by the Distributor or the Funds in
their sole discretion. The minimum initial and subsequent purchase requirements
are as set forth in the Prospectus.
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Payment for and delivery of Shares will be made through the facilities,
and subject to the rules and procedures, of the National Securities Clearing
Corporation (NSCC) Fund Settlement, Entry and Registration Verification System
(Fund/SERV System), subject to the Funds' right to accept or reject orders for
Shares.
5. Suspension or Withdrawal of Offering. We reserve the right in our
discretion, without notice, to suspend sales or withdraw the offering of Shares
entirely or to certain persons or entities in a class or classes specified by
us.
6. SELLING AGENT'S STANDING & RELATED REPRESENTATIONS
(a) Delivery of Fund Materials, Offering Documents and Confirmations.
You agree to deliver to each of your clients making purchases a copy of the then
current Prospectus prior to the time of offering or sale. Subject to receipt of
such material from Distributor, you agree thereafter to deliver to such clients
copies of the annual and interim reports, proxy solicitation and repurchase or
tender offer materials (as applicable) of a Fund and any other communications
made by a Fund to all of its investors (collectively, "Fund Materials"). You
further agree to endeavor to obtain completed proxies from such purchasers and
to forward them to the applicable Fund. Additional copies of the Fund Materials
will be supplied to you in reasonable quantities upon request.
You represent and warrant that you are familiar with Rule 15c2-8 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), relating
to the distribution of preliminary and final prospectuses and agree that you
will comply therewith. You agree to make a record of your distribution of each
preliminary prospectus and when furnished with copies of any revised preliminary
prospectus, you will promptly forward copies thereof to each person to whom you
have theretofore distributed a preliminary prospectus. You further agree to
furnish any confirmations required pursuant to Rule 10b-10 under the Exchange
Act and provide applicable point of sale disclosure to investors concerning the
amount of all compensation received or to be received by you in connection with
the sale of Shares.
You agree that in making offers of Shares you will rely upon no
statement whatsoever, written or oral, other than the statements in the Offering
Documents delivered to you by us. You will not be authorized by a Fund to give
any information or to make any representation not contained in the Offering
Documents in connection with the sale of Shares.
(b) FINRA. You represent and warrant that you are actually engaged in
the investment banking or securities business and either are a member in good
standing of FINRA or, if you are not such a member, you are a foreign bank,
dealer or institution not eligible for membership in FINRA which agrees to make
no sales within the United States, its territories or its possessions or to
persons who are citizens thereof or residents therein, and in making other sales
to comply with all applicable FINRA Rules. If you are a member of FINRA you
agree to promptly notify us if you cease to be in good standing
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with FINRA. You further represent, by your participation in an offering of
Shares, that you have provided to us all documents and other information
required to be filed with respect to you, any related person or any person
associated with you or any such related person pursuant to the supplementary
requirements of FINRA Rule 5110 with respect to review of corporate financing to
the extent that such requirements relate to such offering of Shares.
You agree that, in connection with any purchase or sale of the Shares
wherein a selling concession, discount or other allowance is received or
granted, you will: (i) if you are a member of FINRA, comply with all applicable
interpretive material and Rules of FINRA, including, without limitation, FINRA
Conduct Rule 2740 (relating to Selling Concessions, Discounts and Other
Allowances), or (ii) if you are a foreign bank or dealer or institution not
eligible for such membership, comply with FINRA Conduct Rules 2730 (relating to
Securities Taken in Trade), 2740 (relating to Selling Concessions) and 2750
(relating to Transactions With Related Persons) as though you were such a member
and Conduct Rule 2420 (relating to Dealing with Non-Members) as it applies to a
non-member broker or dealer in a foreign country, and all other applicable rules
of FINRA.
If you are a member of FINRA, you further agree that, prior to making
an offering of Shares to any clients, you will, among other things, comply with
FINRA Conduct Rule 2310 (Recommendations to Customers (Suitability)), which
compliance shall include without limitation considering: (i) the suitability of
this investment with respect to the client's investment objectives and personal
situation, (ii) factors such as the client's personal net worth, income, age,
risk tolerance and liquidity needs, and (iii) whether the client's risk profile
is suitable for this investment.
(c) Registered Broker-Dealer. You represent that you are a broker or
dealer registered under the Exchange Act. You agree to notify us immediately if
you cease to be registered or licensed as a broker or dealer.
(d) SIPC. You agree to promptly notify us if you are not now a member
of the Securities Investor Protection Corporation or its successor ("SIPC"), or
if at any time during the term of this Agreement you cease being a member of
SIPC.
(e) Complaints; Litigation; Regulatory Proceedings. You agree to
promptly advise the Distributor if you receive notice of any client complaint,
litigation initiated or threatened, or communication by any regulatory authority
which relates to a Fund or to a transaction in Shares by you, and you agree to
provide us information and documentation thereon as we may reasonably request,
subject to confidentiality obligations.
(f) Applicable Laws and Regulations. In addition to the laws, rules and
regulations specifically referenced in this Section 6, you agree to comply with
all applicable laws, rules or regulations (including, without limitation, the
FINRA Rules) in connection with your activities under this Agreement.
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7. Anti-Money Laundering. You hereby certify that you have established
and maintain an anti-money laundering program that includes written policies,
procedures and internal controls reasonably designed to identify your clients
and have undertaken appropriate due diligence efforts to "know your customers"
in accordance with all applicable anti-money laundering laws and regulations in
your jurisdiction, including, where applicable, the USA PATRIOT Act of 2001 (the
"PATRIOT Act"), including sections 326 (Customer Identification Program), 356
(Suspicious Activity Reporting), 314 (INFORMATION SHARING), 313/319 (Foreign
Banks), 312 (Correspondent/Private Banking Accounts) and 311 (Special Measures)
of the PATRIOT Act. You represent and warrant that any money contributed to a
Fund by or on behalf of an investor introduced by you, will not be directly or
indirectly derived from activities that may contravene U.S. federal, state and
international laws and regulations, including anti-money laundering laws and
regulations. You also represent and warrant that you will screen any investor
introduced to a Fund by you against the sanctions programs administered by the
U.S. Department of Treasury's Office of Foreign Assets Control ("OFAC"),
including Executive Order 13224, Blocking Property And Prohibiting Transactions
with Persons Who Commit, Threaten to Commit, or Support Terrorism, or the Annex
thereto, as published at xxxx://xxx.xxxxx.xxx/xxxxxxx/ enforcement/ofac/
programs/terror/terror.pdf, and the OFAC list, available at
xxxx://xxx.xxxxx.xxx/ offices/ enforcement/ofac/. You further confirm that you
will monitor for suspicious activity in accordance with the requirements of the
PATRIOT Act. You agree to provide us with such information as we may reasonably
request, including but not limited to, the filling out of questionnaires,
attestations and other documents, to enable us to fulfill our obligations under
the PATRIOT Act. Upon filing a Section 314 notice you agree to comply with all
applicable requirements under the PATRIOT Act and applicable implementing
regulations concerning the use, disclosure, and security of any information that
is shared.
8. Privacy.
You acknowledge that we are subject to the privacy regulations under
Title V of the Xxxxx-Xxxxx-Xxxxxx Act, 15 U.S.C. ss. 6801 et seq., pursuant to
which regulations we are required to obtain certain undertakings from you with
regard to the privacy, use and protection of nonpublic personal financial
information of our clients or prospective clients. Therefore, notwithstanding
anything to the contrary contained in this Agreement, you agree that: (a) you
shall not disclose or use any Client Data (as defined in the last sentence of
this Section 8) except to the extent necessary to carry out your obligations
under this Agreement and for no other purpose; (b) you shall not disclose Client
Data to any third party, including, without limitation, your third party service
providers without our prior consent and an agreement in writing from the third
party to use or disclose such Client Data only to the extent necessary to carry
out your obligations under this Agreement and for no other purposes; (c) you
shall maintain, and shall require all third parties approved under subsection
(b) to maintain, effective information security measures to protect Client Data
from unauthorized disclosure or use; and (d) you shall provide us with
information regarding such security measures upon our reasonable request and
promptly provide us with information regarding any failure of such security
measures or any security breach related to Client Data. The obligations set
forth in this Section shall survive termination of the Agreement. For purposes
of this Agreement,
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Client Data means the nonpublic personal information (as defined in 15 U.S.C.
ss. 6809(4)) of the Distributor's clients or prospective clients (and/or the
Distributor's parent, affiliated or subsidiary companies) received by the
Selling Agent in connection with the performance of its obligations under the
Agreement, including, but not limited to: (a) an individual's name, address,
e-mail address, IP address, telephone number and/or social security number; (b)
the fact that an individual has a relationship with the Distributor and/or its
parent, affiliated or subsidiary companies; or (c) an individual's account
information.
9. Shareholder Services.
(a) Provision of Services. You agree to maintain accounts and provide
certain services for your clients who have purchased or otherwise acquired
Shares in an offering subject to this Agreement, including, without limitation:
(i) handling inquiries from clients regarding a Fund, including, but not limited
to, questions concerning their investments in a Fund, and reports and tax
information provided by a Fund; (ii) assisting in the enhancement of
communications between clients and a Fund; (iii) notifying a Fund of any changes
to shareholder information, such as changes of address; (iv) providing such
other information and shareholder services as may be reasonably requested by us;
(v) assisting in any transfer of Shares made in accordance with the terms of the
Prospectus; and (vi) assisting in any repurchase or tender offers conducted by
Fund (as applicable), including, but not limited to: delivering to each client
in a timely manner any applicable repurchase or tender offer material,
responding to client inquiries about procedures for tendering Shares, tendering
Shares on behalf of clients that wish to participate in the repurchase or tender
offer, remitting repurchase or tender proceeds to the appropriate clients, and
in the event the Fund is required to pro rate repurchase or tender offers,
determining correct allocations among your clients of any repurchase or tender
proceeds and any Shares not purchased in the repurchase or tender offer.
(b) Compensation. Compensation for the services performed by you
pursuant to this Section 9 is set forth in Annex B hereto, as may be amended by
the parties hereto from time to time.
10. Indemnification.
(a) You agree to indemnify and hold harmless the Distributor, the Funds
and each person affiliated with the Distributor or the Funds, and their
respective officers, directors, employees, partners and shareholders from and
against any loss, liability, claim, damage or expense (including the reasonable
cost of investigating or defending any alleged loss, liability claim, damage or
expense and reasonable counsel fees incurred in connection therewith), as
incurred, arising in connection with the performance of your obligations under
this Agreement or your breach of any of its provisions; except insofar as such
loss, liability, claim, damage, or expense is caused by the willful misfeasance,
bad faith, gross negligence or reckless disregard of the Distributor in the
performance of its obligations and duties under this Agreement.
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(b) Distributor agrees to indemnify and hold harmless Selling Agent
(for the purposes of this Section, "Selling Agent" shall mean you, your
directors, officers, employees and agents, and any person who is or may be
deemed to be a controlling person of Selling Agent) from and against any and all
losses, claims, damages, liabilities or expenses (including the reasonable costs
of investigation and attorney's fees and expenses as such expenses are incurred
by Selling Agent in any action or proceeding between the parties to this
Agreement or between Selling Agent and any third party) to which Selling Agent
may become subject, insofar as any such loss, claim, damage, liability or
expense (or action with respect thereto) arises out of or is based on any untrue
statement of a material fact contained in the Prospectus or any Offering
Document relating to an offering of Shares, or arises out of or is based on the
failure to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Distributor's obligation to indemnify and hold harmless Selling Agent
applies only with respect to such statements or omissions of material fact
relating to information about the Distributor furnished in writing by the
Distributor expressly for use in any such Prospectus or sales materials.
(c) The provisions of this Section 10 shall survive termination of this
Agreement.
11. Termination; Supplements and Amendments. This Agreement shall
continue in full force and effect until terminated by a written instrument
executed by each of the parties hereto; provided, however, that the terms and
conditions set forth in Section 9 shall continue in effect until terminated by a
written instrument setting forth the mutual agreements of the Funds and you for
the disposition of any Shares held by you for your clients' accounts. This
Agreement may be supplemented or amended by us by written notice thereof to you,
and any such supplement or amendment to this Agreement shall be effective with
respect to any offering of Shares to which this Agreement applies after the date
of such supplement or amendment. Each reference to "this Agreement" herein
shall, as appropriate, be to this Agreement as so amended and supplemented.
12. Successors and Assigns. This Agreement shall be binding on, and
inure to the benefit of, the parties hereto and the respective successors and
assigns of each of them.
13. Confidentiality. The parties agree to keep the existence and the
terms of this Agreement confidential and not to disclose such terms unless they
are made public other than due to a breach of this Section 13 by the affected
party or as required by law in which case the affected party shall give the
other parties as is reasonably practicable the right to contest such law and/or
limit the scope of the required disclosure. The Selling Agent agrees that
neither it nor any of its affiliates shall publicly disparage the Funds, the
Distributor or any of their respective affiliates.
14. Entire Agreement. This Agreement represents the entire agreement
between the parties and supersedes any prior agreement entered into by the
parties hereto (or their respective predecessors) with respect to the Shares. In
the event that any provision
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hereof is held to be invalid or unenforceable by any court of competent
jurisdiction, such invalidity shall be limited to the jurisdiction in question,
and such invalidity to the extent so held by such court. For the avoidance of
doubt, the decision of a given court having jurisdiction over a given premises
that any provision hereof is invalid or unenforceable shall have no effect
whatsoever in respect of any such premises.
15. Governing Law. This Agreement and the terms and conditions set
forth herein with respect to any offering of Shares shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Please confirm by signing and returning to us the enclosed copy of this
Agreement that your subscription to or your acceptance of any reservation of any
Shares pursuant to an offering shall constitute (i) acceptance of and agreement
to the terms and conditions of this Agreement (as may be supplemented and
amended pursuant to Section 11 hereof); together with and subject to any
supplementary terms and conditions contained in any Written Communication from
us in connection with such offering of Shares, all of which shall constitute a
binding agreement between you and us, (ii) confirmation that your
representations and warranties set forth herein are true and correct at that
time, (iii) confirmation that your agreements set forth herein hereof have been
and will be fully performed by you to the extent and at the times required
thereby and (iv) acknowledgment that you have requested and received from us
sufficient copies of the final Prospectus in order to comply with your
undertakings herein.
Very truly yours,
[------------]
By:
---------------------
Name:
Title:
---------------------------
(Name of Agent)
By:
------------------------
Name:
Title:
Address:
Telephone:
Fax:
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ANNEX A
LIST OF FUNDS
ACAP Strategic Fund
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ANNEX B
Compensation Schedule for ACAP Strategic Fund (the "Fund")
1. You shall be entitled to charge an upfront sales load of up to 3% of
an investor's investment amount.
2. In addition, you shall be entitled to receive an ongoing shareholder
servicing fee of [0.25%] (on an annualized basis) of the aggregate value of
Shares held by your clients that you have referred to the Fund (the "Shareholder
Servicing Fee"). The Shareholder Servicing Fee shall be determined as of the
last day of the month and paid [as soon as reasonably practicable, but not later
than [___] days after the end of such month].
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