Exhibit 2(h)
DISTRIBUTION AGREEMENT
March __, 2002
To: Funds Distributor, Inc.
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: __________, [title]
From: Xxxxxxxxxx Partners Absolute Return Fund LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Re: Distribution Agreement (the "Agreement")
Ladies and Gentlemen:
This is to confirm that, in consideration of the agreements and terms and
conditions hereinafter contained, Xxxxxxxxxx Partners Absolute Return Fund LLC
(the "Company") has agreed that you, Funds Distributor, Inc. ("FDI") shall be,
for the period of this Agreement, the distributor of interests of the Company.
For purposes of this Agreement, the term "Interests" shall mean the authorized
interests of the Company.
1. Services as Distributor
1.1 You will act as agent for the distribution of Interests covered by,
and in accordance with, the registration statement ("Registration
Statement") and prospectus ("Prospectus") of the Company then in effect
under the Securities Act of 1933, as amended ("Securities Act"), and will
transmit promptly any orders received by you for purchase or redemption of
Interests to the transfer agent for the Company of which the Company has
notified you in writing. You will undertake and discharge your obligations
hereunder as an independent contractor and shall have no authority or power
to obligate or bind us by your actions, conduct or contracts except that
you are authorized to accept orders for the purchase or repurchase of the
Interests as our agent. You may appoint sub-agents or distribute through
dealers (each of which, a "Sub-Agent") as you may determine from time to
time, but this Agreement shall not be construed as authorizing any dealer
or other person to accept orders for sale or repurchase of Interests of the
Company on our behalf or otherwise act as our agent for any purpose.
1.2 You agree to use appropriate efforts to solicit orders for the sale
of Interests. It is contemplated that you may enter into sales or servicing
agreements with securities dealers, financial institutions and other
industry professionals, such as investment advisors, accountants and estate
planning firms, and in so doing you will act only on your own behalf as
principal. You agree to use appropriate efforts to solicit orders for the
sale of the Interests and will undertake such advertising and promotion as
you believe
1
reasonable in connection with such solicitation. The Company understands
that you and your affiliates are now and may in the future be the
distributor(s) of the shares of interests of other investment companies
including those having investment objectives similar to those of the
Company. The Company further understands the investors and potential
investors in the Company may invest in shares of interests of such other
investment companies. The Company agrees that Distributor's duties to such
other investment companies shall not be deemed in conflict with its duties
to the Company.
1.3 You shall act as distributor of Interests in compliance with all
applicable laws, rules and regulations, including, without limitations, the
Investment Company Act of 1940, as amended ("Investment Company Act"), the
Securities Act, the Securities Exchange Act of 1934, as amended and the
National Association of Securities Dealers, Inc.'s ("NASD") Conduct Rules,
Constitution and By-Laws. You represent and warrant that you are a
broker-dealer registered with the Securities and Exchange Commission
("SEC")and that you are registered with the relevant securities regulatory
agencies in all fifty states, the District of Columbia and Puerto Rico. You
also represent and warrant that you are a member of the NASD.
1.4 FDI shall obtain appropriate representations and warranties from
each Sub-Agent to the effect that such person or entity (i) is duly
registered with the proper regulatory organizations, including the SEC and
NASD, (ii) has procedures in place to comply with relevant requirements of
the Securities Act and the Investment Advisers Act of 1940, as amended
("Advisers Act"), and the rules and regulations thereunder, and (iii) is
reasonably able to comply with the restrictions applicable to the offering
of Interests. Nothing set forth in any agreement with a Sub-Agent shall
relieve FDI of any of its responsibilities to the Company under this
Agreement.
1.5 Under the terms of a separate Services Agreement with the Company,
you have agreed to file Company advertisements, sales literature and other
marketing and sales related materials with the appropriate regulatory
agencies and to obtain such approvals for their use as may be required by
the SEC, the NASD and/or state securities administrators. You shall not
disseminate to the public any such materials without prior approval by
Xxxxxxxxxx Asset Management, LLC, the investment adviser of the Company.
1.6 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of
any kind deemed by the parties hereto to render sales of the Company's
Interests not in the best interest of the Company, the parties hereto may
decline to accept any orders for, or make any sales of, any Interests until
such time as those parties deem it advisable to accept such orders and to
make such sales and each party shall advise promptly advise the other party
of any such determination. Reasonable advance notice of any such
determination by the Company shall be provided to you.
1.7 The Company agrees to pay all costs and expenses in connection with
the registration of Interests under the Securities Act and all expenses in
connection with facilities for the issue and transfer of Interests and for
supplying information, prices and
2
other data to be furnished by the Company hereunder, and all expenses in
connection with the preparation and printing of the Company's Prospectuses
and statements of additional information for regulatory purposes and for
distribution to shareholders; provided however, that the Company shall not
pay any of the costs of advertising or promotion for the sale of Interests
except for the payment of Rule 12b-1 fees, if applicable, under the terms
of a written agreement.
1.8 The Company agrees to execute any and all documents and to furnish
any and all information and otherwise to take all actions which may be
reasonably necessary in the discretion of the Company's officers in
connection with the qualification of Interests for sale in such states as
you may designate to the Company and the Company may approve, and the
Company agrees to pay all expenses which may be incurred in connection with
your own qualification. You shall pay all expenses connected with your own
qualification as a dealer under state or federal laws and, except as
otherwise specifically provided in this Agreement, all other expenses
incurred by you in connection with the sale of Interests as contemplated in
this Agreement.
1.9 The Company shall furnish you from time to time, for use in
connection with the sale of Interests, such information with respect to the
Company and the Interests as you may reasonably request, all of which shall
be signed by one or more of the Company's duly authorized officers; and the
Company warrants that the statements contained in any such information,
when so signed by the Company's officers, shall be true and correct. The
Company also shall furnish you upon request with: (a) semi-annual reports
and annual audited reports of the Company's books and accounts made by
independent public accountants regularly retained by the Company, (b) such
information as may be necessary for the preparation of all advertising
materials referred to in paragraph 1.5 in accordance with applicable
regulatory requirements, including requirements governing the updating of
performance or rankings under Section 2210 of the NASD Conduct Rules and
IM-2210-3, (d) periodic balance sheets as soon as practicable after the end
of each period, and (e) from time to time such additional information
regarding the Company's financial condition as you may reasonably request.
1.10 The Company represents and warrants to you that all Registration
Statements and Prospectuses filed by the Company with the SEC under the
Securities Act, and under the Investment Company Act, with respect to the
Interests have been carefully prepared in conformity with the requirements
of said Acts and rules and regulations of the SEC thereunder. As used in
this Agreement the terms "Registration Statement" and "Prospectus" shall
mean any registration statement and prospectus, including the statement of
additional information incorporated by reference therein, filed with the
SEC and any amendments and supplements thereto which at any time shall have
been filed with the SEC. The Company represents and warrants to you that
any Registration Statement and Prospectus, when such Registration Statement
becomes effective (and upon the date of each such Prospectus), will contain
all statements required to be stated therein in conformity with said Acts
and the rules and regulations of the SEC; that all statements of fact
contained in any such Registration Statement and Prospectus will be true
and correct when such Registration Statement becomes effective (and upon
the date of each such Prospectus); and that neither any Registration
Statement nor any Prospectus
3
when such Registration Statement becomes effective (and upon the date of
each such Prospectus) will include an untrue statement of a material fact
or omit to state a material fact required to be dated therein or necessary
to make the statements therein not misleading. The Company may, but shall
not be obligated to, propose from time to time such amendment or amendments
to any Registration Statement and such supplement or supplements to any
Prospectus as, in the light of future developments, may, in the opinion of
the Company's counsel, be necessary or advisable. If the Company shall not
propose such amendment or amendments and/or supplement or supplements
within fifteen days after receipt by the Company of a written request from
you to do so stating that your internal or external legal counsel believes
such amendments or supplements to be legally required, you may, at your
option, terminate this Agreement or decline to make offers of the Company's
securities until such amendments are made. In such case, you will be held
harmless from, and indemnified by the Company for, any liability or loss
resulting from the Company's failure to implement such amendment. The
Company shall not file any material amendment to any Registration Statement
or material supplement to any Prospectus without giving you reasonable
notice thereof in advance; provided, however, that nothing contained in
this Agreement shall in any way limit the Company's right to file at any
time such amendments to any Registration Statement and/or supplements to
any Prospectus, of whatever character, as the Company may deem advisable,
such right being in all respects absolute and unconditional.
1.11 Nothing herein shall be deemed to protect you against any liability
to us or to our securities holders to which you would otherwise be subject
by reason of your willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless
disregard of your obligations and duties hereunder.
1.12 The Company authorizes FDI and dealers to use any prospectus in the
form furnished from time to time in connection with the sale of the
Interests. FDI shall not be liable for any error of judgment or mistake of
law or for any loss suffered by Company in connection with the matters to
which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on FDI's part in the performance
of its duties, from reckless disregard by FDI of its obligations and duties
under this Agreement, or from FDI's failure to comply with laws, rules and
regulations applicable to it in connection with its distribution of the
Interests.
The Company agrees to indemnify, defend and hold FDI, its several
partners and employees, and any person who controls FDI within the meaning
of Section 15 of the Securities Act, free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) that FDI, its partners and
employees or any such controlling person, may incur (a) as the result of
acting distributor for the Company; (b) under the Securities Act or under
common law or otherwise, arising out of or based upon (i) any untrue
statement, or alleged untrue statement, of a material fact contained in any
registration statement or any prospectus, (ii) any omission, or alleged
omission, to state a material fact required to be stated in any
registration statement or any prospectus or necessary to make the
statements in either thereof not misleading or (iii) any Company-related
advertisement or sales literature that
4
is not in compliance with applicable laws, rules or regulations (including,
but not limited to the Conduct Rules of the National Association of
Securities Dealers, Inc.); or (c) arising out of or based upon the
electronic processing of orders over the internet; provided, however, that
Company's agreement to indemnify FDI, its partners or employees, and any
such controlling person shall not be deemed to cover any claims, demands,
liabilities or expenses (x) arising out of any statements or
representations as are contained in any prospectus, advertisement or sales
literature and in such financial and other statements as are furnished in
writing to Company by FDI and used in the registration statement or in
corresponding statements made in the prospectus, advertisement or sales
literature, or (y) arising out of or based upon any omission or alleged
omission to state a material fact in such written information furnished by
FDI which is required to be stated or necessary to make the information not
misleading; and further provided that Company's agreement to indemnify FDI
and Company's representations and warranties hereinbefore set in paragraph
1.10 shall not be deemed to cover any liability to Company or its
shareholders to which FDI would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, by reason of FDI's reckless disregard of its material obligations
and duties under this Agreement, or by FDI's failure to comply with any
laws, rules or regulations applicable to it in connection with its
distribution of the Interests.
In the event of a formal legal action, the Company shall be provided
with written notice of an action brought against FDI, its partners and
employees, or any such controlling person, and identifying the person
against whom such action is brought, promptly following receipt of service
of the summons or other first legal process. Any failure to promptly notify
the Company will not relieve the Company from any liability which the
Company may have to the person against whom such action is brought, or to
any other person, by reason of any such untrue, or alleged untrue,
statement or omission, or alleged omission for reasons other than on
account of the Company's indemnity obligations under this section unless
that delay materially prejudices the Company's ability to defend against
the action. A failure to promptly notify the Company will relieve the
Company of its obligations under this indemnity provision if that delay
materially prejudices the Company's ability to defend against the action.
The Company will be entitled to assume the defense of any such action
brought to enforce any such claim, demand or liability if such defense
shall be conducted by counsel of good standing approved by FDI, which
approval shall not be unreasonably withheld. In the event Company elects to
assume the defense of any such suit and retain counsel of good standing so
approved by FDI, the defendant or defendants in such suit shall bear the
fees and expenses of any additional counsel retained by any of them; but in
any case where Company does not elect to assume the defense of any such
suit or in case FDI reasonably withholds approval of counsel chosen by
Company, Company will reimburse FDI, its partners and employees, or the
controlling person or persons named as defendant or defendants in such
suit, for the fees and expenses of any counsel retained by FDI or them.
Company's indemnification agreement contained in this section and Company's
representations and warranties in this Agreement shall remain operative and
in full force and effect regardless of any investigation made by or on
behalf of FDI, its partners and employees, or any controlling person, and
shall survive the delivery of any Interests.
5
This Agreement of indemnity will inure exclusively to FDI's benefit,
to the benefit of its several partners and employees, and their respective
estates, and to the benefit of the controlling persons and their
successors. The Company agrees promptly to notify FDI of the commencement
of any litigation of proceedings against Company or any of its officers or
employees which related, directly or indirectly, the issue and sale of any
Interests or which may otherwise form the basis of an obligation for
Company to indemnify hereunder.
FDI agrees to indemnify, defend and hold the Company, its several
officers and members, and any person who controls the Company within the
meaning of Section 15 of the Securities Act free and harmless from and
against any and all claims, demands, liabilities and expenses (including
the costs of investigating or defending such claims, demands or liabilities
and any reasonable counsel fees incurred in connection therewith) which the
Company, its officers or employees or any such controlling person may incur
under the Securities Act or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Company, its officers
or members or such controlling person resulting from such claims or demands
shall arise directly out any untrue, statement of a material fact contained
in information furnished in writing by FDI to Company and used in response
to required items of the registration statement or in the corresponding
statements made in the prospectus or any omission, or alleged omission, to
state material fact required to be stated in such information or necessary
to make such information not misleading.
FDI shall be provided with written notice of an action brought against
Company, its officers and members, or any such controlling person, and
identifying the person against whom such action is brought. FDI will be
entitled to assume the defense of any suit brought to enforce any such
claim, demand or liability to the extent the same is based on an alleged
misstatement or omission in written information provided by FDI, if such
defense shall be conducted by counsel of good standing approved by Company,
which approval shall not be unreasonably withheld. In the event any such
claim, demand or liability is not based solely on an alleged misstatement
or omission on FDI's part, the Company, its officers and members, or any
controlling person, shall have the right to participate in the defense, and
FDI shall have the right of first control thereof. In the event FDI elects
to assume the defense of any such suit and retain counsel of good standing
so approved by Company, the Company and any other defendant or defendants
in such suit shall bear the fees and expenses of any additional counsel
retained by any of them; but in any case where FDI does not elect to assume
the defense of any such suit, FDI will reimburse Company, its officers,
directors, employees and controlling persons or other persons named as
defendant or defendants in such suit for the reasonable fees and expenses
of any counsel retained by Company or them to the extent related to a
claim, demand, liability or expense covered under this section.
6
1.13 You acknowledge that you have received notice of and accept the
limitations on the Company's liability set forth in its Limited Liability
Company Agreement, as amended from time to time. In accordance therewith,
you agree that the Company's obligations hereunder shall be limited to the
Company and its assets and no party shall seek satisfaction of any such
obligation from any member of the Company, nor from any Trustee, officer,
employee or agent of the Company.
1.14 No Interests shall be offered by either you or the Company under
any of the provisions of this Agreement and no orders for the purchase or
sale of such Interests hereunder shall be accepted by the Company if and so
long as the effectiveness of the Registration Statement then in effect or
any necessary amendments thereto shall be suspended under any of the
provisions of the Securities Act or if and so long as a current Prospectus
as required by Section 10 of said Act, as amended, is not on file with the
SEC; provided, however, that nothing contained in this paragraph 1.14 shall
in any way restrict or have an application to or bearing upon the Company's
obligation to repurchase any Interests from any shareholder in accordance
with the provisions of the Company's Prospectus or charter documents.
1.15 The Company agrees to advise you immediately in writing:
(a) of any request by the SEC for amendments to the Registration
Statement or Prospectus then in effect or for additional
information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or
Prospectus then in effect or the initiation of any proceeding for
that purpose;
(c) of the happening of any event which makes untrue any
statement of a material fact made in the Registration Statement
or Prospectus then in effect or which requires the making of a
change in such Registration Statement or Prospectus in order to
make the statements therein not misleading; and
(d) of all material actions of the SEC with respect to any
material amendments to any Registration Statement or Prospectus
which may from time to time be filed with the SEC.
2. Offering Price
Interests of the Company offered for sale by you shall be offered at a
price per share (the "offering price") equal to (a) the net asset value
(determined in the manner set forth in the Company's charter documents and
Registration Statement) plus (b) a sales charge, if any and except to those
persons set forth in the then-current Prospectus, which shall be the percentage
of the offering price of such Interests as set forth in the Company's
then-current Prospectus. The offering price, if not an exact multiple of one
cent, shall be adjusted to the nearest cent. In addition, Interests of the
Company offered for sale by you may be subject to a contingent deferred sales
charge as set forth in the Company's then-current Prospectus. You shall be
entitled to receive any sales charge or contingent deferred sales charge in
respect of the Shares.
7
Any payments to dealers shall be governed by a separate agreement between you
and such dealer and the Company's then-current Prospectus.
3. Special Requirements Applicable to the Offer and Sale of Company Interests.
3.1 The Company is a closed-end management investment company registered
under the Investment Company Act and the Securities Act. [FDI agrees to
offer and sell Interests to only those persons FDI reasonably believes are
eligible investors in accordance with the most recent Prospectus furnished
to FDI, including those that are "qualified clients" within the meaning of
Rule 205-3 under the Advisers Act ("Qualified Investors").]
3.2 The Company, or any agent of the Company designated in writing by
the Board of Directors of the Company ("Board"), shall be promptly advised
of all purchase orders for Interests in the Company received by FDI or any
Sub-Agent acting on its behalf within the terms of Section 1.1 of this
Agreement. The Company, FDI, and each Sub-Agent may reject any purchase
order if any of them reasonably believes that the potential investor is not
a Qualified Investor, or otherwise in their discretion. Orders will be
binding upon the Company only upon final acceptance by it. The Company (or
its agent) shall confirm orders upon their receipt, will make appropriate
book entries and, upon receipt by the Company (or its agent) of payment
therefor, shall deliver deposit receipts for Interests pursuant to
instructions of FDI or a Sub-Agent. Payment shall be made to the Company
(or its agent) in the manner set forth in the Company's then-current
Registration Statement and Prospectus. FDI agrees to cause such payment and
such instructions to be delivered promptly to the Company (or its agent).
3.3 The minimum initial and additional investment in the Company shall
be the amount set forth in the Company's then-current Registration
Statement unless the Board approves lower amounts and instructs FDI in
writing to accept the lower minimum initial and/or additional investment
amount.
4. Term
This Agreement shall become effective with respect to the Company as of the
date hereof and will continue for an initial two-year term and will continue
thereafter so long as such continuance is specifically approved at least
annually (i) by the Company's Board or (ii) by a vote of a majority of the
Interests of the Company, as the case may be, provided that in either event its
continuance also is approved by a majority of the Board members who are not
"interested persons" of any party to this Agreement by vote cast in person at a
meeting called for the purpose of voting on such approval. This Agreement is
terminable with respect to the Company, without penalty, on not less than sixty
days' notice, by the Company's Board of Directors, by vote of a majority of the
outstanding voting securities of the Company, or by you. This Agreement will
automatically and immediately terminate in the event of its "assignment" (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
as such terms have in the Investment Company Act). You agree to notify the
Company immediately upon the event of your expulsion
8
or suspension by the NASD. This Agreement will automatically and immediately
terminate in the event of your expulsion or suspension by the NASD.
5. Miscellaneous
5.1 The Company recognizes that, except to the extent otherwise agreed
to by the parties hereto, your directors, officers and employees may from
time to time serve as directors, trustees, officers and employees of
corporations and business trusts (including other investment companies),
and that you or your affiliates may enter into distribution or other
agreements with such other corporations and trusts.
5.2 You shall not purchase the Interests for your own account for
purposes of resale to the public, but, subject to the requirements of Rule
205-3 of the Advisers Act, you may purchase Interests for your own
investment account upon written assurance that the purchase is for
investment purposes only and that the Interests will not be resold except
through redemption by us.
5.3 No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or
termination is sought.
5.4 This Agreement shall be governed by the internal laws of the
Commonwealth of Massachusetts without giving effect to principles of
conflicts of laws.
5.5 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule, or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors.
6. Privacy Policy. Notwithstanding any provision herein to the contrary, each
party hereto agrees that any Nonpublic Personal Information, as defined under
Section 248.3(t) of Regulation S-P ("Regulation S-P"), promulgated under the
Xxxxx-Xxxxx-Xxxxxx Act (the "Privacy Act"), disclosed by a party hereunder is
for the specific purpose of permitting the other party to perform the services
set forth in this Agreement. Each party agrees that, with respect to such
information, it will comply with Regulation S-P and the Privacy Act and that it
will not disclose any Nonpublic Personal Information received in connection with
this Agreement to any other party, except to the extent as necessary to carry
out the services set forth in this Agreement or as otherwise permitted by
Regulation S-P or the Privacy Act.
7. Each party to this Agreement has the authority to enter into this Agreement
and perform its obligations hereunder.
[Signature page follows]
9
Please confirm that the foregoing is in accordance with your understanding
and indicate your acceptance hereof by signing below, whereupon this Agreement
shall become a binding agreement between us.
Very truly yours,
XXXXXXXXXX PARTNERS
ABSOLUTE RETURN FUND LLC
By: /s/ Xxxxxxx Xxxxxx
-------------------
Name: Xxxxxxx Xxxxxx
Title: Assitant Secretary
Accepted:
FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: ________________________
10
