EXHIBIT 25(2)(h)
DISTRIBUTION AGREEMENT
AGREEMENT made as of ____________, 2005 between MULTI-STRATEGY HEDGE
ADVANTAGE, a Delaware statutory trust (the "Fund"), and FAM DISTRIBUTORS, INC.,
a Delaware corporation (the "Distributor").
WITNESSETH:
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), as a closed-end, non-diversified
management investment company;
WHEREAS, the Fund is authorized to issue shares of beneficial interest of
the Fund ("Shares") pursuant to the Fund's registration statement on Form N-2,
as it may be amended or supplemented from time to time (the "Registration
Statement");
WHEREAS, the Distributor is a securities firm engaged in the business of
selling shares of investment companies either directly to purchasers or through
other securities dealers; and
WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other with respect to the offering of the Fund's Shares.
NOW THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor; Offering
(a) Subject to the terms and conditions of this Agreement, the Fund
hereby appoints the Distributor as its non-exclusive distributor in connection
with the distribution of the Shares, and the Distributor hereby accepts such
appointment.
(b) The Distributor agrees to use its reasonable best efforts to
offer and sell Shares to investors that the Distributor reasonably believes meet
the eligibility requirements set forth in the Registration Statement and to use
all reasonable efforts to assist the Fund in obtaining performance by each
prospective investor who submits a Subscription Agreement (as defined below).
(c) Unless otherwise agreed by the parties hereto, Xxxxxxx Xxxxx
Investment Managers, LLC, the Fund's investment adviser (the "Investment
Adviser"), or PFPC, Inc., the Fund's administrator (the "Administrator"), shall
be responsible for reviewing each Subscription Agreement to confirm that it has
been completed in accordance with the instructions thereto. The Fund, the
Investment Adviser and/or the Administrator, in its or their sole discretion,
may return to the Distributor any Subscription Agreement that is not completed
to its or their satisfaction and the Fund shall be under no obligation to accept
any Subscription Agreement.
(d) The Distributor acknowledges that Shares will be offered and
sold only as set forth in the Registration Statement and the Fund's Declaration
of Trust, including, without limitation, pricing of Shares, handling of investor
funds, subscription dates and investor eligibility standards.
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(e) The Fund may suspend or terminate the offering of the Shares at
any time as to specific classes of investors (if such separate classes are
established), as to specific jurisdictions or otherwise. Upon notice to the
Distributor of the terms of such suspension or termination, the Distributor
shall suspend solicitation of subscriptions for Shares in accordance with such
terms until the Fund notifies the Distributor that such solicitation may be
resumed.
(f) It is acknowledged and agreed that the Distributor is not
obligated to sell any specific number of Shares or to purchase any Shares for
its own account. The Fund shall be entitled to appoint additional distributors.
Section 2. Agency In offering subscriptions for Shares, the Distributor
shall act solely as an agent of the Fund and not as principal.
Section 3. Duties of the Fund
(a) The Fund shall take, from time to time, but subject always to
any necessary approval of the Board of Trustees of the Fund or of the
shareholders of the Fund (the "Shareholders"), all necessary action to fix the
number of authorized Shares and such steps as may be necessary to register the
same under the Securities Act of 1933, as amended (the "Securities Act"), to the
end that there will be available for sale such number of Shares as the
Distributor reasonably may be expected to sell.
(b) For purposes of the offering of Shares, the Fund will furnish to
the Distributor copies of the Registration Statement, including the prospectus
contained therein, and the subscription agreement and other documentation for
use in the offering of Shares (the "Subscription Agreement"). Additional copies
of such documents will be furnished to the Distributor at no cost to the
Distributor in such numbers as reasonably requested. The Distributor is
authorized to furnish to prospective subscribers for Shares only such
information concerning the Fund and the offering as may be contained in the
Registration Statement, the Fund's formation documents, or any other documents
(including sales material), if approved by the Fund.
(c) The Fund shall furnish to the Distributor copies of all
financial statements of the Fund which the Distributor may reasonably request
for use in connection with its duties hereunder, and this shall include, upon
request by the Distributor, one certified copy of all financial statements
prepared for the Fund by independent public accountants.
(d) The Fund shall use its best efforts to qualify and maintain the
qualification of the Shares for sale under the securities laws of such
jurisdictions as the Distributor and the Fund may approve. Any such
qualification may be withheld, terminated or withdrawn by the Fund at any time
in its discretion. The expense of qualification and maintenance of qualification
shall be borne by the Fund. The Distributor shall furnish such information and
other material relating to its affairs and activities as may be required by the
Fund in connection with such qualification.
(e) The Fund will furnish, in reasonable quantities upon request by
the Distributor, copies of annual and interim reports of the Fund.
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(f) The Fund will furnish the Distributor with such other documents
as it may reasonably require, from time to time, for the purpose of enabling it
to perform its duties as contemplated by this Agreement.
Section 4. Duties of the Distributor
(a) The Distributor shall devote reasonable time and effort to its
duties hereunder. The services of the Distributor to the Fund hereunder are not
to be deemed exclusive and nothing herein contained shall prevent the
Distributor from entering into like arrangements with other investment companies
so long as the performance of its obligations hereunder is not impaired thereby.
(b) In performing its duties hereunder, the Distributor shall use
its best efforts in all respects to duly conform with the requirements of all
applicable laws relating to the sale of securities.
(c) The Distributor shall adopt and follow procedures, as approved
by the officers of the Fund, for the confirmation of sales to investors and
Selected Dealers (as defined below), the collection of amounts payable by
investors and Selected Dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the NASD,
as such requirements may from time to time exist.
Section 5. Selected Dealer Agreements
(a) The Distributor shall have the right to enter into selected
dealer agreements with securities dealers of its choice ("Selected Dealers") for
the sale of Shares; provided that the Distributor shall periodically inform the
Fund's Board of Trustees of the nature and substance of such agreements and that
the Fund shall approve the forms of agreements with such dealers. Shares sold to
Selected Dealers shall be for resale by such dealers only.
(b) Within the United States, the Distributor shall offer and sell
Shares only to such Selected Dealers as are members in good standing of the
NASD.
Section 6. Fees
(a) The Distributor is entitled to charge a placement fee to each
investor on the purchase price of its Shares of up to 3.0% as specified in the
Registration Statement upon acceptance of the investor's subscription for Shares
by the Administrator; provided that the Distributor shall have the authority to
adjust or waive the placement fee in particular cases, at its sole discretion,
in consultation with the Fund or the Administrator and as generally described in
the Registration Statement.
(b) In accordance with applicable NASD Conduct Rules, the
Distributor shall cap the placement fee it receives from investors at 3% of the
total proceeds proposed to be received by the Fund in respect of sales of Shares
registered under the Fund's registration statement on Form N-2 (which is in
effect at the time the payment is proposed to be made).
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Section 7. Payment of Expenses
(a) The Fund shall bear all of its own costs and expenses, including
fees and disbursements of its counsel and auditors, in connection with the
preparation and filing of any required registration statements under the
Investment Company Act, and all amendments and supplements thereto, and in
connection with any fees and expenses incurred with respect to any filings with
the NASD and preparing and mailing annual and interim reports and proxy
materials to shareholders (including but not limited to the expense of setting
in type any such registration statements, or interim reports or proxy
materials).
(b) The Fund shall bear any cost and expenses of qualification of
the Shares for sale pursuant to this Agreement and, if necessary or advisable in
connection therewith, of qualifying the Fund as a broker or dealer in such
states of the United States or other jurisdictions as shall be selected by the
Fund and the Distributor and the cost and expenses payable to each such state
for continuing qualification therein until the Fund decides to discontinue such
qualification.
(c) The Distributor shall be responsible for any payments made to
Selected Dealers as reimbursement for their expenses associated with payments of
sales commissions to financial consultants. In addition, after the prospectuses
and annual and interim reports have been prepared and set in type, the
Distributor shall bear the costs and expenses of printing and distributing any
copies thereof which are to be used in connection with the offering of Shares to
Selected Dealers or investors pursuant to this Agreement. The Distributor shall
bear the costs and expenses of preparing, printing and distributing any other
literature used by the Distributor or furnished by it for use by Selected
Dealers in connection with the offering of the Shares for sale to the public and
any expenses of advertising incurred by the Distributor in connection with such
offering.
Section 8. Indemnification
(a) The Fund shall indemnify and hold harmless the Distributor and
each person, if any, who controls the Distributor, 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 by reason
of any person acquiring any Shares, which may be based upon the Securities Act,
or on any other statute or at common law, on the ground that any registration
statement or other offering materials, as from time to time amended and
supplemented, or an annual or interim report to Shareholders of the Fund,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein not 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 the Distributor; provided, however, that in no case
(i) is the indemnity of the Fund in favor of the Distributor and any such
controlling persons to be deemed to protect the Distributor or any such
controlling persons thereof against any liability to the Fund or its
Shareholders to which the Distributor or any such controlling persons would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of the reckless
disregard of their obligations and duties under this Agreement; or (ii) is the
Fund
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to be liable under its indemnity agreement contained in this paragraph with
respect to any claim made against the Distributor or any such controlling
persons, unless the Distributor or such controlling persons, as the case may be,
shall have notified the Fund in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim or claims that have been served upon the Distributor or such controlling
persons (or after the Distributor or such controlling persons shall have
received notice of such service on any designated agent), but failure to notify
the Fund of any such claim shall not relieve it from any liability which it may
have to the person against whom such action is brought otherwise than on account
of its indemnity agreement contained in this paragraph. The Fund will be
entitled to participate at its own expense in the defense or, if it so elects,
to assume the defense of any suit brought to enforce any such liability, but if
the Fund elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to the Distributor, or such controlling
person or persons of the Distributor. In the event the Fund elects to assume the
defense of any such suit and retain such counsel, the Distributor, or such
controlling person or persons of the Distributor, shall bear the fees and
expenses, as incurred, of any additional counsel retained by them, but in case
the Fund does not elect to assume the defense of any such suit, it will
reimburse the Distributor, or such controlling person or persons of the
Distributor, for the reasonable fees and expenses, as incurred, of any counsel
retained by them. The Fund shall promptly notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers
or Trustees in connection with the issuance or sale of any of the Shares.
(b) The Distributor shall indemnify and hold harmless the Fund and
each of its Trustees and officers and each person, if any, who controls the Fund
against any loss, liability, claim, damage or expense, as incurred, described in
the foregoing indemnity contained in subsection (a) of this Section 8 but only
with respect to statements or omissions made in reliance upon, and in conformity
with, information furnished to the Fund in writing by or on behalf of the
Distributor for use in connection with the Registration Statement or other
offering materials, as from time to time amended, or the annual or interim
reports to Shareholders. In case any action shall be brought against the Fund or
any person so indemnified, in respect of which indemnity may be sought against
the Distributor, the Distributor shall have the rights and duties given to the
Fund, and the Fund and each person so indemnified shall have the rights and
duties given to the Distributor by the provisions of subsection (a) of this
Section 8.
Section 9. Duration and Termination of this Agreement
(a) This Agreement shall become effective as of the date first above
written and shall remain in force for two years thereafter and thereafter
continue from year to year, but only so long as such continuance is specifically
approved at least annually (i) by the Trustees or by the vote of a majority of
the outstanding voting securities of the Fund and (ii) by the vote of a majority
of those Trustees who are not parties to this Agreement or interested persons of
any such party cast in person at a meeting called for the purpose of voting on
such approval.
(b) This Agreement may be terminated at any time, without the
payment of any penalty, by the Trustees or by vote of a majority of the
outstanding voting securities of the Fund, or by the Distributor, on sixty days'
written notice to the other party. This Agreement shall automatically terminate
in the event of its assignment.
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(c) The terms "vote of a majority of the outstanding voting
securities," "assignment," and "interested person," when used in this Agreement,
shall have the respective meanings specified in the Investment Company Act.
Section 10. Amendments of this Agreement This Agreement may be amended by
the parties only if such amendment is specifically approved (i) by the Trustees
or by the vote of a majority of outstanding voting securities of the Fund and
(ii) by the vote of a majority of those Trustees who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
Section 11. Governing Law The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the State of New York
as at the time in effect and the applicable provisions of the Investment Company
Act. To the extent that the applicable law of the State of New York, or any of
the provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written. This Agreement may be executed by the
parties hereto in any number of counterparts, all of which shall constitute one
and the same instrument.
MULTI-STRATEGY HEDGE ADVANTAGE
By: __________________________
Name:
Title:
FAM DISTRIBUTORS, INC.
By: __________________________
Name:
Title:
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