Exhibit (h)(2)
BROKER DEALER
SELLING AGREEMENT
THIS BROKER DEALER SELLING AGREEMENT ("Agreement") made and entered into
between ALPS Distributors, Inc. ("ADI"), a Colorado corporation having its
principal place of business at 0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx
00000, and ___________________________ having its principal place of business
at <>, <>, <> <> (hereinafter
"Broker/Dealer").
WHEREAS, Broker/Dealer desires to enter in this Agreement with ADI to
sell shares of The Xxxxxxxx Multi-Strategy Trust (the "Trust"), a registered
closed-end, non-diversified management investment company. The Trust is
offering common units of beneficial interest in the Trust (the "Shares") as of
the first business day of each month in a continuous private placement to
eligible investors. The Shares have not been registered under the Securities
Act of 1933 (the "Securities Act), and are offered privately pursuant to the
exemption from such registration provided by Section 4(2) of the Securities Act
and Rule 506 of Regulation D thereunder. Eligible investors who purchase
Shares and are admitted to the Trust will become shareholders of the Trust
(the "Shareholders"). Broker/Dealer will provide sales related and continuing
personal services to customers/Shareholders. ADI is the principal underwriter
and agent for the Trust.
NOW, THEREFORE, in consideration of the mutual covenants and promises set
forth herein, the parties agree as follows:
1. Sale of Shares.
(a) Broker/Dealer is hereby appointed as a non-exclusive selling agent
of the Trust during the term herein specified for the purpose of
finding suitable investors for Shares as described herein. Subject
to the performance by ADI of its obligations to be performed
hereunder and to the completeness and accuracy in all material
respects of all the representations and warranties of the Trust
contained herein, Broker/Dealer hereby accepts such agency and
agrees to the terms and conditions set forth herein and in the
Trust's confidential private offering memorandum, as it may be
amended or supplemented from time-to-time (the "Offering
Memorandum") and to use reasonable efforts during the term hereof to
find suitable investors and to provide ongoing services to such
investors for the duration of their investments. It is understood
that Broker/Dealer has no commitment with regard to the sale of the
Shares other than to use reasonable efforts and shall not prevent
Broker/Dealer from acting as a selling agent for the securities of
other issuers that may be offered or sold during the term hereof.
Broker/Dealer's agency relationship with ADI hereunder shall
continue until the termination of this Agreement. Any sales of a
Shares made prior to the date hereof by Broker/Dealer shall be
deemed made pursuant to this Agreement.
(b) In offering and selling Shares to Broker/Dealer's customers,
Broker/Dealer shall in no transaction have any authority to act or
hold itself out as agent for ADI or the Trust - other than as a
selling agent of the Trust. ADI acknowledges that
customers of Broker/Dealer who purchase Shares are the
Broker/Dealer's customers. Broker/Dealer shall be responsible for
opening, approving, and monitoring customer accounts and for the
review and supervision of these accounts, all in accordance with the
rules of the Securities and Exchange Commission ("SEC") and National
Association of Securities Dealers, Inc. ("NASD").
(c) Broker/Dealer agrees to offer and sell Shares to Broker/Dealer's
customers only at net asset value per share, as described in the
Offering Memorandum. Broker/Dealer agrees to deliver, or cause to be
delivered, to each customer, at or prior to the time of any purchase
of Shares, a copy of the Offering Memorandum.
(d) All orders are subject to acceptance or rejection by ADI in its sole
discretion. ADI reserves the right, at its discretion and without
notice to the Broker/Dealer, to suspend sales or to withdraw the
offering of the Shares, in whole or in part, or to make a limited
offering of the Shares. The minimum dollar amounts for purchase of
the Shares for any Shareholder shall be the applicable minimum
amount described in the Offering Memorandum and no order for less or
more than, as the case may be, such amount will be accepted
hereunder. Broker/Dealer hereby expressly acknowledges and agrees
that the Shares are to be offered and sold only to investors who are
both "accredited investors," as define in Rule 501 under the
Securities Act and "qualified clients," as defined in Rule 205-3
under the Investment Company Act of 1940, as amended (the "1940
Act"), in a transaction exempt from registration under the
Securities Act pursuant to Section 4(2) thereof and Rule 506
thereunder (a "Private Placement"). Broker/Dealer hereby represents
and warrants that it is familiar with the requirements of a Private
Placement and hereby covenants that Broker/Dealer will not take or
refrain from taking any action that could be reasonably expected to
jeopardize the Private Placement of the Trust's shares.
(e) The transmission of orders will be governed by instructions that ADI
will periodically issue to Broker/Dealer. Broker/Dealer customers
must pay for Shares in 'Federal Funds,' and ADI must receive
Broker/Dealer customer payment on or before subscription date
established in accordance Offering Memorandum. If ADI does not
receive Broker/Dealer customer payment on or before such
subscription date, ADI may, without notice, cancel the sale.
Broker/Dealer will be responsible for reasonable costs associated
with failure to make payment as required and ADI will be responsible
for reasonable costs associated with failure to accept payment when
made as required.
(f) Broker/Dealer agrees to use the form of the subscription agreement
provided with the Offering Memorandum as the means of placing a
customer's order. The application will be reviewed by ADI or the
Trust to determine that all information necessary to issue Shares
has been entered. Broker/Dealer hereby certifies that all of
Broker/Dealer customers' have certified that their taxpayer
identification numbers ("TIN") or social security numbers ("SSN")
furnished to ADI or the Trust by Broker/Dealer are correct. ADI or
the Trust will not open an account
without Broker/Dealer providing the Trust's transfer agent
("Transfer Agent") with the customer's TIN or SSN.
(g) Broker/Dealer, ADI and the Trust will comply with all applicable
Federal and state laws and with the rules and regulations of
applicable regulatory agencies thereunder. Broker/Dealer will not
offer shares of the Trust for sale in any manner or by any means
that could reasonably be expected to cause Shares to be required to
be registered under the Securities Act or any state securities or
"blue sky" laws.
(h) Any transaction in Shares shall be effected and evidenced by
book-entry on the records maintained by the transfer agent. A
confirmation statement evidencing transactions in Shares will be
transmitted to Broker/Dealer customer's by the transfer agent.
2. Account Options.
(a) At the time of each transaction, Broker/Dealer represents that its'
customers have represented to them that they are of legal age and
are legally authorized to purchase Shares.
(b) Unless otherwise instructed by ADI or the Transfer Agent,
Broker/Dealer may instruct the Transfer Agent to record Shares
purchased in Broker/Dealer name and account as nominee for
Broker/Dealer's customers or in customers name directly, in which
event the Offering Memorandum, proxy statements, periodic reports,
and other printed material will be sent to Broker/Dealer, and all
confirmations and other communications to Shareholders will be
transmitted to Broker/Dealer. Broker/Dealer shall be responsible for
forwarding such printed material, confirmations, and communications,
or the information contained therein, to all customers for whom
Broker/Dealer holds such Shares as nominee. However, the Transfer
Agent or the Trust shall be responsible for the reasonable costs
associated with Broker/Dealer forwarding such printed material,
confirmations, and communications and shall reimburse Broker/Dealer
in full for such costs. Broker/Dealer shall also be responsible for
complying with all reporting and tax withholding requirements with
respect to the customers for whose account Broker/Dealer is holding
such Shares. With respect to customers other than such customers,
Broker/Dealer shall provide ADI with all information (including,
without limitation, certification of TINs and back-up withholding
instructions) necessary or appropriate for ADI to comply with any
legal and regulatory reporting requirements.
3. Broker/Dealer Compensation.
(a) Broker/Dealer compensation, if any, on Broker/Dealer's sales of
Shares will be offered as described in the Offering Memorandum or in
the applicable schedule of concessions issued by ADI and in effect
at the time of ADI sale to Broker/Dealer.
Upon written notice to Broker/Dealer, ADI or the Trust may change or
discontinue any schedule of concessions, or issue a new schedule.
(b) Broker/Dealer shall furnish to ADI or the Trust such information in
writing as shall reasonably be requested by the Trust's Board of
Trustees ("Trust's Board") with respect to the fees paid to
Broker/Dealer pursuant to this Agreement.
(c) ADI may discontinue paying compensation to Broker/Dealer if, at any
time, (i) Broker/Dealer is not appropriately registered in all
capacities necessary to receive such compensation or (ii)
Broker/Dealer breaches any representation, warranty or covenant
contained in this Agreement, as determined by ADI in its sole
discretion. Notwithstanding the foregoing, Broker/Dealer shall not
be entitled to any compensation in respect of a sale to any investor
if ADI determines that another authorized selling agent of ADI is
primarily responsible for or should otherwise be credited with such
sale. In making this determination, ADI will endeavor to act fairly.
Any dispute regarding compensation shall be conclusively resolved by
ADI.
(d) The provisions regarding Broker/Dealer compensation may be
terminated by the vote of a majority of the Trust's Board who are
not interested persons of the Trust, or by a vote of a majority of a
Trust's outstanding Shares, on sixty (60) days' written notice,
without payment of any penalty. Such provisions will be terminated
also by any act that terminates this Agreement and shall terminate
automatically in the event of the assignment (as that term is
defined in the 0000 Xxx) of this Agreement unless agreed to in
writing by the parties.
4. Broker/Dealer Representations.
(a) Broker/Dealer represents and warrants that Broker/Dealer is and will
remain a member in good standing of the National Association of
Securities Dealers, Inc. ("NASD") throughout the term of this
Agreement, and agrees to abide by all of its applicable rules and
regulations including its Rules of Conduct. Broker/Dealer further
agrees to comply with all applicable state and federal laws and
rules and regulations of regulatory agencies having jurisdiction.
The termination of Broker/Dealer's membership in the NASD will
immediately and automatically terminate this Agreement.
Broker/Dealer further represents that Broker/Dealer is qualified to
act as a broker/dealer in the states where Broker/Dealer transacts
business.
(b) Broker/Dealer represents that it and all of its personnel involved
in the activities contemplated hereunder have all governmental,
regulatory, and self-regulatory registrations, memberships, and
licenses required to perform Broker/Dealer's obligations under this
Agreement and to receive compensation, if any, and Broker/Dealer
will maintain all relevant registrations, memberships, and licenses
during the term of this Agreement.
(c) Nothing in this Agreement shall cause Broker/Dealer to be ADI's
partner, employee, or agent (other than a selling agent), or give
Broker/Dealer any authority to act for ADI. Neither ADI nor the
Company shall be liable for any of Broker/Dealer's acts or
obligations under this Agreement.
5. ADI Representations.
(a) ADI represents and warranties that it will comply with all consents,
approvals, authorizations, orders, registrations or qualifications
of or with any such court or governmental agency or body required
for the issuance and sale of the Shares or the consummation by the
Trust of the transactions contemplated by this Agreement.
(b) ADI agrees to comply with all applicable state and federal laws and
rules and regulations of regulatory agencies having jurisdiction
over any aspect covered by this Agreement.
(c) ADI represents and warrants that all appropriate and necessary
organizational and legal action has been duly and validly taken to
authorize the execution and delivery of this Agreement by ADI and
the performance by ADI of all provisions, conditions, covenants or
other terms herein.
(d) ADI represents and warrants that the Shares have been duly
authorized and, when issued and delivered against payment as
contemplated by the Agreement, will be validly issued interests in
the Trust, will be fully paid, and will conform to the description
thereof contained in the Offering Memorandum.
6. Information Relating to the Shares.
(a) No person is authorized to make any representations concerning the
Shares except those contained in the Trust's Offering Memorandum,
and in buying Shares from ADI for customers hereunder, Broker/Dealer
shall rely solely on the representations contained herein and in the
Offering Memorandum and any supplemental information/communications
provided to Broker/Dealer by ADI. Upon Broker/Dealer's request, ADI
will furnish Broker/Dealer with a reasonable number of copies of the
Offering Memorandum.
(b) Broker/Dealer may not use any sales literature or advertising
material concerning Shares, other than the Offering Memorandum or
such printed information that is given to Broker/Dealer by ADI,
without first obtaining ADI's written approval. Broker/Dealer shall
not distribute or make available to the general public any
information regarding the Trust.
7. Indemnification. ADI and Broker/Dealer (each an "Indemnifying Party")
will indemnify and hold the other party and its directors/trustees, officers,
employees, and agents harmless from any claim, demand, loss, expense
(including reasonable attorney's fees), or cause of action resulting from the
willful misconduct or negligence, as measured by industry standards, of the
Indemnifying Party, its directors/trustees, officers, employees and agents, in
carrying out its obligations under this Agreement. This provision will survive
the termination of this Agreement.
8. Duration. This Agreement will continue in effect for one year from its
effective date, and thereafter will continue automatically for successive
annual periods; provided, however, that such continuance is subject to
termination at any time without penalty if a majority of the Trust's Trustees
who are not interested persons (as defined in the 1940 Act), or a majority of
the outstanding Shares of the Trust, vote to terminate this Agreement. This
Agreement will continue in effect from year to year after its effective date,
unless terminated as provided herein.
9. Amendment and Termination of Agreement. Either party to this Agreement
may terminate the Agreement without cause by giving the other party at least
thirty (30) days' written notice of its intention to terminate. This Agreement
will automatically terminate in the event of its assignment (as defined in the
1940 Act). This Agreement may not be changed or amended by either party unless
both parties agree to the change/amendment in writing.
10. Arbitration. In the event of a material dispute under this Agreement,
such dispute shall be settled by arbitration before arbitrators sitting in
Denver, Colorado, in accordance with the NASD's Code of Arbitration Procedures
in effect at the time of the dispute. The arbitrators shall act by majority
decision, and their award may allocate attorneys' fees and arbitration costs
between ADI and Broker/Dealer. The arbitrators' award shall be final and
binding between the parties, and such award may be entered as a judgment in
any court of competent jurisdiction.
11. Notices. All notices required or permitted to be given under this
Agreement shall be given in writing and delivered by personal delivery, by
postage prepaid mail, or by facsimile or a similar means of same day delivery
(with a confirming copy by mail). All notices to ADI shall be given or sent to
ADI at ADI offices located at 0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx
00000, Attn: General Counsel. All notices to Broker/Dealer shall be given or
sent to Broker/Dealer to the attention of Xxxxxx Xxxxxxxx at the address
specified by Broker/Dealer herein. Each party may change the address to which
notices shall be sent by giving notice to the other party in accordance with
this paragraph.
12. Anti-Money Laundering Program. Broker/Dealer hereby certifies that: (i)
it understands that pursuant to various U.S. regulations, it is required to
establish an anti-money laundering program, which satisfies the requirements
of Title III of the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the "USA
Patriot Act"); (ii) Broker/Dealer has developed, implemented, and will
maintain such an anti-money laundering program, including a customer
identification program consistent with the rules under sec. 326 of the USA
Patriot Act, and will comply with all applicable laws and regulations designed
to guard against money laundering activities set out in such program; (iii)
Broker/Dealer will cooperate with ADI and deliver information reasonably
requested by the ADI concerning Shareholders that purchased Shares sold by
Broker/Dealer necessary for ADI or the Trust to comply with the USA Patriot
Act; and (iv) Broker/Dealer will notify ADI, in writing, if it is found by an
independent anti-money laundering auditor, or any Federal, state, or
self-regulatory agencies, to be in violation of the USA Patriot Act, any
regulation implementing the USA Patriot Act, or its anti-money laundering
program relating to this Agreement.
Notwithstanding anything to the contrary, if Broker/Dealer is exempt from
the requirement to develop, implement, and maintain anti-money laundering
policies that comply with USA Patriot Act Broker/Dealer agrees to cooperate
with ADI or the Trust and deliver information reasonably requested by ADI or
the Trust concerning Shareholders that purchased Shares through Broker/Dealer
necessary for ADI and the Trust to comply with either's internal policies, the
USA Patriot Act and relevant rules and regulations.
Broker/Dealer acknowledges that ADI or the Trust may reject or refuse
orders for the sale of Shares with respect to customers for which
Broker/Dealer serves as nominee if Broker/Dealer has not adopted and does not
implement anti-money laundering policies and procedures as required by the USA
Patriot Act.
13. Regulation S-P. In accordance with Regulation S-P, if non-public personal
information regarding customers/Shareholders is disclosed to either party in
connection with this Agreement, the party receiving such information will not
disclose or use that information other than as necessary to carry out the
purposes of this Agreement. Any privacy notice that Broker/Dealer delivers to
customers/Shareholders will comply with Title V of the Xxxxx-Xxxxx-Xxxxxx Act
and Regulations S-P, as each may be amended, and will notify customers that
non-public personal information may be provided to financial service providers
such as security broker-dealers or investment companies and as permitted by
law. This provision will survive the termination of this Agreement.
14. Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto and supersedes all prior agreements
between the parties, whether oral or written, relating to the sale of Shares
or any other subject covered by this Agreement.
15. Partial Invalidity. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule, or otherwise, the remainder
of the Agreement shall not be affected thereby. Furthermore, in the event of
any inconsistency between the Agreement and the then-current Prospectus, the
terms of the then-current Prospectus shall control.
16. Waiver. Failure of ADI or the Company to terminate this Agreement upon
the occurrence of any event set forth in this Agreement as a cause for
termination shall not constitute a waiver of the right to terminate this
Agreement at a later time on account of such occurrence or any succeeding
breach of the same.
17. Heading. The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions of this
Agreement.
18. Applicable Law. This Agreement shall be construed in accordance with the
laws of the state of Colorado, without giving effect to principles of
conflicts of law.
19. Effective Date. This Agreement shall become effective as of the date when
it is accepted and dated below by ADI.
IN WITNESS WHEREOF, ADI's and Broker/Dealer's authorized representatives
have executed this Agreement and represent that they have read and understood
the obligations herein and agree to be bound by the Agreement's terms and
conditions.
ACCEPTED AND AGREED:
BROKER/DEALER: <>
Signature:_____________________
Name:__________________________
Title:_________________________
Address: <>
<>, <> <>
NSCC Dealer # _______________________ Fax Number:_________________________
NSCC Dealer Alpha Code ______________ Date:_______________________________
NSCC Clearing________________________ Primary Contact:____________________
Phone Number:________________________
ALPS DISTRIBUTORS, INC.
By: ___________________________
Name:
Title:
Effective Date:
