Exhibit (h)
DISTRIBUTION AGREEMENT
between
BACAP OPPORTUNITY STRATEGY, LLC
and
BACAP DISTRIBUTORS, LLC
Dated as of: _____________, 2003
BACAP Distributors, LLC
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Sirs:
BACAP Opportunity Strategy, LLC, a Delaware limited liability company
(the "Fund"), is registered as a closed-end, non-diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and has registered $125,000,000 of its limited liability company
interests ("Interests") under the Securities Act of 1933, as amended (the "1933
Act"), to be offered for sale in a public offering in accordance with the terms
and conditions set forth in the Prospectus and Statement of Additional
Information included in the Fund's Registration Statement filed with the
Securities and Exchange Commission (the "Commission") on Form N-2, as it may be
amended from time to time (the "Prospectus").
In this connection, the Fund desires that your firm, BACAP
Distributors, LLC (the "Distributor"), act as distributor for the sale and
distribution of Interests which have been registered as described above and of
any additional Interests which may become registered during the term of this
Agreement. You have advised the Fund that you are willing to act as the
distributor of Interests, and it is accordingly agreed by and between us as
follows:
1. APPOINTMENT OF THE DISTRIBUTOR. The Fund hereby appoints you as the
sole distributor of Interests in connection with the aforesaid public offering
of Interests, and the Fund further agrees from and after the date of this
Agreement, that it will not, without your consent, sell or agree to sell any
Interests otherwise than through you, except: (a) the Fund may issue Interests
in connection with a merger, consolidation or acquisition of assets on such
basis as may be authorized or permitted by the 1940 Act and the rules
thereunder; and (b) the Fund may issue Interests in connection with the
reinvestment of distributions made by the Fund or of any other investment
company if permitted by the current Prospectus.
2. SALE OF INTERESTS. You agree to serve as the distributor of
Interests in accordance with the terms of this Agreement, and to offer Interests
to investors as agent of the Fund either directly or through broker, dealers and
other financial institutions which enter into selling agreements with you
("Selling Agents"). In connection with the offering of Interests, you further
agree that:
(a) You will use your best efforts to sell Interests, provided,
however, that when requested by the Fund at any time because of market or other
economic considerations or abnormal circumstances of any kind, or when agreed to
by mutual consent between you and the Fund, you will suspend such efforts. The
Fund may also withdraw the offering of Interests at any time when required by
the provisions of any statute, order, rule or regulation of any governmental
body having jurisdiction. It is understood that you do not undertake to sell all
or any specific number or amount of Interests.
(b) You shall offer for sale, or sell, Interests:
i) at net asset value as determined by the Fund and in
accordance with the Prospectus relating to the sale of Interests,
except as any departure from such prices shall be permitted by the
rules and regulations of the Commission, plus
ii) such applicable sales load as set forth in the Fund's then
current Prospectus, but which sales load shall be reduced or eliminated
under certain circumstances or with respect to certain types of
investors, in each case, on the basis set forth in the then current
Prospectus.
(c) You will not make offers or sales of Interests except in the manner
set forth in the Prospectus. We have established procedures that are to be
followed in connection with the offer and sale of Interests and you agree not to
make offers or sales of any Interests and agree to require all brokers, dealers
and other financial institutions that enter into selling agreements with you not
to make any such offers or sales except in compliance with such procedures. In
this regard, you agree that:
(i) No sale of Interests to any one investor will be for less
than the minimum amount as may be specified in the Prospectus or as the
Fund shall advise you.
(ii) No offer or sale of Interests will be made in any state
or jurisdiction, or to any prospective investor located in any state or
jurisdiction, where Interests have not been registered or qualified for
offer and sale under applicable state securities laws unless Interests
are exempt from the registration or qualification requirements of such
laws.
(iii) Sales of Interests will be made only to persons who are
"qualified clients," as that term is defined by Rule 205-3 under the
Investment Advisers Act of 1940, as amended, and who meet such other
eligibility requirements as may be imposed by the Fund and set forth in
the Prospectus.
(d) You will furnish to prospective investors only such information
concerning the Fund and the offering of Interests as may be contained in the
current Prospectus or any written supplements thereto, and such other materials
as you have prepared and which comply with applicable laws and regulations and
with applicable rules and interpretations of National Association of Securities
Dealers Regulation, Inc. ("NASDR"). For purposes of the offering of Interests,
the Fund will furnish to you copies of the Prospectus (or prior to the effective
date of the Fund's registration under the 1933 Act, copies of the preliminary
prospectus) and copies of the Fund's Statement of Additional Information ("SAI")
which shall be furnished by you to prospective investors as required by
applicable law and regulations. Additional copies of these materials will be
furnished in such numbers as you may reasonably request for purposes of the
offering.
(e) Interests shall be offered and made available for purchase on a
monthly basis as described in the current Prospectus or on such other basis as
may be determined by the Fund.
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3. COMPENSATION.
(a) You are authorized to impose and retain a sales load in
connection with sales of Interests in accordance with such schedule of sales
loads as is set forth in the Prospectus at the time of such sales, and may
re-allow all or a portion of the sales load to Selling Agents.
(b) As additional compensation for the services to be provided by
the Distributor under this Agreement, you and Selling Agents shall be entitled
to receive compensation as set forth in Appendix C, attached hereto.
4. PURCHASE OF INTERESTS.
(a) As Distributor, you shall have the right, subject to the terms
of this Agreement, to accept or reject orders for the purchase of Interests at
your discretion. Any consideration that you may receive in connection with a
rejected purchase order must be returned promptly.
(b) You agree promptly to issue, or to cause the duly appointed
investor servicing agent of the Fund to issue as your agent, confirmations of
all accepted purchase orders and to transmit a copy of such confirmations to the
Fund. The full subscription amounts payable in connection with each order for
the purchase of Interests by an investor shall be transmitted by you or by the
selling dealer to the Fund's escrow agent, including applicable sales charges,
within the periods specified in the Prospectus.
5. 1933 ACT REGISTRATION. The Fund agrees that it will use its best
efforts to maintain the effectiveness of its Registration Statement under the
1933 Act (the "Registration Statement"). The Fund further agrees to prepare and
file any amendments to the Registration Statement as may be necessary and any
supplemental data in order to comply with the 1933 Act.
6. 1940 ACT REGISTRATION. The Fund is registered under the 1940 Act as
a closed-end management investment company, and will use its best efforts to
maintain such registration and to comply with the requirements of the 1940 Act.
7. STATE BLUE SKY QUALIFICATION. At your request, the Fund will take
such steps as may be necessary and feasible to qualify Interests for sale in
states, territories or dependencies of the United States, the District of
Columbia, and the Commonwealth of Puerto Rico, in accordance with the laws
thereof, and to renew or extend any such qualification; provided, however, that
the Fund shall not be required to qualify Interests or to maintain the
qualification of Interests in any jurisdiction where it shall deem such
qualification disadvantageous to the Fund.
8. DUTIES OF THE DISTRIBUTOR. You agree that:
(a) You will furnish to the Fund any pertinent information required
to be inserted with respect to you as the Distributor within the purview of all
applicable laws and regulations in any reports or registrations required to be
filed by the Fund with any governmental authority;
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(b) You will not make any representations inconsistent with the
information contained in the Prospectus;
(c) You will maintain such records as may be reasonably required for
the Fund or its investor servicing agent to respond to member requests or
complaints, and to permit the Fund to maintain proper accounting records, and
you shall make such records available to the Fund and its investor servicing
agent upon request; and
(d) In performing your duties under this Agreement, you shall comply
with all
requirements of the Prospectus and all applicable laws, rules and regulations
(including the rules of NASDR) with respect to the purchase, sale and
distribution of Interests.
9. ALLOCATION OF COSTS. The Fund will pay the cost of composition and
printing of sufficient copies of its Prospectus and of the SAI as shall
reasonably be required in connection with the distribution of Interests to
investors and for periodic distribution to its members and will pay the expense
of registering Interests for sale under federal securities laws and for
qualifying Interests under state blue sky laws pursuant to paragraph 7. You
shall pay the expenses normally attributable to the offering and sale of
Interests, other than those to be paid by the Fund.
10. INDEMNIFICATION AND EXCULPATION.
(a) The Fund agrees to the indemnification provisions attached
hereto as Appendix A, which form a part of this Agreement.
(b) The Distributor shall not be liable to the Fund for any error or
mistake of judgment or for any loss suffered by the Fund in connection with the
performance by the Distributor of its duties under this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services, or a loss resulting from willful misconduct, bad
faith or gross negligence on the part of the Distributor or any of its officers,
directors, managers, employees or agents (collectively, the "Affiliates") in the
performance of their duties under this Agreement or a loss resulting from
reckless disregard by the Distributor or its Affiliates of their obligations or
duties under this Agreement.
11. DURATION. This Agreement will take effect on the date first set
forth above. Unless earlier terminated pursuant to paragraph 12 hereof, this
Agreement shall remain in effect for an initial term of two (2) years from such
date and thereafter shall continue in effect from year to year, so long as such
continuance shall be approved at least annually by the Fund's Board of Managers
(the "Board"), including the vote of the majority of the Managers who are not
parties to this Agreement or "interested persons" (as defined by the 1940 Act
and the rules thereunder) of any such party, cast in person at a meeting called
for the purpose of voting on such approval.
12. TERMINATION. This Agreement may be terminated (i) by the
Distributor at any time without penalty upon sixty (60) days' written notice to
the Fund (which notice may be waived by the Fund); or (ii) by the Fund at any
time without penalty upon sixty (60) days' written notice to the Distributor
(which notice may be waived by the Distributor). If this Agreement is terminated
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prior to the sale of Interests to the public, the Distributor shall not be
entitled to any compensation hereunder other than reimbursement of any
out-of-pocket expenses that may be payable to the Distributor hereunder.
13. CONDITION TO DISTRIBUTOR'S OBLIGATIONS. Your obligations to provide
services under this Agreement shall be subject to your receipt of an opinion of
counsel to the Fund as to matters set forth in Appendix B of this Agreement.
14. AMENDMENT AND ASSIGNMENT. Any amendment to this Agreement shall be
in writing and shall be subject to the approval of the Board, including the vote
of a majority of the Managers who are not "interested persons," as defined by
the 1940 Act and the rules thereunder, of the Fund or the Distributor. This
Agreement shall automatically and immediately terminate in the event of its
"assignment," as defined by the 1940 Act and the rules thereunder.
15. DISCLAIMER OF MANAGER AND MEMBER LIABILITY. The Distributor
understands and agrees that the obligations of the Fund under this Agreement are
not binding upon any Manager or member of the Fund personally, but bind only the
Fund and the Fund's property. The Distributor acknowledges in this regard that
it has notice of the provisions of the Limited Liability Company Agreement of
the Fund disclaiming Manager and member liability for acts or obligations of the
Fund.
16. NOTICES. All written notices given pursuant to this Agreement shall
be sent to a party at the address set forth herein (or such other address as may
be specified by a party in a written notice to the other party) and shall be
deemed given upon receipt.
17. SECTION HEADINGS. The headings for each paragraph of this Agreement
are for descriptive purposes only, and such headings are not to be construed or
interpreted as part of this Agreement.
If the foregoing is in accordance with your understanding, so indicate
by signing in the space provided below.
BACAP OPPORTUNITY STRATEGY, LLC
By: _____________________________
Name:
Title:
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Accepted:
BACAP DISTRIBUTORS, LLC BACAP ADVISORY PARTNERS, LLC,
with respect to Section 3
By: _______________________________ By: _______________________________
Name: Name:
Title: Title:
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APPENDIX A
In connection with the engagement of the Distributor to advise and
assist the Fund (referred to herein as "we", "our" or "us") with the matters set
forth in this Agreement, we hereby agree to indemnify and hold harmless the
Distributor, its affiliated companies, and each of the Distributor's and such
affiliated companies' respective officers, directors, agents, employees and
controlling persons (within the meaning of each of Section 20 of the Securities
Exchange Act of 1934 and Section 15 of the Securities Act of 1933) (each of the
foregoing, including the Distributor, being hereinafter referred to as an
"Indemnified Person") to the fullest extent permitted by law from and against
any and all losses, claims, damages, expenses (including reasonable fees,
disbursements and other charges of counsel), actions (including actions brought
by us or our equity holders or derivative actions brought by any person claiming
through us or in our name), proceedings, arbitrations or investigations (whether
formal or informal), or threats thereof (all of the foregoing being hereinafter
referred to as "Liabilities"), based upon, relating to or arising out of such
engagement or any Indemnified Person's role therein; PROVIDED, HOWEVER, that we
shall not be liable under this paragraph: (a) for any amount paid in settlement
of claims without our consent, unless our consent is unreasonably withheld, or
(b) to the extent that it is finally judicially determined, or expressly stated
in an arbitration award, that such Liabilities resulted primarily from the
willful misconduct, bad faith or gross negligence of the Indemnified Person
seeking indemnification in the performance of such person's duties under this
Agreement, or from the reckless disregard of such person's obligations or duties
under this Agreement. If multiple claims are brought against any Indemnified
Person in an arbitration or other proceeding and at least one such claim is
based upon, relates to or arises out of the engagement of the Distributor by us
or any Indemnified Person's role therein, we agree that any award, judgment and
other Liabilities resulting therefrom shall be deemed conclusively to be based
on, relate to or arise out of the engagement of the Distributor by us or any
Indemnified Person's role therein, except to the extent that such award or
judgment expressly states that the award or judgment, or any portion thereof, is
based solely upon, relates to or arises out of other matters for which
indemnification is not available hereunder. In connection with our obligation to
indemnify for expenses as set forth above, we further agree to reimburse each
Indemnified Person for all such expenses (including reasonable fees,
disbursements and other charges of counsel) as they are incurred by such
Indemnified Person; provided, however, that if an Indemnified Person is
reimbursed hereunder for any expenses, the amount so paid shall be refunded if
and to the extent it is finally judicially determined, or expressly stated in an
arbitration award, that the Liabilities in question resulted primarily from the
willful misconduct, bad faith or gross negligence of such Indemnified Person in
the performance of such person's duties under this Agreement, or from the
reckless disregard of such person's obligations or duties under this Agreement.
We hereby also agree that neither the Distributor nor any other Indemnified
Person shall have any liability to us (or anyone claiming through us or in our
name) in connection with the Distributor's engagement by us except to the extent
that such Indemnified Person has engaged in willful misconduct, acted in bad
faith or been grossly negligent.
Promptly after the Distributor receives notice of the commencement of
any action or other proceeding in respect of which indemnification or
reimbursement may be sought hereunder, the Distributor will notify us thereof;
but the omission so to notify us shall not relieve us from any obligation
hereunder unless, and only to the extent that, such omission results in our
A-1
forfeiture of substantive rights or defenses. If any such action or other
proceeding shall be brought against any Indemnified Person, we shall, upon
written notice given reasonably promptly following your notice to us of such
action or proceeding, be entitled to assume the defense thereof at our expense
with counsel chosen by us and reasonably satisfactory to such Indemnified
Person; provided, however, that any Indemnified Person may at its own expense
retain separate counsel to participate in such defense. Notwithstanding the
foregoing, such Indemnified Person shall have the right to employ separate
counsel at our expense and to control its own defense of such action or
proceeding if, in the reasonable opinion of counsel to such Indemnified Person,
(i) there are or may be legal defenses available to such Indemnified Person or
to other Indemnified Persons that are different from or additional to those
available to us, or (ii) a difference of position or potential difference of
position exists between us and such Indemnified Person that would make such
separate representation advisable; provided, however, that in no event shall we
be required to pay fees and expenses under this indemnity for more than one firm
of attorneys (in addition to local counsel) in any jurisdiction in any one legal
action or group of related legal actions. We agree that we will not, without the
prior written consent of the Distributor, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated by the Distributor's engagement (whether or
not any Indemnified Person is a party thereto) unless such settlement,
compromise or consent includes an unconditional release of the Distributor and
each other Indemnified Person from all liability arising or that may arise out
of such claim, action or proceeding.
X-0
XXXXXXXX X
CONDITIONS TO THE DISTRIBUTOR'S OBLIGATIONS
The opinion referred to in paragraph 13 shall state that:
1. The Registration Statement, all preliminary prospectuses and the
final prospectus (in the form filed with the SEC pursuant to Rule 497 under the
Act, as amended or supplemented, the "Prospectus") (except with respect to the
financial statements and schedules thereto and other financial data, as to which
we express no opinion) comply as to form in all material respects with the
requirements of the Act and the applicable rules and regulations thereunder.
2. The Registration Statement has become effective under the Act; to
our knowledge, no stop order suspending the effectiveness of the Registration
Statement or suspending or preventing the use of the Prospectus has been issued
and no proceedings for that purpose have been instituted or are threatened or
pending; and any required filing of the Prospectus or any supplement thereto
pursuant to Rule 497 promulgated under the Act have been made in the manner and
within the time period required by Rule 497.
B-1
APPENDIX C
FEE SCHEDULE
In consideration of services relating to the distribution of Interests to
investors by the Distributor and Selling Agents ("Distribution Services"), BACAP
Advisory Partners, LLC, the investment adviser of the Fund (the "Adviser"),
agrees to pay the Distributor compensation in an amount up to 30% of the dollar
amount of incentive allocations, if any, received by the Adviser from the Fund
(such allocations to be determined at the times and in the manner described in
the Prospectus) with respect to each member of the Fund that has purchased an
Interest through the Distributor or a Selling Agent (and each other holder of an
Interest that has acquired such an Interest from a member in accordance with the
provisions of the Limited Liability Company Agreement of the Fund) (the
"Distribution Fee"). The Distributor, in its agreement with each Selling Agent,
shall designate the portion of the Distribution Fee attributable to Interests
placed by such Selling Agent that shall be paid to such Selling Agent (which
portion may be up to the entire Distribution Fee attributable to such
Interests), and the Adviser shall pay such designated portion of the
Distribution Fee to the Selling Agent rather than to the Distributor. Payment of
Distribution Fees shall be made by the Adviser within 30 days after the date on
which any incentive allocation is made to the account of the Adviser by the
Fund.
The Adviser may enter into agreements with the Distributor and Selling Agents
pursuant to which certain ongoing investor services and account maintenance
services are provided to members of the Fund that are their customers ("Investor
Services") and will make payments to the Distributor and Selling Agents in
consideration of those services. In the case of payments made to the Distributor
and to each Selling Agent that is a member of the National Association of
Securities Dealers, Inc., the aggregate amount of: (i) the sales load, (ii)
payments made for Distribution Services and (iii) Investor Services shall be
limited so as not to exceed 8.00% of the gross proceeds of Interests sold,
except as may otherwise be permitted by NASDR.
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