DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this __ day of _____________, 2000 between
XXXxxxxxx.xxx Opportunity Fund, LLC (the "Fund"), a Delaware limited liability
company and XXXxxxxxx.xxx Securities, Inc. (the "Distributor"), a Delaware
corporation.
WHEREAS, the Fund has elected to be regulated as a business development
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and its shares are registered with the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 Act") and the
Securities Exchange Act of 1934, as amended ("1934 Act"); and
WHEREAS, the Distributor is registered as a broker with the SEC under the
1934 Act.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Fund and Distributor hereby agree as follows:
ARTICLE 1. Sale of Shares. The Fund grants to the Distributor the
exclusive right to sell units (the "Shares") of the Fund at the price set forth
in the Prospectus (which shall not be less than the Fund"s net asset value per
Share) as agent and on behalf of the Fund, during the term of this Agreement and
subject to the registration requirements of the 1933 Act and the 1934 Act, the
rules and regulations of the SEC and the laws governing the sale of securities
in the various states ("Blue Sky Laws").
ARTICLE 2. Solicitation of Sales. When soliciting sales of Shares, the
Distributor will be acting as a broker, as that term is defined in the 1934 Act.
In no case will the Distributor act as a dealer, as that term is defined in the
1934 Act, or otherwise as a principal in the solicitation or sale of Shares. The
distribution of Shares will be conducted in compliance with Rule 2810 of the
Conduct Rules of the National Association of Securities Dealers, Inc. ("NASD"
Distributor agrees to perform the necessary due diligence to ensure that all
material facts are adequately and accurately disclosed as prescribed in Rule
2810(b)(3) of the Conduct Rules of the NASD.
In consideration of these rights granted to the Distributor, the
Distributor agrees to use its best efforts, consistent with its other business,
in connection with the distribution of Shares of the Fund; provided, however,
that the Distributor shall not be prevented from entering into like arrangements
with other issuers. The Distributor will not be obligated to purchase any Shares
of the Fund and may not, in fact, purchase Shares as principal or otherwise take
Shares into its inventory. The provisions of this paragraph do not obligate the
Distributor to register as a broker under the Blue Sky Laws of any jurisdiction
if it determines it would be uneconomical for it to do so or to maintain its
registration in any jurisdiction in which it is now registered nor obligate the
Distributor to sell any particular number of Shares.
During the distribution of Shares, the Distributor will comply with the
requirements of Rule 2810(b)(2)(B) of the NASD Conduct Rules.
ARTICLE 3. Authorized Representations. The Distributor is not authorized
by the Fund to give any information or to make any representations other than
those contained in the current registration statement and prospectus of the Fund
filed with the SEC or contained in shareholder reports or other material that
may be prepared by or on behalf of the Fund for the Distributor's use.
ARTICLE 4. Registration of Shares. The Fund agrees that it will take all
action necessary to register Shares under the federal and state securities laws
so that there will be available for sale the number of Shares the Distributor
may reasonably be expected to sell and to pay all fees associated with said
registration. The Fund shall make available its currently effective prospectus
for the entire offering period as described therein. The Fund shall furnish to
the Distributor copies of all information, financial statements and other papers
which the Distributor may reasonably request for use in connection with the
distribution of Shares of the Fund.
ARTICLE 5. Compensation. As compensation for providing the services under
this Agreement the Distributor shall be reimbursed for its actual costs of
distribution as described in the Fund's current prospectus, as amended from time
to time.
ARTICLE 6. Indemnification of Distributor. The Fund agrees to indemnify
and hold harmless the Distributor and each of its directors and officers and
each person, if any, who controls the Distributor within the meaning of Section
15 of the 1933 Act against any loss, liability, claim, damages or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damages, or expense and reasonable counsel fees and
disbursements incurred in connection therewith), arising by reason of any person
acquiring any Shares, based on the ground that the registration statement,
prospectus, shareholder reports or other information filed or made public by the
Fund (as from time to time amended) included an untrue statement of a material
fact or omitted to state a material fact required to be stated or necessary in
order to make the statements made not misleading. However, the Fund does not
agree to indemnify the Distributor or hold it harmless to the extent that the
statements or omission was made in reliance upon, and in conformity with,
information furnished to the Fund by or on behalf of the Distributor.
In no case (i) is the indemnity of the Fund to be deemed to protect the
Distributor against any liability to the Fund or its shareholders to which the
Distributor or such person otherwise would be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under this
Agreement, or (ii) is the Fund to be liable to the Distributor under the
indemnity agreement contained in this paragraph with respect to any claim made
against the Distributor or any person indemnified unless the Distributor or
other person shall have notified the Fund in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the
Distributor or such other person (or after the Distributor or the person shall
have received notice of service on any designated agent). However, failure to
notify the Fund of any
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claim shall not relieve the Fund from any liability which it may have to the
Distributor or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph.
The Fund shall 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 claims subject to this indemnity provision. If the Fund elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Fund and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Fund
elects to assume the defense of any suit and retain counsel, the indemnified
defendants shall bear the fees and expenses of any additional counsel retained
by them. If the Fund does not elect to assume the defense of a suit, it will
reimburse the indemnified defendants for the reasonable fees and expenses of any
counsel retained by the indemnified defendants.
The Fund agrees to notify the Distributor promptly of the commencement of
any litigation or proceedings against it or any of its officers or directors in
connection with the issuance or sale of any of its Shares.
ARTICLE 7. Indemnification of Fund. The Distributor covenants and agrees
that it will indemnify and hold harmless the Fund and each of its directors and
officers and each person, if any, who controls the Fund within the meaning of
Section 15 of the Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel fees incurred in
connection therewith) based upon the 1933 Act, 1934 Act, 1940 Act or any other
statute or common law and arising by reason of any person acquiring any Shares,
and alleging a wrongful act of the Distributor or any of its employees or
alleging that the registration statement, prospectus, Shareholder reports or
other information filed or made public by the Fund (as from time to time
amended) included an untrue statement of a material fact or omitted to state a
material fact required to be stated or necessary in order to make the statements
not misleading, insofar as the statement or omission was made in reliance upon
and in conformity with information furnished to the Fund by or on behalf of the
Distributor.
In no case (i) is the indemnity of the Distributor in favor of the Fund or
any other person indemnified to be deemed to protect the Fund or any other
person against any liability to which the Fund or such other person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is the
Distributor to be liable under the indemnity agreement contained in this
paragraph with respect to any claim made against the Fund or any person
indemnified unless the Fund or person, as the case may be, shall have notified
the Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim shall have been served upon the Fund or upon any person (or after the
Fund or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from
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any liability which it may have to the Fund or any person against whom the
action is brought otherwise than on account of its indemnity agreement contained
in this paragraph.
The Distributor shall 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 the claim, but if the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants whose approval shall not be unreasonably withheld.
In the event that the Distributor elects to assume the defense of any suit and
retain counsel, the defendants in the suit shall bear the fees and expenses of
any additional counsel retained by them. If the Distributor does not elect to
assume the defense of any suit, it will reimburse the indemnified defendants in
the suit for the reasonable fees and expenses of any counsel retained by them.
The Distributor agrees to notify the Fund promptly of the commencement of
any litigation or proceedings against it in connection with the issue and sale
of any of the Fund"s Shares.
ARTICLE 8. Effective Date. This Agreement shall be effective upon its
execution, and unless terminated as provided, shall continue in force for two
year(s) from the effective date. This Agreement shall automatically terminate in
the event of its assignment. As used in this paragraph the term "assignment"
shall have the meaning specified in the 1940 Act. In addition, this Agreement
may at any time be terminated without penalty by the Distributor, by a vote of a
majority of Independent Directors of the Fund or by vote of a majority of the
outstanding voting securities of the Fund upon not less than sixty days prior
written notice to the other party.
ARTICLE 9. Notices. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the last address furnished by the other party to the party giving notice: if
to the Fund or the Distributor notices shall be sent to 000 X. 00xx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000.
ARTICLE 10. Limitation of Liability. A copy of the Operating Agreement of
the Fund has been provided to the Distributor and notice is hereby given that
this Agreement is executed on behalf of the directors of the Fund as directors
and not individually and that the obligations of this instrument are not binding
upon any of the directors, officers or shareholders of the Fund individually but
binding only upon the assets and property of the Fund.
ARTICLE 11. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Delaware and the applicable provisions of the 1940
Act. To the extent that the applicable laws of the State of Delaware, or any of
the provisions herein, conflict with the applicable provisions of the 1940 Act,
the latter shall control.
ARTICLE 12. Multiple Originals. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
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IN WITNESS, the Fund and Distributor have each duly executed this
Agreement, as of the day and year above written.
XXXxxxxxx.xxx Opportunity Fund, LLC
By:
Attest:
XXXxxxxxx.xxx Securities, Inc.
By:
Attest:
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