DISTRIBUTION AGREEMENT SALIENT ABSOLUTE RETURN FUND SALIENT ABSOLUTE RETURN INSTITUTIONAL FUND
SALIENT
ABSOLUTE RETURN FUND
Salient
Capital, L.P.
0000 Xxx
Xxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
This
Distribution Agreement (the “Agreement”) dated as of January 29, 2010, shall be
entered into by and among the funds listed in Appendix B (each a “Fund” and
collectively the “Funds”), each of which is a Delaware statutory trust operating
as a closed-end, non-diversified management investment company registered under
the Investment Company Act of 1940, as amended (the “1940 Act”), and Salient
Capital, L.P. (the “Distributor”), a Delaware limited partnership operating as a
broker-dealer, registered under the Securities and Exchange Act of 1934, as
amended (the “1934 Act”), and with the Financial Industry Regulatory Authority,
Inc. (“FINRA”).
WHEREAS
(A) The
Funds desire to issue shares (“Shares”), pursuant to each Fund’s registration
statement on Form N-2 dated [____________], as amended or supplemented from time
to time including the prospectus and the statement of additional information
(“SAI”) and any supplements or amendments thereto or materials incorporated by
reference into the prospectus of SAI (collectively, “Registration
Statement”).
(B) The
Funds desire to appoint the Distributor as distributor with respect to the
Shares, and the Distributor is willing to accept such appointment.
NOW IT IS
AGREED AS FOLLOWS:
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1.
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Distribution of
Shares
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(a) Subject
to the terms and conditions set forth herein, the Fund appoints the Distributor
as its non-exclusive distributor in connection with the offer and sale of
Shares, and the Distributor hereby accepts such appointment and agrees to use
its reasonable best efforts to offer and sell Shares to investors whom 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 closing the sale of Shares by each investor who submits a Subscription
Agreement (as defined below). Unless otherwise agreed by the parties,
the Fund and/or Salient Advisors, L.P., investment adviser and services agent to
the Fund (the “Investment Adviser” or the “Services Agent”), shall be
responsible for reviewing each Subscription Agreement to confirm that it has
been completed in accordance with the instructions thereto and that each has
been completed by or on behalf of an “Eligible Investor” as described in the
Registration Statement. The Fund and/or the Services Agent, in its or
their sole discretion, may return to the Distributor any Subscription Agreement
that is not completed to its or their satisfaction and shall be under
no
obligation
to accept any Subscription Agreement. 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.
(b)
In offering Shares, the Distributor shall act solely as the agent of the Fund
not as principal.
(c) Prior
to forwarding a Subscription Agreement to the Fund and/or the Services Agent (or
their or its designee) for acceptance, the Distributor shall use its reasonable
efforts to determine that the subscriber for Shares has a legitimate source of
funds, that there is no reason to suspect such subscriber of money laundering
activities, and that in forwarding the Subscription Agreement the Distributor is
compliant with the program described in Section 5(g).
(d) For
purposes of the offering of Shares, the Fund has furnished to the Distributor
copies of the Registration Statement and subscription documentation (the
“Subscription Agreement”). Additional copies of such documents will
be furnished to the Distributor at no cost to the Distributor in such numbers as
may be 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 filed
with the Registration Statement or approved in writing by the Fund (collectively
with the Registration Statement, formation documents and Subscription Agreement,
the Fund’s “Offering Documents”).
(e) The
Fund may suspend or terminate the offering of any Shares at any time as to
specific classes of investors, as to specific jurisdictions or
otherwise. A Fund will promptly advise the Distributor of the
determination to cease offering Shares or recommence offering
Shares. 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) The
Fund will furnish the Distributor with such documents as it may reasonably
require, from time to time, for the purpose of enabling it to offer and sell
Shares as contemplated by this Agreement, or in order to evidence the accuracy
of any of the representations and warranties, or the fulfillment of any of the
conditions contained in this Agreement. All proceedings taken by the
Fund in connection with the issuance and sale of Shares as contemplated in this
Agreement will be satisfactory in form and substance to the
Distributor.
(g) The
Distributor accepts such appointment as distributor and agrees to render such
services and to assume the obligations herein set forth for the compensation
herein provided. The Distributor agrees to (a) provide one or more
persons during normal business hours to respond to telephone questions from
prospective investors concerning the Funds that are referred to it by the Funds’
service providers, (b) monitor the processing of purchase and repurchase orders
for Fund Shares by the Funds’ service providers, (c) enter into distribution and
service agreements with broker-dealers and other financial intermediaries, and
(d) perform such other services as the parties may agree from time to
time. The Distributor shall for all purposes herein provided be
deemed to be an independent contractor and, unless expressly provided herein or
otherwise authorized, shall have no authority to act for or represent the Fund
in any way. The
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Distributor,
by separate agreement with the Fund, may also serve the Fund in other
capacities. The services of the Distributor to the Fund under this
Agreement are not to be deemed exclusive, and the Distributor shall be free to
render similar or other services to others so long as its services hereunder are
not impaired thereby. The Distributor represents that it is a
registered securities dealer and a member in good standing of
FINRA.
(h) The
Distributor will prepare and deliver such reports as requested by each Fund’s
Board of Trustees, and otherwise from time to time as requested by the
Fund. Such reports shall be in substantially the form requested by
the Fund. If requested by the Funds, the Distributor shall send, at
its own expense, one or more appropriate representatives to report in person at
a meeting of the Funds’ Board of Trustees.
(i) The
Distributor will use appropriate efforts to market the Funds and solicit orders
for the sale of the Shares at such prices and on the terms and conditions set
forth in the Registration Statement. The Distributor agrees to file
with all necessary regulatory authorities, such as FINRA and the Securities and
Exchange Commission (the “SEC”), such advertising and sales literature as has
been previously approved by the Funds. The Distributor agrees that it
will have legal responsibility under all applicable laws, rules and regulations,
including the rules and regulations of the SEC and FINRA, for the form and use
of all advertising and sales literature for the Funds which the Distributor
prepares, uses, approves for use and/or files with the SEC and/or
FINRA.
(j) In
carrying out its duties and responsibilities hereunder, the Distributor may,
pursuant to separate written contracts, appoint various financial services firms
and/or advisers (“Firms”), to provide advertising, promotion and other
distribution services contemplated hereunder directly to or for the benefit of
existing and potential shareholders who may be clients of such
Firms. Such Firms shall at all times be deemed to be independent
contractors retained by the Distributor and not the Fund.
(k) The
Distributor shall use its reasonable best efforts with reasonable promptness to
sell such part of the authorized Shares of the Fund remaining unissued as from
time to time that shall be effectively registered under the Securities Act of
1933, as amended (“Securities Act”), at prices determined as hereinafter
provided and on terms hereinafter set forth, all subject to applicable federal
and state laws and regulations and to the Fund’s currently effective
Registration Statement; provided, however, that the Distributor may, in its
discretion, refuse to accept orders for Shares from any particular
applicant. Without limiting the foregoing, the Distributor agrees to:
(i) sell Shares only to an investor who is an “Eligible Investor” as that term
is defined in the Registration Statement; (ii) obtain and comply with any
investor certification requirements set forth in the Fund’s Registration
Statement; and (iii) impose the requirements set forth in (i) and (ii) of this
paragraph as a condition of the sales activity of any Firm or other person with
whom the Distributor enters into a selling group arrangement with respect to the
Shares.
(l) The
Distributor shall sell Shares of the Fund to or through qualified Firms in such
a manner, not inconsistent with the provisions hereof and the Fund’s
Registration Statement, as the Distributor may determine from time to time,
provided that no Firm or other person shall be appointed or authorized to act as
agent of the Fund without prior consent of the Fund. The
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Distributor
is authorized to enter into member servicing arrangements with such Firms as
described in the Fund’s Registration Statement, as applicable, and the Fund, as
described in its Registration Statement, as applicable, will reimburse the
Distributor for any payments made to such Firms that have agreed to provide
ongoing member services and account maintenance services to members in the Fund
that are their customers. In addition to sales made by it as agent of
the Fund, the Distributor may, in its discretion, also sell Shares of the Fund
as principal to persons with whom it does not have selling group
agreements.
(m) Shares
of the Fund offered for sale or sold by the Distributor shall be so offered or
sold at a price per Share determined in accordance with the Registration
Statement. The price the Fund shall receive for Shares purchased from
it shall be the net asset value used in determining the public offering price
applicable to the sale of such Shares, except with respect to Shares sold during
the initial offering period, as defined in the Registration Statement, which
shall be offered and sold at the price set forth therein.
(n) The
Distributor may compensate Firms, from its fees, for sales of Shares at the
commission levels provided in the Registration Statement from time to
time. The Distributor may also pay other commissions, fees or
concessions to Firms, and may pay them to others in its discretion, in such
amounts as the Distributor shall determine from time to time consistent with
applicable regulations.
(o) The
Distributor will require each Firm to conform to the provisions hereof and the
Registration Statement with respect to the public offering price or net asset
value, as applicable, of the Fund’s Shares, and neither the Distributor nor any
such Firms shall withhold the placing of purchase orders so as to make a profit
thereby.
(p) The
Fund will use its reasonable best efforts to keep effectively registered under
the Securities Act, for sale as herein contemplated, such Shares as the
Distributor shall reasonably request and as the Securities and Exchange
Commission shall permit to be so registered. Notwithstanding any
other provision hereof, the Fund may terminate, suspend, or withdraw the
offering of Shares whenever, in its sole discretion, actions it deems to be
desirable.
(q) The
Fund will execute any and all documents and furnish any and all information that
may be reasonably necessary in connection with the qualification of its Shares
for sale (including the qualification of the Fund as a dealer where necessary or
advisable) in such states as the Distributor may reasonably request (it being
understood that the Fund shall not be required without its consent to comply
with any requirement which in its opinion is unduly burdensome). The
Fund will furnish to the Distributor from time to time such information with
respect to the Fund and its Shares as the Distributor may reasonably request for
use in connection with the sale of Shares of the Fund.
(r) The
Distributor shall issue and deliver or shall arrange for various Firms to issue
and deliver on behalf of the Fund such confirmations of sales made by it
pursuant to this Agreement as may be required under any applicable
law. At or prior to the time of issuance of Shares, the Distributor
will pay or cause to be paid to the Fund the amount due the Fund for the sale of
such Shares. Shares shall be registered on the transfer books of the
Fund in such names and denominations as the Distributor may
specify.
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(s) The
Distributor shall order Shares of the Fund from the Fund only to the extent that
it shall have received purchase orders therefore. The Distributor
will not make, or authorize Firms or others to make (a) any short sales of
Shares of the Fund; or (b) any sales of such Shares to any member of the Fund’s
board of trustees (“Board”) or officer of the Fund or to any officer or Board
member of the Distributor or of any corporation or association furnishing
investment advisory, managerial or supervisory services to the Fund, or to any
corporation or association, unless such sales are made in accordance with the
Registration Statement relating to the sale of such Shares. The
Distributor, on behalf of and for the account of the Fund, may repurchase the
Shares of the Fund at such prices and upon such terms and conditions as shall be
specified in the Fund’s Registration Statement. In selling or
repurchasing Shares of the Fund for the account of the Fund, the Distributor
will in all respects conform to the requirements of all state and federal laws
and the Conduct Rules of FINRA, relating to such sale or repurchase, as the case
may be. The Distributor will observe and be bound by all the
provisions of the Fund’s organizational documents (and of any fundamental
policies adopted by the Fund pursuant to the 1940 Act), which in any way
require, limit, restrict, prohibit or otherwise regulate any action on the part
of the Distributor hereunder.
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2.
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Handling of
Orders
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(a) For
purposes of this Agreement, purchases of Shares whose subscriptions were
solicited by the Distributor and accepted by the Fund are referred to herein as
the “Distributor’s Subscribers.”
(b) All
properly presented and accepted subscriptions of the purchase of Shares shall be
executed at the offering price per Shares as described in the Registration
Statement.
(c) The
procedures relating to soliciting and the handling subscriptions for Shares will
be subject to the terms of the Registration Statement and the Operating
Procedures set forth in Appendix A hereto.
(d) Payments
for Shares shall be made as specified in the Registration Statement and
Subscription Agreement.
(e) The
Distributor will not at any time be responsible for performing recordkeeping or
accounting services with respect to the Fund, except as may be described
herein. The Fund shall promptly inform the Distributor of the Fund’s
net assets and net asset value per Share (and/or in certain instances estimated
net asset values) as soon as reasonably practicable following their
calculation. The Distributor is authorized to communicate such
calculations to each of the Distributor’s Subscribers. In the event
that estimated net asset values are provided in lieu of net asset values, the
Distributor shall make appropriate disclosures to the Distributor’s
Subscribers.
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3.
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Fees and
Expenses
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(a) The
Distributor shall not receive any fees, sales load or commissions or charges, or
other compensation from a Fund or a holder of Shares in its capacity as such for
the services the Distributor provides under this Agreement.
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(b) Except
as may otherwise be agreed to by the Fund, the Distributor shall be responsible
for the payment of all costs and expenses incurred by it in connection with the
performance of its obligations under this Agreement (other than those costs
associated with preparing and updating the Registration Statement and with
reviewing the qualifications of prospective investors, which costs will be borne
by the Fund).
(c) The
Distributor may enter into such member servicing arrangements and make such
payments as described in Section 1(l) hereof, and may make such other payments
as set forth in Section 1(m) hereof.
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4.
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Additional
Representation, Warranties and Covenants of the
Fund
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Each Fund
hereby represents, warrants, and covenants to the Distributor (severally and not
jointly) that:
(a) The
Fund has been duly formed under the laws of the State of Delaware and has the
power and authority to effect the offering of its Shares and conduct its
business as described in the Registration Statement. All necessary
filings, consents and other actions necessary to qualify the offering of Shares
in each applicable U.S. state and to conduct the business of the Fund as
described in the Registration Statement have been, or will timely be, made or
taken. The offering and sale of the Shares has been duly registered
under the Securities Act.
(b) The
Funds engage in business as closed-end, non-diversified management investment
companies and are registered as such under the 1940 Act and will maintain the
effectiveness of their registration statements with the Securities and Exchange
Commission.
(c) The
sale of Shares and the execution, delivery and performance of this Agreement and
the Fund’s conduct of business as described in the Registration Statement will
not result in the violation of any applicable law.
(d) The
Fund will use the proceeds from the sale of Shares for the purposes set forth in
the Registration Statement.
(e) Shares
to be or which may be issued by the Fund have been duly authorized for issuance
and sale and, when issued and delivered by the Fund will conform in all material
respects to all statements relating thereto contained in the Registration
Statement.
(f) The
Registration Statement and any selling materials prepared or approved by the
Fund do not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. If, at any time after the
commencement of the offering of Shares and prior to the termination of such
offering, an event occurs that in the opinion of counsel to the Fund materially
affects the Fund and that should be set forth in an amendment or supplement to
the Registration Statement in order to make the statements in the Registration
Statement not misleading the Fund will notify the Distributor as promptly as
practicable of the occurrence of such event and prepare and furnish to the
Distributor copies of an amendment or supplement to the Registration Statement,
in such reasonable quantities as it may request, for delivery to Distributor’s
Subscribers in order that the Registration Statement will not contain any untrue
statement of any material fact or omit
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to state
a material fact that in the opinion of such counsel is necessary to make the
statements in the Registration Statement not misleading. If a Fund
shall not propose such amendment or amendments and/or supplement or supplements
within (15) days after receipt by the Fund of a written request from the
Distributor to do so, the Distributor may, at its option, terminate this
Agreement. A Fund shall not file any amendment to any Registration
Statement or supplement to and prospectus or SAI without giving the Distributor
reasonable notice thereof in advance; provided, however, that nothing contained
in this Agreement shall in any way limit a Fund’s right to file at any time such
amendments to any Registration Statement or supplement any prospectus or SAI as
the Fund may deem advisable, such right being in all respects absolute and
unconditional.
(g) This
Agreement has been duly authorized, executed and delivered by the Fund and, upon
execution by the Distributor, will constitute a valid and binding agreement of
the Fund.
(h) Upon
the Distributor’s request, the Fund will make available to the Distributor any
information pertaining to the Fund reasonably requested by any prospective
investor.
(i) The
foregoing covenants and representations shall be true and correct as of the date
hereof and for so long as the Agreement remains in effect and the Distributor’s
subscribers are invested in that Fund.
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5.
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Additional
Representation, Warranties and Covenants of the
Distributor.
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The
Distributor hereby represents and warrants to the Fund as follows:
(a) The
Distributor will comply with all applicable laws and regulations in connection
with its activities as distributor including, without limitation, all rules and
regulations under the Securities Exchange Act of 1934, as amended.
(b) The
Distributor has full power and authority to enter into, and to perform its
obligations under, this Agreement.
(c) The
execution of this Agreement by the Distributor has been validly
authorized.
(d) In
selling Shares, the Distributor will solicit offers to buy Shares only in
compliance with the procedures described in Section 1(j) above and the
Registration Statement. Neither the Distributor nor any other persons
authorized by the Distributor will give any information or make any
representations, other than those contained in the Registration Statement and
any other Offering Documents specifically approved by the Fund.
(e) The
Distributor will distribute to each person to whom the Distributor has furnished
a copy of the Registration Statement and/or other applicable written offering
document any amendment or supplement thereto provided to the Distributor by the
Fund as may be applicable to such person.
(f) The
Distributor acknowledges that transfers of Shares (and their repurchase by the
Fund) are restricted as described in the Registration Statement.
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(g) The
Distributor represents that it has an anti-money laundering program in place
reasonably designed to comply with Section 352 of the USA Patriot Act and FINRA
Conduct Rule 3011. The Distributor’s anti-money laundering program
includes: (i) Anti-Money Laundering/ “Know your Customer” polices and
procedures; (ii) the designation of an Anti-Money Laundering Compliance Officer;
(iii) recording-keeping and reporting practices in accordance with applicable
law; (iv) reporting of suspicious activity to government authorizes in
accordance with applicable law; (v) anti-money laundering training; and (vi)
independent testing for compliance. The Distributor will provide such
periodic reports or certification to the Fund regarding this program as the Fund
may reasonably request.
(h) The
Distributor maintains all licenses and registrations necessary under applicable
law and regulations (including the rules of FINRA) to provide the services
required to be provided by the Distributor under this Agreement.
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6.
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Liability;
Indemnification
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(a) The
Fund agrees to indemnify, defend and hold the Distributor and its affiliates and
their respective officers, directors, employees, agents, representatives and
controlling persons free and harmless from and against any and all claims,
demands, liabilities and reasonable expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
reasonable expenses (including the cost of investigation or defending such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which the Distributor and its affiliates and their
respective officers, directors, employees, agents, representatives and/or any
such controlling person may incur arising out of or based upon (i) any untrue
statement of a material fact or omission to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading contained in the Registration Statement or other Offering Documents
(except to the extent such untrue statement or omission was made in reliance on
and in conformity with information provided in writing to the Fund, by the
Distributor for inclusion in the Registration Statement or other Offering
Documents); (ii) any material breach by the Fund of any provision of this
Agreement including any representation, warranty, covenant or agreement set
forth herein; (iii) any material violation of any applicable law by the Fund or
its officers, directors, employees, agents (other than the Distributor), or
representatives; (iv) any actions of the Fund and its officers, directors,
employees and agents (other than the Distributor) or representatives relating to
the sale of Shares, including but not limited to any statements or
representations, written or oral, concerning the Fund that such a party makes to
the Distributor and its agents and representatives; (v) the action of the Fund
and its employees and agents relating to the Fund’s processing of Subscription
Agreements and the servicing of customer accounts; or (vi) any act or omission
made in respect of its function as Distributor; provided, however, that, in no
event shall anything herein be so construed as to protect the Distributor
against any liability to which the Distributor would otherwise be subject by
reason of its gross negligence, willful misfeasance or bad faith or reckless
disregard of its obligations and duties under this Agreement, or violation of
any applicable law by the Distributor in connection with the distribution of
Shares. The Funds’ agreement to indemnify the Distributor, and other
indemnities as aforesaid is expressly conditional upon the Fund being promptly
notified of any action brought against the Distributor, such as notification to
be given by letter or facsimile addressed to the Fund at the address set forth
in this Agreement or other address communicated to the Distributor in writing
(but only to
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the
extent that the Fund is prejudiced by the failure to give prompt notice), and
further conditional upon the Distributor reasonably cooperating with the Fund
with respect to any claim or demand for which the Distributor seeks indemnity
and promptly defending such claims if the Fund reasonably
requests. In addition, any determination by the Fund under this
Section 6(a) will be made in accordance with Section 17 of the 1940
Act. The Fund agrees to promptly notify the Distributor of the
commencement of any litigation proceedings against the Fund, or any of its
officers or directors in connection with the issue and sale of any
Shares.
(b) The
Distributor agrees to indemnify, defend and hold each Fund and its controlling
persons free and harmless from and against any and all claims, demands,
liabilities and reasonable expenses (including the cost of investigating or
defending such claims, demands or liabilities and any reasonable counsel fees
incurred in connection therewith) which such party may incur, only to the extent
that such liability or expense incurred by such party resulting from such claims
or demands shall arise out of or be based upon the Distributor’s gross
negligence, willful misfeasance, bad faith or reckless disregard of its
obligations and duties under this Agreement or violation by the Distributor of
any applicable law in connection with the distribution of Shares, and to the
extent that such liability or expense incurred by the Fund and its controlling
persons resulting from such claims or demands shall arise out of or be based
upon (a) any sales literature, advertisements, information, statements or
representations issued or made by the Distributor without the prior written
consent of the Fund or its agent, (b) any untrue or alleged untrue statement of
a material fact contained in information furnished in writing by the Distributor
to a Fund specifically for use in the Registration Statement relating to such
Fund, (c) any omission or alleged omission to state a material fact in
connection with such information required or necessary to make such information
not misleading or (d) the breach by the Distributor of this
Agreement. The Distributor’s agreement to indemnify such party as
aforesaid is expressly conditional upon the Distributor being promptly notified
of any action brought against such party, such notification to be given by
letter or facsimile addressed to the Distributor at its address set forth herein
or other address communicated to the Fund in writing (but only to the extent
that the Distributor is prejudiced by the failure to give prompt notice), and
further conditional upon such party reasonably cooperating with the Distributor
with respect to any claim or demand for which any of such party seeks indemnity
and promptly defending such claim if the Distributor reasonably
requests.
(c) If
recovery is not available under the foregoing indemnification provisions of this
Section 6 for any reason other than as specified therein, the parties entitled
to indemnification by the terms thereof shall be entitled to contribution toward
the amount paid or payable by such indemnified party as a result of the
liabilities, claims, costs (including attorneys fees and expenses), damages and
expenses referred to in Subsection (a) or (b) above. In determining
the amount of contribution to which the respective parties are entitled, there
shall be considered the relative benefits received by each party from the
offering of the Shares, the parties’ relative knowledge and access to
information concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any untrue statement or omission, and any
other equitable considerations appropriate under the circumstances.
(d) Promptly
after receipt by either party of notice of any claim or the commencement of any
action or proceeding with respect to which such party may be entitled to be
indemnified hereunder, the party claiming indemnification (the “Indemnified
Party”) will
9
notify
the other party (the “Indemnifying Party”) in writing of such a claim or the
commencement of such action or proceedings, and the Indemnifying Party will
assume the defense of such action or proceeding and will employ counsel
satisfactory to the Indemnified Party and will pay the fees and expenses of such
counsel as incurred. Notwithstanding the proceeding sentence, the
Indemnified Party will be entitled to employ counsel separate from the
Indemnifying Party’s counsel and from any other party in such action if the
Indemnified Party determines that a conflict of interest exists which makes
counsel chosen by the Indemnifying Party not advisable or if the Indemnified
Party reasonably determines that the Indemnifying Party’s assumption of the
defense does not adequately represent the Indemnified Party’s
interest. In such event the Indemnifying Party will pay the fees and
disbursements of such separate counsel, but in no event shall the Indemnifying
Party be liable for the fees and expenses of more than one counsel (in addition
to local counsel) for the Indemnified Party in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
(e) The
Indemnifying Party agrees that it will not, without prior written consent of the
Indemnified Party, settle any pending or threatened claim or proceeding related
to or arising out of such engagement or transaction or conduct in connection
therewith (whether or not the Indemnified Party is a party to such claim or
proceeding) unless such settlement includes a provision unconditionally
releasing the Indemnified Party from and holding the Indemnified Party harmless
against all liability in respect of claims by any releasing party related to or
arising out of such engagement or any transaction or conduct in connection
therewith. The Indemnifying Party will also promptly reimburse the
Indemnified Party for all reasonable expenses (including counsel fees) as they
are incurred by the Indemnified Party in connection with investigating,
preparing or defending, or providing evidence in, any pending or threatened
claim or proceeding in respect of which indemnification may be sough hereunder
(whether or not the Indemnified Party is a party to such claim or proceeding) or
in enforcing this Agreement.
(f) The
provisions of this Section 6 shall survive termination of this
Agreement.
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7.
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Terms and
Termination
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(a) This
Agreement will become effective for all purposes as of the date first written
above and will remain in effect for an initial term of two years from such date,
unless terminated in accordance with the terms of this
Agreement. Thereafter, this Agreement will continue in effect from
year to year, provided that each such continuance is approved by the Fund’s
Board of Directors, including the vote of a majority of the Directors who are
not “interested persons” of the Fund within the meaning of the 1940
Act.
(b) Either
party may terminate this Agreement without cause, upon thirty (30) days’ prior
written notice to the other party, or, if there has been a material breach of
any condition, warranty, representation or other term of this Agreement by one
party, by written notice to such breaching party, at any time; provided however,
that if this Agreement is terminated as to specific Shares, this Agreement shall
only be deemed terminated with respect to those Shares. This
Agreement shall terminate automatically in the event of its “assignment” within
the meaning of the 1940 Act.
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8.
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Notice
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Each Fund
agrees to advise the Distributor immediately in writing:
(a) of
any request by the SEC for amendments to the Registration Statement relating to
such Fund then in effect with respect to any class of the Shares 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 relating to such Fund then in effect
with respect to any class of the Shares or the initiation of any proceeding for
that purpose;
(c) of
the happening of any event that makes untrue any statement of a material fact
made in the Registration Statement relating to such Fund then in effect with
respect to any class of the Shares or that requires the making of a change in
such Registration Statement in order to make the statements therein not
misleading; and
(d) of
the commencement of any litigation or proceedings against the Fund or any of its
officers or Board members in connection with the issuance and sale of any class
of the Shares.
Any
notices under this Agreement shall be given in writing, sent by hand, overnight
courier, telecopier or certified or registered mail to the address set forth
below or to such other address as shall have been specified in writing to the
other party hereto, and shall be deemed to have been delivered effective at the
earlier of its receipt or within two (2) days after dispatch.
If to a
Fund:
Salient
Absolute Return Fund
0000 Xxx
Xxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Attn: Xxxxxx
X. Xxxxxxxxx
With a
copy to:
Salient
Advisors, L.P.
0000 Xxx
Xxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Attn: Chief
Compliance Officer
If to the
Distributor:
Salient
Capital, L.P.
0000 Xxx
Xxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Attn: Chief
Compliance Officer
11
|
9.
|
Confidentiality
|
(a) The
Fund hereby acknowledges that it has received or will receive written and/or
oral information (such information being referred to in this Section 9 as
“Customer Information”) from the Distributor regarding those customers of the
Distributor that subscribe for Shares including the names of the Distributor’s
subscribers and that all such Customer Information has been or will be furnished
to them subject to the provision of this Section 9. The Fund agrees
that it will use, and that it will ensure that all of its affiliates and agents
and other entities providing services with respect to the Fund’s use, the
Customer Information solely in connection with the subscription for Shares by
subscribers, the booking of such Shares, the administration of the Fund and the
performance of their respective roles with respect to the Fund and its Shares,
and for no other purpose whatsoever. Furthermore, the Fund agrees
that it will not disclose or make available, and will ensure that none of their
affiliates or agents or other entities providing services with respect to the
Fund discloses or makes available, any Customer Information to any person or
entity that does not have a need to know such Customer Information in connection
with the foregoing. Specifically, and without limitation of the
foregoing, the Fund agrees that it will not disclose or make available, and will
ensure that none of their affiliates or agents or other entities providing
service with respect to the Fund disclose or make available, any Customer
Information to any persons or entities responsible for or involved in the
marketing or products or services to customers of such persons or
entities.
(b) The
Distributor acknowledges and agrees that the Fund and its respective affiliates
may disclose Customer Information or portions thereof (1) at the request of a
regulatory or self-regulatory agency or in connection with an examination of the
Fund, or such affiliates by regulatory examiners; (2) pursuant to subpoena or
other legal process; (3) at the express direction of any other authorized
government or self-regulatory agency; (4) to its internal or external attorneys
or auditors; (5) to others to whom the Fund or such affiliates are required to
make such disclosure by law or regulation, and in any of the circumstances
mentioned in clause (2), (3), or (5), the Fund shall (to the extent permitted by
law) give the Distributor reasonable prior notice of any disclosure and shall,
in any event, advise the Distributor of any such disclosure to the extent
permitted by law.
(c) The
provisions of this Section 9 shall not apply to information concerning a
customer that is obtained in any manner other than pursuant to this
Agreement.
(d) The
provisions of this Section 9 shall survive the termination of this
Agreement.
12
|
10.
|
Miscellaneous
|
(a) This
Agreement is to be governed by, and construed in accordance with, the laws of
the State of Delaware without giving effect to choice of laws principles, and
the provisions of the 1940 Act (which provisions shall control in the event of
any conflict between the laws of the State of Delaware and the 1940
Act). Neither this Agreement nor any term hereof may be amended,
changed, waived, discharged or terminated except by an instrument in writing
signed by both parties.
(b) This
Agreement sets forth the entire agreement between the parties hereto and
replaces and supersedes all other understanding, commitments, and agreements
relating to the subject matter hereof.
(c) If
any provision of this Agreement is determined to be unenforceable, the remaining
provisions shall remain enforceable to the extent permissible.
(d) The
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
agreement.
(e) All
parties hereto are expressly put on notice of the Fund’s Declaration of Trust
and all amendments thereto. This Agreement has been executed by and
on behalf of the Fund by its representatives as such representatives and not
individually, and the obligations of the Fund hereunder are not binding upon any
of the Board members, officers, or shareholders of the Fund individually but are
binding upon only the assets and property of the Fund. With respect
to any claim by the Distributor for recovery of any liability of the Fund
arising hereunder allocated to the Fund, whether in accordance with the express
terms hereof or otherwise, the Distributor shall have recourse solely against
the assets of the Fund to satisfy such claim and shall have no recourse against
the assets of any other fund for such purpose.
10
IN
WITNESS WHEREOF, the parties to this Agreement have caused it to be duly
executed as of the date first above written.
SALIENT
ABSOLUTE RETURN FUND
By: /s/ Xxxxxx
Xxxxxxxxx
Name: Xxxxxx
Xxxxxxxxx
Title: Secretary
SALIENT
CAPITAL, L.P.
By: Salient
Capital Management, LLC, Its General Partner
By: /s/ A. Xxxx
Xxxxxxx
Name: A. Xxxx Xxxxxxx
Title: Managing Director
14
Appendix
A
OPERATING
PROCEDURES
Unless
otherwise agreed by the parties, the Fund agrees that it will not accept any
subscriptions for Shares directly from the Distributor’s customers and that any
such subscriptions must be made through the Distributor.
Unless
otherwise agreed by the parties, the Distributor will deliver all Subscription
Agreements to the Services Agent or its designee and the Services Agent or its
designee will be responsible for reviewing all Subscription Agreements to
confirm that they have been completed in their entirety.
The Fund
or its designee will be responsible for maintaining records of all subscribers
and for providing Distributor’s Subscribers, on a timely basis, with at least
quarterly statements of subscriptions and repurchases, and with at least
quarterly unaudited performance information for the Fund. The Fund or
its designee also will be responsible for providing the Distributor’s
Subscribers with confirmations of subscriptions and repurchases.
The
Distributor’s Subscribers must comply with all subscription and repurchase
procedures, including deadlines, set forth in the Registration Statement or
otherwise communicated by the Fund to the Distributor with respect to the
transmission of subscription and repurchase requests.
Appendix
B
Taxable Investor
Funds
SALIENT
ABSOLUTE RETURN FUND
Institutional Investor
Funds
