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Exhibit 99.2(h)(i)
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made this 16th day of January, 2001, between XXXXXXX XXXXXX
CAPITAL ENTREPRENEURS FUND, a Delaware business trust (the "Fund"), and XXXXXXX
XXXXXX CAPITAL LLC, a Delaware limited liability company ("SWC").
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints SWC to act as distributor of shares of
beneficial interest (hereinafter called "shares") of the Fund in jurisdictions
wherein shares of the Fund may legally be offered for sale; provided, however,
that the Fund in its absolute discretion may: (a) issue or sell shares directly
to holders of shares of the Fund upon such terms and conditions and for such
consideration, if any, as it may determine, whether in connection with the
distribution of subscription or purchase rights, the payment or reinvestment of
dividends or distributions, or otherwise; (b) issue or sell shares at net asset
value to the shareholders of any other investment company for which SWC shall
act as distributor who wish to exchange all or a portion of their investment in
shares of such other investment company for shares of the Fund; or (c) issue
shares in connection with the merger or consolidation of any other investment
company with the Fund or the Fund's acquisition, by purchase or otherwise, of
all or substantially all of the assets of any other investment company or all or
substantially all of the outstanding shares of any such company. SWC shall
appoint various financial service firms ("Firms") to provide distribution
services to investors. The Firms shall provide such office space and equipment,
telephone facilities, personnel, literature distribution, advertising and
promotions as is necessary or beneficial for providing information and
distribution services to existing and potential clients of the Firms. SWC may
also provide some of the above services for the Fund.
2. If the Fund has also appointed or appoints another broker-dealer to
serve as a distributor, whether in the United States or abroad, SWC and such
other broker-dealer shall be co-distributors of shares.
3. SWC accepts such appointment as distributor and agrees to render
such services and to assume the obligations herein set forth for the
compensation herein provided. SWC shall for all purposes herein provided unless
otherwise specified 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. SWC, by separate agreement with the
Fund, may also serve the Fund in other capacities. The services of SWC to the
Fund under this Agreement are not to be deemed exclusive, and SWC shall be free
to render similar services or other services to others so long as its services
hereunder are not impaired thereby. SWC represents that it is a registered
security dealer and a member in good standing of the National Association of
Securities Dealers, Inc.
4. In carrying out its duties and responsibilities hereunder, SWC may,
pursuant to separate written contracts, appoint various Firms to provide
advertising, promotion and other
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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 SWC and
not the Fund. SWC may also delegate its authority hereunder to another
broker-dealer to appoint Firms to engage in the sale of shares of the Fund,
subject to the supervision of SWC and consistent with the terms of this
Agreement.
5. SWC shall use its best efforts with reasonable promptness to sell
such part of the authorized shares of the Fund remaining unissued as from time
to time shall be effectively registered under the Securities Act of 1933
("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,
including the prospectus and the statement of additional information and any
supplements or amendments thereto ("Registration Statement") and the Fund's
organizational documents, provided, however, that SWC may in its discretion
refuse to accept orders for shares from any particular applicant. Without
limiting the foregoing, SWC agrees to sell shares only to investors who are a
"Qualified Client" as that term is defined in the Prospectus and in Rule 205-3
under the Investment Advisers Act of 1940, and to impose this requirement as a
condition of the sales activity of any Firm or other person with whom SWC enters
into a selling group arrangement with respect to the shares.
6. SWC shall sell shares of the Fund to or through qualified Firms in
such manner, not inconsistent with the provisions hereof and the Fund's
Registration Statement, as SWC 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. In addition to sales made by it as agent
of the Fund, SWC may, in its discretion, also sell shares of the Fund as
principal to persons with whom it does not have selling group agreements.
7. Shares of any class of the Fund offered for sale or sold by SWC
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 all 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 Prospectus,
which shall be offered and sold at the price set forth therein. Any excess of
the sales price over the net asset value of the shares of the Fund sold by SWC
as agent shall be retained by SWC as a commission for its services hereunder.
SWC may compensate Firms for sales of shares at the commission levels provided
in the Registration Statement from time to time. SWC may pay other commissions,
fees or concessions to Firms, and may pay them to others in its discretion, in
such amounts as SWC shall determine from time to time consistent with applicable
regulations. SWC shall be entitled to receive and retain any applicable early
withdrawal charge as described in the Registration Statement. SWC shall also
receive any distribution fees payable by the Fund as provided in the Fund's plan
of distribution with respect to any class of shares, as amended from time to
time, and any services fees payable by the Fund as provided in the Fund's
service plan with respect to any class of shares, as amended from time to time
(each, a "Plan").
8. SWC 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,
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of the Fund's shares, and neither SWC nor any such Firms shall withhold the
placing of purchase orders so as to make a profit thereby.
9. The Fund will use its best efforts to keep effectively registered
under the Securities Act for sale as herein contemplated such shares as SWC
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, it deems such action to be desirable.
10. 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 SWC 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 SWC from time to time such information
with respect to the Fund and its shares as SWC may reasonably request for use in
connection with the sale of shares of the Fund.
11. SWC 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. At or prior to the time of
issuance of shares, SWC will pay or cause to be paid to the Fund the amount due
the Fund for the sale of such shares. Certificates shall be issued or shares
registered on the transfer books of the Fund in such names and denominations as
SWC may specify.
12. SWC shall order shares of the Fund from the Fund only to the extent
that it shall have received purchase orders therefor. SWC 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 Board member or officer of the Fund or to
any officer or Board member of SWC 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. SWC, 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
Registration Statement. In selling or repurchasing shares of the Fund for the
account of the Fund, SWC will in all respects conform to the requirements of all
state and federal laws and the Conduct Rules of the National Association of
Securities Dealers, Inc., relating to such sale or repurchase, as the case may
be, and SWC will observe and be bound by all the provisions of the Registration
Statement and the Fund's organizational documents (and of any fundamental
policies adopted by the Fund pursuant to the Investment Company Act of 1940, as
amended) which at the time in any way require, limit, restrict, prohibit or
otherwise regulate any action on the part of SWC hereunder.
13. SWC agrees to indemnify and hold harmless the Fund and each of its
Board members and officers and each person, if any, who controls the Fund within
the meaning of Section 15 of the Securities Act, against any and all losses,
claims, damages, liabilities or litigation (including legal and other expenses)
to which the Fund or such Board members, officers, or controlling persons may
become subject under such Act, under any other statute, at common law or
otherwise, arising out of the acquisition of any shares by any person which (i)
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may be based upon any wrongful act by SWC or any of SWC's employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not misleading if such
statement or omission was made in reliance upon information furnished to the
Fund by SWC, or (iii) may be incurred or arise by reason of SWC's acting as the
Fund's agent instead of purchasing and reselling shares as principal in
distributing the shares to the public, provided, however, that in no case (i) is
SWC's indemnity in favor of a Board member or officer or any other person deemed
to protect such Board member or officer or other person against any liability to
which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of reckless disregard of obligations and duties under this Agreement
or (ii) is SWC 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 such person, as the case may be, shall have
notified SWC in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claims shall have
been served upon the Fund or upon such person (or after the Fund or such person
shall have received notice of such service on any designated agent), but failure
to notify SWC of any such claim shall not relieve SWC from any liability which
SWC may have to the Fund or any other person against whom such action is brought
otherwise than on account of SWC's indemnity agreement contained in this
paragraph. SWC shall be entitled to participate, at SWC's own expense, in the
defense, or, if SWC so elects, to assume the defense of any suit brought to
enforce any such liability, but if SWC elects to assume the defense, such
defense shall be conducted by counsel chosen by SWC and satisfactory to the
Fund, to its officers and Board members, and to any controlling person or
persons, defendant or defendants in the suit. In the event SWC elects to assume
the defense of any such suit and retain such counsel, the Fund, such officers
and Board members or controlling person or persons, defendant or defendants in
the suit shall bear the fees and expenses of any additional counsel retained by
them, but, in case SWC does not elect to assume the defense of any such suit,
SWC will reimburse the Fund, such officers and Board members and controlling
person or persons, defendant or defendants in such suit for reasonable fees and
expenses of any counsel retained by them. SWC 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 shares. The Fund shall not, without the prior
written consent of SWC, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which the Fund is or could have been a
party and indemnity has or could have been sought hereunder by the Fund, unless
such settlement includes an unconditional release of SWC from all liability on
claims that are the subject matter of such action, suit or proceeding.
14. The Fund agrees to indemnify and hold harmless SWC and each of
SWC's directors and officers and each person, if any, who controls SWC within
the meaning of Section 15 of the Securities Act, against any and all losses,
claims, damages, liabilities or litigation (including legal and other expenses)
to which SWC or such directors, officers or controlling persons may become
subject under such Act, under any other statute, at common law or otherwise,
arising out of the acquisition of any shares by any person which (i) may be
based upon any wrongful act by the Fund or any of its employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in the
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Registration Statement or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was not made in reliance
upon information furnished to SWC by the Fund; provided, however, that in no
case (i) is the Fund's indemnity in favor of a director or officer or any other
person deemed to protect such director or officer or any other person against
any liability to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
duties or by reason of his reckless disregard of obligations and duties under
this Agreement or (ii) is the Fund to be liable under its indemnity agreement
contained in this paragraph with respect to any claims made against SWC or any
such director, officer or controlling person unless SWC or such director,
officer or controlling person, as the case may be, shall have notified the Fund
in writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon SWC or upon such director, officer or controlling person (or after SWC or
such director, officer or controlling person shall have received notice of such
service on any designated agent), but failure to notify the Fund of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Fund will be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but if the Fund elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to SWC, its directors, officers or controlling person or persons,
by defendant or defendants in the suit. In the event that the Fund elects to
assume the defense of any such suit and retain such counsel, SWC, its directors,
officers or controlling person or persons, defendant or defendants in such suit,
shall bear the fees and expenses of any additional counsel retained by them,
but, in case the Fund does not elect to assume the defense of any such suit, it
will reimburse SWC or such directors, officers or controlling person or persons,
defendant or defendants in the suit, for reasonable fees and expenses of any
counsel retained by them. The Fund agrees to notify SWC 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 shares. SWC shall
not, without the prior written consent of the Fund, effect any settlement of any
pending or threatened action, suit or proceeding in respect of which either SWC
is or could have been a party and indemnity has or could have been sought
hereunder by SWC, unless such settlement includes an unconditional release of
the Fund from all liability on claims that are the subject matter of such
action, suit or proceeding.
15. The Fund shall assume and pay all charges and expenses of its
operations not specifically assumed or otherwise to be provided by SWC under
this Agreement or a Plan. Without limiting the following, the Fund will pay all
fees and expenses in connection with the registration of the Fund and its shares
under the United States securities laws and the registration and qualification
of shares for sale in various jurisdictions in which the Fund shall determine it
advisable to qualify such shares for sale (including registering the Fund as a
broker or dealer or any officer of the Fund or other person as agent or salesman
of the Fund in any such jurisdictions) ("Blue Sky Expenses"). SWC will pay all
expenses (other than expenses which one or more Firms may bear pursuant to any
agreement with SWC) incident to the sale and distribution of the shares issued
or sold hereunder, including, without limiting the generality of the foregoing,
all (a) expenses of printing and distributing any prospectus and of preparing,
printing and distributing or disseminating any other literature, advertising and
selling aids in
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connection with the offering of the shares for sale (except that such expenses
need not include expenses incurred by the Fund in connection with the
preparation, typesetting, printing and distribution of any registration
statement or prospectus, report or other communication to shareholders in their
capacity as such), and (b) expenses of advertising in connection with such
offering.
16. No transfer taxes, if any, which may be payable in connection with
the issue or delivery of shares sold as herein contemplated or of the
certificates for such shares shall be borne by the Fund, and SWC will bear all
such transfer taxes.
17. This Agreement shall become effective on the date first written
above and shall continue for a period of two years after such date; and shall
continue from year to year thereafter only so long as such continuance is
approved in the manner required by the Investment Company Act.
18. This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Fund or by SWC on sixty (60) days' written notice to the other party. The
indemnity provisions contained herein shall remain operative and in full force
and effect regardless of any termination of this Agreement. The Fund may effect
termination with respect to any class of the Fund by a vote of (i) a majority of
the Board members who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of a Plan, this
Agreement, or in any other agreement related to a Plan, or (ii) a majority of
the outstanding voting securities of such class. Without prejudice to any other
remedies of the Fund, the Fund may terminate this Agreement at any time
immediately upon SWC's failure to fulfill any of its obligations hereunder.
19. All material amendments to this Agreement must be approved by a
vote of a majority of the Board, and of the Board members who are not interested
persons of the Fund and who have no direct or indirect financial interest in the
operation of a Plan, this Agreement or in any other agreement related to a Plan,
cast in person at a meeting called for such purpose.
20. The terms "assignment," "interested person" and "vote of a majority
of the outstanding voting securities" shall have the meanings set forth in the
Investment Company Act and the rules and regulations thereunder.
21. SWC shall receive such compensation for its distribution services
as set forth in the Registration Statement. Termination of this Agreement shall
not affect the right of SWC to receive payments on any unpaid balance of any
compensation earned prior to such termination.
22. Notwithstanding anything in this Agreement to the contrary, SWC
shall be contractually bound hereunder by the terms of any publicly announced
waiver of or cap on the compensation received for its services under a Plan or
by the terms of any written document provided to the Board of the Fund
announcing a waiver or cap, as if such waiver or cap were fully set forth
herein.
23. SWC will not use or distribute, or authorize the use, distribution
or dissemination by Firms or others in connection with the sale of Fund shares
any statements other than those
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contained in the Registration Statement, except such supplemental literature or
advertising as shall be lawful under federal and state securities laws and
regulations. SWC will furnish the Fund with copies of all such material.
24. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
25. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
26. All parties hereto are expressly put on notice of the Fund's
Declaration of Trust, and all amendments thereto, all of which are contained in
the Registration Statement and the limitation of shareholder and trustee
liability contained therein. 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
Trustees, 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 SWC for
recovery of any liability of the Fund arising hereunder allocated to a
particular class, whether in accordance with the express terms hereof or
otherwise, SWC shall have recourse solely against the assets of that class to
satisfy such claim and shall have no recourse against the assets of any other
class for such purpose.
27. This Agreement shall be construed in accordance with applicable
federal law and with the laws of the State of Delaware.
28. This Agreement is the entire contract between the parties relating
to the subject matter hereof and supersedes all prior agreements between the
parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the Fund and SWC have caused this Agreement to be
executed as of the day and year first above written.
XXXXXXX XXXXXX CAPITAL ENTREPRENEURS FUND
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Title: President
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XXXXXXX XXXXXX CAPITAL LLC
By: /s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
Title: Chief Executive Officer
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