Exhibit (g)
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made the 20 day of May, 2004, by
and between Blue Rock Market Neutral Fund, LLC a Delaware limited liability
company (the "Fund"), and Blue Rock Advisors, Inc., a Minnesota corporation (the
"Investment Adviser").
WHEREAS, the Fund has registered with the Securities and Exchange
Commission (the "Commission") under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a closed-end, non-diversified management investment
company (the "Registration"), and the Investment Adviser is an investment
adviser registered as such under with the Commission under the Investment
Advisers Act of 1940; and
WHEREAS, the Fund desires to retain the Investment Adviser to act as
its investment adviser pursuant to this Agreement; and
WHEREAS, the Investment Adviser desires to be retained to act as
investment adviser to the Fund pursuant to this Agreement;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed, by and between the parties, as follows:
1. The Fund hereby retains the Investment Adviser to:
(a) act as its investment adviser and, subject to the supervision
and control of the Board of Managers of the Fund (the "Board"), manage the
investment activities of the Fund as hereinafter set forth. Without limiting the
generality of the foregoing, the Investment Adviser shall: obtain and evaluate
such information and advice relating to the economy, securities markets, and
securities as it deems necessary or useful to discharge its duties hereunder;
continuously manage the assets of the Fund in a manner consistent with the
investment objective, policies and restrictions of the Fund, as set forth in the
Confidential Memorandum of the Fund and as may be adopted from time to time by
the Board, and applicable laws and regulations; determine the securities to be
purchased, sold or otherwise disposed of by the Fund and the timing of such
purchases, sales and dispositions; invest discrete portions of the Fund's assets
(which may constitute, in the aggregate, all of the Fund's assets) in
unregistered investment funds or other investment vehicles ("Portfolio Funds"),
which are managed by investment managers ("Portfolio Managers"), including
Portfolio Managers for which separate investment vehicles have been created in
which the Portfolio Managers serve as general partners or managing members and
the Fund is the sole investor ("Portfolio Accounts") and Portfolio Managers who
are retained to manage the Fund's assets directly through separate managed
accounts (Portfolio Managers of Portfolio Accounts and of managed accounts are
collectively referred to as "Sub-Managers") and take such further action,
including the placing of purchase and sale orders and the voting of securities
on behalf of the Fund, as the Investment Adviser shall deem necessary or
appropriate. The Investment Adviser shall furnish to or place at the disposal of
the Fund such information, evaluations, analyses and opinions formulated or
obtained by the Investment Adviser in the discharge of its duties as the Fund
may, from time to time, reasonably request; and
(b) provide, and the Investment Adviser hereby agrees to provide,
certain management, administrative and other services to the Fund.
Notwithstanding the appointment of the Investment Adviser to provide such
services hereunder, the Board shall remain responsible for supervising and
controlling the management, business and affairs of the Fund. The management,
administrative and other services to be provided by the Investment Adviser shall
include:
(i) providing office space, telephone and utilities;
(ii) providing administrative and secretarial, clerical
and other personnel as necessary to provide the
services required to be provided under this
Agreement;
(iii) supervising the entities which are retained by the
Fund to provide administration, custody and other
services to the Fund;
(iv) handling investor inquiries regarding the Fund and
providing investors with information concerning their
investments in the Fund and capital account balances;
(v) monitoring relations and communications between
investors and the Fund;
(vi) assisting in the drafting and updating of disclosure
documents relating to the Fund and assisting in the
preparation of offering materials;
(vii) assisting in the maintenance and updating of investor
information, such as change of address and
employment;
(viii) assisting in the preparation and mailing of investor
subscription documents and confirming the receipt of
such documents and funds;
(ix) assisting in the preparation of regulatory filings
with the Securities and Exchange Commission and state
securities regulators and other Federal and state
regulatory authorities;
(x) preparing reports to and other informational
materials for members and assisting in the
preparation of proxy statements and other member
communications;
(xi) monitoring compliance with regulatory requirements
and with the Fund's investment objective, policies
and restrictions as established by the Board;
(xii) reviewing accounting records and financial reports of
the Fund, assisting with the preparation of the
financial
2
reports of the Fund and acting as liaison with the
Fund's accounting agent and independent auditors;
(xiii) assisting in the preparation and filing of tax
returns;
(xiv) coordinating and organizing meetings of the Board and
meetings of the members of the Fund, in each case
when called by such persons;
(xv) assisting in the preparation of materials and reports
for use in connection with meetings of the Board;
(xvi) maintaining and preserving those books and records of
the Fund not maintained by the Fund's administrator,
accounting agent or custodian (which books and
records shall be the property of the Fund and
maintained and preserved as required by the 1940 Act
and the rules thereunder and shall be surrendered to
the Fund promptly upon request);
(xvii) assisting the Fund in conducting offers to members of
the Fund to repurchase member interests;
(xviii) reviewing and approving all regulatory filings of the
Fund required under applicable law;
(xix) reviewing investor qualifications and subscription
documentation and otherwise assisting in
administrative matters relating to the processing of
subscriptions for interests in the Fund;
(xx) providing the services of persons employed by the
Investment Adviser or its affiliates who may be
appointed as officers of the Fund by the Board; and
(xxi) assisting the Fund in routine regulatory
examinations, and working closely with any counsel
retained to represent the members of the Board who
are not "interested persons," as defined by the 1940
Act and the rules thereunder (the "Independent
Managers") of the Fund in response to any litigation,
investigations or regulatory matters.
2. Provided that the Fund shall not be required to pay any compensation
for services other than as provided by the terms of this Agreement, the
Investment Adviser is authorized to obtain investment information, research or
assistance from any other person, firm or corporation to supplement, update or
otherwise improve its investment management services.
3. Without limiting the generality of paragraph 1 hereof, the
Investment Adviser shall be authorized to open, maintain and close accounts in
the name and on behalf of the Fund with brokers and dealers as it determines are
appropriate; to select and place orders with brokers, dealers or other financial
intermediaries for the execution, clearance or settlement of any transactions on
3
behalf of the Fund on such terms as the Investment Adviser considers appropriate
and that are consistent with the policies of the Fund; and, subject to any
policies adopted by the Board and to the provisions of applicable law, to agree
to such commissions, fees and other charges on behalf of the Fund as it shall
deem reasonable in the circumstances taking into account all such factors as it
deems relevant (including the quality of research and other services made
available to it even if such services are not for the exclusive benefit of the
Fund and the cost of such services does not represent the lowest cost available)
and shall be under no obligation to combine or arrange orders so as to obtain
reduced charges unless otherwise required under the federal securities laws; to
pursue and implement the investment policies and strategies of the Fund using a
multi-manager strategy whereby some or all of the Fund's assets may be committed
from time to time by the Investment Adviser to the discretionary management of
one or more Sub-Managers, the selection of which shall be subject to the
approval of the Board of Managers in accordance with requirements of the 1940
Act and the approval of a majority (as defined in the 0000 Xxx) of the Fund's
outstanding voting securities, unless the Fund receives an exemption from the
provisions of the 1940 Act requiring such approval by security holders; and to
identify appropriate Sub-Managers, assess the most appropriate investment
vehicles (general or limited partnerships, separate managed accounts or other
investment vehicles (pooled or otherwise), and determine the assets to be
committed to each Sub-Manager. The Investment Adviser may, subject to such
procedures as may be adopted by the Board, use affiliates of the Investment
Adviser as brokers to effect the Fund's securities transactions and the Fund may
pay such commissions to such brokers in such amounts as are permissible under
applicable law.
4. MANAGEMENT FEE; EXPENSES
(a) In consideration for the provision by the Investment Adviser of
its services hereunder and the Investment Adviser's bearing of certain expenses,
the Fund will pay the Investment Adviser, a management fee (the "Management
Fee") (accrued and payable monthly within ten business days after the end of
each calendar month) by applying the following annual rates to the net assets of
the Fund determined at the close of each month: 1.00% to the portion of net
assets not exceeding $30 million; 0.90% to the portion of net assets exceeding
$30 million, but not exceeding $100 million; and 0.80% to the portion of net
assets in excess of $100 million. The Management Fee is not assessed against the
Adviser or any of its shareholders, directors, officers, employees or
affiliates.
(b) The Investment Adviser is responsible for all costs and expenses
associated with the provision of its services hereunder including, but not
limited to: expenses relating to the selection and monitoring of Portfolio
Managers; fees of consultants retained by the Investment Adviser; and expenses
relating to qualifying potential investors and reviewing subscription documents
including travel expenses associated with such services. The Investment Adviser
shall, at its own expense, maintain such staff and employ or retain such
personnel and consult with such other persons as may be necessary to render the
services required to be provided by the Investment Adviser or furnished to the
Fund under this Agreement. Without limiting the generality of the foregoing, the
staff and personnel of the Investment Adviser shall be deemed to include persons
employed or otherwise retained by the Investment Adviser or made available to
the Investment Adviser.
4
5. The Fund will, from time to time, furnish or otherwise make
available to the Investment Adviser such financial reports, proxy statements,
policies and procedures and other information relating to the business and
affairs of the Fund as the Investment Adviser may reasonably require in order to
discharge its duties and obligations hereunder.
6. Except as provided herein or in another agreement between the Fund
and the Investment Adviser, the Fund shall bear all of its own expenses,
including, but not limited to: all investment related expenses (E.G., fees paid
directly or indirectly to Portfolio Managers, all costs and expenses directly
related to portfolio transactions and positions for the Fund's account such as
direct and indirect expenses associated with the Fund's investments, including
its investments in Portfolio Funds, transfer taxes and premiums, taxes withheld
on foreign dividends and, if applicable in the event the Fund utilizes a
Portfolio Account, brokerage commissions, interest and commitment fees on loans
and debit balances, borrowing charges on securities sold short, dividends on
securities sold but not yet purchased and margin fees); any expenses associated
with Portfolio Manager background verifications; all costs and expenses
associated with the establishment of any Portfolio Accounts; any non-investment
related interest expense; fees and disbursements of any attorneys and
accountants engaged by the Fund; audit and tax preparation fees and expenses of
the Fund; administrative expenses and fees; custody and escrow fees and
expenses; the costs of an errors and omissions/directors and officers liability
insurance policy and a fidelity bond; the Management Fee; fees and expenses of
members of the Board of Managers who are not employees of the Investment Adviser
or any affiliated person of the Investment Adviser; costs in communicating
information regarding the Fund's transactions among the Investment Adviser and
any custodian or other agent engaged by the Fund; any extraordinary expenses;
and such other expenses as may be approved from time to time by the Board of
Managers.
7. The compensation provided to the Investment Adviser pursuant to
paragraph 4(a) hereof shall be the entire compensation for the services provided
to the Fund and the expenses assumed by the Investment Adviser under this
Agreement.
8. The Investment Adviser will use its best efforts in the supervision
and management of the investment activities of the Fund and in providing
services hereunder, but in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations hereunder, the Investment
Adviser, its directors, officers or employees and its affiliates, successors or
other legal representatives (collectively, the "Affiliates") shall not be liable
to the Fund for any error of judgment, for any mistake of law, for any act or
omission by the Investment Adviser or any of the Affiliates or by any
Sub-Manager or for any loss suffered by the Fund.
9. (a) The Fund shall indemnify the Investment Adviser and its
directors, officers or employees and their respective affiliates, executors,
heirs, assigns, successors or other legal representatives (each an "Indemnified
Person") against any and all costs, losses, claims, damages or liabilities,
joint or several, including, without limitation, reasonable attorneys' fees and
disbursements, resulting in any way from the performance or non-performance of
any Indemnified Person's duties with respect to the Fund, except those resulting
from the willful malfeasance, bad faith or gross negligence of an Indemnified
Person or the Indemnified Person's reckless disregard of such duties, and in the
case of criminal proceedings, unless such Indemnified Person had reasonable
5
cause to believe its actions unlawful (collectively, "disabling conduct").
Indemnification shall be made following: (i) a final decision on the merits by a
court or other body before which the proceeding was brought that the Indemnified
Person was not liable by reason of disabling conduct or (ii) a reasonable
determination, based upon a review of the facts and reached by (A) the vote of a
majority of the Managers who are not parties to the proceeding or (B) legal
counsel selected by a vote of a majority of the Board in a written advice, that
the Indemnified Person is entitled to indemnification hereunder. The Fund shall
advance to an Indemnified Person (to the extent that it has available assets and
need not borrow to do so) reasonable attorneys' fees and other costs and
expenses incurred in connection with defense of any action or proceeding arising
out of such performance or non-performance. The Investment Adviser agrees, and
each other Indemnified Person will agree as a condition to any such advance,
that in the event the Indemnified Person receives any such advance, the
Indemnified Person shall reimburse the Fund for such fees, costs and expenses to
the extent that it shall be determined that the Indemnified Person was not
entitled to indemnification under this paragraph 9.
(b) Notwithstanding any of the foregoing to the contrary, the
provisions of this paragraph 9 shall not be construed so as to relieve the
Indemnified Person of, or provide indemnification with respect to, any liability
(including liability under Federal Securities laws, which, under certain
circumstances, impose liability even on persons who act in good faith) to the
extent (but only to the extent) that such liability may not be waived, limited
or modified under applicable law or that such indemnification would be in
violation of applicable law, but shall be construed so as to effectuate the
provisions of this paragraph 9 to the fullest extent permitted by law.
10. Nothing contained in this Agreement shall prevent the Investment
Adviser or any affiliated person of the Investment Adviser from acting as
investment adviser or manager for any other person, firm or corporation and,
except as required by applicable law (including Rule 17j-1 under the 1940 Act),
shall not in any way bind or restrict the Investment Adviser or any such
affiliated person from buying, selling or trading any securities or commodities
for their own accounts or for the account of others for whom they may be acting.
Nothing in this Agreement shall limit or restrict the right of any member,
officer or employee of the Investment Adviser to engage in any other business or
to devote his or her time and attention in part to the management or other
aspects of any other business whether of a similar or dissimilar nature.
11. This Agreement will take effect on the date first set forth
above. Unless earlier terminated pursuant to this paragraph, this Agreement
shall remain in effect for a period of two (2) years from such date and shall
continue in effect from year to year thereafter, so long as such continuance
shall be approved at least annually by the vote of a "majority of the
outstanding voting securities of the Fund," as defined by the 1940 Act and the
rules thereunder, or by the Board; and provided that in either event such
continuance is also approved by a majority of the Independent Managers, by vote
cast in person at a meeting called for the purpose of voting on such approval.
The Fund may at any time, without payment of any penalty, terminate this
Agreement upon sixty days' prior written notice to the Investment Adviser,
either by majority vote of the Board or by the vote of a "majority of the
outstanding voting securities of the Fund," as defined by the 1940 Act and the
rules thereunder. The Investment Adviser may at any time, without payment of
6
penalty, terminate this Agreement upon sixty days' prior written notice to the
Fund. This Agreement shall automatically terminate in the event of its
"assignment," as defined by the 1940 Act and the rules thereunder.
12. Any notice under this Agreement shall be given in writing and shall
be deemed to have been duly given when delivered by hand or facsimile or five
days after mailed by certified mail, post-paid, by return receipt requested to
the other party at the principal office of such party.
13. This Agreement may be amended only by the written agreement of the
parties. Any amendment shall be required to be approved by the Board and by a
majority of the Independent Managers in accordance with the provisions of
Section 15(c) of the 1940 Act and the rules thereunder. If required by the 1940
Act, any amendment shall also be required to be approved by the vote of a
"majority of the outstanding voting securities of the Fund," as defined by the
1940 Act and the rules thereunder.
14. This Agreement shall be construed in accordance with the laws of
the State of New York and the applicable provisions of the 1940 Act. To the
extent the applicable law of the State of New York, or any of the provisions
herein, conflict with the applicable provisions of the 1940 Act, the latter
shall control.
15. The Fund represents that this Agreement has been duly approved by
the Board, including the vote of a majority of the Independent Managers, and by
the vote of a "majority of the outstanding voting securities of the Fund," as
defined by the 1940 Act and the rules thereunder.
16. The parties to this Agreement agree that the obligations of the
Fund under this Agreement shall not be binding upon any of the Managers, members
of the Fund or any officers, employees or agents, whether past, present or
future, of the Fund, individually, but are binding only upon the assets and
property of the Fund.
17. This Agreement embodies the entire understanding of the parties.
{THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK}
7
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
BLUE ROCK MARKET NEUTRAL FUND, LLC
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------
Attest: Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President and Secretary
Xxxxx Xxxxxxxxx
-----------------------------
BLUE ROCK ADVISORS, INC.
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Attest: Name: Xxxx X. Xxxxx
Title: Vice President and Secretary
Xxxxx Xxxxxxx
-----------------------------
8
