14
ADVISORY AGREEMENT
This Agreement ("the Agreement") is made as of the ___ day of _____,
2002 by and among EVERGREEN INVESTMENT MANAGEMENT COMPANY, LLC, a Delaware
limited liability company ("EIMCO"), with headquarters in Charlotte, North
Carolina and with an address at 000 X. Xxxxx Xxxxxx, XX0, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000-0000, and IVY ASSET MANAGEMENT CORP., a Delaware corporation
("Ivy"), with an address at 000 Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx Xxxx, Xxx Xxxx
00000.
WITNESSETH:
WHEREAS, EIMCO serves as investment adviser to the Evergreen Managed
Strategies Fund, LLC, a Delaware limited liability company ("the Fund"), which
is registered with the Securities and Exchange Commission as an investment
company under the Investment Company Act of 1940 (the "1940 Act") and which will
operate to pool investment funds to be managed by a number of independent
investment managers selected by EIMCO; and
WHEREAS, EIMCO will be responsible for the investment or other
management of the Fund and for the selection of independent investment managers
for the assets of the Fund; and
WHEREAS, EIMCO desires to employ the experience, sources of
information, advice and assistance of Ivy and to have Ivy provide the services
specified in this Agreement to EIMCO concerning the Fund; and
WHEREAS, Ivy is willing, subject to the terms and conditions set forth
below, to provide the services set forth below to EIMCO;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and conditions contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Agreement for Services. EIMCO hereby retains Ivy and Ivy
hereby agrees to perform the services described herein during the Term (as
defined below) for EIMCO.
2. Term. This Agreement shall continue in effect for two years from the
date set forth above and after such date (a) such continuance is specifically
approved at least annually by the Board of Directors of the Fund or by a vote of
a majority of the outstanding voting securities of the Fund, and (b) such
renewal has been approved by the vote of the majority of Directors of the Fund
who are not interested persons, as that term is defined in the 1940 Act, of
EIMCO, Ivy or of the Fund, cast in person at a meeting called for the purpose of
voting on such approval. The initial two year period and any annual continuation
thereafter as described above in this Section 2 are hereinafter defined as the
"Term".
3. Duties and Responsibilities. During the Term, Ivy or its affiliates
(for purposes of this Agreement, an "affiliate" of a party shall include a
person that directly or indirectly controls, is controlled by or is under common
control with such party) shall perform the following services for EIMCO in
connection with the Fund:
(a) research, identify, monitor, evaluate and meet with potential
investment managers;
(b) recommend investment managers to EIMCO;
(c) advise EIMCO in writing as to the recommended allocation of the
funds of the Fund among investment managers, including dates
for retaining and terminating investment managers;
(d) monitor, evaluate and meet with investment managers that are
managing funds of the Fund;
(e) assess the performance of investment managers recommended
by Ivy and which are managing funds of the Fund and make
periodic written recommendations to EIMCO;
(f) review and comment upon offering documents and ancillary sales
materials prepared by EIMCO for the Fund;
(g) participate, at the request of the Fund's Placement Agent and as
mutually agreed to by Ivy, in sales presentations to customers
and other prospective investors in the Funds identified by the
Fund's Placement Agent, provided however, that [___] will pay
the reasonable travel, lodging, meals and other expenses of Ivy
agreed upon in writing by [___];
(h) maintain such books and records as mutually deemed
appropriate by Ivy and EIMCO, or as required by applicable
laws, rules, and regulations, including, without limitation,
section 31(a) of the 1940 Act, relating to the recommendations,
retention, performance and services of investment managers
recommended by Ivy and selected by EIMCO to manage the funds of
the Fund. The parties hereto agree that all such books and
records shall be the property of the Fund and shall be
available for inspection and use by the Securities and
Exchange Commission as required by applicable law, the Fund,
EIMCO or any person retained by the Fund at all reasonable
times, and such books and records shall be maintained by Ivy
for the periods and in the places required by Rule 31a-2 under
the 1940 Act;
(i) render such reports to the Fund's Board of Directors and EIMCO
as they may reasonably request concerning the investment
activities of the Fund; and
(j) prepare and maintain books and records with respect to the Fund,
calculate the estimated value of the assets of the Fund and the
value of beneficial ownership interests in the Fund: prepare
quarterly and annual reports to the beneficial owners of the
Fund; prepare the unaudited financial statements of the Fund,
assist in the annual audit of the Fund by independent auditors
and in the preparation of tax returns for the Fund and perform
such other administrative duties and services as EIMCO may
reasonably request in connection with the operation and
administration of the Fund.
In addition to the foregoing, EIMCO desires to give Ivy, based on
written or oral instructions from EIMCO, the authority to authorize and sign the
subscription agreements and withdrawal requests with regard to the investments
of the Fund, and to cause funds to be invested and withdrawn, as applicable, in
connection therein. Ivy shall have no duty or responsibility to enforce
collection of any check, draft or other instrument for the payment of money
under the subscription agreements related to the Fund. Ivy shall have the right
to act in reliance upon any document, instrument or signature believed by it to
be genuine and to assume that any person purporting to give any notice or
instructions (including any oral instructions) in accordance with the Agreement
or in connection with any transaction to which this Agreement relates has been
duly authorized to do so. Ivy shall not be obligated to make any inquiry as to
the agency, authority, capacity, existence or identity of any person purporting
to give any such notice or instructions (including any oral instructions).
The above-referenced services shall be provided to EIMCO in a timely
and expeditious manner during the Term so as to enable EIMCO to make any
necessary decisions for allocations in connection with the assets of the Fund.
Ivy acknowledges and understands that all decisions relating to the retention
and termination of investment managers and the amounts to be invested and all
other decisions relating to the operation and management of the Fund shall be
made by EIMCO in its sole and absolute discretion and Ivy's duties and
responsibilities under this Agreement shall be solely to provide advice and
administrative or other services as set forth in this Agreement. The power of
EIMCO to invest the assets of the Fund in any manner and with any party or
parties it desires shall not be restricted or otherwise affected by this
Agreement, and Ivy shall not provide services directly to the Fund.
Ivy shall provide the services described herein subject to and in
accordance with (i) the investment objective and policies of the Fund set forth
in the Fund's Prospectus and Statement of Additional Information as from time to
time in effect ("the Governing Documents") (ii) the requirements applicable to
registered investment companies under applicable laws, including, without
limitation the 1940 Act and (iii) any written instructions which EIMCO or the
Fund's Board of Directors may issue from time-to-time. Ivy also agrees to
conduct its activities hereunder in accordance with any applicable procedures or
policies adopted by the Fund's Board of Directors as from time to time in effect
and provided to Ivy ("the Procedures"). EIMCO has provided to Ivy copies of all
Governing Documents and Procedures and shall promptly provide to Ivy any
amendments or supplements thereto.
4. Compensation.
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(a) For the Term of this Agreement (whether or not EIMCO invests
funds with investment managers recommended by Ivy), EIMCO shall pay to Ivy a fee
equal to the annual rate of ____% of the Net Assets (as defined in the Fund's
Limited Liability Company Agreement, dated as of ___, 2002 (the "LLC Agreement")
of the Fund, as determined as of the last day of each calendar quarter. Such fee
shall be paid quarterly as soon as practicable after the end of each calendar
quarter.
5. Confidentiality.
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(a) EIMCO acknowledges and understands that a substantial amount of
the information (i.e., names of investment managers, performance histories,
strategies, allocations, statistical analyses, notes and memoranda regarding
investment managers and other due diligence materials) that may be provided by
Ivy to EIMCO is confidential, proprietary and non-public. EIMCO covenants and
agrees that during the Term and for one (1) year after the termination of this
Agreement, (with respect to the names of investment managers, performance
histories and strategies) or indefinitely thereafter (with respect to
allocations, statistical analyses, notes and memoranda regarding investment
managers and other due diligence materials), EIMCO will not, directly or
indirectly, use, utilize, communicate or otherwise disclose such confidential
information to any person or entity for any purpose whatsoever, except: (i)
during the Term, for the exclusive use of directing the investment of assets of
the Fund, selling interests in the Fund or otherwise managing the affairs of the
Fund; or (ii) after the Term, for use by EIMCO to document the selection,
termination or allocation of the assets of the Fund to any investment manager
recommended by Ivy during the Term; with respect to any information included in
the Governing Documents, semi-annual and annual reports and any other offering
documents for the Fund; or with respect to the names, performance histories,
description of strategies of investment managers and allocations, as necessary
for the continued management and operation of the Fund by EIMCO; or (iii) as
required by law, rule or regulation, including, without limitation, such
information in the Fund's Governing Documents and any amendments and supplements
thereto and in the Fund's semi-annual and annual reports; or (iv) with respect
to the names, performance histories, strategies of investment managers and
allocations used by the Fund, to an investor in the Fund or such investor's
designated advisor(s).
(b) In the event of a violation or threatened violation of this
Section 5, Ivy shall be entitled to the remedies set forth in Section 10(e)
below. In the event that the confidentiality provisions of this Section 5 shall
be deemed unenforceable, invalid or overbroad, in whole or in part, for any
reason, then any court of competent jurisdiction is hereby authorized, requested
and instructed to reform this Section 5 to provide for the maximum
confidentiality restraints upon the activities of EIMCO which may then be legal
and valid.
6. Exclusivity. EIMCO acknowledges and understands that (i) Ivy manages
funds, and provides investment advice to other entities which are in the same
business as that of EIMCO and that are similar to the Fund, (ii) Ivy may engage
investment managers for assets managed by it and/or recommend investment
managers to others and not recommend the same investment managers to EIMCO and
(iii) Ivy may utilize the same investment managers that it recommends to EIMCO.
In addition, certain investment managers may not accept any, or may only accept,
limited assets from the Fund due to the fact that Ivy, its affiliates or other
entities that Ivy advises have invested, or are committed to invest, funds with
such investment managers.
Nothing in this Agreement shall prohibit EIMCO from using or employing
other investment advisers or consultants, subject to the written agreement of
such investment advisers or consultants to maintain information from Ivy
confidential pursuant to Section 5 of this Agreement, or accountants, attorneys,
other service providers or agents in connection with services provided to the
Fund.
7. Standard of Care and Indemnification.
(a) Ivy shall not be responsible or held accountable for any act or
failure to act by investment managers that it recommends except where such act
or failure to act results from Ivy's own gross negligence or willful misconduct.
All investment managers recommended by Ivy will be independent contractors and
Ivy does not have nor will it have control over any such investment manager.
EIMCO understands that the investment managers recommended by Ivy may not
achieve acceptable results and it is possible that losses may be incurred with
respect to funds of the Fund invested with investment managers recommended by
Ivy. Neither Ivy nor anyone on its behalf makes any express or implied guaranty
or warranty relating to the performance or ability of the investment managers
Ivy recommends.
(b) Ivy covenants and agrees to indemnify, defend and hold harmless
EIMCO, its affiliates, including the Fund, and their directors, shareholders
(or other beneficial owners) and employees (collectively, "EIMCO Indemnitees")
from and against any and all claims, liabilities, actions, judgments, causes of
action, fines, assessments, penalties, costs and expenses (including, but not
limited to, reasonable attorneys' fees, court costs, the costs associated with
investigating any claims and any agreed upon amount paid in settlement) arising
directly out of the willful misconduct or gross negligence of Ivy in rendering
its services under, or Ivy's breach of, this Agreement (collectively, "Ivy
Claims"). Counsel chosen by Ivy to defend EIMCO and the EIMCO Indemnitees
hereunder with respect to Ivy Claims shall be subject to EIMCO's approval, which
shall not be unreasonably withheld or delayed. Ivy shall not settle any matter
for which EIMCO and/or EIMCO Indemnitees are responsible hereunder without the
prior written consent of EIMCO.
(c) EIMCO covenants and agrees to indemnify, defend and hold
harmless Ivy and Ivy's officers, directors, shareholders and employees
(collectively, "Ivy Indemnitees") from and against any and all claims,
liabilities, actions, judgments, causes of action, fines, assessments,
penalties, costs and expenses (including, but not limited to, reasonable
attorneys' fees, court costs, the costs associated with investigating any claims
and any agreed upon amount paid in settlement) arising out of, relating to or
otherwise in connection with this Agreement or the services provided by Ivy
hereunder or otherwise relating to EIMCO or the Fund, their operations or
investors in the Fund (collectively "EIMCO Claims"), except where a court of
competent jurisdiction has finally determined (excluding any appeal of such
decision unless such decision is stayed pending such appeal) that the claim,
liability, action, judgment, cause of action, fine, assessment, penalty, costs
or expenses arose directly out of the gross negligence or willful misconduct of
Ivy in rendering its services under this Agreement. Counsel chosen by EIMCO to
defend Ivy and the Ivy Indemnitees hereunder with respect to EIMCO Claims shall
be subject to Ivy's approval, which shall not be unreasonably withheld or
delayed. EIMCO shall not settle any matter for which Ivy and/or the Ivy
Indemnitees are responsible hereunder without the prior written consent of Ivy.
(d) Insofar as exculpation from and/or indemnification for
liabilities arising under the Securities Act of 1933, as amended ("1933 Act"),
or under the Investment Advisers Act of 1940, as amended ("Advisers Act"), may
be permitted under this Section 7, in the opinion of the United States
Securities and Exchange Commission, such exculpation and/or indemnification is
against public policy as expressed in the 1933 Act and the Advisers Act and is
therefore, void and unenforceable.
8. Reports, Accounting and Access to Books and Records.
(a) Reports. EIMCO covenants and agrees that EIMCO shall at all
times keep Ivy fully informed as to capital additions and withdrawals and other
activities of the Fund and shall promptly send copies of all communications sent
to all investors collectively of the Fund to Ivy, including, but not limited, to
letters, reports and financial statements. In particular, EIMCO covenants and
agrees that EIMCO shall promptly notify Ivy of the placement or withdrawal of
any of the assets of the Fund with any investment manager recommended by Ivy.
(b) Access to Books and Records. Except to the extent such duties
are delegated to Ivy pursuant to Section 3, EIMCO covenants and agrees that
EIMCO will maintain true, accurate and complete books and records of the Fund.
To the extent such duties are delegated to Ivy pursuant to Section 3, Ivy
covenants and agrees that Ivy will maintain true, accurate and complete books
and records of the Fund. Upon reasonable advance written notice, Ivy shall have
the right to review and copy the books and records maintained by EIMCO for the
Fund for the sole purpose of verifying the compensation to Ivy under this
Agreement. Any review by Ivy must be conducted during normal business hours and
may only be performed twice during any calendar year. EIMCO shall have the right
to review and copy the books and records maintained by Ivy for the Fund for any
reason as set forth in Section 3.
9. Termination.
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This Agreement may be terminated at any time without payment of any
penalty, by the Fund's Board of Directors, by EIMCO, or by a vote of a
majority of the outstanding voting securities of the Fund upon sixty days' prior
written notice to Ivy or by Ivy upon ninety days' prior written notice to EIMCO,
or upon such shorter notice as may be mutually agreed upon. This Agreement shall
terminate automatically and immediately upon termination of the Investment
Advisory and Management Agreement between EIMCO and the Fund. This Agreement
shall terminate automatically and immediately in the event of its assignment.
The terms "assignment" and "a vote of a majority of the outstanding voting
securities" shall have the meaning set forth for such terms in the 1940 Act.
10. Miscellaneous
(a) Description of Ivy. EIMCO agrees to provide Ivy with drafts of
any supplements to or revisions or versions of the Governing Documents
prepared by EIMCO for use in connection with the offer or sale of units in the
Fund, and agrees that Ivy's prior approval will be required for any description
of Ivy therein.
(b) Status of Relationship. Ivy is an independent contractor
and neither this Agreement nor the performance of any of the obligations
hereunder shall create a partnership or joint venture between EIMCO, on the one
hand, and Ivy, on the other hand, nor shall any agency or employment
relationship be established.
(c) Binding Effect. This Agreement shall inure to the
benefit of and be binding upon each party hereto and their respective heirs,
personal representatives and permitted assignees.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, which together shall constitute one and the same instrument.
(e) Remedies. The parties hereto acknowledge and agree that
the failure of any party hereto to comply with the terms and conditions of this
Agreement will cause irreparable harm to the other parties for which the
calculation of the specific damages will not be readily ascertainable.
Therefore, the parties hereto agree that this Agreement and each provision
contained in this Agreement, including without limitation, the provisions of
Sections 5 and 6 may be specifically enforced by any party hereto against any
and all other parties and the parties hereto shall have the right to all other
equitable remedies in addition to remedies available at law. No failure or delay
on the part of either party in the exercise of any right or remedy shall operate
as a waiver thereof, nor shall any single or partial exercise of any right or
remedy preclude other or further exercise thereof, or the exercise of any other
right or remedy.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such state. The parties
hereto hereby waive their respective rights to a trial by jury with respect to
this Agreement.
(h) Entire Agreement. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements and understandings, whether
written or oral, of the parties in connection therewith, and no covenant,
representations or condition not expressed in this Agreement shall affect the
express provisions of this Agreement.
(i) Notices. All notices, demands, consents and other
communications required or permitted to be given pursuant to this Agreement
shall be in writing and shall be sent by registered or certified mail, postage
prepaid, return receipt requested, addressed to the respective addresses set
forth at the beginning of this Agreement and shall be deemed effective three (3)
days after the same are mailed. Any party may change its address by like notice.
(j) Severability. Any provisions of this Agreement prohibited
by the laws of any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition, or modified to confirm with such laws,
without invalidating the remaining provisions of this Agreement.
(k) Amendment. No provision of this Agreement may be waived,
modified or amended except by an instrument in writing signed by all parties
hereto.
(l) Captions. All paragraph titles and captions in this
Agreement are for convenience only and shall not be deemed part of this
Agreement nor shall such titles and captions define, limit, extend or describe
the scope or intent of any provisions hereof.
IN WITNESS WHEREOF, the parties hereto have hereunto signed this
Agreement the day and year first above written.
Evergreen Investment Management Company, LLC
By:________________________________
Name:
Title:
IVY ASSET MANAGEMENT CORP.
By:________________________________
Name: Xxxxx X. Xxxxxxx
Title: Managing Director and Chief Financial
Officer
