EXHIBIT (g)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of June 22, 2000 between X.X. XXXXXX HEDGE FUND
SERIES/CORE, L.L.C., a Delaware limited liability company (the "Fund"), and X.X.
XXXXXX INVESTMENT MANAGEMENT INC. (the "Adviser" or "JPMIM"), a Delaware
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, as amended.
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a closed-end management investment company and
desires to retain the Adviser as investment adviser to furnish certain
investment advisory and portfolio management services to the Fund, and the
Adviser is willing to furnish these services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints the Adviser as investment adviser
of the Fund for the period and on the terms set forth in this Agreement. The
Adviser accepts this appointment and agrees to render the services herein set
forth, for the compensation herein provided.
2. DUTIES AS INVESTMENT ADVISER.
(a) Subject to the supervision of the Fund's Board of Directors (the
"Board"), the Adviser will have full discretion and authority (i) to manage the
assets and liabilities of the Fund and (ii) to manage the day-to-day business
and affairs of the Fund. In furtherance of and subject to the foregoing, the
Adviser will have full power and authority on behalf of the Fund, among other
matters:
(1) to purchase, sell, exchange, trade and otherwise deal in and with
securities and other property of the Fund and to loan securities of the
Fund;
(2) to do any and all acts and exercise all rights with respect to the
Fund's interest in any person, firm, corporation, partnership or other
entity, including, without limitation, voting interests of the Investment
Funds (as defined in the Fund's Confidential Memorandum (the
"Memorandum"));
(3) to enter into agreements with the Investment Funds irrevocably to
forego the Fund's right to vote its interests or shares of the Investment
Funds;
(4) to enter into agreements with the Investment Funds that provide for,
among other things, the indemnification by the Fund of the Investment Funds
and the Investment Managers (as defined in the Memorandum) to the same or
different extent as provided for in respect of the Adviser, and to
terminate such agreements;
(5) to open, maintain and close accounts with brokers and dealers, to make
all decisions relating to the manner, method and timing of securities and
other investment transactions, to select and place orders with brokers,
dealers or other financial intermediaries for the execution, clearance or
settlement of any transactions on behalf of the Fund on such terms as the
Adviser considers appropriate, and to grant limited discretionary
authorization to such persons with respect to price, time and other terms
of investment and trading transactions, subject to Paragraph 2(b);
(6) to borrow from banks or other financial institutions and to pledge Fund
assets as collateral therefor, to trade on margin, to exercise or refrain
from exercising all rights regarding the Fund's investments, and to
instruct custodians regarding the settlement of transactions, the
disbursement of payments to the Fund's investors (the "Members") with
respect to repurchases of interests in the Fund ("Interests") and the
payment of Fund expenses, including those relating to the organization and
registration of the Fund;
(7) to issue to any Member an instrument certifying that the Member is the
owner of an Interest;
(8) to engage and terminate such attorneys, accountants and other
professional advisers and consultants as the Adviser may deem necessary or
advisable in connection with the affairs of the Fund or as may be directed
by the Board;
(9) to engage the services of persons other than the Subadvisers (the
engagement of which shall be subject to Paragraph 2(a)(14)) to assist the
Adviser in providing, or to provide under the Adviser 's control and
supervision, advice and management to the Fund at the expense of the
Adviser and to terminate such services;
(10) to assist in the preparation and filing of any required tax or
information returns to be made by the Fund;
(11) as directed by the Board, to commence, defend and conclude any action,
suit, investigation or other proceeding that pertains to the Fund or any
assets of the Fund;
(12) if directed by the Board, to arrange for the purchase of (A) one or
more "key man" insurance policies on the life of any principal of the
Adviser, the benefits of which are payable to the Fund, or (B) any
insurance covering the potential liabilities of the Fund or relating to the
performance of the Board or the Adviser, or any of its principals,
directors, officers, employees and agents;
(13) to execute, deliver and perform such contracts, agreements and other
undertakings, and to engage in such activities and transactions as are
necessary and appropriate for the conduct of the business of the Fund;
(14) (A) to direct the formulation of investment policies and strategies
for the Fund using a multi-asset and multiple fund strategy whereby some or
all of the Fund's assets may be committed from time to time by the Adviser
to the discretionary management of one or more Subadvisers, the selection
of which shall be subject to 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, (B) to enter into agreements with the Subadvisers that provide
for, among other things, the indemnification by the Fund of the Subadvisers
to the same or different extent as provided for in respect of the Adviser,
and to terminate such agreements, (C) to authorize the payment of fees and
allocations of profits to Subadvisers pursuant to their respective
governing documents and any rebates or reductions of such fees or
allocations which shall be for the benefit of the Fund and (D) to identify
appropriate Subadvisers, assess the most appropriate investment vehicles
(general or limited partnerships, separate managed accounts or other
investment vehicles (pooled or otherwise) that invest or trade in
securities, and determine the assets to be committed to each Subadviser and
invested through the Subadviser, which investments shall be subject in each
case to the terms and conditions of the respective governing documents used
by the Subadviser;
(15) to oversee the maintenance of all books and records with respect to
the Fund's securities transactions, and furnish the Board with such
periodic and special reports as the Board reasonably may request. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Adviser hereby agrees that all records which it maintains for the Fund are
the property of the Fund, agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any records which it maintains for the Fund
and which are required to be maintained by Rule 31a-l under the 1940 Act
and further agrees to surrender promptly to the Fund any records which it
maintains for the Fund upon request by the Fund;
(16) to oversee the computation of the Fund's net asset value and net
income; and
(17) to effect any transaction on a national securities exchange for the
Fund's account, which transaction is permitted by Section 11(a) of the
Securities Exchange Act of 1934, as amended, and the rules thereunder, and
the Fund hereby consents to the retention of compensation by the Adviser or
any person or entity associated with the Adviser for the transaction.
(b) The Adviser agrees that when placing orders directly with brokers, it
will attempt to obtain the best net result in terms of price and execution;
provided that, the Adviser, in its discretion, may use brokers that provide the
Fund with research, analysis, advice and similar services to execute portfolio
transactions on behalf of the Fund, and the Adviser may pay to those brokers in
return for brokerage and research services a higher commission than may be
charged by other brokers, subject to the Adviser's good faith determination that
such commission is reasonable in terms either of the particular transaction or
of the overall responsibility of the Adviser to the Fund and its other clients
and that the total commissions paid by the Fund will be reasonable in relation
to the benefits to the Fund over the long term. In no instance will portfolio
securities be purchased from or sold to the Adviser, or any affiliated person
thereof, except in accordance with the Federal securities laws and the rules and
regulations thereunder, or any applicable exemptive orders. Whenever the Adviser
simultaneously places orders to purchase or sell the same security on behalf of
the Fund and one or more other accounts advised by the Adviser, such orders will
be allocated as to price and amount among all such accounts in a manner believed
to be equitable to each account. The Fund recognizes that in some cases this
procedure may adversely affect the results obtained for the Fund.
3. FURTHER DUTIES. In all matters relating to the performance of this
Agreement, the Adviser will act in conformity with the Fund's Limited Liability
Company Agreement (the "LLC Agreement"), the Memorandum, and then-current
Registration Statement and with the instructions and directions of the Board,
and will comply with the requirements of the 1940 Act, the rules thereunder, and
all other applicable Federal and state laws and regulations.
4. SERVICES NOT EXCLUSIVE. The services furnished by the Adviser hereunder
are not to be deemed exclusive and the Adviser shall be free to furnish similar
services to others so long as its services under this Agreement are not impaired
thereby or unless otherwise agreed to by the parties hereunder in writing.
Nothing in this Agreement shall limit or restrict the right of any director,
officer or employee of the Adviser, who also may be a Director, officer or
employee of the Fund, 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.
5. EXPENSES.
(a) During the term of this Agreement, the Fund will bear all expenses
incurred in the business of the Fund other than those not specifically assumed
by the Adviser. Expenses to be borne by the Fund will include, but are not
limited to, the following:
(1) all costs and expenses directly related to portfolio transactions and
positions for the Fund's account, including, but not limited to,
brokerage commissions, research fees, interest and commitment fees on
loans and debit balances, borrowing charges on securities sold short,
dividends on securities sold short but not yet purchased, custodial
fees, margin fees, transfer taxes and premiums and taxes withheld on
foreign dividends and indirect expenses from investments in Investment
Funds;
(2) all costs and expenses associated with the organization, operation and
registration of the Fund, offering costs and the costs of compliance
with any applicable Federal or state laws;
(3) the costs and expenses of holding meetings of the Board and any
meetings of Members that are regularly scheduled, permitted or
required to be held under the terms of the LLC Agreement, the 1940 Act
or other applicable law;
(4) reasonable fees and disbursements of any attorneys, accountants
(including tax preparation fees), auditors and other consultants and
professionals engaged on behalf of the Fund to assist in connection
with its operations;
(5) the costs of a fidelity bond and any liability insurance obtained on
behalf of the Fund, the Adviser or the Directors;
(6) any Fees payable to JPMIM or its affiliates as the provider of certain
management and administrative services under the Management and
Administration Agreement;
(7) all costs and expenses associated with the organization of new
Investment Funds actually managed by Subadvisers, if any;
(8) all costs and expenses of preparing, setting in type, printing and
distributing reports and other communications to Members;
(9) the fees of custodians and other persons providing administrative
services to the Fund; and
(10) such other types of expenses as may be approved from time to time by
the Board.
(b) The payment or assumption by the Adviser of any expenses of the Fund
that the Adviser is not required by this Agreement to pay or assume shall not
obligate the Adviser to pay or assume the same or any similar expense of the
Fund on any subsequent occasion.
6. COMPENSATION. As full compensation for the services provided to the Fund
and the expenses assumed by the Adviser under this Agreement, the Adviser shall
be entitled to be the Special Advisory Member of the Fund pursuant to the terms
of the LLC Agreement and to receive an incentive allocation in accordance with
the terms and conditions of Section 5.8 of the LLC Agreement.
7. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
or any Members in connection with the matters to which this Agreement relates,
except to the extent that such a loss results from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement. Any
person, even though also an officer, director, employee, or agent of the
Adviser, who may be or become an officer, Director, employee or agent of the
Fund, shall be deemed, when rendering services to the Fund or acting with
respect to any business of the Fund, to be rendering such service to or acting
solely for the Fund and not as an officer, director, employee, or agent or one
under the control or direction of the Adviser even though compensated by it.
8. INDEMNIFICATION. The Fund agrees that the provisions of Section 3.7 of
the LLC Agreement, as in effect on the date hereof, are for the benefit of, and
may be relied upon and enforced by, the Adviser and its affiliates and their
respective officers, directors, shareholders, partners, employees,
representatives and agents (the Adviser, its affiliates and such other persons,
the "Indemnified Parties") as if the same were set forth in full in this
Agreement. Without limiting the generality of the foregoing, the Fund hereby
agrees to indemnify the Indemnified Parties in accordance with the provisions of
the LLC Agreement as in effect on the date hereof. The provisions of this
paragraph shall survive any termination of this Agreement.
9. DURATION AND TERMINATION.
(a) This Agreement will become effective upon the date hereof provided that
this Agreement will not take effect unless it has first been approved (i) by a
vote of a majority of those Directors who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by vote of a majority of the
outstanding voting securities of the Fund.
(b) Unless sooner terminated as provided herein, this Agreement shall
continue in effect for two years from the date hereof. Thereafter, if not
terminated, this Agreement shall continue automatically for successive one-year
periods, provided that such continuance is specifically approved at least
annually (i) by a vote of a majority of those Directors who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by the Board
or by vote of a majority of the outstanding voting securities of the Fund.
(c) Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the Fund's outstanding voting securities on 60 days' written notice
to the Adviser or by the Adviser at any time, without the payment of any
penalty, on 60 days' written notice to the Fund. This Agreement will
automatically terminate in the event of its assignment.
10. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of New York, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act. To the extent that the
applicable laws of the State of New York conflict with the applicable provisions
of the 1940 Act, the latter shall control.
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"affiliated person," "interested person," "assignment," "broker," "investment
adviser," "national securities exchange," "sell" and "security" shall have the
same meaning as such terms have in the 1940 Act, subject to such exemption as
may be granted by the Securities and Exchange Commission by any rule, regulation
or order. Where the effect of a requirement of the 1940 Act reflected in any
provision of this contract is relaxed by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
X.X. XXXXXX HEDGE FUND SERIES/CORE, L.L.C.
By:
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Name:
Title:
X.X. XXXXXX INVESTMENT MANAGEMENT INC.
By:
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Name:
Title:
