FORM OF INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made as of ___________, 2002 between
TORREY U.S. STRATEGY PARTNERS, LLC, a Delaware limited liability company (the
"Fund"), and TORREY ASSOCIATES LLC (the "Advisor"), a Delaware limited
liability company registered as an investment advisor 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 Advisor as investment advisor to furnish
certain investment advisory and portfolio management services to the Fund,
and the Advisor 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 Advisor as investment
advisor of the Fund for the period and on the terms set forth in this
Agreement. The Advisor accepts this appointment and agrees to render the
services herein set forth, for the compensation herein described.
2. Duties as Investment Advisor.
(a) Subject to the supervision of the Fund's Board of Managers (the
"Board"), the Advisor 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 Advisor 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 Portfolio Funds (as defined in the
Fund's Private Placement Memorandum (the "Memorandum"));
(3) to enter into agreements with the Portfolio Funds irrevocably
to forego the Fund's right to vote its interests or shares of
the Portfolio Funds;
(4) to enter into agreements with the Portfolio Funds that provide
for, among other things, the indemnification by the Fund of
the Portfolio Funds and the Portfolio Managers (as defined in
the Memorandum) to the same or different extent as provided
for in respect of the Advisor, 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 Advisor 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) hereof;
(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 call and conduct meetings of Members at the Fund's
principal office or elsewhere as it may determine and to
assist the Board in calling and conducting meetings of the
Board;
(8) to engage and terminate such attorneys, accountants and other
professional advisors and consultants as the Advisor may deem
necessary or advisable in connection with the affairs of the
Fund or as may be directed by the Board;
(9) to engage and terminate the services of persons other than the
Sub-Advisors (as defined in the Memorandum)(the engagement of
which shall be subject to Paragraph 2(a)(13) hereof) to assist
the Advisor in providing, or to provide under the Advisor's
control and supervision, advice and management to the Fund at
the expense of the Advisor and to terminate such services;
(10) 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;
(11) 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 a member of the Advisor, 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 Advisor, or any of their
principals, directors, officers, members, employees and
agents;
(12) to execute, deliver and perform such contracts, agreements and
other undertakings, and to engage in such activities and
transactions as are, in the opinion of the Advisor, necessary
and appropriate for the conduct of the business of the Fund
without the act, vote or approval of any other Members or
person; and
(13) (A) to direct the formulation of investment policies and
strategies for the Fund using a multi-asset and multi-manager
strategy whereby some or all of the Fund's assets may be
committed from time to time by the Advisor to the
discretionary management of one or more Sub-Advisors, 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 Sub-Advisors
that provide for, among other things, the indemnification by
the Fund of the Sub-Advisors to the same or different extent
as provided for in respect of the Advisor, and to terminate
such agreements, (C) to authorize the payment of fees and
allocations of profits to Sub-Advisors 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 Sub-Advisors, assess
the most appropriate investment vehicles (limited
partnerships, limited liability companies, 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 Sub-Advisor and invested through the
Sub-Advisor, which investments shall be subject in each case
to the terms and conditions of the respective governing
documents used by the Sub-Advisor.
(b) The Advisor, in its discretion, may, directly or indirectly (through
investment in Portfolio Funds or with Sub-Advisors), use brokers who provide
the Fund (or Portfolio Funds or Sub-Advisors) with research, analysis, advice
and similar services to execute portfolio transactions on behalf of the Fund
(or Portfolio Funds), and the Fund (or Portfolio Funds or Sub-Advisors) 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 Advisor's (or
Portfolio Manager's or Sub-Advisor's) good faith determination that such
commission is reasonable in terms either of the particular transaction or of
the overall responsibility of the Advisor (or Sub-Advisor) to the Fund (or of
the Portfolio Manager to the Portfolio Fund) and its other clients and that
the total commissions paid by the Fund (or Portfolio Funds) will be
reasonable in relation to the benefits to the Fund (or Portfolio Funds or
Sub-Advisors) over the long term. Whenever the Advisor, a Sub-Advisor or a
Portfolio Manager simultaneously places orders to purchase or sell the same
security on behalf of the Fund (or Portfolio Fund) and one or more other
accounts advised by the Advisor, Sub-Advisor or Portfolio Manager, 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. Services Not Exclusive. The services furnished by the Advisor
hereunder are not to be deemed exclusive and the Advisor shall be free to
furnish similar services to others. Nothing in this Agreement shall limit or
restrict the right of any director, officer or employee of the Advisor or its
affiliates, who also may be a Manager, 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.
4. 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 Advisor and other service providers pursuant to their
agreements with the Fund. 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
(including research related travel), 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, shareholder servicing fees,
margin fees, transfer taxes and premiums and taxes withheld on
foreign dividends, and expenses from investments in Portfolio
Funds;
(2) all costs and expenses associated with the organization,
operation and registration of the Fund, certain offering costs
and the costs of compliance with any applicable Federal or
state laws;
(3) the costs and expenses of holding any meetings of any Members
that are regularly scheduled, permitted or required to be held
under the terms of the Fund's Limited Liability Company
Agreement (the "LLC Agreement"), the 1940 Act or other
applicable law;
(4) the fees and disbursements of any attorneys, accountants,
auditors and other consultants and professionals engaged on
behalf of the Fund;
(5) the costs of a fidelity bond and any liability or other
insurance obtained on behalf of the Fund, the Advisor or its
affiliates, or the Board;
(6) all costs and expenses associated with the organization of the
Portfolio Funds managed by Sub-Advisors and with the selection
of Portfolio Managers and Portfolio Funds, including due
diligence and travel-related expenses;
(7) all costs and expenses of preparing, setting in type, printing
and distributing reports and other communications to Members;
(8) all expenses of computing the Fund's net asset value,
including any equipment or services obtained for the purpose
of valuing the Fund's investment portfolio, including
appraisal and valuation services provided by third parties;
(9) all charges for equipment or services used for communications
between the Fund and any custodian, or other agent engaged by
the Fund;
(10) the fees of the Fund's administrator and custodian and other
persons providing administrative services to the Fund; and
(11) such other types of expenses as may be approved from time to
time by the Board.
(b) The payment or assumption by the Advisor of any expenses of the Fund
that the Advisor is not required by this Agreement to pay or assume shall not
obligate the Advisor to pay or assume the same or any similar expense of the
Fund on any subsequent occasion.
5. Compensation. As full compensation for the services provided to the
Fund and the expenses assumed by the Advisor under this Agreement, the
Advisor shall receive from the Fund a quarterly management fee (the
"Management Fee") at the annual rate of 2.0% of the Fund's net assets. The
Management Fee is due and payable quarterly in arrears within 10 business
days after the end of the relevant quarter. Net assets means the total value
of all assets under management of a Fund, less all accrued debts, liabilities
and obligations of that Fund, calculated before giving effect to any
repurchases of Interests. The Management Fee is computed based on the net
assets of the Fund as of the end of business on the last business day of each
quarter. The Management Fee is charged in each fiscal period to the capital
accounts of all Members in proportion to their capital accounts at the
beginning of such fiscal period.
6. Limitation of Liability of the Advisor. The Advisor 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 Advisor or its affiliates, who may be or become an
officer, Manager, 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 Advisor even though compensated by it.
7. Indemnification.
(a) The Fund will indemnify the Advisor and its affiliates, and each of
their members, directors, officers and employees and any of their affiliated
persons, 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 in respect
of 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 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
whom 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 Board
members 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 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 Advisor agrees, and
each other Indemnified Person will be required to agree as a condition to any
such advance, that if one of the foregoing parties receives any such advance,
the party will reimburse the Fund for such fees, costs and expenses to the
extent that it shall be determined that the party was not entitled to
indemnification under this Paragraph 7. The rights of indemnification
provided hereunder shall not be exclusive of or affect any other rights to
which any person may be entitled by contract or otherwise under law.
(b) Notwithstanding any of the foregoing, the provisions of this
Paragraph 7 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 7 to the fullest extent permitted by law. The
provisions of this Paragraph 7 shall survive the termination or cancellation
of this Agreement.
8. Duration and Termination.
(a) This Agreement will become effective on the date the Fund commences
investment operations, provided that this Agreement will not take effect
unless it has first been approved (i) by a vote of a majority of those Board
members 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 the Fund commences investment
operations. 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 Board members 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 Advisor or by the Advisor 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.
9. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally; however, the provisions of
this Agreement may be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
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. Consent to Jurisdiction. Any action or proceeding seeking to enforce
any provision of, or based on any right arising out of, this Agreement may be
brought against the Fund in the courts of the State of New York, County of
New York, or, if the Advisor has or can acquire jurisdiction, in the United
States District Court for the Southern District of New York, and the Fund
hereby consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection
to venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on the Fund anywhere in the world.
12. 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
advisor," "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.
TORREY U.S. STRATEGY PARTNERS, LLC
By:
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Name:
Title:
TORREY ASSOCIATES, LLC
By:
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Name:
Title:
80350.0024 #327406
