Exhibit (g)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made as of August __, 2002 between [NAME
OF AETOS FUND], a Delaware limited liability company (the "Fund"), and AETOS
ALTERNATIVES MANAGEMENT, LLC (the "Investment Manager"), a Delaware limited
liability company 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 Investment Manager to furnish certain investment
advisory and portfolio management services to the Fund, and the Investment
Manager 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 Investment Manager as the
investment adviser of the Fund for the period and on the terms set forth in this
Agreement. The Investment Manager accepts this appointment and agrees to render
the services herein set forth, for the compensation herein described.
2. Duties as Investment Manager.
(a) Subject to the supervision of the Fund's Board of Managers (the
"Board"), the Investment Manager 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 Investment Manager 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 Prospectus (the "Prospectus"));
(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
Prospectus) to the same or different extent as provided for in
respect of the Investment Manager, 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
Investment Manager 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 (both direct and indirect) (the
"Investors") 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 Investors 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 advisers and consultants as the Investment
Manager may deem necessary or advisable in connection with the
affairs of the Fund unless otherwise directed by the Board;
(9) to engage and terminate the services of persons other than
Portfolio Managers that manage a Portfolio Account (as defined
in the Prospectus) (a "Sub-Advisor") (the engagement of which
shall be subject to Paragraph 2(a)(13) hereof) to assist the
Investment Manager in providing, or to provide under the
Investment Manager's control and supervision, advice and
management to the Fund at the expense of the Investment
Manager 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 Investment Manager, 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 Investment
Manager, 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 Investment Manager,
necessary and appropriate for the conduct of the business of
the Fund without the act, vote or approval of any other
Investors or person;
(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 Investment Manager 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
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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
Investment Manager, 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; and
(14) to provide administrative services to the Fund, including
providing office space and other support services.
(b) The Investment Manager, in its discretion, may use brokers who
provide the Fund with research, analysis, advice and similar services to execute
portfolio transactions on behalf of the Fund, and the Investment Manager 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 Investment
Manager's good faith determination that such commission is reasonable in terms
either of the particular transaction or of the overall responsibility of the
Investment Manager 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. Whenever the Investment Manager simultaneously
places orders to purchase or sell the same security on behalf of the Fund and
one or more other accounts advised by the Investment 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 Investment
Manager hereunder are not to be deemed exclusive and the Investment Manager
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
Investment Manager or its affiliates, 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.
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 specifically assumed by
the Investment Manager 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,
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;
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(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
Investors 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 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 Investors;
(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 Investment Manager of any
expenses of the Fund that the Investment Manager is not required by this
Agreement to pay or assume shall not obligate the Investment Manager 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 Investment Manager under this Agreement, the Investment
Manager shall receive from the Fund a monthly management fee (the "Management
Fee") computed at the annual rate of 0.75% of the Fund's month end net asset
value. The Management Fee is payable monthly within 10 days of the end of the
relevant month.
6. Limitation of Liability of the Investment Manager. The
Investment Manager shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund or any Investors 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
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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
Investment Manager 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 Investment
Manager even though compensated by it.
7. Indemnification.
(a) The Fund will indemnify the Investment Manager 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 Investment Manager 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
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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 Investment Manager or by the Investment Manager 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, but 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 law
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 Investment Manager 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
adviser," "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.
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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.
[NAME OF AETOS FUND]
By:_______________________________________
Name:
Title:
AETOS ALTERNATIVES MANAGEMENT, LLC
By:_______________________________________
Name:
Title:
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