EXHIBIT (k)(1)
FORM OF ADMINISTRATION AGREEMENT
THIS AGREEMENT, made as of the 26th day of June, 2002, by and between the DB
Hedge Strategies Fund LLC, a Delaware limited liability company (the "Fund") and
DB Investment Managers, Inc., a Delaware corporation (the "Administrator").
W I T N E S S E T H:
WHEREAS, the Fund is a closed-end, management investment company, registered
under the Investment Company Act of 1940, as amended (the "1940 Act") and the
Administrator is an investment adviser registered under the Investment Advisers
Act of 1940, as amended; and
WHEREAS, the Fund desires the Administrator to render administrative services to
the Fund, and the Administrator is willing to render such services upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Administrator to provide the
services set forth below, subject to the overall supervision of the Board of
Directors of the Fund, for the period and on the terms set forth in this
Agreement. The Administrator hereby accepts such appointment and agrees during
such period to render the services herein described and to assume the
obligations set forth herein, for the compensation herein provided.
2. Administrative Services. Subject to the general supervision of the Board of
Directors of the Fund, the Administrator will, at its own expense:
(a) furnish to the Fund the services of its employees and agents in
the management and conduct of the corporate business and affairs of
the Fund;
(b) supervise and manage all aspects of the Fund's operations other
than portfolio management and distribution, as such services are
described in the Fund's Investment Management Agreement and
Underwriting and Distribution Services Agreement, respectively;
(c) provide the Fund with such executive, administrative,
accounting, clerical, and bookkeeping services as are deemed
advisable by the Fund's Board of Directors;
(d) provide the Fund with, or obtain for it, adequate office space
and all necessary office equipment and services including telephone
service, heat, utilities, stationery, supplies and similar items for
any offices as are deemed advisable by the Fund's Board of
Directors;
(e) monitor and review the Fund's contracted services and
expenditures, including the services provided under the
Sub-Administration Agreement and services provided by the custodian,
independent auditors, and legal counsel;
(f) provide the Fund with such administrative and clerical services
for the maintenance of certain Member records as are deemed
advisable by the Fund's Board of Directors;
(g) provide the Fund with, or obtain for it, such appropriate
transfer agency services and services related to payment of
distributions as are deemed advisable by the Fund's Board of
Directors;
(h) provide the Fund with, or obtain for it, such appropriate fund
accounting services as are deemed advisable by the Fund's Board of
Directors;
(i) prepare or supervise the preparation of periodic reports to the
Fund's Members and prepare and file, with such advice of counsel as
reasonably deemed necessary by the Administrator, such documents and
other papers as may be required to comply with the rules,
regulations, and requirements of the Securities and Exchange
Commission ("SEC") and other appropriate governmental agencies,
whether state or federal;
(j) supervise regulatory compliance matters, including, but not
limited to, the compilation of information for reports to, and
filings with, the SEC and other appropriate governmental agencies,
whether state or federal; and
(k) report to the Board of Directors of the Fund concerning its
activities pursuant to this Agreement at regular meetings of the
Board and at such other times as the Board may reasonably request.
3. Allocation of Charges and Expenses. Each party shall bear all expenses of its
employees and overhead incurred by it in connection with its duties under this
Agreement. The Administrator will pay the compensation and expenses of all of
its personnel and will make available, without expense to the Fund, the services
of such of its partners, officers and employees as may duly be elected officers
or Directors of the Fund, subject to their individual consent to serve and to
any limitations imposed by law. The Administrator will not be required to pay
any expenses of the Fund other than those specifically allocated to the
Administrator in Sections 2, 3, and 6. In particular, but without limiting the
generality of the foregoing, the Administrator will not be required to pay: (i)
fees and expenses of any investment adviser of the Fund; (ii) organizational and
offering expenses of the Fund; (iii) fees and expenses incurred by the Fund in
connection with membership in investment company organizations; (iv) brokers'
commissions, transfer taxes, fees, and other expenses connected with the
acquisition, disposition, and valuation of securities and other investments;
(v) fees and charges for portfolio pricing services to a pricing agent, if any;
(vi) outside legal, accounting or auditing expenses; (vii) interest, insurance
premiums, taxes, or governmental fees; (viii) litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
the Fund's business; (ix) the cost of preparing stock certificates or any other
expenses, including, without limitation, clerical expenses of issue, redemption,
or repurchase of units of interest of the Fund; (x) the expenses of and fees for
registering or qualifying units of interest of the Fund for sale and of
maintaining the registration of the Fund and registering the Fund as a broker or
a dealer, if applicable; (xi) the fees and expenses of Directors of the Fund who
are not "interested
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persons" of the Fund; (xii) out-of-pocket travel expenses for all Directors and
other expenses incurred by the Fund in connection with Directors' meetings;
(xiii) the cost of typesetting, printing, and distributing reports and notices
to Members, the SEC, and other regulatory authorities; (xiv) any direct charges
to Members approved by the Board of Directors of the Fund; or (xv) costs in
connection with annual or special meetings of Members, including proxy material
preparation, printing, and mailing. The Administrator shall not be required to
pay expenses of activities that are primarily intended to result in sales of
units of interest of the Fund.
4. Compensation of the Administrator.
(a) For all services to be rendered and payments made as provided in
Sections 2 and 3 hereof, the Fund will pay the Administrator on the
last day of each month a fee at an annual rate equal to a percentage
of the Fund's month-end net assets, including assets attributable to
the investment adviser (or its affiliates) and before giving effect
to any repurchases by the Fund of units of interest of the Fund as
set forth in Appendix A hereto. If this Agreement shall terminate
before the last day of a month, compensation for that part of the
month that this Agreement is in effect shall be prorated in a manner
consistent with the calculations of the fee as set forth above.
(b) In addition to the foregoing, the Administrator may from time to
time agree not to impose all or a portion of its fee otherwise
payable hereunder (in advance of the time such fee or portion
thereof would otherwise accrue) and/or undertake to pay or reimburse
the Fund for all or a portion of its expenses not otherwise required
to be borne or reimbursed by the Administrator. Any such fee
reduction or undertaking may be discontinued or modified by the
Administrator at any time.
5. Other Interests. It is understood that the Directors and officers of the Fund
and Members of the Fund are or may become interested in the Administrator as
directors, officers, employees, shareholders, or otherwise and that directors,
officers, employees, and shareholders of the Administrator are or may become
similarly interested in the Fund, and that the Administrator is or may become
interested in the Fund as Member or otherwise. It is also understood that
directors, officers, employees, and shareholders of the Administrator are or may
become interested (as directors, officers, employees, stockholders, or
otherwise) in other companies or entities (including, without limitation, other
investment companies) controlling, controlled by, or under common control with
the Administrator or which may in the future organize, sponsor, or acquire, or
with which it may merge or consolidate, and that the Administrator or its
affiliates may enter into advisory or management or administration agreements or
other contracts or relationships with such other companies or entities.
6. Sub-Administrators. The Administrator may employ, at its own expense, one or
more sub-administrators (including one or more of the Administrator's
affiliates) from time to time to perform such of the acts and services of the
Administrator and upon such terms and conditions as may be agreed upon between
the Administrator and such sub-administrators.
7. Compliance. The Administrator shall observe and comply with the Fund's
Certificate of
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Formation of Limited Liability Company, the Limited Liability Company Operating
Agreement, the Fund's Registration Statement, any and all applicable federal and
state securities laws, all lawful resolutions of the Fund's Board of Directors,
and other lawful orders and directions given from time to time by the Directors.
All activities engaged in by the Administrator under this Agreement shall be at
all times subject to the control of and review by the Board of Directors.
8. Books and Records. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Administrator hereby agrees that all records that it maintains
or causes to be maintained for the Fund are the property of the Fund and further
agrees to surrender promptly to the Funds any of such records upon the Fund's
request. The Administrator further agrees to preserve or cause to be preserved
for the periods prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-1 under the 1940 Act.
9. Limitation of Liability of Administrator and Fund. The Administrator shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or gross
negligence on its part in the performance of its duties or from reckless
disregard by the Administrator of its obligations and duties under this
Agreement. Any person, even though also employed by the Administrator, who may
be or become an employee of and paid by the Fund shall be deemed, when acting
within the scope of his employment by the Fund, to be acting in such employment
solely for the Fund and not as its employee or agent. It is understood and
expressly stipulated that none of the Directors or Members of the Fund shall be
personally liable hereunder. None of the Directors, officers, agents, or Members
of the Fund assume any personal liability for obligations entered into on behalf
of the Fund. All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund.
10. Name of the Fund. The Fund hereby agrees that in the event that neither the
Administrator nor any of its affiliates acts as the Administrator or investment
adviser to the Fund, the name of the Fund will not be one that suggests an
affiliation with the Administrator or affiliates of the Administrator.
11. Certain Definitions. The term "interested persons" when used herein shall
have the meaning specified in the Investment Company Act of 1940, as amended, as
now in effect or as hereafter amended subject however, to such exemptions as may
be granted by the SEC by any rule, regulation, or order.
12. Duration and Termination of this Agreement. This Agreement shall become
effective on the date hereof. Unless terminated as herein provided, this
Agreement shall remain in full force and effect for two years from the date
hereof and shall continue in full force and effect for successive periods of one
year thereafter, but only so long as such continuance is specifically approved
at least annually by the vote of a majority of the Board of Directors of the
Fund. After its initial term, this Agreement may, on 60 days' written notice to
the other party, be terminated at any time without the payment of any penalty by
the Fund or by the Administrator.
13. Amendment of this Agreement. No provisions of this Agreement may be changed,
waived,
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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.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
15. 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. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
DB HEDGE STRATEGIES FUND LLC
By:
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Xxxxxxx Xxxxxxxxx
Vice President
DB INVESTMENT MANAGERS, INC.
By:
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Xxxxxxx X. Xxxxx
Managing Director
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Appendix A
SCHEDULE OF FEES
Fund Fee
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DB Hedge Strategies Fund LLC 0.50% (0.020833% per month)
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