Exhibit (g)
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made the 1st day of October, 2000, by
and between Excelsior Hedge Fund of Funds I, LLC, a Delaware limited liability
company (the "Fund"), and NCT Opportunities, Inc., a North Carolina corporation
(the "Advisor").
WHEREAS, the Fund intends to engage in business as a closed-end,
non-diversified management investment company and is registered as such under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment adviser; and
WHEREAS, the Fund desires to retain the Advisor to render investment
advisory services and to provide certain administrative services to the Fund in
the manner and on the terms and conditions hereinafter set forth; and
WHEREAS, the Advisor desires to be retained to perform such services on
said terms and conditions;
NOW, THEREFORE, in consideration of the terms and conditions hereinafter
contained, the Fund and the Advisor agree as follows:
1. The Fund hereby retains the Advisor to:
(a) act as its investment adviser and, subject to the supervision and
control of the Board of Managers of the Fund (the "Board"), manage the
investment activities of the Fund as hereinafter set forth. Without
limiting the generality of the foregoing, the Advisor shall: obtain and
evaluate such information and advice relating to the economy, securities
markets, and securities as it deems necessary or useful to discharge its
duties hereunder; continuously manage the assets of the Fund in a manner
consistent with the investment objective, policies and restrictions of the
Fund, as set forth in the Confidential Memorandum of the Fund and as may be
adopted from time to time by the Board, and applicable laws and
regulations; determine the securities to be purchased, sold or otherwise
disposed of by the Fund and the timing of such purchases, sales and
dispositions; invest discrete portions of the Fund's assets (which may
constitute, in the aggregate, all of the Fund's assets) in unregistered
investment funds or other investment vehicles and registered investment
companies ("Investment Funds"), which are managed by investment managers
("Investment Managers"), including Investment Managers for which separate
investment vehicles have been created in which the Investment Managers
serve as general partners or managing members and the Fund is the
g-1
sole investor ("Sub-Funds") and Investment Managers who are retained to
manage the Fund's assets directly through separate managed accounts
(Investment Managers of Sub-Funds and of managed accounts are collectively
referred to as "Subadvisors"), and take such further action, including the
placing of purchase and sale orders and the voting of securities on behalf
of the Fund, as the Advisor shall deem necessary or appropriate. The
Advisor shall furnish to or place at the disposal of the Fund such of the
information, evaluations, analyses and opinions formulated or obtained by
the Advisor in the discharge of its duties as the Fund may, from time to
time, reasonably request; and
(b) provide, and the Advisor hereby agrees to provide, certain management,
administrative and other services to the Fund. Notwithstanding the appointment
of the Advisor to provide such services hereunder, the Board shall remain
responsible for supervising and controlling the management, business and affairs
of the Fund. The management, administrative and other services to be provided by
the Advisor shall include:
(i) the provision of office space, telephone and utilities;
(ii) the provision of administrative and secretarial, clerical and
other personnel as necessary to provide the services required to
be provided under this Agreement;
(iii) the general supervision of the entities which are retained by
the Fund to provide administration, custody and other services to
the Fund;
(iv) the handling of investor inquiries regarding the Fund and
providing them with information concerning their investments in
the Fund and capital account balances;
(v) monitoring relations and communications between investors and the
Fund;
(vi) assisting in the drafting and updating of disclosure documents
relating to the Fund and assisting in the preparation of offering
materials;
(vii) maintaining and updating investor information, such as change of
address and employment;
(viii) assisting in the preparation and mailing of investor
subscription documents and confirming the receipt of such
documents and funds;
(ix) assisting in the preparation of regulatory filings with the
Securities and Exchange Commission and state securities
g-2
regulators and other Federal and state regulatory authorities;
(x) preparing reports to and other informational materials for
members and assisting in the preparation of proxy statements and
other member communications;
(xi) monitoring compliance with regulatory requirements and with the
Fund's investment objective, policies and restrictions as
established by the Board;
(xii) reviewing accounting records and financial reports of the Fund,
assisting with the preparation of the financial reports of the
Fund and acting as liaison with the Fund's accounting agent and
independent auditors;
(xiii) assisting in preparation and filing of tax returns;
(xiv) coordinating and organizing meetings of the Board and meetings
of the members of the Fund, in each case when called by such
persons;
(xv) preparing materials and reports for use in connection with
meetings of the Board;
(xvi) maintaining and preserving those books and records of the Fund
not maintained by any subadvisers of the Fund or the Fund's
administrator, accounting agent or custodian;
(xvii) reviewing and arranging for payment of the expenses of the
Fund;
(xviii) assisting the Fund in conducting offers to members of the Fund
to repurchase member interests;
(xix) reviewing and approving all regulatory filings of the Fund
required under applicable law; and
(xx) reviewing investor qualifications and subscription documentation
and otherwise assisting in administrative matters relating to the
processing of subscriptions for interests in the Fund.
2. Without limiting the generality of paragraph 1 hereof, the Advisor shall
be authorized to open, maintain and close accounts in the name and on behalf of
the Fund with brokers and dealers as it determines are appropriate; to select
and place orders with brokers, dealers or other financial intermediaries for the
execution, clearance or
g-3
settlement of any transactions on behalf of the Fund on such terms as the
Advisor considers appropriate and that are consistent with the policies of the
Fund; and, subject to any policies adopted by the Board and to the provisions of
applicable law, to agree to such commissions, fees and other charges on behalf
of the Fund as it shall deem reasonable in the circumstances taking into account
all such factors as it deems relevant (including the quality of research and
other services made available to it even if such services are not for the
exclusive benefit of the Fund and the cost of such services does not represent
the lowest cost available) and shall be under no obligation to combine or
arrange orders so as to obtain reduced charges unless otherwise required under
the federal securities laws; to pursue and implement the investment policies and
strategies of the Fund using a 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 Subadvisors, the selection of which
shall be subject to the approval of the Board of Managers in accordance with
requirements of the 1940 Act and 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 by
security holders; and to identify appropriate Subadvisors, assess the most
appropriate investment vehicles (general or limited partnerships, separate
managed accounts or other investment vehicles (pooled or otherwise), and
determine the assets to be committed to each Subadvisor. The Advisor may,
subject to such procedures as may be adopted by the Board, use affiliates of the
Advisor as brokers to effect the Fund's securities transactions and the Fund may
pay such commissions to such brokers in such amounts as are permissible under
applicable law.
3. Management Fee; Expenses; Administrative Fee
(a) In consideration for the provision by the Advisor of its services
hereunder and the Advisor's bearing of certain expenses, the Fund will pay the
Advisor a quarterly fee of 0.375% (1.50% on an annualized basis) of the Fund's
"net assets" (the "Management Fee"). "Net assets" shall equal the total value of
all assets of the Fund, less an amount equal to all accrued debts, liabilities
and obligations of the Fund calculated before giving effect to any repurchases
of interests.
(b) The Management Fee will be computed based on the net assets of the Fund
as of the start of business on the first business day of each calendar quarter,
after adjustment for any subscriptions effective on such date, and will be due
and payable in arrears within five business days after the end of such calendar
quarter. In the event that the Management Fee is payable in respect of a partial
quarter, or in the event of contributions or withdrawals of capital to the Fund
other than at the beginning or end of a quarter, such fee will be appropriately
pro-rated.
(c) The Advisor is responsible for all costs and expenses associated with
the provision of its services hereunder including, but not limited to: expenses
relating to the selection and monitoring of Investment Managers; fees of
consultants retained by the Advisor; and expenses relating to qualifying
potential
g-4
investors and reviewing subscription documents. The Advisor shall, at its own
expense, maintain such staff and employ or retain such personnel and consult
with such other persons as may be necessary to render the services required to
be provided by the Advisor or furnished to the Fund under this Agreement.
Without limiting the generality of the foregoing, the staff and personnel of the
Advisor shall be deemed to include persons employed or otherwise retained by the
Advisor or made available to the Advisor.
(d) The Advisor shall be entitled to charge a one-time administrative fee
in an amount, as may be approved by the Board, not to exceed $10,000 to each
person who becomes a member as compensation for the services of the Advisor and
costs incurred by the Advisor in reviewing subscription documents submitted by
and establishing an account for such member; provided that such fee may be
waived, in whole or in part, in the sole discretion of the Advisor, with respect
to a member who has established multiple related accounts.
4. The Fund will, from time to time, furnish or otherwise make available to
the Advisor such financial reports, proxy statements, policies and procedures
and other information relating to the business and affairs of the Fund as the
Advisor may reasonably require in order to discharge its duties and obligations
hereunder.
5. Except as provided herein or in another agreement between the Fund and
the Advisor, the Fund shall bear all of its own expenses, including: all
investment related expenses (including, but not limited to, fees paid directly
or indirectly to Investment Managers, all costs and expenses directly related to
portfolio transactions and positions for the Fund's account such as direct and
indirect expenses associated with the Fund's investments, including its
investments in Investment Funds, transfer taxes and premiums, taxes withheld on
foreign dividends and, if applicable in the event the Fund utilizes a
Subadvisor, brokerage commissions, interest and commitment fees on loans and
debit balances, borrowing charges on securities sold short, dividends on
securities sold but not yet purchased and margin fees); all costs and expenses
associated with the establishment of Investment Funds managed by Subadvisors;
any non-investment related interest expense; attorneys' fees and disbursements
associated with updating the Fund's Confidential Memorandum and subscription
documents; fees and disbursements of any attorneys and accountants engaged by
the Fund; expenses related to the annual audit of the Fund; fees paid to the
Fund's administrator; custody and escrow expenses; the costs of an errors and
omissions/directors and officers liability insurance policy and a fidelity bond;
the fee payable to the Advisor; fees and travel expenses of Managers; all costs
and charges for equipment or services used in communicating information
regarding the Fund's transactions among the Advisor and any custodian or other
agent engaged by the Fund; and any extraordinary expenses.
6. The compensation provided to the Adviser pursuant to paragraph 3(a)
hereof shall be full compensation for the services provided to the Fund and the
expenses assumed by the Advisor under this Agreement.
g-5
7. The Advisor will use its best efforts in the supervision and management
of the investment activities of the Fund and in providing services hereunder,
but in the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations hereunder, the Advisor, its directors,
officers or employees and its affiliates, successors or other legal
representatives (collectively, the "Affiliates") shall not be liable to the Fund
for any error of judgment, for any mistake of law, for any act or omission by
the Advisor or any of the Affiliates or for any loss suffered by the Fund.
8. (a) The Fund shall indemnify the Advisor and its directors, officers or
employees and their respective affiliates, 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 with respect to 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 which 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 members of the Board (the "Managers") 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 (to the extent that
it has available assets and need not borrow to do so) 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 agree as a condition to any such
advance, that in the event the Indemnified Person receives any such advance, the
Indemnified Person shall reimburse the Fund for such fees, costs and expenses to
the extent that it shall be determined that the Indemnified Person was not
entitled to indemnification under this paragraph 9.
(b) Notwithstanding any of the foregoing to the contrary, the provisions of
this paragraph 9 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
9 to the fullest extent permitted by law.
9. Nothing contained in this Agreement shall prevent the Advisor or any
affiliated person of the Advisor from acting as investment adviser or manager
for any other person, firm or corporation and, except as required by applicable
law (including
g-6
Rule 17j-1 under the 1940 Act), shall not in any way bind or restrict the
Advisor or any such affiliated person from buying, selling or trading any
securities or commodities for their own accounts or for the account of others
for whom they may be acting. Nothing in this Agreement shall limit or restrict
the right of any member, officer or employee of the Advisor 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.
10. This Agreement shall become effective as of the date first noted above,
shall remain in effect for an initial term expiring September 30, 2002, and
shall continue in effect from year to year thereafter provided such continuance
is approved at least annually by the vote of a majority of the outstanding
voting securities of the Fund, as defined by the 1940 Act and the rules
thereunder, or by the Board; and provided that in either event such continuance
is also approved by a majority of the Managers who are not parties to this
Agreement or "interested persons" (as defined by the 1940 Act and the rules
thereunder) of any such party (the "Independent Managers"), by vote cast in
person at a meeting called for the purpose of voting on such approval. The Fund
may at any time, without payment of any penalty, terminate this Agreement upon
sixty days' prior written notice to the Advisor, either by majority vote of the
Board or by the vote of a majority of the outstanding voting securities of the
Fund (as defined by the 1940 Act and the rules thereunder). The Advisor may at
any time, without payment of penalty, terminate this Agreement upon sixty days'
prior written notice to the Fund. This Agreement shall automatically terminate
in the event of its assignment (to the extent required by the 1940 Act and the
rules thereunder) unless such automatic termination shall be prevented by an
exemptive order or rule of the Securities and Exchange Commission.
11. Any notice under this Agreement shall be given in writing and shall be
deemed to have been duly given when delivered by hand or facsimile or five days
after mailed by certified mail, post-paid, by return receipt requested to the
other party at the principal office of such party.
12. This Agreement may be amended only by the written agreement of the
parties. Any amendment shall be required to be approved by the Board and by a
majority of the Independent Managers in accordance with the provisions of
Section 15(c) of the 1940 Act and the rules thereunder. If required by the 1940
Act, any amendment shall also be required to be approved by such vote of members
of the Fund as is required by the 1940 Act and the rules thereunder.
13. This Agreement shall be construed in accordance with the laws of the
State of North Carolina and the applicable provisions of the 1940 Act. To the
extent the applicable law of the State of North Carolina, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control.
g-7
14. The Fund represents that this Agreement has been duly approved by the
Board, including a majority of the Independent Managers, and by the sole initial
member of the Fund, in accordance with the requirements of the 1940 Act and the
rules thereunder.
15. The parties to this Agreement agree that the obligations of the Fund
under this Agreement shall not be binding upon any of the Managers, members of
the Fund or any officers, employees or agents, whether past, present or future,
of the Fund, individually, but are binding only upon the assets and property of
the Fund.
16. This Agreement embodies the entire understanding of the parties.
{The remainder of this page has been intentionally left blank}
g-8
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
EXCELSIOR HEDGE FUND OF FUNDS I, LLC
By: /s/
----------------------------------
Attest: Name: Xxxxxxx X. Xxxxxxxxxx
Title: Principal Manager
/s/
-----------------------------
NCT OPPORTUNITIES, INC.
By: /s/
-----------------------------------
its Managing Member
By: /s/
------------------------------------
Attest: Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chairman and Chief Executive Officer
/s/
------------------------------
g-9
