Exhibit K
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 1st day of September, 2002, by and
between Aetos Capital Distressed Investment Strategies Fund, LLC (the "Fund"), a
Delaware limited liability company, and SEI Investments Mutual Funds Services
(the "Administrator"), a Delaware business trust.
WHEREAS, the Fund is a registered, non-diversified, closed-end
management investment company under the Investment the Company Act of 1940, as
amended (the "1940 Act") consisting of limited liability company interests (the
"Interests"); and
WHEREAS, the Fund desires the Administrator to provide, and the
Administrator is willing to provide, administrative and accounting services to
the Fund on the terms and conditions hereinafter set forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Administrator hereby agree as follows:
ARTICLE 1. Retention of the Administrator. The Fund hereby retains the
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Administrator to furnish the Fund with accounting and administrative services as
set forth in this Agreement, and the Administrator hereby accepts such
employment. The Administrator shall be deemed to be an independent contractor
for all purposes herein.
ARTICLE 2. Administrative and Accounting Services. The Administrator
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shall perform or supervise the performance by others of the accounting and
administrative services set forth in Schedule A hereto. In performing its duties
under this Agreement, the Administrator will act in all material respects in
accordance with the Fund's Limited Liability Company Agreement (the "LLC
Agreement") and Offering Memorandum as they may be amended (provided copies are
delivered to the Administrator). The Administrator (i) shall not have or be
required to have any authority to supervise the investment or reinvestment of
the securities or other properties which comprise the assets of the Fund and
(ii) shall not provide any investment advisory services to the Fund, and shall
have no liability related to the foregoing. The Administrator shall provide the
Fund with all necessary office space, equipment, personnel, compensation and
facilities (including facilities for Members' and Board of Managers' meetings)
for providing such services identified in Schedule A. The Administrator may
sub-contract with third parties to perform certain of the services to be
performed by the Administrator hereunder; provided, however, that the
Administrator shall remain principally responsible to the Fund for the acts and
omissions of such other entities. In meeting its duties hereunder, the
Administrator shall have the general authority to do all acts deemed in the
Administrator's reasonable good faith belief to be necessary and proper to
perform its obligations under this Agreement.
ARTICLE 3. Allocation of Charges and Expenses.
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(A) The Administrator. The Administrator shall furnish at its own
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expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this
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Agreement. The Administrator shall also pay all compensation, if any, of
officers of the Fund who are affiliated persons of the Administrator or any
affiliated corporation of the Administrator; provided, however, that unless
otherwise specifically provided, the Administrator shall not be obligated to pay
the compensation of any employee of the Fund retained by the Managers of the
Fund to perform services on behalf of the Fund.
(B) Fund Expenses. The Fund assumes and shall pay or cause to be paid
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all expenses of the Fund not otherwise allocated to the Administrator in this
Agreement, including, without limitation, organizational costs, taxes, expenses
for legal and auditing services, the expenses of preparing (including
typesetting), printing and mailing reports, prospectuses, statements of
additional information, proxy solicitation and tender offer materials and
notices to existing members, all expenses incurred in connection with issuing
and redeeming Interests, the costs of pricing services, the costs of custodial
services, the cost of initial and ongoing registration of the Interests under
Federal and state securities laws, fees and out-of-pocket expenses of Managers
who are not affiliated persons of the Administrator or any affiliated
corporation of the Administrator, the costs of Managers' meetings, insurance,
interest, brokerage costs, litigation and other extraordinary or nonrecurring
expenses, and all fees and charges of service providers to the Fund. The Fund
shall reimburse the Administrator for its reasonable out-of-pocket expenses,
including all reasonable charges for SAS 70 audit charges, and reasonable
copying, postage, telephone, and fax charges incurred by the Administrator in
the performance of its duties.
ARTICLE 4. Compensation of the Administrator. The Fund shall pay to the
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Administrator compensation at the annual rate specified in Schedule B to this
Agreement until this Agreement is terminated in accordance with Article 6. Such
compensation shall be calculated and accrued monthly, and paid to the
Administrator monthly, within 30 days of month-end, otherwise the Administrator
shall be entitled to charge and/or set-off such amounts against any account of
the Fund. If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Administrator's
compensation for that part of the month in which this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees as set
forth above. Payment of the Administrator's compensation for the preceding month
shall be made promptly.
ARTICLE 5. Limitation of Liability of the Administrator. The duties of
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the Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder. (As used in this Article 5, the term "Administrator" shall include
officers, employees and other agents of the Administrator as well as that entity
itself.) Under no circumstances shall the Administrator be liable to the Fund
for consequential, indirect or punitive damages.
So long as the Administrator, or its agents, acts without willful
misfeasance, bad faith or gross negligence in the performance of its duties, and
without reckless disregard of its obligations
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and duties hereunder, the Fund assumes full responsibility and shall indemnify
the Administrator and hold it harmless from and against any and all actions,
suits and claims, whether groundless or otherwise, and from and against any and
all losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses)
arising directly or indirectly out of any act or omission of the Administrator
in carrying out its duties hereunder. The indemnity and defense provisions set
forth herein shall indefinitely survive the termination of this Agreement.
If in any case the Fund may be asked to indemnify or hold the
Administrator harmless, the Administrator shall promptly advise the Fund of the
pertinent facts concerning the situation in question, and the Administrator will
use all reasonable care to identify and notify the Fund promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for indemnification, but failure to do so shall not affect the rights
hereunder.
The Fund shall be entitled to participate at its own expense or, if it
so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Fund elects to assume the defense of
any such claim, the defense shall be conducted by counsel chosen by the Fund and
satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Fund elects to assume the defense of any suit
and retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Fund does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
The Administrator may apply to the Fund at any time for instructions
and may, with the prior consent of Aetos Alternatives Management, LLC, the
Fund's investment manager (the "Manager"), consult counsel for the Fund or its
own counsel and with accountants and other experts, at the Fund's expense, with
respect to any matter arising in connection with the Administrator's duties, and
the Administrator shall not be liable or accountable for any action taken or
omitted by it in good faith in accordance with such instruction or with the
opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Administrator be held to have
notice of any change of authority of any officers, employee or agent of the Fund
until receipt of written notice thereof from the Fund.
Nothing herein shall make the Administrator liable for the performance
or omissions of unaffiliated third parties not under the Administrator's
reasonable control such as, by way of example and not limitation, custodians,
investment advisers or sub-advisers, postal or delivery services,
telecommunications providers and processing and settlement services.
The Administrator is entitled to rely on the price information provided
by the underlying funds in which the Fund invests, brokers and custodians
(provided such brokers and custodians are satisfactory to the Manager) in order
to calculate the Fund's net asset value (and the value of
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members' capital accounts based upon such valuation) and the Administrator shall
not be liable for any valuation errors resulting from the use of such
information.
ARTICLE 6. Duration and Termination of this Agreement.
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(A) This Agreement shall become effective on the date set forth in
Schedule B hereto and shall remain in effect for the full
duration of the Initial Term and each Renewal Term, each as set
forth in Schedule B, unless terminated in accordance with the
provisions of this Article 6. This Agreement may be terminated
only: (a) by either party at the end of the Initial Term or at
any time after the Initial Term on at least 90 days' prior
written notice; (b) by either party hereto on such date as is
specified in written notice given by the terminating party, in
the event of a material breach of this Agreement by the other
party, provided the terminating party has notified the other
party of such material breach at least 45 days prior to the
specified date of termination and the breaching party has not
remedied such breach by the specified date of termination; or (c)
effective upon the liquidation of the Fund. For purposes of this
paragraph, the term "liquidation" shall mean a transaction in
which the assets of the Fund are sold or otherwise disposed of
and proceeds therefrom are distributed in cash to the members in
complete liquidation of the interests of such members in the
Fund.
(B) If this Agreement is terminated by the Fund within three (3)
years from the Effective Date hereof, for any reason other than
as stated in Article 6(A) the Fund shall be liable to pay the
Administrator either the fees payable for the remainder of the
Initial Term as set forth in Schedule B hereto under the
sub-heading "Asset Based Fees" (based on the average net asset
value of the Aetos Funds registered under the 1940 Act for the
three months preceding the day on which the Fund so terminates
this Agreement), or the Annual Minimum Fees payable for the
remainder of the Initial Term, whichever is greater ("the
Deconversion Fee") in accordance with the following schedule: if
the Agreement is terminated within the first 12 months of the
Effective Date, the Fund shall be liable to pay 80 % of the
Deconversion Fee; if the Agreement is terminated after the first
12 months but within 24 months of the Effective Date, the Fund
shall be liable to pay 90 % of the Deconversion Fee; and if this
Agreement is terminated after the first 24 months but within 36
months of the Effective Date, the Fund shall be liable to pay 100
% of the Deconversion Fee. For avoidance of doubt, the Fund shall
remain liable to pay the Administrator the Deconversion Fee in
accordance with the provisions of this Article 6(B) in
circumstances where the assets of the Fund are merged,
reorganized or transferred to an entity to which neither the
Administrator nor an affiliate of the Administrator is appointed
to provide administration services.
ARTICLE 7. Activities of the Administrator. The services of the
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Administrator rendered to the Fund are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests.
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ARTICLE 8. Confidentiality. The Administrator agrees on behalf of
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itself and its employees to treat confidentially all records and other
information relative to the Fund and its members received by the Administrator
in connection with this Agreement, including any non-public personal information
as defined in Regulation S-P, and that it shall not use or disclose any such
information except for the purpose of carrying out the terms of this Agreement;
provided, however, that Administrator may disclose such information as required
by law, or after prior notification to and with prior approval in writing by the
Fund.
ARTICLE 9. Certain Records. The Administrator shall maintain customary
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records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Fund shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Fund and will be made available
to or surrendered promptly to the Fund on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Fund and follow the Fund's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Fund has
agreed to indemnify the Administrator against such liability.
ARTICLE 10. Compliance with Governmental Rules and Regulations. The
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Administrator undertakes to comply in all material respects with applicable
requirements of the Securities Act of 1933, the Securities Exchange Act of 1934,
the 1940 Act, and any laws, rules and regulations of governmental authorities
having jurisdiction with respect to the duties to be performed by the
Administrator hereunder including any applicable anti-money laundering laws and
regulations.
ARTICLE 11. Internet Access. Data and information may be made
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electronically accessible to the Fund and its adviser and/or sub-adviser(s)
through Internet access to one or more links provided by the Administrator ("Web
Link"). All rights in Web Link (including text and "look and feel" attributes)
are owned by the Administrator. Any commercial use of the content or any other
aspect of Web Link requires the written permission of the Administrator. Use of
the Web Link by the Fund or its agents will be subject to any terms of use set
forth on the web site. A Web Link and the information (including text, graphics
and functionality) in the Web Link is presented "As Is" and "As Available"
without express or implied warranties including, but not limited to, implied
warranties of non-infringement, merchantability and fitness for a particular
purpose. The Administrator neither warrants that the Web Link will be
uninterrupted or error free, nor guarantees the accessibility, reliability,
performance, timeliness, sequence, or completeness of information provided on
the Web Link.
ARTICLE 12. Entire Agreement; Amendments. This Agreement constitutes
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the entire agreement between the parties hereto and supersedes any prior
agreement, draft or proposal with respect to the subject matter hereof. This
Agreement or any part hereof may be changed or waived
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only by an instrument in writing signed by the party against which enforcement
of such change or waiver is sought.
ARTICLE 13. Assignment. This Agreement shall not be assignable by
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either party without the prior written consent of the other party.
ARTICLE 14. Agreement for Sole Benefit of the Administrator and the Fund.
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This Agreement is for the sole and exclusive benefit of the Administrator and
the Fund and will not be deemed to be for the direct or indirect benefit of the
clients or customers of the Administrator or the Fund. The clients or customers
of the Administrator or the Fund will not be deemed to be third party
beneficiaries of this Agreement nor to have any other contractual relationship
with the Administrator by reason of this Agreement and each party hereto agrees
to indemnify and hold harmless the other party from any claims of its clients or
customers against the other party including any attendant expenses and
attorneys' fees, based on this Agreement or the services provided hereunder.
ARTICLE 15. Waiver. Any term or provision of this Agreement may be
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waived at any time by the party entitled to the benefit thereof by written
instrument executed by such party. No failure of either party hereto to exercise
any power or right granted hereunder, or to insist upon strict compliance with
any obligation hereunder, and no custom or practice of the parties with regard
to the terms of performance hereof, will constitute a waiver of the rights of
such party to demand full and exact compliance with the terms of this Agreement.
ARTICLE 16. Notice. Any notice required or permitted to be given by
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either party to the other shall be deemed sufficient if sent by registered or
certified mail, federal express (or substantially similar delivery service),
postage prepaid, addressed by the party giving notice to the other party at the
last address furnished by the other party to the party giving notice: if to the
Fund, at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and if to the Administrator,
Attention: General Counsel, Xxx Xxxxxxx Xxxxxx Xxxxx, Xxxx, Xxxxxxxxxxxx, 00000.
ARTICLE 17. Force Majeure. No breach of any obligation of a party to
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this Agreement will constitute an event of default or breach to the extent it
arises out of a cause, existing or future, that is beyond the control and
without negligence of the party otherwise chargeable with breach or default,
including without limitation: work action or strike; lockout or other labor
dispute; flood; war; riot; theft; earthquake or natural disaster. Either party
desiring to rely upon any of the foregoing as an excuse for default or breach
will, when the cause arises, give to the other party prompt notice of the facts
which constitute such cause; and, when the cause ceases to exist, give prompt
notice thereof to the other party.
ARTICLE 18. Equipment Failures. The Administrator shall enter into and
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shall maintain in effect with appropriate parties one or more agreements making
reasonable provisions for emergency use of electronic data processing equipment
to the extent appropriate equipment is available. In the event of equipment
failures, the Administrator, at no additional cost to the Fund, shall take
reasonable steps to minimize service interruptions. The Administrator shall have
no liability with respect to the loss of data or service interruptions caused by
equipment failure,
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provided such loss or interruption is not caused by the Administrator's own
willful misfeasance, bad faith, gross negligence or reckless disregard of its
duties or obligations under this Agreement.
ARTICLE 19. Definitions of Certain Terms. The term "affiliated person,"
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when used in this Agreement, shall have the meaning specified in the 1940 Act
and the rules and regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
ARTICLE 20. Headings. All Article headings contained in this
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Agreement are for convenience of reference only, do not form a part of this
Agreement and will not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, will be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine, or neuter, as the contract
requires.
ARTICLE 21. Governing Law. This Agreement shall be construed in
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accordance with the laws of the State of Delaware without giving effect to the
conflicts of laws principles therof, and the applicable provisions of the 1940
Act. To the extent that the applicable laws of the State of Delaware, or any of
the provisions herein, conflict with the applicable provisions of the 1940 Act,
the latter shall control.
ARTICLE 22. Multiple Originals. This Agreement may be executed in two
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or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 23. Binding Agreement. This Agreement, and the rights and
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obligations of the parties hereunder, shall be binding on, and inure to the
benefit of, the parties and their respective successors and assigns.
ARTICLE 24. Severability. If any part, term or provision of this
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Agreement is held to be illegal, in conflict with any law or otherwise invalid,
the remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be construed and
enforced as if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
AETOS CAPTIAL DISTRESSED INVESTMENT STRATEGIES FUND, LLC
By:
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Name:
Title:
SEI INVESTMENTS MUTUAL FUNDS SERVICES
By:
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Name:
Title:
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SCHEDULE A
LIST OF SERVICES
1. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUOUS BASIS.
The Administrator will perform the following accounting services for the Fund:
(i) Journalize investment, capital and income and expense
activities;
(ii) Receive investment activity for hedge fund-of-fund investments
from investment adviser in written form and facilitate
notification and wire movement process to such funds.
(iii) Receive buy/sell trade tickets from the Adviser, process the
activity on the books and records of the funds and reconcile
such activity with the fund's custodian.
(iv) Maintain individual ledgers for each investment fund in which
the Fund is invested and use valuations provided by the
underlying funds in which the Fund is invested or as reported
by the Adviser;
(v) Maintain historical tax lots for each security;
(vi) Record and reconcile corporate action activity and all other
capital changes;
(vii) Reconcile cash and investment balances of the Fund with the
Fund's custodian(s), and provide the Adviser with the beginning
cash balance available for investment purposes.
(viii) Calculate contractual expenses, including management fees and
incentive allocation, as applicable, in accordance with the
Fund's prospectus;
(ix) Post to and prepare the Statement of Assets and Liabilities
and the Statement of Operations in U.S. dollar terms;
(x) Prepare and monitor the expense accruals and notify any
officer of the Fund of any proposed adjustments;
(xi) Control all disbursements and authorize such disbursements
from the Fund's account with the custodian(s) upon Written
Instructions;
(xii) Calculate capital gains and losses;
(xiii) Determine net income;
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(xiv) Determine applicable foreign exchange gains and losses on
payables and receivables, if applicable;
(xv) Transmit or mail copy of the monthly portfolio valuation to
the Adviser;
(xvi) Arrange for the computation of the net asset value in
accordance with the provisions of the Fund's LLC Agreement
and prospectus; and
(xvii) As appropriate, compute total return and expenses.
(xviii) Maintain records and other information necessary on a book
basis to facilitate the preparation of the Fund's tax returns
and tax information reports to the Members by the audit firm.
2. DESCRIPTION OF ADMINISTRATION SERVICES ON A CONTINUOUS BASIS.
The Administrator will perform the following administration services:
(i) Prepare monthly security transaction listings;
(ii) Supply various normal and customary Fund statistical data as
requested on an ongoing basis;
(iii) Coordinate with the Adviser contractual relationships and
communications between the Fund and its contractual service
providers;
(iv) Prepare and file the Fund's Annual and Semi-Annual Reports
with the SEC on Form N-SAR via XXXXX;
(v) Coordinate with the Adviser the preparation and printing of
the Fund's annual and semi-annual shareholder reports; and
(vi) Perform such additional administrative duties relating to the
administration of the Fund as may subsequently be agreed upon
in writing between the Fund and the Administrator.
(vii) Provide such fund accounting and financial reports in
connection with quarterly meetings of the Board of Managers
as are required or as the Board may reasonably request;
(viii) Manage the tender offer process, including coordinating with
outside service provider to distribute tender offers, track
shareholder responses and tabulate tender offer results;
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(ix) Provide individuals to serve as officers of the Fund, as
requested;
(x) Coordinate with the Fund's counsel on drafting, reviewing and
filing registration statements and tender offers, and
coordinate printing and delivery of prospectus and tender
offers;
(xi) Coordinate the Fund's Board of Mangers' schedule, agenda and
production of Board meeting materials, and attend Board
meetings (if requested);
(xii) Provide consultation to the Fund and its Adviser on
regulatory matters relating to the operation of the Fund,
and update the Fund and its Adviser on significant
regulatory and legislative developments which may affect the
Fund;
(xiii) Develop or assist legal counsel to the Fund in
the development of policies and procedures relating to the
operation of the Fund;
(xiv) Act as liaison to legal counsel to the Fund and, where
applicable, to legal counsel to the Fund's independent
Mangers;
(xv) Coordinate the preparation, review and execution of
contracts between the Fund and third parties;
(xvi) Assist the Fund in handling and responding to routine
regulatory examinations with respect to records retained or
services provided by the Administrator, and coordinate with
the Fund's legal counsel in responding to any non-routine
regulatory matters with respect to such matters;
(xvii) Coordinate as necessary the registration or qualification of
Interests of the Fund with appropriate state securities
authorities.
3. DESCRIPTION OF INVESTOR SERVICES ON A CONTINUOUS BASIS.
The Administrator will perform the following functions:
(i) Maintain the register of Members and enter on such register
all issues, transfers and repurchases of interests in the
Fund;
(ii) Arrange for the calculation of the issue and repurchase
prices of interests in the Fund in accordance with the
Fund's LLC Agreement;
(iii) Allocate income, expenses, gains and losses to individual
Members' capital accounts in accordance with the Fund's LLC
Agreement; and
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(iv) Calculate the Incentive Allocation in accordance with the
Fund's LLC Agreement and reallocate corresponding amounts
from the applicable Members' accounts to the Adviser's
account;
(v) Provide statements to Members on a monthly basis or as
frequently as may otherwise be agreed that set forth the
value of and appropriate detail for the Members' Interests
in the Fund
[END OF SCHEDULE A]
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SCHEDULE B
Fees & Expenses
Administration, Accounting Services and Investor Servicing Fee
(monthly valuation):
Asset Based Fees - calculated based on the aggregate month end net assets of the
Aetos Funds registered under the 1940 Act.
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Asset Level Fund Fees
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First $250 million 12 BP per year
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Next of $250 million 10 BP per year
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Excess of $500 million 8 BP per year
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Annual Minimum Fees - calculated and paid monthly
Minimum Fund Fees
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Annual Minimum per fund $90,000 for the first fund;
$60,000 per additional fund
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Investor Servicing Fee:*
. $50 annual per investor account charge
. $25 per investor transaction
. $15 per investor fulfillment item/phone
call (i.e., offering documents, annual
reports, prospectuses)
* Retail focused registered funds (using
NSCC etc.) will incur a $15,000 annual fee
plus above fee schedule.
Other: All reasonable out of pocket expenses (i.e.,
blue sky fees, fulfillment charges, pricing
service fees, postage, independent board
members, registration fees, facsimile and
telephone charges) incurred by the
Administrator on behalf of the Fund will be
billed to the Fund quarterly in arrears.
Regarding U.S. L.P.s - it is our
understanding that tax services (1065's,
K-1's) will be completed by public
accounting firm in conjunction with annual
audit.
Term: This Agreement shall become effective on
September 1, 2002 ("Effective Date") and
shall remain in effect through August 31,
2005 ("Initial Term") and, thereafter, for
successive terms of one year each (each a
"Renewal Term"), unless and until this
Agreement is terminated in accordance with
the provisions of Article 6 hereof.
[END OF SCHEDULE B]
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