FORM OF
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this[1st day of January, 2003], by and
between Mercantile Alternative Strategies Fund LLC, a Delaware limited
liability company (the "Company"), a registered, non-diversified, closed-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act") consisting of limited liability company interests
(the "Interests"); and Mercantile Capital Advisors, Inc., a Maryland
corporation (the "Administrator").
WHEREAS, the Company desires the Administrator to provide, and the
Administrator is willing to provide administrative and accounting services to
the Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Company and the Administrator hereby agree as
follows:
ARTICLE 1. Retention of the Administrator. The Company hereby retains
the Administrator to furnish the Company with accounting, administrative and
recordkeeping services as set forth in this Agreement, and the Administrator
hereby accepts such employment.
ARTICLE 2. Administrative and Accounting Services. The Administrator
shall perform or arrange for and supervise the performance by others of the
accounting and administrative services necessary for the operation of the
Company. In performing its duties under this Agreement, the Administrator will
act in all material respects in accordance with the Company'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 Company and (ii) shall not provide any
investment advisory services to the Company, and shall have no liability
related to the foregoing. The Administrator shall provide the Company with all
necessary office space, equipment, supplies, personnel, compensation and
facilities (including facilities for Members' and Board of Directors meetings)
for providing such services. The Administrator may sub-contract with third
parties to perform certain or all of the services to be performed by the
Administrator hereunder; provided, however, that the Administrator shall
remain principally responsible to the Company for the acts and omissions of
such other entities. In meeting its duties hereunder, Administrator shall have
the general authority to do all acts deemed in the Administrator's good faith
belief to be necessary and proper to perform its obligations under this
Agreement.
ARTICLE 3. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also pay all
compensation, if any, of officers of the Company 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
Administrator retained by the Directors of the Company to perform services on
behalf of the Company.
(B) Company Expenses. The Company assumes and shall pay or cause to be
paid all other expenses of the Company not otherwise allocated 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
Directors who are not affiliated persons of the Administrator or any
affiliated corporation of the Administrator, the costs of Directors' meetings,
insurance, interest, brokerage costs, litigation and other extraordinary or
nonrecurring expenses, and all fees and charges of service providers to the
Company. The Company 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 Company shall pay to
the Administrator compensation at the annual rate equal to 0.70% (70 basis
points) of the net assets of the Company until this Agreement is terminated in
accordance with Article 6. Such compensation shall be calculated and accrued
daily, 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 Company. 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. Standard of Care; Limitation of Liability of the
Administrator. The Administrator shall exercise due care and diligence to
ensure the accuracy of all services performed under this Agreement. The duties
of 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, sub-administrators and
other agents of the Administrator as well as that entity itself.) Under no
circumstances shall the Administrator be liable to the Company 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 and duties hereunder, the Company 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.
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 and duties hereunder, the
Company 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 the Administrator's willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties hereunder. The indemnity and defense provisions set
forth herein shall indefinitely survive the termination of this Agreement.
The indemnification rights hereunder shall include the right to
reasonable advances of defense expenses in the event of any pending or
threatened litigation with respect to which indemnification hereunder may
ultimately be merited. If in any case a party hereunder (the "Indemnifying
Party") is asked to indemnify or hold the other party harmless (the
"Indemnified Party"), the Indemnified Party shall promptly notify and advise
the Indemnifying Party of the pertinent facts concerning the situation in
question, and the Indemnified Party will use all reasonable care to identify
and notify the Indemnifying Party 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 Indemnifying Party 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 Indemnifying
Party elects to assume the defense of any such claim, the defense shall be
conducted by counsel chosen by the Indemnifying Party and satisfactory to the
Indemnified Party, whose approval shall not be unreasonably withheld. In the
event that the Indemnifying Party elects to assume the defense of any suit
and retain counsel, the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it. If the Indemnifying Party does not
elect to assume the defense of a suit, it will reimburse the Indemnified
Party for reasonable fees and expenses of any counsel retained by the
Indemnified Party.
The Indemnified Party may apply to the Indemnifying Party at any time
for instructions and may consult counsel for the Indemnifying Party or the
Company as applicable, or its own counsel and with the Company's accountants
and other experts, at the Indemnifying Party's expense, with respect to any
matter arising in connection with the Indemnified Party's duties. The
Indemnified Party 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.
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Also, the Indemnified Party 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 authorized person or persons. Nor shall the
Indemnified Party be held to have notice of any change of authority of any
officers, employee or agent of the Indemnifying Party until receipt of
written notice thereof from the Indemnifying Party.
Nothing herein shall make the Indemnified Party liable for the
performance or omissions of unaffiliated third parties not under the
Indemnified Party's reasonable control unless the Indemnified Party has
delegated its duties hereunder to such third party such as, by way of example
and not limitation, 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 Company invests, and brokers in order to
calculate the Company's net asset value and the Administrator shall not be
liable for any valuation errors resulting from the use of such information,
provided the Administrator complies with the valuation procedures described
in the N-2 and adopted by the Company.
ARTICLE 6. Duration and Termination of this Agreement. This Agreement
shall become effective on the date set forth above and shall remain in effect
for the full duration until [January 1, 2006] 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 the end of any Renewal Term on 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; or (c) as to any Company, effective upon
the liquidation of such Company. For purposes of this paragraph, the term
"liquidation" shall mean a transaction in which the assets of the Mercantile
Small Cap Manager 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.
ARTICLE 7. Activities of the Administrator. The services of the
Administrator rendered to the Company 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.
ARTICLE 8. Proprietary and Confidential Information. The Administrator
agrees on behalf of itself and its employees to treat confidentially and as
proprietary information all records and other information relative to the
Administrator 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 approval in writing by the Administrator,
which approval may not be withheld where the Administrator may be exposed to
civil or criminal contempt proceedings or penalties for failure to comply.
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ARTICLE 9. Certain Records. The Administrator shall maintain customary
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 Company shall be prepared and maintained at the expense of
the Administrator, but shall be the property of the Company and will be made
available to or surrendered promptly to the Company on request.
In case of any request or demand for the inspection of such records by
another party, 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 Company will indemnify the Administrator against such
liability.
ARTICLE 10. Compliance with Governmental Rules and Regulations. The
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, the USA Patriot 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
electronically accessible to the Company through Internet access to one or
more links provided by the Administrator or a Sub-Administrator ("Web Link").
All rights in Web Link (including text and "look and feel" attributes) are
owned by the Sub-Administrator. Any commercial use of the content or any other
aspect of Web Link requires the written permission of the Sub-Administrator.
Use of the Web Link by the Company will be subject to any terms of use set
forth on the web site. 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 Sub-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 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 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 either
party without the prior written consent of the other party.
ARTICLE 14. Agreement for Sole Benefit of the Administrator and the
Company. This Agreement is for the sole and exclusive benefit of the Company
and the Administrator and will not be deemed to be for the direct or indirect
benefit of the clients or customers of the Company or the Administrator. The
clients or customers of the Company or the Administrator will not be
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deemed to be third party beneficiaries of this Agreement nor to have any other
contractual relationship with the Company 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
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 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
Administrator at: Xxx Xxxxxxx Xxxxx, Xxxxxxxxx, XX 00000; and if to the Company,
Attention: Mercantile Alternative Strategies Fund, c/o SEI Mutual Fund Services,
Xxx Xxxxxxx Xxxxxx Xxxxx, Xxxx, Xxxxxxxxxxxx, 00000.
ARTICLE 17. Force Majeure. No breach of any obligation of a party to
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. In the event of equipment failures
beyond the Administrator's control, the Administrator shall take reasonable
steps to ensure that any Sub-Administrator can minimize service interruptions
but shall have no liability with respect thereto. The Sub-Administrator shall
be required to develop and maintain a plan for recovery from equipment
failures which may include contractual arrangements with appropriate parties
making reasonable provision for emergency use of electronic data processing
equipment to the extent appropriate equipment is available.
ARTICLE 19. Definitions of Certain Terms. The term "affiliated person,"
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 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
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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
accordance with the laws of the State of Delaware without giving effect to the
conflicts of laws principles thereof, 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 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
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
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.
MERCANTILE CAPITAL ADVISORS, INC.
By:_______________________________
Name:
Title:
MERCANTILE ALTERNATIVE STRATEGIES FUND LLC
By:________________________________
Name:
Title:
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