INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of May 9, 2002 between UBS PW CREDIT & RECOVERY FUND,
L.L.C., a Delaware limited liability company (the "Fund"), and PW fund advisor,
l.l.c. (the "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 Manager as investment adviser to furnish certain
investment advisory and portfolio management services to the Fund, and the
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 Manager as investment adviser
of the Fund for the period and on the terms set forth in this Agreement. The
Manager accepts this appointment and agrees to render the services herein set
forth, for the compensation herein described.
2. DUTIES AS INVESTMENT ADVISER.
(a) Subject to the supervision of the Fund's Board of Directors (the
"Board"), the 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
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
Investment Funds (as defined in the Fund's Confidential Memorandum
(the "Memorandum"));
(3) to enter into agreements with the Investment Funds irrevocably to
forego the Fund's right to vote its interests or shares of the
Investment Funds;
(4) to enter into agreements with the Investment Funds that provide for,
among other things, the indemnification by the Fund of the Investment
Funds and the Investment Managers (as defined in the Memorandum) to
the same or different extent as provided for in respect of the
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 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);
(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 (the "Members")
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 Members 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 Manager may deem
necessary or advisable in connection with the affairs of the Fund or
as may be directed by the Board;
(9) to engage and terminate the services of persons other than the
Subadvisers (the engagement of which shall be subject to Paragraph
2(a)(13)) to assist the Manager in providing, or to provide under the
Manager's control and supervision, advice and management to the Fund
at the expense of the 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 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 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 Manager, necessary and appropriate for the
conduct of the business of the Fund without the act, vote or approval
of any other Members or person; and
(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 Manager to the discretionary management of one or more Subadvisers
(as defined in the Memorandum), 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 agreements with the Subadvisers that provide for,
among other things, the indemnification by the Fund of the Subadvisers
to the same or different extent as provided for in respect of the
Manager, and to terminate such agreements, (C) to authorize the
payment of fees and allocations of profits to Subadvisers 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 Subadvisers, assess the most
appropriate investment vehicles (general or 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
Subadviser and invested through the Subadviser, which investments
shall be subject in each case to the terms and conditions of the
respective governing documents used by the Subadviser.
(b) The 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 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 Manager's good faith determination that
such commission is reasonable in terms either of the particular transaction or
of the overall responsibility of the 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 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 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.
(c) The Fund hereby authorizes the Manager and any entity or person
associated with the Manager which is a member of a national securities exchange
to effect any transaction on such exchange for the account of the Fund, which
transaction is permitted by Section 11(a) of the Securities Exchange Act of
1934, as amended, and Rule 11a2-2(T) thereunder, and the Fund hereby consents to
the retention of compensation by the Manager or any person or entity associated
with the Manager.
3. SERVICES NOT EXCLUSIVE. The services furnished by the Manager hereunder
are not to be deemed exclusive and the 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 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 not specifically assumed
by the 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 Investment Funds;
(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 Members 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, the Manager or its affiliates, PW Fund
Advisor, L.L.C. in its administrative capacity ("PWAdmin"), or the
Directors;
(6) all costs and expenses associated with the organization of the
Investment Funds managed by Subadvisers and with the selection of
Investment Managers and Investment 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 Members;
(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 custodians 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 Manager of any expenses of the Fund
that the Manager is not required by this Agreement to pay or assume shall not
obligate the Manager to pay or assume the same or any similar expense of the
Fund on any subsequent occasion.
5. COMPENSATION. In consideration for the provision by the Manager of its
services hereunder, the Fund will pay the Manager a monthly fee (the "Investment
Management Fee") at the annual rate of 1.45% of the Fund's "net assets" for the
month, excluding assets attributable to the capital accounts, if any, of the
Manager and PWAdmin. "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 repurchase of interests. The
Investment 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 the period to which the
Investment Management Fee relates, after adjustment for any applications
effective on such date, and will be payable in arrears. The Investment
Management Fee will be appropriately pro-rated based on the number of days in
such period.
6. LIMITATION OF LIABILITY OF THE MANAGER. The Manager shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
or any Members 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
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 Manager
or its affiliates, who may be or become an officer, Director, 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 Manager even though compensated by it.
7. INDEMNIFICATION.
(a) The Fund will indemnify the 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 Directors 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 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 Directors 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 is
specifically approved at least annually (i) by a vote of a majority of those
Directors 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 Manager or by the 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. USE OF NAME. The Fund agrees that "UBS" is a registered service xxxx
owned by UBS AG and that, at the Manager's request, it will take all necessary
action to change the name of the Fund to a name not including "UBS" or "PW" in
any form or combination within 10 days of the Manager's request, that the Fund's
failure to do so is not compensible by monetary damages and that the Manager
shall be entitled to equitable relief to enforce the Fund's obligation
hereunder. The provisions of this Paragraph 9 shall survive the termination or
cancellation of this Agreement.
10. 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.
11. 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 laws
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.
12. CONSENT TO JURISDICTION. Any action or proceeding seeking to enforce
any provision of, or based on any right arising out of, Paragraph 9 may be
brought against the Fund in the courts of the State of New York, County of New
York, or, if the Adviser 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.
13. 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," "national securities exchange," "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.
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.
PW FUND ADVISOR, L.L.C.
By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Authorized Person
UBS PW CREDIT & RECOVERY FUND, L.L.C.
By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Authorized Person
