INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of December 31, 2002 between PHOENIX - LJH ADVISORS
FUND LLC, a Delaware limited liability company ("the Fund"), and PHOENIX/LJH
ALTERNATIVE INVESTMENTS LLC ("the Adviser"), a Delaware limited liability
company registered, and which will remain registered for the term of the
Agreement, as an investment adviser under the Investment Advisers Act of 1940,
as amended (the "Advisers Act").
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 Adviser as investment adviser to furnish certain
investment advisory and portfolio management services to the Fund, and the
Adviser 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 Adviser as investment
adviser of the Fund for the period and on the terms set forth in this Agreement.
The Adviser 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 Adviser 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 except as otherwise delegated by the Board. In
furtherance of and subject to the foregoing, the Adviser will have full power
and authority on behalf of the Fund, among other matters:
(1) to conduct and maintain a continuous review of the
Fund's investment portfolio;
(2) to assist in the identification and evaluation of
prospective underlying investment funds or investment managers to
manage assets for the Fund;
(3) to monitor the performance of such funds or managers
managing assets for the Funds on an ongoing basis;
(4) to manage directly the assets of the Fund, including
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;
(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 Adviser
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) with the Board's consent to engage and terminate
such attorneys, accountants and other professional advisers and
consultants as the Adviser may deem necessary or advisable in
connection with the affairs of the Fund or as may be directed by
the Board;
(9) with the Board's consent to engage and terminate the
services of persons to assist the Adviser in providing, or to
provide under the Adviser's control and supervision, advice and
management to the Fund 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 shareholder of the Adviser, 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 Adviser, or any of their
principals, directors, officers, members, employees and agents;
and
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(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 Adviser,
necessary and appropriate for the conduct of the business of the
Fund without the act, vote or approval of any Member or other
person.
(b) The Adviser, 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 Adviser 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 Adviser's good faith
determination that such commission is reasonable in terms either of the
particular transaction or of the overall responsibility of the Adviser 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. In
selecting a broker-dealer to execute each particular transaction, the Adviser
will take the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker-dealer; the size of
and difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of the Fund on a
continuing basis. Accordingly, the price to a Fund in any transaction may be
less favorable than that available from another broker-dealer if the difference
is reasonably justified by other aspects of the portfolio execution services
offered. Whenever the Adviser simultaneously places orders to purchase or sell
the same security on behalf of the Fund and one or more other accounts advised
by the Adviser, 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 Adviser and any entity or
person associated with the Adviser 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 Section 17(e)(2) and
Rule 17e-1 under the 1940 Act and the Fund hereby consents to the retention of
compensation by the Adviser or any person or entity associated with the Adviser.
3. Services Not Exclusive. The services furnished by the Adviser
hereunder are not to be deemed exclusive and the Adviser 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 Adviser 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.
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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 specifically assumed by the Adviser 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;
(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 ("LLC Agreement") 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
insurance obtained on behalf of the Fund, the Adviser or its
affiliates or the Directors;
(6) all costs and expenses of preparing, setting in
type, printing and distributing reports and other communications
to Members;
(7) 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;
(8) all charges for equipment or services used for
communications between the Fund and any custodian, or other agent
engaged by the Fund;
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(9) the fees of custodians and other persons providing
administrative services to the Fund; and
(10) such other types of expenses as may be approved from
time to time by the Board.
(b) The payment or assumption by the Adviser of any expenses of
the Fund that the Adviser is not required by this Agreement to pay or assume
shall not obligate the Adviser to pay or assume the same or any similar expense
of the Fund on any subsequent occasion.
5. Compensation. As full compensation for the services provided to
the Fund and the expenses assumed by the Adviser under this Agreement, the
Adviser will be entitled to be the Special Advisory Member of the Fund pursuant
to the terms of the Fund's LLC Agreement and to receive an incentive allocation
in accordance with the terms and conditions of Section 5.11 of the LLC
Agreement. In addition, the Fund will pay the Adviser a fee computed and paid
monthly in arrears at an annual rate of 1.25% of the Fund's average daily net
assets. If the fees payable to the Adviser begin to accrue before the end of any
month, or if this Agreement terminates before the end of any month, then such
fees for such month shall be prorated according to the proportion which the
partial period bears to the full month in which such effectiveness or
termination occurs. The Adviser may from time to time and for such periods as it
deems appropriate voluntarily reduce its compensation hereunder (and/or
voluntarily assume expenses) for the Fund.
6. Limitation of Liability of the Adviser. The Adviser 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 Adviser 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 Adviser even
though compensated by it.
7. Indemnification.
(a) The Fund will indemnify the Adviser 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
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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 attorney 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 Adviser
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. 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 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
to the fullest extent permitted by law.
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
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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 Adviser or by the Adviser 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. 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. Further, any material amendment, as
determined by the parties thereto with the assistance of legal counsel, shall
not be effective until approved: (a)(i) by the Board and (ii) by the vote of a
majority of the Fund's outstanding voting securities; and (b) by the affirmative
vote of a majority of the Directors who are not parties to this Agreement or
interested persons of a party to this Agreement (other than as Directors), by
votes cast in person at a meeting specifically called for such purpose.
10. Governing Law. This Agreement shall be construed in accordance
with the laws of Delaware, 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 Delaware conflict with the applicable provisions of the 1940
Act, the latter shall control.
11. License Agreement. The Fund shall have the non-exclusive right to
use the name "Phoenix - LJH" to designate itself and any current or future
series of shares only so long as the Adviser serves as investment manager or
adviser to the Fund with respect to such series of shares and the Adviser has
rights to the name. In the event that the Adviser ceases to act as the
investment adviser to the Fund or have rights to the name, the Fund shall cease
using the name "Phoenix - LJH" upon the Adviser's written request.
12. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Adviser shall at all times conform to: (a)
all applicable provisions of the 1940 Act and the Advisers Act and any rules and
regulations adopted thereunder as amended; and (b) the provisions of the
Registration Statement of the Fund under the 1940 Act, as amended; and (c) the
provisions of the Fund's LLC Agreement, as amended; and (d) the provisions of
Procedures of the Fund provided to the Adviser, as amended; and (e) any other
applicable provisions of state and federal law. Adviser will maintain books and
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records with respect to the Fund's securities transactions as are required by
applicable laws and regulations to be maintained and will furnish the Board such
periodic and special reports as are required by applicable laws and regulations
to be furnished or as the Board may reasonable request. Adviser will treat
confidentially and as proprietary information of the Fund all records and other
information relative to the Fund, and will not use records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld where the
Adviser may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Fund.
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. This Agreement may be executed in counterparts, each of
which shall constitute an original and both of which, collectively, shall
constitute one agreement.
The terms "Phoenix - LJH Advisors Fund LLC" and "Directors" (of the Fund)
refer, respectively to the limited liability company created and the Directors,
as directors, but not individually or personally, acting from time to time under
the Fund's organizational documentation, to which reference is hereby made. The
obligations of "Phoenix - LJH Advisors Fund LLC" entered into in the name or on
behalf thereof by any of the Directors, representatives or agents are made not
individually, but in such capacities and are not binding upon any of the
Directors, Members or representatives of the Fund personally, but bind only the
assets of the Fund, and all persons dealing with the Fund or other series of the
Fund must look solely to the assets of the Fund for the enforcement of any
claims against the Fund.
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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.
PHOENIX - LJH ADVISORS FUND LLC
By:
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PHOENIX/LJH ALTERNATIVE
INVESTMENTS LLC
By:
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