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INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the ____ day of ________, 1999, by and between
Xanthus Fund, L.L.C., a Delaware limited liability company (the "Fund"), and
CIBC Xxxxxxxxxxx Advisers, L.L.C., a Delaware limited liability company (the
"Adviser"):
W I T N E S S E T H:
WHEREAS, the Fund intends to engage in business as a closed-end,
non-diversified management investment company and is registered as such under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment adviser; and
WHEREAS, the Fund desires to retain the Adviser to render investment
advisory services to the Fund in the manner and on the terms and conditions
hereinafter set forth; and
WHEREAS, the Adviser desires to be retained to perform such services
on said terms and conditions:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the Fund and the Adviser agree as follows:
1. The Fund hereby retains the Adviser to act as its investment
adviser and, subject to the supervision and control of the Board of Managers of
the Fund (the "Board"), to manage the investment activities of the Fund as
hereinafter set forth. Without limiting the generality of the foregoing, the
Adviser shall: obtain and evaluate such information and advice relating to the
economy, securities markets, and securities as it deems necessary or useful to
discharge its duties hereunder; continuously manage the assets of the Fund in a
manner consistent with the investment objective, policies and restrictions of
the Fund, as set forth in the Confidential Memorandum of the Fund and as may be
adopted from time to time by the Board, and applicable laws and regulations;
determine the securities to be purchased, sold or otherwise disposed of by the
Fund and the timing of such purchases, sales and dispositions; and take such
further action, including the placing of purchase and sale orders and the voting
of securities on behalf of the Fund, as the Adviser shall deem necessary or
appropriate. The Adviser shall furnish to or place at the disposal of the Fund
such of the information, evaluations, analyses and opinions formulated or
obtained by the Adviser in the discharge of its duties as the Fund may, from
time to time, reasonably request.
2. Without limiting the generality of paragraph 1 hereof, the
Adviser shall be authorized to open, maintain and close accounts in the name and
on behalf of the Fund with brokers and dealers as it determines are appropriate;
to select and place orders with brokers, dealers or other financial
intermediaries for the execution, clearance or settlement of any
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transactions on behalf of the Fund on such terms as the Adviser considers
appropriate and which are consistent with the policies of the Fund; and, subject
to any policies adopted by the Board and to the provisions of applicable law, to
agree to such commissions, fees and other charges on behalf of the Fund as it
shall deem reasonable in the circumstances taking into account all such factors
as it deems relevant (including the quality of research and other services made
available to it even if such services are not for the exclusive benefit of the
Fund and the cost of such services does not represent the lowest cost available)
and shall be under no obligation to combine or arrange orders so as to obtain
reduced charges unless otherwise required under the federal securities laws. The
Adviser may use, subject to such procedures as may be adopted by the Board,
affiliates of the Adviser as brokers to effect the Fund's securities
transactions and the Fund may pay such commissions to such brokers in such
amounts as are permissible under applicable law.
3. The Adviser shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as may be
necessary to render the services required to be provided by the Adviser or
furnished to the Fund under this Agreement. Without limiting the generality of
the foregoing, the staff and personnel of the Adviser shall be deemed to include
persons employed or otherwise retained by the Adviser or made available to the
Adviser by its members.
4. The Fund will, from time to time, furnish or otherwise make
available to the Adviser such financial reports, proxy statements, policies and
procedures and other information relating to the business and affairs of the
Fund as the Adviser may reasonably require in order to discharge its duties and
obligations hereunder.
5. The Adviser shall bear the cost of rendering the services to be
performed by it under this Agreement.
6. The Fund assumes and shall pay or cause to be paid all expenses
of the Fund not expressly assumed by the Adviser under this Agreement, including
without limitation: 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 but not yet purchased, custodial fees, margin fees, transfer
taxes and premiums, taxes withheld on foreign dividends and indirect expenses
from investments in investment funds; all costs and expenses associated with the
organization and registration of the Fund, certain offering costs and the costs
of compliance with any applicable Federal or state laws; attorneys' fees and
disbursements associated with updating the Fund's Confidential Memorandum and
subscription documents (the "Offering Materials"); the costs of printing the
Offering Materials; the costs of distributing the Offering Materials to
prospective investors; and attorneys' fees and disbursements associated with the
review of subscription documents executed and delivered to the Fund in
connection with offerings of interests of the Fund; the costs and expenses of
holding meetings of the Board and any meetings of members of the Fund; fees and
disbursements of any attorneys, accountants, auditors and other consultants and
professionals engaged on behalf of the Fund; the administrative services fee
paid to CIBC Xxxxxxxxxxx Corp. pursuant to the Administrative Services Agreement
and the fees of custodians and persons
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providing administrative services to the Fund; the costs of a fidelity bond and
any liability insurance obtained on behalf of the Fund or the Board; all
expenses of computing the Fund's net asset value, including any equipment or
services obtained for these purposes; and all charges for equipment or services
used in communicating information regarding the Fund's transactions among the
Adviser and any custodian or other agent engaged by the Fund.
7. As full compensation for the services provided to the Fund and
the expenses assumed by the Adviser under this Agreement, the Adviser shall be
entitled to be the Special Advisory Member of the Fund pursuant to the terms of
the Limited Liability Company Agreement of the Fund (the "L.L.C. Agreement"). As
the Special Advisory Member, the Adviser shall be entitled to receive an
incentive allocation in accordance with the terms and conditions of Section 5.8
of the L.L.C. Agreement.
8. The Adviser will use its best efforts in the supervision and
management of the investment activities of the Fund and in providing services
hereunder, but in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations hereunder, neither the
Adviser nor any of its members, directors, officers or employees thereof, nor
any of their affiliates, executors, heirs, assigns, successors or other legal
representatives (collectively, the "Affiliates") shall be liable to the Fund for
any error of judgment for any mistake of law or for any act or omission by the
Adviser and its Affiliates.
9. (a) The Fund shall indemnify the Adviser, its members, directors,
officers or employees and any of their affiliates, executors, heirs, assigns,
successors or other legal representatives (each an "Indemnified Person") against
any and all costs, losses, claims, damages or liabilities, joint or several,
including, without limitation, reasonable attorneys' fees and disbursements,
resulting in any way from the performance or non-performance of any Indemnified
Person's duties 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 Managers serving on the Board ("Managers") who are not parties
to the proceeding or (B) legal counsel selected by a vote of a majority of the
Board in a written advice, that the Indemnified Person is entitled to
indemnification hereunder. The Fund shall advance to an Indemnified Person (to
the extent that it has available assets and need not borrow to do so) reasonable
attorneys' fees and other costs and expenses incurred in connection with defense
of any action or proceeding arising out of such performance or non-performance.
The Adviser agrees, and each other Indemnified Person will agree as a condition
to any such advance, that in the event it or he receives any such advance, it or
he shall reimburse the Fund for such fees, costs and expenses to the extent that
it shall be determined that it or he was not entitled to indemnification under
this paragraph 9.
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(b) Notwithstanding any of the foregoing to the contrary, the
provisions of this paragraph 9 shall not be construed so as to relieve the
Indemnified Person of, or provide indemnification with respect to, any liability
(including liability under Federal Securities laws, which, under certain
circumstances, impose liability even on persons who act in good faith) to the
extent (but only to the extent) that such liability may not be waived, limited
or modified under applicable law or that such indemnification would be in
violation of applicable law, but shall be construed so as to effectuate the
provisions of this paragraph 9 to the fullest extent permitted by law.
10. Nothing contained in this Agreement shall prevent the Adviser or
any affiliated person of the Adviser from acting as investment adviser or
manager for any other person, firm or corporation and, except as required by
applicable law (including Rule 17j-1 under the 1940 Act), shall not in any way
bind or restrict the Adviser or any such affiliated person from buying, selling
or trading any securities or commodities for their own accounts or for the
account of others for whom they may be acting. Nothing in this Agreement shall
limit or restrict the right of any member, officer or employee of the Adviser 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.
11. This Agreement shall remain in effect for an initial term
expiring _________________, 2001, and shall continue in effect from year to year
thereafter provided such continuance is approved at least annually by the vote
of a majority of the outstanding voting securities of the Fund, as defined by
the 1940 Act and the rules thereunder, or by the Board; and provided that in
either event such continuance is also approved by a majority of the Managers who
are not parties to this Agreement or "interested persons" (as defined by the
0000 Xxx) of any such party (the "Independent Managers"), by vote cast in person
at a meeting called for the purpose of voting on such approval. The Fund may at
any time, without payment of any penalty, terminate this Agreement upon sixty
days' prior written notice to the Adviser, either by majority vote of the Board
or by the vote of a majority of the outstanding voting securities of the Fund
(as defined by the 1940 Act and the rules thereunder). The Adviser may at any
time, without payment of penalty, terminate this Agreement upon sixty days'
prior written notice to the Fund. This Agreement shall automatically terminate
in the event of its assignment (to the extent required by the 1940 Act and the
rules thereunder) unless such automatic termination shall be prevented by an
exemptive order of the Securities and Exchange Commission.
12. Any notice under this Agreement shall be given in writing and
shall be deemed to have been duly given when delivered by hand or facsimile or
five days after mailed by certified mail, post-paid, by return receipt requested
to the other party at the principal office of such party.
13. This Agreement may be amended only by the written agreement of
the parties. Any amendment shall be required to be approved by the Board and by
a majority of the Independent Managers in accordance with the provisions of
Section 15(c) of the 1940 Act and the rules thereunder. If required by the 1940
Act, any amendment shall also be required to be approved by such vote of members
of the Fund as is required by the 1940 Act and the rules thereunder.
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14. This Agreement shall be construed in accordance with the laws of
the state of New York and the applicable provisions of the 1940 Act. To the
extent the applicable law of the State of New York, or any of the provisions
herein, conflict with the applicable provisions of the 1940 Act, the latter
shall control.
15. The Fund represents that this Agreement has been duly approved
by the Board, including a majority of the Independent Managers, and by the sole
initial member of the Fund, in accordance with the requirements of the 1940 Act
and the rules thereunder.
16. The parties to this Agreement agree that the obligations of the
Fund under this Agreement shall not be binding upon any of the Managers, members
of the Fund or any officers, employees or agents, whether past, present or
future, of the Fund, individually, but are binding only upon the assets and
property of the Fund.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the day and year first above written.
XANTHUS FUND, L.L.C.
By:_______________________________________
Attest: Name:
Title: Manager
CIBC XXXXXXXXXXX ADVISERS, L.L.C.
By: CIBC Xxxxxxxxxxx Corp.,
its Managing Member
By:_______________________________________
Attest: Xxxxxx X. Xxxxxx
Managing Director
__________________________
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