DRAFT DATED DECEMBER 8, 1999
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT (this "Agreement") is entered
into and made effective as of the ___ day of _________, ____, by and between
meVC ADVISERS, INC., a Delaware corporation ("Adviser"), and XXXXXX XXXXXX
JURVETSON MEVC MANAGEMENT CO., LLC, a California limited liability company
("Sub-Adviser"). Terms not otherwise defined herein shall have the meaning
assigned to them in that certain Investment Advisory Agreement (the "Advisory
Agreement"), dated of even date herewith, by and between meVC Xxxxxx Xxxxxx
Jurvetson Fund I, Inc., a Delaware corporation (the "Fund"), and Adviser.
W I T N E S S E T H:
WHEREAS, the Fund is a non-diversified closed-end management investment
company that has elected to be regulated as a business development company
pursuant to the provisions of the Investment Company Act; and
WHEREAS, Adviser is a registered investment adviser under the Advisers
Act; and
WHEREAS, pursuant to the terms and subject to the conditions of the
Advisory Agreement, Adviser has undertaken to serve as the Fund's investment
advisor and, in connection therewith, to perform certain services for the
Fund with respect to the administration of the Fund and its investment
activities; and
WHEREAS, Sub-Adviser is a registered investment adviser under the
Advisers Act; and
WHEREAS, Sub-Adviser desires to serve as an investment sub-adviser to
the Fund and, in connection therewith, to assist Adviser in the fulfillment
of its duties and obligations under the Advisory Agreement, such assistance
to be provided on the terms and subject to the conditions as set forth
herein; and
WHEREAS, Adviser desires to retain Sub-Adviser to assist Adviser in the
fulfillment of its duties and obligations under the Advisory Agreement on the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the Fund intends to apply to the Securities and Exchange
Commission (the "Commission") for an exemptive order pursuant to Sections
6(c) and 57(i) of the Investment Company Act and Rule 17d-1 promulgated
thereunder (the "Order") to allow the Fund to coinvest in the same securities
with certain individuals or entities that may be deemed by the Commission to
be "affiliates" (as defined in the Investment Company Act and the rules and
regulations promulgated thereunder) of the Fund ("Fund Affiliates"); and
WHEREAS, subject to the Commission's grant of the Order, and subject in
all cases to the approval of the Fund's Board of Directors, it is
contemplated that many of the Fund's venture capital investments will be
investments made in conjunction with one or more Fund Affiliates ("Affiliate
Transactions");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. APPOINTMENT OF SUB-ADVISER; DUTIES OF SUB-ADVISOR.
(a) On the terms and subject to the conditions set forth in this
Agreement, Adviser hereby retains Sub-Adviser to serve as the Fund's
investment sub-adviser and, in connection therewith, to assist Adviser with
the fulfillment of its obligations as set forth in the Advisory Agreement.
(b) In all cases subject to the approval of the Fund's Board of
Directors, during the term of this Agreement, Sub-Adviser hereby agrees to:
(i) manage the investment and reinvestment of the Fund's
assets (except for the investment and reinvestment of the Fund's assets
in Temporary Investments (as defined in the Fund's Prospectus), all
obligations with respect to which shall remain those of Adviser);
(ii) continuously review, supervise and administer the Fund's
investment program to determine in its discretion the securities to be
purchased or sold and the portion of the Fund's assets to be held
uninvested;
(iii) provide or make available significant managerial
assistance and guidance to the companies in which the Fund invests,
such assistance and guidance in all cases to be at least the minimum
level required for the Fund to at all times remain in compliance with
the relevant provisions of the Investment Company Act;
(iv) provide the Fund with all required records concerning
Adviser's efforts on behalf of the Fund; and
(v) provide regular reports to the Fund's Board of Directors
concerning Adviser's activities on behalf of the Fund.
2. ACCEPTANCE BY SUB-ADVISER. Sub-Adviser hereby accepts appointment as
an investment sub-adviser to the Fund on the terms and conditions set forth
in this Agreement, and agrees to discharge its duties and responsibilities
hereunder to the best of its abilities and in compliance with the objectives,
policies and limitations as set forth in the Fund's Prospectus and applicable
laws and regulations, subject in all cases to the approval of the Fund's
Board of Directors.
3. COMPENSATION.
(a) For the services rendered by Sub-Adviser as set forth in this
Agreement, Adviser shall pay to Sub-Adviser an amount equal to forty percent
(40%) of any Management Fee paid by the Fund to Adviser pursuant to Section 4
of the Advisory Agreement. Adviser shall remit to Sub-Adviser its portion of
any such Management Fee not later than the third business day following
Adviser's receipt of a Management Fee from the Fund.
(b) As additional compensation for Sub-Adviser's services pursuant to
this Agreement, Adviser shall pay to Sub-Adviser an amount equal to ninety
percent (90%) of any Incentive Fee paid by the Fund to Adviser pursuant to
Section 4 of the Advisory Agreement. Adviser shall remit to Sub-Adviser its
portion of any such Incentive Fee not later than the third business day
following Adviser's receipt of an Incentive Fee from the Fund.
(c) In the event of termination of this Agreement, any compensation to
which Sub-Adviser may be entitled pursuant to this Section 3 shall be
computed as of the period ending on the last business
day on which this Agreement is in effect, subject to pro rata adjustment
based on the number of days elapsed in the current month as a percentage of
the total number of days in such month.
4. EXPENSES. Sub-Adviser shall pay all of its own costs and
expenses, including those costs and expenses incurred by Sub-Adviser in
the discharge of its duties and obligations pursuant to this Agreement.
5. AFFILIATE TRANSACTIONS: With respect to each Affiliate
Transaction proposed for investment by the Fund, Adviser and Sub-Adviser
hereby acknowledge and agree as follows:
(a) Sub-Adviser shall present such opportunity to the Fund's Board of
Directors at least five (5) business days prior to the date an investment
decision must be made, and shall make available to each director all such
documentation and other information as such directors shall deem necessary or
appropriate to allow them to make an informed decision with respect to the
Fund's participation in such investment opportunity; PROVIDED, HOWEVER, that
the Fund's Board of Directors, in its sole and absolute discretion, may waive
some or all of the advance notice requirement on a case-by-case basis.
(b) The Fund's Board of Directors shall have the sole and absolute
discretion with respect to the Fund's participation in an Affiliate
Transaction and, absent the express authorization of the Fund's Board of
Directors, Sub-Adviser shall have no authority to obligate the Fund with
respect to any such Affiliate Transaction.
(c) Sub-Adviser shall at all times comply, and shall conduct itself so
as to allow the Fund to comply, with the terms and conditions as imposed by
the Commission and set forth in the Order.
6. LIMITATION OF LIABILITY. In the absence of: (i) willful misfeasance,
bad faith or gross negligence on the part of Sub-Adviser in the performance
of its obligations and duties hereunder; (ii) reckless disregard by
Sub-Adviser of its obligations and duties hereunder; or (iii) a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages shall be
limited to the period and the amount set forth in Section 36(b)(3) of the
Investment Company Act), Sub-Adviser shall not be subject to any liability to
Adviser or the Fund or any stockholder of the Fund for any error of judgment,
mistake of law or any other act or omission in the course of, or connected
with, the rendering of services by Sub-Adviser hereunder including, without
limitation, for any losses that may be sustained in connection with the
purchase, holding, redemption or sale of any security by Sub-Adviser on
behalf of the Fund.
7. EXCLUSIVITY. The services provided by Sub-Adviser hereunder
are not exclusive and Sub-Adviser shall remain free to render such
services to others.
8. RECORDS. Sub-Adviser agrees to preserve the records required
by Rule 204-2 promulgated under the Advisers Act for the period specified
therein.
9. WRITTEN DISCLOSURE STATEMENT. Sub-Adviser has previously delivered to
each of Adviser and the Fund a written disclosure statement as required by
Section 204-3(a) of the Advisers Act in the form of either a copy of Part II
of Sub-Adviser's Form ADV which complies with Section 204-1(b) of the
Advisers Act or a written document containing at least the information
required by Part II of Form ADV. Such written disclosure statement was
delivered by Sub-Adviser to Adviser and the Fund within the time period
specified by Section 204-1(b) of the Advisers Act.
10. DURATION. This Agreement shall be effective beginning on the date
set forth in the preamble hereof, and shall remain in force for an initial
period of two (2) years. Upon the expiration of
the initial two-year period, this Agreement shall be automatically extended
for successive one (1) year periods, PROVIDED, that each such continuation is
approved by a majority vote of the Fund's Board of Directors and by the
holders of at least a majority of the outstanding voting securities of the
Fund.
11. TERMINATION; AGREEMENT OF THE PARTIES RESPECTING TERMINATION.
(a) This Agreement may be terminated by either party hereto, at any time
and without penalty, upon delivery of written notice of such termination at
least sixty (60) days prior to the termination date, such written notice to
be delivered by the terminating party to the non-terminating party and to the
Board of Directors of the Fund.
(b) This Agreement may be terminated by (i) the Board of Directors of
the Fund or (ii) the holders of a majority of the outstanding voting
securities of the Fund, upon the delivery Adviser and Sub-Adviser of written
notice of such termination at least sixty (60) days prior to the termination
date.
(c) This Agreement shall immediately and automatically terminate in the
event of its assignment without the written consent of Adviser and the Fund.
(d) Except as may be otherwise agreed or consented to by the parties
hereto:
(i) this Agreement shall terminate automatically in the event of a
termination of the Advisory Agreement, such termination to occur
concurrently with the termination of the Advisory Agreement;
(ii) in the event of a termination of this Agreement, Adviser shall
terminate the Advisory Agreement, such termination to occur
concurrently with the terminatioin of this Agreement or as
reasonably practicable thereafter; and
(iii) in the event of a termination of this Agreement or the Advisory
Agreement pursuant to this Section 11, each party hereto agrees
that it will not thereafter provide, agree to provide or cause to
be provided, directly or indirectly, investment advisory services
to the Fund.
12. CHANGE IN MEMBERSHIP OF SUB-ADVISER.
(a) Upon the occurrence of any of the following events, and in no event
later than three (3) business days thereafter, Sub-Adviser shall provide
written notice of such occurrence to each of the Fund and Adviser:
(i) the withdrawal, voluntary or otherwise, of any member (whether
managing or non-managing) from membership in Sub-Adviser;
(ii) the admission of any new member (whether managing or non-managing)
to membership in Sub-Adviser,
(iii) the substitution of any individual or entity in place of any
current member (whether managing or non-managing) of Sub-Adviser;
or
(iv) the occurrence of any other event or series of events which
results, or can reasonably be expected to result, in a change in
the current membership of Sub-Adviser.
(b) Sub-Adviser's obligations pursuant to this Section 12 shall
terminate upon the conversion of Sub-Adviser from a limited liability company
form to a C corporation.
13. AMENDMENTS. This Agreement may be amended with the mutual consent of
the parties, PROVIDED, that any such proposed amendment shall be consented to
by (i) a majority of the Fund's directors, (ii) a majority of the Fund's
disinterested directors and (iii) the holders of a majority of the Fund's
outstanding voting securities.
14. ADVISER HELD HARMLESS. Sub-Adviser shall indemnify and hold Adviser
harmless from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities arising out of or
attributable to any action or failure or omission to act by Sub-Adviser as a
result of Sub-Adviser's willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties under this Agreement.
15. AGENCY RELATIONSHIP. Nothing herein shall be construed as
constituting Sub-Adviser as an agent of Adviser or of the Fund.
16. SEVERABILITY. If any term or condition of this Agreement shall be
found to be invalid or unenforceable to any extent or in any application, the
remainder of this Agreement, including such term or condition, except to the
extent or in such application such term or condition is held invalid or
unenforceable, shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforceable to the fullest
extent and in the broadest application permitted by law.
17. CAPTIONS. The captions of this Agreement are included for
convenience only and in no way define or limit any of the provisions hereof
or otherwise affect their construction or effect.
18. DEFINITIONS. For purposes of this Agreement, the terms "majority of
the outstanding voting securities," "assignment" and "interested person"
shall have the respective meanings assigned to them in the Investment Company
Act and the rules and regulations thereunder, subject, however, to such
exemptions as may be granted to either Adviser or the Fund by the Securities
and Exchange Commission pursuant to the authority conveyed to it under the
provisions of the Investment Company Act and/or the Advisers Act.
19. NOTICES. All notices required or permitted to be delivered under or
pursuant to this Agreement shall be so delivered by certified mail, postage
prepaid, as follows:
If to Adviser: meVC Advisers, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Secretary
If to Sub-Adviser: Xxxxxx Xxxxxx Jurvetson MeVC
Management Co., LLC
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Managing Member
If to the Fund: meVC Xxxxxx Xxxxxx Jurvetson Fund I,
Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Secretary
with a copy to: Pillsbury Madison & Sutro LLP
00 Xxxxxxx Xx., 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Any notice delivered pursuant to this Section 19 shall be deemed
delivered on the third day following its deposit in the United States mail or
the date such notice is actually received by the addressee, whichever shall
occur first.
20. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties with respect to the matters referred to herein and supersedes all
prior agreements, negotiations, commitments or understandings.
21. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to
be an original and together shall constitute one and the same document.
22. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware and the applicable provisions of the
Investment Company Act and the Advisers Act and the rules and regulations
promulgated thereunder.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
MEVC ADVISERS, INC.
By
Xxxxxx X. Xxxxxx
Chief Executive Officer
XXXXXX XXXXXX JURVESTON MEVC
MANAGEMENT CO., LLC
By
Xxxxxxx X. Xxxxxx
Managing Member
