INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made as of the [ ] day of [ ] 2003, by and between XXX
XXXX/SHORT HEDGE FUND LLC, a Delaware limited liability company (the "Fund"),
and THE BANK OF NEW YORK, a New York Bank, on behalf of BNY INVESTMENT ADVISORS,
a separately identifiable division thereof (the "Adviser").
WHEREAS, the Fund is registered with the Securities and Exchange
Commission (the "Commission") as a closed-end management investment company
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"), and the Adviser is an investment adviser registered as such with the
Commission under the Investment Advisers Act of 1940;
WHEREAS, the Fund desires that the Adviser act as its investment
adviser pursuant to this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, it is agreed by and between the parties, as
follows:
1. GENERAL PROVISIONS.
The Fund hereby employs the Adviser and the Adviser hereby
undertakes to act as the investment adviser of the Fund and to perform for the
Fund such other duties and functions as are hereinafter set forth. The Adviser
shall, in all matters, give to the Fund and the Board of Managers of the Fund
(the "Board") the benefit of its best judgment, effort, advice and
recommendations and shall at all times, conform to and use its best efforts to
enable the Fund to conform to (i) the provisions of the Investment Company Act
and any rules or regulations thereunder; (ii) any other applicable provisions of
Federal or state law; (iii) the provisions of the limited liability company
agreement of the Fund, as amended from time to time (the "LLC Agreement"); (iv)
policies and determinations of the Board, (v) the investment policies and
investment restrictions of the Fund as reflected in the registration statement
of the Fund under the Investment Company Act, as such policies may, from time to
time, be amended; and (vi) the Prospectus and Statement of Additional
Information of the Fund, as the same may be amended from time to time. The
appropriate officers and employees of the Adviser shall be available upon
reasonable notice for consultation with the Board with respect to any matters
dealing with the business and affairs of the Fund, including the valuation of
any of the portfolio securities of the Fund.
2. INVESTMENT MANAGEMENT.
(a) The Adviser shall, subject to the direction and control by
the Fund, (i) regularly provide investment advice and recommendations to the
Fund with respect to its investments, investment policies and the purchase and
sale of securities for the Fund; (ii) develop, implement and supervise
continuously the investment program of the Fund and the composition of its
portfolio and determine what securities shall be purchased and sold by the Fund;
and (iii) arrange for the purchase of securities and other investments for the
Fund and the sale or redemption of securities and other investments held in the
portfolio of the Fund.
(b) Provided that the Fund shall not be required to pay any
compensation for services other than as provided by the terms of this Agreement,
the Adviser may: (i) obtain investment information, research or assistance from
any other person, firm or corporation to supplement, update or otherwise improve
its investment management services; and (ii) enter into investment sub-advisory
agreements with any registered investment advisers affiliated with the Adviser,
subject to such approvals of the Board and members of the Fund ("Members ") as
may be required to comply with applicable provisions of the Investment Company
Act, to provide any or all of the investment advisory services required to be
provided by the Adviser under this Agreement, subject to the supervision by the
Adviser.
(c) Provided that nothing herein shall be deemed to protect the
Adviser from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard of its obligations and duties
under this Agreement, the Adviser shall not be liable for any loss sustained by
reason of good faith errors or omissions of the Adviser or any affiliate of the
Adviser, or their respective directors, officers or employees, in connection
with any matters to which this Agreement relates.
(d) Nothing in this Agreement shall prevent the Adviser or any
affiliate thereof from acting as investment adviser for any other person, firm,
fund, corporation or other entity and shall not in any way limit or restrict the
Adviser, or any of its affiliates, or their respective directors, officers,
stockholders or employees from buying, selling or trading any securities or
other investments for its or their own account or for the account of others for
whom it or they may be acting, provided that such activities do not adversely
affect or otherwise impair the performance by the Adviser of its duties and
obligations under this Agreement or under the Investment Advisers Act of 1940,
and further provided that such activities do not violate any provisions of the
codes of ethics of the Adviser and its affiliates governing personal securities
trading by persons who are "access persons" or "covered persons," as defined by
such codes, of the Fund.
3. OTHER DUTIES OF THE ADVISER.
The Adviser shall, at its own expense, provide and supervise the
activities of all administrative and clerical personnel as shall be required to
provide effective administration for the Fund, including the compilation and
maintenance of such records with respect to its operations as may reasonably be
required; the preparation and filing of such reports with respect thereto as
shall be required by the Commission; the composition of periodic reports with
respect to its operations for Members; the composition of proxy materials for
meetings of Members and the composition of such registration statements as may
be required by Federal securities laws for the public sale of interests in the
Fund. The Adviser shall, at its own cost and expense, also provide the Fund with
adequate office space, facilities and equipment.
4. ALLOCATION OF EXPENSES.
All costs and expenses of the Fund not expressly assumed by the
Adviser under this Agreement shall be paid by the Fund, including, but not
limited to: (i) interest and commitment fees on loan and debit balances; (ii)
fees and expenses incident to the organization and registration of the Fund;
(iii) offering costs (including the costs of printing prospectuses);
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(iv) costs of compliance with Federal and state securities laws; (v) fees and
expenses incident to the registration under Federal securities laws of interests
in the Fund for public sale; (vi) all costs and expenses associated with the
organization and operation of any separate investment funds established by the
Fund and managed by portfolio managers retained by the Fund; (vii) all expenses
incident to holding meetings of the Board and Members, including reasonable
travel and out-of-pocket expenses of the members of the Board (each, a
"Manager") and costs associated with the preparation and dissemination of proxy
materials; (viii) the fees and disbursements of Fund counsel and any counsel
retained to represent the Managers who are not "interested persons," as defined
by the Investment Company Act and the rules thereunder, of the Fund (the
"Independent Managers"), independent accountants for the Fund and other
consultants and professionals engaged on behalf of the Fund; (ix) fees payable
to custodians and other persons providing administrative services to the Fund;
(x) the fee payable to the Fund's distributor to compensate it for payments made
to investor service providers; (xi) insurance premiums for fidelity and other
insurance coverage relating to the Fund's operations; (xii) expenses of printing
and distributing reports and notices to Members and proxy materials; and (xiii)
such extraordinary non-recurring expenses as may arise, including litigation,
affecting the Fund and any legal obligation as to which the Fund may be required
to indemnify any Manager or other person. Any officers or employees of the
Adviser (or any entity controlling, controlled by, or under common control with
the Adviser) who may also serve as officers, Managers or employees of the Fund
shall not receive any compensation from the Fund for their services.
5. COMPENSATION OF THE ADVISER.
In consideration of the services provided by the Adviser under
this Agreement, the Fund agrees to pay the Adviser a monthly management fee (the
"Management Fee") computed at the annual rate of 1.50% of the aggregate value of
outstanding Interests determined as of the beginning of each month. A portion of
the Management Fee will be refunded pro rata to the Fund in the event that this
Agreement is terminated pursuant to paragraph 9 effective as of any day other
than the end of a month, based on the number of days remaining in the month.
6. DURATION.
This Agreement will take effect on the date first set forth
above. Unless earlier terminated pursuant to paragraph 9 hereof, this Agreement
shall remain in effect for a period of two (2) years from such date and shall
continue in effect from year to year thereafter, so long as such continuance
shall be approved at least annually by the vote of a "majority of the
outstanding voting securities of the Fund," as defined by the Investment Company
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 Independent Managers, by
vote cast in person at a meeting called for the purpose of voting on such
approval.
7. DISCLAIMER OF MEMBER OR MANAGER LIABILITY.
The Adviser understands and agrees that the obligations of the
Fund under this Agreement are not binding upon any Member or Manager of the Fund
personally, but bind only the Fund and the Fund's property; the Adviser
represents that it has notice of the provisions of
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the LLC Agreement disclaiming Member and Manager liability for acts and
obligations of the Fund.
8. ASSIGNMENT OR AMENDMENT.
Any amendment to this Agreement shall be in writing and shall be
subject to: (i) the approval of the Board, including the vote of a majority of
the Independent Managers and (ii) the affirmative vote or written consent of the
holders of a "majority of the outstanding voting securities of the Fund," as
defined by the Investment Company Act and the rules thereunder, to the extent
such a vote of security holders is required by the Investment Company Act. This
Agreement shall automatically and immediately terminate in the event of its
"assignment," as defined by the Investment Company Act and the rules thereunder.
9. TERMINATION.
This Agreement may be terminated (i) by the Adviser at any time
without penalty upon sixty days' written notice to the Fund (which notice may be
waived by the Fund); or (ii) by the Fund at any time without penalty upon sixty
days' written notice to the Adviser (which notice may be waived by the Adviser),
provided that such termination by the Fund shall be directed or approved by the
Board or by the vote of the holders of a "majority of the outstanding voting
securities of the Fund," as defined by the Investment Company Act and the rules
thereunder, of the Fund.
10. USE OF NAME "IVY."
The Bank of New York hereby grants to the Fund a royalty-free,
non-exclusive license to use the name "Ivy" in the name of the Fund for the
duration of this Agreement and any extensions or renewals thereof. Such license
may, upon termination of this Agreement, be terminated by The Bank of New York,
in which event the Fund shall promptly take whatever action may be necessary to
change its name and discontinue any further use of the name "Ivy" in the name of
the Fund or otherwise. The name "Ivy" may be used or licensed by The Bank of New
York and its affiliates in connection with any of their activities, or licensed
by The Bank of New York to any other party.
11. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York and the provisions of the Investment
Company Act. To the extent the law of the State of New York, or any of the
provisions herein, conflict with the provisions of the Investment Company Act,
the latter shall control.
XXX XXXX/SHORT HEDGE FUND LLC
By:
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Title:
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THE BANK OF NEW YORK, on behalf of BNY
Investment Advisors
By:
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Title:
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