DMR MORTGAGE OPPORTUNITY FUND LP DECLARATION MANAGEMENT & RESEARCH LLC AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT DATED AS OF ________ __, 2008
Exhibit
99.2(g)
DECLARATION
MANAGEMENT & RESEARCH LLC
____________________
AMENDED
AND RESTATED INVESTMENT ADVISORY AGREEMENT
____________________
DATED
AS OF ________ __, 2008
AMENDED
AND RESTATED INVESTMENT ADVISORY AGREEMENT
DATED
AS OF ________ __, 2008
by
and between
and
DECLARATION
MANAGEMENT & RESEARCH LLC
_________________
TABLE
OF CONTENTS
| Section | Page | |
|
1.
|
Appointment
of Declaration as Investment Adviser
|
1
|
|
2.
|
Power
and Authority of the Investment Adviser
|
2
|
|
3.
|
Dealings
with and by Declaration Parties
|
4
|
|
4.
|
Limitation
of Liability and Indemnification of the Declaration
Parties
|
6
|
|
5.
|
Other
Activities of the Declaration Parties
|
7
|
|
6.
|
Brokerage,
Dealing and Other Counterparty Contracts; Custody
|
8
|
|
7.
|
Compensation;
Expenses
|
8
|
|
8.
|
Accounting
and Other Information
|
9
|
|
9.
|
Independent
Contractor
|
10
|
|
10.
|
Term;
Termination; Renewal
|
10
|
|
11.
|
Amendment
|
11
|
|
12.
|
Notices
|
11
|
|
13.
|
Assignment
and Delegation
|
12
|
|
14.
|
Counterparts;
Facsimiles
|
12
|
|
15.
|
No
Waiver
|
12
|
|
16.
|
Right
of Third Parties to Rely on the Power and Authority of the Investment
Adviser
|
12
|
|
17.
|
Rules
of Interpretation
|
13
|
|
18.
|
Binding
Effect; Benefit
|
14
|
|
19.
|
GOVERNING
LAW; VENUE
|
14
|
|
20.
|
No
Registration as a Commodity Pool Operator
|
15
|
|
21.
|
Force
Majeure
|
15
|
|
22.
|
Matters
Not Provided For; Compliance with Law
|
15
|
|
23.
|
Entire
Agreement
|
15
|
|
24.
|
Definitions
|
16
|
|
25.
|
Severability
|
16
|
|
26.
|
Advisers
Act Compliance; No Waiver of Rights
|
16
|
| Management Fee Calculation Schedule | Sch-1 | |
| Certain Investment Guidelines | Sch-2 | |
and
DECLARATION
MANAGEMENT & RESEARCH LLC
AMENDED
AND RESTATED INVESTMENT ADVISORY AGREEMENT
This
Amended and Restated Investment Advisory Agreement (the “Agreement”) is made as of
________ __, 2008 by and between DMR MORTGAGE OPPORTUNITY FUND LP
(the “Fund”), a
Delaware limited partnership whose principal office is c/o Declaration
Management & Research LLC, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and DECLARATION
MANAGEMENT & RESEARCH LLC (“Declaration”), a Delaware
limited liability company whose principal office is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. This Agreement supercedes the
Investment Advisory Agreement dated as of May 15, 2008 by and between the Fund
and Declaration (the “Original
Agreement”), which shall be of no further force or effect.
Capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Second Amended and Restated Limited Partnership
Agreement of the Fund dated as of September 22, 2008 (the “Limited Partnership
Agreement”).
R
E C I T A L S:
WHEREAS, the Fund shall
register with the U.S. Securities and Exchange Commission (the “SEC”) as a closed-end,
non-diversified management investment company (a “CNMIC”) under the Investment
Company Act of 1940, as amended (the “1940 Act”);
WHEREAS, Declaration is
registered with the SEC as an investment adviser under the Investment Advisers
Act of 1940, as amended (the “Advisers Act”);
WHEREAS, the Fund desires to
retain Declaration so that it will render investment advisory services to the
Fund in the manner and on the terms and conditions hereinafter set forth;
and
WHEREAS, Declaration is
willing to render such services and/or engage others to render such services to
the Fund, subject to the supervision of the Fund’s board of directors (the “Board”).
NOW THEREFORE, in
consideration of the premises and the mutual covenants contained herein, the
parties hereto agree as follows:
|
1.
|
Appointment of
Declaration as Investment
Adviser.
|
|
(a)
|
The
Fund hereby appoints Declaration to act as the Fund’s investment adviser
(in such capacity, the “Investment Adviser”)
for the period and on the terms and
|
|
|
conditions
set forth in this Agreement. Declaration hereby accepts such
appointment and agrees to render the services and to assume the
obligations set forth in this Agreement commencing on its effective date
for the compensation herein
provided.
|
|
(b)
|
In
performing its duties hereunder, the Investment Adviser shall comply with
(i) the 1940 Act and all rules and regulations thereunder, (ii) all other
applicable federal and state laws and regulations, (iii) the guidelines
and directions and any applicable procedures adopted by the Board, and
(iv) the fundamental policies and investment restrictions described in the
Fund’s Form N-2 (as amended from time to time, the “Form N-2”), as filed
with the SEC and as set forth in the investment guidelines attached as a
Schedule hereto (collectively, the “CNMIC
Restrictions”).
|
|
(c)
|
Under
the direction of the Investment Adviser, and subject to the supervision of
the Board, the Fund may engage, directly and indirectly, in all aspects of
investing and trading as are permissible for a CNMIC and consistent with
the CNMIC Restrictions. The Fund’s investment objective is to
provide investors with attractive returns through long-biased
opportunistic investing in stressed, distressed and other undervalued
mortgage-backed securities and related fixed-income
assets.
|
|
2.
|
Power and Authority of
the Investment Adviser.
|
|
(a)
|
Without
limiting the generality of the powers conferred upon it by Section 1, and subject
to the CNMIC Restrictions, the Investment Adviser is expressly authorized
and directed by the Board to do the following for or on behalf and in the
name of the Fund:
|
|
(i)
|
make
all investment and trading decisions with respect to the acquisition,
retention and disposition of Investment Assets, and all other manner of
investments, including exercising and enforcing any right of the Fund with
respect to any Investment Asset;
|
|
(ii)
|
assist
the Fund as it may reasonably request in the conduct of the Fund’s
business, including oral and written research, analysis, advice,
statistical and economic data, judgments regarding individual investments,
general economic conditions and trends and long-range investment
policies;
|
|
(iii)
|
determine
or recommend the Investment Assets and techniques that the Fund will
purchase, sell, enter into, use, or provide in an on-going evaluation of
the Fund’s portfolio;
|
|
(iv)
|
furnish
to or place at the disposal of the Fund information, evaluations,
analyses, and opinions formulated or obtained by the Investment Adviser in
the discharge of its duties as the Fund may, from time to time reasonably
request, and maintain or cause to be maintained for the Fund all books,
records, reports, and any other information required under the 1940 Act,
to the extent that such books, records, reports, and
other
|
-2-
|
|
information
are not maintained or furnished by the custodian, transfer agent,
administrator, sub-administrator, or other agent of the
Fund;
|
|
(v)
|
furnish
at the Investment Adviser’s expense for the use of the Fund such office
space, telephone, utilities, and facilities as the Fund may require for
its reasonable needs and to furnish at the Investment Adviser’s expense
clerical services related to research, statistical and investment
work;
|
|
(vi)
|
incur
all manner of obligations as well as stand surety for, guarantee, support
or secure the obligations of any other
Person;
|
|
(vii)
|
own,
sell, assign or otherwise dispose of any personal property and liabilities
on such terms and conditions as the Investment Adviser may
determine;
|
|
(viii)
|
open,
maintain and close one or more accounts (including bank, brokerage, margin
and clearing accounts) and enter into arrangements to self-clear
transactions with financial and commercial institutions (including
clearing and depository
institutions);
|
|
(ix)
|
advance,
deposit or lend cash, Investment Assets or otherwise provide any other
form of financing or leverage on a secured or unsecured, as well as on a
segregated or non-segregated,
basis;
|
|
(x)
|
negotiate
and enter into all manner of derivatives (including swaps) and other
investment, financial and risk management instruments (whether or not
exchange-traded), as well as registration rights, placement, selling and
financing agreements, private placement and securities purchase
agreements, shareholders’ agreements, structured products, repurchase
agreements, reverse repurchase agreements, securities lending and
hypothecation agreements, counterparty agreements and all other forms of
investment, financial and commercial agreements, contracts and
undertakings;
|
|
(xi)
|
engage
the services of such agents, brokers, consultants, advisors, employees and
other service providers as the Investment Adviser deems necessary or
advisable;
|
|
(xii)
|
cause
the Fund to comply with the investment guidelines attached as a Schedule
hereto;
|
|
(xiii)
|
provide
assistance to the Administrator/Custodian and the Board in calculating the
“Invested Capital,” the “Adjustment Factor” and the “Net Asset
Value;”
|
|
(xiv)
|
assist
the Fund in maintaining the books of account of the Fund and, in
cooperation with the Fund’s regular auditors, entering therein all
transactions, matters and things relating to the Fund’s business as
are
|
-3-
|
|
usually
entered into the books of account kept by persons engaged in businesses
such as that engaged in by the
Fund;
|
|
(xv)
|
prepare,
execute, file, and deliver any documents related to any of the foregoing;
and
|
|
(xvi)
|
generally,
to act or decline to act for the Fund in all matters relating to the
trading and investing of the Investment
Assets.
|
|
(b)
|
The
Fund may not incur any indebtedness for borrowed money (but may invest in
derivatives which have imbedded leverage), and the Investment Adviser
shall use reasonable best efforts to ensure that the Fund’s investing and
trading will not generate “unrelated business taxable income” for
tax-exempt investors in the Fund.
|
|
(c)
|
The
Investment Adviser shall use reasonable best efforts to liquidate all of
the Fund’s Investment Assets prior to the end of the Distribution
Period.
|
|
3.
|
Dealings with and by
Declaration Parties.
|
|
(a)
|
Without
in any respect limiting the effect of the “Key Person Event” provisions of
Section 3.5 of the
Limited Partnership Agreement, no Declaration Party shall be required to
devote full time to the affairs of the Fund, but each shall devote such
time as each believes may reasonably be required to perform such Person’s
obligations under this Agreement and under the ▇▇▇▇
▇▇▇.
|
|
(b)
|
To
the extent that at law or in equity the Investment Adviser has duties
(including fiduciary duties) and liabilities relating to the Fund or to
any other Person bound by or acting under this Agreement, it shall not be
liable to the Fund for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they
restrict the duties and liabilities of the Investment Adviser otherwise
existing at law or in equity, are agreed by the Fund to replace the other
duties and liabilities of the Investment
Adviser.
|
|
(c)
|
Nothing
in this Agreement shall limit the right of any Declaration Party to
organize, engage in or possess an interest in, directly or indirectly,
other business ventures or investments of any nature or description for
its own account (including engaging in transactions involving investment
assets owned by, or of the same type owned by, the Fund), independently or
with others, including any investment in any aspect of the operation,
administration, trading or investment business or any other business
engaged in by the Fund, and the Fund shall not have any rights in or to
such investment or independent venture or the income or profits derived
therefrom.
|
|
(d)
|
Declaration
Parties have, and in the future may have, other clients, including funds
or other debt obligation vehicles, which invest, direct or indirectly, in
debt obligations and other securities that would be appropriate as an
investment for the Fund and have no duty in making such investments to act
in a way that is favorable to the Fund. Such investments may be
different from those made on
|
-4-
|
|
behalf
of the Fund. Declaration Parties may have economic interests in
or other relationships with issuers in whose obligations or securities the
Fund may invest. In particular, Declaration Parties may make or hold for
client accounts an investment in an issuer’s securities that may be pari passu, senior or
junior in ranking to an investment in such issuer’s securities made or
held by the Fund or in which partners, security holders, officers,
directors, agents or employees of Declaration Parties serve on boards of
directors or otherwise have on-going relationships. Each of such ownership
and other relationships may result in securities laws restrictions on
transactions in such securities by the Fund and otherwise create conflicts
of interest for the Fund. In such instances, Declaration Parties may in
their discretion make investment recommendations and decisions that may be
the same as or different from those made with respect to the Fund’s
investments.
|
|
(e)
|
Any
Declaration Party and any of its Affiliates may invest and trade for their
personal accounts.
|
|
(f)
|
Any
Declaration Party may invest and trade for the Fund as well as for any
other Declaration Client accounts.
|
|
(g)
|
Any
Declaration Party may operate and administer Declaration Client accounts,
render operational, administrative, trading, investment advisory and other
services to other Persons with respect to investment assets which advice
is identical, dissimilar or contrary to the advice that the Investment
Adviser provides to the Fund.
|
|
(h)
|
The
Investment Adviser may sponsor additional “hedge funds” or “private equity
funds” as well as more traditional products which compete with the Fund
both in the markets and for Declaration’s
resources.
|
|
(i)
|
Declaration
Parties, in connection with their other business activities, may acquire
material non-public confidential information that may restrict the
Investment Adviser from purchasing securities or selling securities for
itself or its clients (including the Fund) or otherwise using such
information for the benefit of its clients or
itself.
|
|
(j)
|
The
Investment Adviser may, subject to and to the extent permitted by the 1940
Act and any other applicable Law, cause the Fund, and any other
Declaration Party or Declaration Client, to engage in all manner of
transactions with any other Declaration Party, Declaration Client or the
Fund, or any Affiliate of any of the
foregoing.
|
|
(k)
|
Declaration
Parties, by reason of their other business activities, may cause the
Investment Adviser not to be able to, or to determine not to, initiate a
transaction for the Fund that the Investment Adviser would otherwise have
initiated for the Fund.
|
-5-
|
4.
|
Limitation of Liability and
Indemnification of the Declaration
Parties.
|
|
(a)
|
No
Declaration Party shall be personally liable for the return or payment of
all or any portion of the capital of or profits allocable to the Fund, any
Limited Partner or any former Limited Partner, it being expressly agreed
that any return of capital or payment of profits made pursuant to this
Agreement, the Limited Partnership Agreement and/or the Subscription and
Capital Commitment Agreement (as each may be amended or supplemented from
time to time, the “Material Contracts”)
shall be made solely from the assets of the Fund (which shall not include
any right of contribution from any Declaration
Party).
|
|
(b)
|
No
Declaration Party shall have any liability to the Fund, any Limited
Partner or any former Limited Partner for: (i) any act performed, or the
omission to perform any act, within the scope of the power and authority
conferred on Declaration by any Material Contract, except by reason of
acts or omissions of a Declaration Party Finally Determined to constitute
fraud, willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties (or as otherwise required by Law); (ii) the
termination of this Agreement pursuant to the terms hereof; (iii) the
performance by a Declaration Party of, or the omission by a Declaration
Party to perform, any act which such Declaration Party reasonably believed
to be consistent with the advice of attorneys, accountants or other
professional advisers to the Fund or to such Declaration Party with
respect to matters relating to the Fund; (iv) the conduct of any Person
selected or engaged and monitored by such Declaration Party with due care;
(v) any tax imposed on the Fund or the Limited Partners in any
jurisdiction, or any costs incurred in respect of a tax audit or similar
procedure; or (vi) any tax position taken by Declaration (to the extent
that Declaration is authorized to take any relevant tax position) and
which was not clearly contrary to Law when
taken.
|
|
(c)
|
No
Independent Director shall have any liability to the Fund, the General
Partner, any Limited Partner or any former Limited Partner for conduct
Finally Determined to have constituted a violation of Law, provided that
such Independent Director reasonably believed such conduct to be lawful
and in the interest of the Fund at the time of such
conduct.
|
|
(d)
|
The
Fund shall indemnify, defend, and hold harmless each Declaration Party
and, as Declaration, subject to the Board’s ultimate authority, may
determine, the agents, advisors and consultants of Declaration (each also
an “Indemnified
Party”), from and against any loss, cost, expense, liability, fees
(including attorneys’ fees and expenses) and damages suffered or sustained
by such Indemnified Party by reason of any acts or omissions, or alleged
acts or omissions, arising out of the activities of an Indemnified Party,
reasonably believed by such Indemnified Party to be on behalf of the Fund
or in furtherance of the interests of the Fund, provided that those acts
or omissions are not Finally Determined to constitute conduct for which
such Indemnified Party would be subject to liability under the standard of
liability set forth in this Section
4.
|
-6-
|
(e)
|
An
Indemnified Party shall be entitled to receive advances from the Fund to
cover the cost of defending any claim or action against such Indemnified
Party; provided, that such Indemnified Party enters into a written
agreement that all such advances shall be repaid to the Fund (without
interest) if it is Finally Determined that such Indemnified Party is not
entitled to indemnity under Section 4(d), and
otherwise complies with the requirements of the 1940
Act.
|
|
(f)
|
The
rights of an Indemnified Party to indemnification shall survive the
winding-up of the Fund and the death, withdrawal, declaration of legal
incapacity, dissolution, winding-up or Bankruptcy of such Indemnified
Party.
|
|
(g)
|
None
of the various exculpatory or indemnification provisions of this Section 4 are to be
interpreted as in any respect resulting in the Fund waiving any rights or
claims which the Fund may have under any federal or state securities
laws.
|
|
5.
|
Other Activities of
the Declaration Parties.
|
|
(a)
|
Declaration
Parties may have investments of their own, and a Declaration Party may be
acting as an operator, administrator, trading advisor or investment
manager for others. The Declaration Parties may be or become associated
with other investment entities and engage in investment management for
others. Except to the extent necessary to perform the
Investment Adviser’s obligations hereunder, nothing herein shall be deemed
to limit or restrict the right of any Declaration Party to engage in, or
to devote time and attention to the management of any other business,
whether of a similar or dissimilar nature, or to render services of any
kind to any other Person. For the avoidance of doubt,
Declaration Parties may engage in all activities and transactions
contemplated by or described in the Private Placement
Memorandum.
|
|
(b)
|
(i) The
Declaration Parties (i) may engage in or possess an interest, direct or
indirect, in any business venture of any nature or description (including
other investment funds) for their own respective accounts, independently
or with others, including, without limitation, any business, industry or
activity in which the Fund may be interested in investing or may also have
investments, and (ii) may do so without any obligation to report the same
to the Fund or to afford the Fund any opportunity to participate
therein. The Fund shall not have any rights in or to any such
independent venture or investment in any of the revenues or profits
derived therefrom.
|
|
(ii)
|
Among
Declaration Clients, including the Fund, the Investment Adviser shall
allocate assets to each Declaration Client account in light of its
investment objectives and guidelines, cash position and other
factors. It is Declaration's policy (i) to allocate investment
opportunities to the extent practicable to the accounts of Declaration
Clients over time in a manner that Declaration believes is fair and
equitable and (ii) not to intentionally favor or disfavor any Declaration
Client.
|
-7-
|
(c)
|
From
time to time, a Declaration Client may invest in, or withdraw an
investment from, an investment in which the Fund is invested, is
withdrawing its investment from, or is not invested. In
addition, the Investment Adviser may recommend that the Fund purchase or
sell an investment that is being sold or purchased by another Declaration
Client or otherwise give advice or take action with regard to other
Declaration Clients that differs from the advice given with respect, or
action taken with regard, to the
Fund.
|
|
6.
|
Brokerage, Dealing and
Other Counterparty Contracts;
Custody.
|
|
(a)
|
The
Investment Adviser is authorized to negotiate all brokerage, dealing and
other counterparty agreements between the Fund and its respective brokers,
dealers and counterparties, as well as all other agreements relating to
the Fund’s investing, including agreements with Declaration
Parties. The Investment Adviser, absent bad faith, shall have
no liability for the terms of any such agreement or for the actions or
omissions for any such broker, dealer or
counterparty.
|
|
(b)
|
The
Investment Adviser will use reasonable efforts to obtain the best net
prices and execution for all orders placed with respect to the Fund,
considering all circumstances that are relevant in its reasonable
determination. The Investment Adviser is not obligated to
select a broker or dealer solely on the basis of the rate of commission or
the spread it offers. Subject to the objective of obtaining
best prices and execution, the Investment Adviser may take into
consideration the full range and quality of services furnished by brokers
and dealers.
|
|
(c)
|
Declaration
may aggregate sales and purchase orders of securities placed for the Fund
with similar orders being made simultaneously for other clients, including
affiliated clients, where Declaration believes this to be appropriate, in
the best interest of the client accounts (including the Fund), and
consistent with applicable legal requirements. It is
Declaration’s policy to make all allocations of aggregated trades among
participating accounts on a fair and equitable basis over time, to the
extent practicable, without favoring any account or type of account or
client over another over a period of time. In addition, in
making its investment decisions for each account, Declaration will use its
best judgment on behalf of each client taking into consideration the
investment guidelines for the account and other factors. It is
Declaration’s policy to allocate investment opportunities to the extent
practicable to each account over time in a manner that Declaration
believes is fair and equitable to each client
account.
|
|
(d)
|
The
Investment Adviser assumes no responsibility for the actions or omissions
of any broker or dealer selected by Investment Adviser in good
faith.
|
|
7.
|
Compensation;
Expenses.
|
|
(a)
|
As
compensation for the services performed pursuant to this Agreement, the
Investment Adviser shall receive a monthly management fee (the “Management Fee”) in the amount and
calculated in the manner set forth in the Management Fee Calculation
Schedule.
|
-8-
|
(b)
|
No
Management Fee will be paid to Declaration by the Fund after the end of
the Distribution Period.
|
|
(c)
|
In
the event that Declaration advances costs incurred on behalf of the Fund,
Declaration shall be fully entitled to be reimbursed
therefor.
|
|
(d)
|
The
Fund will bear its operating costs (including, but not limited to,
administrative, custody, transfer, escrow, filing, printing, consulting,
accounting, tax, audit, insurance, regulatory and legal fees and other
expenses), extraordinary expenses, as well as any other expenses set forth
in the Limited Partnership Agreement or as agreed by the Board from time
to time. The Fund will also bear its brokerage commissions,
“broken deal” costs, due diligence expenses and other transaction fees in
connection with the acquisition and disposition of its positions as well
as custodian fees for Fund assets held in cash or securities at various
banks, broker-dealers and other financial institutions, except that the
fees of ▇▇▇▇ ▇▇▇▇▇▇▇ Distributors LLC are paid by
Declaration. The Investment Adviser does not use “soft dollar”
arrangements.
|
|
(e)
|
The
Fund will not pay any internal operating costs (e.g., salaries, bonuses
or office rent) of any Declaration
Party.
|
|
(f)
|
All
matters concerning calculation of the Management Fee shall be determined
by the General Partner subject to the ultimate authority of the Board
unless specifically and expressly otherwise provided for by the CNMIC
Restrictions or other applicable Law. Any such determinations
and allocations shall be final and binding on the Fund and all of the
Limited Partners.
|
|
(g)
|
Declaration,
in its capacity as General Partner of the Fund, will be allocated and
receive Carried Interest distributions pursuant to Sections 2.11 and 6.2(b) of the Limited
Partnership Agreement. Declaration will not receive Carried Interest
distributions after the scheduled date of the termination or expiration of
this Agreement.
|
|
8.
|
Accounting and Other
Information.
|
|
(a)
|
The
Fund shall instruct its brokers and counterparties to send confirmations
of all trades executed for the Fund’s account to the Investment
Adviser.
|
|
(b)
|
The
Investment Adviser shall furnish to the Fund or its representative such
information concerning its discharge of its obligations hereunder as the
Fund may reasonably request; provided, that the Investment Adviser need
not disclose any information which it determines to be the Investment
Adviser’s proprietary information or legally
privileged.
|
|
(c)
|
The
Investment Adviser shall maintain all records relating to its management
of the Fund’s Investment Assets as may be required by Law. At
the reasonable request
of the Board, the Investment Adviser shall give the Fund (at the expense
of the Fund) reasonable access to such documents and shall permit the Fund
and its representatives to copy such documents; provided, that the
Investment Adviser
|
-9-
|
|
need
not disclose any information which it determines to be the Investment
Adviser’s proprietary information or legally
privileged.
|
|
9.
|
Independent
Contractor.
|
For all
purposes of this Agreement, Declaration shall be an independent contractor and
not an employee or dependent agent of the Fund. Nothing in this
Agreement shall be construed as making the Fund a partner or co-venturer with
any Declaration Party or Declaration Client. Except as provided in
this Agreement, any other agreements authorized by the Limited Partnership
Agreement and/or the Limited Partnership Agreement itself, Declaration shall
have no authority to bind, obligate or represent the Fund. This
Agreement (together with the other Material Contracts) establishes and limits by
its terms Declaration’s obligations to the Fund.
|
10.
|
Term; Termination;
Renewal.
|
|
(a)
|
(i) This
Agreement shall remain in effect until the date which is two years from
the day and date first written above, and shall continue in effect year to
year thereafter, but only so long as such continuance is specifically
approved at least annually by the affirmative vote of: (i) a majority of
the members of the Fund’s Directors who are not parties to this Agreement
or interested persons (as defined in the ▇▇▇▇ ▇▇▇) of any party to this
Agreement, or of any entity regularly furnishing investment advisory
services with respect to the Fund pursuant to an agreement with any party
to this Agreement, cast in person at a meeting called for the purpose of
voting on such approval; and (ii) a majority of the Fund’s Board of
Directors or the holders of a majority (as defined in the ▇▇▇▇
▇▇▇) of the outstanding voting securities of the
Fund.
|
|
|
(ii) This
Agreement may nevertheless be terminated at any time, on 60 days’ written
notice, by the Fund’s Board, by vote of holders of a majority of the
outstanding voting securities of the Fund, or by the Investment
Adviser.
|
|
|
(iii) The
Limited Partnership Agreement requires Declaration, other Declaration
Parties and Declaration Clients to waive their respective voting rights
regarding termination or continuance of this
Agreement.
|
|
(b)
|
This
Agreement shall automatically be terminated in the event of its
“assignment” for purposes of the Advisers Act or the 1940 Act, as provided
in Section 13
(unless consent to such assignment has been obtained in accordance with
Section
13(a)).
|
|
(c)
|
The
expiration or termination of this Agreement shall in no respect extinguish
the obligations of the Fund for the payment of fees and expenses in
respect of services rendered by the Investment Adviser prior to the
effective date of such expiration or
termination.
|
-10-
|
11.
|
Amendment.
|
This
Agreement may not be amended except by the written consent of both the Fund and
the Investment Adviser.
|
12.
|
Notices.
|
Unless
otherwise specified in this Agreement, all notices or other communications that
any party to this Agreement may desire or be required to give hereunder shall be
in writing and shall be personally delivered, delivered by facsimile, e-mail,
digital image file or any other electronic form (collectively, “facsimile”), in each case
with confirmed receipt of the transmission (and, unless waived by the recipient
upon such receipt, confirmed by delivery in another manner permitted hereunder),
mailed by certified or registered mail (postage prepaid), sent by overnight
delivery by a reputable private carrier (receipt confirmed) or the postal
service (return receipt requested) addressed:
if to the
Fund to:
c/o
Declaration Management & Research LLC
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
if to
Declaration to:
DECLARATION
MANAGEMENT & RESEARCH LLC
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, III
with a
copy to:
DECLARATION
MANAGEMENT & RESEARCH LLC
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇-▇▇-▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇
All
notices or other communications shall be deemed to have been validly given upon
receipt when personally delivered or delivered by a confirmed facsimile, on the
fifth Business Day after having been mailed by certified or registered mail, or
on the next Business Day after being sent for overnight delivery by a reputable
private carrier or the postal service, as the case may be.
Any
notice period prescribed by this Agreement shall commence on the day that the
relevant notice is effective as provided in this Section 12. Such
notice period shall include all days, and shall conclude as of the close of
business on the day which is the prescribed number of days following the
commencement day, or if such day is not a Business Day, as of the close of
business on the next succeeding Business Day.
-11-
|
13.
|
Assignment and
Delegation.
|
|
(a)
|
Neither
the Fund nor the Investment Adviser may assign (i.e., any change in
control considered an “assignment” for purposes of the Advisers Act or the
▇▇▇▇ ▇▇▇) any of its rights or delegate any of its obligations and/or
power and authority under this Agreement without the prior written consent
of the other party hereto; provided, however, that the Investment Adviser
may, with the consent of the Board and subject to applicable Law, delegate
all or any portion of its obligations, power and authority hereunder to
any Declaration Party or Declaration Parties at any time, in which case
Declaration shall promptly so notify the Limited Partners; and provided
further, that the successors to the Investment Adviser’s business shall be
entitled to the assignment of the Investment Adviser’s rights hereunder,
to the full extent and subject to the procedures required by the Advisers
Act and the 1940 Act.
|
|
(b)
|
This
Agreement shall automatically be terminated in the event of its
“assignment” for purposes of the Advisers Act or the 1940 Act unless
consent to such assignment has been obtained in accordance with Section
13(a).
|
|
14.
|
Counterparts;
Facsimiles.
|
This
Agreement may be executed in one or more counterparts, each of which shall,
however, together constitute one and the same document. Facsimile
signature pages shall have the same binding force and effect as original
copies.
|
15.
|
No
Waiver.
|
|
(a)
|
Unless
specifically authorized to do so by this Agreement, the Investment Adviser
may not waive any term hereof. To the limited extent that the Investment
Adviser is authorized to waive any term of this Agreement, no failure or
delay on the part of the Investment Adviser in exercising any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right,
power or remedy. Failure on the part of the Fund or the
Investment Adviser to complain of any act of the other or to declare the
other in default under this Agreement, irrespective of how long such
failure continues, shall not constitute a waiver by the Fund or the
Investment Adviser of its rights with respect to such default until the
applicable statute-of-limitations period has
run.
|
|
(b)
|
Any
waiver granted hereunder must be in writing and shall be valid only in the
specific instance in which given.
|
|
16.
|
Right of Third Parties
to Rely on the Power and Authority of the Investment
Adviser.
|
The acts
of the Investment Adviser relating to the subject matter of this Agreement in
carrying out the business of the Fund may be relied upon by any third party as
binding upon the Fund.
-12-
|
17.
|
Rules of
Interpretation.
|
In this
Agreement, unless inconsistent with the context or the contrary intention
appears, a reference to:
|
(a)
|
“May”
shall be construed as permissive;
|
|
(b)
|
A
“month” or a “quarter” means a calendar month or quarter (as the case may
be);
|
|
(c)
|
A
“notice” means written notice unless otherwise
stated;
|
|
(d)
|
“Shall”
shall be construed as imperative;
|
|
(e)
|
The
masculine includes the feminine and neuter
respectively;
|
|
(f)
|
Writing
includes typewriting, printing, lithography, photography and other modes
of representing or reproducing words in a legible and non-transitory
form;
|
|
(g)
|
Any
reference to a Law, agreement or a document shall be deemed also to refer
to any amendment, supplement or replacement
thereof;
|
|
(h)
|
Whenever
this Agreement refers to a number of days, such number shall refer to
calendar days unless such reference specifies Business
Days;
|
|
(i)
|
The
term “and/or” is used herein to mean both “and” as well as
“or.” The use of “and/or” in certain contexts in no respects
qualifies or modifies the use of the terms “and” or “or” in
others. The term “or” shall not be interpreted to be exclusive,
and the term “and” shall not be interpreted to require the conjunctive —
in each case, unless the context otherwise
requires;
|
|
(j)
|
The
table of contents to and the headings in this Agreement have been inserted
for convenience of reference only, are not part of this Agreement and
shall not be used in construing this
Agreement;
|
|
(k)
|
The
terms “include” and “including” are to be construed as non-exclusive (so
that, by way of example and for the avoidance of doubt, “including” shall
mean “including without
limitation”);
|
|
(l)
|
Unless
the context of this Agreement otherwise requires (i) words using singular
or plural number also include the plural or singular number, respectively,
(ii) the terms “hereof,” herein,” “hereby” and derivative or similar words
refer to the entire Agreement, (iii) the masculine gender shall include
the feminine and neuter, (iv) any reference to a Law, agreement or a
document shall be deemed to also refer to any amendment, supplement or
replacement thereof, and (v) whenever this Agreement refers to a number of
days, such number shall refer to calendar days unless such reference
specifies Business Days.
|
|
(m)
|
Terms
defined in this Agreement by reference to any other agreement, document or
instrument shall have the meanings assigned to them in such
agreement,
|
-13-
|
|
document
or instrument whether or not such agreement, document or instrument is
then in effect.
|
|
(n)
|
No
provision of this Agreement shall be construed in favor of or against any
Person by reason of the extent to which any such Person, its Affiliates,
or their respective employees or counsel participated in the drafting
thereof; and
|
|
(o)
|
In
the event of any inconsistency between the provisions of this Agreement
and of the Limited Partnership Agreement, the Directors shall determine
which provisions shall control (all Limited Partners having expressly
agreed to the terms of both this Agreement and the Limited Partnership
Agreement).
|
|
14.
|
Binding Effect;
Benefit.
|
This
Agreement shall be binding upon and shall inure to the benefit of the Fund,
Declaration, all Persons indemnified hereunder and their respective estates,
permitted successors, Transferees, custodians, executors, administrators, legal
representatives, heirs and permitted assigns.
|
15.
|
GOVERNING LAW;
VENUE.
|
|
(a)
|
THIS
AGREEMENT IS MADE PURSUANT TO AND SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT IS
EXECUTED BY THE PARTIES OR THE LOCATION OF ANY OFFICE, VENTURE OR
OPERATION OF THE FUND OR THE INVESTMENT ADVISER. ANY ACTION OR
PROCEEDING BROUGHT BY ANY DECLARATION PARTY AGAINST ONE OR MORE LIMITED
PARTNERS, DIRECTORS OR THE FUND RELATING IN ANY WAY TO THIS AGREEMENT OR
THE OPERATION OF THE FUND MAY, AND ANY ACTION OR PROCEEDING BROUGHT BY ANY
OTHER PARTY AGAINST ANY DECLARATION PARTY OR THE FUND RELATING IN ANY WAY
TO THIS AGREEMENT OR THE OPERATION OF THE FUND MAY ALSO, BE BROUGHT AND
ENFORCED IN THE CITY, COUNTY AND STATE OF NEW YORK OR (TO THE EXTENT
SUBJECT MATTER JURISDICTION EXISTS THEREFOR) IN THE COURTS OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND THE FUND AND THE
INVESTMENT ADVISER IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
BOTH SUCH STATE AND FEDERAL COURTS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING. THE FUND AND THE INVESTMENT ADVISER IRREVOCABLY
WAIVE ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO LAYING THE
VENUE OF ANY SUCH ACTION OR PROCEEDING IN THE COURTS OF THE CITY, COUNTY
AND STATE OF NEW YORK OR IN THE COURTS OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK AND ANY CLAIM THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
|
-14-
|
(b)
|
EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO
ANY CLAIM AGAINST ANY DECLARATION PARTY RELATING IN ANY WAY TO THIS
AGREEMENT, THE OPERATION OF THE FUND OR THE OFFERING OF THE
INTERESTS.
|
|
(c)
|
THE
FUND HEREBY AGREES THAT SERVICE OF PROCESS MAY BE EFFECTED ON SUCH PARTY
IN THE SAME MANNER AS NOTICES ARE GIVEN PURSUANT TO SECTION
12.
|
|
20.
|
No Registration as a
Commodity Pool Operator.
|
The Fund
will trade futures contracts. However, the Fund has claimed an
exclusion from registration as a commodity pool operator (“CPO”) pursuant to Commodity
Futures Trading Commission (“CFTC”) Regulation 4.5(a)(1)
and is not subject to CPO regulation. Also, the Investment Adviser is
exempted from registration as a commodity trading advisor (“CTA”) and is generally not
subject to CTA regulation.
|
21.
|
Force
Majeure.
|
Notwithstanding
anything to the contrary contained herein, in the event that, due to the
occurrence of a natural or man-made disaster, armed conflict, act of war or
terrorism, riot, labor disruption, computer hardware or software failure,
inaccessibility or error or any other circumstance beyond the Investment
Adviser’s or the Fund’s control, it becomes impossible (in the case of the
Investment Adviser, other than as a result of the Investment Adviser acting in
bad faith or due to the Investment Adviser’s fraud, gross negligence or willful
disregard of its duties or otherwise as required by Law) for the Investment
Adviser or the Fund to perform any obligation, make or receive any payment or
delivery or comply with any provision of this Agreement, failure to perform such
obligation, make or receive such payment or delivery or comply with any such
provisions shall not constitute a breach hereof.
|
22.
|
Matters Not Provided
For; Compliance with Law.
|
|
(a)
|
The
Investment Adviser shall be empowered to decide any question arising with
respect to the Fund and/or this Agreement, and to make such provisions as
the Investment Adviser deems to be in, or not opposed to, the interests of
the Fund, but which are not specifically set forth
herein.
|
|
(b)
|
The
Investment Adviser may, but shall have no obligation to, take any action
which the Investment Adviser determines necessary or advisable to ensure
that the Fund is not in violation of Law or in breach of any contractual
provisions. The Investment Adviser shall not, however, be
liable or responsible for any such violation except as provided in Section
4.
|
|
23.
|
Entire
Agreement.
|
This
Agreement, the Limited Partnership Agreement and the other Material Contracts
contain the entire agreement and understanding of the parties hereto relating to
the
-15-
subject
matter hereof, and supersedes any prior agreement and understanding of the
parties relating to such subject matter (including, without limitation, the
Original Agreement).
|
24.
|
Definitions.
|
|
(a)
|
Defined
terms not otherwise defined herein are used with the meanings set forth in
the Limited Partnership Agreement.
|
|
(b)
|
No
amendment or modification to the definitions set forth in the Limited
Partnership Agreement which affects any defined term used in this
Agreement shall be effective in respect of this Agreement without the
consent of Declaration.
|
|
25.
|
Severability.
|
In the
event that any provision of this Agreement is held to be invalid or
unenforceable in any jurisdiction, such provision shall be deemed modified to
the minimum extent necessary so that such provision, as so modified, shall no
longer be held to be invalid or unenforceable. Any such modification,
invalidity or unenforceability shall be strictly limited both to such provision
and to such jurisdiction, and in each case to no other. Furthermore,
in the event of any such modification, invalidity or unenforceability, this
Agreement shall be interpreted so as to achieve the intent expressed herein to
the greatest extent possible in the jurisdiction in question and otherwise as
set forth herein.
|
26.
|
Advisers Act
Compliance; No Waiver of
Rights.
|
(a) Any
provisions of this Agreement which are construed to violate the Advisers Act
shall be deemed null and void ab initio. The
Fund acknowledges receipt of Declaration’s Form ADV Part II at least 48 hours
prior to the execution and delivery of this Agreement.
(b) The Fund
shall not, as a result of any provision hereof, be deemed to have waived any
rights which the Fund may have under any federal or state securities,
commodities or other laws.
* * * *
*
-16-
IN
WITNESS WHEREOF, this Agreement has been executed by the Fund and Declaration as
the date first written above.
By:
______________________________________
Name:
_______________________________
Director
Accepted:
DECLARATION
MANAGEMENT & RESEARCH LLC
By: _________________________________________
Name:
Title:
-17-
MANAGEMENT
FEE CALCULATION SCHEDULE
to
the
AMENDED
AND RESTATED INVESTMENT ADVISORY AGREEMENT
DATED
AS OF ________ __, 2008
(the
“Agreement”)
by
and between
and
DECLARATION
MANAGEMENT & RESEARCH LLC
Unless
otherwise defined herein, defined terms have the meaning set forth in the
Agreement or the Limited Partnership Agreement.
|
1.
|
The
Management Fee will be paid to the Investment Adviser by the Fund in
arrears as of the end of each month. The Management Fee will be
1/12 times a
1.50% annual rate times the aggregate
Invested Capital of each Limited
Partner.
|
|
2.
|
During
the Reinvestment Period, Invested Capital will equal the aggregate Capital
Contributions to the Fund.
|
|
3.
|
During
the Distribution Period, Invested Capital will be recalculated as of the
end of each month, and will equal (a) the aggregate Capital Contributions
to the Fund minus
(b) the product of (1) distributions made to Limited Partners by the Fund
and (2) the Adjustment Factor. The Adjustment Factor is the
ratio (expressed as a percentage not exceeding 100%) of (a) aggregate
Invested Capital as of the end of the preceding month to (b) the Net Asset
Value of the Fund as of the end of the preceding month. The
Adjustment Factor has the effect of reducing the base on which the
Management Fee is calculated to reflect returns of capital to investors
during the Distribution Period.
|
|
4.
|
No
Management Fee will apply after the end of the Distribution
Period.
|
|
5.
|
Management
Fees (as well as the Fund’s expenses) are paid from the proceeds of
Capital Calls and/or Fund
investments.
|
|
6.
|
All
Management Fees due shall be paid in cash within three Business Days of
the date when due. Any such amounts due but not timely paid
(for whatever reason) shall bear interest at one-month LIBOR beginning
with the fifth Business Day after the date when due. In the
event of any dispute concerning any amounts so due, the Fund shall, at the
request of the Investment Adviser, immediately pay over to the Investment
Adviser the full amount not the subject of dispute, pending final
resolution of the exact amount due.
|
|
7.
|
If
the Investment Adviser serves hereunder for less than the whole of any
month, the fee hereunder shall be prorated according to the proportion
that such period bears to the full month and shall be payable within 30
days after the end of the relevant month or the date of termination of
this Agreement, as applicable. The value of the Invested
Capital of the Fund and the Adjustment Factor (based in part on Net Asset
Value) shall be determined pursuant to the applicable provisions of the
Limited Partnership Agreement and the CNMIC
Restrictions.
|
INVESTMENT
GUIDELINES SCHEDULE
to
the
AMENDED
AND RESTATED INVESTMENT ADVISORY AGREEMENT
DATED
AS OF ________ __, 2008
(the
“Agreement”)
by
and between
and
DECLARATION
MANAGEMENT & RESEARCH LLC
Unless
otherwise defined herein, defined terms have the meaning set forth in the
Agreement or the Limited Partnership Agreement.
From the
end of the Draw Period to the end of the Reinvestment Period, the Investment
Adviser intends to adhere to the following investment guidelines in implementing
the Fund’s investment strategy:
|
1.
|
The
Fund will not invest more than 5% of its Net Asset Value in any single
position.
|
|
2.
|
The
Fund may invest up to 100% of its Net Asset Value in residential
mortgage-backed securities (“RMBS”).
|
|
3.
|
The
Fund will not invest more than 35% of its Net Asset Value in commercial
mortgage-backed securities (“CMBS”) and commercial
real estate collateralized debt obligation (“CDO”) positions
primarily backed by CMBS, combined.
|
|
4.
|
The
Fund will not invest more than 25% of its Net Asset Value in structured
finance CDOs primarily backed by RMBS, and will not invest in any
structured finance CDO issue rated below Aa3/AA- at the time of its
initial issuance.
|
|
5.
|
The
Fund will not invest in long credit default swap (“CDS”) positions (i.e., the Fund will not
enter CDS as a seller of credit protection under CDS
positions).
|
|
6.
|
The
Fund will not invest more than 35% of its Net Asset Value in short credit
positions; all short CDS positions will be entered into for risk
mitigation purposes only.
|
|
7.
|
The
Fund will not invest more than 15% of its Net Asset Value in corporate
credit instruments, each of which must be mortgage- or mortgage-industry
related.
|
|
8.
|
The
Fund will invest at least 80% of its assets, under normal circumstances,
in mortgage-related investments and investments in the mortgage
industry.
|
Compliance
with the foregoing investment guidelines will be measured on (1) the first
business day after the end of the Draw Period, (2) the end of the Reinvestment
Period and (3) the trade date of each new investment made between dates (1) and
(2). Market movements,
distributions
and other factors may result in the Fund’s portfolio exceeding any one or more
of the foregoing limits at any given point in time. Furthermore, due
to the illiquidity of the Fund’s portfolio and difficulty in valuing its
positions, allocations to specific holdings or sectors may from time to time
exceed one or more of the foregoing limits. In general, the
Investment Adviser will not be liable for the Fund exceeding any one or more of
the foregoing investment guidelines; provided that the Investment Adviser has
not acted in bad faith.
Sch-2