Exhibit 99.2(g)(iii)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the [__] day of [ ], 2003, by and between ASA
MARKET NEUTRAL EQUITY FUND LLC, an Illinois limited liability company (the
"Fund") and QED CAPITALWORKS LLC, a Delaware limited liability company (the
"Adviser").
W I T N E S S E T H
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WHEREAS, the Fund is engaged in business as a closed-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"); and
WHEREAS, the Adviser is engaged principally in rendering management and
investment advisory services under the Investment Advisers Act of 1940, as
amended; and
WHEREAS, the Fund has established a separately managed account to which
it will allocate a portion of its assets (less than 25% of the Net Asset Value
of the Fund) (the "QED Account");
WHEREAS, the Fund desires to retain the Adviser to provide investment
advisory services to the Fund with respect to the QED Account on a managed
account basis in the manner and on the terms hereinafter set forth; and
WHEREAS, the Adviser is willing to provide investment advisory services
to the Fund with respect to the QED Account on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and the covenants
hereinafter contained, the Fund and the Adviser hereby agree as follows:
ARTICLE I.
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Duties of the Adviser
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The Fund hereby employs the Adviser to act as an investment adviser of
the Fund with respect to the QED Account and to furnish, or arrange for its
affiliates to furnish, the investment advisory services described below,
subject to the policies of, review by and overall control of the Board of
Directors of the Fund, for the period and on the terms and conditions set
forth in this Agreement. The Adviser hereby accepts such employment and agrees
during such period, at its own expense, to render, or arrange for the
rendering of, such services and to assume the obligations herein set forth for
the compensation provided for herein. The Adviser and its affiliates for all
purposes herein shall be deemed to be independent contractors and, unless
otherwise expressly provided or authorized, shall have no authority to act for
or represent the Fund in any way or otherwise be deemed agents of the Fund.
The Adviser 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
operating agreement of the Fund, as amended from time to time (the "Operating
Agreement"), (iv) policies and determinations of the Board of Directors of the
Fund and (v) the Prospectus and Statement of Additional Information of the
Fund, as the same may be amended from time to time.
(a) Investment Advisory Services. The Adviser shall provide, or arrange
for its affiliates to provide, the QED Account with such investment research,
advice and supervision as the latter from time to time may consider necessary
for the proper supervision of the assets of the QED Account, shall furnish
continuously an investment program for the QED Account and shall
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determine from time to time which securities shall be purchased, sold or
exchanged and what portion of the assets of the QED Account shall be held in
the various securities in which the QED Account invests, options, futures,
options on futures or cash, subject always to the restrictions of the
Operating Agreement of the Fund, the provisions of the Investment Company Act
and the statements relating to the Fund's investment objectives, investment
policies and investment restrictions as the same set forth in filings made by
the Fund under the federal securities laws. The Adviser shall manage the QED
Account on a discretionary basis. The Adviser shall make decisions with
respect to the QED Account as to the manner in which voting rights, rights to
consent to corporate action and any other rights pertaining to the securities
held in the QED Account shall be exercised. Should the Board of Directors at
any time, however, make any definite determination as to the investment policy
of the Fund and notify the Adviser thereof in writing, the Adviser shall be
bound by such determination for the period, if any, specified in such notice
or until similarly notified that such determination has been revoked. The
Adviser shall monitor the performance of the QED Account. The Adviser shall
take, on behalf of the QED Account, all actions which it deems necessary to
implement the investment policies determined as provided above, and in
particular to place all orders for the purchase or sale of portfolio
securities for the QED Account with brokers or dealers selected by it, and to
that end, the Adviser is authorized as the agent of the Fund with respect to
the QED Account to give instructions to the custodian of the Fund as to
deliveries of securities and payments of cash for the QED Account. In
connection with the selection of such brokers or dealers and the placing of
such orders with respect to the assets of the QED Account, the Adviser is
directed at all times to seek to obtain execution and prices within the policy
guidelines determined by the Board of Directors and set forth in filings made
by the Fund under the federal securities laws. Subject to
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this requirement and the provisions of the Investment Company Act, the
Securities Exchange Act of 1934, as amended, and other applicable provisions
of law, the Adviser may select brokers or dealers with which it or the Fund is
affiliated. The Adviser shall periodically report to the Board of Directors
concerning the performance of the QED Account. Such reporting shall be both
sufficiently frequent and detailed to permit the Fund to comply with its
obligations under the Investment Company Act and the Fund's Prospectus.
ARTICLE II.
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Allocation of Charges and Expenses
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(a) The Adviser. The Adviser shall provide the staff and personnel
necessary to perform its obligations under this Agreement, shall assume and
pay or cause to be paid all expenses incurred in connection with the
maintenance of such staff and personnel, and, at its own expense, shall
provide the necessary office space, facilities, equipment and necessary
personnel.
(b) The Fund. The Fund assumes, and shall cause to pay or cause to be
paid, all other expenses related to the QED Account including, without
limitation: taxes; investment-related expenses incurred by the Fund (including
but not limited to costs associated with organizing and operating the QED
Account, placement fees, interest on indebtedness, fees for data and software
providers, research expenses, professional fees (including, without
limitation, expenses of consultants and experts relating to investments); fees
and expenses for accounting and custody services.
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ARTICLE III.
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Compensation of the Adviser
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(a) Management Fee. For the services rendered hereunder, the facilities
furnished and the expenses assumed by the Adviser, the Fund shall pay to the
Adviser a fee (the "Management Fee") monthly in arrears based upon the
aggregate value of the outstanding Interests of the Fund managed by the
Adviser in the QED Account, determined as of the last business day of the
previous month, at the annual rate of 1.7%. The value of the Interests shall
be determined pursuant to the applicable provisions of the Operating
Agreement, valuation procedures and Prospectus and Statement of Additional
Information of the Fund, each as amended from time to time. The Management Fee
shall be calculated on a pro rata basis in the case of any partial months.
Payment of the Management Fee for the preceding month shall be made as
promptly as possible after completion of the computations contemplated herein.
(b) Incentive Allocation. The Fund shall pay to the Adviser at the end of
each Accounting Period (as defined below) a performance-based profit
allocation (the "Incentive Allocation") equal to 15% of the Investment Profits
(as defined herein) earned by the QED Account which exceed the High Water Xxxx
(as defined below) then in effect. If the High Water Xxxx at the end of the
Accounting Period in which an Incentive Allocation was made shall be adjusted
downward during the three subsequent Accounting Periods, then the Incentive
Allocation shall be reduced to reflect such reductions in the High Water Xxxx.
In no event shall the Adviser's Incentive Allocation be reduced below zero or
shall the Adviser be obligated to refund any amount beyond the amount of
Incentive Allocations previously paid to it. An Incentive Allocation shall no
longer be subject to adjustment or refund upon the withdrawal of
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all or a portion of the Fund's assets from the QED Account if on the date of
such withdrawal the QED Account has a Net Asset Value equal to or greater than
the High Water Xxxx then in effect.
The "High Water Xxxx" for the QED Account shall be measured as of the end
of each Accounting Period and shall be equal to the Net Asset Value of the QED
Account immediately following the payment of the most recent Incentive
Allocation, decreased by Management Fees accrued for the current Accounting
Period and adjusted for allocations of Fund assets to and from the QED
Account).
"Investment Profits" shall mean the amount by which the balance of the
QED Account at the end of an Accounting Period exceeds the balance of the QED
Account at the beginning of such Accounting Period. "Investment Losses" shall
mean the amount by which the balance of the QED Account at the beginning of an
Accounting Period exceeds the balance of the QED Account at the end of such
Accounting Period, in each case taking into account both realized and
unrealized gains and losses and adjusted to reflect withdrawals and additions
to the QED Account.
"Accounting Period" shall mean (i) a calendar quarter, (ii) the date upon
which this Agreement is terminated and/or the QED Account is liquidated, or
(iii) upon the dissolution of the Fund, the period beginning on the first day
after the immediately preceding Accounting Period and ending upon the
distribution of the Fund's assets as provided in the Operating Agreement.
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ARTICLE IV.
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Limitation of Liability of the Adviser
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The Adviser shall not be liable for any error of judgment or mistake of
law or for any damage or loss arising out of any investment or for any act or
omission in connection with its activities hereunder, including but not
limited to any damage or loss incurred by the QED Account, the Board, the
Fund's custodian or administrator, any bank, broker or dealer, or any agent,
partner, director, officer or employee of any of them, unless such loss arises
from the Adviser's willful malfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder.
ARTICLE V.
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Activities of the Adviser
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The services of the Adviser to the Fund are not to be deemed to be
exclusive; the Adviser and any person controlled by or under common control
with the Adviser (for purposes of this Article V referred to as "affiliates')
are free to render investment advisory services to others, provided that such
activities do not in the Adviser's judgment adversely affect or otherwise
impair the performance by the Adviser of its duties and obligations under this
Agreement or under the Investment Company Act. The Adviser and its affiliates
may recommend to any other person or advisory client a particular strategy
that they do not select for the QED Account.
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ARTICLE VI.
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Duration and Termination of this Agreement
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This Agreement shall become effective as of the date first above written
and shall remain in force for a period of two years thereafter and thereafter
continue from year to year, but only so long as such continuance specifically
is approved at least annually by (i) the Board of Directors of the Fund, or by
the vote of a majority of the outstanding voting securities of the Fund, and
(ii) a majority of those Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for
the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Directors or by a vote of a majority of the
outstanding voting securities of the Fund, or by the Adviser, on sixty (60)
days' written notice to the other party. This Agreement shall terminate
automatically in the event of its assignment, provided that an assignment to a
corporate successor to all or substantially all of the Adviser's business or
to a wholly owned subsidiary of such corporate successor which does not result
in change of actual control or management of the Adviser's business shall not
be deemed an assignment for purposes of this paragraph.
ARTICLE VII.
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Amendment of this Agreement
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This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of the Board of Directors of the Fund,
including a majority of those Directors who are not parties to this Agreement
or interested persons of any such party cast in person at a meeting called for
the purpose of voting on such approval and, where required by the
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Investment Company Act, by the vote of a majority of the outstanding voting
securities of the Fund.
ARTICLE VIII.
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Definitions of Certain Terms
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The terms "vote of a majority of the outstanding voting securities",
"assignment", "affiliated person" and "interested person", when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act and the rules and regulations thereunder, subject, however, to
such exemptions as may be granted by the Securities and Exchange Commission
under said Act.
ARTICLE IX.
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Use of Name
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The Adviser hereby grants the Fund a royalty-free, non-exclusive right
and license to use the names "QED" and/or "QED CapitalWorks" in connection
with the Fund's investment products and services, in each case only for the
duration of this Agreement and any extension or renewal thereof. Such license
may, upon termination of this Agreement, be terminated by the Adviser, in
which event the Fund shall promptly take whatever action may be necessary to
discontinue any further use of the names "QED" and "QED CapitalWorks." The
names "QED" or "QED CapitalWorks" may be used or licensed by the Adviser and
its affiliates in connection with any of their activities, or licensed by the
Adviser to any other party.
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ARTICLE X.
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Governing Law
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This Agreement shall be governed by and construed in accordance with the
laws of the State of [New York] and the applicable provisions of the
Investment Company Act. To the extent that the applicable laws of the State of
[New York], or any of the provisions herein, conflict with the applicable
provisions of the Investment Company Act, the latter shall control.
ARTICLE XI.
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Miscellaneous Provisions
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(a) Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby, and, to this extent, the
provisions of this Agreement shall be deemed to be so severable.
(b) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one such counterpart.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
ASA MARKET NEURAL EQUITY FUND LLC
By:
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Name:
Title:
QED CAPITALWORKS LLC
By:
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Name:
Title:
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