Exhibit 99.2(g)
FORM OF INVESTMENT ADVISORY AGREEMENT
MOUNT YALE OPPORTUNITY FUND, LLC
AGREEMENT, made as of **[ ], 2004 between Mount Yale Opportunity Fund, LLC,
a Delaware limited liability company (the "Fund"), and Mount Yale Asset
Management, LLC, a Delaware limited liability company (the "Adviser").
WHEREAS, the Fund is registered with the Securities and Exchange Commission
(the "SEC") as a closed-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Fund desires to retain the Adviser 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, the Adviser is willing to render such services and/or engage
others to render such services to the Fund;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed by the parties as follows:
1. Appointment. The Fund hereby appoints the Adviser to act as investment
adviser and provide investment advisory services to the Fund, subject to the
supervision of the Fund's board of managers (the "Board," "Board of Managers,"
or "Managers"), for the period and on the terms and conditions set forth in this
Agreement. The Adviser 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.
2. Responsibilities of the Adviser.
(a) The Adviser hereby undertakes and agrees, upon the terms and conditions
herein set forth, subject to the supervision of the Fund's Board of Managers,
either directly or indirectly through one or more Subadvisers (as that term is
defined in paragraph 4 below):
(i) to make investment decisions and provide a program of continuous
investment management for the Fund; prepare, obtain, evaluate, and make
available to the Fund research and statistical data in connection
therewith; obtain and evaluate such information and advice relating to the
economy, securities markets, and securities as it deems necessary or useful
to discharge its duties hereunder; engage in or supervise the selection,
acquisition, retention, and sale of investments, securities, and/or cash;
engage in or supervise the selection, acquisition, retention, and sale of
unregistered investment funds, and/or other investment vehicles (the
"Investment Funds"); select brokers or dealers to execute transactions; and
all of the aforementioned shall be done in accordance with the Fund's
investment objective, policies, and limitations as stated in the Fund's
prospectus and statement of additional information (the "SAI") included as
part of the Fund's registration statement filed with the SEC on Form N-2
under the Securities Act of 1933, as amended, and the 1940 Act (the
"Registration Statement"), as amended from time to time, and in accordance
with guidelines and directions from the Fund's Board of Managers and any
applicable laws and regulations;
(ii) subject to the direction and control of the Fund's Board of
Managers, to 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;
determine or recommend the securities, instruments, repurchase agreements,
options, and other investments (including the Investment Funds), and
techniques that the Fund will purchase, sell, enter into, use, or provide
in an ongoing evaluation of the Fund's portfolio; continuously manage and
supervise the investment program of the Fund and the composition of its
investment portfolio in a manner consistent with the investment objective,
policies, and restrictions of the Fund, as set forth in its Registration
Statement and as may be adopted from time to time by the Board, and
applicable laws and regulations; determine or recommend the extent to which
the Fund's portfolio shall be invested in securities, Investment Funds, and
other assets, and what portion if any, should be held uninvested; and
undertake to do anything incidental to the foregoing to facilitate the
performance of its obligations hereunder;
(iii) furnish to or place at the disposal of the Fund information,
evaluations, analyses, and opinions formulated or obtained by the Adviser
in the discharge of its duties as the Fund may, from time to time
reasonably request, 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, and reports, and other
information are not maintained or furnished by the custodian, transfer
agent, administrator, sub-administrator, or other agent of the Fund;
(iv) to furnish at the 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 Adviser's expense clerical
services related to research, statistical, and investment work;
(v) to render to the Fund management and administrative assistance in
connection with the operation of the Fund that shall include (i) compliance
with all reasonable requests of the Fund for information, including
information required in connection with the Fund's filings with the SEC,
other federal and state regulatory organizations, and self-regulatory
organizations, and (ii) such other services as the Adviser shall from time
to time determine to be necessary or useful to the administration of the
Fund; and
(vi) to pay the reasonable salaries, fees, and expenses of the Fund's
officers and employees (including the Fund's share of payroll taxes) and
any fees and expenses of the Fund's Managers who are managers, officers, or
employees of or otherwise affiliated with the Adviser; provided, however,
that the Fund, and not the Adviser, shall bear travel
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expenses (or an appropriate portion thereof) of Managers and officers of
the Fund who are managers, officers, or employees of the Adviser to the
extent that such expenses relate to attendance at meetings of the Fund's
Board of Managers or any committees thereof or advisers thereto. The
Adviser shall bear all expenses arising out of its duties hereunder but
shall not be responsible for any expenses of the Fund other than those
specifically allocated to the Adviser in this Agreement.
(b) In particular, but without limiting the generality of the foregoing,
the Adviser shall not be responsible, except to the extent of the reasonable
compensation of the Fund's employees who are managers, officers, or employees of
the Adviser whose services may be involved, for the following expenses of the
Fund: organizational and offering expenses of the Fund; fees payable to any
consultants, including an advisory board (if applicable); fees paid directly or
indirectly to investment advisers of the Investment Funds; brokerage commissions
or all other costs and expenses directly related to portfolio transactions,
acquiring or disposing of any portfolio security, and positions for the Fund's
account such as direct or indirect expenses associated with the Fund's
investments, including investments in the Investment Funds; legal expenses;
auditing and accounting expenses; telephone, telex, facsimile, postage, and
other communications expenses; interest, insurance premiums, taxes, and
governmental fees; dues and expenses incurred by the Fund or with respect to the
Fund in connection with membership in investment company trade organizations;
fees and expenses of the Fund's administrator, sub-administrator, custodian,
transfer agent and registrar, distribution disbursing agent, or any other agent
of the Fund; payment for portfolio pricing or valuation services to pricing
agents, accountants, bankers, and other specialists (if any); fees and expenses
related to the repurchase of units of members; other expenses in connection with
the issuance, offering, distribution, sale, or underwriting of units issued by
the Fund, including preparing stock certificates; expenses of registering or
qualifying units of the Fund for sale; expenses relating to investor and public
relations; freight, insurance, and other charges in connection with any shipment
of the Fund's portfolio securities; expenses of preparing, printing, and
distributing prospectuses, SAIs, reports, notices to members, the SEC, and other
regulatory agencies, and providing distributions to members; costs of
stationery; costs of members' and other meetings, including proxy preparation,
printing, and mailing; or litigation expenses.
3. Use of Name. As licensee of the rights to use and sublicense the use of
the name "Mount Yale" trademark and any derivatives thereof or logo associated
with the name, the Adviser hereby grants the Fund a non-exclusive right and
sublicense to use (i) the Mount Yale name and xxxx as part of the Fund's name
(the "Fund Name"), and (ii) in connection with the Fund's investment products
and services, in each case only for so long as this Agreement, any other
investment advisory agreement between the Fund and the Adviser (or any
organization which shall have succeeded to the Adviser's business as investment
manager (the "Adviser's Successor")), or any extension, renewal or amendment
hereof or thereof remains in effect, and only for so long as the Adviser is a
licensee of the Mount Yale name and xxxx, provided, however, that the Adviser
agrees to use its best efforts to maintain its license to use and sublicense the
Mount Yale name and xxxx. The Fund agrees that it shall have no right to
sublicense or assign rights to use the Mount Yale name and xxxx, it shall
acquire no interest in the Mount Yale name and xxxx other than the rights
granted herein and that the Fund shall not challenge the validity of the Mount
Yale name and xxxx or the ownership thereof. The Fund further agrees that all
services and products it offers in connection with the Mount Yale name
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and xxxx shall meet commercially reasonable standards of quality, as may be
determined by the Adviser from time to time. At the Adviser's reasonable
request, the Fund shall cooperate with the Adviser and shall execute and deliver
any and all documents necessary to maintain and protect (including, but not
limited to any trademark infringement action) the Adviser and/or enter the Fund
as a registered user thereof. At such time as this Agreement or any other
investment advisory agreement shall no longer be in effect between the Adviser
(or the Adviser's Successor) and the Fund, or the Adviser no longer is a
licensee of the Mount Yale name and xxxx, the Fund shall (to the extent that,
and as soon as, it lawfully can) cease to use the Fund Name or any other name
indicating that it is advised by, managed by or otherwise connected with the
Adviser (or the Adviser's Successor). In no event shall the Fund use the Mount
Yale name and xxxx or any other name or xxxx confusingly similar thereto
(including, but not limited to, any name or xxxx that includes the name "Mount
Yale") if this Agreement or any other investment advisory agreement between the
Adviser (or the Adviser's Successor) and the Fund is terminated.
4. Subadvisers. The Adviser may, at its expense and subject to its
supervision, engage one or more persons, including, but not limited to,
subsidiaries and affiliated persons of the Adviser, to render any or all of the
investment advisory services that the Adviser is obligated to render under this
Agreement, including, subject to approval of the Fund's Board of Managers, a
person or persons to render investment advisory services including the provision
of a continuous investment program and the determination of the composition of
the securities and other assets of the Fund (each, a "Subadviser"). Member
approval of the appointment of a Subadviser by the Adviser pursuant to this
paragraph is required only to the extent required by applicable law, as may be
modified by any exemptive order or other interpretation received from the SEC.
5. Regulatory Compliance. In performing its duties hereunder, the Adviser
(and any Subadvisers selected by the Adviser) shall comply with the 1940 Act and
all rules and regulations thereunder, all other applicable federal and state
laws and regulations, with any applicable procedures adopted by the Fund's Board
of Managers, and with the provisions of the Fund's Registration Statement.
6. Compensation. As compensation for the services performed and the
facilities and personnel provided by the Adviser pursuant to this Agreement, the
Fund will pay the Adviser monthly in arrears a fee, calculated on the last
business day of each month during such month at the annual rate of 2.00% of the
Fund's month-end net assets. If the Adviser shall serve 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 net assets of the Fund shall be
determined pursuant to the applicable provisions of the limited liability
company operating agreement (the "Operating Agreement"), valuation procedures,
and Registration Statement of the Fund, each as amended from time to time. If
the determination of the net asset value of the Fund has been suspended for a
period including the end of any month when the Adviser's compensation is payable
pursuant to this paragraph, then the Adviser's compensation payable with respect
to such month shall be computed on the basis of the value of the net assets of
the Fund as last determined (whether during or prior to such month). If the Fund
determines the value of the net assets of its portfolio more than once in any
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month, then the last such determination thereof in that month shall be deemed to
be the sole determination thereof in that month for the purposes of this
paragraph.
7. Portfolio Transactions.
(a) In executing transactions for the Fund and selecting brokers or
dealers, the Adviser (either directly or through Subadvisers) shall place orders
pursuant to its investment determinations for the Fund directly with the issuer,
or with any broker or dealer, in accordance with applicable policies expressed
in the Fund's Registration Statement and in accordance with any applicable legal
requirements. Without limiting the foregoing, the Adviser (or a Subadviser)
shall use its best efforts to obtain for the Fund the most favorable price and
best execution available, considering all of the circumstances, and shall
maintain records adequate to demonstrate compliance with this requirement.
Subject to the appropriate policies and procedures approved by the Fund's Board
of Managers, the Adviser (or the Subadviser) may, to the extent authorized by
Section 28(e) of the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"), cause the Fund to pay a broker or dealer that
provides brokerage or research services to the Adviser (or the Subadviser) an
amount of commission for effecting a portfolio transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if the Adviser (or the Subadviser) determines, in good faith,
that such amount of commission is reasonable in relationship to the value of
such brokerage or research services provided viewed in terms of that particular
transaction or the Adviser's (or the Subadviser's) overall responsibilities to
the Fund or its other advisory clients. To the extent authorized by Section
28(e) of the Securities Exchange Act and the Fund's Board of Managers, the
Adviser (or the Subadviser) shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely by reason
of such action.
(b) To the extent applicable to the Fund and consistent with these
standards, in accordance with Section 11(a) of the Securities Exchange Act and
Rule 11a2-2(T) thereunder, and subject to any other applicable laws and
regulations, the Adviser (or the Subadviser) is further authorized to allocate
the orders placed by it on behalf of the Fund to the Adviser (or the Subadviser)
if it is registered as a broker or dealer with the SEC, to its affiliate that is
registered as a broker or dealer with the SEC, or to such brokers and dealers
that also provide research or statistical research and material, or other
services to the Fund or the Adviser (or the Subadviser). Such allocation shall
be in such amounts or proportions as the Adviser (or the Subadviser) shall
determine consistent with the above standards, and, upon request, the Adviser
(or the Subadviser) will report on said allocation regularly to the Fund's Board
of Managers indicating the broker-dealers to which such allocations have been
made and the basis therefor.
8. Reports. The Adviser (or the Subadviser) will regularly report to the
Fund's Board of Managers on the investment program of the Fund and the issuers
and securities generally represented in the Fund's portfolio, including reports
received from the Investment Funds, and will furnish the Fund's Board of
Managers such periodic and special reports as the Managers may reasonably
request.
9. Not Exclusive. Nothing herein shall be construed as prohibiting the
Adviser, Subadviser, or any manager, officer, partner, employee, or affiliate
thereof from providing investment management or advisory services to, or
entering into investment management or
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advisory agreements with, other clients (including other registered investment
companies), including clients which may from time to time purchase and/or sell
securities of issuers in which the Fund invests, or from utilizing (in providing
such services) information furnished to the Adviser by advisors and consultants
to the Fund and others (including Subadvisers); provided however, that the
Adviser will undertake no activities that, in its judgment, will adversely
affect the performance of its obligations under this Agreement.
10. Conflicts of Interest. Whenever the Fund and one or more other accounts
or investment companies managed or advised by the Adviser or a Subadviser have
available funds for investment, investments suitable and appropriate for each
shall be allocated in accordance with procedures approved by the Fund's Board of
Managers and believed by the Adviser or the Subadviser to be equitable to each
entity. Similarly, opportunities to sell securities shall be allocated in
accordance with procedures approved by the Fund's Board of Managers and believed
by the Adviser or the Subadviser to be equitable. The Fund recognizes that in
some cases this procedure may adversely affect the size of the position that may
be acquired or disposed of for the Fund. In addition, the Fund acknowledges that
any member, manager, officer, or persons employed by the Adviser, its
affiliates, or a Subadviser, who may also be a member, manager, officer, or
person employed by the Fund, to assist in the performance of the Adviser's or
the Subadviser's duties hereunder will not devote their full time to such
service and nothing contained herein shall be deemed to limit or restrict the
right of the Adviser or any affiliate of the Adviser or a Subadviser to engage
in and devote time and attention to other businesses or to render services of
whatever kind or nature.
11. Independent Contractor. The Adviser shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Fund's Board of Managers from time to time,
have no authority to act for or represent the Fund in any way or otherwise be
deemed its agent.
12. Liability. The Adviser may rely on information reasonably believed by
it to be accurate and reliable, including but not limited to, any information or
report from the Investment Funds, and shall give the Fund the benefit of its
best judgment and effort in rendering services hereunder. Neither the Adviser
nor its members, officers, managers, employees, or agents and its affiliates,
successors, or other legal representatives shall be subject to any liability for
any act or omission, error of judgment, mistake of law, or for any loss suffered
by the Fund, in the course of, connected with, or arising out of any services to
be rendered hereunder, except by reason of willful misfeasance, bad faith, or
negligence on the part of the Adviser in the performance of its duties or by
reason of reckless disregard on the part of the Adviser of its obligations and
duties under this Agreement. Any person, even though also employed by the
Adviser, who may be or become an employee of the Fund and paid by the Fund shall
be deemed, when acting within the scope of his employment by the Fund, to be
acting in such employment solely for the Fund and not as an employee or agent of
the Adviser.
13. Indemnification.
(a) The Fund will indemnify the Adviser and its affiliates, and each of
their members, managers, officers, and employees and any of their affiliated
persons, executors, heirs, assigns, successors, or other legal representatives
(each an "Indemnified Person") against any and all
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costs, losses, claims, damages, or liabilities, joint or several, including,
without limitation, reasonable attorneys' fees and disbursements, resulting in
any way from the performance or non-performance of any Indemnified Person's
duties in respect of the Fund, except those resulting from the willful
misfeasance, bad faith or negligence of an Indemnified Person or the Indemnified
Person's reckless disregard of such duties and, in the case of criminal
proceedings, unless such Indemnified Person had reasonable cause to believe its
actions unlawful (collectively, "disabling conduct"). Indemnification shall be
made following: (i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the Indemnified Person was not
liable by reason of disabling conduct; or (ii) a reasonable determination, based
upon a review of the facts and reached by (A) the vote of a majority of the
Managers who are not parties to the proceeding or (B) legal counsel selected by
a vote of a majority of the Board in a written advice, that the Indemnified
Person is entitled to indemnification hereunder. The Fund shall advance to an
Indemnified Person reasonable attorneys' fees and other costs and expenses
incurred in connection with defense of any action or proceeding arising out of
such performance or non-performance. The Adviser agrees, and each other
Indemnified Person will be required to agree as a condition to any such advance,
that if one of the foregoing parties receives any such advance, the party will
reimburse the Fund for such fees, costs, and expenses to the extent that it
shall be determined that the party was not entitled to indemnification under
this paragraph. The rights of indemnification provided hereunder shall not be
exclusive of or affect any other rights to which any person may be entitled by
contract or otherwise under law.
(b) Notwithstanding any of the foregoing, the provisions of this paragraph
shall not be construed so as to relieve the Indemnified Person of, or provide
indemnification with respect to, any liability (including liability under
federal securities laws, which, under certain circumstances, impose liability
even on persons who act in good faith) to the extent (but only to the extent)
that such liability may not be waived, limited, or modified under applicable law
or that such indemnification would be in violation of applicable law, but shall
be construed so as to effectuate the provisions of this paragraph to the fullest
extent permitted by law. The provisions of this paragraph shall survive the
termination or cancellation of this Agreement.
14. Term of Agreement; Termination. 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 Board of Managers who are not
parties to this Agreement or interested persons (as defined in the 0000 Xxx) 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 Managers or
the holders of a majority of the outstanding voting securities of the Fund. This
Agreement may nevertheless be terminated at any time without penalty, on 60
days' written notice, by the Fund's Board of Managers, by vote of holders of a
majority of the outstanding voting securities of the Fund, or by the Adviser.
This Agreement shall automatically be terminated 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 a change of actual control or management of
the
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Adviser's business shall not be deemed to be an assignment for the purposes of
this Agreement. Any notice to the Fund or the Adviser shall be deemed given when
received by the addressee.
15. Assignment. This Agreement may not be transferred, assigned, sold, or
in any manner hypothecated or pledged by either party hereto, except as
permitted under the 1940 Act or rules and regulations adopted thereunder.
16. Amendment. This Agreement may be amended only by the written agreement
of the parties. Any amendment shall be required to be approved by the Board and
by a majority of the independent Managers in accordance with the provisions of
Section 15(c) of the 1940 Act and the rules and regulations adopted thereunder.
If required by the 1940 Act, any material amendment shall also be required to be
approved by such vote of members of the Fund as is required by the 1940 Act and
the rules thereunder.
17. Conflicts of Laws. This Agreement shall be construed in accordance with
the laws of the State of Delaware, without giving effect to the conflicts of
laws principles thereof, provided, however, that nothing herein shall be
construed as being inconsistent with the 1940 Act. As used herein, the terms
"interested person," "assignment," and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the 1940 Act.
18. Management of Subsidiaries. If the Fund's Board of Managers determines
that it is in the best interests of the Fund and its members to carry on all or
part of the business of the Fund through one or more subsidiaries, the Board of
Managers may cause the substantive terms of this Agreement to apply to the
management of any such subsidiary or subsidiaries.
19. Fund Obligations. This Agreement is made by the Fund and executed on
behalf of the Fund by an officer of the Fund, and the obligations created hereby
are not binding on any of the Managers, officers, members, employees, or agents,
whether past, present, or future of the Fund individually, but bind only the
assets and property of the Fund.
20. 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 effected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
21. 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.
22. Supersedes Other Agreements. This Agreement supersedes all prior
investment advisory, management, and/or administration agreements in effect
between the Fund and the Adviser.
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IN WITNESS WHEREOF, the parties have executed this Agreement by their
officers thereunto duly authorized as of the day and year first written above.
MOUNT YALE OPPORTUNITY FUND, LLC
By:
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Name:
Title:
MOUNT YALE ASSET MANAGEMENT, LLC
By:
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Name:
Title:
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