1
EXHIBIT 2 (g)(ii)
SOVEREIGN ADVISERS, INC. LETTERHEAD
INVESTMENT ADVISORY AGREEMENT
This Agreement is made by and between SOUTHEAST INTERACTIVE TECHNOLOGY
FUND I, LLC ("Client") and Sovereign Advisors, Inc., a North Carolina
Corporation ("Advisor").
1. APPOINTMENT OF ADVISOR. By execution of this Agreement and
effective as of the effective date set forth in the attached Schedule of Fees,
the Advisor accepts appointment as investment advisor for the Account and will
supervise and direct investments of the Account subject to such limitations as
the Client may communicate in writing to the Advisor from time to time. The
Advisor, as agent and attorney in fact with respect to the Account, when it
deems appropriate, without prior consultation with Client, may, (i) buy, sell,
exchange, convert and otherwise trade in any stocks, bonds and other securities
of every kind and description, and (ii) place orders for the execution of such
securities transactions with or through such brokers, dealers, or issuers as
the Advisor may select. THE ADVISOR SHALL NOT ACT AS CUSTODIAN FOR THE
ACCOUNT.
2. ESTABLISHING ACCOUNT AND EFFECTING TRANSACTIONS. The Advisor shall
have full and complete discretion to establish accounts and to execute
transactions through one or more broker/dealers as The Advisor selects, unless
the Client specifically directs otherwise by written notice. The Client
understands and acknowledges that, as described in Advisor's Form ADV, Part II,
the Advisor may take into consideration a number of factors in selecting
broker/dealers to execute transactions in addition to execution and commission
price, including research information and other services, consistent with all
applicable Federal, State, NASD and exchange regulations and that Portfolio may
be charged commissions on transactions which may be in excess of the amount of
commissions another broker or dealer would have charged. The Client further
understands and agrees that the Advisor may receive certain reimbursements and
services (commonly referred to as "Soft Dollar Compensation") from brokers
executing transactions for the Portfolio based upon, in whole or in part, the
volume of commissions generated by transactions for the Portfolio. In
addition, the Advisor is authorized and empowered to execute any and all
agreements with broker/dealers on the Client's behalf. This authorization is a
continuing one and shall remain in full force and effect until receipt from the
Client of a written notice of its revocation thereof. Unless the Client
designates otherwise and subject to the limitations set forth herein, the
Advisor may execute transactions through or with its affiliate company,
Interstate/Xxxxxxx Xxxx ("IJL"). The Client grants to IJL the authority to
effect agency cross transactions (whereby IJL acts as a broker) or principal
transactions (whereby the Advisor directs IJL to sell securities to the
Account from IJL's inventory or purchase securities from the Account for IJL's
inventory), to the extent permitted by law. The Client's consent to
"principal" transactions contained herein, can be revoked at any time by
written notice to Sovereign Advisers.
3. STANDARD OF CARE. It is agreed that the sole standard of care
imposed upon the Advisor by this Agreement is to act with the care, skill,
prudence, and diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims. While the
Advisor will make a good faith effort to require brokers and dealers selected
to effect Account transactions to perform their obligations, the Advisor shall
not be responsible for any loss incurred by reason of any act or omission of
any broker, dealer or custodian for the Account. In maintaining its records,
The Advisor does not assume responsibility for the accuracy of information
furnished by Client or any other party.
2
4. INVESTMENT OBJECTIVES AND RESTRICTIONS. Client has specified in
Schedule A the investment objectives and any specific investment restrictions
which govern the Account. It will be the Client's responsibility to advise the
Advisor of any changes or modifications in the investment objectives of the
Account as well as any additional investment restrictions applicable thereto and
to give the Advisor prompt written notice if Client deems any investments
recommended or made for the Account to be in violation of such objectives or
restrictions. Unless the Client notifies the Advisor in writing of specific
restrictions, the investments recommended for, or made on behalf of the
Account, shall be deemed not to be restricted under the current or future laws
of any state or by virtue of the terms of any other contract or instrument
purporting to bind the Client and the Advisor.
5. PROCEDURES. The operational procedures which shall apply to the
conduct of the Account are set forth in Schedule B and may be modified from
time to time by the Advisor upon prior written notice to the Client.
6. SERVICE TO OTHER CLIENTS. It is understood that the Advisor
performs investment advisory services for various clients and that the Advisor
may give advice and take action with respect to other clients which may differ
from advice given to Client or the timing or nature of action taken with
respect to the Account. The Advisor agrees, to the extent practicable, to
allocate investment opportunities to the Account over a period of time on a fair
and equitable basis relative to other clients.
7. FEES. The Advisor's compensation shall be calculated on the basis
of the market value of all assets under management and shall be paid in
accordance with the attached Schedule of Fees which may be amended by Advisor
from time to time upon thirty (30) days written notice to the Client.
8. TERMINATION. This Agreement may be terminated at any time upon
thirty business days prior to written notice by either party. Fees will be
prorated to date of termination and any unearned portion of prepaid fees will
be refunded to the Client without penalty. The Client shall have the option to
terminate this Agreement without penalty within five business days after the
date of execution; provided, however, that any investment action taken by
Advisor with respect to the Portfolio prior to the effective date of such
termination shall be at the Client's risk.
9. NOTICES. Unless otherwise specified herein, all notices and
instructions with respect to security transactions or any other matters
contemplated by this Agreement shall be deemed duly given when received in
writing by the Advisor at the address first above written or when
hand-delivered or deposited by first-class mail addressed to the Client at the
address appearing below and to the Custodian at such address as it may specify
to the Advisor in writing, or at such other address or addresses as shall be
specified. The Advisor may rely upon any notice (written or oral) from any
person reasonably believed by it to be genuine and authorized.
10. REPRESENTATIONS BY CLIENTS. The Client represents and confirms
that the employment of the Advisor is authorized by the governing documents
relating to the Account and that the terms hereof do not violate any obligation
by which the Client is bound, whether arising by contract, operation of law or
otherwise, and, if the Client is a corporation or trust, that (a) this
Agreement has been duly authorized by appropriate action and when executed and
delivered will be binding upon the Client in accordance with its terms, and (b)
the Client will deliver to the Advisor such evidence of such authority as the
Advisor may reasonably require, whether by way of a certified resolution or
otherwise. The Client agrees to indemnify the Advisor and its affiliates and
hold them harmless against any and all losses costs claims, and liabilities
which any of them may suffer or incur arising out of a breach by the Client of
its representations and warranties contained in this Agreement. The Client
will deliver to the Advisor such evidence of the
3
Client's authority to act as the Advisor may reasonably require, whether by way
of certified resolution, trust agreement or otherwise.
11. ARBITRATION. The Client hereby agrees that all disputes and
controversies, which may arise between the Client and the Advisor, concerning
any transaction or the construction, performance or breach of this or any
agreement between the Client and the Advisor, whether entered into prior to,
on, or subsequent to the date thereof, shall be determined by arbitration in
Charlotte, North Carolina, in accordance with the securities rules of the
American Arbitration Association. The Client acknowledges that a decision in
any such proceeding shall be final and binding upon both parties, that the
Client is waiving its rights to seek other remedies in court including any
rights to a jury trial, that the panel of arbitrators will typically include
persons who were or are affiliated with the securities industry, that the
arbitration process, including discovery, is generally more limited than a
court proceeding and that the arbitrators are not required in their decision to
include factual findings or legal reasoning and any right to appeal or seek
modification of the arbitrators' rulings is strictly limited.
12. REPRESENTATIONS BY ADVISOR. By execution of this Agreement, the
Advisor represents and confirms that it is registered as an investment advisor
under the Investment Advisors Act of 1940 and that with respect to the
performance of its duties hereunder with respect to the Account (if it is a
qualified employee benefit plan) the Advisor is a "fiduciary" as that term is
defined under the Employee Retirement Income Security Act of 1974.
13. ACKNOWLEDGMENT-OF RECEIPT OF FORM ADV PART II. The Client hereby
acknowledges that the Client has received and read a copy of Advisors Form ADV,
Part II required by Rule 204-3 of the Investment Advisers Act of 1940 and the
Client understands that the effective date of this Agreement may not be earlier
that 48 hours after the Client's receipt of the brochure.
14. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of North Carolina.
Agreed and Accepted this 13th Southeast Interactive
--------- --------------------------------
day of June 19 95 (Client) Technology Fund I, LLC
------------ ------------
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
in Charlotte, NC
-------------------------------- --------------------------------
(City and State)
(City and State)
SOVEREIGN ADVISERS, INC. 000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
By /s/ Xxxxxx X. Xxxxx Date June 13, 1995
-------------------------------- -----------------------------
Authorized Officer
4
SCHEDULE A
INVESTMENT OBJECTIVES AND RESTRICTIONS
1. The investment objectives governing the Account are:
to maximize current return with limited fluctuation in principle value in
liquid fixed income securities.
2. Transactions for the Account shall be subject to the following specific
restrictions and limitations (if none, state "none"):
the account shall be invested primarily in securities backed by the U.S.
Government and its agencies. No derivative securities will be permitted.
3. The foregoing investment objectives, restrictions and limitations shall
govern the Account unless and until the Advisor receives written notice from
the Client of any changes to or modifications of the foregoing.
5
Schedule B
Operational Procedures
1. All transactions will be consummated by payment to, or delivery by, the
Client, or such other party as the Client may designate in writing (the
"Custodian"), of all cash and/or securities due to or from the Account.
THE ADVISOR SHALL NOT ACT AS CUSTODIAN FOR THE ACCOUNT, BUT MAY ISSUE
SUCH INSTRUCTIONS TO THE CUSTODIAN AS MAY BE APPROPRIATE IN CONNECTION
WITH THE SETTLEMENT OF TRANSACTIONS INITIATED BY THE ADVISOR PURSUANT TO
SECTION 1 OF THE AGREEMENT. Instructions of the Advisor to the Client
and/or the Custodian shall be made in writing sent by first-class mail
or, at the option of the Advisor, orally and confirmed in writing as
soon as practical thereafter, and the Advisor shall instruct all brokers
and dealers executing orders on behalf of the account to forward to the
Client and/or the Custodian copies of all confirmations promptly after
execution of transactions.
2. The Advisor shall not have any obligation to purchase or sell, or to
recommend for purchase or sale, for the Account any security which the
Advisor, its principals, affiliates or employees may purchase or sell
for its or their own accounts for the account of any other client, if
in the opinion of the Advisor, such transaction or investment appears
unsuitable, impractical or undesirable for the Account.
3. ALLOCATION OF BROKERAGE. When the Advisor places orders for the
execution of portfolio transactions for the Account, the Advisor may
allocate such transactions to such brokers and dealers for execution on
such markets, at such prices and at such commission rates as in good
faith judgment of the Advisor will be in the best interest of the
Account, taking into consideration in the selection of such brokers and
dealers not only the available prices and rates of brokerage
commissions, but also other relevant factors (such as, without
limitation, execution capabilities, reliability and quality, research
and other brokerage services provided by such brokers or dealers and the
value to clients of an ongoing relationship of the Advisor with such
brokers and dealers) which are expected to enhance the general portfolio
management capabilities of the Advisor, without having to demonstrate
that such factors are of direct benefit to the Account. Consistent with
the foregoing, the Advisor is not obligated to obtain the lowest
possible commission rate so long as the difference in costs is
reasonably justified by the quality of the services offered.
4. REPORTS TO ADVISOR. The Client will provide, or instruct the Custodian
to provide, the Advisor with such periodic reports of the status of the
Account as the Advisor may reasonably request, including written
inventories of the Account investments at least monthly.
5. CONFIDENTIAL RELATIONSHIP. All information and advice furnished by
either party to the other hereunder, including their respective agents
and employees, shall be treated as confidential and shall not be
disclosed to third parties except as required by law.
6. PROXIES. The Advisor will not be required to take any action or
render any advice with respect to the voting of proxies solicited by
or with respect to the issuers of securities in which assets of the
Account may be invested from time to time.
6
SCHEDULE C
-----------
FEES
-----
The amount of fees will be billed as follows:
Time-weighted Assets Under Management 50 Basis Points Per Annum
The fee will be billed quarterly in arrears based upon the average-daily
balance of the preceeding quarter. Any contributions or withdrawals during
the quarter will be time weighted for billing purposes.
