EXHIBIT 99.2(g)
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[INVESTMENT ADVISORY AGREEMENT]
INVESTMENT ADVISORY AGREEMENT
This Agreement is entered into this 1st day of January, 1999 between Zazove
Associates, L.L.C., a Delaware limited liability company (the "Advisor")
and Zazove Convertible Securities Fund, Inc., a Maryland corporation (the
"Fund"):
1. DISCRETIONARY AUTHORITY. Advisor shall have full power to supervise
and direct the investment of the Fund's assets including decisions as to
whether, when and how to buy, sell, exchange, invest, reinvest or retain
the assets of the Fund, making and implementing investment decisions all
without prior consultation with the Fund or its directors, consistent with
the investment policies as set forth in Paragraph 2 and the investment
objectives and fundamental policies of the Fund set forth in the Fund's
Registration Statement on Form N-2 filed with the Securities and Exchange
Commission, as it may be amended from time to time. Advisor shall have
complete discretion as to the nature, amount and timing of all such
transactions.
2. INVESTMENT POLICIES. Advisor shall manage the assets of the Fund
primarily through the creation and maintenance of a portfolio of
convertible securities. Convertible securities consist of convertible
bonds and convertible preferred stocks, but may also include warrants and
similar instruments that may be exchanged at the holder's option into a
predetermined number of the issuer's or another party's shares of common
stock. Advisor is also authorized to invest assets of the Fund in other
financial instruments including common stocks, preferred stocks, bonds,
options, warrants, mutual funds, short-term money market instruments and
similar financial instruments. Securities purchased for the Fund may be
publicly or privately issued by domestic or foreign companies and may be
non-investment grade.
The Fund shall be managed in a manner consistent with the description
of the Fund's investment strategy and policies contained in the Fund's
Private Placement Memorandum and the Fund's Registration Statement on Form
N-2 filed with the Securities and Exchange Commission, as it may be amended
from time to time.
3. CUSTODY.
(a) Except in respect of assets invested in the Partnership, the
assets of the Fund shall be held by the bank, trust company, broker-dealer
or other entity appointed by the Fund as custodian of the Fund (the
"Custodian"). The Fund shall enter into an agreement with Custodian (the
"Custodial Agreement") that provides for Custodian to be responsible at all
times for the physical custody of the assets of the Fund and for the
collection of interest, dividends and other income attributable to the
assets of the Fund.
(b) The Custodial Agreement shall provide, in part, that (i)
Advisor shall have complete authority to direct the investment of the Fund,
(ii) Custodian shall supply reports to the Fund of the activity in the
account at least once each month, and (iii) Custodian shall supply reports
to Advisor of the activity in the Fund on a monthly basis. The Fund shall
instruct Custodian to deliver a copy of the Custodial Agreement to Advisor.
4. BROKERAGE.
(a) Advisor may place orders for the execution of transactions with
or through such brokers, dealers, or banks (referred to collectively as
"Brokers") as Advisor may select. In selecting Brokers to execute
transactions on behalf of the Fund, Advisor will seek the best overall
terms available. In assessing the best overall terms available for any
transaction, Advisor may consider such factors as it deems relevant,
including, the breadth of the market in the security, the price of the
security, the reliability, financial condition and execution capability of
the Broker, research services, reasonableness of the commission and other
factors.
(b) The Fund understands that Advisor may execute brokerage
transactions for the Fund through Brokers who also provide Advisor with
"research services," as defined in section 28(e)(3) of the Securities
Exchange Act of 1934. The Fund understands that the commission paid to
such Brokers could, in certain cases, be in excess of the amount of
commission another Broker would charge for the same transaction. Before
effecting any such transaction, Advisor will determine in good faith that
the amount of such commission is reasonable in relation to the value of the
brokerage and research services provided by such Broker, viewed in terms of
either that particular transaction or Advisor's overall responsibilities to
all of its clients. The research services may include, among other things,
research reports on companies, industries or securities; economic and
financial data; financial publications; research oriented computer
hardware, software and services; and quotation terminals and related
services. Research furnished by Brokers may benefit all or only some of
the Advisor's clients, including the Fund, and could be used in connection
with accounts other than those that generated the commission to the Brokers
providing the services. Advisor's ability to obtain such research services
is an integral factor in the establishment of Advisor's fees hereunder.
(c) The Fund understands that Advisor engages in the practice of
placing aggregate orders for the purchase or sale of securities on behalf
of its clients, which could include the Fund. In all cases in which an
aggregate order to purchase or sell securities is placed by Advisor, each
account that participates in the aggregated order will participate at the
average price and all transactions costs will be shared on a pro-rata
basis. Advisor will act in good faith in the allocation of aggregated
orders such that no account (including the Fund's account) is favored over
any other account.
5. VOTING OF PORTFOLIO SECURITIES. Decisions on voting of proxies will
be made by Advisor. the Fund indemnifies and holds harmless Advisor and
its members, officers and employees against any and all claims relating to
the decision of Advisor on the voting of proxies, including the decision to
refrain from voting.
6. DIVIDENDS AND EARNINGS. Unless otherwise specified in writing by the
Fund, all dividends, interest and proceeds of sales with respect to Fund
assets will remain in the Fund for reinvestment.
7. CONFIDENTIAL RELATIONSHIP. All information and advice furnished by
either party to the other shall be treated as confidential and shall not be
disclosed to third parties except as otherwise agreed or as required by
law.
8. NON-EXCLUSIVE CONTRACT/CONFLICT OF INTEREST. Advisor acts as Advisor
to other clients and may give advice, and take action, with respect to any
of those which may differ from the advice given, or the timing or nature of
action taken, with respect to the Fund. Advisor shall have no obligation
to purchase or sell for the Fund, or to recommend for purchase or sale by
the Fund, any security which Advisor, its members, affiliates or employees
may purchase or sell for themselves or for any other clients. The Fund
recognizes that transactions in a specific security may not be accomplished
for all of Advisor's client accounts at the same time or at the same price.
9. EXCULPATION. Except as otherwise required by applicable law, Advisor
and its officers, members, agents and employees shall not be liable for any
action or inaction taken or omitted to be taken, or for any errors of
judgment, in managing the assets of the Fund; provided, however, that such
action or inaction was taken or omitted to be taken in good faith and in a
manner reasonably believed to be in, or not opposed to, the best interests
of the Fund and did not constitute gross negligence, willful misconduct or
material breach of this Agreement or any fiduciary obligation to the Fund.
Advisor and its officers, members, agents and employees shall not be liable
for any action or inaction taken or omitted to be taken by Custodian or any
Broker or other third party. Notwithstanding the foregoing, the Federal
securities laws impose liabilities under certain circumstances on persons
who act in good faith, and, therefore, nothing herein shall in any way
constitute a waiver or limitation of any rights which the Fund may have
under any Federal securities laws.
10. INDEMNIFICATION. The Fund shall indemnify and hold harmless the
Advisor, its affiliates, and the partners, shareholders, members, officers,
directors, agents and employees of any of them from and against any loss,
expense, damage or injury suffered or sustained by any of them by reason of
any acts, omissions or alleged acts or omissions arising out of any of
their activities on behalf of the Fund, in furtherance of the interests of
the Fund, or in connection with the issuance and sale of interest in the
Fund, including but not limited to any judgment, award, settlement,
reasonable attorney's fees and other costs or expenses incurred in
connection with the investigation, defense or settlement of any actual or
threatened action, proceeding or claim; provided, that such acts, omissions
or alleged acts or omissions upon which such actual or threatened action,
proceeding or claim is based were done in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interests of the
Fund and did not constitute gross negligence, willful misconduct or
material breach of this Agreement or any fiduciary obligation to the Fund.
The termination of any action, proceeding or claim by settlement shall not,
in itself, create a presumption that the conduct in question was not
undertaken in good faith and in a manner reasonably believed to be in, or
not opposed to, the best interests of the Fund. Any such indemnification,
however, shall only be from the assets of the Fund.
The foregoing agreement of indemnity shall be in addition to, and
shall in no respect limit or restrict, any other remedies which may be
available to an indemnified party. This foregoing indemnity provision
shall not increase the liability of any shareholder of the Fund beyond the
amount of such shareholder's capital and profits (exclusive of
distributions or other returns of capital, including redemptions).
11. AGREEMENT NOT ASSIGNABLE. No assignment (as that term is defined in
the Investment Advisers Act of 1940, as amended) of this Agreement may be
made by Advisor without the prior written consent of the Fund.
12. TERMINATION. This Agreement may be terminated at any time by either
the Fund or Advisor upon not less than sixty days prior written notice to
the other party. Fees will be prorated to the date of
termination and any unearned portion of prepaid fees will be refunded
to the Fund without penalty.
13. REPRESENTATIONS.
(a) Advisor represents that it is registered as an investment
advisor under the Investment Advisers Act of 1940, as amended, and that
such registration is currently effective.
(b) The Fund understands and acknowledges that (i) engaging Advisor
to manage the Fund is appropriate for sophisticated investors who can
accept fluctuations in principal value, (ii) all investment in securities
involve a risk of loss of capital and no guaranty or representation can be
made by Advisor that the Fund will generate profits or that the Fund will
not incur loss of invested capital, and (iii) Advisor does not make any
guaranties regarding the future performance or success of the Fund.
(c) The Fund represents that entering into this Agreement,
including the granting of the right to make decisions with respect to the
voting of proxies, is (i) authorized by, has been accomplished in
accordance with, and does not violate, any documents governing the Fund and
(ii) not in violation of any law, rule, regulation, order, writ, judgment,
injunction or other decree applicable to the Fund.
14. MANAGEMENT FEES.
(a) MONTHLY MANAGEMENT FEE. In consideration for services provided
hereunder, the Fund shall pay Advisor a monthly fee in an amount equal to
the sum of:
(i) one-twelfth (1/12th) of two percent (2%) of the first
twenty (20) million dollars of Fund capital as of the opening of business
on the first business day of each month,
(ii) one-twelfth (1/12th) of one and one half percent (1-1/2%)
of the next fifty (50) million dollars of Fund capital as of the opening of
business on the first business day of each month, and
(iii) one-twelfth (1/12th) of one percent (1%) of Fund capital
in excess of seventy (70) million dollars as of the opening of business on
the first business day of each month.
The management fee shall become due and payable after the first
day of each month. The Advisor is authorized to request the payment of
management fees directly from the custodian, provided, that a copy of the
monthly invoice is also delivered to the Fund. The management fee will be
prorated in the event the Fund commences or terminates trading other than
at the beginning of a month.
15. EXPENSES. All expenses of any sort or kind relating to the Fund,
including, but not limited to, brokerage and custody fees, and other costs
of safekeeping, transport and acquisition and disposition of securities
shall be incurred by the Fund.
16. DISCLOSURE STATEMENT. The Fund acknowledges that it has received a
copy of the Advisor's Disclosure Statement that is on file with the
Securities and Exchange Commission (Part II of Form ADV). Notwithstanding
anything to the contrary in this Agreement, the Fund
shall have the option to terminate this Agreement within five
business days after the date of execution of this Agreement; provided,
however, that any investment action taken by Advisor with respect to the
Fund prior to the effective date of such termination shall be at the Fund's
risk. In the event that the Fund terminates the Agreement pursuant to this
Section 17, the termination shall be effective immediately and any all
prepaid management fees shall be refunded in full.
17. INDEPENDENT CONTRACTOR. For all purposes of this Agreement, the
Advisor shall be an independent contractor and not an employee or
independent agent of the Fund; nor shall anything herein be construed as
making the Fund a partner or co-venturer with the Advisor or any of its
other clients. Except as provided in this Agreement, the Advisor shall
not have any authority to bind, obligate or represent the Fund. The Fund
shall at all times retain possession of, and all rights, title and interest
in the Account, securities and all monies generated by the trading of the
Account.
18. NOTICES.
Any communications or notices provided for in this Agreement shall be
sent to the Advisor and to the Fund in writing to the following address, or
to such other addresses as the parties may direct by written notice
hereunder.
If to the Advisor:
Zazove Associates, L.L.C.
0000 X. Xxxxxxxx Xxx., Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
If to the Fund:
Zazove Convertible Securities Fund, Inc.
0000 X. Xxxxxxxx Xxx., Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
All communications or notices sent to the addresses or
telecommunication numbers provided above (or as otherwise directed by the
parties by notice hereunder) shall be deemed to have been duly given upon
receipt.
19. MISCELLANEOUS.
(a) This Agreement may be modified, amended, or supplemented only
by a written instrument signed by the parties to be bound or affected by
such amendment.
(b) This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Illinois.
(c) Headings and captions contained herein are for convenience only
and shall not control or affect the meaning or construction of any
provision hereof.
(d) This Agreement constitutes the entire agreement and supersedes
all prior agreements and understandings, oral or written, among the parties
hereto with respect to the subject matter hereof.
(e) If any provision of this Agreement, or the application of such
provision to any person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to
persons or circumstances other than those to which it is held invalid,
shall not be affected thereby.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
ZAZOVE CONVERTIBLE SECURITIES FUND, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Director
ZAZOVE ASSOCIATES, L.L.C.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chief Operating Officer
