Exhibit 99.2(g)(ii)
SUBADVISORY AGREEMENT
THIS AGREEMENT made as of the ______ day of _____________, 2003
BY AND BETWEEN:
GUIDANCE CAPITAL LLC,
an Illinois limited liability company
("Subadviser")
ASPEN STRATEGIC ALLIANCE LLC,
a Delaware limited liability company
("Adviser"), and
ASA MARKET NEUTRAL EQUITY FUND LLC
an Illinois limited liability company
(the "Fund").
WHEREAS, the Fund has been established under the laws of the State of
Illinois to invest in a portfolio of Investment Funds (as defined below),
which invest and trade in a broad range of securities, currencies, commodities
and other financial instruments;
WHEREAS, (i) pursuant to Section 8(a) of the Investment Company Act of
1940, as amended (the "1940 Act"), the Fund registered as a non-diversified,
closed-end management investment company under the 1940 Act by filing a Form
N-8A Notification of Registration with the Securities and Exchange Commission
("SEC") on July 1, 2003, and (ii) pursuant to Section 8(b) of the 1940 Act,
the Fund filed its Registration Statement on Form N-2 with the SEC on July 1,
2003;
WHEREAS, the Fund's Board of Directors (the "Board") has appointed
Adviser as investment adviser to the Fund, pursuant to an advisory agreement
(the "Advisory Agreement") dated ______ __, 2003 by and between the Fund and
Adviser, to provide discretionary investment management services to the Fund;
and
WHEREAS, Adviser desires to appoint Subadviser to provide investment
advice and certain related services to Adviser in respect of the Fund, and
Subadviser wishes to accept such appointment on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:
1. Appointment of Subadviser
-------------------------
Subject always to the supervision and control of the Board, any duly
constituted committee thereof or any officer of the Fund acting pursuant to
like authority and to such
policies as the Board may determine, Adviser hereby appoints Subadviser to
provide, at Subadviser's expense, Portfolio Management Services (as defined in
Section 2) with respect to those assets belonging to the Fund that the Adviser
designates from time to time, ("Designated Assets") and Subadviser hereby
accepts such appointment, on the terms and subject to the conditions set forth
in this Agreement. It is understood that Adviser may itself provide Portfolio
Management Services or other services with respect to assets of the Fund as to
which Subadviser has not been appointed to provide Portfolio Management
Services.
2. Responsibilities of Subadviser
------------------------------
Subadviser acknowledges that the Fund will seek to achieve its investment
objective(s) ("Fund Objective(s)") by investing and reinvesting its assets
primarily in a portfolio of equity interests issued by limited partnerships,
limited liability companies, business trusts and similar business vehicles
whose primary business is investing in securities and other financial
instruments but that are not registered or required to register as investment
companies under the 1940 Act by virtue of the exclusion from the definition of
"investment company" provided by Section 3(c)(1) or Section 3(c)(7) of the
1940 Act ("Investment Funds"). From time to time, assets may also be allocated
to registered investment companies to the extent permitted by the 1940 Act.
The Fund may also invest its assets directly pursuant to investment management
agreements granting the portfolio manager ("Portfolio Manager") of an
Investment Fund discretionary investment authority on a managed account basis,
or through the creation of a separate investment vehicle (any such managed
account or investment vehicle, a "Portfolio Account"). Accordingly, in
providing sub-advisory services to Adviser and the Fund hereunder, Subadviser
shall perform the following duties, in each case based upon its professional
skill, experience and judgment:
(a) obtaining and evaluating such economic, statistical and financial
data and information and undertaking such additional investment research as
shall be necessary or advisable in the judgment of Subadviser for making
recommendations regarding the management of the investment and reinvestment of
the assets belonging to the Fund in accordance with the Fund Objective(s);
(b) identifying Investment Funds and/or Portfolio Managers that
Subadviser believes are appropriate for the Fund in light of the Fund
Objective(s), performing all necessary due diligence on the Portfolio Managers
of such Investment Funds, and recommending such Investment Funds and/or
Portfolio Managers to the Adviser;
(c) recommending allocations of the Designated assets among such
appropriate Investment Funds and/or Portfolio Accounts to the Adviser in light
of the Fund Objective(s);
(d) monitoring the performance of the Investment Funds in which the Fund
has invested with a view to determining whether continued investment by the
Fund in such Investment Funds is appropriate in light of the Fund
Objective(s);
(e) evaluating and recommending appropriate changes to the Fund
Objective(s) from time to time;
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(f) providing such other advice and services as Adviser or the Board may
from time to time reasonably request in connection with the investment
operations of the Fund which the Subadviser is designated to manage; and
(g) regularly reporting to Adviser and the Board with respect to the
implementation of the investment policies of the Fund, and reporting on a
monthly basis to the Adviser and the Board regarding the Portfolio Managers
and/or Investment Funds recommended by the Subadviser to which the Fund has
allocated assets.
(h) it being understood that Subadviser's role is limited to making
recommendations to Adviser and that Subadviser shall have no authority to
select Portfolio Managers, change allocations of Fund assets, or exercise
investment discretion.
3. Compensation
------------
As compensation for its services hereunder, Adviser shall pay Subadviser
compensation calculated and payable in the manner set out in Schedule A hereto
(or such lesser amount as Subadviser may from time to time agree to receive)
and in accordance with the Fund's Operating Agreement.
4. Standard of Care/Representations
--------------------------------
(a) Subadviser shall have no obligations to the Fund or Adviser other
than those expressly set forth in this Agreement and any other obligations
arising under applicable law.
(b) Subadviser shall not be liable for any error in judgment or mistake
of law or for any damage or loss suffered by the Fund in connection with the
subject matter of this Agreement, including but not limited to any damage or
loss incurred by reason of any act or omission of the Board, Adviser,
Sub-Adviser, the Fund's custodian or administrator, any bank, broker, dealer,
investment manager of any Investment Fund, or any agent, member, partner,
director, officer or employee of any of them, except to the extent such damage
or loss arises from willful misfeasance, bad faith or gross negligence on the
part of Subadviser, or reckless disregard of Subadviser's obligations and
duties hereunder.
(c) Subadviser's responsibility under this Agreement is to furnish
Adviser with investment advisory services based upon Subadviser's professional
skill, experience and judgment, and Subadviser makes no representation or
warranty (i) as to the accomplishment of any particular investment results by
any Investment Fund or the Fund's portfolio as a whole, or (ii) as to the
accuracy or completeness of any information supplied by Subadviser to Adviser,
the Fund or the Fund's custodian or administrator which is provided by an
Investment Fund (or the portfolio manager thereof) or other third-party to
Subadviser and conveyed by Subadviser (either in its entirety or in excerpted
format to any or all of them). Notwithstanding the foregoing, Subadviser shall
only provide to Adviser, the Fund and the Fund's custodian or administrator
information which the Sub-advisor believes to be accurate and complete.
(d) Subadviser shall not: (i) have any investment discretion with respect
to the allocation of Fund assets; (ii) be responsible for, or be obligated
hereunder to provide advice with respect to, the effect of the tax laws and
regulations of any jurisdiction or commodities and
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securities laws and regulations of any jurisdiction (including, for the
avoidance of doubt, any law, rules or regulations applicable to the operation
of registered investment companies); or (iii) at any time have custody of the
assets of the Fund.
(e) Subadviser represents and warrants that:
(i) it is a limited liability company duly formed and validly
existing under the laws of the State of Illinois;
(ii) it has full limited liability company power and authority to
perform its obligations under this Agreement;
(iii) this Agreement has been duly and validly authorized, executed
and delivered on behalf of Subadviser and is a valid and binding agreement of
Subadviser enforceable against Subadviser in accordance with its terms;
(iv) the execution and delivery of this Agreement by Subadviser, the
incurrence by Subadviser of the obligations set forth in this Agreement and
the performance by Subadviser of such obligations will not violate, or
constitute a breach of or a default under, the constituent documents of
Subadviser or any agreement or instrument by which it is bound, or, to the
best of Subadviser's knowledge, any order, rule, law or regulation applicable
to Subadviser of any court, governmental body, administrative agency or
self-regulatory authority having jurisdiction over Subadviser;
(v) there is not pending or, to the best of Subadviser's knowledge,
threatened, any action, suit or proceeding before or by any court or other
governmental or self-regulatory authority to which Subadviser is a party,
which might reasonably be expected to result in any material adverse change in
the financial condition or regulatory qualifications of Subadviser;
(vi) it, and each of its principals and employees, has all United
States state and federal governmental, regulatory and exchange licenses and
approvals required to perform its obligations hereunder, including, without
limitation and to the extent required, registration by Subadviser as an
investment adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and as a commodity pool operator and a commodity trading
advisor under the Commodity Exchange Act; and
(vii) it will not, and will not permit its affiliates to, distribute
offering or other materials relating to the Fund or take any other action in
the nature of a general solicitation, public offering or advertisement of the
Fund or that might call into question the characterization as a private
placement exempt from registration under the federal securities laws of the
Fund's issuance of interests.
(f) Adviser hereby represents and warrants to Subadviser that:
(i) it is a limited liability company duly formed and validly
existing under the laws of the State of Delaware;
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(ii) it has full limited liability company power and authority to
perform its obligations under this Agreement and the Advisory Agreement;
(iii) this Agreement and the Advisory Agreement have been duly and
validly authorized, executed and delivered on its behalf and are its valid and
binding agreements, enforceable against it in accordance with their respective
terms;
(iv) the execution and delivery of this Agreement and the Advisory
Agreement by it, the incurrence of the obligations by it set forth herein and
the performance by it of such obligations will not violate, or constitute a
breach of or default under, its constituent documents or any agreement or
instrument by which it is bound or, to the best of its knowledge, any order,
rule, law or regulation applicable to it of any court, governmental body,
administrative agency or self-regulatory authority having jurisdiction over
it;
(v) there is not pending or, to the best of its knowledge,
threatened, any action, suit or proceeding before or by any court or other
governmental or self-regulatory authority to which it is a party, which might
reasonably be expected to result in any material adverse change in its
financial condition or regulatory qualifications; and
(vi) it, and each of its directors, officers and employees, has all
governmental, regulatory and exchange licenses and approvals required to
conduct its business and perform its obligations hereunder and under the
Advisory Agreement.
(g) The Fund hereby represents and warrants to Subadviser that:
(i) it is a limited liability company duly formed and validly
existing under the laws of the State of Illinois;
(ii) it has full limited liability company power and authority to
perform its obligations under this Agreement and the Advisory Agreement;
(iii) this Agreement and the Advisory Agreement have been duly and
validly authorized, executed and delivered on its behalf and are its valid and
binding agreements, enforceable against it in accordance with their respective
terms;
(iv) the execution and delivery of this Agreement and the Advisory
Agreement by it, the incurrence of the obligations by it set forth herein and
the performance by it of such obligations will not violate, or constitute a
breach of or default under, its constituent documents or any agreement or
instrument by which it is bound or, to the best of its knowledge, any order,
rule, law or regulation applicable to it of any court, governmental body,
administrative agency or self-regulatory authority having jurisdiction over
it;
(v) there is not pending or, to the best of its knowledge,
threatened, any action, suit or proceeding before or by any court or other
governmental or self-regulatory authority to which it is a party, which might
reasonably be expected to result in any material adverse change in its
financial condition or regulatory qualifications; and
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(vi) it, and each of its directors, officers and employees, has all
governmental, regulatory and exchange licenses and approvals required to
conduct its business and perform its obligations hereunder and under the
Advisory Agreement.
5. Term and Termination
--------------------
This Agreement shall become effective upon its execution, and:
(a) this Agreement may be terminated at any time, without payment of any
penalty, (i) by Adviser, (ii) by the Board or (iii) by vote of a majority of
the outstanding voting securities of the Fund, in each case by not less than
sixty days' written notice delivered or mailed by registered mail, postage
prepaid, to Subadviser, or immediately in the event that (t) key investment
personnel leave Subadviser and Adviser concludes that the loss of the services
of such personnel could materially adversely affect Subadviser's performance
hereunder, (u) Subadviser or key investment personnel of Subadviser are
indicted for a felony involving moral turpitude or that could cause material
harm to Subadviser or its reputation, (v) senior key investment personnel of
the Subadviser ( for purposes hereof, senior key investment personnel of the
Subadviser shall be Xx. Xxxxx Xxx and Xx. X. Xxxxxxxxxx Elliman, III) are or
become ineligible to serve in the capacity of employee, officer, director,
member of an advisory board or principal underwriter for any registered
investment company under Section 9 of the 1940 Act, or any successor
provision, or the rules or regulations promulgated thereunder, (w) the
commencement of enforcement proceedings against Subadviser or any employee of
Subadviser by the SEC, the Commodity Futures Trading Commission or any state
securities regulator, (x) actions or omissions shall have resulted in the
imposition of sanctions against Subadviser or any employee of Subadviser under
the Advisers Act, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the 1940 Act, the Commodity Exchange Act or
any state securities law, or the rules or regulations promulgated thereunder,
(y) failure of Subadviser or its employees to maintain required licenses and
registrations to perform duties hereunder, or (z) Subadviser commits a
material breach of this Agreement or there is a material failure by Subadviser
to perform its duties hereunder and, if such breach or failure to perform is
susceptible to cure, such breach or failure to perform is not cured within ten
business days of the Sub-Adviser's knowledge of such breach or failure to
perform.
(b) this Agreement may be terminated by Subadviser at any time by not
less than 180 days' written notice delivered or mailed by registered mail,
postage prepaid, to the Adviser;
(c) unless otherwise terminated, this Agreement shall continue in effect
for two years from the date of execution, and from year to year thereafter so
long as such continuance is specifically approved at least annually (i) by the
Board or by vote of a majority of the outstanding voting securities of the
Fund, and (ii) by vote of a majority of the members of the Board who are not
interested persons of the Fund or Adviser or Subadviser, cast in person at a
meeting called for the purpose of voting on such approval; and
(d) this Agreement shall terminate automatically as set forth in Section
11.
In the event that this Agreement is terminated, Subadviser agrees to
cooperate with Adviser and any successor subadviser to Subadviser and provide
such information or take such
6
other action as may be reasonably requested by Adviser in order to ensure
continuous, high quality services are provided to the Fund; provided, however,
that it is understood that Subadviser shall not be responsible for any act or
omission of Adviser or any successor subadviser.
6. Nonliability of Subadviser
--------------------------
Notwithstanding any other provisions of this Agreement, in the absence of
willful misfeasance, bad faith or gross negligence on the part of Subadviser,
or reckless disregard of its obligations and duties hereunder, Subadviser,
including its officers, partners, employees or agents, shall not be subject to
any liability to Adviser or the Fund, or to any shareholder, member, officer,
director, partner or manager thereof, for any act or omission in the course
of, or connected with, rendering services hereunder.
7. Certain Information
-------------------
Subadviser shall promptly notify Adviser in writing of the occurrence of
any of the following events: (a) Subadviser shall fail to be registered as an
investment adviser under the Advisers Act and under the laws of any
jurisdiction in which Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement or any other
agreement concerning the provision of investment advisory services to the
Fund; (b) Subadviser shall fail to be registered as a commodity pool operator
or commodity trading advisor under the Commodity Exchange Act and under the
laws of any jurisdiction in which Subadviser is required to be registered as a
commodity pool operator or commodity trading advisor in order to perform its
obligations under this Agreement or any other agreement concerning the
provision of investment advisory services to the Fund; (c) Subadviser shall
have been served or otherwise have notice of any action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court, public
board or body, involving the affairs of the Fund; (d) a change in control of
Subadviser or any parent of Subadviser within the meaning of the 1940 Act is
proposed, pending, contemplated or shall have occurred (provided that the
requirement to provide prompt notice of events identified in this clause (d)
shall not require Subadviser to disclose any confidential information or
unannounced plans, and provided further that Subadviser shall in any event
provide notice of events identified in this clause (d) by the earlier of (i)
the time Subadviser or any parent of it executes definitive documentation with
respect to such an event and (ii) the time public announcement of such an
event is made); (e) there is a material adverse change in the business or
financial condition of Subadviser (provided that Subadviser shall not be
liable for damages to the extent due to Subadviser's failure to provide notice
of such a material adverse change); or (f) any event the occurrence of which
may permit the Adviser immediately to terminate this Agreement pursuant to
Section 5(a).
8. Status of Subadviser; Power of Attorney
---------------------------------------
It is understood and agreed that Subadviser shall be deemed to be an
independent contractor and that, except as otherwise provided herein,
Subadviser shall not have authority to act for, represent or bind in any way,
and shall not otherwise be deemed to be an agent of, the Fund or Adviser.
Nothing contained herein (other than Adviser's or Subadviser's ownership of a
membership interest in the Fund) shall create or constitute Subadviser or any
Investment Fund
7
and the Fund or Adviser as members of any partnership, limited liability
company, joint venture, association, syndicate, unincorporated business or
other separate entity, or shall be deemed to confer on any of them any
express, implied or apparent authority to incur any obligation or liability on
behalf of any other such entity (other than as set forth in this Section 9).
The Fund hereby constitutes and appoints Subadviser as the Fund's true
and lawful representative and attorney-in-fact, in the Adviser's name, place
and stead, to make, execute, sign and acknowledge all subscription agreements
and similar contracts on behalf of the Fund as in Subadviser's judgment are
necessary or desirable for Subadviser to implement the investment policies of
the Fund by purchasing and selling securities of Investment Funds and other
issuers and placing orders for such purchasers and sales. The foregoing power
of attorney is revocable, and will terminate in any event upon the termination
of this Agreement.
9. Authorized Persons
------------------
Each party hereto will provide the other parties with a schedule of the
persons authorized to give or receive instructions on behalf of such party
hereunder, and shall amend such schedule as may be necessary from time to
time. Each party hereto may rely on the authority of any person identified in
such schedule and shall not be liable for any actions taken or not taken
hereunder in good faith reliance upon the authority of any such person.
10. Assignment
----------
This Agreement will terminate automatically, without the payment of any
penalty, in the event of its assignment or in the event that the Advisory
Agreement shall have terminated for any reason.
11. Amendments; Waivers
-------------------
This Agreement may be amended at any time by mutual written consent of
the parties, provided that, if required by law, such amendment shall also have
been approved by vote of a majority of the outstanding voting securities of
the Fund and by vote of a majority of the members of the Board who are not
interested persons of the Fund or Adviser or Subadviser, cast in person at a
meeting called for the purpose of voting on such approval. No waiver shall be
deemed by any course of conduct or acquiescence and no waiver shall be
enforceable against any party hereto unless in writing and signed by the party
against whom such waiver is claimed.
12. Certain Definitions
-------------------
For the purpose of this Agreement, the terms "vote of a majority of the
outstanding voting securities," "interested person," "affiliated person" and
"assignment" shall have their respective meanings defined in the 1940 Act,
subject, however, to such exemptions or no-action positions as may be granted
by the SEC or its staff under the 1940 Act.
13. Survival of Obligations
-----------------------
Provisions of this Agreement that by their terms or by their context are
to be performed in whole or in part after termination of this Agreement shall
survive any termination of this
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Agreement, including obligations under Section 3 with respect to compensation
earned by the Subadviser prior to such termination but unpaid at the time of
termination.
14. Miscellaneous
-------------
(a) The headings in this Agreement are included for the convenience or
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(b) This Agreement shall be governed by the laws of the State of Georgia
and the laws applicable therein.
(c) Any notice required or permitted to be given hereunder shall be
deemed to be sufficiently given if such notice is delivered or sent by
facsimile as hereinafter set forth. Any notice delivered shall be deemed to
have been given on the date of delivery. Any notice sent by facsimile shall be
deemed to be delivered on the day it is sent unless it is sent on a day that
is not a business day or is sent after 4:00 p.m. (New York City time) on a
business day, in which case it shall be deemed to be delivered on the next
business day. A "business day" is a day on which the New York Stock Exchange
is open for business. Notice shall be effectively given, if delivered or sent
by facsimile to the following addresses:
(i) if to Subadviser, to it at:
Guidance Capital L.L.C.
X.X. Xxx 000
000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
XXX
Attention: X. Xxxxxxxxxx Elliman, III
Facsimile: (000) 000-0000
(ii) if to Adviser, to it at:
Aspen Strategic Alliance LLC
000 Xxxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
(iii) if to the Fund, to it at:
Aspen Market Neutral Equity Fund LLC
000 Xxxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
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Attention: Xxxxxx X. Xxxxxxxx
Facsimile: (000-000-0000)
Any party may change its address for receiving notices by giving notice in the
manner set out above to the other parties.
(d) If any term or provision of this Agreement or the application thereof
to any person or circumstances is held to be invalid, illegal or otherwise
unenforceable to any extent, then, to the fullest extent permitted by law: (a)
such invalidity, illegality or unenforceability shall not affect any other
term or provision of this Agreement; (b) all other terms and provisions of
this Agreement shall remain in full force and effect and shall be liberally
construed in order to carry out the intent of the parties hereto as nearly as
may be possible; and (c) the parties hereto shall use all reasonable efforts
to substitute a valid, legal and enforceable provision which, insofar as
practicable, implements the purposes and intent of this Agreement.
(e) This Agreement may be executed in one or more counterparts, which
shall together constitute one and the same document.
(f) The parties hereto acknowledge and agree that the Fund shall in no
event have any liability to any party hereto or any other person for the
obligations, representations and warranties of the Adviser or Subadviser
hereunder, including, without limitation, Adviser's obligation to compensate
Subadviser pursuant to Section 3; provided that, the Fund has duly paid all
amounts owed to it to the Adviser.
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IN WITNESS WHEREOF the parties hereto have entered into this Agreement as
of the date first above written.
GUIDANCE CAPITAL L.L.C.
By:
--------------------------
Name:
Title:
ASPEN STRATEGIC ALLIANCE LLC
By:
--------------------------
Name:
Title:
ASA MARKET NEUTRAL EQUITY FUND
LLC
By:
--------------------------
Name:
Title:
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SCHEDULE "A"
COMPENSATION
Adviser will pay to Subadviser a management fee (the "Management Fee"),
monthly in arrears. The Management Fee is payable at the annual rate of 0.75%
of the aggregate value of outstanding interests in the Fund (the "Interests").
On or before the fifteenth business day of each month, the Fund will calculate
(i) the net asset value of the Interests as of the last business day of the
previous month (the "Payment Date") and (ii) an amount (the "Monthly
Management Fee") equal to one-twelfth of 0.75% of the aggregate value of the
Interests on the Payment Date. Adviser will pay the most recently calculated
Monthly Management Fee to Subadviser on or before the fifteenth business day
of each month. The Monthly Management Fee shall be calculated on a pro rata
basis in the case of any partial months.
Within 90 days after the Fund's fiscal year end, the Fund will cause an
audit to be performed, and the Fund's net asset value as of the last business
day of each month in such fiscal year shall be established by the Fund's
independent accountant. Based on the audit, the Monthly Management Fee for
each month in such fiscal year shall be recalculated. If the sum of the
Monthly Management Fees (as recalculated) for such fiscal year exceeds the
amounts paid already by the Adviser in respect of such Monthly Management
Fees, then the Adviser shall pay the amount of such excess to the Manager
within 45 days after the completion of the Fund's audit. If the sum of the
Monthly Management Fees (as recalculated) for such fiscal year is less than
the amounts paid already by the Adviser in respect of such Monthly Management
Fees, then the Adviser shall reduce the amount of the next Monthly Management
Fee paid by the amount of such deficit (and, if necessary to fully account for
such deficit, subsequent Monthly Management Fees).
