Exhibit 99.g
FORM OF INVESTMENT ADVISORY AGREEMENT
This INVESTMENT ADVISORY AGREEMENT ("AGREEMENT") is made this __ day of
______, 2004, by and between Madison Harbor Balanced Strategies, Inc., a
Maryland Corporation, (the "FUND") and Madison Harbor Capital Management, LLC, a
Delaware limited liability company (the "ADVISER").
WITNESSETH:
WHEREAS, the Fund intends to engage in business as a closed-end,
non-diversified, management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 ACT"); and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "ADVISERS ACT"), and is engaged
in the business of providing advice relating to investments in securities;
WHEREAS, the Fund desires to retain the Adviser to render investment advisory
services to the Fund in the manner and on the terms and conditions hereinafter
set forth; and
WHEREAS, the Adviser desires to be retained to perform such services on
said terms and conditions;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Fund and the Adviser agree as follows:
1. APPOINTMENT OF ADVISER. The Fund hereby appoints the Adviser as
investment adviser of the Fund for the period and on the terms set forth in this
Agreement. The Adviser accepts this appointment and agrees to render the
services herein set forth, for the compensation herein described.
2. DUTIES OF ADVISER.
a. Subject to the supervision of the Fund's Board of Directors (the
"Board"), the Adviser shall have full discretion and authority
(i) to manage the assets and liabilities of the Fund and (ii) to
manage the day-to-day business and affairs of the Fund, in each
case in accordance with the investment objective, policies and
restrictions that are set forth in the Fund's Private Placement
Memorandum (the "Memorandum") which is filed as part of the
Fund's Registration Statement on Form N-2, dated _______, 2004,
and as it may be amended from time to time. In furtherance of and
subject to the foregoing, the Adviser shall have full power and
authority on behalf of the Fund, among other matters:
1. to purchase, sell, exchange, trade and otherwise deal
in and with securities and other property of the Fund
and to loan securities of the Fund;
2. to do any and all acts and exercise all rights with
respect to the Fund's interest in any person, firm,
corporation, partnership or other entity, including,
without limitation, voting interests of the underlying
funds (as defined in the Memorandum);
3. to open, maintain and close accounts with brokers and
dealers, to make all decisions relating to the manner,
method and timing of securities and other investment
transactions, to select and place orders with brokers,
dealers or other financial intermediaries for the
execution, clearance or settlement of any transactions
on behalf of the Fund on such terms as the Adviser
considers appropriate, and to grant limited
discretionary authorization to such persons with
respect to price, time and other terms of investment
and trading transactions, subject to Paragraph 2(b)
hereof;
4. to borrow from banks or other financial institutions
and to pledge Fund assets as collateral therefore, to
trade on margin, to exercise or refrain from exercising
all rights regarding the Fund's investments, and to
instruct custodians regarding the settlement of
transactions, the
disbursement of payments to the Fund's investors (the
"Shareholders") with respect to repurchases of
interests in the Fund ("Interests") and the payment of
Fund expenses, including those relating to the
organization and registration of the Fund;
5. to engage and terminate such attorneys, accountants and
other professional advisers and consultants as the
Adviser may deem necessary or advisable in connection
with the affairs of the Fund or as may be directed by
the Board;
6. to engage and terminate the services of one or more
sub-advisers (the engagement of which shall be subject
to the approval requirements of the 0000 Xxx) to assist
the Adviser in providing, or to provide under the
Adviser's control and supervision, advice and
management to the Fund at the expense of the Adviser or
of the Fund and to terminate such services, all subject
to the terms hereof and applicable law;
7. as directed by the Board, to commence, defend and
conclude any action, suit, investigation or other
proceeding that pertains to the Fund or any assets of
the Fund;
8. if directed by the Board, to arrange for the purchase
of (A) one or more "key man" insurance policies on the
life of any principal of a member of the Adviser, the
benefits of which are payable to the Fund, or (B) any
insurance covering the potential liabilities of the
Fund or relating to the performance of the Board or the
Adviser, or any of their principals, directors,
officers, members, employees and agents; and
9. to execute, deliver and perform such contracts,
agreements and other undertakings, and to engage in
such activities and transactions as are, in the opinion
of the Adviser, necessary or appropriate for the
conduct of the business of the Fund without the act,
vote or approval of any other Shareholders or person.
b. The Adviser, in its discretion, may, directly or indirectly
(through investment in underlying funds or with sub-advisers),
use brokers who provide the Fund (or underlying funds or
sub-advisers) with research, analysis, advice and similar
services to execute portfolio transactions on behalf of the Fund
(or underlying funds), and the Fund (or underlying funds or
sub-advisers) may pay to those brokers in return for brokerage
and research services a higher commission than may be charged by
other brokers, subject to the Adviser's (or underlying fund
portfolio manager's ("portfolio manager") or sub-adviser's) good
faith determination that such commission is reasonable in terms
either of the particular transaction or of the overall
responsibility of the Adviser (or sub-adviser) to the Fund (or of
the portfolio manager to the underlying fund) and its other
clients and that the total commissions paid by the Fund (or
underlying funds) will be reasonable in relation to the benefits
to the Fund (or underlying funds or sub-advisers) over the long
term. Whenever the Adviser, a sub-adviser or an underlying fund
manager simultaneously places orders to purchase or sell the same
security on behalf of the Fund (or underlying fund) and one or
more other accounts advised by the Adviser, sub-adviser, if any,
or portfolio manager, such orders will be allocated as to price
and amount among all such accounts in a manner believed to be
equitable to each account. The Fund recognizes that in some cases
this procedure may adversely affect the results obtained for the
Fund.
3. SERVICES NOT EXCLUSIVE. The services furnished by the Adviser hereunder
are not to be deemed exclusive and the Adviser shall be free to furnish similar
services to others. Nothing in this Agreement shall limit or restrict the right
of any member, director, officer or employee of the Adviser or its affiliates,
who also may be a director, officer or employee of the Fund, to engage in any
other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar or
dissimilar nature.
4. EXPENSES.
a. During the term of this Agreement, the Fund will bear all
expenses incurred in the business of the Fund, other than those
not specifically assumed by the Adviser and other service
providers pursuant
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to their agreements with the Fund. Expenses to be borne by the
Fund will include, but are not limited to, the following:
1. all costs and expenses directly related to portfolio
transactions and positions for the Fund's account,
including, but not limited to, brokerage commissions,
research fees (including research related travel),
interest and commitment fees on loans and debit
balances, borrowing charges on securities sold short,
dividends on securities sold short but not yet
purchased, custodial fees, shareholder servicing fees,
margin fees, transfer taxes and premiums and taxes
withheld on foreign dividends, and expenses from
investments in underlying funds;
2. all costs and expenses associated with the
organization, operation and registration of the Fund,
certain offering costs and the costs of compliance with
any applicable Federal or state laws;
3. the costs and expenses of holding any meetings of any
Shareholders that are regularly scheduled, permitted or
required to be held under the terms of the Fund's
Articles of Incorporation or Bylaws, the 1940 Act or
other applicable law;
4. the fees and disbursements of any attorneys,
accountants, auditors and other consultants and
professionals engaged on behalf of the Fund;
5. the costs of a fidelity bond and any liability or other
insurance obtained on behalf of the Fund or the Board;
6. all costs and expenses associated with the selection of
underlying funds, including due diligence and
travel-related expenses;
7. all costs and expenses of preparing, setting in type,
printing and distributing reports and other
communications to Shareholders;
8. all expenses of computing the Fund's net asset value,
including any equipment or services obtained for the
purpose of valuing the Fund's investment portfolio,
including appraisal and valuation services provided by
third parties;
9. the fees of the Fund's administrator and custodian and
other persons providing administrative services to the
Fund;
10. all charges for equipment or services used for
communications between the Fund and any service
provider engaged by the Fund; and
11. such other types of expenses as may be approved from
time to time by the Board.
b. The payment or assumption by the Adviser of any expenses of the
Fund that the Adviser is not required by this Agreement to pay or
assume shall not obligate the Adviser to pay or assume the same
or any similar expense of the Fund on any subsequent occasion.
5. COMPENSATION. As compensation for the services provided to the Company
and the expenses assumed by the Adviser under this agreement, the Adviser shall
receive from the Fund a quarterly management fee at annual rate equal to the sum
of (i) 1.0% of the net asset value ("NAV") of the managed account (as defined in
the Memorandum), and (ii) 2.0% of the NAV of funds invested in underlying funds.
For purposes of determining the Adviser's fee, the NAV of each of the managed
account and amounts invested in underlying funds will be the value of total
assets of each, minus a pro rata portion of the sum of accrued liabilities
(including accrued expenses) of the Fund and any declared but unpaid dividends
on the Fund's shares ("Shares"). The management fee shall be earned at the
beginning of each quarter and payable once the NAV calculation is finalized for
the most recently closed quarter. The Adviser has agreed to waive the management
fee during the subscription period for the Shares.
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6. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
or any holders of Shares in connection with the matters to which this Agreement
relates, except to the extent that such a loss results from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement. Any person, even though also a member, officer, director, employee or
agent of the Adviser or its affiliates, who may be or becomes an officer,
employee or agent of the Fund, shall be deemed when rendering services to the
Fund or acting with respect to any business of the Fund, to be rendering such
service to or acting solely for the Fund and not as an officer, director,
employee, or agent of one under the control or direction of the Adviser even
though compensated by it.
7. INDEMNIFICATION.
a. The Fund will indemnify the Adviser and its affiliates, and each
of their members, shareholders, directors, 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 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 malfeasance, bad faith or gross
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 Board members who are not
parties to the proceeding or (B) legal counsel selected by a vote
of a majority of the Board, 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 7. 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 7 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 7 to the fullest
extent permitted by law. The provisions of this Paragraph 7 shall
survive the termination or cancellation of this Agreement.
8. DURATION AND TERMINATION.
a. This Agreement will become effective on the date the Fund
commences investment operations, provided that this Agreement
will not take effect unless it has first been approved (i) by a
vote of a majority of those Board members 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 (ii) by vote of a majority of the outstanding
voting securities of the Fund.
b. Unless sooner terminated as provided herein, this Agreement shall
continue in effect for two years from the date the Fund commences
investment operations. Thereafter, if not terminated, this
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Agreement shall continue automatically for successive one-year
periods, provided that such continuance is specifically approved
at least annually by (i) members of the Board who are not parties
to this Agreement or interested persons of any such party within
the meaning of the 1940 Act, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) the Board or
by a vote of a majority of the outstanding voting securities of
the Fund.
c. Notwithstanding the foregoing, this Agreement may be terminated
at any time, without the payment of any penalty, by the action of
the Board or by a vote of a majority of the Fund's outstanding
voting securities, on 60 days' written notice to the Adviser, or
by the Adviser at any time, without the payment of any penalty,
on 60 days' written notice to the Fund.
d. This Agreement will automatically terminate in the event of its
assignment.
9. NOTICE. Any notice under this Agreement shall be given in writing and
shall be deemed to have been duly given when delivered by hand or facsimile or
five days after mailed by certified mail, post-paid, by return receipt requested
to the other party at the principal office of such party.
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally; however, the provisions of
this Agreement may be changed, waived, discharged or terminated by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, subject to the requirement of the 1940 Act.
11. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of New York, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act. To the extent that the
applicable laws of the State of New York conflict with the applicable provisions
of the 1940 Act, the later shall control.
12. MISCELLANEOUS.
a. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
b. 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.
c. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
d. As used in this Agreement, the terms "majority of the outstanding
voting securities," "affiliated person," "interested person,"
"assignment," "broker," "investment adviser," "national
securities exchange," "sell" and "security" shall have the same
meaning as such terms have in the 1940 Act, subject to such
exemption as may be granted by the Securities and Exchange
Commission by any rule, regulation or order.
e. Where the effect of a requirement of the 1940 Act reflected in
any provision of this contract is relaxed by a rule, regulation
or order of the Securities and Exchange Commission, whether of
special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
MADISON HARBOR BALANCED
STRATEGIES, INC.
By:
-------------------------
[NAME]
[TITLE]
MADISON HARBOR CAPITAL
MANAGEMENT, LLC
By:
-------------------------
[NAME]
[TITLE]
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