Exhibit (G)(2)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT, dated October ___, 2004, between GMAC Institutional Advisors,
LLC (the "Adviser"), a ______________ limited liability company, and Hyperion
GMAC Capital Advisors, L.L.C. (the "Sub-Adviser"), a Delaware limited liability
company.
WHEREAS, the Adviser has entered into an Investment Advisory Agreement (the
"Advisory Agreement") as of October ___, 2004, with Quadrant Fund, Inc. (the
"Fund"), a Maryland corporation; and
WHEREAS, the Adviser seeks to retain the Sub-Adviser in connection with the
Adviser's duties and obligations under said Investment Advisory Agreement and
the Sub-Adviser desires to provide such assistance.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed by and between the parties hereto as
follows:
1. In General
The Sub-Adviser agrees, all as more fully set forth herein, to act as
investment adviser to the Adviser with respect to the investment of all of the
Fund's assets and to provide investment research and advice with respect to,
supervise and arrange the purchase of assets for and the sale of assets held in
the investment portfolio of the Fund (the "Portfolio").
2. Duties and Obligations of the Sub-Adviser with Respect to
Investments of Assets of the Fund
(a) Subject to the succeeding provisions of this paragraph and subject
to the direction and control of the Adviser, the Sub-Adviser shall (i) act
as investment adviser for and supervise and manage the investment and
reinvestment of the Portfolio only and in connection therewith have
complete discretion in purchasing and selling assets for the Fund and in
voting, exercising consents and exercising all other rights appertaining to
such securities on behalf of the Fund; (ii) supervise continuously the
investment program of the Fund and the composition of its investment
portfolio; and (iii) arrange, subject to the provisions of paragraph 3
hereof, for the purchase and sale of assets held in the Portfolio.
(b) In the performance of its duties under this Agreement, the
Sub-Adviser shall at all times conform to, and act in accordance with, any
requirements imposed by (i) the provisions of the Investment Company Act of
1940 (the "Act"), and of any rules or regulations in force thereunder; (ii)
the provisions of Subchapter M of the Internal Revenue Code of 1986, as
amended, and of any rules or regulations in force thereunder; (iii) any
other applicable provision of law; (iv) any policies and determinations of
the Board of Directors of the Fund and of the Adviser; and (v) the
provisions of the Articles of Incorporation and By-Laws of the Fund, as
such documents are amended from time to time.
(c) The Sub-Adviser will bear all costs and expenses of its members
and employees and any overhead incurred in connection with its duties
hereunder and shall bear the costs of any salaries or directors fees of any
officers or directors of the Fund who are affiliated persons (as defined in
the Act) of the Sub-Adviser.
(d) The Sub-Adviser shall give the Adviser the benefit of its best
judgment and effort in rendering services hereunder, but the Sub-Adviser
shall not be liable for any act or omission or for any loss sustained by
the Fund in connection with the matters to which this Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
(e) Nothing in this Agreement shall prevent the Sub-Adviser or any
director, officer, employee or other affiliate thereof from acting as
investment adviser for any other person, firm or corporation, or from
engaging in any other lawful activity, and shall not in any way limit or
restrict the Sub-Adviser or any of its partners, officers, employees or
agents from buying, selling or trading any securities for its or their own
accounts or for the accounts of others for whom it or they may be acting,
provided, however, that the Sub-Adviser will undertake no activities which,
in its judgment, will adversely affect the performance of its obligations
under this Agreement.
(f) (i) The Adviser will have sole and absolute discretion to
determine the amount or percentage of Fund assets to be invested. The
Sub-Adviser shall invest the Fund's assets as soon as practicable or at
such later time as the Adviser may direct after funds are made available
for investment. From time to time the Adviser may determine to increase or
decrease the amount or percentage of Fund assets to be invested. If the
Adviser determines to increase such amount or percentage, the Sub-Adviser
shall invest such additional funds as soon as practicable, or at such later
time as the Adviser may direct, after (i) notice of such increase is given
to the Sub-Adviser and (ii) such additional funds are made available for
investment. If, on the other hand, the Adviser determines to decrease such
amount or percentage, the Sub-Adviser shall, as soon as practicable, or at
such later time as the Adviser may direct, after notice of such decrease is
given to the Sub-Adviser, liquidate that portion of the Portfolio required
for the Portfolio to represent the desired amount or percentage of the Fund
assets and cause such liquidated assets to be available to the Adviser.
(ii) Hedging of positions in the Portfolio, if any, will be undertaken
by the Adviser in consultation with the Sub-Adviser.
(g) The Sub-Adviser shall provide the Adviser with monthly reports
within 5 business days of the end of each month and quarterly reports
within 7 business days of the end of each calendar quarter. Such reports
shall include (i) an itemized print-out of the Portfolio as of the last day
of the period, including the current market value thereof (ii) a statement
of the Sub-Adviser's advice concerning the Fund's investments in light of
the objectives of the Fund and the then current market conditions, (iii) a
print-out of the performance of the Portfolio relative to a mutually agreed
upon securities index, and (iv) such other information as the Adviser may
from time to time reasonably request.
3. Portfolio Transactions and Brokerage
The Sub-Adviser is authorized, for the purchase and sale of the
securities in the Portfolio, to employ such securities dealers as may, in
the judgment of the Sub-Adviser, implement the policy of the Fund to obtain
the best net results taking into account such factors as price, including
dealer spread, the size, type and difficulty of the transaction involved,
the firm's general execution and operational facilities and the firm's risk
in positioning the securities involved. Consistent with this policy, the
Sub-Adviser is authorized to direct the execution of Portfolio transactions
to dealers and brokers furnishing statistical information or research
deemed by the Sub-Adviser to be useful or valuable to the performance of
its investment advisory functions for the Portfolio. In addition, the
Sub-Adviser may give proper instructions to the Fund's custodian. The
Adviser, upon the Sub-Adviser's request, shall confirm such authority to
the Custodian.
4. Compensation of the Sub-Adviser
The Adviser pays no fee for the Sub-Adviser's services, it being
understood that the Sub-Adviser will receive fees for managing the assets
of the Fund's shareholders.
5. Indemnity
(a) Subject to and only to the extent of the indemnification provided
to the Adviser by the Fund in the Advisory Agreement, the Adviser hereby
agrees to indemnify the Sub-Adviser and each of the Sub-Adviser's
directors, officers, employees and agents (including any individual who
serves at the Sub-Adviser's request as director, officer, partner, trustee
or the like of another corporation or other entity in connection with the
Sub-Adviser's duties under this Agreement) (each such person being an
"indemnitee") against any liabilities and expenses, including amounts paid
in satisfaction of judgments, in compromise or as fines and penalties, and
counsel fees (all as provided in accordance with applicable corporate law)
reasonably incurred by such indemnitee in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or investigative body in which
he may be or may have been involved as a party or otherwise or with which
he may be or may have been threatened, while acting in any capacity set
forth above in this Section 5 or thereafter by reason of his having acted
in any such capacity, except with respect to any matter as to which he
shall have been adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interest of the Fund and
the Adviser and furthermore, in the case of any criminal proceeding, so
long as he had no reasonable cause to believe that the conduct was
unlawful; provided, however, that (1) no indemnitee shall be indemnified
hereunder against any liability to the Adviser or the Fund or its
stockholders or any expense of such indemnitee arising by reason of (i)
willful misfeasance, (ii) bad faith, (iii) gross negligence or (iv)
reckless disregard of the duties involved in the conduct of his position
(the conduct referred to in such clauses (i) through (iv) being sometimes
referred to herein as "disabling conduct"), (2) as to any matter disposed
of by settlement or a compromise payment by such indemnitee, pursuant to a
consent decree or otherwise, no indemnification either for said payment or
for any other expenses shall be provided unless there has been a
determination, in accordance with paragraph 5(c) below, that such
settlement or compromise is in the best interests of the Fund and the
Adviser and that such indemnitee appears to have acted in good faith in the
reasonable belief that his action was in the best interest of the Fund and
the Adviser and did not involve disabling conduct by such indemnitee, (3)
with respect to any action, suit or other proceeding voluntarily prosecuted
by any indemnitee as plaintiff, indemnification shall be mandatory only if
the prosecution of such action, suit or other proceeding by such indemnitee
was authorized by the Adviser and (4) the indemnity provided herein shall
only be effective if, and to the extent, the Adviser is indemnified by the
Fund pursuant to the Advisory Agreement for the loss related to such
indemnity.
(b) To the extent made available to the Adviser pursuant to the
Advisory Agreement, the Adviser shall make advance payments in connection
with the expenses of defending any action with respect to which
indemnification might be sought hereunder if the Adviser receives a written
affirmation of the indemnitee's good faith belief that the standard of
conduct necessary for indemnification has been met and a written
undertaking to reimburse the Adviser, unless it is subsequently determined
that it is entitled to such indemnification and if the Adviser and the
directors of the Fund determine that the facts then known to them would not
preclude indemnification. In addition, at least one of the following
conditions must be met: (A) the indemnitee shall provide security for this
undertaking, (B) the Adviser and the Fund shall be insured against losses
arising by reason of any lawful advances, (C) a majority of a quorum
consisting of directors of the Fund who are neither "interested persons" of
the Fund (as defined in Section 2(a)(19) of the Act) nor parties to the
proceeding ("Disinterested Non-Party Directors") or (D) an independent
legal counsel in a written opinion, shall determine, based on a review of
readily available facts (as opposed to a full trial-type inquiry), that
there is reason to believe that the indemnitee ultimately will be found
entitled to indemnification.
(c) All determinations with respect to indemnification hereunder shall
be made (1) by a final decision on the merits by a court or other body
before whom the proceeding was brought that such indemnitee is not liable
by reason of disabling conduct or, (2) in the absence of such a decision,
by (i) the Advisor together with a majority vote of a quorum of the
Disinterested Non-Party Directors of the Fund, or (ii) if such a quorum is
not obtainable or even, if obtainable, if a majority vote of such quorum so
directs, independent legal counsel in a written opinion. All determinations
regarding advance payments in connection with the expense of defending any
proceeding shall be authorized in accordance with the immediately preceding
clause (2) above.
The rights accruing to any indemnitee under these provisions shall not
exclude any other right to which he may be lawfully entitled.
6. Duration and Termination
(a) This Agreement shall become effective on the date first set forth
above and shall continue until ______________, 2006. This Agreement shall
continue thereafter from year to year, but only so long as such
continuation is specifically approved at least annually in accordance with
the requirements of the Investment Company Act of 1940.
(b) This Agreement may be terminated by the Sub-Adviser at any time
without penalty upon giving the Adviser sixty days' written notice (which
notice may be waived by the Adviser) and may be terminated by the Adviser
at any time without penalty upon giving the Sub-Adviser sixty days' notice
(which notice may be waived by the Sub-Adviser); provided that such
termination by the Adviser shall be effected if so directed or approved by
the vote of a majority of the Directors of the Fund in office at the time
or by the vote of the holders of a "majority" (as defined in the Investment
Company Act of 1940) of the voting securities of the Fund at the time
outstanding and entitled to vote. This Agreement shall terminate
automatically in the event of its assignment (as "assignment" is defined in
the Investment Company Act of 1940). The Sub-Adviser represents that it is
a corporation and will notify the Adviser promptly after any change in
control of such corporation, as defined in Section 2(a)(9) of the Act.
7. Assignment
This Agreement may not be assigned by either party hereto and will
terminate upon assignment.
8. Notices
Any notice under this Agreement shall be in writing to the other party
at such address as the other party may designate from time to time for the
receipt of such notice and shall be deemed to be received on the date
actually received.
9. Governing Law
This Agreement shall be construed in accordance with the laws of the
State of New York for contracts to be performed entirely therein without
reference to choice of law principles thereof and in accordance with the
applicable provisions of the Act.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their
respective seals to be hereunto affixed, all as of the day and the year
first above written.
GMAC INSTITUTIONAL ADVISORS, LLC
By:
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HYPERION GMAC CAPITAL ADVISORS, L.L.C.
By:
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