Exhibit (K)(2)
ADMINISTRATION AGREEMENT
AGREEMENT made this ______ day of October, 2004 by and between Quadrant Fund,
Inc., a Maryland corporation (hereinafter called the "Fund"), and Hyperion
Capital Management, Inc. (hereinafter called "Administrator" or "HCM");
W I T N E S S E T H
WHEREAS, The Fund intends to engage in business as a closed-end
diversified management investment company and is registered as such under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, The Fund desires to retain the Administrator to render
administrative services in the manner and on the terms and conditions
hereafter set forth; and
WHEREAS, The Administrator desires to be retained to perform services
on said terms and conditions.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the Fund and the Administrator agree as
follows:
1. Duties of the Administrator. The Fund hereby retains the Administrator
to act as administrator of the Fund, subject to the supervision and direction of
the Board of Directors of the Fund, as hereinafter set forth. The Administrator
shall perform or arrange for the performance of the following administrative and
clerical services: (i) maintain and keep the books and records of the Fund as
required by law or for the proper operation of the Fund; (ii) prepare and,
subject to approval by the Fund, file reports and other documents required by
U.S. Federal, state and other applicable laws and regulations and by stock
exchanges on which Fund shares are listed, including proxy materials and
periodic reports to Fund stockholders; (iii) respond to inquiries from Fund
shareholders; (iv) calculate and publish or arrange for the calculation and
publication of, the net asset value of the Fund's shares; (v) oversee, and, as
the Board may reasonably request or deem appropriate, make reports and
recommendations to the Board on, the performance of administrative and
professional services rendered to the Fund by others, including its custodian,
registrar, transfer agent, dividend disbursing agent and dividend reinvestment
plan agent, as well as accounting, auditing and other services; (vi) provide the
Fund with the services of persons competent to perform the foregoing
administrative and clerical functions; (vii) provide the Fund with
administrative office and data processing facilities; (viii) arrange for payment
of the Fund's expenses; (ix) consult with the Fund's officers, independent
accountants, legal counsel, custodian, accounting agent and transfer and
dividend disbursing agent in establishing the accounting policies of the Fund;
(x) prepare such financial information and reports as may be required by any
banks from which the Fund borrows funds; and (xi) provide such assistance to the
investment adviser, the custodian and the Fund's counsel and auditors as
generally may be required to carry on properly the business and operations of
the Fund. The Fund agrees to cause the Investment Adviser to deliver, on a
timely basis, such information to the Administrator as may be necessary or
appropriate for the Administrator's performance of its duties and
responsibilities hereunder, including but not limited to, records of
transactions, valuation of investments in United States dollars (which may be
based on information provided by a pricing service) and shareholder reports and
expenses borne by the Fund, and the Administrator shall be entitled to rely on
the accuracy and completeness of such information in performing its duties
hereunder.
2. Expenses of the Administrator. The Administrator assumes and shall pay
for maintaining the staff and personnel necessary to perform its obligations
under this Agreement, and shall at its own expense, pay the incremental
Accounting Agent fees to the Custodian (currently estimated at $_____ per
month), provide office space, facilities, equipment and necessary personnel
which it is obligated to provide under paragraph 1 hereof, except that the Fund
shall pay the expenses of legal counsel as provided in paragraph 4(b) of this
Agreement. The Fund and the Investment Adviser assume and shall pay or cause to
be paid all other expenses of the Fund as set forth in the Investment Advisory
Agreement.
3. Compensation of the Administrator. For the services rendered to the Fund
by the Administrator pursuant to this Agreement, the Fund shall pay to the
Administrator on the first business day of each calendar month a fee for the
previous month at an annual rate equal to ___% of the Fund's average weekly net
assets. For the purpose of determining fees payable to the Administrator, the
net assets of the Fund shall mean the average weekly value of the total assets
of the Fund, minus the sum of accrued liabilities of the Fund and accumulated
dividends on any Preferred Shares issued by the Fund, but without deducting the
aggregate liquidation value of any outstanding Preferred Shares. The value of
the Fund's net assets shall be computed at the times and in the manner specified
in the Fund's registration statement on Form N-2, as amended from time to time
(the "Registration Statement"). Compensation by the Fund of the Administrator
shall commence on ________, 2004. Upon termination of this Agreement before the
end of a month, the fee for such part of that month shall be prorated according
to the proportion that such period bears to the full monthly period and shall be
payable within seven (7) days after the date of termination of this Agreement.
4. Limitation of Liability of the Administrator; Indemnification.
(a) The Administrator shall not be liable to the Fund or the Investment
Adviser for any error of judgment or mistake of law or for any loss arising out
of any act or omission by the Administrator in the performance of its duties
hereunder. Nothing herein contained shall be construed to protect the
Administrator against any liability to the Fund, its shareholders, the
Investment Adviser or any sub-investment adviser to which the Administrator
shall otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or by reckless disregard of its
obligations and duties hereunder.
(b) The Administrator may, with respect to questions of law, apply for and
obtain the advice and opinion of counsel to the Fund, at the expense of the
Fund, and with respect to the application of generally accepted accounting
principles or Federal tax accounting principles, apply for and obtain the advice
and opinion of the independent auditors of the Fund, at the expense of the Fund.
The Administrator shall be fully protected with respect to any action taken or
omitted by it in good faith in conformity with such advice or opinion.
(c) The Fund agrees to indemnify and hold harmless the Administrator from
and against all charges, claims, expenses (including legal fees) and liabilities
reasonably incurred by the Administrator in connection with the performance of
its duties hereunder, except such as may arise from the Administrator's willful
misfeasance, bad faith, gross negligence in the performance of its duties or by
reckless disregard of its obligations and duties hereunder. The Fund shall make
advance payments in connection with the expenses of defending any action with
respect to which indemnification might be sought hereunder if the Fund receives
a written affirmation of the Administrator's good faith belief that the standard
of conduct necessary for indemnification has been met and a written undertaking
to reimburse the Fund unless it is subsequently determined that it is entitled
to such indemnification and if 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 Administrator shall
provide security for this undertaking, (B) the Fund shall be insured against
losses arising by reason of any lawful advances, or (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 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 Administrator ultimately will be found entitled to indemnification.
(d) As used in this Paragraph 4, the term "Administrator" shall include any
affiliates of the Administrator performing services for the Fund contemplated
hereby and directors, officers, agents and employees of the Administrator and
such affiliates.
5. Activities of the Administrator. The services of the Administrator under
this Agreement are not to be deemed exclusive, and the Administrator and any
person controlled by or under common control with the Administrator shall be
free to render similar services to others.
6. Duration and Termination of this Agreement. This Agreement shall become
effective as of the date first above written and shall remain in force until
terminated as provided herein. This Agreement may be terminated at any time,
without the payment of any penalty, by the Fund or the Administrator, on sixty
days' written notice to the other party. This Agreement shall automatically
terminate in the event of its assignment.
7. Amendments of this Agreement. This Agreement may be amended by the
parties hereto only if such amendment is specifically approved by the Board of
Directors of the Fund and such amendment is set forth in a written instrument
executed by each of the parties hereto.
8. Governing Law. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect and the applicable provisions of the 1940 Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
9. Counterparts. This Agreement may be executed by the parties hereto in
counterparts and if executed in more than one counterpart the separate
instruments shall constitute one agreement.
10. Notices. Any notice under this Agreement, shall be in writing and shall
be deemed to be received on the earlier of the date actually received or on the
fourth day after the postmark if such notice is mailed first class postage
prepaid. Notice shall be addressed: (a) if to the Fund, to: Treasurer, Quadrant
Fund, Inc., One Liberty Plaza, 000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000; or (b) if to the Administrator, to: President, Hyperion Capital
Management, Inc., One Liberty Plaza, 000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000-0000.
IN WITNESS WHEREOF, parties hereto have executed this Agreement as of the
day and year first above written. QUADRANT FUND, INC.
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By: Xxxxxxxx X. Xxx
Title: President
HYPERION CAPITAL MANAGEMENT, INC.
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By: Xxxxxx X. Xxxxxxx
Title: Chief Operating Officer
