Exhibit G.2
FINAL
SUBADVISORY AGREEMENT
This Subadvisory Agreement is made and entered into as of July 31, 2002
between General Motors Investment Management Corporation (the "Adviser") and
Numeric Investors L.P. (the "Subadviser").
WHEREAS, the Adviser serves as investment adviser to GM Absolute Return
Strategies Fund I (the "Portfolio"), a series of GM Absolute Return Strategies
Fund, LLC (the "Company"), pursuant to an Investment Advisory Agreement between
the Adviser and the Company dated as of June 15, 2001, as amended from time to
time (the "Advisory Agreement");
WHEREAS, the Company (and the Portfolio) intend to engage in business as an
investment company;
WHEREAS, the Company (and the Portfolio) are currently not subject to
registration as an investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"), pursuant to an exception available under the 1940
Act;
WHEREAS, the Company currently anticipates that it will register under the
1940 Act (upon which the Company will be referred to in this Agreement as a
"1940 Act Registered Company"), although it is not required to do so hereby;
WHEREAS, the Advisory Agreement permits the Adviser to retain one or more
subadvisers on behalf of the Portfolio; and
WHEREAS, the Adviser wishes to appoint the Subadviser to manage certain
assets of the Portfolio, and the Subadviser is willing to accept such
appointment, all subject to and in accordance with the terms and conditions
contained herein and, if the Company is a 1940 Act Registered Company, the 1940
Act.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
1. Appointment as Subadviser. The Adviser hereby retains the Subadviser to
provide investment management services with respect to the Subadvised Assets (as
that term is defined in Section 2) in accordance with the terms and conditions
of this Agreement, subject to the supervision of the Adviser and the Company's
Board of Managers ("Board"), once such Board is appointed, and the Subadviser
hereby accepts such retention as subadviser. In such capacity, the Subadviser
shall be responsible for the Portfolio's investments with respect to the
Subadvised Assets.
2. Subadvised Assets. The "Subadvised Assets" shall consist of (i) that
portion of the cash and investments of the Portfolio as the Adviser may place
under the supervision of the Subadviser from time to time plus (ii) all
investments, reinvestments and proceeds of the sale thereof, including, without
limitation, all dividends and interest on investments, and all appreciation
thereof and additions thereto, less depreciation thereof and withdrawals
therefrom.
The Adviser will give five (5) business days' prior written notice to the
Subadviser of any anticipated additions to or anticipated withdrawals from the
Subadvised Assets.
3. Investment Guidelines and Objectives. The Subadviser is authorized and
directed and agrees to cause the Subadvised Assets to be invested, held and sold
in accordance with the objectives and guidelines set forth in Schedule A
attached hereto (the "Investment Guidelines") and, if the Company is a 1940 Act
Registered Company, the Company's registration statement as in effect from time
to time under the 1940 Act ("1940 Act Registration Statement"). The Adviser or
the Board may from time to time amend the Investment Guidelines and the Company
may from time to time amend any 1940 Act Registration Statement. Any amendment
to the Investment Guidelines or Registration Statement, including any amendment
to such Registration Statement, shall be effective with respect to the
Subadviser five (5) days after receipt of notice thereof by the Subadviser.
4. Custody of Assets.
4.1 All Subadvised Assets will be held by the Company's designated
custodian ("Custodian") in one or more of the Portfolio's custody accounts under
custody arrangements with the Custodian and approved by the Company ("Custody
Agreements," which shall include any amendments or additional agreements entered
into after the date hereof provided such agreements are delivered to
Subadviser). The Subadviser shall at no time have custody or physical control of
any of the Subadvised Assets. Subadviser acknowledges receipt of the Custody
Agreements and agrees to comply at all times with all requirements relating to
such arrangements to the extent applicable to the performance of the
Subadviser's obligations under this Agreement. The Adviser acknowledges that all
fees and expenses of the Custodian are paid by the Company.
4.2 The Adviser shall use its best efforts to cause the Company on
behalf of the Portfolio, subject to any approval required of the Board, and the
Custodian to accept instructions from the Subadviser to execute transactions for
the Subadvised Assets and to provide the Subadviser daily and monthly reports
concerning the status of the Subadvised Assets and such other information
relating to the Subadvised Assets as the Subadviser may from time to time
request. As of the date of this Agreement, the Adviser represents to the
Subadviser that all requisite authority has been obtained to permit the
Subadviser to manage the Subadvised Assets in accordance with the terms of this
Agreement pursuant to instructions given to the Custodian by the Subadviser and
the Adviser agrees to notify the Subadviser in writing if such authority is
terminated during the term of this Agreement.
4.3 Instructions of the Subadviser to the Custodian shall be made as
required by the Custody Agreements. The Subadviser shall instruct all brokers or
dealers executing orders on behalf of the Subadvised Assets to forward to the
Custodian and the Adviser copies of all brokerage confirmations promptly after
execution of transactions. Upon giving proper instructions to the Custodian, the
Subadviser shall have no responsibility or liability with respect to custodial
arrangements or the acts, omissions or other conduct of the Custodian.
5. Powers and Duties of the Subadviser. In its full discretion, the
Subadviser shall have full power and duty to invest and reinvest the Subadvised
Assets in such eligible securities
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(as specified in Schedule A hereto), in either long or short positions, as the
Subadviser in its discretion shall consider to be in the best interest of the
beneficial owners of the Company with respect to the Portfolio; provided,
however, that all such activities shall be conducted in a manner consistent with
the Investment Guidelines and the Subadviser's obligations and duties under the
applicable law, including, as applicable, the 1940 Act and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). In this
connection, the Subadviser shall have full power and authority to (i) issue
orders for the Subadvised Assets to a broker or dealer; (ii) instruct the
Custodian to exercise or abstain from exercising any option, privilege or right
held with respect to Subadvised Assets; (iii) monitor the correct collection of
income on the Subadvised Assets by the Custodian; and (iv) take any other action
with respect to securities or other property comprising the Subadvised Assets as
needed to serve the best interest of the beneficial owners of the Company with
respect to the Portfolio and to follow the Investment Guidelines.
The Subadviser shall manage the Subadvised Assets in accordance with the
applicable requirements and fiduciary standards under ERISA and the 1940 Act,
each as applicable, and any regulations from time to time promulgated
thereunder. To the extent that any provision of this Agreement or any written or
oral instructions issued in connection with the management of the Investment
Account conflicts with any applicable provision of ERISA, the 1940 Act or any
such regulation, the provisions of ERISA, the 1940 Act, or any regulation
thereunder, each as applicable, shall be followed.
6. Adviser Authorization. The Adviser shall provide the Subadviser with a
list of authorized persons for the Company (which may be Adviser personnel) and
their specimen signatures from whom the Subadviser may accept signed written
day-to-day instructions, confirmations or authority under this Agreement.
The Subadviser shall not be liable for acting in good faith upon any
instruction, confirmation or authority purporting to have been signed by an
authorized person, which signature the Subadviser reasonably believes to be
genuine, notwithstanding the fact that subsequently it shall be shown that such
instruction, confirmation or authority was not in fact signed by an authorized
person.
7. Investment Management Fees. As compensation for the Investment Manager's
services rendered hereunder, the Adviser shall arrange for the Company to pay
directly to the Subadviser the management fees and performance-based
compensation described in Schedule B attached hereto. All fees must be approved,
and their payment directed, by an authorized person for the Company (described
in Section 6 above).
8. Services to Other Clients. The services of the Subadviser are not to be
deemed exclusive to the Portfolio, it being understood that the Subadviser may
perform investment advisory services for various other clients and it is
acknowledged that the Subadviser may give advice and take action with respect to
any of its other clients which may differ from advice given, or from the timing
or nature of actions taken, with respect to the Subadvised Assets.
The Subadviser agrees that any transactions effected by the Subadviser on
behalf of itself or by the Subadviser's general partners, officers, employees or
other access persons (within the
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meaning of Rule 17j-1 under the 0000 Xxx) shall only be permitted if in
compliance with the 1940 Act, the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and ERISA, each as applicable. The Subadviser represents,
warrants and agrees that it has adopted and shall maintain in effect during the
term of this Agreement, a code of ethics ("Code") adopted pursuant to Rule 17j-1
under the 1940 Act, a copy of which has been provided to the Company and the
Adviser, which contains such provisions as are required under Rule 17j-1 and as
the Subadviser reasonably believes are necessary to prevent it and any of its
access persons from violating the Code. The Subadviser agrees that it will
comply with (and require its access persons to comply with) the Code at all
times during the term of this Agreement treating the Company as if it were at
all times a 1940 Act Registered Company whether or not it is so registered and
will provide to the Company and the Adviser a copy of all reports, information
and amendments to the Code on a timely basis as required therein and by the 1940
Act. In connection with the Company becoming a 1940 Act Registered Company and
after such registration, the Subadviser agrees that its Code, including
amendments, shall be subject to approval by the Board, and the Subadviser agrees
to make such modifications to such Code as are reasonably requested from time to
time by the Board.
9. Brokerage Services. The Subadviser shall have full discretion to select
brokers or dealers to effect the purchase and sale of securities. Any brokerage
agreements shall be executed by an authorized person designated under Section 6.
When the Subadviser places orders for the purchase or sale of securities under
this Agreement, the Subadviser shall seek to obtain the best available execution
and, in connection with such selection, is authorized to consider the fact that
a broker or dealer has furnished brokerage and/or research services for the
benefit of the Portfolio directly or indirectly. The Subadviser is authorized to
cause the Portfolio with respect to Subadvised Assets to pay brokerage
commissions which may be in excess of the lowest rates available to brokers who
execute transactions for the Subadvised Assets of the Portfolio or who otherwise
provide brokerage and research services used by the Subadviser, provided that
the Investment Manager determines in good faith that the amount of each such
commission paid to a broker is reasonable in relation to the value of the
brokerage and research services provided by such broker and that such
transaction is in compliance with Section 28(e) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). The Subadviser agrees to select and
monitor the performance of brokers and dealers in accordance with Section 28(e)
of the Exchange Act and the Subadviser's duties under the 1940 Act, the Advisers
Act and ERISA, as applicable, and any policies or procedures adopted by the
Board.
10. Proxies. The Subadviser shall have the power and the responsibility to
vote, either in person or by proxy, tender and take all actions incident to the
ownership of all securities in which the Subadvised Assets may be invested from
time to time. Such proxy voting will be in accordance with the Subadviser's
duties under applicable law. The Subadviser shall provide to the Adviser and the
Company, promptly upon request, periodic reports summarizing the proxy voting.
The Subadviser shall provide to the Company and the Adviser a copy of any proxy
voting policies, upon the execution of this Agreement, and copies of every
amendment to such proxy voting policies, prior to implementation of such
amendments.
11. Representations of Subadviser. The Subadviser represents and covenants
to the Adviser and the Company as follows:
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(a) Subadviser is registered as an investment adviser under the Advisers
Act and it will notify the Adviser and the Company of any change in
its partners.;
(b) Subadviser is eligible to act as an investment adviser to a 1940 Act
Registered Company and is not subject to any disqualification under
the 1940 Act which would preclude it from so acting and, if Subadviser
ceases to be so eligible, is disqualified under the 1940 Act, or is
subject to any SEC or other administrative enforcement action or
administrative proceeding, it shall immediately notify the Adviser and
the Company in writing;
(c) Subadviser has provided a copy of its Form ADV (parts I and II) to the
Adviser and the Company at least 48 hours prior to entering into this
Agreement, and the information contained therein is accurate and
complete in all material respects and does not omit to state any
material fact necessary in order to make the statements made, not
misleading. Subadviser will provide copies to the Adviser and the
Company of any amendment to its Form ADV (part I or II) promptly after
such amendment is made;
(d) Subadviser has the power, capacity and authority to enter into this
Agreement and to perform in accordance herewith, and the terms hereof
do not violate any obligation by which the Subadviser is bound,
whether arising by contract, operation of law or otherwise.
12. Adviser Representations. The Adviser represents and warrants to the
Subadviser as follows:
(a) Adviser is registered as an investment adviser under the Advisers Act;
(b) Adviser is eligible to act as an investment adviser to a 1940 Act
Registered Company and is not subject to any disqualification under
the 1940 Act which would preclude it from so acting;
(c) Adviser has the power, capacity and authority to enter into this
Agreement and to perform in accordance herewith, and the terms hereof
do not violate any obligation by which the Adviser is bound, whether
arising by contract, operation of law or otherwise; and
(d) A true and complete copy of the Advisory Agreement, and true and
complete copies of every amendment to such agreement, will be
delivered to the Investment Manager as promptly as practicable after
the adoption thereof.
13. Performance-Based Compensation. The Adviser represents that each equity
owner of the Portfolio of the Company is a "qualified client" within the meaning
of Rule 205-3 under the Advisers Act.
14. ERISA Investment Manager. Until the Company becomes a 1940 Act
Registered Company, the Adviser hereby appoints the Subadviser as "investment
manager" in accordance with Section 3(38) of ERISA with respect to each of the
constituent members of the Company
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the assets of which are included in the Subadvised Assets, and appoints the
Subadviser as the Adviser's attorney-in-fact to invest and reinvest the
Subadvised Assets as fully as the Adviser itself could do. The Subadviser hereby
acknowledges that it is an ERISA fiduciary with respect to the Subadvised Assets
until such time as the Company is a 1940 Act Registered Company and accepts such
retention and appointment and agrees to provide such investment management
services. The Subadviser represents that it is and will continue to qualify as a
"Qualified Professional Asset Manager" under Department of Labor Prohibited
Transaction Class Exemption 84-14 until such time as the Company is a 1940 Act
Registered Company.
15. Indemnification. The Subadviser shall indemnify and hold harmless the
Company and the Adviser from and against any liability or loss which they or any
of them may incur or suffer to the extent such liability or loss was caused by
the negligence, misfeasance or bad faith of the Subadviser, or the inaccurate
representation of or material breach by the Subadviser of any of the provisions
of this Agreement.
By way of example but not as a limitation, the Subadviser agrees that a
material breach of this Agreement will occur if (i) any transaction is entered
into by the Company at the direction of the Subadviser constitutes a non-exempt
prohibited transaction under Section 406 of ERISA or Section 4975 of the
Internal Revenue Code of 1986, as amended, or (ii) at any time during the term
of this Agreement, the Subadviser does not have in excess of $100 million under
management on an unleveraged basis.
16. Confidentiality. The Subadviser shall regard as confidential all
information concerning the affairs of the Company, the Adviser and their
affiliates, but shall be permitted to disclose to third parties the fact that
the Subadviser is performing investment management activities on behalf of the
Adviser and the Company provided the prior written consent to such disclosure is
given by the Adviser. The Adviser shall regard as confidential all information
and recommendations furnished by the Subadviser under this Agreement except as
such information may be required to be disclosed (i) to a regulatory or
administrative body that has jurisdiction over the operation of the Adviser, the
Company or any of their respective affiliates, (ii) pursuant to subpoena or
other legal process, (iii) to the Company or its members or (iv) in regulatory
filings or reports.
17. Term and Termination. This Agreement will be effective on the date
hereof and, following the earlier of (i) the date the Company is a 1940 Act
Registered Company or (ii) a 1940 Act duly constituted Board first approves this
Agreement in accordance with the requirements of the 1940 Act, this Agreement
shall continue for a period of two years, subject thereafter to being continued
from year to year if specifically approved each year by either (a) the Board
(and the disinterested directors of the Company as specified in the 1940 Act),
or (b) by the affirmative vote of a majority of the Portfolio's outstanding
voting securities (as specified in the 1940 Act). Prior to each 1940 Act
required approval of this Agreement, the Board may request and the Subadviser
shall furnish such information as may reasonably be necessary to enable the
Board to evaluate the terms of this Agreement.
Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by giving to the other party written
notice. If the Adviser is terminating the Agreement, notice shall be given to
the Subadviser at least five (5) business days
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prior to the date on which such termination is to become effective. If the
Subadviser is terminating the Agreement, notice shall be given to the Adviser
and the Company at least sixty (60) days prior to the date on which such
termination is to be effective.
In addition, this Agreement may be terminated at any time, without the
payment of any penalty, and upon five (5) business days written notice by a vote
of the Board or by the vote of a majority of the Company's outstanding voting
securities (as defined in the 1940 Act).
18. Non-assignment. This Agreement shall not be assigned (as such term is
defined in the 1940 Act) without the prior written consent of the other party
hereto and such additional consents and approvals as may be required under
applicable securities laws. This Agreement shall automatically terminate in the
event of its assignment (within the meaning of the 0000 Xxx) without required
consents and approvals.
19. Miscellaneous. This Agreement, including the Schedules attached hereto,
constitutes the entire agreement between the parties concerning the subject
matter hereof and supersedes all prior agreements and understandings, oral or
written, between them regarding such subject matter. The Company is intended to
benefit from covenants and representations made by the parties hereto.
20. Amendments and Waivers. This Agreement may only be amended by a writing
signed by both the Subadviser and the Adviser and, if the Company is a 1940 Act
Registered Company, each such amendment will be approved by the Board and/or the
Company's shareholders as required by the 1940 Act. The Adviser or Subadviser
may by written consent waive, either prospectively or retrospectively and either
for a specified period of time or indefinitely, the operation or effect of any
provision of this Agreement. No waiver of any right by any party hereto shall be
construed as a waiver of the same or any other right at any other time.
21. Books and Records; Information and Personnel. In connection with and
following the Company becoming a 1940 Act Registered Company, Subadviser agrees
as follows:
(a) to keep and maintain all books and records required under the 1940 Act
with respect to the Subadvised Assets, to provide copies and access to
the Adviser and the Company of all such books and records immediately
upon request on any business day and to return such books and records
to the Company upon termination of this Agreement, it being agreed
that all such books and property are the property of the Company;
(b) to provide such reports and information concerning the Subadviser and
Subadvised Assets as the Adviser, the Company or the Board may from
time to time request, including information for inclusion in the
Company's registration statement under the 1940 Act or reports
prepared pursuant thereto, including proxy statements and annual and
semi-annual reports, and Subadviser represents that all the
information so provided to the Company shall be accurate and
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complete in all material respects and will not omit any material fact
necessary to make the information not misleading; and
(c) to make available upon reasonable notice to the Company, Board and
applicable regulatory authorities senior personnel of the Subadviser
involved in performing the Subadviser's duties under this Agreement,
including for purposes of meetings of the Board, reporting of the
management of Subadvised Assets under this Agreement and for
regulatory inquiries.
22. Notices. Except as otherwise expressly provided in this Agreement,
whenever any notice is required or permitted to be given under any provision of
this Agreement, such notice shall be in writing, shall be signed by or on behalf
of the party giving the notice and shall be mailed by certified mail, return
receipt requested or sent by courier or telefax with confirmation of
transmission to the other party (with copies if so indicated) at the address set
forth below or to such other address as a party may from time to time specify to
the other party by such notice hereunder. Any such notice shall be deemed duly
given when delivered (with copies if so indicated) at such address.
23. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the substantive laws of the state of New York,
without giving effect to its principles of conflicts of law.
24. Counterparts. This Agreement may be executed in any number of
counterparts, any one of which need not contain the signature of more than one
party, but all of such counterparts together shall constitute one agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its duly authorized representative, as of the date
first above written.
NUMERIC INVESTORS L.P. General Motors Investment
Management Corporation
By: WBE & ASSOCIATES, LLC
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxxx
---------------------------- ----------------------------
Xxxxxxx X. Xxxxxx, Xxxxx Xxxxxxxx,
Chief Financial Officer Vice President
Address: Address:
One Memorial Drive 000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxx
Copy: General Counsel
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
SCHEDULE A
to
SUBADVISORY AGREEMENT between
Numeric Investors L.P. and General Motors Investment Management Corporation
July 31, 2002
Investment Parameters/Mandate
Capitalized terms used herein but not otherwise defined shall have the
meanings given to them in Schedule B.
1. Investment Objective. The objective of the Portfolio for the Subadvised
Assets is to attain the highest total return consistent with a reasonable degree
of risk and in keeping with standards of prudence. The Subadviser will manage
the Subadvised Assets in a manner as close as is reasonably practical to the
Numeric European Long/Short Fund I L.P. ("xxx Xxxx") subject to the remainder of
these guidelines, which take precedence. If the investment strategy of the Fund
changes materially, the Subadviser will notify the Adviser and the Company of
the changes before their implementation with respect to the Subadvised Assets.
2. Risk and Return Objectives/Performance Goals. The Subadvised Asset's
return will be reported by the Subadviser at the end of each month, and the
Subadviser's performance will be reported by the Subadviser against the Index.
The Subadviser shall seek to exceed the Index by an annualized 600 basis
points on an after-fees basis over a three-year period; however, no guarantees
can or are being made with respect to performance of the Subadvised Assets.
3. Eligible Securities. Only the following securities are eligible
investments:
.. Common stock, preferred stock and saving shares of companies listed on a
recognized stock exchange in any of the countries within the Index may be
bought or sold short. ADR's or GDR's of the aforementioned companies may
also be bought or sold short.
.. Subject to the Adviser authorization requirements in paragraph 6 below,
MSCI Pan-Euro futures, or other futures as deemed appropriate, may be owned
on a long-only basis, subject the overall limitations on futures
transactions contained herein.
.. Swap transactions as a substitute for direct investment in common or
preferred stocks, and not for leverage; provided, however, that the
Subadviser may not enter into any swap transaction at any time if as a
result the aggregate notional exposure under swap transactions would exceed
50% of the value of the Subadvised Assets, and swap transactions may be
entered into only with the counterparties and pursuant to documentation
approved by the Adviser on behalf the Portfolio.
.. Currency transactions for currency hedging purposes or for purposes of
obtaining currency for delivery upon settlement of transactions for the
purchase or sale of investments, and not for leverage.
.. Short-term Euro cash deposits and cash and collateral deposits held with
the Custodian.
4. Cash Levels and Leverage.
.. Cash balances will be held in foreign currencies of countries in which
investments are denominated as well as U.S. dollars.
.. Once the Company becomes a 1940 Act Registered Company, the Subadviser
shall manage the Subadvised Assets in compliance with the senior securities
restrictions of Section 18 of the 1940 Act, including required asset
coverage ratios.
.. Prior to the Company becoming a 1940 Act Registered Company, the following
shall apply:
.. The market value of securities held long with respect to Subadvised Assets
will usually not exceed 100% of the Closing Equity, and at no time will
exceed 105% of the Closing Equity.
.. The market value of securities sold short in the Subadvised Assets will
usually not exceed 100% of the Closing Equity, and at no time will exceed
105% of the Closing Equity.
.. The market exposure obtained using MSCI Pan-Euro futures will usually not
exceed 100% of the Closing Equity, and at no time will exceed 105% of the
Closing Equity.
5. Risk Controls.
.. The maximum position size for the longs and the shorts will be 1.33% at
cost of the Closing Equity, and 1.66% at market value of the Closing
Equity.
.. The Subadvised Assets will not consist of more than 2% of the outstanding
stock of any single company.
.. The Subadvised Assets will be sector (per Numeric sector definitions)
neutral to +/- 3% (i.e. the percent of longs in a particular sector will
equal the percent of shorts in a particular sector to within 3%).
.. The Subadvised Assets will be country neutral to +/- 5% (i.e. the percent
of longs in a particular country will equal the percent of shorts in a
particular sector to within 5%).
6. Additional Restrictions. Notwithstanding any other provision hereof, the
Subadviser shall not take any of the following actions:
(a) enter into any futures or options on futures contracts transactions,
directly or indirectly, regulated under the Commodity Exchange Act, as
amended, or otherwise, without the prior written consent of the
Adviser.
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(b) after the Company is a 1940 Act Registered Company, enter into any
transaction which is prohibited under the Company's 1940 Act
Registration Statement, the 1940 Act or any policies or procedures
adopted by the Board.
7. Definitions.
.. "Closing Equity" shall mean, as of any date, the sum of all cash of the
Subadvised Assets (including, without limitation, short credit balances) at
the close of business on such date, plus the value of all eligible
securities and other assets owned and held in a long position of the
Subadvised Assets at the close of business on such date, minus the value of
all eligible securities held as a short position of the Subadvised Assets
at the close of business on such date. For purposes hereof, value shall be
computed in accordance with paragraph 3 of Schedule B.
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SCHEDULE B
to
SUBADVISORY AGREEMENT between
Numeric Investors L.P. and General Motors Investment Management Corporation
July 31, 2002
Investment Management Compensation
1. Management Fees. Promptly following the last day of each fiscal quarter,
the Adviser shall pay (or arrange for the Company to pay directly) the
Subadviser a management fee for services rendered in administering and managing
the Subadvised Assets during such quarter. This quarterly management fee shall
equal the amount determined by multiplying the value of the Subadvised Assets as
of the last business day of each month in the quarter and 1/12 of 1%. With
respect to funds that are contributed or withdrawn during a quarter, the
management fee shall be prorated based on the number of days such funds are
under management by the Subadviser during such quarter.
2. Performance-Based Compensation. In addition to the fees paid or payable
under the preceding paragraphs, the Adviser shall pay (or arrange the Company to
pay directly) to the Subadviser a Performance Fee (as defined below) as of each
Measurement Date (as defined below). Notwithstanding anything in this Agreement
to the contrary, no Performance Fee shall be charged prior to the first
anniversary of the date Subadvised Assets were managed by the Subadviser.
In the event that the Company or the Adviser shall withdraw assets from
Subadvised Assets on or before any such Measurement Date (but after the first
anniversary of the date of establishment of the Subadvised Assets), the
Performance Fee, if any, shall be computed and paid immediately before such
withdrawal, treating the date of withdrawal as a Measurement Date.
"Performance Fee" shall mean, for any Measurement Date, the greater of (a)
zero, and (b)(i) 20% of the remainder of (x) the Account Return through such
Measurement Date minus (y) the Implied Return through such date minus (ii) the
sum of all Performance Fees previously charged. The Subadviser shall have no
obligation to make any payment to the Adviser (or the Company) in the event that
the amount of any Performance Fee is negative at any time.
"Account Return" shall mean, as of any Measurement Date, (a) the value of
the Subadvised Assets as of such Measurement Date minus (b) the value of the
Subadvised Assets at the beginning of the Relevant Measurement Period minus (c)
the aggregate amount of all further contributions to Subadvised Assets during
the Relevant Measurement Period, plus (d) the aggregate amount of all
withdrawals from Subadvised Assets during the Relevant Measurement Period which
are excluded from the calculation of the value of the Subadvised Assets as of
such
Measurement Date, plus (e) the aggregate amount of all Performance Fees charged
to and paid to the Subadviser prior to such Measurement Date during the Relevant
Measurement Period.
"Implied Return" shall mean (a) the value of the Subadvised Assets at the
beginning of the Relevant Measurement Period multiplied by the Index Return (as
defined below) during the Relevant Measurement Period, plus (b) the sum of the
products of (i) each additional contribution to Subadvised Assets during the
Relevant Measurement Period multiplied by (ii) the Index Return from the date of
such additional contribution through and including such Measurement Date, minus
(c) the sum of the products of (i) each withdrawal of capital from Subadvised
Assets during the Relevant Measurement Period multiplied by (ii) the Index
Return from the date of such withdrawal through and including such Measurement
Date.
"Index" shall mean the total rate of return of 90-day Treasury bills as
measured by Xxxxxxx Xxxxx and currently available from Bloomberg systems as code
GO01 (or if such index is abolished, a successor index as agreed between the
Adviser and Subadviser).
"Index Return" shall mean the time-weighted rate of return of the Index,
including dividends on stocks in such Index, and stated as a percentage.
"Measurement Date" shall mean July 31st of each year starting July 31st of
2003. In the case of contract termination, measurement date shall mean the final
date on which funds are available for management hereunder.
"Relevant Measurement Period" shall mean the period ending with the
Measurement Date and beginning with the date of the establishment of the
Subadvised Assets.
3. Valuation of Assets. Whenever valuation of Subadvised Assets is required
hereunder, the Adviser shall make a reasonable valuation and appraisal in
accordance with the 1940 Act, as applicable, and any pricing procedures approved
by the Board. The Adviser shall prepare a statement of the net worth of the
Subadvised Assets showing as of the valuation date the value which, in the
judgment of the Adviser, reflects the value of all Subadvised Assets less all
attributable expenses, obligations and liabilities. A copy of such statement
shall be forwarded to the Subadviser as soon as practicable but in no event
later than the end of the second month after the valuation date. Securities
which are listed on a national securities exchange shall be valued at their last
sales prices on the date of determination, or, if no sales occurred on such day,
at the mean between the bid and asked prices on such day. Securities which are
not listed on a national securities exchange shall be valued at their last sales
prices on the date of determination, or, if no sales occurred on such day, at
their last closing bid prices if owned and held in a long position for the
Subadvised Assets and their last closing asked prices if held as a short
position for the Subadvised Assets. All other securities and all property other
than securities shall be valued at fair value as reasonably determined by the
Adviser. Notwithstanding the foregoing, securities or other property subject to
any restriction shall be valued by the Adviser taking into account such
restriction. Paragraph 3 shall be subject to such additional 1940 Act pricing
procedures as may be adopted from time to time by the Board.
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