EXHIBIT (G)(1)
MANAGEMENT AGREEMENT
AGREEMENT dated __________, 2003 between Hyperion Collateralized Securities
Fund, Inc. (the "Fund"), a Maryland corporation, and Hyperion Capital
Management, Inc. (the "Adviser"), a Delaware corporation.
WHEREAS, the Fund intends to engage in business as a closed-end
non-diversified management investment company and is registered as such under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser is a registered investment adviser under the
Investment Adviser's Act of 1940; and
WHEREAS, the Fund desires to retain the Adviser to render investment
advisory and administrative services in the manner and on the terms and
conditions hereafter set forth; and
WHEREAS, the Advisor desires to be retained to perform such services on the
following terms and conditions.
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 Adviser agrees, all as more fully set forth herein, to act as
investment adviser and administrator to the Fund with respect to the investment
of the Fund's assets and to supervise and arrange the purchase of securities for
and the sale of securities held in the investment portfolio of the Fund.
2. Duties and Obligations with respect to Investments of Fund Assets
(a) Subject to the succeeding provisions of this paragraph and subject to
the direction and control of the Fund's Board of Directors, the Adviser shall
(i) act as investment adviser for and supervise and manage the investment and
reinvestment of the Fund's assets and in connection therewith have complete
discretion in purchasing and selling securities and other assets for the Fund
and in voting, exercising consents and exercising all other rights appertaining
to such securities and other assets 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 securities and other assets held in the
investment portfolio of the Fund.
(b) In the performance of its duties under this Agreement, the Adviser
shall at all times conform to, and act in accordance with, any requirements
imposed by (i) the provisions of the 1940 Act, and of any rules or regulations
in force thereunder; (ii) any other applicable provision of law; (iii) the
provisions of the Articles of Incorporation and By-Laws of the Fund, as such
documents are amended from time to time; (iv) the Fund's Registration Statement
filed under the 1940 Act, including the Private Placement Memorandum forming a
part thereof; and (v) any policies and determinations of the Board of Directors
of the Fund.
(c) The Adviser will bear all costs and expenses of its 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 0000 Xxx) of the Adviser.
(d) The Adviser shall give the Fund the benefit of its best judgment and
effort in rendering services hereunder, but the 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 Adviser or any director,
officer, employee or other affiliate thereof from acting as investment adviser
for any other other person, firm or corporation, or from engaging in any lawful
activity, and shall not in any way limit or restrict the 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 Adviser will undertake no
activities which, in its judgment, will adversely affect the performance of its
obligations under this Agreement.
(f) The Adviser shall report to the Fund's Board of Directors, at each
meeting thereof, all changes in the Fund's portfolio and will also keep the Fund
in touch with important developments affecting the Fund and, on the Adviser's
initiative, will furnish the Fund from time to time with such information as the
Adviser may believe appropriate for this purpose, whether concerning the
individual entities whose securities are included in the Fund, the activities in
which such entities engage, Federal income tax policies applicable to the Fund's
investments, or the conditions prevailing in the financial markets or the
economy generally. The Adviser shall also furnish the Fund with such statistical
and analytical information with respect to the Fund's securities as it may
believe appropriate or as the Fund may reasonably request.
3. Portfolio Transactions and Brokerage
The Adviser is authorized, for the purchase and sale of the Fund's
portfolio securities, to employ such securities dealers as may, in the judgment
of the 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 Adviser is authorized to direct the
execution of the Fund's portfolio transactions to dealers and brokers furnishing
statistical information or research deemed by the Adviser to be useful or
valuable to the performance of its investment advisory functions for the Fund.
4. Duties and Obligations with respect to Administration
(a) Subject to the supervision and direction of the Board of Directors of the
Fund, as hereinafter set forth, the Fund hereby retains the Adviser to also
act as administrator of the Fund. The Adviser 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 may be 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 custodian and the Fund's counsel
and auditors as generally may be required to carry on properly the business
and operations of the Fund.
(b) The Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its administration obligations under this
Agreement, and shall at its own expense, pay the incremental Accounting Agent
fees to the Custodian (currently estimated at $4,000 per month), provide office
space, facilities, equipment and necessary personnel which it is obligated to
provide under paragraph 4 hereof, except that the Fund shall pay the expenses of
legal counsel as provided in paragraph 6 of this Agreement.
5. Compensation
(a) The Fund agrees to pay to the Adviser for all services rendered and the
Adviser agrees to accept as full compensation for all services rendered by the
Adviser pursuant to this Agreement, a fee computed and payable monthly in an
amount equal to 0.41% for the Fund's first five fiscal years and 0.40% for each
year thereafter of the Fund's average weekly net assets on an annualized basis,
for the then-current fiscal year. For any period less than a month during which
this Agreement is in effect, the fee shall be prorated according to the
proportion which such period bears to a full month of 28, 29, 30 or 31 days, as
the case may be. The Adviser may waive its right to any fee to which it is
entitled hereunder, provided such waiver is delivered to the Fund in writing.
(b) For purposes of this Agreement, the average weekly net assets of the
Fund shall mean the average weekly value of the total assets of the Fund, minus
the sum of accrued liabilities (including accrued expenses) of the Fund and any
declared but unpaid dividends on the Common Shares issued by the Fund and any
Preferred Shares issued by the Fund (the "Preferred Shares") and any accumulated
dividends on any Preferred Shares, but without deducting the aggregate
liquidation value of the Preferred Shares. The average weekly net assets of the
Fund shall be calculated pursuant to the procedures adopted by resolutions of
the Directors of the Fund for calculating the net asset value of the Fund's
shares or delegating such calculations to third parties.
6. Duration and Termination
This Agreement shall become effective on the date first set forth above and
shall continue until December 2, 2005. 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 1940 Act.
This Agreement may be terminated by the Adviser at any time without penalty
upon giving the Fund sixty days' written notice (which notice may be waived by
the Fund) and may be terminated by the Fund at any time without penalty upon
giving the Adviser sixty days' notice (which notice may be waived by the
Adviser), provided that such termination by the Fund shall be 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 0000 Xxx)
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 1940 Act).
7. 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 earlier of the date
actually received or on the fourth day after the postmark if such notice is
mailed first class postage prepaid.
8. 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 1940 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.
HYPERION COLLATERALIZED SECURITIES FUND, INC.
By:
----------------------------
Name:
Title:
HYPERION CAPITAL MANAGEMENT, INC.
By:
---------------------------
Name:
Title: