Exhibit (g)(1)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT dated August 4, 1989 between The Hyperion Total Return Fund, Inc.
(the "Fund"), a Maryland corporation, and Hyperion Capital Management, Inc. (the
"Adviser"), a Delaware corporation.
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 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 of the 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 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 Investment Company Act of 1940 (the "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; and (iv) any policies and determinations of the Board of
Directors of the Fund.
(c) The Adviser will bear all costs and expenses of its partners 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 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.
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. Compensation of the Adviser
(a) The Fund agrees to pay to the Adviser and the Adviser agrees to accept as
full compensation for all services rendered by the Adviser as such, a fee
computed and payable monthly in an amount equal to .65% 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.
(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.
5. Indemnity
(a) The Fund hereby agrees to indemnify the Adviser and each of the Adviser's
directors, officers, employees and agents (including any individual who
serves at the Adviser's request as director, officer, partner, trustee or
the like of another corporation or other entity) (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
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 Fund or its shareholders 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 that such settlement or compromise is in the
best interests of the Fund 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 did not involve disabling conduct by such
indemnitee and (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 a majority of the full
Board of the Fund.
(b) 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 indemnitee'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 he 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 indemnitee shall
provide a 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 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) 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
This Agreement shall become effective on the date first set forth above and
shall continue in effect until the next meeting of stockholders of the Fund (but
in any event not more than two years after such effective date) and 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.
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 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 Adviser is a corporation and will notify the Fund
promptly after any change in the ownership of such corporation.
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 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.
[SEAL]THE HYPERION TOTAL RETURN FUND, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
[SEAL] HYPERION CAPITAL MANAGEMENT, INC.
By /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
