Exhibit K(2)
SUB-ADMINISTRATION AGREEMENT
Agreement dated as of May 23, 2000 among Hyperion Capital Management, Inc.
(the "Company"), a Delaware corporation on behalf of the Hyperion 2005
Investment Grade Opportunity Term Trust, Inc., Hyperion 2002 Term Trust, Inc.,
Hyperion Total Return Fund, Inc., Lend Lease Hyperion High Yield CMBS Fund, Inc.
and Lend Lease Hyperion Mortgage Opportunity Fund, Inc. (the "Funds") and State
Street Bank and Trust Company, a Massachusetts trust company (the "Bank").
WHEREAS, each Fund, except Lend Lease Hyperion Mortgage Opportunity Fund,
Inc., is registered as closed-end, management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, Lend Lease Hyperion Mortgage Opportunity Fund, Inc. is registered
as an open-end, management investment
company under the 1940 Act;
WHEREAS, the Company has been appointed as administrator to the Funds;
WHEREAS, the Company and the Funds desire to retain the Bank to furnish
certain administrative services to the Funds, and the Bank is willing to furnish
such services, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF BANK
The Company and the Funds hereby appoint the Bank to act as
sub-administrator with respect to the Funds for purposes of providing certain
administrative services for the period and on the terms set forth in this
Agreement. The Bank accepts such appointment and agrees to render the services
stated herein.
The Funds will initially consist of the portfolio(s) and/or class(es) of
shares (each an "Investment Fund") listed in Schedule A to this Agreement. In
the event that the Funds establishes one or more additional Investment Funds
with respect to which the Company and the Funds wish to retain the Bank to act
as administrator hereunder, the Company and the Funds shall notify the Bank in
writing. Upon written acceptance by the Bank, such Investment Fund shall become
subject to the provisions of this Agreement to the same extent as the existing
Investment Funds, except to the extent that such provisions (including those
relating to the compensation and expenses payable by the Funds and its
Investment Funds) may be modified with respect to each additional Investment
Fund in writing by the Company, the Funds and the Bank at the time of the
addition of the Investment Fund.
2. DELIVERY OF DOCUMENTS
Each Fund will promptly deliver to the Bank copies of each of the following
documents and all future amendments and supplements, if any:
a. It's Articles of Incorporation and by-laws;
b. The Fund's currently effective registration
statement under the Securities Act of 1933, as amended (the
"1933 Act"), if applicable, and the 1940 Act and the Fund's
Prospectus(es) and Statement(s) of Additional Information
relating to all Investment Funds and all amendments and
supplements thereto as in effect from time to time;
c. A copy of the investment advisory agreement between the Fund
and its investment adviser, including any sub-advisory
agreement between the Fund and its investment sub-adviser,
if any; and
d. Such other certificates, documents or opinions which the
Bank may, in its reasonable discretion, deem necessary or
appropriate in the proper performance of its duties.
3. REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Fund that:
a. It is a Massachusetts trust company, duly organized and
existing under the laws of The Commonwealth of
Massachusetts;
b. It has the corporate power and authority to carry on its
business in The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted
or threatened which would impair the Bank's ability to
perform its duties and obligations under this Agreement; and
e. Its entrance into this Agreement shall not cause a
material breach or be in material conflict with any other
agreement or obligation of the Bank or any law or regulation
applicable to it.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
Each Fund represents and warrants to the Bank that:
a. It is a corporation, duly organized, existing and in good
standing under the laws of the State of Maryland;
b. It has the corporate power and authority under applicable
laws and by its Articles of Incorporation and by-laws to
enter into and perform this Agreement;
c. All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
d. It is an investment company properly registered under the
1940 Act;
e. A registration statement under the 1933 Act, where
applicable, and the 1940 Act has been filed and will be
effective and remain effective during the term of this
Agreement. The Fund also warrants to the Bank that as of the
effective date of this Agreement, all necessary filings
under the securities laws of the states in which the Fund
offers or sells its shares have been made;
f. No legal or administrative proceedings have been instituted
or threatened which would impair the Fund's ability to
perform its duties and obligations under this Agreement;
g. Its entrance into this Agreement will not cause a material
breach or be in material conflict with any other agreement
or obligation of the Fund or any law or regulation
applicable to it; and
h. As of the close of business on the date of this Agreement,
the Fund is authorized to issue shares of beneficial
interest, and it will initially offer shares, in the
authorized amounts as set forth in Schedule A to this
Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Bank that:
a. It is a corporation, duly organized, existing and in good
standing under the laws of Delaware;
b. It has the power and authority under Delaware law and by its
charter and by-laws to enter into and perform this
Agreement;
c. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted
or threatened which would impair the Company's ability to
perform its duties and obligations under this Agreement; and
e. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement
or obligation of the Company or any law or regulation
applicable to it.
6. ADMINISTRATION SERVICES
The Bank shall provide the following services, in each case, subject to the
control, supervision and direction of the Fund and the Company and the review
and comment by the Fund's and the Company's auditors and legal counsel and in
accordance with procedures which may be established from time to time between
the Fund, the Company and the Bank:
a. Oversee the determination and publication of each Fund's net
asset value in accordance with the Fund's policy as adopted
from time to time by the Board;
b. Oversee the maintenance by the Fund's custodian of certain
books and records of each Fund as required under Rule
31a-1(b) of the 1940 Act;
c. Review calculation, submit for approval by officers of each
Fund and arrange for payment of the Fund's expenses;
d. Prepare for review and approval by officers of each Fund
financial information for the Fund's semi-annual and annual
reports, proxy statements and other communications required
or otherwise to be sent to Fund shareholders, and arrange
for the printing and dissemination of such reports and
communications to shareholders;
e. Prepare for review by an officer of and legal counsel for
the Fund the Fund's periodic financial reports required to
be filed with the Securities and Exchange Commission ("SEC")
on Form N-SAR and financial information required by Form N-2
and such other reports, forms or filings as may be mutually
agreed upon;
f. Prepare reports relating to the business and affairs of each
Fund as may be mutually agreed upon (including but not
limited to performance and aged receivables) and not
otherwise prepared by the Fund's investment adviser,
custodian, legal counsel or independent accountants;
g. Make such reports and recommendations to the Board
concerning the performance of the independent accountants as
the Board may reasonably request;
h. Make such reports and recommendations to the Board
concerning the performance and fees of the Fund's custodian
and transfer and dividend disbursing agent ("Transfer
Agent") as the Board may reasonably request or deems
appropriate;
i. Oversee and review calculations of fees paid to the Fund's
investment adviser, custodian and Transfer Agent;
j. Consult with each Fund's officers, independent accountants,
legal counsel, custodian and Transfer Agent in establishing
the accounting policies of the Fund;
k. Respond to, or refer to each Fund's officers or Transfer
Agent, shareholder inquiries relating to the Fund;
l. Provide periodic testing of portfolios to assist the Fund's
investment adviser in complying with Internal Revenue Code
mandatory qualification requirements, the requirements of
the 1940 Act and Fund prospectus limitations as may be
mutually agreed upon;
m. Review and provide assistance on shareholder communications;
n. Maintain general calendar for each Fund;
o. Maintain copies of the Fund's charter and by-laws and copies
of minutes of meetings of the Board of Directors of the Fund
and meeting of shareholders of each Fund;
p. File annual and semi-annual shareholder reports with the
appropriate regulatory agencies; review text of "President's
letters" to shareholders and "Management's Discussion of
Fund Performance" (which shall also be subject to review by
the Fund's legal counsel);
q. Provide limited legal services as described in the Fee
Schedule to this Agreement;
r. Develop or assist in developing guidelines and procedures to
improve overall compliance by the Fund and its various
agents; and
s. Prepare and file with the SEC Rule 24f-2 notices.
The Bank shall provide the office facilities and the personnel required by it to
perform the services contemplated herein.
7. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Bank shall receive from the Company such compensation for
the Bank's services provided pursuant to this Agreement as may be agreed to from
time to time in a written fee schedule approved by the parties and initially set
forth in the Fee Schedule to this Agreement. The fees are accrued daily and
billed monthly and shall be due and payable upon receipt of the invoice. Each
Fund shall pay to the Bank any and all compensation and reimbursement of expense
that are not paid to the Bank by the Company. Upon the termination of this
Agreement before the end of any month, the fee for the part of the month before
such termination shall be prorated according to the proportion which such part
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. In addition, the Company shall reimburse the Bank
for its out-of-pocket costs incurred in connection with this Agreement.
The Company agrees promptly to reimburse the Bank for any
equipment and supplies specially ordered by or for a Fund, or the Company,
through the Bank and for any other expenses not contemplated by this Agreement
that the Bank may incur on a Fund's or the Company's behalf, at the Fund's or
the Company's request or with the Fund's or the Company's consent.
Each Fund will bear all expenses that are incurred in its
operation and not specifically assumed by the Bank. Expenses to be borne by each
Fund, include, but are not limited to: organizational expenses; cost of services
of independent accountants and outside legal and tax counsel (including such
counsel's preparation and review of the Fund's registration statement, proxy
materials as well as federal and state tax qualification as a regulated
investment company and other reports and materials that may be prepared by the
Bank under this Agreement); cost of any services contracted for by the Fund
directly from parties other than the Bank; cost of trading operations and
brokerage fees, commissions and transfer taxes in connection with the purchase
and sale of securities for the Fund; investment advisory fees; taxes, insurance
premiums and other fees and expenses applicable to its operation; costs
incidental to any meetings of shareholders including, but not limited to, legal
and accounting fees, proxy filing fees and the costs of preparation, filing
(edgarization), printing and mailing of any proxy materials; costs incidental to
Board meetings, including fees and expenses of Board members; the salary and
expenses of any officer, director/trustee or employee of the Fund; costs
incidental to the preparation, filing (edgarization), printing and distribution
of the Fund's registration statements and any amendments thereto and shareholder
reports; cost of typesetting and printing of prospectuses; cost of preparation
and filing of the Fund's tax returns and Form N-SAR (other than pursuant to
Section 6f. of this Agreement), and all notices, registrations and amendments
associated with applicable federal and state tax and securities laws; all
applicable registration fees and filing fees required under federal and state
securities laws; fidelity bond and directors' and officers' liability insurance;
and cost of independent pricing services used in computing each Fund's net asset
value.
The Bank is authorized to and may employ or associate with such person
or persons as the Bank may deem desirable to assist it in performing its duties
under this Agreement; provided, however, that the compensation of such person or
persons shall be paid by the Bank and that the Bank shall be as fully
responsible to the Fund for the acts and omissions of any such person or persons
as it is for its own acts and omissions.
8. INSTRUCTIONS AND ADVICE
At any time, the Bank may apply to the Treasurer or Compliance
Officer for instructions and may consult with its own legal counsel or outside
counsel for the Fund or the independent accountants for the Fund at the expense
of the Fund, with respect to any matter arising in connection with the services
to be performed by the Bank under this Agreement; provided, however, that legal
fees and expenses of the Bank for consultation with its own legal counsel shall
not be an expense of the Fund unless such payment is approved by the Fund. The
Bank shall not be liable, and shall be indemnified by the Fund, for any action
taken or omitted by it in good faith in reliance upon any such instructions or
advice or upon any paper or document believed by it to be genuine and to have
been signed by the proper person or persons. The Bank shall not be held to have
notice of any change of authority of any person until receipt of written notice
thereof from the Fund. Nothing in this paragraph shall be construed as imposing
upon the Bank any obligation to seek such instructions or advice, or to act in
accordance with such advice when received.
9. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement and, except as otherwise provided
under Section 6, shall have no responsibility for the actions or activities of
any other party, including other service providers. The Bank shall have no
liability for any error of judgment or mistake of law or for any loss or damage
resulting from the performance or nonperformance of its duties hereunder unless
solely caused by or resulting from the gross negligence or willful misconduct of
the Bank, its officers or employees. The Bank shall not be liable for any
special, indirect, incidental, or consequential damages of any kind whatsoever
(including, without limitation, attorneys' fees) under any provision of this
Agreement or for any such damages arising out of any act or failure to act
hereunder. In any event, the Bank's liability under this Agreement shall be
limited to its total annual compensation earned and fees paid hereunder during
the preceding twelve months for any liability or loss suffered by the Fund
including, but not limited to, any liability relating to qualification of the
Fund as a regulated investment company or any liability relating to the Fund's
compliance with any federal or state tax or securities statute, regulation or
ruling.
The Bank shall not be responsible or liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its control, including
without limitation, work stoppage, power or other mechanical failure, computer
virus, natural disaster, governmental action or communication disruption.
The Company and the Fund shall indemnify and hold the Bank
harmless from all loss, cost, damage and expense, including reasonable fees and
expenses for counsel, incurred by the Bank resulting from any claim, demand,
action or suit in connection with the Bank's acceptance of this Agreement, any
action or omission by it in the performance of its duties hereunder, or as a
result of acting upon any instructions reasonably believed by it to have been
duly authorized by the Company and the Fund, provided that this indemnification
shall not apply to actions or omissions of the Bank, its officers or employees
in cases of its or their own gross negligence or willful misconduct.
The indemnification contained herein shall survive the
termination of this Agreement.
10. CONFIDENTIALITY
The Bank agrees that, except as otherwise required by law or
in connection with any required disclosure to a banking or other regulatory
authority, it will keep confidential all records and information in its
possession relating to the Fund or its shareholders or shareholder accounts and
will not disclose the same to any person except at the request or with the
written consent of the Fund.
11. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
Each Fund assumes full responsibility for complying with all
securities, tax, commodities and other laws, rules and regulations applicable to
it.
In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Bank agrees that all records which it maintains for the Fund shall
at all times remain the property of the Fund, shall be readily accessible during
normal business hours, and shall be promptly surrendered upon the termination of
the Agreement or otherwise on written request. The Bank further agrees that all
records which it maintains for the Fund pursuant to Rule 31a-1 under the 1940
Act will be preserved for the periods prescribed by Rule 31a-2 under the 1940
Act unless any such records are earlier surrendered as provided above. Records
shall be surrendered in usable machine-readable form.
12. SERVICES NOT EXCLUSIVE
The services of the Bank to the Fund are not to be deemed
exclusive, and the Bank shall be free to render similar services to others. The
Bank shall be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Fund from time to time, have no
authority to act or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
13. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective on the date of its
execution and shall remain in full force and effect from the effective date for
an initial term of one year from the effective date and shall automatically
continue in full force and effect after such initial term unless either party
terminates this Agreement by written notice to the other party at least sixty
(60) days prior to the expiration of the initial term. Either party may
terminate this Agreement at any time after the initial term upon at least sixty
(60) days' prior written notice to the other party. Termination of this
Agreement with respect to any given Investment Fund shall in no way affect the
continued validity of this Agreement with respect to any other Investment Fund.
Upon termination of this Agreement, the Company shall pay to the Bank such
compensation and any reimbursable expenses as may be due under the terms hereof
as of the date of such termination, including reasonable out-of-pocket expenses
associated with such termination. Each Fund shall pay to the Bank any and all
compensation and reimbursement of expense that are not paid to the Bank by the
Company. This Agreement may be modified or amended from time to time by mutual
written agreement of the parties hereto.
14. NOTICES
Any notice or other communication authorized or required by this Agreement
to be given to either party shall be in writing and deemed to have been given
when delivered in person or by confirmed facsimile, or posted by certified mail,
return receipt requested, to the following address (or such other address as a
party may specify by written notice to the other): If to the Company: Hyperion
Capital Management, Inc., One Liberty Plaza, 000 Xxxxxxxx 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, if to the Funds: c/o Hyperion Capital Management, Inc., One
Liberty Plaza, 000 Xxxxxxxx 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,; if to the
Bank: State - Street Bank and Trust Company, 0 Xxxxxx xx Xxxxxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000-0000, Attn: Fund Administration Legal Department, fax:
(000)000-0000.
15. NON-ASSIGNABILITY
This Agreement shall not be assigned by any party hereto without the prior
consent in writing of the other two parties, except that the Bank may assign
this Agreement to a successor of all or a substantial portion of its business,
or to a party controlling, controlled by or under common control with the Bank.
16. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of each
Fund, the Company and the Bank and their respective successors and permitted
assigns.
17. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties hereto
with respect to the subject matter hereof and supersedes all previous
representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing.
18. WAIVER
The failure of a party to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver nor shall it deprive
such party of the right thereafter to insist upon strict adherence to that term
or any term of this Agreement. Any waiver must be in writing signed by the
waiving party.
19. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the balance
of the Agreement shall remain in effect, and if any provision is inapplicable to
any person or circumstance it shall nevertheless remain applicable to all other
persons and circumstances.
20. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
21. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and
amendments hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
Hyperion Capital Management, Inc.
By: / s / Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Operating Officer
Hyperion 2005 Investment Grade Opportunity Term Trust, Inc.
Hyperion 2002 Term Trust, Inc.
Hyperion Total Return Fund, Inc.
Lend Lease Hyperion High Yield CMBS Fund, Inc.
Lend lease Hyperion Mortgage Opportunity Fund, Inc.
By: / s / Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Treasurer
STATE STREET BANK AND TRUST COMPANY
By: / s / Xxxxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Executive Vice President
SUB-ADMINISTRATION AGREEMENT
Hyperion Funds
SCHEDULE A
Listing of Investment Funds and Authorized Shares
Investment Fund Authorized Shares
Hyperion 2005 Investment Grade Opportunity Term Trust, Inc.
Hyperion 2002 Term Trust, Inc.
Hyperion Total Return Fund, Inc.
Lend Lease Hyperion High Yield CMBS Fund, Inc.
Lend Lease Hyperion Mortgage Opportunity Fund, Inc.
STATE STREET BANK AND TRUST COMPANY
FUND ADMINISTRATION COMPLEX FEE SCHEDULE
FOR
HYPERION FUNDS
I. FEES FOR FUND ADMINISTRATION SERVICES:
The following fee schedule is for sub-administration services for the
following Hyperion Funds: Hyperion 2002 Term Trust Inc., Hyperion 2005
Investment Grade Opportunity Term Trust Inc., Hyperion Total Return
Fund Inc., Lend Lease Hyperion High Yield Commercial Mortgage Fund,
Inc. For these funds, the service include: Daily accounting oversight;
IRS, SEC & Prospectus Compliance; financial reporting; expense
budgeting & xxxx processing; SEC performance, board reporting and
limited legal services1. For these services, the funds will be charged
according to the following fee schedule:
Annual Fee2
Average Assets Break Point Expressed in Basis Points: 1/100 of 1%
-------------------------- --------------------------------------
First $100 Million 9.00
Next $100 Million 7.00
Thereafter 5.00
Minimum Per Fund $100,000
Fund Fees:
The total net assets of all funds will be used to calculate the fee by
multiplying the net assets of all funds by the basis point fees in the
above schedule. The minimum fee will be calculated by multiplying the
minimum fee by the number of funds to arrive at the total minimum fee.
The greater of the basis point fee or the minimum fee will be accrued
to each fund based on the pro-rata total net asset value of each fund.
II. Services Not Performed
This proposal specifically does not include the following services:
proxy tabulation, assembling and distributing board books, telephone
support for shareholders' inquiries, tax preparation and filing, blue
sky services and other services as outlined in the Administration
Contract and Fund Profile.
III. Multiple Classes of Shares
An additional $10,000 annual fee will be applied for each class of
shares, excluding the first class of shares, if more than one class of
shares is operational in a Fund.
IV. OUT OF POCKET EXPENSES - Include, But May Not Be Limited To:
o Legal fees, audit fees and other professional fees
o Postage
o Supplies related to Fund records
o Travel and lodging for Board and Operations meetings
o Preparation of financial statements other than Annual and Semi-Annual
Reporting, $3,000 per financial report.
V. SPECIAL ARRANGEMENTS
Fees for activities of a non-recurring nature such as reorganizations,
and/or preparation of special reports will be subject to negotiation.
Fees for a change in fund structure (i.e., Core and Feeder) are subject
to negotiation.
VI. TERM OF THE CONTRACT
The parties agree that this fee schedule shall remain in effect until
December 31, 2001 and from year to year thereafter until it is revised
as a result of negotiations initiated by either party.
HYPERION CAPITAL MANAGEMENT, INC. STATE STREET BANK
/ s / Xxxxxx X. Xxxxxxx / s / Xxxxxxxx X. Xxxxxxx
--------------------------- --------------------------
Name Xxxxxxxx X. Xxxxxxx
COO Executive Vice President
------------------------------------
Title
9/14/00 9/20/00
Date Date
--------
1 Legal services are limited to the preparation, for review and approval by
Hyperion and it's outside legal counsel, of the following: initial fund
registration statements on Form N-2, annual proxy statements and Form N-8F.
2 Administration fees of $20,000 will be waived for the first year for the
fund complex.
