EXHIBIT 10 - IN REFERENCE TO ITEM 77.Q3
ADMINISTRATION AGREEMENT
AGREEMENT made this 1st day of December, 1996 by and between The
Hyperion Total Return 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 and Hyperion Capital Management, Inc. (the "Investment
Adviser") are entering into an Investment Advisory Agreement (the "Investment
Advisory Agreement") pursuant to which the Investment Adviser will provide
investment advice to the Fund and be responsible for the portfolio management
of the Fund; 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 expense; (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
$3,000 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 .20% 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 December 1, 1996. Upon termination of this
Agreement before the end of a month, the fee for such part of that month shall
be pro-rated 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
Administrators 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 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 much be met: (A) the Administrator 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 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 Fund, to: Treasurer,
The Hyperion Total Return Fund, Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000; or (b) if to the Administrator, to: President, Hyperion Capital
Management, Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE HYPERION TOTAL RETURN FUND, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Treasurer
HYPERION CAPITAL MANAGEMENT
By: /s/ Xxxxx X. Xxxxxx
Title: Managing Director and Chief Operating Officer
