Exhibit K(1)
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
prorated 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 s 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 in 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 ought 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, parties hereto have executed this Agreement as of the
day and year first above written.
HYPERION TOTAL RETURN FUND, INC.
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------
Xxxxxx Xxxxxxxx
Title: Treasurer
HYPERION CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
Title: Managing Director and
Chief Operating Officer
