Exhibit (G)
MANAGEMENT AGREEMENT
AGREEMENT dated November ____, 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; 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 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.
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 0.425% for the Fund's first two
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. 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 6 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 it 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 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 0000 Xxx) 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.
7. Duration and Termination
This Agreement shall become effective on the date first set forth above and
shall continue until _______________. 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).
8. 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.
9. 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:
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Name:
Title:
HYPERION CAPITAL MANAGEMENT, INC.
By:
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Name:
Title:
