SUBADVISORY AGREEMENT
THIS AGREEMENT is made and entered into as of the ___th day
of ________, 199__, between CYPRESSTREE ASSET MANAGEMENT CORPORATION, INC. (the
"Adviser"), a Delaware corporation registered under the Investment Advisers Act
of 1940, as amended (the "Advisers Act"), and CYPRESSTREE INVESTMENT MANAGEMENT
COMPANY, INC. (the "Subadviser"), a Delaware corporation also registered under
the Advisers Act.
W I T N E S E T H
WHEREAS, the Adviser, pursuant to an Advisory Agreement
with the CypressTree Senior Floating Rate Fund, Inc., a Maryland Corporation
(the "Fund"), dated as of the ____th day of ____________, 199__ (the "Advisory
Agreement"), has been retained to act as investment adviser for the Fund;
WHEREAS, the Fund is registered with the Securities and
Exchange Commission (the "SEC") as a closed-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser desires to retain the Subadviser to
provide a continuous investment program for the Fund, and the Subadviser is
willing to render those services subject to the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT AS SUBADVISER
The Fund desires to employ its capital by investing and
reinvesting in securities of the kind and in accordance with the limitations
specified in the Fund's Prospectus and Statement of Additional Information
relating to the Fund as may be in effect from time to time (collectively, the
"Prospectus") and which are filed with the SEC as part of the Fund's
Registration Statement on Form N-2, as amended from time to time, and in such
manner and to such extent as may be approved by the Board of Directors of the
Fund. A copy of the Prospectus has been provided to the Subadviser. The Adviser
retains the Subadviser to act as investment adviser for and to manage the Fund's
Assets subject to the supervision of the Adviser and the Board of Directors of
the Fund and subject to the terms of this Agreement, and the Subadviser accepts
that employment. In this capacity, the Subadviser will be responsible for the
investment management of the Fund's assets. It is recognized that the Subadviser
now acts, and that from time to time hereafter may act, as investment adviser to
one or more other investment companies and to fiduciary or other managed
accounts and that the Adviser and the Fund have no objection to those
activities.
-2-
2. DUTIES OF THE SUBADVISER
a. Investments. The Subadviser is authorized and directed and agrees,
subject to the stated investment policies and restrictions of the
Fund as set forth in the Prospectus and subject to the directions of
the Adviser and the Fund's Board of Directors, to purchase, hold and
sell investments for the Fund ("Fund Investments") and to monitor on
a continuous basis the performance of such Fund Investments. Subject
to the supervision of the Board of Directors and the Adviser and the
terms and conditions of this Agreement, including without limitation
section 2(b), the Subadviser will: (1) manage the Fund's Assets in
accordance with the Fund's investment objective, policies and
limitations as stated in the Prospectus; (2) make investment
decisions for the Fund; (3) place purchase and sale orders for
portfolio transactions for the Fund; and (4) manage otherwise
uninvested Fund cash. In providing these services, the Subadviser
will formulate and implement a continuous program of investment,
evaluation and, if appropriate, sale and reinvestment of the Fund's
Assets. The Adviser agrees to provide to the Subadviser such
assistance as may be reasonably requested by the Subadviser in
connection with its activities under this Agreement, including,
without limitation, information concerning the Fund, its funds
available (or to become available) for investment, and generally as
to the condition of the Fund's affairs.
b. Compliance with Applicable Laws and Governing Documents. In the
performance of its duties and obligations under this Agreement, the
Subadviser will act in conformity with the Prospectus and with the
instructions and directions received in writing from the Adviser or
the Board of Directors of the Fund and will comply with the
requirements of the 1940 Act, the Advisers Act, the Internal Revenue
Code of 1986, as amended (the "Code") (including the requirements for
qualification as a regulated investment company) and all other
federal and state laws and regulations applicable to its services
under this Agreement.
The Adviser will provide the Subadviser with reasonable advance
notice of any change in the Fund's investment objectives, policies
and restrictions as stated in the Prospectus, and the Subadviser
will, in the performance of its duties and obligations under this
Agreement, manage the Fund Investments consistent with such changes.
The Adviser acknowledges and agrees that the Prospectus will at all
times be in compliance with all disclosure requirements under all
applicable federal and state laws and regulations relating to the
Fund, including, without limitation, the 1940 Act and the rules and
regulations under this Agreement, and that the Subadviser will have
no liability in connection therewith, except as to the accuracy of
material information furnished in writing by the Subadviser to the
Fund or to the Adviser specifically for inclusion in the Prospectus.
The Subadviser hereby agrees to provide to the Adviser in a timely
manner such information relating to the Subadviser and its
relationship to, and actions for, the Fund as may be required to be
contained in the Prospectus.
-3-
In fulfilling these requirements and its other requirements and
obligations under this Agreement, the Subadviser will be entitled to
rely on and act in accordance with (1) information provided to it by
the Fund's administrator, fund accountant, custodian or other service
provider and (2) instructions, which may be standing instructions,
from the Adviser. The Adviser agrees to provide or cause to be
provided to the Subadviser on an ongoing basis upon request by the
Subadviser, such information as is requested by the Subadviser for
the performance of its obligations under this Agreement, and the
Subadviser will not be in breach of any term of this Agreement or be
deemed to have acted negligently if the Adviser fails to provide or
cause to be provided such information and the Subadviser relies on
the information most recently provided to it.
c. Voting of Proxies. The Subadviser will have the power to vote, either
in person or by proxy, all securities in which the Fund may be
invested from time to time, and will not be required to seek
instructions from the Adviser or the Fund.
d. Agent. Subject to any other written instructions of the Adviser or
the Fund, the Subadviser is hereby appointed the Adviser's and the
Fund's agent and attorney-in-fact for the limited purposes of
executing account documentation, agreements, contracts and other
documents as the Subadviser will be requested by brokers, dealers,
counterparties and other persons in connection with its management of
the assets of the Fund.
e. Portfolio Transactions. Subject to the approval of the Board of
Directors of the Fund, the Subadviser, in carrying out its duties
hereunder, may cause the Fund to pay a broker-dealer which furnishes
brokerage or research services as such services are defined under
Section 28(e) of the Securities Exchange Act of 1934, as amended (the
"34 Act"), a higher commission than that which might be charged by
another broker dealer which does not furnish brokerage or research
services or which furnishes brokerage or research services deemed to
be of lesser value, if such commission is deemed reasonable in
relation to the brokerage and research services provided by the
broker-dealer, viewed in terms of either that particular transaction
or the overall responsibilities of the Subadviser with respect to the
accounts as to which it exercises investment discretion (as such term
is defined under Section 3(a)(35) of the 34 Act).
It is recognized that the services provided by such brokers or other
entities may be useful to the Subadviser in connection with the
Subadviser's services to other clients. On occasions when the
Subadviser deems the purchase or sale of a security to be in the best
interests of the Fund as well as other clients of the Subadviser, the
Subadviser, to the extent permitted by applicable laws and
regulations, may, but is under no obligation to, aggregate the
securities to be sold or purchased in order to obtain the most
favorable price or lower brokerage commissions and efficient
execution. In that event, allocation of securities so sold
-4-
or purchased, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary
obligations to the Fund and to its other clients over time. It is
recognized that in some cases, this procedure may adversely affect
the price paid or received by the Fund or the size of the position
obtainable for, or disposed of by, the Fund.
f. Certain Transactions. The Subadviser and any affiliated person of the
Subadviser will not purchase securities or other instruments from or
sell securities or other instruments to the Fund; provided, however,
the Subadviser may purchase securities or other instruments from or
sell securities or other instruments to the Fund if the transaction
is permissible under applicable laws and regulations, including,
without limitation, the 1940 Act and the Advisers Act and the rules
and regulations promulgated under both those acts.
The Subadviser, including its Access Persons (as defined in Rule
17j-1(e) under the 1940 Act), agrees to observe and comply with Rule
17j-1 and its Code of Ethics (which will comply in all material
respects with Rule 17j-1, as amended from time to time). On a
quarterly basis, the Subadviser will either (i) certify to the
Adviser that the Subadviser and its Access Persons have complied with
the Subadviser's Code of Ethics with respect to the Fund's assets or
(ii) identify any material violations that have occurred with respect
to the Fund's assets. In addition, the Subadviser will report at
least annually to the Adviser concerning any other violations of the
Subadviser's Code of Ethics that required significant remedial action
and that were not previously reported.
g. Books and Records. Pursuant both to the 1940 Act and the Advisers Act
and the rules and regulations promulgated under those acts, the
Subadviser will maintain separate books and records of all matters
pertaining to the Fund's assets. The Fund's books and records will be
available to the Adviser at any time upon reasonable request during
normal business hours and will be available for telecopying without
unreasonable delay to the Adviser during any day that the Fund is
open for business.
h. Information Concerning Fund Investments and Subadviser. From time
to time as the Adviser or the Fund may reasonably request (but no
less often than quarterly), the Subadviser will furnish or cause to
be furnished the requesting party reports on portfolio transactions
and reports on Fund Investments held in the portfolio, all in such
detail as the Adviser or the Fund may reasonably request. The
Subadviser will also inform the Adviser promptly of changes in
portfolio managers responsible for Subadviser Assets or of changes in
the control of the Subadviser. The Subadviser will be available to
its officers and employees to meet with the Fund's Board of Directors
in person on reasonable notice to review the Fund
-5-
Investments and the Subadviser will report to the Board of Directors
in writing on the Fund Investments monthly.
i. Custody Arrangements. The Subadviser will on each business day
provide the Adviser and the Fund's custodian such information as the
Adviser and the Fund's custodian may reasonably request relating to
all transactions concerning the Fund Investments including, without
limitation, recommendations, in accordance with policies and
procedures established by the Directors, as to the fair value of
securities for which market quotes are not available.
3. INDEPENDENT CONTRACTOR
In the performance of its duties under this Agreement, the
Subadviser is an independent contractor and unless otherwise expressly provided
in this Agreement or otherwise authorized in writing, will have no authority to
act for or represent the Fund or the Adviser in any way or otherwise be deemed
an agent of the Fund or the Adviser.
4. EXPENSES
During the term of this Agreement, Subadviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage fees and commissions and other transaction charges, if any) purchased
for the Fund. The Subadviser will not be responsible for any expenses of the
operations of the Fund including, without limitation, brokerage fees and
commissions and other transaction charges, if any. The Subadviser will not be
responsible for the Fund's or the Adviser's expenses.
5. COMPENSATION
a. The Adviser will pay the Subadviser a fee, computed daily and paid
monthly on or before the last business day of the month, at the
following annualized rate: 0.45% of the Fund's average daily net
assets for average daily net assets up to and including $1 billion;
0.40% of the Fund's average daily net assets for average daily net
assets between $1 billion and up to and including $2 billion; and
0.35% of the Fund's average daily net assets for average daily net
assets in excess of $2 billion. In calculating the net assets of the
Fund, for purposes of this computation, all liabilities of the Fund
will be deducted from gross assets except the principal amount of any
indebtedness for money borrowed, including debt securities issued by
the Fund.
b. If this Agreement becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end
of such month or from the beginning of the prorated according to the
proportion which that period bears to the full month in which the
effectiveness or termination occurs.
-6-
c. Notwithstanding any other provision of this Agreement, the Subadviser
may from time to time agree not to impose all or a portion of its fee
otherwise payable under this Agreement (in advance of the time such
fee or portion of the fee would otherwise accrue). Any such fee
reduction may be discontinued or modified by the Subadviser at any
time.
6. REPRESENTATION AND WARRANTIES OF SUBADVISER
The Subadviser represents and warrants to the Adviser and
the Fund as follows:
a. The Subadviser is registered as an investment adviser under the Advisers Act;
b. The Subadviser is a corporation duly organized and validly
existing under the laws of the State of Delaware with the power to
own and possess its assets and carry on its business as it is now
being conducted;
c. The execution, delivery and performance by the Subadviser of this
Agreement are within the Subadviser's powers and have been duly
authorized by its Board of Directors or shareholders, and no action
by or in respect of, or filing with, any governmental body, agency or
official is required on the part of the Subadviser for the execution,
delivery and performance by the Subadviser of this Agreement, and the
execution, delivery and performance by the Subadviser of this
Agreement do not contravene or constitute a default under (i) any
provision of applicable law, rule or regulation, (ii) the
Subadviser's governing instruments, or (iii) any material agreement,
judgment, injunction, order, decree or other instrument binding upon
the Subadviser;
d. The Form ADV of the Subadviser previously provided to the Adviser
is a true and complete copy of the form filed with the SEC and the
information contained therein is accurate and complete in all
material respects.
7. REPRESENTATIONS AND WARRANTIES OF ADVISER
The Adviser represents and warrants to the Subadviser as
follows:
a. The Adviser is registered as an investment adviser under the Advisers
Act;
b. The Adviser is a corporation duly organized and validly existing
under the laws of the State of Delaware with the power to own and
possess its assets and carry on its business as it is now being
conducted;
c. The execution, delivery and performance by the Adviser of this
Agreement are within the Adviser's powers and have been duly
authorized by its Board of
-7-
Directors or shareholders, and no action by or in respect of, or
filing with, any governmental body, agency or official is required on
the part of the Adviser for the execution, delivery and performance
by the Adviser of this Agreement, and the execution, delivery and
performance by the Adviser of this Agreement do not contravene or
constitute a default under (i) any provision of applicable law, rule
or regulation, (ii) the Adviser's governing instruments, or (iii) any
material agreement, judgment, injunction, order, decree or other
instrument binding upon the Adviser;
d. The Form ADV of the Adviser previously provided to the Subadviser is
a true and complete copy of the form filed with the SEC and the
information contained therein is accurate and complete in all
material respects;
e. The Adviser acknowledges that it has received a copy of the
Subadviser's Form ADV prior to the execution of this Agreement;
f. The Fund is in compliance in all material respects, and during the
term of this Agreement will remain in compliance in all material
respects, with all federal and state laws, rules and regulations
applicable to the Fund and the operation of its business (other than
those related to investment objectives, policies and restrictions
over which the Subadviser has discretion pursuant to the terms
hereof), including, without limitation, applicable disclosure and
filing obligations for prospectuses, statements of additional
information, registration statements, periodic reports to
shareholders and regulatory bodies, proxy statements and promotional
materials and advertisements; and
g. The Fund is in compliance in all material respects, and during the
term of this Agreement will remain in compliance in all material
respects, with the terms and conditions of the Prospectus (other than
those related to investment objectives, policies and restrictions
over which the Subadviser has discretion pursuant to the terms
hereof), including, without limitation, provisions relating to the
computation of the Fund's net asset value and those relating to
processing purchase, exchange and repurchase requests.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DUTY TO
UPDATE INFORMATION
All representations and warranties made by the Subadviser
and the Adviser pursuant to Sections 6 and 7, respectively, will survive for the
duration of this Agreement and the parties to this Agreement will promptly
notify each other in writing upon becoming aware that any of the foregoing
representations and warranties are no longer true.
-8-
9. LIABILITY
Neither the Subadviser nor any of its officers, directors,
or employees, nor any person performing executive, administrative, trading, or
other functions for the Fund (at the direction or request of the Subadviser) or
the Subadviser in connection with the Subadviser's discharge of its obligations
undertaken or reasonably assumed with respect to this Agreement, shall be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates, except for loss
resulting from willful misfeasance, bad faith, or gross negligence in the
performance of its or his or her duties on behalf of the Fund or from reckless
disregard by the Subadviser or any such person of the duties of the Subadviser
under this Agreement.
10. DURATION AND TERMINATION
a. This Agreement will become effective on the latest of its
execution, the effective date of the Fund's registration statement
under the Securities Act of 1933 or the date on which this Agreement
is approved by the vote of a majority of the outstanding voting
securities (as defined in the Investment Company Act) of the Fund.
The Agreement will continue in effect for two years from the date of
its execution, and from year to year thereafter, but only so long as
such continuance is specifically approved at least annually either by
the Directors of the Fund or by the vote of a majority of the
outstanding voting securities of the Fund, provided that in either
event such continuance will also be approved by the vote of a
majority of the Directors of the Fund who are not interested persons
(as defined in the Investment Company Act) of any party to this
Agreement cast in person at a meeting called for the purpose of
voting on such approval.
b. If the shareholders of the Fund fail to approve the Agreement or
any continuance of the Agreement, the Subadviser will continue to act
as subadviser with respect to the Fund pending the required approval
of the Agreement or its continuance or of a new contract with the
Subadviser or a different adviser or other definitive action;
provided, that the compensation received by the Subadviser in respect
of the Fund during such period will be no more than its actual costs
incurred in furnishing investment advisory and management services to
the Fund or the amount it would have received under the Agreement in
respect of the Fund, whichever is less.
c. This Agreement may be terminated at any time, without the payment of
any penalty, by the Directors of the Fund, by the Adviser, or by the
vote of a majority of the outstanding voting securities of the Fund,
on sixty days' written notice to the Subadviser; or by the Subadviser
on sixty days' written notice to the Fund and the Adviser. This
Agreement may be terminated immediately in the event of a material
breach of any provision of this Agreement by the other party to this
Agreement. This Agreement will automatically terminate, without the
payment of
-9-
any penalty, in the event of its assignment (as defined in the
Investment Company Act), or on termination of the Advisory Agreement.
11. REFERENCE TO SUBADVISERS
Neither the Adviser, the Fund nor any affiliated person or
agent of the Adviser or the Fund will make reference to or use the name of
"CypressTree Investment Management Company" or any derivative thereof or logo
associated with that name, except references concerning the identity of and
services provided by the Subadviser to the Fund, which references will not
differ in substance from those included in the Prospectus and this Agreement, in
any advertising or promotional materials without the prior approval of the
Subadviser, which approval will not be unreasonably withheld or delayed.
Upon termination of this Agreement in accordance with
Section 10(b) hereof, the Adviser, the Fund and the Fund and their affiliates
will cease to make such reference or use such name (or derivative or logo).
12. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Fund in writing of
the occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Adviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
b. the Subadviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, public board or body, involving the affairs
of the Fund; and
c. the chief executive officer or controlling stockholder of the
Subadviser or the portfolio manager of the Fund changes.
13. AMENDMENT
This Agreement may be amended by written amendment signed
by the parties, provided that the terms of any material amendment shall be
approved (i) by the vote of a majority of the outstanding voting securities of
the Fund and (ii) by the vote of a majority of the Directors of the Fund who are
not interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval, if such approval is
required by law.
-10-
14. CONFIDENTIALITY
Subject to the duties of the Subadviser to comply with
applicable law, including any demand of any regulatory or taxing authority
having jurisdiction, the Subadviser will treat as confidential all records and
other information pertaining to the Fund or the Adviser that the Subadviser
maintains or receives as a result of its responsibilities under this Agreement.
In addition, subject to the duties to comply with any applicable law, the
Adviser agrees to treat as confidential any information concerning the
Subadviser, including its investment policies or objectives, that the Adviser
receives as the result of its actions under this Agreement.
15. NOTICE
All notices required to be given pursuant to this Agreement
will be delivered or mailed to the last known business address of the Fund, the
Adviser, or the Subadviser in person or by registered mail or a private mail or
delivery service providing the sender with notice of receipt. Notice will be
deemed given on the date delivered or mailed in accordance with this section.
16. GOVERNING LAW
The provisions of this Agreement will be construed and
interpreted in accordance with the laws of the Commonwealth of Massachusetts, or
any of the applicable provisions of the Investment Company Act. To the extent
that the laws of the Commonwealth of Massachusetts, or any of the provisions in
this Agreement, conflict with applicable provisions of the Investment Company
Act, the latter will control.
17. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which will be deemed an original, all of which will together constitute
one and the same instrument.
18. CERTAIN DEFINITIONS
For the purposes of this Agreement, "interested person,"
"affiliated person", "majority of outstanding voting securities" and
"assignment" have their respective meanings as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the SEC.
19. HEADINGS
The headings in the sections of this Agreement are inserted
for convenience of reference only and will not constitute a part of this
Agreement.
-11-
20. SEVERABILITY
If any provision of this Agreement is held or made invalid
by a court decision, statute, rule, or otherwise, the remainder of this
Agreement will not be affected.
21. ENTIRE AGREEMENT
This Agreement contains the entire understanding and
agreement of the parties.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first written above.
CYPRESSTREE ASSET MANAGEMENT
CORPORATION, INC.
By:
-------------------------------
Xxxxxx X. Xxxxxx, Xx.
Vice President
CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC.
By:
-------------------------------
