SUB-INVESTMENT ADVISORY AGREEMENT
Effective as of ____________
Credit Suisse Asset Management Limited
One Xxxxx Xxxxxx
Xxxxxx, Xxxxxx Xxxxxxx
X00 0XX
Dear Sirs:
Credit Suisse Absolute Return Fund (the "Fund"), a series of Credit Suisse
Capital Funds, a business trust organized and existing under the laws of the
Commonwealth of Massachusetts, and Credit Suisse Asset Management, LLC, as
investment adviser to the Fund ("Credit Suisse"), herewith confirm their
agreement with Credit Suisse Asset Management Limited (the "Sub-Adviser"), a
corporation organized under the laws of England, as follows:
1. Investment Description; Appointment
The Fund desires to employ the capital of the Fund by investing and
reinvesting in securities of the kind and in accordance with the limitations
specified in the Fund's Agreement and Declaration of Trust, as may be amended
from time to time (the "Agreement and Declaration of Trust"), and in the Fund's
Prospectus(es) and Statement(s) of Additional Information, as from time to time
in effect (the "Prospectus" and "SAI," respectively), and in such manner and to
such extent as may from time to time be approved by the Board of Trustees of the
Fund. Copies of the Prospectus, SAI and Agreement and Declaration of Trust have
been or will be submitted to the Sub-Adviser. The Fund agrees to promptly
provide the Sub-Adviser copies of all amendments to the Prospectus and SAI on an
on-going basis. The Fund employs Credit Suisse as its investment adviser. Credit
Suisse desires to employ and hereby appoints the Sub-Adviser to act as its
sub-investment adviser upon the terms set forth in this Agreement. The
Sub-Adviser accepts the appointment and agrees to furnish the services set forth
below for the compensation provided for herein.
2. Services as Sub-Investment Adviser
(a) Subject to the supervision and direction of Credit Suisse, the
Sub-Adviser will provide investment advisory and portfolio management advice to
all or that portion of the Fund's assets designated by Credit Suisse from time
to time (the "Assets") in accordance with (a) the Agreement and Declaration of
Trust, (b) the Investment Company Act of 1940, as amended (the "1940 Act"), and
the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and all
applicable Rules and Regulations of the Securities and Exchange Commission (the
"SEC") and all other applicable laws and regulations, and (c) the Fund's
investment objective and policies as stated in the Prospectus and SAI and
investment parameters provided by Credit Suisse from time to time. In connection
therewith, the Sub-Adviser will:
(i) manage the Assets or furnish recommendations to manage the Assets
in accordance with the Fund's investment objective and policies;
(ii) make investment decisions or recommendations with respect to the
Assets;
(iii) if requested by Credit Suisse will place purchase and sale
orders for securities on behalf of the Fund with respect to the Assets;
(iv) exercise voting rights with respect to the Assets if requested by
Credit Suisse; and
(v) furnish Credit Suisse and the Fund's Board of Trustees with such
periodic and special reports as the Fund or Credit Suisse may reasonably
request.
In providing those services, the Sub-Adviser will, if requested by Credit
Suisse, provide investment research and supervision of the Assets and conduct a
continued program of investment, evaluation and, if appropriate, sale and
reinvestment of the Assets.
(b) In connection with the performance of the services of the Sub-Adviser
provided for herein, the Sub-Adviser may contract at its own expense with third
parties for the acquisition of research, clerical services and other
administrative services that would not require such parties to be required to
register as an investment adviser under the Advisers Act; provided that the
Sub-Adviser shall remain liable for the performance of its duties hereunder.
3. Execution of Transactions
(a) In executing transactions for the Assets, selecting brokers or dealers
and negotiating any brokerage commission rates, the Sub-Adviser will use its
best efforts to seek best execution. In assessing best execution available for
any portfolio transaction, the Sub-Adviser will consider all factors it deems
relevant including, but not limited to, the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of any commission for
the specific transaction and for transactions executed through the broker or
dealer in the aggregate. In selecting brokers or dealers to execute a particular
transaction and in evaluating the best overall terms available, to the extent
that the execution and price offered by more than one broker or dealer are
comparable the Sub-Adviser may consider any brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to the Sub-Adviser or to Credit Suisse for use on behalf of the Fund or
other clients of the Sub-Adviser or Credit Suisse.
(b) It is understood that the services of the Sub-Adviser are not
exclusive, and nothing in this Agreement shall prevent the Sub-Adviser from
providing similar services to other investment companies or from engaging in
other activities, provided that those activities do not adversely affect the
ability of the Sub-Adviser to perform its services under this Agreement. The
Fund and Credit Suisse further understand and acknowledge that the persons
employed by the Sub-Adviser to assist in the performance of its duties under
this Agreement will not devote their full time to that service. Nothing
contained in this Agreement will be deemed to limit or restrict the right of the
Sub-Adviser or any affiliate of the Sub-Adviser to engage in and devote time and
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attention to other businesses or to render services of whatever kind or nature,
provided that doing so does not adversely affect the ability of the Sub-Adviser
to perform its services under this Agreement.
(c) On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as of other investment
advisory clients of the Sub-Adviser, the Sub-Adviser may, to the extent
permitted by applicable laws and regulations, but shall not be obligated to,
aggregate the securities to be so sold or purchased with those of its other
clients. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the
Sub-Adviser in a manner that is fair and equitable, in the judgment of the
Sub-Adviser, in the exercise of its fiduciary obligations to the Fund and to
such other clients. The Fund recognizes that the effect of the aggregation may
operate on some occasions to the Fund's advantage or disadvantage. The
Sub-Adviser shall provide to Credit Suisse and the Fund all information
reasonably requested by Credit Suisse and the Fund relating to the decisions
made by the Sub-Adviser regarding allocation of securities purchased or sold, as
well as the expenses incurred in a transaction, among the Fund and the
Sub-Adviser's other investment advisory clients.
(d) In connection with the purchase and sale of securities for the Fund,
the Sub-Adviser will provide such information as may be reasonably necessary to
enable the custodian and co-administrators to perform their administrative and
recordkeeping responsibilities with respect to the Fund.
4. Disclosure Regarding the Sub-Adviser
(a) The Sub-Adviser has reviewed the disclosure about the Sub-Adviser
contained in the Fund's registration statement and represents and warrants that,
with respect to such disclosure about the Sub-Adviser or information related,
directly or indirectly, to the Sub-Adviser, such registration statement
contains, as of the date hereof, no untrue statement of any material fact and
does not omit any statement of a material fact which is required to be stated
therein or necessary to make the statements contained therein not misleading.
(b) The Sub-Adviser agrees to notify Credit Suisse and the Fund promptly of
(i) any statement about the Sub-Adviser contained in the Fund's registration
statement that becomes untrue in any material respect, (ii) any omission of a
material fact about the Sub-Adviser in the Fund's registration statement which
is required to be stated therein or necessary to make the statements contained
therein not misleading, or (iii) any reorganization or change in the
Sub-Adviser, including any change in its ownership or key employees.
(c) Prior to the Fund or Credit Suisse or any affiliated person (as defined
in the 1940 Act, an "Affiliate") of either using or distributing sales
literature or other promotional material referring to the Sub-Adviser
("Promotional Material"), the Fund or Credit Suisse, where applicable, shall
forward such material to the Sub-Adviser and shall allow the Sub-Adviser
reasonable time to review the material. The Sub-Adviser will not act
unreasonably in its review of Promotional Material and the Fund or Credit
Suisse, where applicable, will use all reasonable efforts to ensure that all
Promotional Material used or distributed by or on behalf of the Fund or
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Credit Suisse will comply with the requirements of the Advisers Act, the 1940
Act and the rules and regulations promulgated thereunder.
(d) The Sub-Adviser has supplied Credit Suisse and the Fund copies of its
Form ADV with all exhibits and attachments thereto and will hereinafter supply
Credit Suisse and the Fund, promptly upon preparation thereof, copies of all
amendments or restatements of such document.
5. Representations and Warranties
5.1 The Sub-Adviser represents and warrants that:
(a) it is a duly registered investment adviser under the Advisers
Act, a duly registered investment adviser in any and all states of the United
States in which the Sub-Adviser is required to be so registered and has obtained
all necessary licenses and approvals in order to perform the services provided
in this Agreement. The Sub-Adviser covenants to maintain all necessary
registrations, licenses and approvals in effect during the term of this
Agreement.
(b) it has read and understands the Prospectus and SAI and
warrants that in investing the Fund's assets it will use all reasonable efforts
to adhere to the Fund's investment objectives, policies and restrictions
contained therein.
(c) it has adopted a written Code of Ethics in compliance with
Rule 17j-1 under the 1940 Act and will provide the Fund with any amendments to
such Code.
5.2 The Fund represents and warrants that:
(a) it has full power to enter into the terms of this
Agreement and to enter into transactions contemplated by this Agreement and that
its entry into the Agreement nor the exercise by the Sub-Adviser of its
discretions or powers under this Agreement will result in any default under any
contract or other agreement or instrument to which the Fund is a party, or any
statute or rule, regulation or order of any governmental agency or body
applicable to the Fund.
(b) information which has been provided to the Sub-Adviser in
relation to the Fund's status, residence and domicile for taxation purposes is
complete and correct, and the Fund agrees to provide any further information
properly required by any competent authority.
(c) it will notify the Sub-Adviser promptly if there is any
material change in any of the above information and will provide such other
relevant information as the Sub-Adviser may reasonably request in order to
fulfill its regulatory and contractual obligations. The Fund acknowledges that a
failure to provide such information may adversely affect the quality of the
services that the Sub-Adviser may provide.
5.3 Credit Suisse represents and warrants that it has full power to
enter into the terms of this Agreement and to enter into transactions
contemplated by this Agreement and that neither its entry into the
Agreement nor the exercise by the Sub-Adviser of its discretions or powers
under this Agreement will result in any default under any contract or other
agreement or instrument to which Credit Suisse is a party, or any
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statute or rule, regulation or order of any governmental agency or body
applicable to Credit Suisse.
6. Compliance
(a) The Sub-Adviser agrees that it shall promptly notify
Credit Suisse and the Fund (i) in the event that the SEC or any other regulatory
authority has censured its activities, functions or operations; suspended or
revoked its registration as an investment adviser; or has commenced proceedings
or an investigation that may result in any of these actions, (ii) in the event
that there is a change in the Sub-Adviser, financial or otherwise, that
adversely affects its ability to perform services under this Agreement or (iii)
upon having a reasonable basis for believing that, as a result of the
Sub-Adviser's investing the Fund's assets, the Fund's investment portfolio has
ceased to adhere to the Fund's investment objectives, policies and restrictions
as stated in the Prospectus or SAI or is otherwise in violation of applicable
law.
(b) Credit Suisse agrees that it shall promptly notify the
Sub-Adviser in the event that the SEC has censured Credit Suisse or the Fund;
placed limitations upon any of their activities, functions or operations;
suspended or revoked Credit Suisse's registration as an investment adviser; or
has commenced proceedings or an investigation that may result in any of these
actions.
(c) The Fund and Credit Suisse shall be given access to the
records with respect to the Fund of the Sub-Adviser at reasonable times solely
for the purpose of monitoring compliance with the terms of this Agreement and
the rules and regulations applicable to the Sub-Adviser relating to its
providing investment advisory services to the Fund, including without limitation
records relating to trading by employees of the Sub-Adviser for their own
accounts and on behalf of other clients. The Sub-Adviser agrees to cooperate
with the Fund and Credit Suisse and their representatives in connection with any
such monitoring efforts.
7. Books and Records
(a) In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Sub-Adviser hereby agrees that all records which it maintains
for the Fund are the property of the Fund and further agrees to surrender
promptly to the Fund any of such records upon request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act and to
preserve the records required by Rule 204-2 under the Advisers Act for the
period specified therein.
(b) The Sub-Adviser hereby agrees to furnish to regulatory
authorities having the requisite authority any information or reports in
connection with services that the Sub-Adviser renders pursuant to this Agreement
which may be requested in order to ascertain whether the operations of the Fund
are being conducted in a manner consistent with applicable laws and regulations.
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8. Provision of Information; Proprietary and Confidential Information
(a) Credit Suisse agrees that it will furnish to the
Sub-Adviser information related to or concerning the Fund that the Sub-Adviser
may reasonably request.
(b) The Sub-Adviser agrees on behalf of itself and its
employees to treat confidentially and as proprietary information of the Fund all
records and other information relative to the Fund, Credit Suisse and prior,
present or potential shareholders and not to use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder except after prior notification to and approval in writing of the
Fund, which approval shall not be unreasonably withheld and may not be withheld
where the Sub-Adviser may be exposed to civil or criminal contempt proceedings
for failure to comply or when requested to divulge such information by duly
constituted authorities.
(c) The Sub-Adviser represents and warrants that neither it
nor any affiliate will use the name of the Fund, Credit Suisse or any of their
affiliates in any prospectus, sales literature or other material in any manner
without the prior written approval of the Fund or Credit Suisse, as applicable.
9. Standard of Care
The Sub-Adviser shall exercise its best judgment in rendering
the services described herein. The Sub-Adviser shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund or Credit
Suisse in connection with the matters to which this Agreement relates, except
that the Sub-Adviser shall be liable for a loss resulting from a breach of
fiduciary duty by the Sub-Adviser with respect to the receipt of compensation
for services; provided that nothing herein shall be deemed to protect or purport
to protect the Sub-Adviser against any liability to the Fund or Credit Suisse or
to shareholders of the Fund to which the Sub-Adviser would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or by reason of the Sub-Adviser's reckless
disregard of its obligations and duties under this Agreement. The Fund and
Credit Suisse understand and agree that the Sub-Adviser may rely upon
information furnished to it reasonably believed by the Sub-Adviser to be
accurate and reliable and, except as herein provided, the Sub-Adviser shall not
be accountable for loss suffered by the Fund by reason of such reliance of the
Sub-Adviser.
10. Compensation
In consideration of the services rendered pursuant to this
Agreement, Credit Suisse will pay the Sub-Adviser such amounts as the parties
may agree upon from time to time as set forth on Schedule A, as amended from
time to time.
11. Expenses
(a) The Sub-Adviser will bear all expenses in connection with
the performance of its services under this Agreement, which shall not include
the Fund's expenses listed in paragraph 11(b).
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(b) The Fund will bear certain other expenses to be incurred
in its operation, including: investment advisory and administration fees; taxes,
interest, brokerage fees and commissions, if any; fees of Trustees of the Fund
who are not officers, directors, or employees of Credit Suisse or the
Sub-Adviser or affiliates of any of them; fees of any pricing service employed
to value shares of the Fund; SEC fees, state Blue Sky qualification fees and any
foreign qualification fees; charges of custodians and transfer and dividend
disbursing agents; the Fund's proportionate share of insurance premiums; outside
auditing and legal expenses; costs of maintenance of the Fund's existence; costs
attributable to investor services, including, without limitation, telephone and
personnel expenses; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings of the
shareholders of the Fund and of the officers or Board of Trustees of the Fund;
and any extraordinary expenses.
12. Term of Agreement
This Agreement shall commence on the date first written above
and shall continue for an initial two-year period commencing on the date first
written above, and thereafter shall continue automatically for successive annual
periods, provided such continuance is specifically approved at least annually by
(a) the Board of Trustees of the Fund or (b) a vote of a "majority" (as defined
in the 0000 Xxx) of the Fund's outstanding voting securities, provided that in
either event the continuance is also approved by a majority of the Board of
Trustees who are not "interested persons" (as defined the 0000 Xxx) of any party
to this Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable, without penalty, (i) by
Credit Suisse on 60 (sixty) days' written notice to the Fund and the
Sub-Adviser, (ii) by the Board of Trustees of the Fund or by vote of holders of
a majority of the Fund's shares on 60 (sixty) days' written notice to Credit
Suisse and the Sub-Adviser, or (iii) by the Sub-Adviser upon 60 (sixty) days'
written notice to the Fund and Credit Suisse. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 0000 Xxx) by any
party hereto. In the event of termination of this Agreement for any reason, all
records relating to the Fund kept by the Sub-Adviser shall promptly be returned
to Credit Suisse or the Fund, free from any claim or retention of rights in such
records by the Sub-Adviser. In the event this Agreement is terminated or is not
approved in the foregoing manner, the provisions contained in paragraph numbers
4(c), 7, 8 and 9 shall remain in effect.
13. Amendments
No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (a) the holders of a majority of the
outstanding voting securities of the Fund and (b) the Board of Trustees of the
Fund, including a majority of Trustees who are not "interested persons" (as
defined in the 0000 Xxx) of the Fund or of either party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law.
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14. Notices
14.1 All communications hereunder shall be given (a) if to the
Sub-Adviser, to Credit Suisse Asset Management Limited, One Xxxxx Xxxxxx, Xxxxxx
X00 0XX (Attention: Xxxxx Xxxxxxx), telephone: 00-00-0000-0000, telecopy:
00-00-0000-0000, (b) if to Credit Suisse, to Credit Suisse Asset Management,
LLC, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 (Attention: J. Xxxxx
Xxx), telephone: (000) 000-0000, telecopy: (000) 000-0000, and (c) if to the
Fund, c/o Credit Suisse Funds, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000, telephone: (000) 000-0000, telecopy: (000) 000-0000 (Attention:
President).
14.2 The Sub-Adviser may rely on, and act without further
enquiry upon, any instruction, notice or request of any person(s) who is or who
the Sub-Adviser reasonably believes in good faith to be person(s) designated by
Credit Suisse or the Fund to give such instruction, notice or request, and
further provided that such instruction, notice or request is made in writing and
sent by original signed letter, facsimile or electronic means in accordance with
the provisions of Clause 14.1.
14.3 Credit Suisse and the Fund will provide a list of
person(s) who are authorized to give instructions and sign documents and take
other actions in respect of the Assets. Credit Suisse or the Fund shall notify
the Sub-Adviser promptly of any amendment to such list and provide specimen
signatures of new signatories, and the Sub-Adviser shall accept any such
amendments.
15. Choice of Law
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York in the United States,
including choice of law principles; provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the Advisers Act or any
applicable rules, regulations or orders of the SEC.
16. Miscellaneous
(a) The captions of this Agreement are included for
convenience only and in no way define or limit any of the provisions herein or
otherwise affect their construction or effect.
(b) If any provision of this Agreement shall be held or made
invalid by a court decision, by statute or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
(c) Nothing herein shall be construed to make the Sub-Adviser
an agent of Credit Suisse or the Fund.
(d) This Agreement may be executed in counterparts, with the
same effect as if the signatures were upon the same instrument.
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17. United Kingdom Regulatory Matters
The Sub-Adviser is regulated by the Financial Services
Authority ("FSA") in carrying out its investment business. It therefore is
subject to the rules and guidelines established by the FSA including the Conduct
of Business Sourcebook. Under the FSA Rules, the following provisions apply:
(a) The FSA requires that all clients of the Sub-Adviser be
classified into specific categories. On the basis of the information which
Credit Suisse has given, the Sub-Adviser has determined that Credit Suisse is an
Intermediate Customer and the Fund is a Private Customer.
(b) (i) The Sub-Adviser is permitted to trade in Futures, Options and
Contracts for Differences including on and off exchange transactions
("Derivative Instruments"), subject to limitations described herein. The
markets on which Derivative Instruments are executed can be highly
volatile. Such investments carry a high risk of loss and a relatively small
adverse market movement may result not only in the loss of the original
investment but also in unquantifiable further loss exceeding any margin
deposited.
(ii) The Sub-Adviser may instruct the Custodian to pay margin, or
(subject to the rules of the exchange concerned) deposit investments by way
of margin or collateral, on any Derivative Instrument out of the Assets.
The Fund shall not be required to pay margin in cash beyond the amount of
cash held at the relevant time on the Fund's behalf and immediately
available for margin payments.
(c) The Sub-Adviser will not supply the Fund with contract
notes. The periodic reports provided under Section 2(iv) will contain
information that would have been provided in the contract notes.
(d) In order to comply with applicable laws and related regulatory
requirements, there may be periods when the Sub-Adviser will not be
permitted to initiate or recommend certain types of transactions.
(e) No warranty is given by the Sub-Adviser as to the performance or
profitability of the Assets or any part of them.
(f) The Sub-Adviser has in operation a written procedure in
accordance with the FSA Rules for the effective consideration and proper
handling of complaints from customers. Any complaint by Credit Suisse or the
Fund hereunder should be sent in writing to the Compliance Officer of the
Sub-Adviser at the address specified in Section 14.
******************
[signature page follows]
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Please confirm that the foregoing is in accordance with your understanding
by indicating your acceptance hereof at the place below indicated, whereupon it
shall become a binding agreement between us.
Very truly yours,
CREDIT SUISSE ASSET MANAGEMENT, LLC
By:
-------------------------------
Name:
Title:
CREDIT SUISSE ABSOLUTE RETURN FUND,
a series of the CREDIT SUISSE CAPITAL FUNDS
By:
------------------------------
Name:
Title:
CREDIT SUISSE ASSET
MANAGEMENT LIMITED
By:
----------------------------
Name:
Title:
Date:
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SCHEDULE A
Credit Suisse will pay the Sub-Adviser a fee equal to 25% of the advisory
fee (after waivers and reimbursements) paid by the Fund to Credit Suisse, one
quarter of which shall be payable in U.S. dollars in arrears on the last
business day of each calendar quarter. The fee for the first period during which
this Agreement is in effect shall be pro-rated for the portion of the calendar
quarter that the Agreement is in effect.
A-1
