SUB-ADVISORY 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 North
American 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.
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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.
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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 or
purchased, as well as the
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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 Investments and
the Subadviser will report to the Board of Directors in writing on the Fund
Investments monthly.
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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.
c. Notwithstanding any other provision of this Agreement, the Subadviser may
from
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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 Directors
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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.
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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 any penalty, in the
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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.
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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
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of reference only and will not constitute a part of this Agreement.
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: ______________________________________
______________________________________
