EXHIBIT (g)
ADVISORY AGREEMENT
ADVISORY AGREEMENT made as of July 30, 2004, by and between Highland
Capital Management, L.P., a Delaware limited partnership (the "MANAGER"), and
Columbia Floating Rate Advantage Fund, a Massachusetts business trust (the
"FUND").
WHEREAS, the Fund is engaged in business as a closed-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 ACT"), and periodically offers to repurchase its
shares in conformity with the provisions of Rule 23c-3 under the 1940 Act, which
funds are generally referred to as "interval funds"; and
WHEREAS the Manager is engaged principally in the business of rendering
investment management services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended;
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the
parties hereto as follows:
SECTION 1. APPOINTMENT OF MANAGER.
The Fund hereby appoints the Manager to act as manager and investment
adviser to the Fund for the period and on the terms herein set forth. The
Manager accepts such appointment and agrees to render the services herein set
forth, for the compensation herein provided.
SECTION 2. DUTIES OF MANAGER.
The Manager, at its own expense, shall furnish the following services
and facilities to the Fund:
(a) INVESTMENT PROGRAM. The Manager shall (i) furnish
continuously an investment program for the Fund, (ii) determine
(subject to the overall supervision and review of the Board of Trustees
of the Fund) what investments shall be purchased, held, sold or
exchanged by the Fund and what portion, if any, of the assets of the
Fund shall be held uninvested, and (iii) make changes in the
investments of the Fund. The Manager also shall manage, supervise and
conduct the other affairs and business of the Fund and matters
incidental thereto, subject always to the control of the Board of
Trustees of the Fund, and to the provisions of the organizational
documents of the Fund, the Registration Statement of the Fund and its
securities, including the Prospectus and Statement of Additional
Information, and the 1940 Act, in each case as from time to time
amended and in effect. Subject to the foregoing, the Manager shall have
the authority to engage one or more sub-advisers in connection with the
management of the Fund, which sub-advisers may be affiliates of the
Manager.
(b) OFFICE SPACE AND FACILITIES. The Manager shall furnish the
Fund office space in the offices of the Manager, or in such other place
or places as may be agreed upon from time to time, and all necessary
office facilities, simple business equipment, supplies, utilities and
telephone service for managing the affairs and investments of the Fund.
(c) ADMINISTRATIVE SERVICES. The Manager shall supervise the
business and affairs of the Fund and shall provide such services and
facilities as may be required for the effective administration of the
Fund as are not provided by employees or other agents engaged by the
Fund, provided that the Manager shall not have any obligation to
provide under this Agreement any such services which are the subject of
a separate agreement or arrangement between the Fund and the Manager,
or an affiliate of the Manager, or any third-party administrator.
(d) FIDELITY BOND. The Manager shall arrange for providing and
maintaining a bond issued by a reputable insurance company authorized
to do business in the place where the bond is issued against larceny
and embezzlement covering each officer and employee of the Fund who may
singly or jointly with others have access to funds or securities of the
Fund, with direct or indirect authority to draw upon such funds or to
direct generally the disposition of such funds. The bond shall be in
such reasonable amount as a majority of the Trustees who are not
"interested persons" of the Fund, as defined in the 1940 Act, shall
determine, with due consideration given to the aggregate assets of the
Fund to which any such officer or employee may have access. The premium
for the bond shall be payable by the Fund in accordance with SECTION
3(M).
(e) PORTFOLIO TRANSACTIONS. The Manager shall place all orders
for the purchase and sale of portfolio securities for the account of
the Fund with brokers or dealers selected by the Manager, although the
Fund will pay the actual brokerage commissions on portfolio
transactions in accordance with SECTION 3(D).
In placing portfolio transactions for the Fund, it is recognized that
the Manager will give primary consideration to securing the most favorable price
and efficient execution. Consistent with this policy, the Manager may consider
the financial responsibility, research and investment information and other
services provided by brokers or dealers who may effect or be a party to any such
transaction or other transactions to which other clients of the Manager may be a
party. It is understood that neither the Fund nor the Manager has adopted a
formula for allocation of the Fund's investment transaction business. It is also
understood that it is desirable for the Fund that the Manager have access to
supplemental investment and market research and security and economic analysis
provided by brokers who may execute brokerage transactions at a higher cost to
the Fund than would otherwise result when allocating brokerage transactions to
other brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the Manager is authorized to place orders for the purchase
and sale of securities for the Fund with such brokers, subject to review by the
Fund's Board of Trustees from time to time with respect to the extent and
continuation of this practice. It is understood that the services provided by
such brokers may be useful or beneficial to the Manager in connection with its
services to other clients.
On occasions when the Manager deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the Manager, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be so sold or purchased in order
to obtain the most favorable price or lower brokerage commissions and efficient
execution. 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 Manager in
the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Fund and to such other clients.
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SECTION 3. ALLOCATION OF EXPENSE.
Except for the services and facilities to be provided by the Manager as
set forth in SECTION 2 above, the Fund assumes and shall pay all expenses for
all other Fund operations and activities and shall reimburse the Manager for any
such expenses incurred by the Manager. Unless the Prospectus or Statement of
Additional Information of the Fund provides otherwise, the expenses to be borne
by the Fund shall include, without limitation:
(a) all expenses of organizing the Fund;
(b) the charges and expenses of (i) any registrar, stock
transfer or dividend disbursing agent, shareholder servicing agent,
custodian or depository appointed by the Fund for the safekeeping of
its cash, portfolio securities and other property, including the costs
of servicing shareholder investment accounts and bookkeeping,
accounting and pricing services, provided to the Fund (other than those
utilized by the Manager in providing the services described in SECTION
2), (ii) any agent engaged for the purposes of conducting auctions with
respect to the Fund's taxable auction rate preferred stock, if any
shall be issued, (iii) any institution serving as trustee with respect
to the Fund's Senior Extendible Notes, and (iv) fees of any stock
exchange or any rating agency responsible for rating outstanding
securities of the Fund;
(c) the charges and expenses of bookkeeping, accounting and
auditors;
(d) brokerage commissions and other costs incurred in
connection with transactions in the portfolio securities of the Fund,
including any portion of such commissions attributable to brokerage and
research services as defined in Section 28(e) of the Securities
Exchange Act of 1934;
(e) taxes, including issuance and transfer taxes, and
corporate registration, filing or other fees payable by the Fund to
federal, state or other governmental agencies;
(f) expenses, including the cost of printing certificates,
relating to the issuance of securities of the Fund;
(g) expenses involved in registering and maintaining
registrations of the Fund and of its securities with the Securities and
Exchange Commission and various states and other jurisdictions,
including reimbursement of actual expenses incurred by the Manager or
others in performing such functions for the Fund, and including
compensation of persons who are employees of the Manager, in proportion
to the relative time spent on such matters;
(h) expenses of shareholders' and trustees' meetings,
including meetings of committees, and of preparing, printing and
mailing proxy statements, quarterly reports, semi-annual reports,
annual reports and other communications to existing security holders;
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(i) expenses of preparing and printing prospectuses and
marketing materials;
(j) compensation and expenses of trustees who are not
affiliated with the Manager;
(k) charges and expenses of legal counsel in connection with
matters relating to the Fund, including, without limitation, legal
services rendered in connection with the Fund's corporate and financial
structure and relations with its security holders, issuance of shares
of the Fund and registration and qualification of securities under
federal, state and other laws;
(l) the cost and expense of maintaining the books and records
of the Fund, including general ledger accounting;
(m) insurance premiums on fidelity, errors and omissions and
other coverages, including the expense of obtaining and maintaining a
fidelity bond as required by Section 17(g) of the 1940 Act which may
also cover the Manager;
(n) expenses incurred in obtaining and maintaining any surety
bond or similar coverage with respect to securities of the Fund;
(o) interest payable on Fund borrowings;
(p) such other non-recurring expenses of the Fund as may
arise, including expenses of actions, suits or proceedings to which the
Fund is a party and expenses resulting from the legal obligation which
the Fund may have to provide indemnity with respect thereto;
(q) expenses and fees reasonably incidental to any of the
foregoing specifically identified expenses; and
(r) all other expenses permitted by the Prospectus and
Statement of Additional Information of the Fund as being paid by the
Fund.
SECTION 4. ADVISORY FEE.
In return for its advisory services, the Fund will pay the Manager a
monthly fee, computed and accrued daily, based on an annual rate of 0.45% of the
average net assets of the Fund for the first one billion dollars
($1,000,000,000), 0.40% of the average net assets of the Fund for the next one
billion dollars ($1,000,000,000), and 0.35% of the average net assets of the
Portfolio over two billion dollars ($2,000,000,000). The Manager may waive a
portion of its fees. If this Agreement becomes effective subsequent to the first
day of a month or shall terminate before the last day of a month, compensation
for such month shall be computed in manner consistent with the calculation of
the fees payable on a monthly basis. Subject to the provisions of SECTION 5
below, the accrued fees will be payable monthly as promptly as possible after
the end of each month during which this Agreement is in effect. Operating
expenses shall not include brokerage, interest, taxes, deferred organization
expenses and extraordinary expenses, if any.
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SECTION 5. REIMBURSEMENTS.
The parties agree that they may negotiate from time to time for the
Manager to reimburse certain costs and expenses of the Fund. If such an
agreement is in effect, the determination of whether reimbursement for such
costs and expenses is due the Fund from the Manager will be made on an accrual
basis once monthly, and if it is so determined that such reimbursement is due,
the accrued amount of such reimbursement which is due shall serve as an offset
to the investment advisory fee payable monthly by the Fund to the Manager
pursuant to SECTION 4 hereof, and the amount to be paid by the Manager to the
Fund as soon as is practicable at the end of a fiscal year of the Fund shall be
equal to the difference between the aggregate reimbursement due the Fund from
the Manager for that fiscal year and the aggregate offsets made by the Fund
against the aggregate investment advisory fees payable to the Manager pursuant
to SECTION 4 hereof for that fiscal year by virtue of such aggregate
reimbursement. The foregoing limitation on reimbursement of costs and expenses
shall exclude interest, taxes, brokers' charges and expenses, extraordinary
costs and expenses (as determined by the Board in its exercise of its business
judgment), and, if payable by the Fund, the costs and expenses incident to the
public offering or private placement of securities of the Fund, including debt
securities.
SECTION 6. RELATIONS WITH FUND.
Subject to and in accordance with the organizational documents of the
Manager and the Fund, as well as their policies and procedures and codes of
ethics, it is understood that Trustees, officers, agents and shareholders of the
Fund are or may be interested in the Manager (or any successor thereof) as
directors, officers or otherwise, that partners, officers and agents of the
Manager (or any successor thereof) are or may be interested in the Fund as
Trustees, officers, agents, shareholders or otherwise, and that the Manager (or
any such successor thereof) is or may be interested in the Fund as a shareholder
or otherwise.
SECTION 7. LIABILITY OF MANAGER.
The Manager shall not be liable to the Fund 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; provided, however, that no provision of
this Agreement shall be deemed to protect the Manager against any liability to
the Fund or its shareholders to which it might otherwise be subject by reason of
any willful misfeasance, bad faith or gross negligence in the performance of its
duties, or the reckless disregard of its obligations and duties under this
Agreement, nor shall any provision hereof be deemed to protect any trustee or
officer of the Fund against any such liability to which he might otherwise be
subject by reason of any willful misfeasance, bad faith or gross negligence in
the performance of his duties or the reckless disregard of his obligations and
duties.
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SECTION 8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall become effective on the date first
set forth above, such date being the date on which this Agreement has been
executed following (1) the approval of the Board of Trustees of the Fund,
including approval by a vote of a majority of the Trustees who are not
"interested persons" (as defined in the 0000 Xxx) of the Manager or the Fund,
cast in person at a meeting called for the purpose of voting on such approval
and (2) the approval by a vote of a majority of the outstanding voting
securities of the Fund. Unless terminated as herein provided, this Agreement
shall remain in full force and effect until the date which is two years after
the effective date of this Agreement. Subsequent to such initial period of
effectiveness, this Agreement shall continue in full force and effect, subject
to PARAGRAPH 8(C), for successive one-year periods so long as such continuance
is approved at least annually (a) by either the Board of Trustees of the Fund or
by vote of a majority of the outstanding voting securities (as defined in the
0000 Xxx) of the Fund, voting as a single class, and (b) in either event, by the
vote of a majority of the trustees of the Fund who are not parties to this
Agreement or "interested persons" (as defined in the 0000 Xxx) of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(b) AMENDMENT. 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 vote of the holders of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of the Fund, voting as a single class.
(c) TERMINATION. This Agreement may be terminated at any time, without
payment of any penalty, by vote of the Trustees or by vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of the Fund, voting
as a single class, or by the Manager, in each case on not more than sixty (60)
days' nor less than thirty (30) days' prior written notice to the other party.
(d) AUTOMATIC TERMINATION. This Agreement shall automatically and
immediately terminate in the event of its assignment (as defined in the 1940
Act).
SECTION 9. SERVICES NOT EXCLUSIVE.
The services of the Manager to the Fund hereunder are not to be deemed
exclusive, and the Manager shall be free to render similar services to others so
long as its services hereunder are not impaired thereby. In addition, the
parties may enter into agreements pursuant to which the Manager provides
administrative or other non-investment advisory services to the Fund, and may be
compensated for such other services.
SECTION 10. PRIOR AGREEMENTS SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties hereto.
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SECTION 11. NOTICES.
Notices under this Agreement shall be in writing and shall be
addressed, and delivered or mailed postage prepaid, to the other party at such
address as such other party may designate from time to time for the receipt of
such notices. Until further notice to the other party, the address of each party
to this Agreement for this purpose shall be 00000 Xxxx Xxxx, Xxxxx 0000, Xxxxxx,
Xxxxx 00000.
SECTION 12. GOVERNING LAW; COUNTERPARTS.
This Agreement shall be construed in accordance with the laws of the
State of Delaware, and the applicable provisions of the 1940 Act. To the extent
that applicable law of the State of Delaware, or any of the provisions herein,
conflict with applicable provisions of the 1940 Act, the latter shall control.
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
SECTION 13. MISCELLANEOUS.
The Manager agrees to advise the Fund of any change of its membership
(which shall mean its general partner) within a reasonable time after such
change. If the Manager enters into a definitive agreement that would result in a
change of control (within the meaning of the 0000 Xxx) of the Manager, it agrees
to give the Fund the lesser of sixty days' notice and such notice as is
reasonably practicable before consummating the transaction.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
HIGHLAND CAPITAL MANAGEMENT, L.P.
By: STRAND ADVISORS, INC.,
its general partner
By:
--------------------------------------------
Name:
Title:
COLUMBIA FLOATING RATE ADVANTAGE FUND
By: --------------------------------------------
Name:
Title:
A copy of the document establishing the Fund is filed with the
Secretary of the Commonwealth of Massachusetts. This Agreement is executed by
officers not as individuals and is not binding upon any of the Trustees,
officers or shareholders of the Fund individually but only upon assets of the
Fund.
