Exhibit (d)(2)
BELSTAR HIGH YIELD FUND
SUBADVISORY AGREEMENT
AGREEMENT made this ______ day of __________, 2002 by and between Voyager
Advisors, LLC, a Delaware Limited Liability Company (hereinafter the "Adviser"),
investment adviser for the Belstar High Yield Fund (hereinafter the "Fund") and
Penn Capital Management Company, Inc., a New Jersey corporation (hereinafter the
"Subadviser").
WHEREAS, the Adviser has been retained by the Fund, an open-end
diversified management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), to provide investment advisory
services to the Fund pursuant to an Investment Advisory Agreement dated
__________, 2002 (the "Investment Advisory Agreement"); and
WHEREAS, the Fund's Trustees, including a majority of the Trustees who are
not "interested persons," as defined in the 1940 Act, of the Fund or any party
to this Subadvisory Agreement and the Fund's shareholders have approved the
appointment of the Subadviser to perform certain investment advisory services
for the Fund pursuant to this Subadvisory Agreement with the Adviser, and the
Subadviser is willing to perform such services for the Fund;
WHEREAS, the Subadviser is or will be registered as an investment adviser
under the Investment Advisers Act of 1940, as amended ("Advisers Act"), prior to
performing its services for the Fund under this Agreement;
NOW THEREFORE, in consideration of the promises and mutual convenants
herein contained, it is agreed between the Adviser and the Subadviser as
follows:
1. Appointment. The Adviser hereby appoints the Subadviser to perform
advisory services to the Fund for the periods and on the terms set forth in this
Subadvisory Agreement. The Subadviser accepts such appointment and agrees to
furnish the services herein set forth, for the compensation herein provided.
2. Duties of Subadviser. The Adviser hereby authorizes Subadviser to
manage the investment and reinvestment of cash and investments constituting the
assets of the Fund with power on behalf of and in the name of the Fund at
Subadviser's discretion; subject at all times to the supervision of the Adviser
and the Trustees of the Fund, including, without limitation:
(a) to direct the purchase, subscription or other acquisition of
investments and to direct the sale, redemption, and exchange of investments,
subject to the duty to render to the Trustees of the Fund, the Adviser and the
Custodian written reports of the composition of the portfolio of the Fund as
often as the Adviser or Trustees of the Fund shall reasonably require;
(b) to make all decisions relating to the manner, method and timing
of investment transactions, to select brokers, dealers and other intermediaries
by or through whom such transactions will be effected, and to engage such
consultants, analysts and experts in connection therewith as may be considered
necessary or appropriate;
(c) to direct banks, brokers or custodians to disburse funds or
assets solely in order to execute investment transactions for the Fund, provided
that the Subadviser shall have no other authority to direct the transfer of the
Fund's funds or assets to itself or other persons and shall have no other
authority over the disbursement (as opposed to investment decisions) of funds or
assets nor any custody of any of the Fund's funds or assets; and
(d) to take all such other actions as may be considered necessary or
appropriate to discharge its duties hereunder; provided that any specific or
general directions which the Trustees of the Fund, or the Adviser may give to
the Subadviser with regard to any of the foregoing powers shall, unless the
contrary is expressly stated therein, override the general authority given by
this provision to the extent that the Trustees of the Fund may, at any time and
from time to time, direct, either generally or to a limited extent and either
alone or in concert with the Adviser or the Subadviser (provided that such
directions would not cause the Subadviser to violate any fiduciary duties or any
laws with regard to the Subadviser's duties and responsibilities), all or any of
the same as they shall think fit and, in particular, the Adviser shall have the
right to request the Subadviser to place trades through brokers and other agents
of the Adviser's choice, subject to the Subadviser's judgment that such brokers
or agents will provide best execution, taking into consideration factors the
Subadviser deems relevant including, without limitation, the price of the
security, research or other services which render that broker's services the
most appropriate for the
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Subadviser's needs, the financial condition and dealing and execution capability
of the broker or dealer and the reasonableness of the commission, if any, for
the specific transaction and on a continuing basis; and provided further that
nothing herein shall be construed as giving the Subadviser power to manage the
aforesaid cash and investments in such a manner as would cause the Fund to be
considered a "dealer" in stocks, securities or commodities for U.S. federal
income tax purposes.
The Adviser shall monitor and review the performance of the Subadviser
under this Agreement, including but not limited to the Subadviser's performance
of the duties delineated in subparagraphs (a)-(d) of this provision; provided
however that nothing herein shall constitute the Subadviser as an agent of the
Adviser or the Adviser as a guarantor of the performance of the Subadviser, or
otherwise make the Adviser responsible for the actions of the Subadviser.
The Subadviser further agrees that, in performing its duties hereunder, it
will:
(a) (i) comply in all material respects with the 1940 Act and all
rules and regulations thereunder, the Advisers Act, the Internal Revenue Code
(the "Code") and all other applicable federal and state laws and regulations,
the current Prospectus and Statement of Additional Information for the Fund
supplied to the Subadviser by the Adviser, and with any applicable procedures
adopted by the Trustees in writing supplied to the Subadviser by the Adviser;
(ii) manage the Fund in accordance with the investment requirements for
regulated investment companies under Subchapter M of the Code and regulations
issued thereunder; and (iii) direct the placement of orders pursuant to its
investment determinations for the Fund directly with the issuer, or with any
broker or dealer, in accordance with applicable policies expressed in the Fund's
Prospectus and/or Statement of Additional Information and in accordance with
applicable legal requirements;
(b) furnish to the Fund whatever non-proprietary reports the Fund
may reasonably request with respect to the Fund's assets or contemplated
strategies. In addition, the Subadviser will keep the Fund and the Trustees
informed of developments materially affecting the Fund's portfolio and shall, on
the Subadviser's own initiative, furnish to the Fund from time to time whatever
information the Subadviser believes appropriate for this purpose;
(c) make available to the Fund's administrator, (the
"Administrator"), the Adviser, and the Fund, promptly upon their request, such
copies of its investment records and ledgers with respect to the Fund as may be
required to assist the Adviser, the Administrator and the Fund in their
compliance with applicable laws and regulations. The Subadviser will furnish the
Adviser or the Trustees with such periodic and special reports regarding the
Fund as they may reasonably request; and
(d) immediately notify the Adviser and the Fund in the event that
the Subadviser or any of its affiliates: (i) becomes aware that it is subject to
a statutory disqualification that prevents the Subadviser from serving as an
investment adviser pursuant to this Subadvisory Agreement; or (ii) becomes aware
that it is the subject of an administrative proceeding or enforcement action by
the Securities and Exchange Commission ("SEC") or other regulatory authority.
The Subadviser further agrees to notify the Fund and the Adviser immediately of
any material fact known to the Subadviser respecting or relating to the
Subadviser that is not contained in the Fund's Registration Statement, or any
amendment or supplement thereto, but that is required to be disclosed therein,
and of any statement contained therein that becomes untrue in any material
respect. The Fund, Adviser, Administrator, and their affiliates shall likewise
immediately notify the Subadviser if any of them becomes aware of any regulatory
action of the type described in this subparagraph 2(d).
3. Allocation of Charges and Expenses. The Subadviser shall pay all
expenses associated with the management of its business operations in performing
its responsibilities hereunder, including the cost of its own overhead,
research, compensation and expenses of its directors, officers and employees,
and other internal operating costs; provided, however, that the Subadviser shall
be entitled to reimbursement on a monthly basis by the Adviser of all reasonable
out-of-pocket expenses properly incurred by it in connection with serving as
subadviser to the Fund. For the avoidance of doubt, the Fund shall bear or
separately arrange for another to bear its own overhead and other internal
operating costs (whether incurred directly or by the Adviser or the Subadviser)
including, without limitation:
(a) the costs incurred by the Fund in the preparation and printing
of the Prospectus or any offering literature (including any form of
advertisement or other solicitation materials calculated to lead to investors
subscribing for shares);
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(b) all fees and expenses on behalf of the Fund to the Transfer
Agent and the Custodian;
(c) the reasonable fees and expenses of accountants, auditors,
lawyers and other professional advisors to the Fund;
(d) any interest, fee or charge payable on or on account of any
borrowing by the Fund;
(e) fiscal and governmental charges and duties relating to the
purchase, sale, issue or redemption of shares and increases in authorized share
capital of the Fund;
(f) the fees of any stock exchange or over-the-counter market on
which shares of the Fund may from time to time be listed, quoted or dealt in and
the expenses of obtaining any such listing, quotation or permission to deal;
(g) the fees and expenses (if any) payable to Trustees;
(h) brokerage, fiscal or governmental charges or duties in respect
of or in connection with the acquisition, holding or disposal of any of the
assets of the Fund or otherwise in connection with its business;
(i) the expenses of publishing details and prices of shares of the
Fund in newspapers and other publications;
(j) all expenses incurred in the convening of meetings of
shareholders or in the preparation of agreements or other documents relating to
the Fund or in relation to the safe custody of the documents of title of any
investments;
(k) all Trustees communication costs; and
(1) all premiums and costs for Fund insurance and blanket fidelity
bonds.
4. Compensation. As compensation for the services provided by the
Subadviser under this Agreement, the Adviser will pay the Subadviser at the end
of each calendar month an advisory fee computed daily at an annual rate equal to
0.00 of 1% of the Fund's average daily net assets under $25 million, 0.30 of 1%
of the Fund's average daily net assets greater than or equal to $25 million, and
0.38 of 1% of the Fund's average daily net assets greater than or equal to $50
million. The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time) on
each day on which the net asset value of the Fund is determined consistent with
the provisions of Rule 22c-1 under the 1940 Act and the terms of the Fund's
Registration Statement. The value of net assets of the Fund shall always be
determined pursuant to the applicable provisions of the Fund's Declaration of
Trust and the Registration Statement. If, pursuant to such provisions, the
determination of net asset value is suspended for any particular business day,
then for the purposes of this Section 4, the value of the net assets of the Fund
as last determined shall be deemed to be the value of its net assets as of the
close of regular trading on the New York Stock Exchange, or as of such other
time as the value of the net assets of the Fund's portfolio may lawfully be
determined, on that day. If the determination of the net asset value of the
shares of the Fund has been so suspended for a period including any month end
when the Subadviser's compensation is payable pursuant to this Section, the
Subadviser's compensation payable at the end of such month shall be computed on
the basis of the value of the net assets of the Fund as last determined (whether
during or prior to such month). If the Fund determines the value of the net
assets of its portfolio more than once on any day, then the last such
determination thereof on that day shall be deemed to be the sole determination
thereof on that day for the purposes of this Section 4.
5. Books and Records. The Subadviser agrees to maintain such books and
records with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable legal
provisions, and to preserve such records for the periods and in the manner
required by applicable laws or regulations. The Subadviser also agrees that
records it maintains and preserves pursuant to Rule 31a-2 under the 1940 Act
(excluding trade secrets or intellectual property rights) in connection with its
services hereunder are the property of the Fund and will be surrendered promptly
to the Fund upon its request, and the Subadviser further agrees that it will
furnish to regulatory authorities having the requisite authority any information
or reports in connection with its services hereunder which may be requested in
order to determine whether the operations of the Fund are being conducted in
accordance with applicable laws and regulations.
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6. Standard of Care and Limitation of Liability. The Subadviser shall
exercise its best judgment in rendering the services provided by it under this
Subadvisory Agreement. The Subadviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or the holders
of the Fund's shares or by the Adviser in connection with the matters to which
this Subadvisory Agreement relates, provided that nothing in this Subadvisory
Agreement shall be deemed to protect or purport to protect the Subadviser
against liability to the Fund or to holders of the Fund's shares or to the
Adviser to which the Subadviser 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 Subadviser's reckless disregard of its obligations
and duties under this Subadvisory Agreement. As used in this Section 6, the term
"Subadviser" shall include any officers, directors, employees or other
affiliates of the Subadviser performing services for the Fund.
In no event shall the Subadviser be liable for actions taken, or actions
not taken, with respect to the performance of services under this Subadvisory
Agreement based upon specific information, instructions or requests given or
made to the Subadviser by the Adviser, and this Subadvisory Agreement does not
in any way limit the duties and responsibilities that the Adviser has agreed to
under the Investment Advisory Agreement.
7. Services Not Exclusive. The Adviser understands that the Subadviser now
acts, will continue to act and may act in the future as investment advisor to
fiduciary and other managed accounts and as investment advisor to other
investment companies, and, except as may be separately agreed to from time to
time between the Adviser and the Subadviser, the Trust has no objection to the
Subadviser so acting, provided that whenever the Fund and one or more other
accounts or investment companies advised by the Subadviser have available funds
for investment, investments suitable and appropriate for each will be allocated
in accordance with a methodology believed to be equitable to each entity. The
Subadviser agrees to allocate similar opportunities to sell securities. The
Adviser recognizes that, in some cases, this procedure may limit the size of the
position that may be acquired or sold for the Fund. In addition, the Adviser
understands that the persons employed by the Subadviser to assist in the
performance of the Subadviser's duties hereunder will not devote their full time
to such service and nothing contained herein shall be deemed to limit or
restrict the right of the Subadviser or any affiliate of the Subadviser to
engage in and devote time and attention to other business or to render services
of whatever kind or nature.
8. Duration and Termination. This Agreement shall become effective as of
the date of its execution and shall continue in effect for a period of up to two
years from the date of execution. Thereafter, this Agreement shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by (i) the Fund's Trustees or (ii) a
vote of a "majority" of the outstanding voting securities (as defined in the
0000 Xxx) of the Fund, provided that in either event the continuance also is
approved by a majority of the Fund's Trustees who are not "interested persons"
(as defined in the 0000 Xxx) of the Fund or 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, on 60 days written
notice by the Adviser, by the Fund's Trustees, or by vote of holders of a
majority of the Fund's shares. For a period of eighteen months from the date of
execution of this Agreement, the Subadviser may terminate this Agreement,
without penalty, on six months written notice. Thereafter, the Subadviser may
terminate this Agreement, without penalty, on 60 days written notice. This
Agreement will terminate automatically five business days after the Subadviser
receives written notice of the termination of the advisory agreement between the
Fund and the Adviser. This Agreement also will terminate automatically in the
event of its assignment (as defined in the 1940 Act).
9. Amendments. No provision of this Subadvisory Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by both parties, and no material amendment of this Subadvisory Agreement
shall be effective until approved by an affirmative vote of (i) a majority of
the outstanding voting securities (as defined in the 0000 Xxx) of the Fund, and
(ii) a majority of the Trustees of the Fund, including a majority of Trustees
who are not interested persons of the Fund or of any party to this Subadvisory
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law.
10. Independent Contractor. Subadviser shall for all purposes of this
Agreement be deemed to be an independent contractor and, except as otherwise
expressly provided herein, shall have no authority to act for, bind or represent
the Fund or Adviser in any way or otherwise be deemed to be an agent of the Fund
or the Adviser.
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Likewise, the Fund, the Adviser and their respective affiliates, agents and
employees shall not be deemed agents of the Subadviser and shall have not
authority to bind Subadviser.
11. Use of Name. (a) The Fund may, subject to sub-clause (b) below, use
the name, "Penn Capital Management Company, Inc." or "Penn Capital" for
promotional purposes only for so long as this Agreement (or any extension,
renewal or amendment thereof) continues in force, unless the Subadviser shall
specifically consent in writing to such continued use thereafter. Any permitted
use by the Fund during the term hereof of the name of the Subadviser or Penn
Capital shall in no way prevent the Subadviser or any of it shareholders or any
of their successors, from using or permitting the use of such name (whether
singly or in any combination with any other words) for, by or in connection with
an entity or enterprise other than the Fund. The name and right to the name Penn
Capital Management Company, Inc. or any derivation of the name Penn Capital
shall at all times be owned and be the sole and exclusive property of Penn
Capital and its affiliated entities. Penn Capital Management Company, Inc., by
entering into this Agreement, is allowing the Fund to use the name Penn Capital
Management Company, Inc. and/or Penn Capital solely by or on behalf of the Fund.
At the conclusion of this Agreement or in the event of any termination of this
Agreement or if the Subadviser's services are terminated for any reason, each of
the authorized parties and their respective employees, representatives,
affiliates, and associates agree that they shall immediately cease using the
name Penn Capital Management Company, Inc. and/or Penn Capital of said name for
any purpose whatsoever.
(b) The Adviser and its affiliates shall not publish or distribute,
and shall cause the Fund not to publish or distribute to Fund shareholders,
prospective investors, sales agents or members of the public any disclosure
document, offering literature (including any form of advertisement or other
solicitation materials calculated to lead investors to subscribe for and
purchase shares of the Fund) or other document referring by name to the
Subadviser or any of its affiliates, unless the Subadviser shall have consented
in writing to such references in the form and context in which they appear;
provided however, that where the Fund timely seeks to obtain approval of
disclosure contained in any documents required to be filed by the Fund, and such
approval is not forthcoming on or before the date on which such documents are
required by law to be filed, the Subadviser shall be deemed to have consented to
such disclosure.
12. Miscellaneous.
(a) This Subadvisory Agreement shall be governed by the laws of the
State of New York, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC
thereunder. In the event of any litigation in which the Adviser and the
Subadviser are adverse parties and there are no other parties to such
litigation, such action shall be brought in the United States District Court for
the State of New York, located in New York, New York.
(b) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(c) This Agreement may be executed in one or more counterparts, all
of which taken together shall be deemed to constitute one and the same
instrument.
13. Notices. Any notice, instruction or other instrument required or
permitted to be given hereunder may be delivered in person to the offices of the
parties during normal business hours, or delivered or sent by prepaid registered
mail, express mail or by facsimile to the parties at such offices or such other
address as may be notified by either party from time to time. Such notice,
instruction or other instrument shall be deemed to have been served, in the case
of a registered letter at the expiration of seventy-two (72) hours after
posting; in the case of express mail, within twenty-four (24) hours after
dispatch; and in the case of facsimile, immediately on dispatch, and if
delivered outside normal business hours it shall be deemed to have been received
at the next time after delivery or transmission when normal business hours
commence. Evidence that the notice, instruction or other instrument was properly
addressed, stamped and put into the post shall be conclusive evidence of
posting.
14. Non-Solicitation. Adviser, its affiliates and their respective agents
(including brokers engaged in marketing and selling shares of the Fund), and
each of their employees and affiliates agree not to knowingly solicit to invest
in the Fund any persons or entities who are clients of or investors in any fund
or investment vehicle managed by any entity owned or affiliated with Penn
Capital Management Company, Inc.
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15. Privacy. Notwithstanding any provision herein to the contrary, each
party agrees not to use or disclose nonpublic personal information of customers
and consumers of the Fund for any purpose other than performance of its
responsibilities and duties under this Subadvisory Agreement or as required or
permitted by applicable law, including, without limitation, Regulation S-P of
the SEC.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of _______________, 2002.
VOYAGER ADVISORS, LLC
By: _____________________________________
XXXXXX X. XXXXX
President
PENN CAPITAL MANAGEMENT COMPANY, INC.
By: _____________________________________
XXXXXXX X. XXXXXX
Chief Investment Officer
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