DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, made as of the ___th day of _____________,
199__, between CYPRESSTREE SENIOR FLOATING RATE FUND, INC., a Maryland
corporation (the "Fund"), and CYPRESSTREE FUNDS DISTRIBUTORS, INC., a Delaware
corporation ("Distributor").
W I T N E S E T H
WHEREAS, the Fund is a closed-end management investment company,
registered as such with the Securities and Exchange Commission under the
Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Fund's Board of Directors ("the Board") has authorized
the continuous offering of the Fund's shares;
WHEREAS, Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934 and has the facilities to distribute the shares
of common stock of the Fund;
WHEREAS, the Fund and Distributor desire to enter into a distribution
agreement with respect to the shares of the Fund;
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT OF DISTRIBUTOR
Distributor will act as the distributor for the sale of
shares of the Fund. The terms "shares of the Fund" or "shares" as used in this
Distribution Agreement means shares of common stock issued by the Fund.
2. AGENCY RELATIONSHIP
In the sale of shares of the Fund, Distributor will act as
agent of the Fund except in any transaction in which Distributor sells such
shares as a dealer to the public, in which event Distributor will act as
principal for its own account.
3. SALE OF FUND SHARES
The Fund will sell shares only through Distributor except
that the Fund may at any time:
a. Sell shares of the Fund to investors pursuant to applications
received and accepted by the Fund or its transfer agent.
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b. Issue shares to any corporation, association, trust, partnership, or
other organization, or its, or their, security holders,
beneficiaries, or members, in connection with a merger,
consolidation, or reorganization to which the Fund is a party, or in
connection with the acquisition of all or substantially all the
property and assets of such corporation, association, trust,
partnership, or other organization;
c. Issue shares at net asset value to the Fund's shareholders in
connection with the reinvestment of dividends and other distributions
paid by the Fund;
d. Issue shares of the Fund at net asset value to Directors,
officers, and employees of the Fund, its investment manager, any
principal underwriter of the Fund, and their affiliates, including
any trust, pension, profit-sharing, or other benefit plan established
for such persons, registered representatives and other employees of
dealers having Dealer Agreements with Distributor and with respect to
all such persons listed, their respective spouse, siblings, parents
and children, and to other persons as permitted by applicable rules
adopted by the Securities and Exchange Commission (the "Commission")
under the 1940 Act, as in effect from time to time and as described
in the Fund's current effective Prospectus relating to the Fund which
is part of the Fund's Registration Statement in effect under the
Securities Act of 1933, as amended (the "1933 Act"), at the time of
offer or sale (the "Prospectus");
e. Issue shares of the Fund at net asset value to the sponsor
organization, custodian or depository of a periodic or single payment
plan, or similar plan for the purchase of shares of the Fund,
purchasing for such plan;
f. Issue shares of the Fund in the course of any other transaction
specifically provided for in the Fund's Prospectus, or on the written
consent of Distributor; or
4. BEST EFFORTS
Distributor will devote its best efforts to the sale of
shares of the Fund. It is contemplated that Distributor will enter into sales or
servicing agreements with securities brokers and dealers, financial institutions
and other industry professionals, such as investment advisers, accountants and
estate planning firms, and in so doing will act only on its own behalf as
principal.
5. QUALIFICATION OF DEALERS
In its sales to dealers, Distributor will use its best
efforts to determine that those dealers are appropriately qualified to transact
business in securities under applicable laws, rules and regulations promulgated
by the national, state, local or other governmental or quasi-governmental
authorities that have jurisdiction in a particular instance.
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6. OFFERING PRICE
The applicable public offering price of the shares of the
Fund will be the price that is equal to the net asset value per share plus such
sales charge, if any, as may be provided for in the Prospectus. Net asset value
per share will be determined for the Fund in the manner and at the time or times
set forth in and subject to the provisions of the Prospectus. On each business
day on which the New York Stock Exchange is open for business, the Fund will
furnish Distributor with the net asset value of the Shares of each available
series and class, which shall be determined in accordance with the then-
effective prospectus.
7. ACCEPTANCE OF ORDERS
Distributor will accept all orders for shares received by
Distributor, unless rejected by Distributor or the Fund, immediately on receipt
and will confirm those sales at an offering price determined in accordance with
the provisions of the Prospectus and the 1940 Act, and applicable rules in
effect under the 1940 Act. Distributor will not hold orders subject to
acceptance nor otherwise delay their execution. In conformance with the rules of
the NASD, Distributor will not accept conditional orders. The provisions of this
paragraph will not be construed to restrict the right of the Fund to withhold
shares of the Fund from sale under paragraph 14 of this Distribution Agreement.
8. ISSUANCE OF SHARES
The Fund or its transfer agent will be promptly advised of
all orders received, and will cause shares of the Fund to be issued on payment
received in accordance with policies established by the Fund and Distributor.
9. COMPLIANCE WITH LAW
Distributor will adopt and follow procedures as approved by
the officers of the Fund for the confirmation of sales to dealers, the
collection of amounts payable by dealers on sales, and the cancellation of
unsettled transactions, as may be necessary to comply with the requirements of
the NASD and the 1940 Act, as those requirements may from time to time exist.
10. REGISTRATION AS CLOSED-END INVESTMENT COMPANY
The Fund agrees to use its best efforts to maintain its
registration as a closed-end management investment company under the 1940 Act.
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11. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
a. The Fund agrees to use its best efforts to maintain an effective
Registration Statement under the 1933 Act, and warrants that the
Prospectus included in that Registration Statement will contain all
statements required by and will conform with the requirements of the
1933 Act and the rules and regulations under the 1933 Act, and that
no part of any prospectus, at the time the Registration Statement of
which it is a part is declared effective, will contain any untrue
statement of a material fact or omit to state a material fact
required to be stated in the Prospectus, or necessary to make the
statements in the Prospectus not misleading.
b. Distributor agrees and warrants that it will not in the sale of
shares of the Fund use any prospectus, advertising or sales
literature not approved by the Fund or its officers nor make any
untrue statement of a material fact nor omit the stating of a
material fact necessary in order to make the statements made, in the
light of the circumstances under which they are made, not misleading.
c. The Fund will furnish to Distributor such information with respect
to each series and class of the Fund's shares, in such form and
signed by such of the Fund's officers as Distributor may reasonably
request, and the Fund warrants that the statements therein contained,
when so signed, will be true and correct. The Fund will also furnish
Distributor with such information and will take such action as
Distributor may reasonably request in order to qualify shares for
sale to the public under the Blue Sky Laws of jurisdictions in which
Distributor may wish to offer them. The Fund will furnish Distributor
with annual audited financial statements of the Fund's books and
accounts certified by independent public accountants, with
semi-annual financial statements prepared by the Fund, with
registration statements and, from time to time, with such additional
information regarding the Fund's financial condition as Distributor
may reasonably request.
d. Other than the Fund's currently effective prospectus, Distributor
will not issue any sales material or statements except literature or
advertising that conforms to applicable requirements of Federal and
State securities laws and regulations and that have been filed, where
necessary, with the appropriate regulatory authorities. Distributor
will furnish the Fund with copies of all such materials prior to
their use and no such material shall be published if the Fund shall
reasonably and promptly object. Distributor shall comply with the
applicable Federal and State laws and regulations where the Fund's
shares are offered for sale and conduct its affairs with the Fund and
with dealers, brokers or investors in accordance with the Rules of
Fair Practice of the NASD.
e. Distributor agrees to indemnify and hold the Fund harmless from any
and all loss, expense, damage and liability resulting from a breach
by Distributor of the
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agreements and warranties in this paragraph, or from the use of any
sales literature, information, statistics or other aid or device
employed in connection with the sale of shares not approved by the
Fund and its officers.
12. PROSPECTUS PRINTING EXPENSES
The expense of each printing of each Prospectus and each
revision of the Prospectus or addition to the Prospectus deemed necessary by the
Fund's officers to meet the requirements of applicable laws will be divided
between the Fund, Distributor and any other principal underwriter of the shares
of the Fund as they may from time to time agree.
13. QUALIFICATION OF SHARES
To the extent required by law, the Fund agrees to use its
best efforts to qualify and maintain the qualification of an appropriate number
of the shares of the Fund for sale under the securities laws of such states as
Distributor and the Fund may approve. Any such qualification may be withheld,
terminated or withdrawn by the Fund at any time in its discretion. The expense
of qualification and maintenance of qualification will be borne by the Fund, but
Distributor will furnish such information and other materials relating to its
affairs and activities as may be required by the Fund or its counsel in
connection with qualification.
14. REJECTION OF ORDERS
The Fund and Distributor acknowledge that each has the
right to reject any order for the purchase of shares for any reason. In
addition, the Fund may withhold shares from sale in any state or country
temporarily or permanently if, in the opinion of its counsel, the offer or sale
would be contrary to law or if the Board of Directors or the President or any
Vice President of the Fund determines that the offer or sale is not in the best
interest of the Fund. The Fund will give prompt notice to Distributor of any
withholding and will indemnify it against any loss suffered by Distributor as a
result of withholding by reasons of non-delivery of Fund shares after a good
faith confirmation by Distributor of sales of shares of the Fund before receipt
of notice of withholding.
15. TERMINATION
a. This Distribution Agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the members of the
Board of Directors of the Fund who are not interested persons of the
Fund or by a vote of a majority of the outstanding voting securities
of the Fund on thirty (30) days' written notice to Distributor, or by
Distributor on like notice to the Fund.
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b. This Distribution Agreement may be terminated by either party upon
five (5) days' written notice to the other party in the event that
the Commission has issued an order or obtained an injunction or other
court order suspending effectiveness of the Registration Statement
covering the shares of the Fund.
c. This Distribution Agreement also may be terminated by the Fund
without penalty payable by the Fund upon five (5) days' written
notice to Distributor, should the NASD expel Distributor or suspend
its membership in that organization.
16. NOTIFICATION OF PROCEEDINGS
Distributor will inform the Fund promptly of the
institution of any proceedings against it by the Commission, the NASD or any
state regulatory authority.
17. ASSIGNMENT
This Agreement will terminate automatically in the event of
its assignment. The term "assignment" has the meaning given that term in the
1940 Act.
18. LIMITATION OF LIABILITY
No provision of this Distribution Agreement will protect or
purport to protect Distributor against any liability to the Fund or holders of
shares of the Fund for which Distributor would otherwise be liable by reason of
willful misfeasance, bad faith or negligence.
19. TERM
Unless sooner terminated in accordance with the provisions
of paragraphs 15 or 17 of this Distribution Agreement, this Distribution
Agreement will continue in effect for two years from the date of execution and
from year to year thereafter, but only so long as its continuance is
specifically approved at least annually by (i) vote of a majority of the
Directors of the Fund who are not interested persons of the Fund and who are not
parties to this Agreement or interested persons of any such party as defined by
the 1940 Act, cast in person at a meeting called for the purpose of voting on
such approval and (ii) either the Board of Directors of the Fund or a vote of a
majority, as defined by the 1940 Act, of the outstanding shares of the Fund.
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IN WITNESS WHEREOF, the parties to this Distribution
Agreement have caused this instrument to be executed by their duly authorized
officers as of the date first written above.
CYPRESSTREE SENIOR FLOATING RATE
FUND, INC.
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By:
CYPRESSTREE FUNDS DISTRIBUTORS, INC.
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By:
