INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN
FLOATING RATE PORTFOLIO
AND
CHANCELLOR LGT SENIOR SECURED MANAGEMENT, INC.
Contract made as of ________, 1997, between Floating Rate Portfolio, a
Delaware business trust ("Portfolio"), and Chancellor LGT Senior Secured
Management, Inc., a New York corporation ("Chancellor SSM").
WHEREAS the Portfolio is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as a closed-end management investment company;
and
WHEREAS the Portfolio desires to retain Chancellor SSM as investment
manager to furnish certain investment advisory and portfolio management
services to the Portfolio, and Chancellor SSM is willing to furnish such
services;
NOW THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Portfolio hereby appoints Chancellor SSM as
investment manager of the Portfolio for the period and on the terms set forth
in this Contract. Chancellor SSM accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. DUTIES AS INVESTMENT MANAGER.
(a) Subject to the supervision of the Portfolio's Board of
Trustees ("Board"), Chancellor SSM will provide a continuous investment
program for the Portfolio, including investment research and management with
respect to all securities and investments and cash equivalents of the
Portfolio. Chancellor SSM will determine from time to time what securities
and other investments will be purchased, retained or sold by the Portfolio
and the brokers and dealers through whom trades will be executed.
(b) Chancellor SSM agrees that in placing orders with brokers and
dealers it will attempt to obtain the best net results in terms of price and
execution. Consistent with this obligation, Chancellor SSM may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who
sell shares of the Common Stock of the Portfolio or who provide the Portfolio
or Chancellor SSM's other clients with research, analysis, advice and similar
services. Chancellor SSM may pay to brokers and dealers, in return for
research and analysis, a higher commission or spread than may be charged by
other brokers and dealers, subject to Chancellor SSM's determining in good
faith that such commission or spread is reasonable in terms either of the
particular transaction or of the overall responsibility of Chancellor SSM to
the Portfolio and its other clients, and that the total commissions or
spreads paid by the Portfolio will be reasonable in relation to the benefits
to the Portfolio over the long term. In no instance will portfolio
securities be purchased from or sold to Chancellor SSM or any affiliated
person thereof except in accordance with the federal securities laws and the
rules and regulations thereunder. Whenever Chancellor SSM simultaneously
places orders to purchase or sell the same security on behalf of the
Portfolio and one or more other accounts advised by Chancellor SSM, such
orders will be allocated as to price and amount among all such accounts in a
manner believed to be equitable to each account. The Portfolio recognizes
that in some cases this procedure may adversely affect the results obtained
for the Portfolio.
(c) Chancellor SSM will oversee the maintenance of all books and
records with respect to the securities transactions of the Portfolio and will
furnish the Board with such periodic and special reports as the Board
reasonably may request. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Chancellor SSM hereby agrees that all records which it
maintains for the Portfolio are the property of the Portfolio, agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any
records which it maintains for the Portfolio and which are required to be
maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender
promptly to the Portfolio any records which it maintains for the Portfolio
upon request by the Portfolio.
(d) Chancellor SSM will oversee the computation of the net asset
value and the net income of the Portfolio as described in the currently
effective registration statement of the Portfolio under the Securities Act of
1933, as amended, and the 1940 Act and any supplements thereto ("Registration
Statement") or as more frequently requested by the Board.
3. DUTIES AS ADMINISTRATOR. Chancellor SSM will administer the
affairs of the Portfolio subject to the supervision of the Portfolio's Board
of Trustees ("Board") and the following understandings:
(a) Chancellor SSM will supervise all aspects of the
non-investment operations of the Portfolio, including the oversight of
transfer agency, custodial, pricing and accounting services, except as
hereinafter set forth; provided, however, that nothing herein contained shall
be deemed to relieve or
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deprive the Board of its responsibility for control of the conduct of the
affairs of the Portfolio.
(b) At Chancellor SSM's expense, Chancellor SSM will provide the
Portfolio with such corporate, administrative and clerical personnel
(including officers of the Portfolio) and services as are reasonably deemed
necessary or advisable by the Board.
(c) Chancellor SSM will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the
Portfolio's prospectus, proxy material, tax returns and required reports with
or to the Portfolio's shareholders, the Securities and Exchange Commission
and other appropriate federal or state regulatory authorities.
(d) Chancellor SSM will provide the Portfolio with, or obtain for
it, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
4. FURTHER DUTIES. In all matters relating to the performance of this
Contract, Chancellor SSM will act in conformity with the Instrument of Trust,
Bylaws and Registration Statement of the Portfolio and with the instructions
and directions of the Board, and will comply with the requirements of the
1940 Act, the rules thereunder, and all other applicable federal and state
laws and regulations.
5. DELEGATION OF CHANCELLOR SSM'S DUTIES AS INVESTMENT MANAGER. With
respect to the Portfolio, Chancellor SSM may enter into contracts with a
sub-adviser ("Sub-Advisory Contract") in which Chancellor SSM delegates to
such sub-adviser the performance of any or all of the services specified in
Paragraph 2 of this Contract, provided that (i) each Sub-Advisory Contract
imposes on the sub-adviser bound thereby, all the duties and conditions to
which Chancellor SSM is subject with respect to the delegated services under
Paragraphs 2 and 3 of this Contract; (ii) each Sub-Advisory Contract meets
all requirements of the 1940 Act and rules thereunder; and (iii) Chancellor
SSM shall not enter into a Sub-Advisory Contract unless it is approved by the
Board prior to implementation.
6. DELEGATION OF CHANCELLOR SSM'S DUTIES AS ADMINISTRATOR. With
respect to the Portfolio, Chancellor SSM may enter into one or more contracts
("Sub-Administration Contract") with a sub-administrator in which Chancellor
SSM delegates to such sub-administrator the performance of any or all of the
services specified in Paragraph 3 of this Contract, provided that (i) each
Sub-Administration Contract imposes on the sub-administrator
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bound thereby all the duties and conditions to which Chancellor SSM is
subject with respect to the delegated services under Paragraph 3 of this
Contract; (ii) each Sub-Administration Contract meets all requirements of the
1940 Act and rules thereunder; and (iii) Chancellor SSM shall not enter into
a Sub-Administration Contract unless it is approved by the Board prior to
implementation.
7. SERVICES NOT EXCLUSIVE. The services furnished by Chancellor SSM
hereunder are not to be deemed exclusive and Chancellor SSM shall be free to
furnish similar services to others so long as its services under this
Contract are not impaired thereby. Nothing in this Contract shall limit or
restrict the right of any director, officer or employee of Chancellor SSM,
who may also be a Trustee, officer or employee of the Portfolio, to engage in
any other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.
8. EXPENSES.
(a) During the term of this Contract, the Portfolio will bear all
expenses incurred in its operations which are not specifically assumed by
Chancellor SSM.
(b) Expenses borne by the Portfolio will include but not be
limited to the following: (i) the cost (including brokerage commissions, if
any) of securities purchased or sold by the Portfolio and any losses incurred
in connection therewith; (ii) fees payable to and expenses incurred on behalf
of the Portfolio by Chancellor SSM under this Contract; (iii) expenses of
organizing the Portfolio; (iv) filing fees and expenses relating to the
registration and qualification of the Portfolio's shares and the Portfolio
under federal and/or state securities law and maintaining such registrations
and qualifications; (v) fees and salaries payable to the Portfolio's Trustees
who are not parties to this Contract or interested persons of any such party
("Independent Trustees"); (vi) all expenses incurred in connection with the
Independent Trustees' services, including travel expenses; (vii) taxes
(including any income or franchise taxes) and governmental fees; (viii) costs
of any liability, uncollectible items of deposit and other insurance and
fidelity bonds; (ix) any costs, expenses or losses arising out of a liability
or claim for damages or other relief asserted against the Portfolio for
violation of any law; (x) legal, accounting and auditing expenses, including
legal fees of special counsel for the Independent Trustees; (xi) charges of
custodians, transfer agents, pricing agents and other agents; (xii) costs of
preparing share certificates; (xiii) expenses of setting in type, printing
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and mailing prospectuses and supplements thereto, statements of additional
information, reports and proxy materials for existing shareholders; (xiv) any
extraordinary expenses (including fees and disbursements of counsel, costs of
actions, suits or proceedings to which the Portfolio is a party and the
expenses the Portfolio may incur as a result of its legal obligation to
provide indemnification to its Trustees, officers, employees and agents)
incurred by the Portfolio; (xv) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (xvi) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xvii) the
cost of investment company literature and other publications provided by the
Portfolio to its Trustees and officers; and (xviii) costs of mailing,
stationery and communications equipment.
(c) Chancellor SSM will assume the cost of any compensation for
services provided to the Portfolio received by the officers of the Portfolio
and by the Trustees of the Portfolio who are not Independent Trustees.
(d) The payment or assumption by Chancellor SSM of any expense of
the Portfolio that Chancellor SSM is not required by this Contract to pay or
assume shall not obligate Chancellor SSM to pay or assume the same or any
similar expense of the Portfolio on any subsequent occasion.
9. COMPENSATION.
(a) For the services provided under this Contract, the Portfolio
will pay Chancellor SSM a fee, computed weekly and paid monthly, at the
annualized rate of 0.95% of the Portfolio's average daily net assets.
(b) The fee shall be computed weekly and paid monthly to
Chancellor SSM on or before the last business day of the next succeeding
calendar month.
(c) If this Contract becomes effective or terminates before the
end of any month, the fee for the period from the effective date to the end
of the month or from the beginning of such month to the date of termination,
as the case may be, shall be prorated according to the proportion which such
period bears to the full month in which such effectiveness or termination
occurs.
10. LIMITATION OF LIABILITY OF CHANCELLOR SSM AND INDEMNIFICATION.
Chancellor SSM shall not be liable, and the Portfolio shall indemnify
Chancellor SSM and its directors,
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officers and employees, for any costs or liabilities arising from any error
of judgment or mistake of law or any loss suffered by the Portfolio in
connection with the matters to which this Contract relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part
of Chancellor SSM in the performance by Chancellor SSM of its duties or from
reckless disregard by Chancellor SSM of its obligations and duties under this
Contract. Any person, even though also an officer, partner, employee, or
agent of Chancellor SSM, who may be or become a Trustee, officer, employee or
agent of the Portfolio, shall be deemed, when rendering services to the
Portfolio or acting with respect to any business of the Portfolio, to be
rendering such service to or acting solely for the Portfolio and not as an
officer, partner, employee, or agent or one under the control or direction of
Chancellor SSM even though paid by it.
11. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date written
above, provided that this Contract shall not take effect with respect to the
Portfolio unless it has first been approved (i) by a vote of a majority of
the Independent Trustees, cast in person at a meeting called for the purpose
of voting on such approval, and (ii) by vote of a majority of the Portfolio's
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract
shall continue in effect for two years from the above written date.
Thereafter, if not terminated, with respect to the Portfolio, this Contract
shall continue automatically for successive periods not to exceed twelve
months each, provided that such continuance is specifically approved at least
annually (i) by a vote of a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or by vote of a majority of the outstanding voting
securities of the Portfolio.
(c) Notwithstanding the foregoing, with respect to the Portfolio
this Contract may be terminated at any time, without the payment of any
penalty, by vote of the Board or by a vote of a majority of the outstanding
voting securities of the Portfolio on sixty days' written notice to
Chancellor SSM or by Chancellor SSM at any time, without the payment of any
penalty, on sixty days' written notice to the Portfolio. This Contract will
automatically terminate in the event of its assignment.
12. AMENDMENT. No provision of this Contract may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed
by the party against which
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enforcement of the change, waiver, discharge or termination is sought, and no
amendment of this Contract shall be effective until approved by vote of a
majority of the Portfolio's outstanding voting securities.
13. GOVERNING LAW. This Contract shall be construed in accordance with
the laws of the State of California and the 1940 Act. To the extent that the
applicable laws of the State of California conflict with the applicable
provisions of the 1940 Act, the latter shall control.
14. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be
affected thereby. This Contract shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in
this Contract, the terms "majority of the outstanding voting securities,"
"interested person," "assignment," "broker," "dealer," "investment adviser,"
"national securities exchange," "net assets," "prospectus," "sale," "sell"
and "security" shall have the same meaning as such terms have in the 1940
Act, subject to such exemption as may be granted by the Securities and
Exchange Commission by any rule, regulation or order. Where the effect of a
requirement of the 1940 Act reflected in any provision of this Contract is
made less restrictive by a rule, regulation or order of the Securities and
Exchange Commission, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation
or order.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
Attest: FLOATING RATE PORTFOLIO
By:
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Attest: CHANCELLOR LGT SENIOR SECURED
MANAGEMENT, INC.
By:
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