EXHIBIT (G)(2)
FLOATING RATE PORTFOLIO
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO SENIOR SECURED MANAGEMENT, INC.
Contract made as of May 29, 1998, between A I M Advisors, Inc., a Delaware
corporation ("Adviser"), and INVESCO Senior Secured Management, Inc., a New York
corporation ("Sub-Adviser").
WHEREAS Adviser has entered into an Investment Management and Administration
Contract with Floating Rate Portfolio ("Portfolio"), a closed-end management
investment company registered under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS Adviser desires to retain Sub-Adviser as sub-adviser and
sub-administrator to furnish certain advisory and administrative services to the
Portfolio, and Sub-Adviser 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. Adviser hereby appoints Sub-Adviser as sub-adviser and
sub-administrator of the Portfolio for the period and on the terms set forth in
this Contract. Sub-Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. DUTIES AS SUB-ADVISER.
(a) Subject to the supervision of the Portfolio's Board of Trustees
("Board") and Adviser, the Sub-Adviser 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.
The Sub-Adviser will determine from time to time what securities and investments
will be purchased, retained or sold by the Portfolio., and the brokers and
dealers through whom trades will be executed.
(b) The Sub-Adviser 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, the Sub-Adviser may, in its discretion,
purchase and sell portfolio securities from and to brokers and dealers who
provide the Portfolio's, [Adviser's], or Sub-Adviser's other clients with
research, analysis, advice and similar services. The Sub-Adviser may pay, in
return for such services research and analysis, a higher commission or spread
than may be charged by other brokers and dealers, subject to the Sub-Adviser'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 the
Sub-Adviser 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 the Sub-Adviser, or any affiliated
person thereof, except in accordance with the federal securities laws and the
rules and regulations thereunder and any exemptive orders currently in effect.
Whenever the Sub-Adviser simultaneously places orders to purchase or sell the
same security on behalf of the Portfolio and one or more other accounts advised
by the Sub-Adviser, 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 is some cases this procedure may adversely affect the
results obtained for the Portfolio.
(c) The Sub-Adviser will maintain all books and records with respect to the
securities transactions of the Portfolio, and will furnish the Board and Adviser
with such periodic and special reports as the Board or Adviser reasonably may
request. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Sub-Adviser 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
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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.
3. DUTIES AS SUB-ADMINISTRATOR. Sub-Adviser will administer the affairs of
the Portfolio subject to the supervision of the Portfolio's Board of Trustees
("Board"), the Adviser, and the following understandings:
(a) Sub-Adviser will supervise all aspects of the operations of the
Portfolio, including the oversight of transfer agency and custodial services
except as hereinafter set forth; provided, however, that nothing herein
contained shall be deemed to relieve or deprive the Board of its responsibility
for control of the conduct of the affairs of the Portfolio.
(b) At Sub-Adviser's expense, Sub-Adviser 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) Sub-Adviser 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) Sub-Adviser will provide the Portfolio with, or obtain for them,
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, Sub-Adviser will act in conformity with the Agreement and Declaration
of Trust, By-Laws 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 SUB-ADVISER'S DUTIES AS SUB-ADVISER AND
SUB-ADMINISTRATOR. With respect to the Portfolio, Sub-Adviser may enter into
one or more contracts ("Sub-Sub-Advisory or Sub-Sub-Administration Contracts")
with a Sub-Sub-Adviser or Sub-Sub-Administrator in which Sub-Adviser delegates
to such sub-sub-adviser or sub-sub-administrator the performance of any or all
of the services specified in Paragraph 2 and 3 of this Contract, provided that:
(i) each Sub-Sub-Advisory and Sub-Sub-Administration Contract imposes on the
sub-sub-adviser or sub-sub-administrator bound thereby all the duties and
conditions to which Sub-Adviser is subject with respect to the services under
Paragraphs 2, 3 and 4 of this Contract; (ii) each Sub-Sub-Advisory and
Sub-Sub-Administration Contract meets all requirements of the 1940 Act and rules
thereunder, and (iii) Adviser shall not enter into a Sub-Sub-Advisory or
Sub-Sub-Administration Contract unless it is approved by the Board prior to
implementation.
6. SERVICES NOT EXCLUSIVE. The services furnished by Sub-Adviser hereunder
are not to be deemed exclusive and Sub-Adviser 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 Sub-Adviser, 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.
7. EXPENSES.
(a) During the term of this Contract, the Portfolio will bear all expenses
not specifically assumed by Sub-Adviser.
(b) Expenses borne by the Portfolio will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Portfolio and any losses incurred in
connection therein; (ii) fees payable to and expenses incurred on behalf of the
Portfolio by Adviser under this
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Contract; (iii) investment consulting fees and related costs; (iv) expenses of
organizing the Portfolio; (v) costs incurred in connection with the issuance,
sale or repurchase of the Portfolio's shares of beneficial interest; (vi) filing
fees and expenses relating to the registration and qualification for the
Portfolio's shares and the Portfolio under federal and/or state securities laws
and maintaining such registrations and qualifications; (vii) expenses of
preparing and filing reports and other documents with governmental and
regulatory agencies; (viii) 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"); (ix) all expenses incurred in connection with
the Independent Trustees' services, including travel expenses; (x) Taxes
(including any income or franchise taxes) and governmental fees; (xi) costs of
any liability, uncollectible items of deposit and other insurance and fidelity
bonds; (xii) any costs, expenses or losses arising out of a liability of or
claim for damages or other relief asserted against the Portfolio for violation
of any law; (xiii) interest charges; (xiv) legal, accounting and auditing
expenses, including legal fees of special counsel for the Independent Trustees;
(xv) charges of custodians, transfer agents, pricing agents and other agents;
(xvi) costs of preparing share certificates; (xvii) expenses of setting in type,
printing and mailing prospectuses and supplements thereto, reports, notices and
proxy materials for existing shareholders; (xviii) expenses of obtaining and
maintaining securities exchange listing of the Portfolio's shares of beneficial
interest; (xix) 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 officers, Trustees, employees and
agents) incurred by the Portfolio; (xx) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (xxi) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xxii) the cost
of investment company literature and other publications provided by the
portfolio to its Trustees and officers; and (xxiii) costs of mailing, stationery
and communications equipment.
(c) Sub-Adviser 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 Sub-Adviser of any expense of the Portfolio
that Sub-Adviser is not required by this Contract to pay or assume shall not
obligate Sub-Adviser to pay or assume the same or any similar expense of the
Portfolio on any subsequent occasion.
8. COMPENSATION.
(a) For the services provided to a Portfolio under this Contract, Adviser
will pay Sub-Adviser a fee, computed daily and paid monthly, as set forth in
Appendix A hereto.
(b) The fee shall be computed weekly and paid monthly to Sub-Adviser 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.
9. LIMITATION OF LIABILITY OF SUB-ADVISER AND INDEMNIFICATION. Sub-Adviser
shall not be liable 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 Sub-Adviser in
the performance by Sub-Adviser of its duties or from reckless disregard by
Sub-Adviser of its obligations and duties under this Contract. Any person, even
though also an officer, partner, employee, or agent of Sub-Adviser, 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 Sub-Adviser even though paid by it.
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10. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date hereabove written,
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 Sub-Adviser or by
Sub-Adviser 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.
11. 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 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, when required by the 1940 Act.
12. GOVERNING LAW. This Contract shall be construed in accordance with the
laws of the State of Delaware (without regard to Delaware conflict or choice of
law provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
13. 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: A I M ADVISORS, INC.
-------------------------------------------- By: -----------------------------------------
Name:
Title:
Attest: INVESCO SENIOR SECURED MANAGEMENT, INC.
-------------------------------------------- By: -----------------------------------------
Name:
Title:
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APPENDIX A
TO
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
The Adviser shall pay the Sub-Adviser, as full compensation for all services
rendered and all facilities furnished hereunder, a sub-advisory fee of 0.48% of
the Portfolio's average daily net assets for the calendar year, computed in the
manner used for the determination of the Portfolio's net asset value.
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