SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
BETWEEN
CHANCELLOR LGT SENIOR SECURED MANAGEMENT, INC.
AND
CHANCELLOR LGT ASSET MANAGEMENT, INC.
Contract made as of _________, 1997, between Chancellor LGT Senior
Secured Management, Inc., a New York corporation ("Chancellor SSM"), and
Chancellor LGT Asset Management, Inc., a California corporation ("Chancellor
LGT").
WHEREAS Chancellor SSM has entered into an Investment Management and
Administration Contract with Floating Rate Portfolio (the "Portfolio"), a
closed-end management investment company registered under the Investment
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS Chancellor SSM desires to retain Chancellor LGT as sub-adviser
and sub-administrator to furnish certain advisory and administrative services
to the Portfolio, and Chancellor LGT 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. Chancellor SSM hereby appoints Chancellor LGT as
sub-adviser and sub-administrator of the Portfolio for the period and on the
terms set forth in this Contract. Chancellor LGT 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 Chancellor SSM, the Sub-Adviser will provide a continuous
investment program, including investment research and management, for a
portion of the investments of the Portfolio to be determined by the Manager
(the "Sub-Advised Assets"). The Sub-Adviser will determine from time to time
investments to be purchased, retained or sold with respect to the Sub-Advised
Assets of the Portfolio. The Sub-Adviser will be responsible for placing
purchase and sell orders for such investments and for other related
transactions. The Sub-Adviser will provide services under this Agreement in
accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's registration statement.
(b) The Sub-Adviser agrees that, in placing orders with brokers, it
will attempt to obtain the best net result in terms of price and execution;
provided that, on behalf of the Portfolio, the Sub-Adviser may, in its
discretion, purchase portfolio securities from and sell portfolio securities
to brokers who provide the Portfolio with research, analysis, advice and
similar services, and the Sub-Adviser may pay to those brokers, in return for
such services, a higher commission than may be charged by other brokers,
subject to the Sub-Adviser determining in good faith that such commission 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 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. 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.
(c) The Sub-Adviser will maintain all books and records required to be
maintained by the Sub-Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of
the Portfolio, and will furnish the Board and Chancellor SSM with such
periodic and special reports as the Board or Chancellor SSM reasonable 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 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) The Sub-Adviser will provide the Board and Chancellor SSM on a
regular basis with economic and investment analyses and reports and make
available to the Board and Chancellor SSM upon request any economic,
statistical and investment services normally available to institutional or
other customers of the Sub-Adviser.
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3. DUTIES AS SUB-ADMINISTRATOR. Chancellor LGT 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 LGT 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 deprive the Board of its responsibility for control
of the conduct of the affairs of the Portfolio.
(b) At Chancellor LGT's expense, Chancellor LGT 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 LGT 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 LGT 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 LGT 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. SERVICES NOT EXCLUSIVE. The services furnished by Chancellor LGT
hereunder are not to be deemed exclusive and Chancellor LGT 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 LGT,
who may also be a Director, 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.
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6. 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 LGT.
(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 LGT 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 under federal and/or
state securities laws 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 of 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
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 officers, Trustees, 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.
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(c) Chancellor LGT will assume the cost of any compensation for
services provided to the Portfolio received by the officers and by the
Trustees of the Portfolio who are not Independent Trustees.
(d) The payment or assumption by Chancellor LGT of any expense of
the Portfolio that Chancellor LGT is not required by this Contract to pay or
assume shall not obligate Chancellor LGT to pay or assume the same or any
similar expense of the Portfolio on any subsequent occasion.
7. COMPENSATION.
(a) For the services provided under this Contract, Chancellor SSM
will pay Chancellor LGT a fee, computed weekly and paid monthly, at the
annualized rate of 0.95% of the average daily net value of the Portfolio's
Sub-Advised Assets.
(b) The fee shall be computed weekly and paid monthly to
Chancellor LGT 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.
8. LIMITATION OF LIABILITY OF CHANCELLOR LGT AND INDEMNIFICATION.
Chancellor LGT 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 Chancellor LGT in the performance by Chancellor LGT of its duties or from
reckless disregard by Chancellor LGT of its obligations and duties under this
Contract. Any person, even though also an officer, partner, employee, or
agent of Chancellor LGT, 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 LGT even though paid by it.
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9. 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
Chancellor LGT or by Chancellor LGT 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.
10. 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.
11. 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.
12. 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
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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.
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: CHANCELLOR LGT SENIOR SECURED
MANAGEMENT, INC.
By:
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Attest: CHANCELLOR LGT ASSET
MANAGEMENT, INC.
By:
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