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:________________________________
Attest: CHANCELLOR LGT SENIOR SECURED
MANAGEMENT, INC.
___________________________ By:________________________________
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