As filed with the Securities and Exchange Commission on March 21, 1997.
1940 Act File No. 811-07969
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
FLOATING RATE PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
50 California Street, 27th Floor
San Francisco, California 94111
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (800) 824-1580
David J. Thelander, Esq.
Chancellor LGT Asset Management, Inc.
50 California Street, 27th Floor
San Francisco, California 94111
(Name and Address of Agent for Service)
<PAGE>
EXPLANATORY NOTE
This Registration Statement, has been filed by the Registrant pursuant
to Section 8(b) of the Investment Company Act of 1940, as amended (the "1940
Act"). However, interests in the Registrant have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), since such interests will
be issued solely in private placement transactions that do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act.
Investments in the Registrant may be made only by U.S. and foreign investment
companies, common or commingled trust funds, organizations or trusts described
in Sections 401(a) or 501(a) of the Internal Revenue Code of 1986, as amended,
or similar organizations or entities that are "accredited investors" within the
meaning of Regulation D under the 1933 Act. This Registration Statement, does
not constitute an offer to sell, or the solicitation of an offer to buy, any
interest in the Registrant.
<PAGE>
Floating Rate Portfolio
Contents of Registration Statement
This registration statement of Floating Rate Portfolio contains the following
documents:
Facing Sheet
Contents of Registration Statement
Part A
Part B
Part C
Signature Page
Exhibits
<PAGE>
PART A
Responses to Items 1, 2, 3.2, 4, 5, 6 and 7 of Part A have been omitted
pursuant to Paragraph 3 of Instruction G of the General Instructions to Form
N-2.
Responses to certain Items required to be included in Part A of this
Registration Statement are incorporated herein by reference from Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-2 of GT Global Floating
Rate Fund, Inc. (the "Fund" (1933 Act File No. 333-17425 and 1940 Act File No.
811-07957)), as filed with the Securities and Exchange Commission (the "SEC") on
March 14, 1997.
Item 3. Fee Table and Synopsis
Not Applicable.
Item 8. General Description of the Registrant
Floating Rate Portfolio (the "Portfolio") is a closed-end,
non-diversified management investment company which was organized as a business
trust under the laws of the State of Delaware on January 9, 1997. Interests in
the Portfolio are issued solely in private placement transactions that do not
involve any "public offering" within the meaning of Section 4(2) of the
Securities Act of 1933, as amended (the "1933 Act"). Investments in the
Portfolio may be made only by U.S. and foreign investment companies, common or
commingled trust funds, organizations or trusts described in Sections 401(a) or
501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), or similar
organizations or entities that are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This Registration Statement, as amended, does
not constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.
Information on the Portfolio's investment objective, the kinds of
securities in which the Portfolio principally invests, other investment
practices of the Portfolio and the risk factors associated with investments in
the Portfolio are incorporated herein by reference from the sections entitled
"Investment Objective and Policies" and "Special Considerations and Risk
Factors" in the prospectus of the Fund included in the Fund's Registration
Statement on Form N-2.
A-1
<PAGE>
Item 9. Management
A description of how the business of the Portfolio is managed is
incorporated herein by reference from the section entitled "Management" in the
Fund's prospectus included in the Fund's Registration Statement on Form N-2. The
following list identifies the specific sections of the Fund's prospectus under
which the information required by Item 9 of Form N-2 may be found: each listed
section is incorporated herein by reference.
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Item 9.1(a) Management
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Item 9.1(b) Management - Investment Management
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Item 9.1(c) Management - Investment Management
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Item 9.1(d) Management - Investment Management
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Item 9.1(e) Custodian, Transfer and Dividend Disbursing Agent
and Registrar
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Item 9.1(f) Management
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Item 9.1(g) Management; Portfolio Transactions
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Item 9.2(a) Not Applicable
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Item 9.2(b) Not Applicable
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Item 9.2(c) Not Applicable
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Item 9.2(d) Not Applicable
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Item 9.3
Until such time as the Fund completes the public offering of its
shares, LGT Asset Management, Inc. ("LGT AM") will be a control person of the
Registrant. LGT AM is an indirect parent of Chancellor LGT Senior Secured
Management, Inc., and is a subsidiary of Liechtenstein Global Trust, a financial
services holding company. Liechtenstein Global Trust in turn is controlled by
the Price of Liechtenstein Foundation, which serves as the parent organization
for the various business enterprises of the Princely Family of Liechtenstein.
Information as to LGT AM, and affiliated companies in the LGT Group, is included
in Chancellor LGT Asset Management, Inc.'s Form ADV filed on November 1, 1996
with the SEC (Registration number 801-10254) and is incorporated herein by
reference.
Item 10. Capital Stock, Long-Term Debt, and Other Securities
Item 10.1 Capital Stock
The Portfolio is organized as a trust under the laws of the State of
Delaware and intends to be classified as a partnership for income tax purposes.
Under the Trust Instrument, the Portfolio shall consist of one or more separate
and distinct series. Additional series shall be established by, and shall be
effective upon, the adoption of a resolution by the trustees. The trustees may
designate the relative rights and preferences of the interests of each series.
The Portfolio shall maintain separate and distinct records for each series. A
A-2
<PAGE>
series may issue any number of interests. Each holder of an interest in a series
shall be entitled to receive its pro rata share of all distributions made with
respect to that series. On redemption of an interest in a series, an interest
holder shall be paid solely out of the assets belonging to that series.
The beneficial interest in the Portfolio shall be divided into
interests in one or more series. The number of interests in the Portfolio and
each series shall be unlimited. All interests issued by the Portfolio shall be
fully paid and nonassessable. Interest holders shall have no preemptive or other
rights to subscribe to any additional interests or other securities issued by
the Portfolio. The trustees shall have full power and authority, in their sole
discretion and without obtaining interest holder approval, (a) to issue original
or additional interests at such times and on such terms and conditions as they
deem appropriate, (b) to establish and to change in any manner interests in any
series with such preference, terms of conversion, voting powers, rights, and
privileges as the trustees may determine (but the trustees may not change
interests in a manner materially adverse to the interest holders), (c) to divide
or combine the interests in any series into a greater or lesser number, (d) to
classify or reclassify any unissued interests of any series into one or more
series, (e) to abolish any one or more series, (f) to issue interests to acquire
other assets (including assets subject to, and in connection with, the
assumption of liabilities) and businesses, and (g) to take such other action
with respect to the interests as the trustees may deem desirable.
The trustees shall accept investments in any series from such persons
and on such terms as they may from time to time authorize. At the trustees' sole
discretion, such investments, subject to applicable law, may be in the form of
cash or securities in which that series is authorized to invest. The trustees
shall have the right to refuse to accept investments in any series at any time
without any cause or reason therefor whatsoever. Notwithstanding anything in the
Portfolio's Trust Instrument to the contrary, (a) interests shall be only be
issued in a transaction or transactions not requiring registration under the
1933 Act and (b) no series shall at any time have more than 100-interest
holders. In determining the number of interest holders of any series, a person
owning an interest through a partnership, grantor trust, or S corporation (a
"flow-through entity") shall be counted as a interest holder if substantially
all the value of that person's interest in the flow-through entity is
attributable to that series and a principal purpose for using a tiered structure
was to satisfy the 100-interest holder condition. The trustees shall impose such
other limitations on investments in the series as are necessary to avoid having
any series treated as a "publicly traded partnership" within the meaning of
section 7704 of the Code.
The Portfolio or any series may be terminated by a majority vote of
interest holders of the Portfolio or the affected series, respectively, or the
trustees by written notice to the interest holders. Any series shall be
terminated 120 days after an interest holder in that series either (i) makes an
assignment for the benefit of creditors, (ii) files a voluntary petition in
bankruptcy, (iii) is adjudicated a bankrupt or insolvent, (iv) files any
pleading admitting or failing to contest the material allegations of a petition
filed against it in any bankruptcy or insolvency proceeding, or (v) seeks,
consents to, or acquiesces in the appointment of a trustee, receiver, or
liquidator of the interest holder or of all or any substantial part of its
assets, unless, within such 120 days, interest holders (excluding the interest
holder with respect to whom such event occurs) owning a majority of the
interests in that series vote to continue that series.
The trustees may, without interest holder approval, cause the Portfolio
or any series to merge or consolidate with or into any other entity or entities.
Any agreement of merger or consolidation or certificate of merger may be signed
by a majority of trustees, and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.
A-3
<PAGE>
The trustees may, without the prior consent or vote of the interest
holders, (i) cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction or any other trust, partnership,
association, or other organization (each a "successor entity") to take over all
of the trust property or the assets belonging to any series or to carry on any
business in which the trust or any series shall directly or indirectly have any
interest, (ii) sell, convey, and transfer the Portfolio property or the assets
belonging to any series to any such successor entity in exchange for the equity
interests thereof or otherwise, and (iii) lend money to, subscribe for the
equity interests in, and enter into any contracts with any such successor
entity.
Item 10.2 Long-Term Debt
Not applicable.
Item 10.3 General
Not applicable.
Item 10.4 Taxes
Information on the taxation of the Portfolio is incorporated
by reference from the section entitled "Taxes - Taxation of the Portfolio" in
the Fund's prospectus included in the Fund's Registration Statement on Form N-2.
Item 10.5 Outstanding Securities
Not applicable.
Item 10.6 Securities Ratings
Not applicable.
Item 11. Defaults and Arrears on Senior Securities
Not applicable.
Item 12. Legal Proceedings
Not applicable.
Item 13. Table of Contents of Statement of Additional Information
Not applicable.
A-4
<PAGE>
PART B
Part B of this Registration Statement should be read in conjunction
with Part A. Capitalized terms used in this Part B and not otherwise defined
have the meanings given them in Part A of this Registration Statement.
Responses to certain Items required to be included in Part B of this
Registration Statement are incorporated herein by reference from Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-2 of the Fund (1933 Act
File No. 333-17425 and 1940 Act File No. 811-07957)), as filed with the SEC on
March 14, 1997.
Item 14. Cover Page
Not applicable.
Item 15. Table of Contents
Not applicable.
Item 16. General Information and History
Not applicable.
Item 17. Investment Objective and Policies
Part A contains basic information about the investment objective,
policies and limitations of the Portfolio. This Part B supplements the
discussion in Part A of the investment objective, policies and limitations of
the Portfolio.
Information on the fundamental investment limitations and the
non-fundamental investment policies and limitations of the Portfolio, the types
of securities bought and investment techniques used by the Portfolio and certain
risks attendant thereto, as well as other information on the Portfolio's
investment programs, is incorporated by reference from the sections entitled
"Investment Objective and Policies, "Investment Restrictions," "Special
Considerations and Risk Factors," and "Portfolio Transactions" in the Fund's
prospectus included in the Fund's Registration Statement on Form N-2.
Item 18. Management
Information about the trustees and officers of the Portfolio, and their
roles in management of the Portfolio and other GT Global Funds, is incorporated
by reference from the section entitled "Directors and Executive Officers" in the
Fund's prospectus included in the Fund's Registration Statement on Form N-2.
The Board of Directors of the Portfolio has an Audit Committee,
comprised of Ms. Quigley, and Messrs. Anderson, Bayley and Patterson, which is
responsible for reviewing and evaluating the audit function, including
recommending firms to serve as independent auditors of the Portfolio. Each
trustee and officer of the Portfolio is also a director and/or trustee and
officer, respectively, of the 11 registered investment companies with 41 series
B-1
<PAGE>
managed administered by the Chancellor LGT Asset Management, Inc. ("Chancellor
LGT"). The Portfolio pays each trustee who is not a director, officer or
employee of Chancellor LGT or any affiliated company $5,000 a year, plus $300
for each meeting of the Board attended by the trustee, and reimburses travel and
other expenses incurred in connection with attending Board meetings. Other
trustees and officers receive no compensation or expense reimbursement from the
Portfolio. The Portfolio has not yet commenced operations and no trustee or
officer of the Portfolio owns any beneficial interest in the Portfolio. The
Portfolio requires no employees since the Chancellor LGT Senior Secured
Management, Inc. and other third-party service providers perform substantially
all of the services necessary for the Portfolio's operations.
Item 19. Control Persons and Principal Holders of Securities
Until such time as the GT Global Floating Rate Fund, Inc. completes the
public offering of its shares, LGT Asset Management, Inc. ("LGT AM") will be a
control person of the Registrant. LGT AM is an indirect parent of Chancellor LGT
Senior Secured Management, Inc., and is a subsidiary of Liechtenstein Global
Trust, a financial services holding company. Liechtenstein Global Trust in turn
is controlled by the Prince of Liechtenstein Foundation, which serves as the
parent organization for the various business enterprises of the Princely Family
of Liechtenstein. Information as to LGT AM, and affiliated companies in the LGT
Group, is included in Chancellor LGT's Form ADV filed on November 1, 1996 with
the SEC (Registration number 801-10254) and incorporated herein by reference.
The Fund is expected to invest substantially all of the proceeds of its
public offering in the Portfolio. As s result, the Fund is expected to control
the Portfolio. During such time the Fund controls the Portfolio, the Fund may
take actions affecting the Portfolio without the approval of any other investor.
The address of the Fund is 50 California Street, 27th Floor, San Francisco,
California 94111.
The Fund has informed the Portfolio that whenever it is requested to
vote on any proposal of the Portfolio, it will hold a meeting of shareholders
and will cast its vote as instructed by its shareholders. It is anticipated that
other investors in the Portfolio would follow the same or a similar practice.
Item 20. Investment Advisory and Other Services
Information on the investment management and other services provided
for or on behalf of the Portfolio is incorporated herein by reference from the
sections entitled "Management," "Directors and Executive Officers" and
"Additional Information" in the Fund's prospectus included in the Fund's
Registration Statement on Form N-2. The following list identifies the specific
sections in the Fund's prospectus under which the information required by Item
20 of Form N-2 may be found; each section is incorporated herein by reference.
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Item 20.1(a) Management
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Item 20.1(b) Management - Investment Management
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Item 20.1(c) Management - Investment Management
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Item 20.2 Management - Investment Management
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Item 20.3 Not Applicable
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Item 20.4 Management - Investment Management
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Item 20.5(a) Not Applicable
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B-2
<PAGE>
Item 20.5(b) Not Applicable
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Item 20.5(c) Not Applicable
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Item 20.6 Custodian, Transfer and Dividend Disbursing Agent
and Registrar
============================= ==================================================
Item 20.7 Additional Information - Independent Accountants
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Item 20.8 Not Applicable
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Item 21. Brokerage Allocation and Other Practices
A description of the Portfolio's brokerage allocation and other
practices is incorporated herein by reference from the section entitled
"Portfolio Transactions" in the Fund's prospectus included in the Fund's
Registration Statement on Form N-2.
Item 22. Tax Status
Information on the taxation of the Portfolio is incorporated by
reference from the section entitled "Taxes - Taxation of the Portfolio" in the
Fund's prospectus included in the Fund's Registration Statement on Form N-2.
Item 23. Financial Statements
The audited Statement of Assets and Liabilities of the Portfolio as of
March 14, 1997, are attached hereto.
B-3
<PAGE>
Coopers Coopers & Lybrand L.L.P.
&Lybrand a professional services firm
Report of Independent Accountant
To the Board of Trustees of
Floating Rate Portfolio
We have audited the accompanying statement of assets and liabilities of Floating
Rate Portfolio (the "Portfolio") as of March 21, 1997. This financial statement
is the responsibility of the Fund's management. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of cash held by the custodian as of March 21, 1997. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the net assets of the Portfolio as of March 21, 1997, in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
------------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 21, 1997
<PAGE>
FLOATING RATE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 14, 1997
- --------------------------------------------------------------------------------
ASSETS
- ------
Cash........................................................$100,100
---- --------
Deferred organization expenses (Note 2).....................$ 96,000
--------------------------------------- --------
LIABILITIES
- -----------
Payable for deferred organization expenses (Note 2) ........$ 96,000
--------------------------------------------------- --------
Commitments (Notes 2 and 3) ................................$ 0
-------------------------- --------
NET ASSETS.......................................................$100,100
- ---------- --------
<PAGE>
NOTES TO STATEMENT OF ASSETS AND LIABILIITIES
Note 1 Floating Rate Portfolio (the "Portfolio") was organized as a Delaware
business trust pursuant to a Trust Instrument on January 9, 1997. The Portfolio
has been inactive except for matters relating to its organization and
registration as an investment company under the Investment Company Act of 1940
and the sale of beneficial interests (the "Initial Interests") therein at the
aggregate purchase price of $100,000 to GT Global Floating Rate Fund, Inc. (the
"Fund") and $100 to LGT Asset Management, Inc. ("LGT AM").
Note 2 Organization expenses are being deferred and will be amortized on a
straight line basis over a period not to exceed five years that commences on the
effective date of the Portfolio's Registration Statement on Form N-2. The amount
paid by the Portfolio on any withdrawal by the Fund or LGT AM of the Initial
Interests will be reduced by a portion of any unamortized organization expenses,
determined by the proportion of the amount of the Initial Interest withdrawn to
the aggregate amount of the Initial Interests then outstanding after taking into
account any prior withdrawals of any of the Initial Interests.
Note 3 At 4:00 p.m., Eastern time, on each business day of the Portfolio, the
value of an investor's beneficial interest in the Portfolio is equal to the
product of (i) the aggregate net asset value of the Portfolio multiplied by (ii)
the percentage representing that investor's share of the aggregate beneficial
interest in the Portfolio effective for that day.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(1) Financial Statements:
The financial statements and report by Coopers & Lybrand L.L.P.,
independent auditors, are included in Part B.
(2) Exhibits:
(a) Trust Instrument dated January 9, 1997 - Filed herewith.
(b) By-Laws dated January 9, 1997 - Filed herewith.
(c) Not applicable.
(d) Instruments Defining the Rights of Security Holders - Filed
herewith.
(e) Not applicable.
(f) Not applicable.
(g)(1) Form of Investment Management and Administration Contract
between the Registrant and Chancellor LGT Senior Secured
Management, Inc. - Filed herewith.
(g)(2) Form of Sub-Advisory and Sub-Administration Contract between
Chancellor LGT Senior Secured Management, Inc. and Chancellor
LGT Asset Management, Inc. - Filed herewith.
(h) Not applicable.
(i) Not applicable.
(j) Form of Custodian Contract between the Registrant and State
Street Bank & Trust Company - Filed herewith.
(k)(1) Form of Fund Accounting and Pricing Agent Agreement between
the Registrant, GT Global Floating Rate Fund, Inc. and
Chancellor LGT Asset Management, Inc. - Filed herewith.
(k)(2) Form of Transfer Agency Contract between the Registrant and GT
Global Investor Services, Inc. - Filed herewith.
(l) Not applicable.
(m) Not applicable.
C-1
<PAGE>
(n) Consent of Coopers & Lybrand L.L.P. - Filed herewith.
(o) Not applicable.
(p) Not applicable.
(q) Not applicable.
(r) Not applicable.
Item 25. Marketing Arrangements
Not applicable.
Item 26. Other Expenses of Issuance and Distribution
Not applicable.
Item 27. Persons Controlled by or Under Common Control
Not applicable.
Item 28. Number of Holders of Securities
Number of Record Holders
Title of Class as of March 21, 1997
- -------------- ------------------------
Shares of Beneficial Interest None
C-2
<PAGE>
Item 29. Indemnification
Reference is hereby made to Article X of the Registrant's Trust
Instrument, filed as Exhibit 2(a) to this Registration Statement.
The Registrant's trustees and officers are insured under an errors and
omissions liability insurance policy. The Registrant is insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 30. Business and Other Connections of the Investment Adviser
Information as to any other business, profession, vocation or
employment of a substantial nature in which each director or officer of
Chancellor LGT Senior Secured Management, Inc. is, or at any time during the
past two years has been, engaged for his or her own account or in the capacity
of director, officer, employee, partner or trustee is incorporated herein by
reference from the sections entitled "Management" and "Directors and Executive
Officers" in the Fund's Part A.
Information as to the directors and officers of Chancellor LGT Asset
Management, Inc., Registrant's sub-advisor, is included in such advisor's Form
ADV (File No. 801-10254), filed with the SEC, which is incorporated herein by
reference thereto.
Item 31. Location of Accounts and Records
Accounts, books and other records required by Rules 31a-1 and 31a-2
under the Investment Company Act of 1940, as amended, will be maintained and
held in the offices of the Registrant's Custodian, State Street Bank and Trust
Company, 1776 Heritage Drive, North Quincy, Massachusetts 02171, except that the
Registrant's corporate records (its trust instrument, bylaws and minutes of the
meetings of its Board of Directors) will be maintained at the offices of
Chancellor LGT Asset Management, Inc., 50 California Street, 27th Floor, San
Francisco, California 94111.
Item 32. Management Services
Other than as set forth in Parts A and B of this Registration
Statement, the Registrant is not a party to any management-related service
contract.
Item 33. Undertakings
Not applicable.
C-3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement on Form N-2 to be signed
on its behalf by the undersigned, thereunto duly authorized, in San Francisco,
California on the 21st day of March, 1997.
FLOATING RATE PORTFOLIO
By: /s/ David J. Thelander
-----------------------------
David J. Thelander
Secretary
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
(a) Trust Instrument dated January 9, 1997.
(b) By-Laws dated January 9, 1997.
(d) Instruments Defining the Rights of Security Holders - Filed
herewith.
(g)(1) Form of Investment Management and Administration Contract
between the Registrant and Chancellor LGT Senior Secured
Management, Inc. - Filed herewith.
(g)(2) Form of Sub-Advisory and Sub-Administration Contract between
Chancellor LGT Senior Secured Management, Inc. and Chancellor
LGT Asset Management, Inc. - Filed herewith.
(j) Form of Custodian Contract between the Registrant and State
Street Bank & Trust Company - Filed herewith.
(k)(1) Form of Fund Accounting and Pricing Agent Agreement between
the Registrant, GT Global Floating Rate Fund, Inc. and
Chancellor LGT Asset Management, Inc. - Filed herewith.
(k)(2) Form of Transfer Agency Contract between the Registrant and
GT Global Investor Services, Inc. - Filed herewith.
(n) Consent of Coopers & Lybrand L.L.P. - Filed herewith.
TRUST INSTRUMENT
OF
FLOATING RATE PORTFOLIO
This TRUST INSTRUMENT is made as of January 9, 1997, by the Trustees,
to establish a business trust for the investment and reinvestment of funds
contributed to the Trust by investors. The Trustees declare that all money and
property contributed to the Trust shall be held and managed in trust pursuant to
this Trust Instrument. The name of the Trust created by this Trust Instrument is
"Floating Rate Portfolio," subject to change as provided herein.
ARTICLE I
DEFINITIONS
-----------
As used herein, the following terms shall have the following meanings,
unless otherwise provided or required by the context:
(a) "Assets belonging to" a Series means all consideration received by the
Trust for the issuance or sale of Interests in that Series, together
with all assets in which such consideration is invested or reinvested
and all income, earnings, profits, and proceeds thereof (including any
proceeds derived from the sale, exchange, or liquidation of such
assets), and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be;
(b) "Book Capital Account" means, for any Holder of Interests in a
particular Series at any time, the Book Capital Account of the Holder
with respect to that Series, determined in accordance with Article VI,
Section 1;
(c) "By-Laws" means the By-Laws of the Trust adopted by the Trustees, as
amended from time to time;
(d) "Code" means the Internal Revenue Code of 1986, as amended;
(e) "Commission" and "Interested Person" have the meanings provided in the
1940 Act, as modified by any applicable order or orders of the
Commission or interpretive releases of the Commission thereunder;
(f) "Covered Person" means every person who is, or has been, a Trustee or
an officer, employee, or agent of the Trust;
(g) "Delaware Act" means Chapter 38 of Title 12 of the Delaware Code,
entitled "Treatment of Delaware Business Trusts," as amended from time
to time;
(h) "Fiscal Year" means, with respect to any Series, an annual period as
determined by the Trustees;
<PAGE>
(i) "Holder" means, as of any particular time, a holder of record of an
Interest in a Series at such time;
(j) "Interest" means, with respect to each Series, the beneficial interest
of a Holder in that Series, including all rights, powers, and
privileges accorded to such Holders in this Trust Instrument. The
Interest of a Holder in any particular Series may be expressed as a
percentage, determined by calculating, at such times and on such bases
as the Trustees shall from time to time determine, the ratio of the
Holder's Book Capital Account balance to the total Book Capital
Account balances of all Holders in that Series. Reference herein to a
specified percentage in, or fraction of, the Interests of the Holders
in a Series means Holders whose combined Book Capital Account balances
represent such specified percentage or fraction of the Book Capital
Account balances of all Holders in that Series;
(k) "Majority Interests Vote" means "the vote of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the
Trust or a Series, as applicable;
(l) "Net Asset Value" means, with respect to any Series, the amount by
which the Assets belonging to that Series exceed its liabilities, all
as determined by or under the Trustees' direction;
(m) "Net Profits" of a Series for any given time period means the excess
of its Net Asset Value at the close of business on the last day of
such period, prior to any distributions being made with respect to
such period, over its Net Asset Value as of the opening of business on
the first day of such period, after any contributions made on such
date; and "Net Losses" of a Series for any given time period means the
excess of its Net Asset Value as of the opening of business on the
first day of such period, after any contributions made on such date,
over its Net Asset Value at the close of business on the last day of
such period, prior to any distributions being made with respect to
such period;
(n) "1940 Act" means the Investment Company Act of 1940, as amended;
(o) "Registered Investment Company" means a company registered as a
management investment company under the 1940 Act;
(p) "Series" means a series of Interests established pursuant to Article
IV;
(q) "Trust" means the business trust named "Floating Rate Portfolio"
established hereby; provided that if the Trustees determine that the
use of such name is not advisable, they may select such other name for
the Trust as they deem proper and the Trust may hold its property and
conduct its activities under such other name;
(r) "Trust Instrument" means this Trust Instrument, as amended from time
to time. References in this Trust Instrument to "Trust Instrument,"
"hereof," "herein," and "hereunder" shall be deemed to refer to this
Trust Instrument in its entirety rather than the Article or Section in
which such words appear;
(s) "Trustees" means the persons who have signed this Trust Instrument, so
long as they continue in office in accordance with the terms hereof,
and all other persons who may from time to time be duly qualified and
serving as Trustees in accordance with Article II, in all cases in
their capacities as Trustees hereunder; and
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(t) "Trust Property" means any and all property, real or personal,
tangible or intangible, that is owned or held by or for the Trust or
any Series or the Trustees on behalf of the Trust or any Series.
ARTICLE II
TRUSTEES
--------
Section 1. MANAGEMENT OF THE TRUST. The business and affairs of the
Trust shall be managed by or under the direction of the Trustees, and they shall
have all powers necessary or desirable to carry out that responsibility; and no
Holder shall have any right to conduct any Trust business. The Trustees may
execute all instruments and take all action they deem necessary or desirable to
promote the interests of the Trust. Any determination made by the Trustees in
good faith as to what is in the interests of the Trust shall be conclusive.
Section 2. INITIAL TRUSTEE; NUMBER AND ELECTION OF TRUSTEES. The
initial Trustee shall be the person initially signing this Trust Instrument. The
number of Trustees (other than the initial Trustee) shall be fixed from time to
time by a majority of the Trustees; provided that, from and after investment in
the Trust by the first Holder(s), there shall be at least two Trustees. The
Holders shall elect the Trustees (other than the initial Trustee) on such dates
as the Trustees may fix from time to time.
Section 3. TERM OF OFFICE. Each Trustee shall hold office for life or
until his or her successor is elected or the Trust terminates; except that (a)
any Trustee may resign by delivering to the other Trustees or to any Trust
officer a written resignation effective upon such delivery or a later date
specified therein; (b) any Trustee may be removed with or without cause at any
time by a written instrument signed by at least two-thirds of the other
Trustees, specifying the effective date of removal; (c) any Trustee who requests
to be retired, or who has become physically or mentally incapacitated or is
otherwise unable to serve, may be retired by a written instrument signed by a
majority of the other Trustees, specifying the effective date of retirement; and
(d) any Trustee may be removed at any meeting of Holders by a vote of the
Holders of at least two-thirds of the Interests.
Section 4. VACANCIES; APPOINTMENT OF TRUSTEES. Whenever a vacancy
exists among the Trustees, regardless of the reason for such vacancy, the
remaining Trustees shall appoint any person as they determine in their sole
discretion to fill that vacancy, consistent with the limitations under the 1940
Act. Such appointment shall be made by a written instrument signed by a majority
of the Trustees or by a resolution of the Trustees, duly adopted and recorded in
the records of the Trust, specifying the effective date of the appointment. The
Trustees may appoint a new Trustee as provided above in anticipation of a
vacancy expected to occur because of the retirement, resignation, or removal of
a Trustee, or an increase in the number of Trustees, provided that such
appointment shall become effective only at or after the expected vacancy occurs.
Such appointment shall be subject to section 16(a) of the 1940 Act.
Section 5. TEMPORARY VACANCY OR ABSENCE. Until any vacancy among the
Trustees is filled, or while any Trustee is absent from his or her domicile
(unless that Trustee has made arrangements to be informed about, and to
participate in, the affairs of the Trust during such absence) or is physically
or mentally incapacitated, the remaining Trustees shall have all the powers
hereunder. Any Trustee may, by power of attorney, delegate his or her powers as
a Trustee for a period not exceeding six months at any one time to any other
Trustee or Trustees.
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Section 6. CHAIRMAN. The Trustees may appoint one of their number to be
Chairman of the Trustees. He or she shall perform any such duties as the
Trustees may from time to time designate.
Section 7. ACTION BY THE TRUSTEES. The Trustees shall act by majority
vote at a meeting duly called (including a telephonic meeting, unless the 1940
Act requires that a particular action be taken only at a meeting of the Trustees
in person) at which a quorum is present or by written consent of a majority of
the Trustees (or such greater number as may be required by applicable law)
without a meeting. A majority of the Trustees shall constitute a quorum at any
meeting. Meetings of the Trustees may be called orally or in writing by the
President of the Trust or by any two Trustees. Notice of the time, date, and
place of all Trustees meetings shall be given to each Trustee by telephone,
facsimile, or other electronic mechanism sent to his or her home or business
address at least twenty-four hours in advance of the meeting or by written
notice mailed to his or her home or business address at least seventy-two hours
in advance of the meeting. Notice need not be given to any Trustee who attends
the meeting without objecting to the lack of notice or who signs a waiver of
notice either before or after the meeting. Subject to the requirements of the
1940 Act, the Trustees by majority vote may delegate to any Trustee or Trustees
authority to approve particular matters or take particular actions on behalf of
the Trust. Any written consent or waiver may be provided and delivered to the
Trust by facsimile or other similar electronic mechanism.
Section 8. EFFECT OF TRUSTEES NOT SERVING. The death, resignation,
retirement, removal, incapacity, or inability or refusal to serve of the
Trustees, or any one of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Trust Instrument.
Section 9. TRUSTEES, ETC. AS HOLDERS. Subject to any restrictions in
the By-Laws, any Trustee, officer, agent, or independent contractor of the Trust
may acquire, own, and dispose of Interests to the same extent as any other
Holder. The Trustees may issue and sell Interests to and buy Interests from any
such person or any firm or company in which such person is interested, subject
only to any general limitations herein.
ARTICLE III
POWERS OF THE TRUSTEES
----------------------
Section 1. POWERS. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if they were the sole owners of the Trust Property and business in
their own right, but with such powers of delegation as may be permitted by this
Trust Instrument. The Trustees in all instances shall act as principals, free of
the control of the Holders. The Trustees shall have full power and authority to
take or refrain from taking any action and to execute any contracts and
instruments that they may consider necessary or desirable in the management of
the Trust. The Trustees shall not in any way be bound or limited by current or
future laws or customs applicable to trust investments, but shall have full
power and authority to make any investments that they, in their sole discretion,
deem proper to accomplish the purposes of the Trust. The Trustees may exercise
all of their powers without recourse to any court or other authority. Subject to
any applicable limitation herein or in the By-Laws, operating documents, or
resolutions of the Trust, the Trustees shall have power and authority, without
limitation:
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(a) To operate as and carry on the business of a Registered Investment
Company and to exercise all the powers necessary and proper to conduct
such a business;
(b) To subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute,
or otherwise deal in or dispose of any form of property, including
cash (U.S. currency), foreign currencies and related instruments, and
securities (including common and preferred stocks, warrants, bonds,
debentures, time notes and all other evidences of indebtedness,
negotiable or non-negotiable instruments, obligations, certificates of
deposit or indebtedness, commercial paper, repurchase agreements,
reverse repurchase agreements, convertible securities, forward
contracts, options, and futures contracts) issued, guaranteed, or
sponsored by any state, territory, or possession of the United States
or the District of Columbia or their political subdivisions, agencies,
or instrumentalities, or by the U.S. Government, any foreign
government, or any agency, instrumentality, or political subdivision
thereof, or by any international instrumentality, or by any bank,
savings institution, corporation, or other business entity organized
under the laws of the United States (including a Registered Investment
Company or any series thereof, subject to the provisions of the 1940
Act) or under foreign laws, without regard to whether any such
securities mature before or after the possible termination of the
Trust; to exercise any and all rights, powers, and privileges of
ownership or interest in respect of any and all such investments of
every kind and description; and to hold cash or other property
uninvested, without in any event being bound or limited by any current
or future law or custom concerning investments by trustees;
(c) To adopt By-Laws not inconsistent with this Trust Instrument providing
for the conduct of the business of the Trust and to amend and repeal
them to the extent such right is not reserved to the Holders;
(d) To elect and remove such officers and appoint and terminate such
agents as they deem appropriate;
(e) To employ as custodian of any assets of the Trust, subject to any
provisions herein or in the By-Laws, one or more banks, trust
companies, or companies that are members of a national securities
exchange or other entities permitted by the Commission to serve as
such;
(f) To delegate such authority as they consider desirable to any officers
of the Trust and to any agent, independent contractor, manager,
investment adviser, or custodian;
(g) To sell or exchange any or all of the assets of the Trust, subject to
Article XI, Section 4;
(h) To vote or give assent, or exercise any rights of ownership, with
respect to securities or other property; and to execute and deliver
powers of attorney delegating such power to other persons;
(i) To exercise powers and rights of subscription or otherwise that in any
manner arise out of ownership of securities or other property;
(j) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes,
and with separate Interests representing beneficial interests in each
such Series, all in accordance with Article IV;
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(k) To incur and pay all expenses that in the Trustees' opinion are
necessary or incidental to carry out any of the purposes of this Trust
Instrument; to pay reasonable compensation to themselves as Trustees
from the Trust Property or the Assets belonging to any appropriate
Series; to pay themselves such compensation for special services,
including legal and brokerage services, and such reimbursement for
expenses reasonably incurred by themselves on behalf of the Trust or
any Series, as they in good faith may deem reasonable; and to fix the
compensation of all officers and employees of the Trust;
(l) To the full extent permitted by section 3804 of the Delaware Act, to
allocate assets, liabilities, and expenses of the Trust to particular
Series or to apportion the same between or among two or more Series,
provided that any liabilities or expenses incurred by a particular
Series shall be payable solely out of the Assets belonging to that
Series as provided for in Article IV, Section 4;
(m) To consent to or participate in any plan for the reorganization,
consolidation, or merger of any corporation or concern whose
securities are held by the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by any such corporation or
concern; and to pay calls or subscriptions with respect to any
security held in the Trust;
(n) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including claims for
taxes;
(o) To make distributions of income and of capital gains to Holders in the
manner hereinafter provided for;
(p) To borrow money or otherwise obtain credit and to secure the same by
mortgaging, pledging, or otherwise subjecting as security any assets
of the Trust, including the lending of portfolio securities, and to
endorse, guarantee, or undertake the performance of any obligation,
contract,, or engagement of any other person, firm, association, or
corporation;
(q) To purchase, and pay for, out of Trust Property or the Assets
belonging to any appropriate Series, insurance policies insuring the
Holders, Trustees, officers, employees, agents, and/or independent
contractors of the Trust (including the investment adviser of any
Series) against all claims arising by reason of holding any such
position or by reason of any action taken or omitted by any such
person in such capacity, whether or not the Trust would have the power
to indemnify such person against such liability;
(r) To establish committees for such purposes, with such membership and
such responsibilities as the Trustees may consider proper, including a
committee consisting of fewer than all of the Trustees then in office,
which may act for and bind the Trustees and the Trust with respect to
the institution, prosecution, dismissal, settlement, review, or
investigation of any legal action, suit, or proceeding, pending or
threatened;
(s) To issue, sell, repurchase, redeem, cancel, retire, acquire, hold,
reissue, resell, dispose of, and otherwise deal in Interests; to
establish terms and conditions regarding the issuance, sale,
repurchase, redemption, cancellation, retirement, acquisition,
holding, reissuance, resale, disposition of, or other dealing in
Interests; and, subject to Article IV, to apply to any such
repurchase, redemption, cancellation, retirement, or acquisition of
Interests any Trust Property or any Assets belonging to the particular
Series with respect to which such Interests are issued; and
(t) To carry on any other business in connection with or incidental to any
of the foregoing powers, to do everything necessary or desirable to
accomplish any purpose or to further any of the foregoing powers, and
to take every other action incidental to the foregoing business or
purposes, objects, or powers.
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The foregoing clauses shall be construed as objects and powers, and the
enumeration of specific powers shall not limit in any way the general powers of
the Trustees. Any action by one or more of the Trustees in his, her, or their
capacity as such hereunder shall be deemed an action on behalf of the Trust or
the applicable Series and not an action in an individual capacity. No one
dealing with the Trustees shall be under any obligation to make any inquiry
concerning the authority of the Trustees or to see to the application of any
payments made or property transferred to the Trustees or upon their order.
Section 2. CERTAIN TRANSACTIONS. Except as prohibited by applicable
law, the Trustees may, on behalf of the Trust, buy any securities from or sell
any securities to, or lend any assets of the Trust to, any Trustee or officer of
the Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with any investment adviser or
administrator for the Trust or with any Interested Person of such person. The
Trust may employ any such person or entity in which such person is an Interested
Person as broker, legal counsel, registrar, investment adviser, administrator,
or custodian or in any other capacity upon customary terms.
Section 3. OWNERSHIP OF TRUST PROPERTY. (a) The Trust Property shall be
held separate and apart from any assets now or hereafter held by the Trustees or
any successor Trustees in any capacity other than as Trustees hereunder. All the
Trust Property and legal title thereto shall at all times be vested in the
Trustees as joint tenants on behalf of the Trust, except that the Trustees may
cause legal title to any Trust Property to be held, on such terms as the
Trustees may in their sole discretion determine, (1) in a form not indicating
any trust, whether in bearer, book entry, unregistered, or other negotiable
form, or (2) either in the name of the Trust or one or more of the Trustees or
in the name of a custodian or a nominee or nominees, subject to safeguards
according to the usual practice of business trusts or investment companies. No
Holder shall have any right or title or direct or indirect severable ownership
in any Trust Property or any Asset belonging to any Series or any right of
partition or possession thereof or of any profits or rights of the Trust or any
Series, but each Holder only shall have a proportionate undivided beneficial
interest in the Trust or any Series represented by an Interest.
(b) The right, title, and interest of the Trustees in the Trust
Property shall vest automatically in each person who may hereafter become a
Trustee upon such person's due election and qualification as such. Upon the
resignation, removal, or death of a Trustee, he or she shall automatically cease
to have any right, title, or interest in any of the Trust Property, and the
right, title, and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered.
Section 4. FURTHER POWERS. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices, whether within or without the State of Delaware, in any
and all states of the United States, in the District of Columbia, and in any and
all commonwealths, territories, dependencies, colonies, possessions, agencies,
or instrumentalities of the United States and of foreign governments, and to do
all such other things and execute all such instruments as they deem necessary,
proper, or desirable in order to promote the interests of the Trust although
such things are not herein specifically mentioned. Any determination made by the
Trustees in good faith as to what is in the interests of the Trust shall be
conclusive. In construing this Trust Instrument, the presumption shall be in
favor of a grant of power to the Trustees.
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ARTICLE IV
SERIES; INTERESTS
-----------------
Section 1. ESTABLISHMENT OF SERIES. The Trust shall consist of one or
more separate and distinct Series. The Trustees hereby establish the Series
listed in Schedule A attached hereto and made a part hereof. Each additional
Series shall be established by, and shall be effective upon, the adoption of a
resolution by the Trustees. The Trustees may designate the relative rights and
preferences of the Interests of each Series. The Trust shall maintain separate
and distinct records for each Series. A Series may issue any number of
Interests. Each Holder of an Interest in a Series shall be entitled to receive
its pro rata share of all distributions made with respect to that Series. On
redemption of an Interest in a Series, a Holder shall be paid solely out of the
Assets belonging to that Series. The Trustees may change the name of any Series
without Holder approval.
Section 2. INTERESTS. The beneficial interest in the Trust shall be
divided into Interests in one or more Series. The number of Interests in the
Trust and each Series shall be unlimited. All Interests issued hereunder shall
be fully paid and nonassessable. Holders shall have no preemptive or other right
to subscribe to any additional Interests or other securities issued by the
Trust. The Trustees shall have full power and authority, in their sole
discretion and without obtaining Holder approval, (a) to issue original or
additional Interests at such times and on such terms and conditions as they deem
appropriate, (b) to establish and to change in any manner Interests in any
Series with such preferences, terms of conversion, voting powers, rights, and
privileges as the Trustees may determine (but the Trustees may not change
Interests in a manner materially adverse to the Holders of such Interests), (c)
to divide or combine the Interests in any Series into a greater or lesser
number, (d) to classify or reclassify any unissued Interests of any Series into
one or more Series, (e) to abolish any one or more Series, (f) to issue
Interests to acquire other assets (including assets subject to, and in
connection with, the assumption of liabilities) and businesses, and (g) to take
such other action with respect to the Interests as the Trustees may deem
desirable.
Section 3. INVESTMENT IN THE TRUST; LIMITATION ON NUMBER OF HOLDERS.
The Trustees shall accept investments in any Series from such persons and on
such terms as they may from time to time authorize. At the Trustees' sole
discretion, such investments, subject to applicable law, may be in the form of
cash or securities in which that Series is authorized to invest, valued as
provided in Article VI, Section 2. The Trustees shall have the right to refuse
to accept investments in any Series at any time without any cause or reason
therefor whatsoever. Notwithstanding anything herein to the contrary, (a)
Interests shall only be issued in a transaction or transactions not requiring
registration under the Securities Act of 1933 and (b) no Series shall at any
time have more than 100 Holders. In determining the number of Holders of any
Series, a person owning an Interest through a partnership, grantor trust, or S
corporation (a "flow-through entity") shall be counted as a Holder if
substantially all the value of that person's interest in the flow-through entity
is attributable to that Series and a principal purpose for using a tiered
structure was to satisfy the 100-Holder condition. The Trustees shall impose
such other limitations on investments in the Series as are necessary to avoid
having any Series treated as a "publicly traded partnership" within the meaning
of section 7704 of the Code.
Section 4. ASSETS AND LIABILITIES OF SERIES. (a) All Assets belonging
to a particular Series shall be held and accounted for separately from the other
Trust Property and the Assets belonging to every other Series. The Assets
belonging to a particular Series shall belong only to that Series and to no
other Series, for all purposes, subject only to the rights of creditors of that
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Series. Any Trust Property that is not readily identifiable as belonging to any
particular Series shall be allocated by the Trustees between or among such
Series as the Trustees, in their sole discretion, deem fair and equitable, and
any such Trust Property allocated to a Series shall be Assets belonging to that
Series. The Assets belonging to a Series shall be so recorded on the books of
the Trust and shall be held by the Trustees in trust for the benefit of the
Holders of Interests in that Series. The Assets belonging to a Series shall be
charged with the liabilities of that Series and all expenses, costs, charges,
and reserves attributable to that Series. Any liabilities, expenses, costs,
charges, and/or reserves of the Trust that are not readily identifiable as
attributable to any particular Series shall be allocated and charged by the
Trustees between or among such Series in such manner as the Trustees, in their
sole discretion, deem fair and equitable. Each allocation pursuant to this
paragraph shall be conclusive and binding upon the Holders of Interests in all
Series for all purposes.
(b) Without limiting the foregoing, but subject to the Trustees' right
to allocate liabilities, expenses, costs, charges, and reserves as herein
provided, the debts, liabilities, obligations, and expenses incurred, contracted
for, or otherwise existing with respect to a particular Series shall be
enforceable only against the Assets belonging to that Series, and not against
the Trust Property generally or the Assets belonging to any other Series. Notice
of this limitation on enforceabililty may, in the Trustees' sole discretion, be
set forth in the Trust's certificate of trust (whether originally or by
amendment) as filed or to be filed with the Secretary of State of the State of
Delaware pursuant to the Delaware Act, and upon the giving of such notice in the
certificate of trust, the provisions of section 3804 of the Delaware Act
relating to limitations on liabilities among Series (and the effect thereunder
of setting forth such notice in the certificate of trust) shall become
applicable to the Trust and each Series. Any person extending credit to,
contracting with, or having any claim against any Series may look only to the
Assets belonging to that Series to satisfy or enforce any debt, obligation, or
claim with respect to that Series. No Holder or former Holder of any Series
shall have a claim on or any right to any Assets belonging to any other Series.
Section 5. REGISTER OF INTERESTS. The Trust shall maintain a register
containing the name and address and Book Capital Account balance of each Holder
of each Series. The register shall be conclusive as to the identity of Holders
of record of each Series and who shall be entitled to payments of distributions
or otherwise to exercise or enjoy the rights of Holders. No Holder shall be
entitled to receive payment of any distribution, or to receive notice as herein
provided, until it has given its address to such officer or agent of the
Trustees as shall keep such register for entry thereon.
Section 6. STATUS OF INTERESTS; LIMITATION OF HOLDER LIABILITY.
Interests shall be deemed to be personal property giving Holders only the rights
provided in this Trust Instrument. Every Holder, by virtue of having acquired an
Interest, shall be held expressly to have assented to and agreed to be bound by
the terms of this Trust Instrument and to have become a party hereto. No Holder
shall be personally liable for the debts, liabilities, obligations, and/or
expenses incurred by, contracted for, or otherwise existing with respect to the
Trust or any Series. Neither the Trust nor the Trustees shall have any power to
bind any Holder personally or to demand payment from any Holder for anything,
other than as expressly agreed by the Holder. Holders shall have the same
limitation of personal liability as is extended to shareholders of a private
corporation for profit incorporated in the State of Delaware. Every written
obligation of the Trust or any Series shall contain a statement to the effect
that such obligation may only be enforced against the Trust Property or the
Assets belonging to that Series, as the case may be; however, the omission of
such statement shall not operate to bind or create personal liability for any
Holder or Trustee.
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ARTICLE V
INCREASES, DECREASES, AND REDEMPTIONS OF INTERESTS
--------------------------------------------------
Section 1. INCREASES. Subject to the provisions hereof and such
restrictions as the Trustees, in their sole discretion, may from time to time
adopt, each Holder may increase its investment in any Series at any time without
limitation. An increase in a Holder's investment in any Series shall be
reflected as an increase in the Holder's Book Capital Account balance with
respect to that Series and shall be included in its Interest therein.
Section 2. DECREASES AND REDEMPTIONS. Each Holder may decrease its
investment in any Series or redeem its entire Interest in any Series (I.E.,
completely withdraw therefrom) at any time, on such terms and conditions as the
Trustees, in their sole discretion, may from time to time determine, subject to
any applicable provisions of the 1940 Act. A decrease in or redemption of a
Holder's investment in any Series shall be reflected as a decrease in the
Holder's Book Capital Account balance with respect to that Series and shall be
deducted from its Interest therein. Subject to the foregoing, the Trust shall,
on appropriate and adequate notice from a Holder, decrease or redeem the
Holder's Interest for an amount (which shall be treated as a distribution for
purposes of Article VI, Section 1) determined by applying a formula adopted for
such purpose by resolution of the Trustees; provided that (a) such amount shall
not exceed the smaller of (i) the decrease in the Holder's Book Capital Account
balance effected by such decrease or redemption and (ii) the positive balance in
the Holder's Book Capital Account (determined after taking into account such
adjustments as are required by Treasury Regulation ss. 1.704-1(b)(2)(ii)(B)(2)
but before reduction thereof to reflect the distribution of such amount) and (b)
if so authorized by the Trustees, the Trust may, at any time and from time to
time, (i) charge fees for effecting any such decrease or redemption, at such
rates as the Trustees in their sole discretion may establish, and (ii) suspend
such right of decrease or redemption. The procedures for effecting decreases or
redemptions shall be as determined by the Trustees from time to time.
ARTICLE VI
BOOK CAPITAL ACCOUNT BALANCES;
NET ASSET VALUE; ALLOCATIONS AND DISTRIBUTIONS
----------------------------------------------
Section 1. BOOK CAPITAL ACCOUNT BALANCES. (a) A Book Capital Account
shall be maintained for each Holder of each Series. With respect to each Series,
each Holder's Book Capital Account (i) shall be credited with the amount(s) of
consideration paid by the Holder to purchase or increase its Interest in that
Series and with the Holder's share of that Series' Net Profits, (ii) shall be
charged with the Holder's share of that Series' Net Losses, distributions to the
Holder, and withholding taxes (if any), and (iii) shall otherwise appropriately
reflect transactions of that Series and its Holders. No interest shall be paid
on any amount of consideration paid to the Trust to purchase or increase
Interests.
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(b) The Book Capital Account balances of Holders of each Series shall
be determined periodically at such time or times as the Trustees may determine.
The power and duty to make calculations necessary to determine such balances may
be delegated by the Trustees to an investment adviser, custodian, or such other
person as the Trustees may determine.
(c) Notwithstanding anything herein to the contrary, the Book Capital
Accounts and any related accounts (including without limitation tax capital
accounts and revaluation accounts) of the Holders and of any Series shall at all
times during the full term of that Series be determined and maintained in
accordance with the requirements of Treasury Regulation ss. 1.704-1(b)(2)(iv).
The Trustees are authorized to prescribe, in their sole discretion, such
policies for the establishment and maintenance of such accounts ("Policies") as
they, in consultation with the Trust's professional advisers, consider to be in
accordance with such requirements.
Section 2. NET ASSET VALUE. In making a determination of Net Asset
Value, the Trustees, without Holder approval, may alter the method of valuing
portfolio securities insofar as permitted under the 1940 Act and the rules,
regulations, and interpretations thereof promulgated or issued by the Commission
or any applicable order of the Commission. The Trustees may delegate any of
their powers and duties under this Section with respect to the valuation of
assets and liabilities.
Section 3. ALLOCATION OF NET PROFITS AND NET LOSSES. (a) As of the
close of business each day, the Net Profits and Net Losses of each Series shall
be determined and allocated to and among the Holders of that Series in
proportion to their respective Interests in that Series, determined as of the
opening of business on that day.
(b) Except as otherwise provided in this Section, for each taxable year
of a Series, all items of income, gain, loss, deduction, or credit that are
recognized by that Series for tax purposes shall be allocated pursuant to
Treasury Regulation ss. 1.704-1(b) in such manner as to equitably reflect
amounts credited or debited to the Book Capital Account of each Holder of that
Series for such year. Allocations of such items also shall be made, where
appropriate, in accordance with section 704(c) of the Code and the regulations
thereunder, as may be provided in any Policies adopted by the Trustees pursuant
to Section 1(e) of this Article.
(c) Expenses of a Series, if any, that are borne by any Holder of that
Series in its individual capacity shall be specially allocated to the Holder.
(d) Notwithstanding anything to the contrary in the preceding
paragraphs (b) or (c), if any Holder of a Series unexpectedly receives any
adjustments, allocations, or distributions described in Treasury Regulation
ss.ss. 1.704-1(b)(2)(ii)(D)(4), (5), or (6), items of income (including gross
income) and gain of that Series shall be specially allocated to the Holder in an
amount and manner sufficient to eliminate the deficit balance in the Holder's
Book Capital Account (as determined in accordance with Treasury Regulation ss.
1.704-1(b)(2)(ii)(D)) created by such adjustments, allocations, or distributions
as quickly as possible. Any special allocations of income and gain of a Series
pursuant to this paragraph shall be taken into account in computing subsequent
allocations of income and gain of that Series pursuant to this Article, so that
the net amount of any items of that Series so allocated and the income, gain,
loss, deductions, and other items of that Series allocated to each Holder
pursuant to this Article shall, to the extent possible, equal the net amount
that would have been allocated to each such Holder pursuant to this Article if
such special allocations had not been made.
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Section 4. DISTRIBUTIONS. The Trustees may from time to time agree to
the payment of distributions to Holders of a Series. The amount of such
distributions and the payment of them and whether they are paid in cash or in
any other Assets belonging to a Series shall be determined wholly in the sole
discretion of the Trustees.
Section 5. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any
foregoing provision of this Article, the Trustees may prescribe, in their sole
discretion,, such other bases and times for determining, for financial reporting
and/or tax accounting purposes, (a) the Net Profits, Net Losses, taxable income,
tax loss, and/or net assets of any Series (or, where appropriate in the
Trustees' sole judgment, of the Trust as a whole) and/or (b) the allocation of
the Net Profits or Net Losses and taxable income or tax loss so determined
among, or the payment of distributions to, the Holders of any Series as they
deem necessary or desirable to enable the Trust or any Series to comply with any
provision of the 1940 Act, the Code, any rule or regulation thereunder, or any
order of exemption issued by the Commission or any ruling issued by the Internal
Revenue Service, all as in effect now or as hereafter amended or modified.
ARTICLE VII
HOLDERS' VOTING POWERS AND MEETINGS
-----------------------------------
Section 1. VOTING POWERS. (a) The Holders shall have power to vote only
with respect to (1) the election of Trustees as provided in Article II, Section
2, (2) the removal of Trustees as provided in Article II, Section 3(d), (3) any
investment advisory or management contract as provided in Article VIII, Section
1, (4) any termination of the Trust as provided in Article XI, Section 4, (5)
the amendment of this Trust Instrument as provided in Article XI, Section 8, and
(6) such additional matters relating to the Trust as may be required or
authorized by law, this Trust Instrument, the By-Laws, or any registration of
the Trust with the Commission or any state, or as the Trustees may consider
desirable.
(b) On any matter submitted to a vote of the Holders, all Interests
shall be voted separately by individual Series, except (1) when required by the
1940 Act, Interests shall be voted in the aggregate and not by individual
Series, and (2) when the Trustees have determined that the matter affects the
interests of more than one Series, then the Holders of all affected Series shall
be entitled to vote thereon. There shall be no cumulative voting in the election
of Trustees. Interests may be voted in person or by proxy or in any manner
provided for in the By-Laws. The By-Laws may provide that proxies may be given
by any electronic or telecommunications device or in any other manner, but if a
proposal by anyone other than the officers of the Trust or Trustees is submitted
to a vote of the Holders of any Series, or if there is a proxy contest or proxy
solicitation or proposal in opposition to any proposal by such officers or the
Trustees, Interests may be voted only in person or by written proxy. Until
Interests in a Series are issued, the Trustees may, as to that Series, exercise
all rights of Holders and take any action required or permitted to be taken by
Holders by law, this Trust Instrument, or the By-Laws.
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Section 2. MEETINGS OF HOLDERS. The first Holders' meeting shall be
held to elect Trustees at such time and place as the Trustees designate. Annual
meetings shall not be required. Special meetings of the Holders of any Series
may be called by the Trustees and shall be called by the Trustees upon the
written request of Holders owning at least ten percent of the Interests of that
Series entitled to vote. Special meetings of Holders shall be held, notices of
such meetings shall be delivered, and waivers of notice shall be effective as
provided in the By-Laws. Any action that may be taken at a meeting of Holders
may be taken without a meeting according to procedures set forth in the By-Laws.
Section 3. QUORUM; REQUIRED VOTE. One-third of the Interests in each
Series, or one-third of the Interests in the Trust, entitled to vote in person
or by proxy shall be a quorum for the transaction of business at a Holders'
meeting with respect to that Series, or the entire Trust, respectively. Any
lesser number shall be sufficient for adjournments. Any adjourned session of a
Holders' meeting may be held within a reasonable time without further notice.
Except when a larger vote is required by law, this Trust Instrument, or the
By-Laws, a majority of the Interests voted in person or by proxy shall decide
any matters to be voted upon with respect to the entire Trust, and a plurality
of such Interests shall elect a Trustee; provided that, if this Trust Instrument
or applicable law permits or requires that Interests be voted on any matter by
individual Series, then a majority of the Interests of that Series (or, if
required or permitted by law, regulation, Commission order, or no-action letter,
a Majority Interests Vote of that Series) voted in person or by proxy vote on
the matter shall decide that matter insofar as that Series is concerned. Holders
may act as to the Trust or any Series by the written consent of a majority (or
such greater amount as may be required by applicable law) of the Interests of
the Trust or that Series, as the case may be.
ARTICLE VIII
CONTRACTS WITH SERVICE PROVIDERS
--------------------------------
Section 1. INVESTMENT ADVISER AND PLACEMENT AGENT. The Trustees may, on
behalf of the Trust or any Series, enter into one or more (a) investment
advisory contracts providing for investment advisory services, statistical and
research facilities and services, and other facilities and services to be
furnished to the Trust or Series and (b) placement agent agreements, on such
terms and conditions as the Trustees may, in their sole discretion, determine to
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be acceptable. Any such investment advisory contract may provide for the
investment adviser to effect purchases, sales, or exchanges of portfolio
securities or other Trust Property on behalf of the Trustees or may authorize
any officer or agent of the Trust to effect such purchases, sales, or exchanges
pursuant to the investment adviser's recommendations. The Trustees may authorize
any investment adviser to employ one or more subadvisers or servicing agents.
Section 2. ADMINISTRATOR. The Trustees, on behalf of the Trust or any
Series, may enter into administration and management agreements with any party
or parties on such terms and conditions as the Trustees may, in their sole
discretion, determine to be acceptable.
Section 3. CUSTODIAN. The Trustees shall at all times place and
maintain the securities and other investments of the Trust and of each Series
with a custodian meeting the requirements of section 17(f) of the 1940 Act and
the rules thereunder. The Trustees, on behalf of the Trust or any Series, may
enter into an agreement with a custodian, on such terms and conditions as the
Trustees may, in their sole discretion, determine to be acceptable, providing
for the custodian, among other things, (a) to hold the securities owned by the
Trust or any Series and deliver the same upon written order or oral order
confirmed in writing, (b) to receive and receipt for any moneys due to the Trust
or any Series and deposit the same in its own banking department or elsewhere,
(c) to disburse such funds upon orders or vouchers, and (d) to employ one or
more sub-custodians.
Section 4. PARTIES TO CONTRACTS WITH SERVICE PROVIDERS. The Trustees
may enter into any contract referred to in this Article with any entity,
although one or more of the Trustees or officers of the Trust may be an officer,
director, trustee, partner, shareholder, or member of such entity, and no such
contract shall be invalidated or rendered void or voidable because of such
relationship. No person having such a relationship shall be (a) disqualified
from voting on or executing a contract in his or her capacity as Trustee and/or
Holder, (b) liable merely by reason of such relationship for any loss or expense
to the Trust with respect to such a contract, or (c) accountable for any profit
realized directly or indirectly therefrom, provided that such contract was
reasonable and fair and not inconsistent with this Trust Instrument or the
By-Laws.
Section 5. COMPLIANCE WITH 1940 ACT. Any contract referred to in this
Article shall be consistent with and subject to the applicable requirements of
section 15 of the 1940 Act and the rules and orders thereunder with respect to
its adoption, authorization, approval, continuance in effect, renewal, and
termination. No amendment to a contract referred to in Section 1(a) of this
Article shall be effective unless assented to in a manner consistent with the
requirements of such section, rules, and orders.
ARTICLE IX
EXPENSES OF THE TRUST AND SERIES
--------------------------------
Subject to Article IV, Section 4, the Trust or any Series shall pay, or
shall reimburse the Trustees from the Trust Property or the Assets belonging to
that Series, for its expenses and disbursements, including interest charges,
taxes, brokerage fees and commissions; expenses of issuance and redemption of
14
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Interests; insurance premiums; applicable fees and expenses of third parties,
including the Trust's investment advisers, managers, administrators, custodians,
and fund accountants; fees of valuation, interest, dividend, credit, and other
reporting services; costs of membership in trade associations;
telecommunications expenses; funds transmission expenses; auditing, legal, and
compliance expenses; costs of forming the Trust and Series and maintaining the
Trust's existence; costs of preparing registration statements of the Trust and
each Series and amendments thereto and reports for Holders; expenses of meetings
of Holders and proxy solicitations therefor (unless otherwise agreed to by
another party); costs of maintaining books and accounts; costs of reproduction,
stationery, and supplies; fees and expenses of the Trustees; compensation of the
Trust's officers and employees and costs of other personnel performing services
for the Trust or any Series; costs of Trustees meetings; Commission registration
fees and related expenses; state or foreign securities laws registration fees
and related expenses; and such non-recurring items as may arise, including
litigation to which the Trust or a Series (or a Trustee or officer of the Trust
acting as such) is a party, and for all losses and liabilities incurred by them
in administering the Trust. The Trustees shall have a lien on the Assets
belonging to the appropriate Series, or in the case of an expense allocable to
more than one Series, the Assets belonging to each such Series, prior to any
rights or interests of the Holders thereto, for the reimbursement to them of
such expenses, disbursements, losses, and liabilities.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
-------------------------------------------
Section 1. LIMITATION OF LIABILITY. All persons contracting with or
having any claim against the Trust or a particular Series shall look only to the
Trust Property or the Assets belonging to that Series, respectively, for payment
under such contract or claim; and neither the Trustees nor any of the Trust's
officers, employees, or agents, whether past, present, or future, shall be
personally liable therefor. Every written instrument or obligation on behalf of
the Trust or any Series shall contain a statement to the foregoing effect, but
the absence of such statement shall not operate to make any Trustee or officer
of the Trust liable thereunder. Provided they have exercised reasonable care and
have acted under the reasonable belief that their actions are in the best
interest of the Trust, the Trustees and officers of the Trust shall not be
responsible or liable for any act or omission or for neglect or wrongdoing of
themselves or any officer, agent, employee, investment adviser, or independent
contractor of the Trust, but nothing contained in this Trust Instrument or in
the Delaware Act shall protect any Trustee or officer of the Trust against
liability to the Trust or to Holders to which he or she would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his or her office.
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Section 2. INDEMNIFICATION. (a) Subject to the exceptions and
limitations contained in paragraphs (b) and (c) below,
(1) every Covered Person shall be indemnified by the
Trust or the appropriate Series to the fullest extent permitted by law
against liability and all expenses reasonably incurred or paid by him
or her in connection with any claim, action, suit, or proceeding in
which he or she becomes involved as a party or otherwise by virtue of
his or her being or having been a Covered Person and against amounts
paid or incurred by him or her in the settlement thereof, and
(2) as used herein, the words "claim," "action,"
"suit," and "proceeding" shall apply to all claims, actions, suits, and
proceedings (whether civil, criminal, or other, including appeals),
actual or threatened, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties, and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person--
(1) who shall have been adjudicated by a court or
body before which the proceeding was brought (A) to be liable to the
Trust or the Holders by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct
of his or her office or (B) not to have acted in good faith in the
reasonable belief that his or her action was in the best interest of
the Trust, or
(2) in the event of a settlement, unless there has
been a determination that such Covered Person did not engage in willful
misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his or her office (A) by the court or
other body approving the settlement, (B) by the vote of at least a
majority of those Trustees who are neither Interested Persons of the
Trust nor parties to the proceeding based upon a review of readily
available facts (as opposed to a full trial-type inquiry), or (C) by
written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry).
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(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, and shall inure to the benefit of the heirs, executors,
and administrators of a Covered Person.
(d) To the maximum extent permitted by applicable law, expenses in
connection with the preparation and presentation of a defense to any claim,
action, suit, or proceeding of the character described in paragraph (a) of this
Section may be paid by the Trust or applicable Series from time to time prior to
final disposition thereof upon receipt of an undertaking by or on behalf of such
Covered Person that such amount will be paid over by him or her to the Trust or
applicable Series if it is ultimately determined that he or she is not entitled
to indemnification under this Section; provided that either (1) such Covered
Person shall have provided appropriate security for such undertaking, (2) the
Trust is insured against losses arising out of any such advance payments, or (3)
either a majority of the Trustees who are neither Interested Persons of the
Trust nor parties to the proceeding, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available facts
(as opposed to a full trial-type inquiry), that there is reason to believe that
such Covered Person will not be disqualified from indemnification under this
Section.
(e) Any repeal or modification of this Article by the Holders, or
adoption or modification of any other provision of this Trust Instrument or the
By-Laws inconsistent with this Article, shall be prospective only, to the extent
that such repeal or modification would, if applied retrospectively, adversely
affect any limitation on the liability of any Covered Person or indemnification
available to any Covered Person with respect to any act or omission that
occurred prior to such repeal, modification, or adoption.
Section 3. INDEMNIFICATION OF HOLDERS. If any Holder or former Holder
of any Series is held personally liable solely by reason of his, her, or its
being or having been a Holder and not because of his, her, or its acts or
omissions or for some other reason, the Holder or former Holder (or his, her, or
its heirs, executors, administrators, or other legal representatives or, in the
case of any entity, its general successor) shall be entitled, out of the Assets
belonging to the applicable Series, to be held harmless from and indemnified
against all loss and expense arising from such liability, and the Trust shall
satisfy any judgment thereon from the Assets belonging to that Series. The
Trust, on behalf of the affected Series, shall, upon request by the Holder,
assume the defense of any claim made against the Holder for any act or
obligation of that Series.
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ARTICLE XI
MISCELLANEOUS
-------------
Section 1. TRUST NOT A PARTNERSHIP, EXCEPT FOR INCOME TAX PURPOSES. (a)
This Trust Instrument creates a trust and not a partnership, and no Trustee
shall have any power to bind personally either the Trust's officers or any
Holder. Notwithstanding the foregoing, it is intended that the Trust (or each
Series if there is more than one Series) be classified as a partnership for
income tax purposes, and the Trustees shall do all things they, in their sole
discretion, determine are necessary to achieve that objective, including
affirmatively electing such classification on Internal Revenue Form 8832. Any
Trustee is hereby authorized to sign such form on behalf of the Trust or any
Series, and the Trustees may delegate such authority to any executive officer(s)
of any Series' investment adviser. The Trustees, in their sole discretion and
without the vote or consent of the Holders, may amend this Trust Instrument to
ensure that this objective is achieved.
(b) The Trustees annually shall designate for each Series a "Tax
Matters Partner" under section 6231(a)(7) of the Code. A Series' Tax Matters
Partner shall have all the powers and responsibilities of such position as
provided in the Code, provided it (1) shall promptly furnish the Internal
Revenue Service with information sufficient to cause each Holder in that Series
to be treated as a "notice partner" as defined in section 6231(a)(8) of the
Code, (2) shall not file any action or suit or extend any statute of limitations
relating to Series tax matters without first notifying each such Holder and
obtaining the consent of Holders owning more than 50% of all Interests in that
Series, and (3) shall not settle any action or suit relating to Series tax
matters without first notifying all Holders in that Series and obtaining the
consent of Holders owning at least 75% of all Interests therein. Reasonable
expenses incurred by the Tax Matters Partner, in its capacity as such, will be
treated as Series expenses. Any Holder in a Series shall have the right to
participate in any administrative proceedings relating to the determination of
partnership tax items at that Series' level.
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Section 2. TRUSTEE ACTION; EXPERT ADVICE; NO BOND OR SURETY. The
exercise by the Trustees of their powers and discretion hereunder in good faith
and with reasonable care under the circumstances then prevailing shall be
binding upon everyone interested. Subject to Article X, the Trustees shall not
be liable for errors of judgment or mistakes of fact or law. The Trustees may
take advice of counsel or other experts with respect to the meaning and
operation of this Trust Instrument and, subject to Article X, shall not be
liable for any act or omission in accordance with such advice or for failing to
follow such advice. The Trustees shall not be required to give any bond as such
nor any surety if a bond is obtained.
Section 3. RECORD DATES. The Trustees may fix in advance a date up to
ninety days before the date of any Holders' meeting, or the date for the payment
of any dividends or other distributions, or the date for the allotment of
rights, or the date when any change, conversion, or exchange of Interests shall
go into effect as a record date for the determination of the Holders entitled to
notice of, and to vote at, any such meeting, or entitled to receive payment of
such dividend or other distribution, or to receive any such allotment of rights,
or to exercise such rights in respect of any such change, conversion, or
exchange of Interests. Record dates for adjourned meetings of Holders shall be
set according to the By-Laws.
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Section 4. TERMINATION OF THE TRUST OR ANY SERIES. (a) The Trust or any
Series may be terminated by (1) a Majority Interests Vote of the Trust or the
affected Series, respectively, or (2) the Trustees by written notice to the
Holders. Any Series shall be terminated 120 days after a Holder of an Interest
in that Series either (i) makes an assignment for the benefit of creditors, (ii)
files a voluntary petition in bankruptcy, (iii) is adjudicated a bankrupt or
insolvent, (iii) files any pleading admitting or failing to contest the material
allegations of a petition filed against it in any bankruptcy or insolvency
proceeding, or (v) seeks, consents to, or acquiesces in the appointment of a
trustee, receiver, or liquidator of the Holder or of all or any substantial part
of its assets, unless, within such 120 days, Holders (excluding the Holder with
respect to whom such event occurs) owning a majority of the Interests in that
Series vote to continue that Series.
(b) On termination of the trust or any Series pursuant to paragraph
(a),
(1) the Trust or that Series thereafter shall carry on no
business except for the purpose of winding up its affairs,
(2) the Trustees shall proceed to wind up the affairs of the
Trust or that Series, and all powers of the Trustees under this Trust
Instrument with respect thereto shall continue until such affairs have
been wound up, including the powers to fulfill or discharge the
contracts of the Trust or that Series, collect its assets, sell,
convey, assign, exchange, or otherwise dispose of all or any part of
its remaining assets to one or more persons at public or private sale
for consideration that may consist in whole or in part of cash,
securities, or other property of any kind, discharge or pay its
liabilities, and do all other acts appropriate to liquidate its
business, and
(3) after paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities, and
refunding agreements, as they deem necessary for their protection, the
Trustees shall distribute the remaining assets of the Trust or that
Series, in cash or in kind or partly each, among the Holders of the
Trust or that Series in proportion to their respective Interests
therein (that is, in accordance with the Holders' positive Book Capital
Account balances), after taking into account such adjustments as are
required by Treasury Regulation ss. 1.704-1(b)(2)(ii)(B)(2).
20
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(c) On completion of distribution of the remaining assets pursuant to
paragraph (a), the Trust or the affected Series shall terminate and the Trustees
and the Trust shall be discharged from all further liabilities and duties
hereunder with respect thereto and the rights and interests of all parties
therein shall be canceled and discharged. On termination of the Trust, following
completion of winding up of its business, the Trustees shall cause a certificate
of cancellation of the Trust's certificate of trust to be filed in accordance
with the Delaware Act, which certificate may be signed by any one Trustee.
Section 5. REORGANIZATION AND INCORPORATION. (a) Notwithstanding
anything else herein, the Trustees may, without Holder approval, cause the Trust
or any Series to merge or consolidate with or into any other entity or entities.
Any agreement of merger or consolidation or certificate of merger may be signed
by a majority of Trustees, and facsimile signatures conveyed by electronic or
telecommunication means shall be valid. Pursuant to and in accordance with
section 3815(f) of the Delaware Act, an agreement of merger or consolidation
approved by the Trustees in accordance with this Section may effect any
amendment to this Trust Instrument or effect the adoption of a new trust
instrument of the Trust if the Trust or a Series is the surviving or resulting
entity in the merger or consolidation.
(b) Notwithstanding anything else herein to the contrary, the Trustees
may, without the prior consent or vote of the Holders, (i) cause to be organized
or assist in organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association, or other organization
(each a "successor entity") to take over all of the Trust Property or the Assets
belonging to any Series or to carry on any business in which the Trust or any
Series shall directly or indirectly have any interest, (ii) sell, convey, and
transfer the Trust Property or the Assets belonging to any Series to any such
successor entity in exchange for the equity interests thereof or otherwise, and
(iii) lend money to, subscribe for the equity interests in, and enter into any
contracts with any such successor entity.
Section 6. TRUST INSTRUMENT. The original or a copy of this Trust
Instrument and of each amendment hereto shall be kept at the Trust's office,
where it may be inspected by any Holder. Anyone dealing with the Trust may rely
on a certificate by a Trustee or an officer of the Trust as to the authenticity
of this Trust Instrument or any such amendment and as to any matters in
connection with the Trust.
21
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Section 7. APPLICABLE LAW. This Trust Instrument and the Trust created
hereunder are governed by and construed and administered according to the
Delaware Act and the applicable laws of the State of Delaware; provided that
there shall not be applicable to the Trust, the Trustees, or this Trust
Instrument (a) the provisions of section 3540 of Title 12 of the Delaware Code
or (b) any provisions of the laws (statutory or common) of the State of Delaware
(other than the Delaware Act) pertaining to trusts that relate to or regulate
(1) the filing with any court or governmental body or agency of trustee accounts
or schedules of trustee fees and charges, (2) affirmative requirements to post
bonds for trustees, officers, agents, or employees of a trust, (3) the necessity
for obtaining court or other governmental approval concerning the acquisition,
holding, or disposition of real or personal property, (4) fees or other sums
payable to trustees, officers, agents, or employees of a trust, (5) the
allocation of receipts and expenditures to income or principal, (6) restrictions
or limitations on the permissible nature, amount, or concentration of trust
investments or requirements relating to the titling, storage, or other manner of
holding of trust assets, or (7) the establishment of fiduciary or other
standards of responsibilities or limitations on the acts or powers of trustees,
that are inconsistent with the limitations, liabilities, or authorities and
powers of the Trustees set forth or referenced in this Trust Instrument. The
Trust shall be of the type commonly called a "Delaware business trust," and
without limiting the provisions hereof the Trust may exercise all powers that
are ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or privileges
afforded to trusts or actions that may be engaged in by trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege, or action shall not imply that the Trust may not exercise such power
or privilege or take such action.
Section 8. AMENDMENTS. Except as specifically provided herein, the
Trustees may, without any Holder vote, amend this Trust Instrument by making an
amendment hereto or an amended and restated trust instrument; provided that
Holders shall have the right to vote on any amendment (a) that would affect
their voting rights granted in Article VII, Section 1, (b) to this Section, (c)
required to be approved by Holders by law or by the Trust's registration
statement(s) filed with the Commission, or (d) submitted to them by the Trustees
in their discretion. Any amendment submitted to Holders that the Trustees
determine would affect the Holders of any Series shall be authorized by vote of
the Holders of that Series and no vote shall be required of Holders of a Series
that is not affected. Notwithstanding anything else herein to the contrary, any
amendment to Article X that would have the effect of reducing the
indemnification and other rights provided thereby to Trustees, officers,
employees, and agents of the Trust or to Holders or former Holders, and any
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repeal or amendment of this sentence shall each require the affirmative vote of
the Holders of two-thirds of the Interests entitled to vote thereon. A
certification signed by a majority of the Trustees setting forth an amendment to
this Trust Instrument and reciting that it was duly adopted by the Holders or by
the Trustees as aforesaid or a copy of this Trust Instrument, as amended,
executed by a majority of the Trustees, shall be conclusive evidence of such
amendment when lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as
Interests are first sold, this Trust Instrument may be terminated or amended in
any respect by the affirmative vote of a majority of the Trustees or by an
instrument signed by a majority of the Trustees.
Section 9. FISCAL YEAR. The Fiscal Year of each Series shall end on a
specified date as set forth in the By-Laws. The Trustees may change the Fiscal
Year of any Series without Holder approval.
Section 10. SEVERABILITY. The provisions of this Trust Instrument are
severable. If the Trustees determine, with the advice of counsel, that any
provision hereof conflicts with any applicable provisions of the 1940 Act, the
Code, or any other applicable law or regulation, the conflicting provision
hereof shall be deemed never to have constituted a part of this Trust
Instrument; provided that such determination shall not affect any of the
remaining provisions of this Trust Instrument or render invalid or improper any
action taken or omitted prior to such determination. If any provision hereof is
held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision only in such jurisdiction
and shall not affect such provision in any other jurisdiction or any other
provision of this Trust Instrument in any jurisdiction.
Section 11. INTERPRETATION. The masculine gender herein shall include
the feminine and neuter genders. Headings herein are for convenience only and
shall not affect the construction of this Trust Instrument. This Trust
Instrument may be executed in any number of counterparts, each of which shall be
deemed an original.
IN WITNESS WHEREOF, the undersigned, being the initial
Trustee, has executed this Trust Instrument as of the date first above written.
--------------------------------
David J. Thelander, as
Trustee and not individually
Address: 50 California Street, 27th Floor
San Francisco, CA 94111
<PAGE>
A-1
SCHEDULE A
----------
Initial Series established hereby:
Floating Rate Portfolio
A-1
<PAGE>
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS.......................................................1
ARTICLE II - TRUSTEES.........................................................3
Section 1. Management of the Trust..................................3
Section 2. Initial Trustee; Number and Election of Trustees.........3
Section 3. Term of Office...........................................3
Section 4. Vacancies; Appointment of Trustees.......................3
Section 5. Temporary Vacancy or Absence.............................3
Section 6. Chairman.................................................4
Section 7. Action by the Trustees...................................4
Section 8. Effect of Trustees Not Serving...........................4
Section 9. Trustees. etc. as Holders................................4
ARTICLE III - POWERS OF THE TRUSTEES..........................................4
Section 1. Powers...................................................4
Section 2. Certain Transactions.....................................7
Section 3. Ownership of Trust Property..............................7
Section 4. Further Powers...........................................7
ARTICLE IV - SERIES; INTERESTS................................................8
Section 1. Establishment of Series..................................8
Section 2. Interests................................................8
Section 3. Investment in the Trust; Limitation on Number of
Holders..................................................8
Section 4. Assets and Liabilities of Series.........................8
Section 5. Register of Interests....................................9
Section 6. Status of Interests; Limitation of Holder Liability......9
ARTICLE V - INCREASES, DECREASES, AND REDEMPTIONS OF INTERESTS................9
Section 1. Increases...............................................10
Section 2. Decreases and Redemptions...............................10
ARTICLE VI - BOOK CAPITAL ACCOUNT BALANCES; NET ASSET VALUE; ALLOCATIONS
AND DISTRIBUTIONS...............................................10
Section 1. Book Capital Account Balances...........................10
Section 2. Net Asset Value.........................................11
Section 3. Allocation of Net Profits and Net Losses................11
Section 4. Distributions...........................................11
Section 5. Power to Modify Foregoing Procedures....................11
i
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ARTICLE VII - HOLDERS' VOTING POWERS AND MEETINGS............................12
Section 1. Voting Powers...........................................12
Section 2. Meetings of Holders.....................................12
Section 3. Quorum; Required Vote...................................12
ARTICLE VIII CONTRACTS WITH SERVICE PROVIDERS................................13
Section 1. Investment Adviser and Placement Agent..................13
Section 2. Administrator...........................................13
Section 3. Custodian...............................................13
Section 4. Parties to Contracts with Service Providers.............13
Section 5. Compliance with 1940 Act................................13
ARTICLE IX - EXPENSES OF THE TRUST AND SERIES................................14
ARTICLE X - LIMITATION OF LIABILITY AND INDEMNIFICATION......................14
Section 1. Limitation of Liability.................................14
Section 2. Indemnification.........................................15
Section 3. Indemnification of Holders..............................16
ARTICLE XI - MISCELLANEOUS...................................................16
Section 1. Trust not a Partnership, Except For Income Tax
Purposes................................................16
Section 2. Trustee ActioN; Expert Advice; No Bond or Surety........16
Section 3. Record Dates............................................17
Section 4. Termination of the Trust or any Series..................17
Section 5. Reorganization and Incorporation........................18
Section 6. Trust Instrument........................................18
Section 7. Applicable Law..........................................18
Section 8. Amendments..............................................19
Section 9. Fiscal Year.............................................19
Section 10. Severability............................................19
Section 11. Interpretation..........................................19
SCHEDULE A
ii
FLOATING RATE PORTFOLIO
BY-LAWS
<PAGE>
January 9, 1997
TABLE OF CONTENTS
Page
ARTICLE I
PRINCIPAL OFFICE AND SEAL................................................. 1
Section 1. Principal Office..................................... 1
Section 2. Seal................................................. 1
ARTICLE II
MEETINGS OF TRUSTEES...................................................... 1
Section 1. Action by Trustees................................... 1
Section 2. Compensation of Trustees............................. 1
ARTICLE III
COMMITTEES................................................................ 1
Section 1. Establishment........................................ 1
Section 2. Proceedings; Quorum; Action.......................... 1
Section 3. Compensation of Committee Members.................... 2
ARTICLE IV
OFFICERS.................................................................. 2
Section 1. General.............................................. 2
Section 2. Election, Tenure and Qualifications of Officers...... 2
Section 3. Vacancies and Newly Created Offices.................. 2
Section 4. Removal and Resignation.............................. 2
Section 5. President............................................ 3
Section 6. Vice President(s).................................... 3
Section 7. Treasurer and Assistant Treasurer(s)................. 3
Section 8. Secretary and Assistant Secretaries.................. 3
Section 9. Compensation of Officers............................. 3
Section 10. Surety Bond.......................................... 3
ARTICLE V
MEETINGS OF HOLDERS....................................................... 3
Section 1. No Annual Meetings................................... 3
Section 2. Special Meetings..................................... 3
Section 3. Notice of Meetings; Waiver........................... 4
Section 4. Adjourned Meetings................................... 4
Section 5. Validity of Proxies.................................. 4
Section 6. Record Date.......................................... 4
Section 7. Action Without a Meeting............................. 4
i
<PAGE>
ARTICLE VI
BENEFICIAL INTERESTS...................................................... 5
Section 1. No Certificates...................................... 5
Section 2. Transfer of Interests................................ 5
ARTICLE VII
CUSTODY OF SECURITIES..................................................... 5
Section 1. Employment of a Custodian............................ 5
Section 2. Termination of Custodian Agreement................... 5
Section 3. Other Arrangements................................... 5
ARTICLE VIII
FISCAL YEAR AND ACCOUNTANT................................................ 5
Section 1. Fiscal Year.......................................... 5
Section 2. Accountant........................................... 5
ARTICLE IX
AMENDMENTS................................................................ 6
Section 1. General.............................................. 6
Section 2. By Holders Only...................................... 6
ARTICLE X
NET ASSET VALUE........................................................... 6
ARTICLE XI
MISCELLANEOUS.............................................................. 6
Section 1. Inspection of Books................................... 6
Section 2. Severability.......................................... 6
Section 3. Headings.............................................. 6
ii
<PAGE>
BY-LAWS
OF
FLOATING RATE PORTFOLIO
These By-Laws of Floating Rate Portfolio (the "Trust"), a Delaware
business trust, are subject to the Trust Instrument of the Trust dated as of
January 9, 1997, as from time to time amended, supplemented or restated (the
"Trust Instrument"). Capitalized terms used herein have the same meanings as in
the Trust Instrument.
ARTICLE I
PRINCIPAL OFFICE AND SEAL
-------------------------
Section 1. Principal Office. The principal office of the Trust shall be located
in Wilmington, Delaware or such other location as the Trustees determine. The
Trust may establish and maintain other offices and places of business as the
Trustees determine.
Section 2. Seal. The Trustees may adopt a seal for the Trust in such form and
with such inscription as the Trustees determine. Any Trustee or officer of the
Trust shall have authority to affix the seal to any document.
ARTICLE II
MEETINGS OF TRUSTEES
--------------------
Section 1. Action by Trustees. Trustees may take actions at meetings held at
such places and times as the Trustees may determine, or without meetings, all as
provided in Article II, Section 7, of the Trust Instrument.
Section 2. Compensation of Trustees. Each Trustee who is neither an employee of
an investment adviser of the Trust or any Series nor an employee of an entity
affiliated with the investment adviser may receive such compensation from the
Trust for services and reimbursement for expenses as the Trustees may determine.
ARTICLE III
COMMITTEES
-----------
Section 1. Establishment. The Trustees may designate one or more committees of
the Trustees, which may include an Executive Committee, a Nominating Committee,
and an Audit Committee. The Trustees shall determine the number of members of
each committee and its powers and shall appoint its members and its chair. Each
committee member shall serve at the pleasure of the Trustees. The Trustees may
abolish any committee at any time. Each committee shall maintain records of its
meetings and report its actions to the Trustees. The Trustees may rescind any
action of any committee, but such rescission shall not have retroactive effect.
The Trustees may delegate to any committee any of its powers, subject to the
limitations of applicable law.
Section 2. Proceedings; Quorum; Action. Each committee may adopt such rules
governing its proceedings, quorum and manner of acting as it shall deem proper
and desirable. In the absence of such rules, a majority of any committee shall
<PAGE>
constitute a quorum, and a committee shall act by the vote of a majority of a
quorum.
Section 3. Compensation of Committee Members. Each committee member who is not
an "interested person" of the Trust, as defined in the 1940 Act ("Disinterested
Trustees") may receive such compensation from the Trust for services and
reimbursement for expenses as the Trustees may determine.
ARTICLE IV
OFFICERS
----------
Section 1. General. The officers of the Trust shall include a President, one or
more Vice Presidents, a Treasurer, and a Secretary, and may include one or more
Assistant Treasurers or Assistant Secretaries and such other officers ("Other
Officers") as the Trustees may determine.
Section 2. Election, Tenure and Qualifications of Officers. The Trustees shall
elect the officers of the Trust. Each officer elected by the Trustees shall hold
office until his or her successor shall have been elected and qualified or until
his or her earlier death, inability to serve, or resignation. Any person may
hold one or more offices, except that the Chairman and the Secretary may not be
the same individual. A person who holds more than one office in the Trust may
not act in more than one capacity to execute, acknowledge, or verify an
instrument required by law to be executed, acknowledged, or verified by more
than one officer. No officer of the Trust need be a Trustee or Holder.
Section 3. Vacancies and Newly Created Offices. Whenever a vacancy shall occur
in any office or if any new office is created, the Trustees may fill such
vacancy or new office.
Section 4. Removal and Resignation. Officers serve at the pleasure of the
Trustees and may be removed at any time with or without cause. The Trustees may
delegate this power to the President with respect to any Other Officer. Such
removal shall be without prejudice to the contract rights, if any, of the person
so removed. Any officer may resign from office at any time by delivering a
written resignation to the Trustees or the President. Unless otherwise specified
therein, such resignation shall take effect upon delivery.
Section 5. President. The President shall be the chief executive officer of the
Trust. Subject to the direction of the Trustees, the President shall have
general charge, supervision and control over the Trust's business affairs and
shall be responsible for the management thereof and the execution of policies
established by the Trustees. The President shall preside at any Holders'
meetings and at all meetings of the Trustees. Except as the Trustees may
otherwise order, the President shall have the power to grant, issue, execute or
sign such powers of attorney, proxies, agreements or other documents. The
President also shall have the power to employ attorneys, accountants and other
advisers and agents for the Trust. The President shall exercise such other
powers and perform such other duties as the Trustees may assign to the
President.
Section 6. Vice President(s). The Vice President(s) shall have such powers and
perform such duties as the Trustees or the President may determine. At the
request or in the absence or disability of the President, the Vice President(s)
shall perform all the duties of the President and, when so acting, shall have
all the powers of the President.
Section 7. Treasurer and Assistant Treasurer(s). The Treasurer shall be the
principal financial and accounting officer of the Trust. The Treasurer shall
have general charge of the finances and books of the Trust, and shall report to
the Trustees annually regarding the financial condition of each Series as soon
as possible after the close of such Series' fiscal year. The Treasurer shall be
2
<PAGE>
responsible for the delivery of all funds and securities of the Trust to such
company as the Trustees shall retain as Custodian. The Treasurer shall furnish
such reports concerning the financial condition of the Trust as the Trustees may
request. The Treasurer shall perform all acts incidental to the office of
Treasurer, subject to the Trustees' supervision, and shall perform such
additional duties as the Trustees may designate.
Any Assistant Treasurer may perform such duties of the Treasurer as the
Trustees or the Treasurer may assign, and, in the absence of the Treasurer, may
perform all the duties of the Treasurer.
Section 8. Secretary and Assistant Secretaries. The Secretary shall record all
votes and proceedings of the meetings of Trustees and Holders in books to be
kept for that purpose. The Secretary shall be responsible for giving and serving
notices of the Trust. The Secretary shall have custody of any seal of the Trust
and shall be responsible for the records of the Trust, including the register of
Interests and such other books and documents as may be required by the Trustees
or by law. The Secretary shall perform all acts incidental to the office of
Secretary, subject to the supervision of the Trustees, and shall perform such
additional duties as the Trustees may designate.
Any Assistant Secretary may perform such duties of the Secretary as the
Trustees or the Secretary may assign, and, in the absence of the Secretary, may
perform all the duties of the Secretary.
Section 9. Compensation of Officers. Each officer may receive such compensation
from the Trust for services and reimbursement for expenses as the Trustees may
determine.
Section 10. Surety Bond. The Trustees may require any officer or agent of the
Trust to execute a bond (including, without limitation, any bond required by the
Investment Company Act of 1940, as amended ("1940 Act") and the rules and
regulations of the Securities and Exchange Commission ("Commission") to the
Trust in such sum and with such surety or sureties as the Trustees may
determine, conditioned upon the faithful performance of his or her duties to the
Trust, including responsibility for negligence and for the accounting of any of
the Trust's property, funds or securities that may come into his or her hands.
ARTICLE V
MEETINGS OF HOLDERS
-------------------
Section 1. No Annual Meetings. There shall be no annual meeting of Holders,
unless required by law.
Section 2. Special Meetings. The Secretary shall call a special meeting of
Holders of any Series or Class whenever ordered by the Trustees.
The Secretary also shall call a special meeting of Holders of any
Series or Class upon the written request of Holders owning at least ten percent
of the Outstanding Interests of such Series or Class entitled to vote at such
meeting; provided, that (1) such request shall state the purposes of such
meeting and the matters proposed to be acted on, and (2) the Holders requesting
such meeting shall have paid to the Trust the reasonably estimated cost of
preparing and mailing the notice thereof, which the Secretary shall determine
and specify to such Holders. If the Secretary fails for more than thirty days to
call a special meeting when required to do so, the Trustees or the Holders
requesting such a meeting may, in the name of the Secretary, call the meeting by
giving the required notice. The Secretary shall not call a special meeting upon
the request of Holders of any Series or Class to consider any matter that is
substantially the same as a matter voted upon at any special meeting of Holders
of such Series or Class held during the preceding twelve months, unless
requested by the holders of a majority of the Outstanding Interests of such
Series or Class entitled to be voted at such meeting.
A special meeting of Holders of any Series or Class shall be held at
such time and place as is determined by the Trustees and stated in the notice of
that meeting.
3
<PAGE>
Section 3. Notice of Meetings; Waiver. The Secretary shall call a special
meeting of Holders by giving written notice of the place, date, time, and
purposes of that meeting at least fifteen days before the date of such meeting.
The Secretary may deliver or mail, postage prepaid, the written notice of any
meeting to each Holder entitled to vote at such meeting. If mailed, notice shall
be deemed to be given when deposited in the United States mail directed to the
Holder at his or her address as it appears on the records of the Trust.
Section 4. Adjourned Meetings. A meeting of Holders may be adjourned one or more
times for any reason, including the failure of the presence of a quorum to
attending the meeting. No notice of adjournment of a meeting to another time or
place need be given to Holders if such time and place are announced at the
meeting at which the adjournment is taken or reasonable notice is given to
persons present at the meeting, and if the adjourned meeting is held within a
reasonable time after the date set for the original meeting. Any business that
might have been transacted at the original meeting may be transacted at any
adjourned meeting. If after the adjournment a new record date is fixed for the
adjourned meeting, the Secretary shall give notice of the adjourned meeting to
Holders of record entitled to vote at such meeting. Any irregularities in the
notice of any meeting or the nonreceipt of any such notice by any of the Holders
shall not invalidate any action otherwise properly taken at any such meeting.
Section 5. Validity of Proxies. Subject to the provisions of the Trust
Instrument, Holders entitled to vote may vote either in person or by proxy;
provided, that either (1) the Holder or his or her duly authorized attorney has
signed and dated a written instrument authorizing such proxy to act, or (2) the
Trustees adopt by resolution an electronic, telephonic, computerized or other
alternative to execution of a written instrument authorizing the proxy to act,
but if a proposal by anyone other than the officers or Trustees is submitted to
a vote of the Holders of any Series or Class, or if there is a proxy contest or
proxy solicitation or proposal in opposition to any proposal by the officers or
Trustees, Interests may be voted only in person or by written proxy. Unless the
proxy provides otherwise, it shall not be valid for more than eleven months
prior to the date of the meeting. All proxies shall be delivered to the
Secretary or other person responsible for recording the proceedings before being
voted. A proxy with respect to Interests held in the name of two or more persons
shall be valid if executed by one of them unless at or prior to exercise of such
proxy the Trust receives a specific written notice to the contrary from any one
of them. Unless otherwise specifically limited by their terms, proxies shall
entitle the Holder to vote at any adjournment of a meeting of Holders. A proxy
purporting to be executed by or on behalf of a Holder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. At every meeting of Holders, unless the
voting is conducted by inspectors, the chairman of the meeting shall decide all
questions concerning the qualifications of voters, the validity of proxies, and
the acceptance or rejection of votes. Subject to the provisions of the Delaware
Business Trust Act, the Trust Instrument, or these By-Laws, the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder shall govern all matters concerning the giving,
voting or validity of proxies, as if the Trust were a Delaware corporation and
the Holders were shareholders of a Delaware corporation.
Section 6. Record Date. The Trustees may fix in advance a date up to ninety days
prior to the date of any meeting of Holders as a record date for the
determination of the Holders entitled to notice of, and to vote at, any such
meeting. The Holders of record entitled to vote at a meeting of Holders shall be
deemed the Holders of record at any meeting reconvened after one or more
adjournments, unless the Trustees have fixed a new record date. If the meeting
of Holders is adjourned for more than sixty days after the original date, the
Trustees shall establish a new record date.
Section 7. Action Without a Meeting. Holders may take any action without a
meeting if a majority (or such greater amount as may be required by law) of the
4
<PAGE>
Outstanding Interests entitled to vote on the matter consent to the action in
writing and such written consents are filed with the records of Holders'
meetings. Such written consent shall be treated for all purposes as a vote at a
meeting of the Holders.
ARTICLE VI
BENEFICIAL INTERESTS
--------------------
Section 1. No Certificates. Neither the Trust nor any Series or Class shall
issue certificates certifying the ownership of Interests, unless the Trustees
may otherwise specifically authorize such certificates.
Section 2. Transfer of Interests. Interests shall be transferable only by a
transfer recorded on the books of the Trust by the Holder of record in person or
by his or her duly authorized attorney or legal representative. Interests may be
freely transferred and the Trustees may, from time to time, adopt rules and
regulations regarding the method of transfer of such Interests.
ARTICLE VII
CUSTODY OF SECURITIES
---------------------
Section 1. Employment of a Custodian. The Trust shall at all times place and
maintain all cash, securities and other assets of the Trust and of each Series
in the custody of a custodian meeting the requirements set forth in Article VII,
Section 4 of the Trust Instrument ("Custodian"). The Custodian shall be
appointed from time to time by the Board of Trustees, who shall determine its
remuneration.
Section 2. Termination of Custodian Agreement. Upon termination of any Custodian
Agreement or the inability of the Custodian to continue to serve as custodian,
in either case with respect to the Trust or any Series, the Board of Trustees
shall (a) use its best efforts to obtain a successor Custodian; and (b) require
that the cash, securities and other assets owned by the Trust or any Series be
delivered directly to the successor Custodian.
Section 3. Other Arrangements. The Trust may make such other arrangements for
the custody of its assets (including deposit arrangements) as may be required by
any applicable law, rule or regulation.
ARTICLE VIII
FISCAL YEAR AND ACCOUNTANT
--------------------------
Section 1. Fiscal Year. The fiscal year of the Trust shall end on December 31st.
Section 2. Accountant. The Trust shall employ independent certified public
accountants as its Accountant to examine the accounts of the Trust and to sign
and certify financial statements filed by the Trust. The Accountant's
certificates and reports shall be addressed both to the Trustees and to the
Holders. A majority of the Disinterested Trustees shall select the Accountant at
any meeting held within ninety days before or after the beginning of the fiscal
year of the Trust, acting upon the recommendation of the Audit Committee. The
employment of the Accountant shall be conditioned upon the right of the Trust to
terminate such employment without any penalty by vote of a Majority Holder Vote
at any meeting of Holders called for that purpose.
5
<PAGE>
ARTICLE IX
AMENDMENTS
----------
Section 1. General. Except as provided in Section 2 of this Article, these
By-Laws may be amended by the Trustees, or by the affirmative vote of a majority
of the Outstanding Interests entitled to vote at any meeting.
Section 2. By Holders Only. After the issue of any Interests, this Article may
only be amended by the affirmative vote of the holders of the lesser of (a) at
least two-thirds of the Outstanding Interests present and entitled to vote at
any meeting, or (b) at least fifty percent of the Outstanding Interests.
ARTICLE X
NET ASSET VALUE
---------------
The term "Net Asset Value" of any Series shall mean that amount by
which the assets belonging to that Series exceed its liabilities, all as
determined by or under the direction of the Trustees. Net Asset Value per
Interest shall be determined separately for each Series and each Class and shall
be determined on such days and at such times as the Trustees may determine. The
Trustees shall make such determination with respect to securities for which
market quotations are readily available, at the market value of such securities,
and with respect to other securities and assets, at the fair value as determined
in good faith by the Trustees; provided, however, that the Trustees, without
Holder approval, may alter the method of appraising portfolio securities insofar
as permitted under the 1940 Act and the rules, regulations and interpretations
thereof promulgated or issued by the SEC or insofar as permitted by any order of
the SEC applicable to the Series or to the Class. The Trustees may delegate any
of their powers and duties under this Article X with respect to appraisal of
assets and liabilities. At any time the Trustees may cause the Net Asset Value
per Interest last determined to be determined again in a similar manner and may
fix the time when such redetermined values shall become effective.
ARTICLE XI
MISCELLANEOUS
-------------
Section 1. Inspection of Books. The Board of Trustees shall from time to time
determine whether and to what extent, and at what times and places, and under
what conditions the accounts and books of the Trust or any Series or Class shall
be open to the inspection of Holders. No Holder shall have any right to inspect
any account or book or document of the Trust except as conferred by law or
otherwise by the Board of Trustees or by resolution of Holders.
Section 2. Severability. The provisions of these By-Laws are severable. If the
Board of Trustees determine, with the advice of counsel, that any provision
hereof conflicts with the 1940 Act, the regulated investment company provisions
of the Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of these
By-Laws; provided, however, that such determination shall not affect any of the
remaining provisions of these By-Laws or render invalid or improper any action
taken or omitted prior to such determination. If any provision hereof shall be
held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision only in such jurisdiction
and shall not affect any other provision of these By-Laws.
Section 3. Headings. Headings are placed in these By-Laws for convenience of
reference only and in case of any conflict, the text of these By-Laws rather
than the headings shall control.
6
Floating Rate Portfolio (the "Registrant")
The Registrant's Trust Instrument provides the following:
ARTICLE IV
SERIES; INTERESTS
-----------------
Section 1. Establishment of Series. The Trust shall consist of one or
more separate and distinct Series. The Trustees hereby establish the Series
listed in Schedule A attached hereto and made a part hereof. Each additional
Series shall be established by, and shall be effective upon, the adoption of a
resolution by the Trustees. The Trustees may designate the relative rights and
preferences of the Interests of each Series. The Trust shall maintain separate
and distinct records for each Series. A Series may issue any number of
Interests. Each Holder of an Interest in a Series shall be entitled to receive
its pro rata share of all distributions made with respect to that Series. On
redemption of an Interest in a Series, a Holder shall be paid solely out of the
Assets belonging to that Series. The Trustees may change the name of any Series
without Holder approval.
Section 2. Interests. The beneficial interest in the Trust shall be
divided into Interests in one or more Series. The number of Interests in the
Trust and each Series shall be unlimited. All Interests issued hereunder shall
be fully paid and nonassessable. Holders shall have no preemptive or other right
to subscribe to any additional Interests or other securities issued by the
Trust. The Trustees shall have full power and authority, in their sole
discretion and without obtaining Holder approval, (a) to issue original or
additional Interests at such times and on such terms and conditions as they deem
appropriate, (b) to establish and to change in any manner Interests in any
Series with such preferences, terms of conversion, voting powers, rights, and
privileges as the Trustees may determine (but the Trustees may not change
Interests in a manner materially adverse to the Holders of such Interests), (c)
to divide or combine the Interests in any Series into a greater or lesser
number, (d) to classify or reclassify any unissued Interests of any Series into
one or more Series, (e) to abolish any one or more Series, (f) to issue
Interests to acquire other assets (including assets subject to, and in
connection with, the assumption of liabilities) and businesses, and (g) to take
such other action with respect to the Interests as the Trustees may deem
desirable.
Section 3. Investment in the Trust; Limitation on Number of Holders.
The Trustees shall accept investments in any Series from such persons and on
such terms as they may from time to time authorize. At the Trustees' sole
<PAGE>
discretion, such investments, subject to applicable law, may be in the form of
cash or securities in which that Series is authorized to invest, valued as
provided in Article VI, Section 2. The Trustees shall have the right to refuse
to accept investments in any Series at any time without any cause or reason
therefor whatsoever. Notwithstanding anything herein to the contrary, (a)
Interests shall only be issued in a transaction or transactions not requiring
registration under the Securities Act of 1933 and (b) no Series shall at any
time have more than 100 Holders. In determining the number of Holders of any
Series, a person owning an Interest through a partnership, grantor trust, or S
corporation (a "flow-through entity") shall be counted as a Holder if
substantially all the value of that person's interest in the flow-through entity
is attributable to that Series and a principal purpose for using a tiered
structure was to satisfy the 100-Holder condition. The Trustees shall impose
such other limitations on investments in the Series as are necessary to avoid
having any Series treated as a "publicly traded partnership" within the meaning
of section 7704 of the Code.
Section 4. Assets and Liabilities of Series. (a) All Assets belonging
to a particular Series shall be held and accounted for separately from the other
Trust Property and the Assets belonging to every other Series. The Assets
belonging to a particular Series shall belong only to that Series and to no
other Series, for all purposes, subject only to the rights of creditors of that
Series. Any Trust Property that is not readily identifiable as belonging to any
particular Series shall be allocated by the Trustees between or among such
Series as the Trustees, in their sole discretion, deem fair and equitable, and
any such Trust Property allocated to a Series shall be Assets belonging to that
Series. The Assets belonging to a Series shall be so recorded on the books of
the Trust and shall be held by the Trustees in trust for the benefit of the
Holders of Interests in that Series. The Assets belonging to a Series shall be
charged with the liabilities of that Series and all expenses, costs, charges,
and reserves attributable to that Series. Any liabilities, expenses, costs,
charges, and/or reserves of the Trust that are not readily identifiable as
attributable to any particular Series shall be allocated and charged by the
Trustees between or among such Series in such manner as the Trustees, in their
sole discretion, deem fair and equitable. Each allocation pursuant to this
paragraph shall be conclusive and binding upon the Holders of Interests in all
Series for all purposes.
(b) Without limiting the foregoing, but subject to the Trustees' right
to allocate liabilities, expenses, costs, charges, and reserves as herein
provided, the debts, liabilities, obligations, and expenses incurred, contracted
for, or otherwise existing with respect to a particular Series shall be
enforceable only against the Assets belonging to that Series, and not against
the Trust Property generally or the Assets belonging to any other Series. Notice
of this limitation on enforceabililty may, in the Trustees' sole discretion, be
- 2 -
<PAGE>
set forth in the Trust's certificate of trust (whether originally or by
amendment) as filed or to be filed with the Secretary of State of the State of
Delaware pursuant to the Delaware Act, and upon the giving of such notice in the
certificate of trust, the provisions of section 3804 of the Delaware Act
relating to limitations on liabilities among Series (and the effect thereunder
of setting forth such notice in the certificate of trust) shall become
applicable to the Trust and each Series. Any person extending credit to,
contracting with, or having any claim against any Series may look only to the
Assets belonging to that Series to satisfy or enforce any debt, obligation, or
claim with respect to that Series. No Holder or former Holder of any Series
shall have a claim on or any right to any Assets belonging to any other Series.
Section 5. Register of Interests. The Trust shall maintain a register
containing the name and address and Book Capital Account balance of each Holder
of each Series. The register shall be conclusive as to the identity of Holders
of record of each Series and who shall be entitled to payments of distributions
or otherwise to exercise or enjoy the rights of Holders. No Holder shall be
entitled to receive payment of any distribution, or to receive notice as herein
provided, until it has given its address to such officer or agent of the
Trustees as shall keep such register for entry thereon.
Section 6. Status of Interests; Limitation of Holder LiabilitySection
6. Status of Interests; Limitation of Holder Liability. Interests shall be
deemed to be personal property giving Holders only the rights provided in this
Trust Instrument. Every Holder, by virtue of having acquired an Interest, shall
be held expressly to have assented to and agreed to be bound by the terms of
this Trust Instrument and to have become a party hereto. No Holder shall be
personally liable for the debts, liabilities, obligations, and/or expenses
incurred by, contracted for, or otherwise existing with respect to the Trust or
any Series. Neither the Trust nor the Trustees shall have any power to bind any
Holder personally or to demand payment from any Holder for anything, other than
as expressly agreed by the Holder. Holders shall have the same limitation of
personal liability as is extended to shareholders of a private corporation for
profit incorporated in the State of Delaware. Every written obligation of the
Trust or any Series shall contain a statement to the effect that such obligation
may only be enforced against the Trust Property or the Assets belonging to that
Series, as the case may be; however, the omission of such statement shall not
operate to bind or create personal liability for any Holder or Trustee.
- 3 -
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
<PAGE>
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
- 2 -
<PAGE>
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
- 3 -
<PAGE>
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
- 4 -
<PAGE>
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,
- 5 -
<PAGE>
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
- 6 -
<PAGE>
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.
- 7 -
<PAGE>
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:________________________________
- 8 -
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.
<PAGE>
(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.
- 2 -
<PAGE>
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.
- 3 -
<PAGE>
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.
- 4 -
<PAGE>
(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.
- 5 -
<PAGE>
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
- 6 -
<PAGE>
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:________________________________
Attest: CHANCELLOR LGT ASSET
MANAGEMENT, INC.
____________________________ By:_________________________________
- 7 -
CUSTODIAN CONTRACT
Between
FLOATING RATE PORTFOLIO
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
CUSTODIAN CONTRACT
------------------
This Contract between Floating Rate Portfolio, a business trust
organized and existing under the laws of Delaware, having its principal place of
business at 50 California Street, San Francisco, California 94111 hereinafter
called the "Portfolio", and State Street Bank and Trust Company, a Massachusetts
trust company, having its principal place of business at 225 Franklin Street,
Boston, Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
-----------------------------------------------------
The Portfolio hereby employs the Custodian as the custodian of its
assets, including securities which it desires to be held in places within the
United States ("domestic securities") and securities it desires to be held
outside the United States ("foreign securities") pursuant to the provisions of
the Instrument of Trust. The Portfolio agrees to deliver to the Custodian all
securities and cash owned by it, and all payments of income, payments of
principal or capital distributions received by it with respect to all securities
owned by the Portfolio from time to time, and the cash consideration received by
it for such new or shares of beneficial interest $.001 par value, ("Shares") of
the Portfolio as may be issued or sold from time to time. The Custodian shall
not be responsible for any property of the Portfolio held or received by the
Portfolio and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
4), the Custodian shall from time to time employ one or more sub-custodians
located in the United States, but only in accordance with an applicable vote by
the Board of Trustees of the Portfolio, and provided that the Custodian shall
have no more or less responsibility or liability to the Portfolio on account of
any actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Portfolio's foreign securities and other assets the foreign banking
institutions and foreign securities depositories designated in Schedule A hereto
but only in accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Portfolio Held
By the Custodian in the United States.
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2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of the Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by the
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S. Department of the
Treasury, collectively referred to herein as "Securities Systems" and
(b) commercial paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent
<PAGE>
("Direct Paper") which is deposited and/or maintained in the Direct
Paper System of the Custodian pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by the Portfolio held by the Custodian or in
a Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System Account")
only upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, and only in the
following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Portfolio or into the name of any nominee or nominees of
the Custodian or into the name or nominee name of any agent
appointed pursuant to Section 2.9 or into the name or nominee
name of any sub-custodian appointed pursuant to Article 1; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities are to
be deliveries to the Custodian.
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall have
no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
<PAGE>
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities made by
the Portfolio, but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Portfolio,
which may be in the form of cash or obligations issued by the
United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is
to be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the delivery
of securities owned by the Portfolio prior to the receipt of such
collateral;
11) For delivery as security in connection with any borrowings by the
Portfolio requiring a pledge of assets by the Portfolio, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Portfolio, the Custodian and a broker-dealer registered
under the Securities Exchange Act of 1934 (the "Exchange Act")
and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Portfolio;
13) For delivery in accordance with the provisions of any agreement
among the Portfolio, the Custodian, and a Futures Commission
Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Portfolio;
14) For any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or of the Executive Committee
signed by an officer and certified by the Secretary or an
Assistant Secretary, specifying the securities of the Portfolio
to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Portfolio or of any
<PAGE>
nominee of the Custodian which nominee shall be assigned exclusively to
the Portfolio, unless the Portfolio has authorized in writing the
appointment of a nominee to be used in common with other registered
investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed
pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article l. All securities accepted
by the Custodian on behalf of the Portfolio under the terms of this
Contract shall be in "street name" or other good delivery form. If,
however, the Portfolio directs the Custodian to maintain securities in
"street name" or other good delivery form. If, however, the Portfolio
directs the Custodian to maintain securities in "street name", the
Custodian shall utilize its best efforts only to timely collect income
due the Portfolio on such securities and to notify the Portfolio on a
best efforts basis only of relevant corporate actions including,
without limitation, pendency of calls, maturities, tender or exchange
offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of the Portfolio
which shall contain only property held by the Custodian as Custodian
for the Portfolio, subject only to draft or order by the Custodian
acting pursuant to the terms of this Contract, and shall hold in such
account or accounts, subject to the provisions hereof, all cash
received by it from or for the account of the Portfolio, other than
cash maintained by the Portfolio in a bank account established and used
in accordance with Rule 17f-3 under the Investment Company Act of 1940.
Portfolios held by the Custodian for the Portfolio may be deposited by
it to its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; provided, however, that every
such bank or trust company shall be qualified to act as a custodian
under the Investment Company Act of 1940 and that each such bank or
trust company and the Portfolios to be deposited with each such bank or
trust company shall be approved by vote of a majority of the Board of
Trustees of the Portfolio. Such Portfolios shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Availability of Federal Portfolios. Upon mutual agreement between the
Portfolio and the Custodian, the Custodian shall, upon the receipt of
Proper Instructions, make federal Portfolios available to the Portfolio
as of specified times agreed upon from time to time by the Portfolio
and the Custodian in the amount of checks received in payment for
Shares of the Portfolio which are deposited into the Portfolio's
account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to United States registered securities held hereunder to
which the Portfolio shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely basis
all income and other payments with respect to United States bearer
domestic securities if, on the date of payment by the issuer, such
<PAGE>
securities are held by the Custodian or its agent thereof and shall
credit such income, as collected, to the Portfolio's custodian account.
Without limiting the generality of the foregoing, the Custodian shall
detach and present for payment all coupons and other income items
requiring presentation as and when they become due and shall collect
interest when due on securities held hereunder. Income due the
Portfolio on United States securities loaned pursuant to the provisions
of Section 2.2 (10) shall be the responsibility of the Portfolio. The
Custodian will have no duty or responsibility in connection therewith,
other than to provide the Portfolio with such information or data as
may be necessary to assist the Portfolio in arranging for the timely
delivery to the Custodian of the income to which the Portfolio is
properly entitled.
2.7 Payment of Portfolio Monies. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties,
the Custodian shall pay out monies of the Portfolio in the following
cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth
in Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.11; (d) in the case of
repurchase agreements entered into between the Portfolio and
the Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either
in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing
purchase by the Portfolio of securities owned by the Custodian
along with written evidence of the agreement by the Custodian
to repurchase such securities from the Portfolio or (e) for
transfer to a time deposit account of the Portfolio in any
bank, whether domestic or foreign; such transfer may be
effected prior to receipt of a confirmation from a broker
and/or the applicable bank pursuant to Proper Instructions as
defined in Article 4;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Portfolio whether or not such expenses are to
be in whole or part capitalized or treated as deferred
expenses;
4) For the payment of any dividends declared pursuant to the
governing documents of the Portfolio;
5) For payment of the amount of dividends received in respect of
securities sold short;
<PAGE>
6) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or of the Executive
Committee of the Portfolio signed by an officer of the
Portfolio and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting
forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the
Person or persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of the Portfolio is made by the Custodian in advance of receipt
of the securities purchased in the absence of specific written
instructions from the Portfolio to so pay in advance, the Custodian
shall be absolutely liable to the Portfolio for such securities to the
same extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, and its rules or regulations, to act as a custodian,
as its agent to carry out such of the provisions of this Article 2 as
the Custodian may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian (as
distinguished from a sub-custodian appointed pursuant to Section 3) of
its responsibilities or liabilities hereunder. In the event of any
loss, damage or expense suffered or incurred by the Portfolio caused by
or resulting from the negligence or willful misconduct of any agent
appointed by the Custodian pursuant to this paragraph 2.9, the
Custodian shall promptly reimburse the Portfolio in the amount of such
loss, damage, or expense.
2.10 Deposit of Portfolio Assets in Securities Systems. The Custodian may
deposit and/or maintain domestic securities owned by the Portfolio in a
clearing agency registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of 1934, which acts as
a securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities Systems" in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The custodian may deposit and/or maintain domestic securities
of the Portfolio in a Securities System provided that such
securities are represented in an account ("Account") of the
Custodian in the Securities System which shall not include any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
<PAGE>
2) The records of the Custodian with respect to domestic
securities of the Portfolio which are maintained in a
Securities System shall identify by book-entry those
securities belonging to the Portfolio;
3) The Custodian shall pay for domestic securities purchased for
the account of the Portfolio upon (i) receipt of advice from
the Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such payment and
transfer for the account of the Portfolio. The Custodian shall
transfer domestic securities sold for the account of the
Portfolio upon (i) receipt of advice from the Securities
System that payment for such securities has been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such transfer and payment for the
account of the Portfolio. Copies of all advices from the
Securities System of transfers of domestic securities for the
account of the Portfolio shall identify the Portfolio, be
maintained for the Portfolio by the Custodian and be provided
to the Portfolio at its request. The Custodian shall furnish
the Portfolio confirmation of each transfer to or from the
account of the Portfolio in the form of a written advice or
notice and shall furnish to the Portfolio copies of daily
transaction sheets reflecting each day's transactions in the
Securities System for the account of the Portfolio on the next
business day;
4) The Custodian shall provide the Portfolio with any report
obtained by the Custodian (or by any agent appointed by the
custodian pursuant to Section and furnished to the custodian)
on the Securities Systems accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the Securities System;
5) The Custodian shall have received the initial certificate
required by Article 12 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Portfolio for any loss,
damage or expense to the Portfolio resulting from use of the
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of
its or their employees or from failure of the Custodian or any
such agent to enforce effectively such rights as it may have
against the Securities System; at the election of the
Portfolio, it shall be entitled to be subrogated to the rights
of the Custodian with respect to any claim against the
Securities System or any other person which the Custodian may
have as a consequence of any such loss, damage or expense if
and to the extent that the Portfolio has not been made whole
for any such loss, damage or expense. The Custodian agrees to
cooperate with the Portfolio in connection with the
enforcement of the Portfolio's subrogation rights.
<PAGE>
2.11 Portfolio Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by the Portfolio
in the Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Portfolio in the Direct
Paper System only if such securities are represented in an
account ("Account") of the Custodian in the Direct Paper System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the
Portfolio; the Custodian shall pay for securities purchases for
the account the Portfolio upon the making of an entry on the
records of the custodian to reflect such payment and transfer of
securities to the account of the Portfolio. The Custodian shall
transfer securities sold for the account of the Portfolio upon
the making of an entry on the records of the Custodian to reflect
such transfer and receipt of payment for the account of the
Portfolio;
5) The Custodian shall furnish the Portfolio confirmation of each
transfer to or from the account of the Portfolio, in the form of
a written advice or notice, of Direct Paper on the next business
day following such transfer and shall furnish to the Portfolio
copies of daily transaction sheets reflecting each day's
transaction in the Securities System for the account of the
Portfolio;
6) The Custodian and any agent appointed pursuant to paragraph 2.9
shall provide the Portfolio with any report on their respective
systems of internal accounting control as the Portfolio may
reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of the Portfolio, into which account or accounts may
be transferred cash and/or securities, including securities maintained
in an account by the Custodian pursuant to Section 2.10 hereof, (i) in
accordance with the provisions of any agreement among the Portfolio,
the Custodian and a broker-dealer registered under the Exchange Act and
a member of .he NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements
in connection with transactions by the Portfolio, (ii) for purposes of
segregating cash or government securities in connection with options
purchased, sold or written by the Portfolio or commodity futures
contracts or options thereon purchased or sold by the Portfolio, (iii)
for the purposes of compliance by the Portfolio with the procedures
<PAGE>
required by Investment Company Act Release No. 10666, or any subsequent
release or releases of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered investment
companies and (iv) as mutually agreed upon from time to time in writing
by the Custodian and the Portfolio.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of the Portfolio held by
it and 'n connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are to be voted,
and shall promptly deliver to the Portfolio such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Portfolio all written information (including, without limitation,
pendency of calls and maturities of domestic securities and expirations
of rights in connection therewith and notices of exercise of call and
put options written by the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian
from issuers of the domestic securities being held for the Portfolio.
With respect to tender or exchange offers, the Custodian shall transmit
promptly to the Portfolio all written information received by the
Custodian from issuers of the domestic securities whose tender or
exchange is sought and from the party (or his Agents) making the tender
or exchange offer. If the Portfolio desires to take action with respect
to any tender offer, exchange offer or any other similar transaction,
the Portfolio shall notify the Custodian at least three business days
prior to the date on which the Custodian is to take such action.
2.16 Reports to Portfolio by Independent Public Accountants. The Custodian
shall provide the Portfolio, at such times as the Portfolio may
reasonably require, with reports by independent public accountants on
the accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures
contracts, including domestic securities deposited and/or maintained in
a Securities System, relating to the services provided by the Custodian
under this Contract; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Portfolio to
provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, there are no such inadequacies, the
reports shall so state.
3. Duties of the Custodian with Respect to Property of the Portfolio Held
Outside of the United States.
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<PAGE>
3.1 Appointment of Foreign Sub-Custodians. The Portfolio hereby authorizes
and instructs the Custodian to employ as sub-custodians for the
Portfolio's securities and other assets maintained outside the United
States the foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as defined in
Section 4 of this Contract, together with a certified resolution of the
Portfolio's Board of Trustees, the Custodian and the Portfolio may
agree to amend Schedule A hereto from time to time to designate
additional foreign banking institutions and foreign securities
depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Portfolio may instruct the Custodian to cease the
employment of any one or more such sub-custodians for maintaining
custody of the Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities, as defined in paragraph (c)(l) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents
in such amounts as the Custodian or the Portfolio may determine to be
reasonably necessary to effect the Portfolio's foreign securities
transactions. The Custodian shall identify on its books as belonging to
the Portfolio, the foreign securities of the Portfolio held by each
foreign sub-custodian.
3.3 Foreign Securities Depositories. Except as may otherwise be agreed upon
in writing by the Custodian and the Portfolio, assets of the Portfolios
shall be maintained in foreign securities depositories only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.4 hereof.
3.4 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the Portfolio's
assets will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution
or its creditors or agent, except a claim of payment for their safe
custody or administration; (b) beneficial ownership of the Portfolio's
assets will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to the
Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted
under applicable law the independent public accountants for the
Portfolio, will be given access to the books and records or the foreign
banking institution relating to its actions under its agreement with
the Custodian; and (e) assets of the Portfolio held by the foreign
sub-custodian will be subject only to the instructions of the Custodian
or its agents.
<PAGE>
3.5 Access of Independent Accountants of the Portfolio. Upon request of the
Portfolio, the Custodian will use its best efforts to arrange for the
independent accountants of the Portfolio to be afforded access to the
books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
3.6 Reports by Custodian. The Custodian will supply to the Portfolio from
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio's securities and other
assets and advices or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf or the Portfolio indicating, as
to securities acquired for the Portfolio, the identity of the entity
having physical possession of such securities.
3.7 Transactions in Foreign Custody Account. (a) Except as otherwise
provided in paragraph (b) of this Section 3.7, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to
the foreign securities of the Portfolio held outside the United States
by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of
the Portfolio and delivery of securities maintained for the
account of the Portfolio may be effected in accordance with the
customary established securities trading or securities processing
practices and procedures in the jurisdiction or market in which
the transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or
an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from
such purchaser or dealer.
c) Securities maintained in the custody of a foreign sub-custodian
may be maintained in the name of such entity's nominee to the
same extent as set forth in Section 2.3 of this Contract, and the
Portfolio agrees to hold any such nominee harmless from any
liability as a holder of record of such securities.
3.8 Liability of Foreign Sub-Custodians. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless,
the Custodian and the Portfolio from and against any loss, damage,
cost, expense, liability or claim arising out of or in connection with
the institutions performance of such obligations. At the election of
<PAGE>
the Portfolio, it shall be entitled to be subrogated to the rights of
the Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Portfolio has not been
made whole for any such loss, damage, cost, expense, liability or
claim.
3.9 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. bank as contemplated by paragraph 3.12 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care.
3.10 Reimbursement or Advances. If the Portfolio requires the Custodian to
advance cash or securities for any purpose including the purchase or
sale of foreign exchange or of contracts for foreign exchange, or in
the event that the Custodian or its nominee shall incur or be assessed
any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may
arise from its or its nominee's own negligent action, negligent failure
to act or willful misconduct, any property at any time held for the
account of the Portfolio shall be security therefor and should the
Portfolio fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of Portfolio assets
to the extent necessary to obtain reimbursement.
3.11 Monitoring Responsibilities. The Custodian shall furnish annually to
the Portfolio, during the month of June, information concerning the
foreign sub-custodians employed by the Custodian. Such information
shall be similar in kind and scope to that furnished to the Portfolio
in connection with the initial approval of this Contract. In addition,
the Custodian will promptly inform the Portfolio in the event that the
Custodian learns of a material adverse change in the financial
condition of a foreign sub-custodian or any material loss of the assets
of the Portfolio or in the case of any foreign sub-custodian not the
subject of an exemptive order from the Securities and Exchange
Commission is notified by such foreign sub-custodian that there appears
to be a substantial likelihood that its shareholders' equity will
decline below $200 million (U.S. dollars or the equivalent thereof) or
that its shareholders' equity has declined below S200 million (in each
case computed in accordance with generally accepted U.S. accounting
principles).
3.12 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
the Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract.
<PAGE>
(b) Cash held for the Portfolio in the United Kingdom shall be
maintained in an interest bearing account established for the
Portfolio with the Custodian's London branch, which account
shall be subject to the direction of the Custodian, State
Street London Ltd. or both.
3.13 Tax Law. The Custodian shall have no responsible or liability for any
obligations now or hereafter imposed on the Portfolio or the Custodian
as custodian of the Portfolio by the tax law of the United States of
America or any state or political subdivision whereof. It shall be the
responsibility of the Custodian to use reasonable efforts and due care
(a) to perform such ministerial steps as are required to collect any
tax refund, (b) to ascertain the appropriate rate of tax withholding
and (c) to provide such documents as may be required to enable the
Portfolio to receive appropriate tax treatment under applicable tax
laws and any applicable treaty provisions. Unless otherwise informed by
the Portfolio, the Custodian, in performance of its duties under this
Section, shall be entitled to apply categorical treatment of the
Portfolio according to the nationality of the Portfolio, the
particulars of its organization and other relevant details that shall
be supplied by the Portfolio. The Custodian shall be entitled to rely
on any information supplied by the Portfolio. The Custodian may engage
reasonable professional advisors disclosed to the Portfolio by the
Custodian, which may include attorneys, accountants or financial
institutions in the regular business of investment administration and
may rely upon advice received therefrom. It shall be the duty of the
Portfolio to inform the Custodian of any change in the organization,
domicile or other relevant fact concerning tax treatment of the
Portfolio and further to inform the Custodian if the Portfolio is or
becomes the beneficiary of any special ruling or treatment not
applicable to the general nationality and category or entity of which
the Portfolio is a part under general laws and treaty provisions.
4. Proper Instructions
-------------------
Proper Instructions as used herein means a writing or tested telex
signed or initialed by one or more person or persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested, and may be in the
form of standing instructions. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Portfolio shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Trustees of the Portfolio
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
<PAGE>
between electro-mechanical or electronic devices provided; the Board of Trustees
and the Custodian are satisfied that such procedures afford adequate safeguards
for the Portfolios assets. For purposes of this Section, Proper Instructions
shall include instructions received by the Custodian pursuant to any three party
agreement which requires a segregated asset account in accordance with Section
2.12.
5. Actions Permitted without Express Authority
-------------------------------------------
The Custodian may in its discretion, without express authority from the
Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be accounted
for to the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks, in
general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Portfolio
except as otherwise directed by the Board of Trustees of the
Portfolio.
6. Evidence of Authority
---------------------
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the
Portfolio. The Custodian may receive and accept a certified copy of a vote of
the Board of Trustees of the Portfolio as conclusive evidence (a) of the
<PAGE>
authority of any person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Trustees pursuant to the
Instrument of Trust as described in such vote, and such vote may be considered
as in full force and effect until receipt by the Custodian of written notice to
the contrary.
7. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
-----------------------------------------------------------------------
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Portfolio to
keep the books of account of the Portfolio and/or compute the net asset value
per share of the outstanding shares of the Portfolio or, if directed in writing
to do so by the Portfolio pursuant to Proper Instructions, shall itself keep
such books of account and/or compute such net asset value per share. The net
asset value of the Portfolio's shares will be determined weekly as determined by
the Portfolio's Board of Trustees and will also be determined monthly as of the
close of regular trading on the New York Stock Exchange, Inc. The net asset
value per share will be computed by dividing the value of the securities held by
the Portfolio plus any cash or other assets (including interest and dividends
accrued but not yet received and earned discount) minus all liabilities
(including accrued expenses) by the total number of shares outstanding at such
time. If so directed, the Custodian shall also calculate weekly the net income
of the Portfolio as described in the Portfolio's currently effective prospectus
related to the Portfolio and shall advise the Portfolio and the Transfer Agent
weekly of the total amounts of such net income and, if instructed in writing by
an officer of the Portfolio to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various components.
The calculations of the net asset value per share and the weekly income of the
Portfolio shall be made at the time or times described from time to time in the
Portfolio's currently effective prospectus.
8. Mitigation by Custodian
-----------------------
Upon the occurrence of any event connected with the duties of the
Custodian under this Contract which causes or may cause any loss, damage or
expense to the Portfolio, (i) the Custodian shall, and (ii) shall exercise
reasonable efforts to cause any subcustodian to, use reasonable efforts and take
all reasonable steps under the circumstances to mitigate the effects of such
event and to avoid continuing harm to the Portfolio.
<PAGE>
9. Notification of Litigation; Right to Proceed
--------------------------------------------
The Portfolio shall not be liable for indemnification under this
Contract to the extent that the Portfolio's ability to defend against any
litigation or proceeding brought against the Custodian in respect of which
indemnity may be sought under this Contract is prejudiced by the Custodian's
failure to give prompt notice of the Commencement or any such litigation or
proceeding with respect to claims in such litigation or proceedings for which
indemnity by the Portfolio may be sought and subject to applicable law and the
ruling of any court of competent jurisdiction, the Portfolio shall be entitled
to participate in any such litigation or proceeding and, after written notice
from the Portfolio to the Custodian, the Portfolio may assume the defense of
such litigation or proceeding with counsel of its choice at its own expense in
respect of that portion of the litigation for which the Portfolio may be subject
to an indemnification obligation; provided, however, that the Custodian shall be
entitled to participate in the defense of any such litigation or proceeding. If
the Portfolio has acknowledged in writing its obligation to indemnify the
Custodian with respect to such litigation or proceeding, the Custodian's
participation shall be at its own expense and the Portfolio shall control the
defense of the litigation or proceeding. If the Portfolio is not permitted to
participate in or control such litigation or proceeding under applicable law or
by a ruling of a court of competent jurisdiction, the Custodian shall reasonably
prosecute such litigation or proceeding. The Custodian shall not consent to the
entry of any judgment or enter into any settlement in any such litigation or
proceeding without providing the Portfolio with adequate notice of any such
settlement or judgment, and without the Portfolio's prior written consent. The
Custodian shall submit written evidence to the Portfolio with respect to any
cost or expense for which it is seeking indemnification in such form and detail
as the Portfolio may reasonably request.
10. Records
-------
The Custodian shall create and maintain and retain all records relating
to its activities and obligations under this Contract in such manner as will
meet the obligations of the Portfolio under the Investment Company Act of 1940
and the rules and regulations thereunder, with particular attention to Section
31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the
property of the Portfolio and in the event of termination of this Contract shall
be delivered to the Portfolio or a successor custodian as instructed by the
Portfolio. All such records shall at all times during the regular business hours
<PAGE>
of the Custodian be open for inspection and audit by duly authorized officers,
employees or agents of, attorneys for and auditors employed by the Portfolio and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Portfolio's request, supply the Portfolio with a tabulation of
securities owned by the Portfolio and held by the Custodian and shall, when
requested to do so by the Portfolio and for such compensation as shall be agreed
upon between the Portfolio and the Custodian, include certificate numbers in
such tabulations.
11. Opinion of Portfolio's Independent Accountant
---------------------------------------------
The Custodian shall take all reasonable action, as the Portfolio may
from time to time request, to obtain from year to year favorable opinions from
the Portfolio's independent accountants with respect to its activities hereunder
in connection with the preparation of the Portfolio's Form N-2, and Form N-SAR
or other annual reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
12. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Portfolio and the Custodian.
13. Responsibility of Custodian
---------------------------
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
<PAGE>
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care and diligence in carrying out the provisions of this
Contract and shall be liable to the Portfolio for all losses, damages and
expenses suffered or incurred by the Portfolio resulting from the failure of the
Custodian to exercise such reasonable care and diligence. The Portfolio agrees
that the Custodian shall be indemnified by and shall be without liability to the
Portfolio for any action taken or omitted by it in good faith without
negligence. It shall be entitled to rely on and may act upon advice of counsel
(who may be counsel for the Portfolios on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to subcustodians
located in the United States (except as specifically provided in Article 3.9)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by, the direction of or authorization by the Portfolio to maintain custody or
any securities or cash of the Portfolio in a foreign country including, but not
limited to, losses resulting from nationalization, expropriation, currency
restrictions or acts of war or terrorism.
If the Portfolio requires the Custodian to take any action with respect
to securities, which action involves the payment of money or which action may,
in the opinion of the Custodian, result in the custodian or its nominee assigned
to the Portfolio being liable for the payment of money or incurring liability of
some other form, the Portfolio, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an amount equal to
the Custodian's reasonable estimate of the amount to be paid or for which the
Custodian may potentially be liable and in a form satisfactory to the Custodian.
If the Portfolio requires the Custodian, its affiliates, subsidiaries
or agents, to advance cash or securities for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement) or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Portfolio shall
<PAGE>
be security therefor and should the Portfolio fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash and to
dispose of the Portfolio's assets to the extent necessary to obtain
reimbursement.
14. Effective Period; Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.10 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Trustees of the Portfolio has approved the initial
use of a particular Securities System, as required by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall not act
under Section 2.11 hereof in the absence of receipt or an initial certificate of
the Secretary or an Assistant Secretary that the Board of Trustees has approved
the initial use of the Direct Paper System; provided further, however, that the
Portfolio shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Instrument of
Trust, and further provided, that the Portfolio may at any time by action of its
Board of Trustees (i) substitute another bank or trust company for the Custodian
by giving notice as described above to the Custodian, or (ii) immediately
terminate this Contract in the event of the appointment of a conservator or
receiver for the Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate regulatory agency
or court of competent jurisdiction.
Upon termination of the Contract, the Portfolio shall pay to the
Custodian such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for its costs, expenses and
disbursements.
15. Successor Custodian
-------------------
If a successor custodian shall be appointed by the Board of Trustees of
the Portfolio, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
<PAGE>
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Portfolio's securities held in a
Securities System unless otherwise instructed by the Portfolio.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Portfolio, delivered at the office of the Custodian, transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Portfolio's
securities held in any Securities System. Thereafter, such bank or Trust Company
shall be the successor of the Custodian under this contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Portfolio to procure the certified copy of the vote referred to
or of the Board of Trustees to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Custodian retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations of
the Custodian shall remain in full force and effect. The Custodian agrees to
cooperate with the successor custodian and the Portfolio in execution of
documents and performance of other action necessary or desirable in order to
substitute the successor custodian for the Custodian.
<PAGE>
16. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the custodian and
the Portfolio may from time to time agree on such provisions interpretive of or
in addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Instrument of Trust of the Portfolio. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
17. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
18. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Portfolio and the Custodian relating to the custody
of the Portfolio's assets.
19. Shareholder Communications Election
-----------------------------------
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Portfolio to indicate whether it authorizes
the Custodian to provide the Portfolio's name, address, and share position to
requesting companies whose securities the Portfolio owns. If the Portfolio tells
the Custodian "no", the Custodian will not provide this information to
requesting companies. If the Portfolio tells the custodian "yes" or does not
<PAGE>
check either "yes" or "no" below, the custodian is required by the rule to treat
the Portfolio as consenting to disclosure of this information for all securities
owned by the Portfolio or any funds or accounts established by the Portfolio.
For the Portfolio's protection, the Rule prohibits the requesting company from
using the Portfolio's name and address for any purpose other than corporate
communications. Please indicate below whether the Portfolio consents or objects
by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Portfolio's
name, address, and share positions.
N0 [ ] The Custodian is not authorized to release the
Portfolio's name, address, and share positions.
20. Assignment
----------
Neither the Portfolio nor the Custodian shall have the right to assign
any of its rights or obligations under this Contract without the prior written
consent of the other party.
21. Severability
------------
If any provision of this Contract is held to be unenforceable as a
matter of law, the other terms and provisions hereof shall not be affected
thereby and shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as Of the ______ day of _______, 1997.
ATTEST FLOATING RATE PORTFOLIO
_________________________ By ______________________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
__________________________ By ________________________________________
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed as of the ______ day of
_______, 1997.
ATTEST FLOATING RATE PORTFOLIO
__________________________ By ________________________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
__________________________ By _________________________________________
Executive Vice President
<PAGE>
Schedule A
----------
The following foreign bank institutions and foreign securities
depositories have been approved by the Board of Trustees of Floating Rate
Portfolio for use as sub-custodians for the Portfolio's Securities and other
assets:
(Insert banks and securities depositories)
Certified:
___________________________________
Portfolio's Authorized Officer
Date: _____________________________
FUND ACCOUNTING AND PRICING AGENT AGREEMENT
This Fund Accounting and Pricing Agent Agreement (the "Agreement") is
made as of __________, 1997, by and among GT Global Floating Rate Fund, Inc.
(the "Fund"), Floating Rate Portfolio (the "Portfolio"), and Chancellor LGT
Asset Management, Inc. ("Chancellor LGT").
WHEREAS, each of the Fund and the Portfolio is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a closed-end
management investment company;
WHEREAS, the Fund and the Portfolio are part of a complex of investment
companies that are managed and/or administered by Chancellor LGT (the "GT Global
Group of Funds");
WHEREAS, the Fund and the Portfolio desire to retain Chancellor LGT to
act as their accounting and pricing agent, and Chancellor LGT is willing to act
in such capacities.
NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions hereinafter set forth, the Fund, the Portfolio and Chancellor LGT
hereby agree as follows:
SECTION 1. APPOINTMENT. The Fund and the Portfolio hereby
appoint Chancellor LGT to act as the accounting and pricing agent for the period
and on the terms and conditions set forth in this Agreement. Chancellor LGT
hereby accepts such appointment and agrees to render the services set forth for
the compensation herein provided.
SECTION 2. DEFINITIONS. As used in this Agreement and in
addition to the terms defined elsewhere herein, the following terms shall have
the meanings assigned to them in this Section:
(a) "Authorized Person" means any officer of the Fund
or the Portfolio and any other person, whether or not any such person
is an officer or employee of the Fund or the Portfolio, duly authorized
by the Board of Directors or Trustees, the President or any Vice
President of the Fund or the Portfolio to give Oral and/or Written
Instructions on behalf of the Fund or the Portfolio.
(b) "Commission" means the Securities and Exchange
Commission.
(c) "Custodian" means the custodian or custodians
employed by the Fund and the Portfolio to maintain custody of the
Fund's and the Portfolio's assets.
<PAGE>
(d) "Governing Documents" means the Articles of
Incorporation, Declaration of Trust, By-Laws and other applicable
charter documents of the Fund and the Portfolio, all as they may be
amended from time to time.
(e) "Oral Instruction" means oral instructions
actually received by Chancellor LGT from an Authorized Person or from a
person reasonably believed by Chancellor LGT to be an Authorized
Person, provided that, any Oral Instruction shall be promptly confirmed
by Written Instructions.
(f) "Prospectus" means the current prospectus of
the Fund.
(g) "Shares" means shares of beneficial interest
of the Fund and of the Portfolio.
(h) "Shareholder" means any owner of Shares.
(i) "Written Instructions" means written instructions
delivered by hand, mail, tested telegram or telex, cable or facsimile
sending device received by Chancellor LGT and signed by an Authorized
Person.
SECTION 3. COMPLIANCE WITH LAWS, ETC. In performing its
responsibilities hereunder, Chancellor LGT shall comply with all terms and
provisions of the Governing Documents, the Prospectus and all applicable state
and federal laws including, without limitation, the 1940 Act and the rules and
regulations promulgated by the Commission thereunder.
SECTION 4. SERVICES. In consideration of the compensation
payable hereunder and subject to the supervision and control of the Fund's and
the Portfolio's Boards, Chancellor LGT shall provide the following services to
the Fund and the Portfolio:
(a) PRICING AGENT. As pricing agent, Chancellor LGT
shall:
(1) Obtain security market quotes from services
approved by the investment manager of the Portfolio or, if
such quotes are unavailable, then obtain such prices from the
investment manager of the Portfolio or from such sources as
the investment manager may direct, and, in either case,
calculate the market value of the Portfolio's investments; and
(2) Value the assets of the Portfolio and compute the
net asset value per Share of the Portfolio at such dates and
times and in the manner specified in the then
- 2 -
<PAGE>
currently effective Prospectus and transmit to the Portfolio's
investment manager.
(b) ACCOUNTING AGENT. As fund accounting agent,
Chancellor LGT shall:
(1) Calculate the net income of the Fund;
(2) Calculate capital gains or losses for the
Fund from the sale or disposition of assets, if any;
(3) Maintain the general ledger and other accounts,
books and financial records of the Fund and the Portfolio, as
required under Section 31(a) of the 1940 Act and the rules
promulgated by the Commission thereunder in connection with
the services provided by Chancellor LGT;
(4) Perform the following functions on a daily
basis:
(A) journalize the Fund's and the
Portfolio's investment, capital share and
income and expense activities;
(B) reconcile cash and investment balances
of the Fund and the Portfolio with the Custodian and
provide the Portfolio's investment manager with the
beginning cash balance available for investment
purposes and update the cash availability throughout
the day as required by the investment manager;
(C) verify investment buy/sell trade tickets
received from the Fund's investment manager and
transmit trades to the Fund's Custodian for proper
settlement;
(D) maintain individual ledgers for
investment securities;
(E) maintain historical tax lots for
investment securities;
(F) calculate various contractual expenses
(e.g., advisory and custody fees);
(G) post to and prepare the Fund's and the
Portfolio's statement of assets and liabilities and
statement of operations; and
- 3 -
<PAGE>
(H) monitor expense accruals and notify an
Authorized Person of any proposed adjustments;
(5) Receive and act upon notices, Oral and Written
Instructions, certificates, instruments or other
communications from the Fund's and the Portfolio's shareholder
servicing and transfer agent;
(6) Assist in the preparation of financial
statements semiannually which will include the
following items:
(A) schedule of investments;
(B) statement of assets and liabilities;
(C) statement of operations;
(D) changes in net assets;
(E) cash statement; and
(F) schedule of capital gains and losses;
(7) Prepare monthly security transaction
listings;
(8) Prepare quarterly broker security
transactions summaries; and
(9) At the reasonable request of the Fund or the
Portfolio, assist in the preparation of various reports or
other financial documents required by federal, state and other
appropriate laws and regulations.
SECTION 5. COMPENSATION. As compensation for the services
rendered by Chancellor LGT hereunder during the term of the Agreement, the Fund
and the Portfolio shall pay to Chancellor LGT monthly such fees as shall be
agreed to from time to time by the Fund, the Portfolio and Chancellor LGT, in
writing and attached hereto as Schedule A. In addition, as may be agreed to from
time to time in writing by the Fund, the Portfolio and Chancellor LGT, the Fund
and the Portfolio shall reimburse Chancellor LGT for certain expenses that it
incurs in rendering services under this Agreement.
SECTION 6. RELIANCE BY CHANCELLOR LGT ON INSTRUCTIONS. Unless
otherwise provided in this Agreement, Chancellor LGT shall act only upon Oral or
Written Instructions. Chancellor LGT shall be entitled to rely upon any such
Instructions actually received by it under this Agreement. The Fund and the
Portfolio agree that Chancellor LGT shall incur no liability to the Fund or the
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Portfolio in acting upon Oral or Written Instructions given to Chancellor LGT
hereunder, provided that, such Instructions reasonably appear to have been
received from an Authorized Person.
SECTION 7. COOPERATION WITH AGENTS OF THE FUND AND THE
PORTFOLIO. Chancellor LGT shall cooperate with the Fund's and the Portfolio's
agents and employees, including, without limitation, their independent
accountants, and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that all necessary information is
made available to such agents to the extent necessary in the performance of
their duties to the Fund and the Portfolio.
SECTION 8. CONFIDENTIALITY. Chancellor LGT, on behalf of
itself and its employees, agrees to treat confidentially all records and other
information relating to the Fund and the Portfolio except when requested to
divulge such information by duly constituted authorities provided that
notification and prior approval is obtained from the Fund or the Portfolio,
which approval shall not be unreasonably withheld and may not be withheld if
Chancellor LGT, in its judgment, may be subject to civil or criminal contempt
proceedings for failure to comply.
SECTION 9. STANDARD OF CARE. In the performance of its
responsibilities hereunder, Chancellor LGT shall exercise care and diligence in
the performance of its duties and act in good faith and use its best efforts to
ensure the accuracy and completeness of all services under this Agreement. In
performing services hereunder, Chancellor LGT:
(a) shall be under no duty to take any action on
behalf of the Fund or the Portfolio except as specifically set forth
herein or as may be specifically agreed to by Chancellor LGT in
writing, and in computing the net asset value per Share of the Fund or
the Portfolio, Chancellor LGT may rely upon any information furnished
to it including, without limitation, information (1) as to the accrual
of liabilities of the Fund or the Portfolio and as to liabilities of
the Fund or the Portfolio not appearing on the books of account kept by
Chancellor LGT, (2) as to the existence, status and proper treatment of
reserves, if any, authorized by the Fund or the Portfolio, (3) as to
the sources of quotations to be used in computing net asset value, (4)
as to the fair value to be assigned to any securities or other property
for which price quotations are not readily available and (5) as to the
sources of information with respect to "corporate actions" affecting
portfolio securities of the Portfolio (information as to "corporate
actions" shall include information as to dividends, distributions,
interest payments, prepayments, stock splits, stock dividends, rights
offerings,
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conversions, exchanges, recapitalizations, mergers, redemptions, calls,
maturity dates and similar actions, including ex-dividend and record
dates and the amounts and terms thereof);
(b) shall be responsible and liable for all losses,
damages and costs (including reasonable attorneys' fees) incurred by
the Fund or the Portfolio which is due to or caused by Chancellor LGT's
negligence in the performance of its duties under this Agreement or for
Chancellor LGT's negligent failure to perform such duties as are
specifically assumed by Chancellor LGT in this Agreement, provided
that, to the extend that duties, obligations and responsibilities are
not expressly set forth in this Agreement, Chancellor LGT shall not be
liable for any act or omission that does not constitute willful
misfeasance, bad faith or negligence on the part of Chancellor LGT or
reckless disregard by Chancellor LGT of such duties, obligations and
responsibilities; and
(c) without limiting the generality of the foregoing,
Chancellor LGT shall not, in connection with Chancellor LGT's
duties under this Agreement, be under any duty or obligation
to inquire into and shall not be liable for or in respect of:
(1) the validity or invalidity or authority
or lack of authority of any Oral or Written
Instruction, notice or other instrument which
conforms to the applicable requirements of this
Agreement, if any and that Chancellor LGT reasonably
believes to be genuine; and
(2) delays or errors or loss of data
occurring by reason of circumstances beyond
Chancellor LGT's control including, without
limitation, acts of civil or military authorities,
national emergencies, labor difficulties, fire,
mechanical breakdown, denial of access, earthquake,
flood or catastrophe, acts of God, insurrection, war,
riots, or failure of the mails, transportation,
communication or power supply.
Notwithstanding any other provisions of this Agreement, the following provisions
shall apply with respect to Chancellor LGT's computation of the Fund's and the
Portfolio's net asset value: Chancellor LGT shall be held to the exercise of
reasonable care in computing and determining net asset value as provided in
Section 4(a), above, but shall not be held accountable or liable for any losses,
damages or expenses of the Fund, the Portfolio or any Shareholder or former
Shareholder may incur arising from or based upon errors or delays in the
determination of such net
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asset value unless such error or delay was due to Chancellor LGT's negligence or
willful misfeasance in the computation and determination of such net asset
value. The parties hereto acknowledge, however, that Chancellor LGT causing an
error or delay in the determination of net asset value may, but does not in an
of itself, constitute negligence or willful misfeasance. In no event shall
Chancellor LGT be liable or responsible to the Fund or the Portfolio or any
other party for any error or delay which continued or was undetected after the
date of an audit of the Fund or the Portfolio performed by the certified public
accountants employed by the Fund or the Portfolio if, in the exercise of
reasonable care in accordance with generally accepted accounting principles,
such accountants should have become aware of such error or delay in the course
of performing such audit. Chancellor LGT's liability for any such negligence or
willful misfeasance which results in an error in determination of such net asset
value be limited to the direct out-of-pocket loss the Fund, the Portfolio and/or
any Shareholder or former Shareholder shall actually incur.
Without limiting the generality of the foregoing, Chancellor
LGT shall not be held accountable or liable to the Fund, the Portfolio, a
Shareholder or former Shareholder or any other person for any delays or losses,
damages or expenses any of them may suffer or incur resulting from (1)
Chancellor LGT's failure to receive timely and suitable notification concerning
quotations, corporate actions or similar matters relating to or affecting
portfolio securities of the Fund or the Portfolio or (2) any errors in the
computation of a net asset value based upon or arising out of quotations or
information as to corporate actions if received by Chancellor LGT from a source
that Chancellor LGT was authorized to rely upon. Nevertheless, Chancellor LGT
will use its best judgment in determining whether to verify through other
sources any information that it has received as to quotations or corporate
actions if Chancellor LGT has reason to believe that any such information is
incorrect.
SECTION 10. RECEIPT OF ADVICE. If Chancellor LGT is in doubt
as to any action to be taken or omitted by it, Chancellor LGT may request, and
shall be entitled to rely upon, directions and advice from the Fund or the
Portfolio, including Oral or Written Instructions where appropriate, or from
counsel of its own choosing (who may also be counsel for the Fund or the
Portfolio), with respect to any question of law. In case of conflict between
directions, advice or Oral and Written Instructions received by Chancellor LGT
pursuant to this Section, Chancellor LGT shall be entitled to rely on and follow
the advice received from counsel as described above. Chancellor LGT shall be
protected in any action or in action that it takes in reliance on any
directions, advice or Oral or Written Instructions received pursuant to this
Section that Chancellor LGT, after the receipt of the same, in good faith
believes to be consistent with
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such directions, advice or Oral or Written Instructions, as the case may be.
Notwithstanding the foregoing, nothing in this Section shall be construed as
imposing on Chancellor LGT any obligation to seek such directions, advice or
Oral or Written Instruction, or to act in accordance with them when received,
unless the same is a condition to Chancellor LGT's properly taking or omitting
to take such action under the terms of this Agreement.
SECTION 11. INDEMNIFICATION OF CHANCELLOR LGT. The
---------------------------------------------------------------
Fund and the Portfolio agree, separately and not jointly, to indemnify and hold
harmless Chancellor LGT and its officers, directors, employees, nominees and
subcontractors, if any, from all taxes, charges, expenses, assessments, claims
and liabilities, including, without limitation, liabilities arising under the
1940 Act, the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, the Commodities Exchange Act and any state or foreign
securities or blue sky laws, and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, arising directly or indirectly
from any action or thing that Chancellor LGT takes or omits to take or do:
(a) at the request or on the direction of or in
reliance upon the advice of the Fund or the Portfolio;
(b) upon Oral or Written Instructions; or
(c) in the performance by Chancellor LGT of its
responsibilities under this Agreement;
provided that, Chancellor LGT shall not be indemnified against any liability to
the Fund or the Portfolio, or any expenses incident thereto, arising out of
Chancellor LGT's own willful misfeasance, bad faith or negligence or reckless
disregard of its duties in connection with the performance of its duties and
obligations specifically described in this Agreement.
SECTION 12. INDEMNIFICATION OF THE FUND AND THE PORTFOLIO.
Chancellor LGT agrees to indemnify and hold harmless each of the Fund and the
Portfolio and their officers, trustees, directors and employees, from all taxes,
charges, expenses, assessments, claims and liabilities, including, without
limitation, liabilities arising under the 1940 Act, the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, the Commodities
Exchange Act and any state or foreign securities or blue sky laws, and expenses,
including, without limitation, reasonable attorneys' fees and disbursements,
arising directly or indirectly from any action or omission of Chancellor LGT
that does not meet the standard of care to which Chancellor LGT is subject under
Section 9, above.
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SECTION 13. LIMITATION OF LIABILITY OF SHAREHOLDERS AND
TRUSTEES OF THE FUND AND THE PORTFOLIO. It is expressly agreed that the
obligations of the Fund and the Portfolio hereunder shall not be binding upon
any of the shareholders, trustees, directors, officers, nominees, agents or
employees of the Fund or the Portfolio personally, but shall only bind the
assets and property of the Fund or the Portfolio, respectively, as provided in
the Governing Documents. The execution and delivery of this Agreement has been
authorized by the Boards of the Fund and the Portfolio, and this Agreement has
been executed and delivered by an authorized officer of each of the Fund and the
Portfolio acting as such, and neither such authorization by the Boards nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Fund or the Portfolio as provided
in the Governing Documents.
SECTION 14. DURATION AND TERMINATION. This Agreement shall
continue with respect to the Fund and the Portfolio until termination with
respect to the Fund or the Portfolio is effected by the Fund, the Portfolio, or
Chancellor LGT upon sixty days' prior written notice to the other. In the event
of the "assignment" of this Agreement within the meaning of the 1940 Act, this
Agreement shall terminate automatically.
SECTION 15. NOTICES. All notices and other communications
hereunder, including Written Instructions, shall be in writing or by confirming
telegram, cable, telex or facsimile sending device. Notices with respect to a
party shall be directed to such address as may from time to time be designated
by that party to the other.
SECTION 16. FURTHER ACTIONS. The Fund, the Portfolio and
Chancellor LGT agree to perform such further acts and to execute such further
documents as may be necessary or appropriate to effect the purposes of this
Agreement.
SECTION 17. AMENDMENTS. This Agreement, or any part thereof,
may be amended only by an instrument in writing signed by the Fund, the
Portfolio and Chancellor LGT.
SECTION 18. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together constitute one and the same instrument.
SECTION 19. MISCELLANEOUS. This Agreement embodies the entire
agreement and understanding between the Fund, the Portfolio and Chancellor LGT
and supersedes all prior agreements and understandings relating to the subject
matter hereof, provided that the Fund, the Portfolio and Chancellor LGT may
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embody in one or more separate documents their agreement or agreements with
respect to such matters that this Agreement provides may be later agreed to by
and among the Fund, the Portfolio and Chancellor LGT from time to time. The
captions in this Agreement 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. This Agreement shall be governed by and construed in
accordance with California law. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the Fund, the Portfolio and Chancellor
LGT and their respective successors.
IN WITNESS WHEREOF, the Fund, the Portfolio and Chancellor LGT
have caused this Agreement to be executed by their officers designated below as
of this day, month and year first above written.
GT GLOBAL FLOATING RATE FUND, INC.
By: ____________________________
Attest: ____________________________
FLOATING RATE PORTFOLIO
By: ____________________________
Attest: ____________________________
CHANCELLOR LGT ASSET MANAGEMENT, INC.
By: ____________________________
Attest: ____________________________
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SCHEDULE A
FUND ACCOUNTING AND PRICING AGENT FEES
Annual Fee payable based on aggregate net assets of the GT Global Group
of Funds:
First $5 billion in net assets .02% (2 basis points) of the
of the GT Global Group of Fund's average daily net assets
Funds: .01% (1 basis point) of the
Portfolio's average daily net
assets
In excess of $5 billion in net .01% (1 basis point) of the
assets of the GT Global Group Fund's average daily net assets
of Funds: .01% (1 basis point) of the
Portfolio's average daily net
assets
TRANSFER AGENCY CONTRACT BETWEEN
FLOATING RATE PORTFOLIO
AND
GT GLOBAL INVESTOR SERVICES, INC.
This Transfer Agency Contract ("Contract") is made as of
_______________, 1997 between Floating Rate Portfolio (the "Portfolio"), a
Delaware business trust, and GT Global Investor Services, Inc. ("GT"), a
California corporation.
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 may from time-to-time in the future establish
one or more additional separate and distinct series of shares of beneficial
interest of the Portfolio; and
WHEREAS, the Portfolio desires to retain GT to act as transfer agent
and dividend disbursing agent to the Portfolio, and GT is willing to act in such
capacities;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
I. APPOINTMENT
The Portfolio hereby appoints GT to act as transfer agent and dividend
disbursing agent of the Portfolio for the period and on the terms set forth in
this Contract. GT accepts such appointment and agrees to render the services
herein set forth for the compensation herein provided.
II. DEFINITIONS
As used in this Contract, the following terms shall have the definition
ascribed to them in this Paragraph.
(A) "Agent" means a broker, dealer or other agent authorized to act on
behalf of a Shareholder in transactions involving Shares.
(B) "Agent Firm" means an investment, stock brokerage or other business
firm employing an Agent.
(C) "Authorized Person" means any officer of the Portfolio and any
other person, whether or not any such person is an officer or employee of the
Portfolio, duly authorized by the Board of Trustees, the President or any Vice
President of the Portfolio to give Oral and Written Instructions on behalf of
the Portfolio. The Portfolio will provide to GT and keep current a written list
of all Authorized Persons.
(D) "Custodian" means the custodian or custodians employed by the
Portfolio to maintain custody of the Portfolio's assets.
<PAGE>
(E) "Distributor" means the principal underwriter of the Shares of the
Portfolio.
(F) "Governing Trust Documents" means the Instrument of Trust,
Certificate of Trust and other applicable Governing Trust documents of the
Portfolio all as may be amended from time to-time.
(G) "Oral Instructions" means oral instructions actually received by GT
from an Authorized Person or from a person reasonably believed by GT to be an
Authorized Person.
(H) "Registration Statement" means the current N-2 of the Portfolio.
(I) "Shares" means shares of beneficial interest of the Portfolio.
(J) "Shareholder" means the owner of Shares.
(K) "Written Instructions" means written instructions delivered by
hand, mail, tested telegram or telex, cable, or facsimile sending device,
received by GT and signed by an Authorized Person.
III. AUTHORIZED AND REGISTERED SHARES
(A) As of the date if this Contract, the Portfolio represents that
there is no limitation on the number of Shares that are authorized for issuance
under the Portfolio's Instrument of Trust. The Portfolio agrees to keep GT
apprised, to the extent necessary for GT to adequately perform its duties
hereunder, of the number of shares of the Portfolio authorized for issuance.
IV. COMPLIANCE BY GT WITH GOVERNING TRUST DOCUMENTS, REGISTRATION
STATEMENT AND APPLICABLE LAW AND REGULATION
All of GT's actions in fulfilling its responsibilities under this
Contract shall be made in accordance with the Registration Statement, the
Governing Trust Documents, the rules and regulations of the Securities and
Exchange Commission and the laws and regulations of the State of Delaware
relating to the issuance and transfer of securities such as the Shares.
V. RECORDS
(A) GT shall maintain records of the accounts for each Shareholder
which include the following information with respect to the Portfolio:
(1) name, address and United States Taxpayer Identification
Number;
(2) number of Shares held and number of Shares for which
certificates, if any, have been issued, including certificate numbers and
denominations;
(3) historical information regarding the account of each
Shareholder, including dividends and distributions paid and the date and price
of all transactions in a Shareholder's account;
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(4) any stop or restraining order placed against a
Shareholder's account;
(5) any correspondence relating to the current maintenance of
shareholder's account;
(6) information with respect to all tax withholdings;
(7) any information required to enable GT to perform any
calculations contemplated or required by this Agreement or that may reasonably
be requested by the Portfolio.
(B) The books and records pertaining to the Portfolio which are in the
possession of GT shall be the property of the Portfolio. Such books and records
shall be prepared and maintained as required by the 1940 Act and other
applicable laws, rules and regulations. The Portfolio or its authorized
representatives shall have access to such books and records at all times during
GT's normal business hours. Upon the reasonable request of the Portfolio, copies
of any such books and records shall be provided by GT to the Portfolio or its
authorized representatives, at the Portfolio's expense.
VI. TRANSACTIONS NOT REQUIRING INSTRUCTIONS
In the absence of contrary Written Instructions, GT is authorized to
take the following actions in providing services under this Contract, all in
accordance with the provisions of the Registration Statement:
(A) SHARE TRANSACTIONS -- UNCERTIFICATED SHARES
(1) ISSUANCE OF SHARES. Upon receipt by GT of a purchase order
for Shares from the Distributor or directly from an investor or an investor's
Agent, upon the further receipt by GT of sufficient information necessary to
enable GT to establish an account, and after confirmation of receipt of payment
for such Shares, GT shall create an account and issue and credit Shares to such
account.
(2) TRANSFERS OF SHARES. When the Distributor, a Shareholder
or a Shareholder's Agent provides GT with instructions to transfer Shares on the
books of the Portfolio, and GT further receives such documentation as is
necessary to process the transfer, GT shall transfer the registration of such
Shares and if necessary deliver them pursuant to such instructions.
(3) TENDER OFFERS. Upon receipt of acceptance of a tender
offer from the Distributor, a Shareholder or a Shareholder's Agent, GT shall
repurchase the number of Shares indicated thereon from the tendering
Shareholder's account and disburse to the tendering Shareholder or the
Shareholder's Agent, if so instructed, the proceeds of the repurchase.
(B) SHARE TRANSACTIONS - CERTIFICATED SHARES
(1) The Portfolio shall supply GT with a sufficient supply of
certificates representing Shares, in the form approved from time to time by the
Board of Trustees or officers of the Portfolio, and, from time-to-time, shall
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replenish such supply upon the request of GT Certificates shall be property
executed, manually or by facsimile signature, by the duly authorized officers of
the Portfolio. Notwithstanding the death, resignation or removal of any officer
of the Portfolio, such executed certificates bearing the manual or facsimile
signature of such officer shall remain valid and may be issued to Shareholders
until GT is otherwise directed.
(2) In the case of the loss or destruction of any certificate
representing Shares, no new certificate shall be issued in lieu thereof, unless
there shall first have been furnished an appropriate bond of indemnity issued by
a surety company approved by GT.
(3) Upon receipt of written instructions from a Shareholder or
a Shareholder's Agent of uncertificated Shares for a certificate in the number
of shares in the Shareholder's account, GT shall issue the requested certificate
and deliver it to the Shareholder in accordance with the Shareholder's
instructions.
(4) GT shall process all orders for the purchase, transfer,
redemption and exchange of certificated Shares in the same fashion as it
processes such orders for uncertificated Shares, as specified in subparagraph
VI(A) of this Contract, provided that, as specified in the Registration
Statement, GT receives properly executed and completed certificates and stock
power transfers or similar documents necessary to effectuate the contemplated
transaction.
(5) Upon receipt of certificates, which shall be in proper
form for transfer, together with Shareholder's instructions to hold such
certificates for safekeeping, GT shall reduce such Shares to uncertificated
status, while retaining the appropriate registration in the name of the
Shareholder upon the transfer books.
(C) SPECIAL INVESTMENT AND WITHDRAWAL PLANS. GT shall process
transactions of Shareholders participating in any special investment and/or
withdrawal plans or programs established by the Portfolio or the Distributor
with respect to Shares, such as automatic investment plans, systematic
withdrawal plans and dollar cost averaging investing programs, in accordance
with the terms of such plans or programs as provided to GT the Portfolio or the
Distributor.
VII. RELIANCE BY GT ON INSTRUCTIONS
Unless otherwise provided in this Contract, GT shall act only upon Oral
or Written Instructions (collectively, "Instructions"). GT shall be entitled to
rely upon any Instructions actually received by it under this Contract. The
Portfolio agrees that GT shall incur no liability to the Portfolio in acting
upon Instructions given to GT hereunder, provided that such Instructions
reasonably appear to have been received from an Authorized Person.
VIII. DIVIDENDS AND DISTRIBUTION
(A) The Portfolio shall furnish GT with appropriate evidence of action
by the Portfolio's board of trustees declaring dividends and distributions and
authorizing their payment as described in the Registration Statement. After
deducting any amount required to be withheld by any applicable tax laws, rules
and regulations or other applicable laws, rules and regulations, in accordance
with the instructions in proper form from a Shareholder and the provisions of
the Governing Trust Documents and Registration Statement, GT shall issue and
credit the account of the Shareholder with Shares or pay such dividends for
distributions to the Shareholder in cash, upon the election of the Shareholder
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as provided for in the Registration Statement. In lieu of receiving from the
Custodian and paying to Shareholders cash dividends or distributions, GT may
arrange for the direct payment of cash dividends and distributions to
Shareholders by the Custodian, in accordance with such procedures and controls
as are mutually agreed upon from time to time by and among the Portfolio, GT and
the Custodian.
(B) GT shall prepare and file with the Internal Revenue Service and
other appropriate taxing authorities, and address and mail to Shareholders, such
returns and information relating to dividends and distributions paid by the
Portfolio as are required to be so prepared, filed and mailed by applicable
laws, rules and regulations, or such substitute form of notice as may from time
to time be permitted or required by the Internal Revenue Service. On behalf of
the Portfolio, GT shall mail certain requests for Shareholders' certifications
under penalties of perjury of taxpayer identification numbers and/or other
information and pay on a timely basis to the appropriate Federal authorities any
taxes withheld on dividends and distributions paid by the Portfolio, all as
required by applicable Federal tax laws and regulations.
IX. COMMUNICATIONS WITH SHAREHOLDERS
(A) COMMUNICATIONS TO SHAREHOLDERS. GT will address and mail all
communications by the Portfolio to the shareholders of the Portfolio, including
reports to Shareholders, confirmations of purchases and sales of Shares,
periodic account statements, dividend and distribution notices and proxy
materials for meetings of shareholders. GT will receive and tabulate the proxy
cards for meetings of Shareholders, and if requested by the Portfolio, attend
meetings of Shareholders for purposes of reporting on and certifying such
tabulations.
(B) CORRESPONDENCE. GT will answer such correspondence from
Shareholders, Agents and others relating to its duties hereunder and such other
correspondence as may from time to time be mutually agreed upon by GT and the
Portfolio.
X. OTHER ONGOING SERVICES
As requested by the Portfolio, GT shall also provide the following
services on an ongoing basis:
(A) Furnish to the Portfolio or its designated agent such
state-by-state registration reports reasonably necessary to enable the Portfolio
to keep current the registration of its shares with state securities
authorities.
(B) Provide toll free phone lines for direct Shareholder use, plus
customer liaison staff with on-line inquiry capacity.
(C) File with the Internal Revenue Service such information on behalf
of each Shareholder as is required by law.
(D) Provide the Portfolio with Shareholder lists and such statistical
information as the Portfolio reasonably may request.
(E) Provide the Custodian with such information as the Portfolio or the
Custodian reasonably may request.
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(F) Mail duplicate confirmations and/or statements to Agents with
respect to their clients' accounts and transactions in Shares, whether such
transactions were executed through such Agents or directly through GT.
(G) Provide detail for confirmations and/or statements to be provided
to Shareholders by Agent Firms, and provide such other Shareholder accounting
information to Agent Firms as may be agreed upon between the Portfolio and GT.
(H) Provide to the custodian timely notification of Share transactions
and such other information as may be agreed upon from time to time by the
Portfolio, GT and the Custodian.
XI. COOPERATION WITH ACCOUNTANTS
GT shall cooperate with the Portfolio's independent public accountants
and shall take all reasonable action in the performance of its obligations under
this Contract to assure that all necessary information is made available to such
accountants for the timely expression of their opinion with respect to the
financial statements of the Portfolio.
XII. CONFIDENTIALITY
GT agrees on behalf of itself and its employees to treat confidentially
all records and other information relative to the Portfolio and their prior,
present or potential Shareholders, except, after prior notification to and
approval in writing by the Portfolio, which approval shall not be unreasonably
withheld and may not be withheld when GT may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested do divulge such
information by duly constituted authorities, or when so requested by the
Portfolio.
XIII. COMPENSATION
As compensation for the services rendered by GT during the term of this
Contract, the Portfolio will pay to GT monthly fees that shall be agreed to from
time to time by the Portfolio and GT. In addition, as may be agreed to from time
to time by the Portfolio and GT, the Portfolio shall reimburse GT for certain
expenses incurred by GT in rendering services with respect to that Fund under
this Contract.
XIV. STANDARD OF CARE
(A) In the performance of its duties hereunder, GT shall be obligated
to exercise care and diligence and to act in good faith and to use its best
efforts within reasonable limits to ensure the accuracy and completeness of all
services provided under this Contract.
(B) GT shall be under no duty to take any action on behalf of the
Portfolio except as specifically set forth herein or as may be specifically
agreed to by GT in writing.
(C) GT shall be responsible and liable for all losses, damages and
costs (including reasonable attorneys fees) incurred by the Portfolio which is
due to or caused by GT's negligence in the performance of its duties under this
contract or for GT's negligent failure to perform such duties as are
specifically ascribed to GT in this Contract; provided that, to the extent that
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duties, obligations and responsibilities are not expressly set forth in this
Contract, GT shall not be liable for any act or omission which does not
constitute willful misfeasance, bad faith or gross negligence on the part of GT,
or reckless disregard by GT of such duties, obligations and responsibilities.
(D) Without limiting the generality of the foregoing subparagraphs of
this Paragraph XIV or of any other provision of this Contract, in connection
with GT's duties under this Contract, GT shall not be under any duty or
obligation to inquire into and shall not be liable for or in respect of:
(1) the validity or invalidity or authority or lack thereof of
any Oral or Written Instruction, notice or other instrument which conforms to
the applicable requirements of this Contract, if any, and which GT reasonably
believes to be genuine; or
(2) delays or errors or loss of data occurring by reason of
circumstances beyond GT's control, including acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical breakdown,
earthquake, flood or catastrophe, acts of God, insurrection, war, riots or
failure of the mails, transportation, communication or power supply.
XV. RECEIPT OF ADVICE
(A) ADVICE OF INVESTMENT FUNDS. If GT is in doubt as to any action to
be taken or omitted by it, GT may request and shall receive from the Portfolio
directions or advice including Oral or Written Instructions where appropriate.
(B) ADVICE OF COUNSEL. If GT is in doubt as to any question of law
involved in any action to be taken or omitted by it, GT may request advice from
counsel of its own choosing (who may also be counsel for the Portfolio, the
Distributor and/or the investment adviser of the Portfolio).
(C) CONFLICTING ADVICE. In case of conflict between directions, advice
or Oral or Written Instructions received by GT pursuant to subparagraph (A) of
this Paragraph and advice received by GT pursuant to subparagraph (b) of this
Paragraph, GT shall be entitled to rely on and follow the advice received
Pursuant to subparagraph (8) alone.
(D) PROTECTION OF GT.
(1) GT shall be protected in any action or inaction which it
takes in reliance on any directions, advice or Oral or Written Instructions
received pursuant to subparagraphs (A) or (B) of this Paragraph which GT, after
receipt of any such directions, advice or Oral or Written Instructions, in good
faith believes to be consistent with such directions, advice or Oral or Written
Instructions, as the case may be.
(2) Notwithstanding the foregoing, nothing in this Paragraph
shall be construed as imposing upon GT any obligation (a) to seek such
directions, advice or Oral or Written Instructions, or (b) to act in accordance
with such directions advice or Oral or Written Instructions when received,
unless, under the terms of another provision of this Contract, the same is a
condition to GT's properly taking or omitting to take such actions.
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<PAGE>
XVI. INDEMNIFICATION OF GT
The Portfolio agrees to indemnify and hold harmless GT and its nominees
and sub contractors, if any, from all taxes, charges, expenses, assessments,
claims and liabilities (including, without limitation, liabilities arising under
the 1933 Act, the 1940 Act, the Securities Exchange Act of 1934, the Commodities
Exchange Act, and any state and foreign securities and blue sky laws, all as or
to be amended from time to time) and expenses, including (without limitation)
reasonable attorneys' fees and disbursements, arising directly or indirectly
from any action or thing which GT takes or does or omits to take or do:
(A) at the request or on the direction of or in reliance upon the
advice of the Portfolio;
(B) upon Oral or Written Instructions; or
(C) in the performance by GT of its responsibilities under this
Contract;
PROVIDED that GT shall not be indemnified against any liability to the Portfolio
or the Shareholders (or any expenses incident to such liability) arising out of
GT's own willful misfeasance, bad faith or negligence or reckless disregard of
its duties in connection with the performance of its duties and obligations
specifically described in this Contract.
XVII. INDEMNIFICATION OF THE PORTFOLIO
GT agrees to indemnify and hold harmless the Portfolio from all taxes,
charges, expenses, assessments, claims and liabilities (including, without
limitation, liabilities arising under the 1933 Act, the 1940 Act, the Securities
Exchange Act of 1934, the Commodities Exchange Act, and any state and foreign
securities and blue sky laws, all as or to be amended from time to time) and
expenses, including (without limitation) reasonable attorneys' fees and
disbursements, arising directly or indirectly from any action or omission of GT
that does not meet the standard of care to which GT is subject under Paragraph
XIV of this Contract.
XVIII. DURATION AND TERMINATION
This Contract shall continue with respect to the Portfolio until
termination with respect to that Fund by the Portfolio or GT on sixty (60) days'
prior written notice.
XIX. REGISTRATION AS A TRANSFER AGENT
GT represents that it is currently registered as a transfer agent with
the Securities and Exchange Commission, and that it will remain so registered
for the duration of this Contract. GT agrees that it will promptly notify the
Portfolio in the event of any material change in its status as a registered
transfer agent. Should GT fail to be registered with the Securities and Exchange
Commission as a transfer agent at any time during the term of this Contract, the
Portfolio may immediately terminate this Contract, upon written notice to GT.
XX. NOTICES
All notices and other communications hereunder, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notices with respect to a party shall be directed to
such address as may from time to time be designated by that party to the other.
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<PAGE>
XXI. FURTHER ACTIONS
Each party agrees to perform such further acts and execute such further
documents as are necessary to effect the purposes of this Contract.
XXII. AMENDMENTS
This Contract or any part hereof may be amended only by an instrument
in writing signed by both parties hereto.
XXIII. COUNTERPARTS
This Contract may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
XXIV. MISCELLANEOUS
This Contract embodies the entire agreement and understanding between
the parties hereto, and supersedes all prior agreements and understandings
relating to the subject matter hereof, provided that the parties may embody in
one or more separate documents their agreement or agreements with respect to
such matters that this Contract provides may be later agreed to by and between
the parties from time to time. 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. This
Contract shall be governed by and construed in accordance with California law.
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 and shall inure to the
benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their officers designated below on the day and year first written
above.
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<PAGE>
FLOATING RATE PORTFOLIO.
- ------------------- ----------------------------
Attest: /S/ By: /S/ David R. Thelander
GT GLOBAL INVESTOR SERVICES, INC.
- ------------------- ---------------------------
Attest: By: /S/ James R. Tufts
President
-10-
Coopers Coopers & Lybrand L.L.P.
&Lybrand a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
Floating Rate Portfolio:
We consent to the inclusion in the Registration Statement on Form N-2 of our
report dated March 21, 1997 on our audit of the statement of assets and
liabilities of Floating Rate Portfolio. We also consent to the reference to our
firm under the caption "Independent Accountants."
/s/ Coopers & Lybrand L.L.P.
--------------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 21, 1997
