File No. 811-08957
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
Amendment No. 1 [X]
Stein Roe Floating Rate Limited Liability Company
(Exact Name of Registrant as Specified in Charter)
One South Wacker Drive
Chicago, IL 60606
(Address of Principal Executive Offices)
(800) 338-0593
(Registrant's Telephone Number, Including Area Code)
Heidi J. Walter Cameron S. Avery
Vice-President and Secretary Bell, Boyd & Lloyd
Stein Roe Floating Rate Limited Three First National Plaza
Liability Company 70 W. Madison Street, Suite 3300
One South Wacker Drive Chicago, Illinois 60602
Chicago, Illinois 60606
(Name and Address of Agents for Service)
<PAGE>
EXPLANATORY NOTE
Throughout this Registration Statement, information concerning
Stein Roe Floating Rate Limited Liability Company (the
"Portfolio") is incorporated by reference from the Registration
Statement on Form N-2 of Stein Roe Floating Rate Income Fund (File
No. 333-61751 under the Securities Act of 1933 (the "1933 Act"))
(the "Filing"), which was filed electronically with the Securities
and Exchange Commission on November 16, 1998 (Accession No.
0000773757-98-000042). The Filing contains the prospectus and
statement of additional information (the "SAI") for Stein Roe
Floating Rate Income Fund (the "Feeder Fund"), which invests
substantially all of its assets in the Portfolio.
This Registration Statement has been filed by the Registrant
pursuant to Section 8(b) of the Investment Company Act of 1940
(the "1940 Act"). However, interests in the Portfolio are not
being filed under the 1933 Act because 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 1933 Act. Investments in the Portfolio may be made only by
investment companies, insurance company separate accounts, common
or commingled trust funds, 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 "security" of the Portfolio within the meaning of the
1933 Act.
<PAGE> A-1
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.
ITEM 3. FEE TABLE AND SYNOPSIS
Not applicable.
ITEM 8. GENERAL DESCRIPTION OF THE REGISTRANT
(1) The Portfolio is a closed-end, non-diversified management
investment company which was organized as a limited liability
company under the laws of the State of Delaware on August 14,
1998. 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 1933 Act. Investments
in the Portfolio may be made only by investment companies,
insurance company separate accounts, common or commingled trust
funds, 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 "security" of the
Portfolio within the meaning of the 1933 Act.
(2)-(4) Registrant incorporates by reference information
concerning the Portfolio's investment objective and investment
practices and risk factors associated with investments in the
Portfolio in the section entitled "Investment Objectives and
Policies," "How the Portfolio Invests," "Special Risk
Considerations" and "Other Investment Practices" in the Feeder
Fund prospectus.
(5) Investments in the Portfolio may not be transferred.
However, the Portfolio will, pursuant to Rule 23c-3 under the 1940
Act, make offers to repurchase at net asset value a portion of its
interests. See "Periodic Tender Offers" in the Feeder Fund
prospectus and "Investment Restrictions" and "Tender Offer
Fundamental Policy" in the Feeder Fund SAI. Subject to the
Portfolio's investment restriction with respect to borrowings, the
Portfolio may borrow money or issue debt obligations to finance
its repurchase obligations. See "Investment Restrictions" in the
Feeder Fund SAI.
(6) Not applicable.
ITEM 9. MANAGEMENT
1(a) Board of Managers. The Board of Managers of the Portfolio
has overall management responsibility for the Portfolio.
Registrant incorporates by reference information concerning the
Portfolio's management from "Management of the Fund" and
"Organization and Description of Shares" in the Feeder Fund
prospectus.
1(b) - (c) Registrant incorporates by reference information
concerning the Portfolio's management from "Management of the
Fund" and "Organization and Description of Shares" in the Feeder
Fund prospectus.
<PAGE> A-2
1(d) Transfer Agent. SteinRoe Services Inc. ("SSI"), P.O. Box
1722, Boston, MA 02105, a wholly owned subsidiary of Liberty
Financial Companies, Inc., acts as agent of the Portfolio for the
transfer of shares, disbursement of dividends and maintenance of
shareholder accounting records. Under a separate agreement, SSI
also provides certain investors accounting services to the
Portfolio.
1(e) Custodian. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02101, is the custodian of
the Portfolio and has custody of the securities and cash of the
Portfolio. The custodian, among other things, attends to the
collection of principal and income and payment for and collection
of proceeds of securities bought and sold by the Portfolio.
1(f) Expenses. The Portfolio is responsible for all of its
expenses not expressly stated to be payable by the other party
under the Portfolio Management Agreement, Administrative Agreement
and Accounting and Bookkeeping Agreement and Investor Services
Agreement.
1(g) Not applicable.
(2) Not applicable.
(3) Control Persons. The Registrant does not consider that it is
directly or indirectly controlling, controlled by or under common
control with other persons within the meaning of this Item. As of
the date hereof, there are no shares of the Portfolio outstanding.
ITEM 10. CAPITAL STOCK, LONG-TERM DEBT AND OTHER SECURITIES
1(a)-(f) Registrant incorporates by reference information
concerning interests in the Portfolio from "Organization and
Description of Shares" and "Master/Feeder Funds: Structure and
Risk Factors" in the Feeder Fund prospectus. An interest in the
Portfolio has no preemptive or conversion rights and is fully paid
and non-assessable, except as set forth below. The Portfolio is
not required to hold annual meetings of investors, and has no
current intention to do so, but the Portfolio will hold special
meetings of investors when, in the judgment of the Board, it is
necessary or desirable to submit matters for an investor vote.
Changes in fundamental policies will be submitted to investors for
approval. An investors' meeting will be held upon the written,
specific request to the Board of investors holding in the
aggregate not less than 10% of the units in the Portfolio.
Investors have under certain circumstances (e.g., upon application
and submission of certain specified documents to the Board by a
specified number of shareholders) the right to communicate with
other investors in connection with requesting a meeting of
investors for the purpose of removing one or more Board members.
Investors also have the right to remove one or more Board members
without a meeting by a declaration in writing by a specified
number of investors. Upon liquidation of the Portfolio, investors
would be entitled to share pro rata in the net assets available
for distribution to investors (unless another sharing method is
required for federal income tax reasons, in accordance with the
sharing method adopted by the Board).
<PAGE> A-3
The Portfolio is organized as a limited liability company under
the laws of the State of Delaware. Under the Agreement, the
Portfolio is authorized to issue units. Each investor is entitled
to vote in proportion to the amount of its investment in the
Portfolio. Investments in the Portfolio may not be transferred.
However, the Portfolio will, pursuant to Rule 23c-3 under the 1940
Act, make offers to repurchase at net asset value a portion of its
interests. See "Periodic Tender Offers" in the Feeder Fund
prospectus and "Investment Restrictions" and "Tender Offer
Fundamental Policy" in the Feeder Fund SAI. Subject to the
Portfolio's investment restriction with respect to borrowings, the
Portfolio may borrow money or issue debt obligations to finance
its repurchase obligations. See "Investment Restrictions" in the
Feeder Fund SAI.
The net income of the Portfolio shall consist of (i) all income
accrued less the amortization of any premium on the assets of the
Portfolio, less (ii) all actual and any accrued expenses of the
Portfolio determined in accordance with generally accepted
accounting principles. Income includes discount earned (including
both original issue, and by election, market discount) on discount
paper accrued ratably to the date of maturity and any net realized
gains or losses on the assets of the Portfolio. All of the net
income of the Portfolio is allocated among the investors in
accordance with their interests (unless another sharing method is
required for federal income tax reasons, in accordance with the
sharing method adopted by the Board).
(2) - (3) Not applicable.
(4) It is intended that the assets, income and distributions of
the Portfolio will be managed in such a way that an investor in
the Portfolio will be able to satisfy the requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code") for qualification as a regulated investment company
("RIC"), assuming the investor invested all of its assets in the
Portfolio.
Under the anticipated method of the operation of the Portfolio,
the Portfolio will not be subject to any federal income tax.
However, each investor in the Portfolio will be taxed on its share
(as determined in accordance with the governing instruments of the
Portfolio) of the ordinary income and capital gain in determining
its income tax liability. The determination of such share will be
made in accordance with an allocation method designed to satisfy
the Internal Revenue Code of 1986, as amended (the "Code"), and
the regulations promulgated thereunder. Distributions of net
income and capital gain are to be made pro rata to investors in
accordance with their investment in the Portfolio. For federal
income tax purposes, however, income, gain, or loss may be
allocated in a manner other than pro rata, if necessary to reflect
gains or losses properly allocable to fewer than all investors as
a result of contributions of securities or redemptions of portions
of an investor's unrealized gain or loss in assets.
(5) Not applicable.
(6) Not applicable.
<PAGE> A-4
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.
<PAGE> B-1
PART B
ITEM 14. COVER PAGE
Not applicable.
ITEM 15. TABLE OF CONTENTS
General Information and History..............................B-1
Investment Objective and Policies............................B-1
Management...................................................B-1
Control Persons and Principal Holders of Securities..........B-1
Investment Advisory and Other Services ......................B-2
Brokerage Allocation and Other Practices.....................B-2
Tax Status...................................................B-2
Financial Statements.........................................B-4
ITEM 16. GENERAL INFORMATION AND HISTORY
Not applicable.
ITEM 17. INVESTMENT OBJECTIVE AND POLICIES
Part A, Item 8 contains additional information about the
investment objective and policies of the Portfolio. This Part B
should be read in conjunction with Part A. Capitalized terms in
this Part B and not otherwise defined have the meanings given to
them in Part A.
(1)-(3) Registrant incorporates by reference additional
information concerning the investment policies of the Portfolio as
well as information concerning the investment restrictions of the
Portfolio from "Investment Policies," "Portfolio Investments and
Strategies" and "Investment Restrictions" in the Feeder Fund SAI.
(4) Not applicable.
ITEM 18. MANAGEMENT
The Portfolio is organized as a Delaware limited liability
company; therefore, it is required to have a board of managers
rather than a board of trustees. The managers of the Portfolio
are the same persons as the trustees of the Feeder Fund.
Registrant incorporates by reference additional information
concerning the management of the Portfolio from "Management" in
the Feeder Fund SAI.
ITEM 19. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of the date hereof, the only persons known to own of record or
"beneficially" 5% or more of the outstanding interests of the
Portfolio within the definition of that term as contained in Rule
13d-3 under the Securities Exchange Act of 1934 were Stein Roe
Floating Rate Income Fund and Stein Roe Institutional Floating
Rate Income Fund, which each held 50% of the outstanding
interests. The address of Stein Roe Floating Rate Income Fund and
Stein Roe Institutional Floating Rate Income Fund is One South
Wacker Drive, Chicago, Illinois 60606.
<PAGE> B-2
ITEM 20. INVESTMENT ADVISORY AND OTHER SERVICES
Registrant incorporates by reference information concerning
investment advisory and other services provided to the Portfolio
and the Feeder Fund from "Investment Advisory Services,"
"Distributor," "Transfer Agent," "Custodian" and "Independent
Auditors" in the Feeder Fund SAI.
ITEM 21. BROKERAGE ALLOCATION AND OTHER PRACTICES
Registrant incorporates by reference information concerning the
brokerage practices of the Portfolio from "Portfolio Transactions"
in the Feeder Fund SAI.
ITEM 22. TAX STATUS
The Portfolio is organized as a limited liability company under
the laws of the State of Delaware. Under the anticipated method
of the operation of the Portfolio, the Portfolio will not be
subject to any federal income tax nor is it expected to have any
Delaware income tax liability. However, each investor in the
Portfolio will be taxed on its share (as determined in accordance
with the governing instruments of the Portfolio) of the ordinary
income and capital gain in determining its income tax liability.
The determination of such share will be made in accordance with an
allocation method designed to satisfy the Code, and the
regulations promulgated thereunder.
The Portfolio's taxable year end is June 30. Although, as
described above, the Portfolio will not be subject to federal
income tax, it will file appropriate income tax returns.
It is intended that the Portfolio's assets, income and
distributions will be managed in such a way that an investor in
the Portfolio will be able to satisfy the requirements of
Subchapter M of the Code for qualification as a RIC, assuming that
the investor invests all of its assets in the Portfolio.
In order for an investment company investing in the Portfolio to
qualify for federal income tax treatment as a regulated investment
company, at least 90% of its gross income for a taxable year must
be derived from qualifying income; i.e., dividends, interest,
income derived from loans of securities, gains from the sale of
stock or securities or foreign currencies, or other income
(including but not limited to gains from options, futures, or
forward contracts) derived with respect to its business of
investing in stock, securities, or currencies. Any investment
company investing in the Portfolio also will be required to
distribute each year at least 90% of its investment company
taxable income (in order to escape federal income tax on
distributed amounts) and to meet certain tax diversification
requirements. Because an investment company investing in the
Portfolio may invest all of its assets in the Portfolio, the
Portfolio must satisfy all of these tax requirements in order for
such other investment companies to satisfy them.
The Portfolio will allocate at least annually to its shareholders
its distributive share of any net investment income and net
capital gains which have been recognized for federal income tax
<PAGE> B-3
purposes (including unrealized gains at the end of the Portfolio's
taxable year on certain options and futures transactions that are
required to be marked-to-market).
The Portfolio intends to distribute substantially all of its
income including any net realized capital gains, and thereby be
relieved of any federal income tax liability to the extent of such
distributions. Because capital gain distributions reduce net
asset value, if a shareholder purchases shares shortly before a
record date he will, in effect, receive a return of a portion of
his investment in such distribution. The distribution would
nonetheless be taxable to him, even if the net asset value of
shares were reduced below his cost. However, for federal income
tax purposes, the shareholder's original cost would continue as
his tax basis.
Interest on indebtedness incurred or continued by shareholders to
purchase or carry shares of the Portfolio is not deductible for
federal income tax purposes. Under rules applied by the Internal
Revenue Service to determine whether borrowed funds are used for
the purpose of purchasing or carrying particular assets, the
purchase of shares may, depending upon the circumstances, be
considered to have been made with borrowed funds even though the
borrowed funds are not directly traceable to the purchase of
shares.
The Portfolio expects that less than 100% of dividends will
qualify for the deduction for dividends received by corporate
shareholders.
To the extent the Portfolio invests in foreign securities, it may
be subject to withholding and other taxes imposed by foreign
countries. Tax treaties between certain countries and the United
States may reduce or eliminate such taxes. Investors may be
entitled to claim U.S. foreign tax credits with respect to such
taxes, subject to certain provisions and limitations contained in
the Code. Specifically, if more than 50% of the Portfolio's total
assets at the close of any fiscal year consist of stock or
securities of foreign corporations, the Portfolio may file an
election with the Internal Revenue Service pursuant to which
shareholders of a Portfolio will be required to (1) include in
ordinary gross income (in addition to taxable dividends actually
received) their pro rata shares of foreign income taxes paid by
the Portfolio even though not actually received, (2) treat such
respective pro rata shares as foreign income taxes paid by them,
and (3) deduct such pro rata shares in computing their taxable
incomes, or, alternatively, use them as foreign tax credits,
subject to applicable limitations, against their United States
income taxes. Shareholders who do not itemize deductions for
federal income tax purposes will not, however, be able to deduct
their pro rata portion of foreign taxes paid by the Portfolio,
although such shareholders will be required to include their share
of such taxes in gross income. Shareholders who claim a foreign
tax credit may be required to treat a portion of dividends
received from the Portfolio as separate category income for
purposes of computing the limitations on the foreign tax credit
available to such shareholders. Tax-exempt shareholders will not
ordinarily benefit from this election relating to foreign taxes.
Each year, the Portfolio will notify shareholders of the amount of
(1) each shareholder's pro rata share of foreign income taxes paid
by the Portfolio and (2) the portion of dividends which represents
income from each foreign country, if the Portfolio qualifies to
pass along such credit.
<PAGE> B-4
The foregoing discussion does not address the special tax rules
applicable to certain classes of investors, such as tax-exempt
entities, insurance companies and financial institutions.
Investors should consult their own tax advisors with respect to
special tax rules that may apply in their particular situations as
well as the state, local, or foreign tax consequences of investing
in the Portfolio.
ITEM 23. FINANCIAL STATEMENTS
Please refer to the audit financial statements in the Feeder Fund
SAI.
<PAGE> C-1
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(1) Financial Statements. The financial statements called for by
this item are incorporated by reference in Part B and listed in
Item 23 hereof.
(2) Exhibits:
(a)(1) Certificate of Formation of Registrant.
(2) Limited Liability Company Agreement of Registrant.
(b) By-Laws of Registrant.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) Portfolio Management Agreement between the Registrant and
Stein Roe & Farnham Incorporated dated Nov. 20, 1998.
(h) Not applicable.
(i) Not applicable.
(j) Form of Custodian Agreement between Registrant and State
Street Bank and Trust Company
(k) (1) Investor Service Agreement between Registrant and
SteinRoe Services Inc. dated Nov. 20, 1998.
(2) Bookkeeping and Accounting Agreement between
Registrant and Stein Roe & Farnham Incorporated dated
Nov. 20, 1998.
(l) Not applicable
(m) Not applicable
(n) Not applicable
(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 WITH
REGISTRANT.
Registrant does not consider that it is directly or indirectly
controlled by or under common control with other persons within
the meaning of this item.
<PAGE> C-2
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
Title of Class Number of Record Holders
---------------------- -----------------------
Stein Roe Floating Rate
Limited Liability Company 2
ITEM 29. INDEMNIFICATION
Reference is made to Article XIV of the Registrant's Limited
Liability Company Agreement (Exhibit (a)(2)) with respect to
indemnification of the managers and officers of Registrant against
liabilities which may be incurred by them in such capacities.
Registrant, its managers and officers, its investment adviser, the
other investment companies advised by the adviser, and persons
affiliated with them are insured against certain expenses in
connection with the defense of actions, suits, or proceedings and
certain liabilities that might be imposed as a result of such
actions, suits or proceedings. Registrant will not pay any
portion of the premiums for coverage under such insurance that
would (1) protect any manager or officer against any liability to
Registrant or its shareholders to which he 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 office or (2) protect its investment adviser or
principal underwriter, if any, against any liability to Registrant
or its shareholders to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, or gross
negligence, in the performance of its duties, or by reason of its
reckless disregard of its duties and obligations under its
contract or agreement with the Registrant; for this purpose the
Registrant will rely on an allocation of premiums determined by
the insurance company.
Registrant expects that each of Stein Roe Floating Rate Income
Fund and Stein Roe Institutional Floating Rate Income Fund will
invest substantially all of its assets in the Portfolio. In that
connection, managers and officers of Registrant have signed the
registration statement of each of those entities on behalf of the
Portfolio insofar as those registration statements relate to the
Portfolio, and those entities have agreed to indemnify Registrant
and its managers and officers against certain liabilities which
may be incurred by them.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
The Adviser is a wholly owned subsidiary of SteinRoe Services Inc.
("SSI"), which in turn is a wholly owned subsidiary of Liberty
Financial Companies, Inc., which is a majority owned subsidiary of
Liberty Corporation Holdings, Inc., which in turn is a subsidiary
of LFC Holdings, Inc., which in turn is a subsidiary of Liberty
Mutual Equity Corporation, which in turn is a subsidiary of
Liberty Mutual Insurance Company. The Adviser acts as investment
adviser to individuals, trustees, pension and profit-sharing
plans, charitable organizations, and other investors. In addition
to Registrant, it also acts as investment adviser to other
investment companies having different investment policies.
<PAGE> C-3
For a two-year business history of officers and directors of the
Adviser, please refer to the Form ADV of Stein Roe & Farnham
Incorporated and to the section of the Statement of Additional
Information (Part B) entitled "Investment Advisory and Other
Services."
Certain directors and officers of the Adviser also serve and have
during the past two years served in various capacities as
officers, directors, or trustees of SSI and of the Registrant and
other investment companies managed by the Adviser. (The listed
entities are located at One South Wacker Drive, Chicago, Illinois
60606, except for SteinRoe Variable Investment Trust and Liberty
Variable Investment Trust, which are located at Federal Reserve
Plaza, Boston, MA 02210 and LFC Utilities Trust, which is located
at One Financial Center, Boston, MA 02111.) A list of such
capacities is given below.
POSITION FORMERLY
HELD WITHIN
CURRENT POSITION PAST TWO YEARS
------------------- --------------
STEINROE SERVICES INC.
Gary A. Anetsberger Vice President
Kenneth J. Kozanda Vice President; Treasurer
Kenneth R. Leibler Director
C. Allen Merritt, Jr. Director; Vice President
Heidi J. Walter Vice President; Secretary
Hans P. Ziegler Director; President; Chairman
SR&F BASE TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Sr. Vice-President Treasurer
Thomas W. Butch President Executive V-P;
Trustee
Kevin M. Carome Vice-President; Asst. Secy.
Loren A. Hansen Executive Vice-President
Heidi J. Walter Vice-President; Secretary
Hans P. Ziegler Executive Vice-President
STEIN ROE INCOME TRUST; STEIN ROE INSTITUTIONAL TRUST; AND
STEIN ROE TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Sr. Vice-President Treasurer
Thomas W. Butch President Exec. V-P;
V-P; Trustee
Kevin M. Carome Vice-President; Asst. Secy.
Loren A. Hansen Executive Vice-President
Michael T. Kennedy Vice-President
Stephen F. Lockman Vice-President
Steven P. Luetger Vice-President
Lynn C. Maddox Vice-President
Jane M. Naeseth Vice-President
Heidi J. Walter Vice-President; Secretary
Hans P. Ziegler Executive Vice-President
STEIN ROE INVESTMENT TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Sr. Vice-President Treasurer
David P. Brady Vice-President
<PAGE> C-4
Thomas W. Butch President Exec. V-P;
V-P; Trustee
Daniel K. Cantor Vice-President
Kevin M. Carome Vice-President; Asst. Secy.
E. Bruce Dunn Vice-President
Erik P. Gustafson Vice-President
Loren A. Hansen Executive Vice-President
James P. Haynie Vice-President
Harvey B. Hirschhorn Vice-President
Eric S. Maddix Vice-President
Lynn C. Maddox Vice-President
Arthur J. McQueen Vice-President
Gita R. Rao Vice-President
Michael E. Rega Vice-President
M. Gerard Sandel Vice-President
Gloria J. Santella Vice-President
Heidi J. Walter Vice-President; Secretary
Hans P. Ziegler Executive Vice-President
STEIN ROE ADVISOR TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Sr. Vice-President Treasurer
David P. Brady Vice-President
Thomas W. Butch President Exec. V-P;
V-P; Trustee
Daniel K. Cantor Vice-President
Kevin M. Carome Vice-President; Asst. Secy.
E. Bruce Dunn Vice-President
Erik P. Gustafson Vice-President
Loren A. Hansen Executive Vice-President
James P. Haynie Vice-President
Harvey B. Hirschhorn Vice-President
Michael T. Kennedy Vice-President
Stephen F. Lockman Vice-President
Eric S. Maddix Vice-President
Lynn C. Maddox Vice-President
Arthur J. McQueen Vice-President
Maureen G. Newman Vice-President
Gita R. Rao Vice-President
Michael E. Rega Vice-President
M. Gerard Sandel Vice-President
Gloria J. Santella Vice-President
Heidi J. Walter Vice-President; Secretary
Hans P. Ziegler Executive Vice-President
STEIN ROE MUNICIPAL TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Sr. Vice-President Treasurer
Thomas W. Butch President Exec. V-P;
V-P; Trustee
Kevin M. Carome Vice-President; Asst. Secy.
Joanne T. Costopoulos Vice-President
Loren A. Hansen Executive Vice-President
Brian M. Hartford Vice-President
William C. Loring Vice-President
Lynn C. Maddox Vice-President
Maureen G. Newman Vice-President
<PAGE> C-5
Veronica M. Wallace Vice-President
Heidi J. Walter Vice-President; Secretary
Hans P. Ziegler Executive Vice-President
STEINROE VARIABLE INVESTMENT TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior Vice-President Treasurer
Thomas W. Butch President
Kevin M. Carome Vice-President; Asst. Secretary
E. Bruce Dunn Vice President
William M. Garrison Vice President
Erik P. Gustafson Vice President
Loren A. Hansen Executive Vice-President
Harvey B. Hirschhorn Vice President
Michael T. Kennedy Vice President
Jane M. Naeseth Vice President
Steven M. Salopek Vice President
William M. Wadden IV Vice President
Heidi J. Walter Vice President
Hans P. Ziegler Executive Vice-President
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior Vice-President
Thomas W. Butch President; Manager
Kevin M. Carome Vice-President; Asst. Secretary
Loren A. Hansen Executive Vice-President
Heidi J. Walter Vice-President; Secretary
Hans P. Ziegler Executive V-P
STEIN ROE FLOATING RATE INCOME TRUST; STEIN ROE INSTITUTIONAL
FLOATING RATE INCOME TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior Vice-President
Thomas W. Butch President; Trustee
Kevin M. Carome Vice-President; Asst. Secretary
Brian W. Good Vice-President
James R. Fellows Vice-President
Loren A. Hansen Executive Vice-President
Heidi J. Walter Vice-President; Secretary
Hans P. Ziegler Executive V-P
LFC UTILITIES TRUST
Gary A. Anetsberger Vice President
Ophelia L. Barsketis Vice President
Deborah A. Jansen Vice President
LIBERTY VARIABLE INVESTMENT TRUST
Ophelia L. Barsketis Vice President
Deborah A. Jansen Vice President
Kevin M. Carome Vice President
<PAGE> C-6
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
Heidi J. Walter, Secretary
Stein Roe Floating Rate Limited Liability Company
One South Wacker Drive
Chicago, Illinois 60606
ITEM 32. MANAGEMENT SERVICES
Not applicable
ITEM 33. UNDERTAKINGS
Not applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of
1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago and State of Illinois on the
4th day of December, 1998
STEIN ROE FLOATING RATE LIMITED
LIABILITY COMPANY
By: THOMAS W. BUTCH
Thomas W. Butch
President and Manager
<PAGE>
INDEX OF EXHIBITS FILED WITH THIS REGISTRATION STATEMENT
Exhibit
Number Exhibit
(a) (1) Certificate of Formation.
(2) Limited Liability Company Agreement
(b) By-Laws
(g) Portfolio Management Agreement
(j) Form of Custodian Agreement
(k) (1) Investor Service Agreement
(2) Bookkeeping and Accounting Agreement
State of Delaware
Office of the Secretary of State
----------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF LIMITED LIABILITY COMPANY OF "STEIN
ROE FLOATING RATE LIMITED LIABILITY COMPANY", FILED IN THIS
OFFICE ON THE FOURTEENTH DAY OF AUGUST, A. D., 1998, AT 1
O'CLOCK P.M.
[SEAL OF THE STATE OF DELAWARE]
EDWARD J. FREEL
Edward J. Freel, Secretary of State
2933614 8100 AUTHENTICATION: 9254154
981319826 DATE: 08-14-98
<PAGE>
CERTIFICATE OF FORMATION
OF
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY
This Certificate of Formation of SteinRoe Floating Rate
Limited Liability Company (the "Fund"), dated as of August 14,
1998, is being duly executed and filed by Kathleen M. Moynihan,
an authorized person, to form a limited liability company under
the Delaware Limited Liability Company Act (6 Del.C. Section 18-
101, et. seq.) (the "Delaware Act").
FIRST. The name of the limited liability company formed
hereby is Stein Roe Floating Rate Limited Liability Company.
SECOND. The address of the registered office of the Fund
in the State of Delaware is The Corporation Trust Company, 1209
Orange Street, Wilmington, Delaware 19801, County of New Castle.
THIRD. The name and address of the registered agent for
service of process on the Fund in the State of Delaware is The
Corporation Trust Company, 1209 Orange Street, Wilmington,
Delaware 19801, County of New Castle.
FOURTH. The Fund shall consist of Shares, which shall be
divided into one or more separate and distinct Series
established by a resolution of the Managers, as such terms is
defined in Section 18-101(10) of the Delaware Act. The Managers
shall have full power and authority, in their sole discretion
and without obtaining Shareholder approval, to establish and to
change in any manner Shares of any Series with such preferences,
terms of conversion, voting powers, rights and privileges as the
Managers may determine (but the Managers may not change
outstanding Shares in a manner materially adverse to the
Shareholders of such Series); to divide or combine the Shares of
any Series into a greater or lesser number; to classify or
reclassify any unissued Shares or any Series into one or more
Series of Shares; to abolish any one or more Series of Shares;
to issue Shares to acquire other assets (including assets
subject to, and in connection with, the assumption of
liabilities) and businesses; and to take such other action with
respect to the Shares or Series of Shares as the Managers may
deem desirable.
FIFTH. All consideration received by the Fund for the
issue and sale of Shares of a particular Series, together with
all assets in which such consideration is invested or
reinvested, 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), shall be held and accounted for separately from the
assets of every other Series and are referred to as "assets
belonging to" that Series. The assets belonging to a Series
shall belong only to that Series for all purposes, and no other
Series, subject only to the rights of creditors of that Series.
Any assets, income, earnings, profits, and proceeds thereof,
funds or payments which are not readily identifiable as
belonging to any particular Series shall be allocated by the
Managers among one or more Series as the Managers deem fair and
equitable. Each such allocation shall be conclusive and biding
upon the Shareholders of all Series for all purposes. 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 general liabilities,
expenses, costs, charges or reserves of the Fund which are not
readily identifiable as belonging to any particular Series shall
be allocated by the Managers among any one or more Series as the
Managers deem fair and equitable. Each such allocation shall be
conclusive and binding upon the Shareholders of all Series for
all purposes.
Without limiting the foregoing, but subject to the right of
the Managers to allocate general Fund liabilities, expenses,
costs, charges or 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 against the assets of such Series only, and not
against the assets of any other Series. Pursuant to Section 18-
215 of the Delaware Act, notice is hereby given that any person
extending credit to, contracting with, or having any claim
against any Series may look only to the assets of that Series to
satisfy or enforce any debt with respect to that Series. No
Shareholder or former Shareholder of any Series shall have a
claim on or any right to any assets allocated or belonging to
any other Series.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Formation as of the date first above written.
KATHLEEN M. MOYNIHAN
Kathleen M. Moynihan
Authorized Person
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY
EFFECTIVE AS OF NOVEMBER 3, 1998
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I GENERAL PROVISIONS................................1
Section 1.1 Business Purpose..................................1
Section 1.2 Operation.........................................1
Section 1.3 Definitions.......................................1
Section 1.4 Name..............................................3
Section 1.5 Registered Offices; Registered Agents.............3
Section 1.6 Principal Place of Business.......................3
Section 1.7 Investment Objective..............................3
Section 1.8 Plurals and Gender................................3
Section 1.9 Headings..........................................4
ARTICLE II TERM OF THE FUND..................................4
ARTICLE III SHARES............................................4
ARTICLE IV INVESTMENT IN THE FUND............................5
Section 4.1 Purchase of Shares................................5
Section 4.2 No Preemptive Rights..............................5
Section 4.3 Nonassessability of Shares........................5
Section 4.4 Net Asset Value of the Fund; Net Asset Value
Per Share.........................................5
Section 4.5 Valuation.........................................6
ARTICLE V CAPITAL ACCOUNTS, TAX ACCOUNTS AND ALLOCATIONS....6
ARTICLE VI ADVISORY SERVICES AND DISTRIBUTION................6
Section 6.1 Investment Advisory and Distribution Agreements...6
Section 6.2 Payment of Expenses by the Fund...................7
ARTICLE VII THE MANAGERS......................................7
Section 7.1 Election of Managers..............................7
Section 7.2 Resignation of Manager............................7
Section 7.3 Removal of Manager................................7
Section 7.4 Effect of Death, Resignation, Etc. of a Manager...7
ARTICLE VIII RIGHTS, DUTIES AND OBLIGATIONS OF THE MANAGERS....8
Section 8.2 Management of Fund Business.......................8
Section 8.3 Independent Activities of the Managers............9
Section 8.4 Prospective Investors............................10
Section 8.5 Federal and State Income Taxes...................10
Section 8.6 Restrictions on Transfers and Repurchases........10
ARTICLE IX COMPENSATION AND LIMITATION OF LIABILITY OF
MANAGERS.........................................10
Section 9.1 Compensation.....................................10
Section 9.2 Limitation of Liability..........................10
ARTICLE X RIGHTS AND OBLIGATIONS OF THE SHAREHOLDERS.......11
Section 10.1 Limited Liability................................11
Section 10.2 Repurchase of Shares.............................11
Section 10.3 Repurchase Offer Procedures......................11
Section 10.4 Repurchase Amounts...............................12
Section 10.5 Liquidity Requirements...........................12
ARTICLE XI VOTING POWERS AND MEETINGS.......................12
Section 11.1 Voting Powers....................................12
Section 11.2 Meetings of Shareholders.........................13
Section 11.3 Quorum and Required Vote.........................13
Section 11.4 Action by Written Consent........................13
ARTICLE XII CUSTODY OF ASSETS; DEPOSITORIES..................14
ARTICLE XIII DISTRIBUTIONS....................................14
ARTICLE XIV INDEMNIFICATION..................................14
Section 14.1 Managers, Officers, etc..........................14
Section 14.2 Compromise Payment...............................15
Section 14.3 Indemnification Not Exclusive....................15
ARTICLE XV MISCELLANEOUS....................................16
Section 15.1 Governing Law....................................16
Section 15.2 Entire Agreement.................................16
Section 15.3 Amendments.......................................16
Section 15.4 Managers, Shareholders, etc. Not Personally
Liable; Notice...................................16
Section 15.5 Manager's Good Faith Action, Expert Advice,
No Bond or Surety................................16
Section 15.6 Merger, Consolidation and Sale of Assets.........17
Section 15.7 Conversion.......................................17
Section 15.8 Severability.....................................17
Section 15.9 Benefit..........................................17
Section 15.10 Tax Matters Member...............................18
<PAGE>
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY
This Amended and Restated Limited Liability Company Agreement
of Stein Roe Floating Rate Limited Liability Company (the "Fund")
is entered into as of November 3, 1998, by and among the Board of
Managers of the Fund (the "Managers"), and each Feeder Fund
(defined below) who shall execute a counterpart of this Limited
Liability Company Agreement as a member.
ARTICLE I
GENERAL PROVISIONS
Section 1.1 Business Purpose. The purpose of the Fund is to
provide investors a managed investment primarily in securities,
debt instruments and other instruments and rights of a financial
character.
Section 1.2 Operation. The Feeder Funds agree to the
operation of the Fund in accordance with the terms of this
Agreement. The Feeder Funds further agree that the Fund shall be
operated as a limited liability company pursuant to the provisions
of the Act (defined below), and, except as herein otherwise
expressly provided, the rights and liabilities of the Feeder Funds
shall be as provided in the Act.
Section 1.3 Definitions. For purposes of this Agreement:
(a) "Act" means the Delaware Limited Liability
Company Act, 6 Del. C. Sec. 18-101, et seq., as amended from time to
time.
(b) "Agreement" means this Limited Liability Company
Agreement, as amended, modified, supplemented or restated from
time to time.
(c) "Bankruptcy" has the meaning given it in Section
18-101 of the Act.
(d) "Board" means the Board of Managers of the Fund.
(e) "By-laws" means the Amended and Restated By-laws
of the Fund adopted by the Board as of November 3, 1998, as
amended from time to time.
(f) "Capital Account Establishment and Maintenance
Policies of the Fund" means the policies set forth on Exhibit A
hereto and incorporated herein by reference.
(g) "Certificate" means the Certificate of Formation
of the Fund filed with the Delaware Secretary of State on August
14, 1998, pursuant to which the Fund was formed, and any
amendments to such certificate or restatements of such
certificate.
(h) "Code" means the Internal Revenue Code of 1986
(or any successor law), as amended.
(i) "Continuing Manager" means any Manager (i) who is
not a "person" or an "affiliated person" of a "person" (as such
term is defined in Section 1.3(y) of this Agreement) who enters or
proposes to enter into any transaction with the Fund described
herein (an "interested party") and (ii) who has been a Manager for
a period of at least twelve months (or since the commencement of
the Fund's operations if that period is less than twelve months),
or is a successor to a Continuing Manager who is not an interested
party and is recommended to succeed a Continuing Manager by a
majority of the then Continuing Managers.
(j) "Custodian" means State Street Bank and Trust
Company, or such other person appointed as the Fund's custodian by
the Managers.
(k) "Disinterested Manager" means a Manager who is
not an interested person (as such term is defined in Section
1.3(y) of this Agreement of the Fund or the Investment Adviser.
(l) "Feeder Funds" means Stein Roe Floating Rate
Income Fund, Stein Roe Institutional Floating Rate Income Fund and
any other feeder fund that may be established in the future, and
is admitted as a Feeder Fund in accordance with Section 4.1 of
this Agreement. Each Feeder Fund shall be a "member" as that term
is defined in the Act.
(m) "Fund" means the limited liability company formed
by the filing of the Certificate and operated under the Act
pursuant to this Agreement.
(n) "Investment Adviser" means Stein Roe & Farnham
Incorporated, a Delaware corporation, or any other person or
entity selected as the Fund's investment adviser by the Managers.
(o) "Manager" refers to a Manager of the Fund named
herein or any other person elected as Manager pursuant to Section
7.1 of this Agreement.
(p) "Net Asset Value of the Fund" has the meaning set
forth in Section 4.4 of this Agreement.
(q) "Net Asset Value per Share" has the meaning set
forth in Section 4.4 of this Agreement.
(r) "Prospectus" means the prospectus of the Stein
Roe Floating Rate Income Fund filed with the Securities and
Exchange Commission as Part A of the Fund's Registration Statement
on Form N-2, as it may be amended from time to time (Investment
Company Act File No. 811-08953) and the prospectus of the Stein
Roe Institutional Floating Rate Income Fund filed with the
Securities and Exchange Commission as Part A of the Fund's
Registration Statement on Form N-2, as it may be amended from time
to time (Investment Company Act File No. 811-08955)
(s) "Repurchase Date" means the Repurchase Pricing
Date immediately following the expiration of the three to six week
period after the Fund notifies Feeder Funds in writing of a Tender
Offer.
(t) "Regulations" means regulations promulgated under
the Code, as such Regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
(u) "Share" means a "limited liability company
interest" in the Fund as that latter term is used in the Act,
together with all of the rights, preferences, powers and
privileges as may be provided under this Agreement.
(v) "Share Percentage" of a Feeder Fund as of a
Valuation Date means the product expressed as a percentage of (i)
100 multiplied by (ii) the fraction (x) the nominator of which is
the number of such Feeder Fund's Shares and (y) the denominator of
which is the number of outstanding Shares of the Fund, in each
case as of the Valuation Date. The sum of the Share Percentages
of all Feeder Funds shall be 100%.
(w) "Tender Offer" means an offer by the Fund to
Feeder Funds to repurchase between 5% and 25% of its outstanding
Shares on at least a quarterly basis at Net Asset Value in
accordance with Section 11.2 of this Agreement.
(x) The "1940 Act" refers to the Investment Company
Act of 1940 and the rules and regulations thereunder, all as
amended from time to time.
(y) The terms "affiliated person," "assignment,"
"closed-end company," "commission," "interested person," "majority
of the outstanding shares," "open-end company," "person" and
"principal underwriter" shall have the meanings given them in the
1940 Act.
(z) "Valuation Date" means the last business day of
each quarter or such other date as may be designated by the
Manager.
Section 1.4 Name. The name of the Fund shall be Stein Roe
Floating Rate Limited Liability Company and all transactions of
the Fund shall be carried on and completed in such name.
Section 1.5 Registered Offices; Registered Agents. The
Fund's registered agent and office in Delaware shall be The
Corporation Trust Company, 1209 Orange Street, Wilmington,
Delaware 19801. At any time, the Managers may designate another
registered agent and/or registered office.
Section 1.6 Principal Place of Business. The principal
place of business of the Fund shall be One South Wacker Drive,
Chicago, Illinois 60606, or at such other place or places as the
Managers may from time to time designate.
Section 1.7 Investment Objective. The Fund's investment
objective is to provide a high level of current income, consistent
with the preservation of capital. The Fund shall have the power
to engage in all activities that are necessary, suitable,
desirable, convenient or incidental to the accomplishment of the
foregoing business purpose and investment objective. The Fund
shall do so under the direction of the Managers.
Section 1.8 Plurals and Gender. Where appearing in this
Agreement the singular shall include the plural and the masculine
shall include the feminine, and vice versa, unless the context
clearly indicates a different meaning.
Section 1.9 Headings. The headings and subheadings in this
Agreement are inserted for convenience of reference only and are
to be ignored in any construction of the provisions hereof.
ARTICLE II
TERM OF THE FUND
Unless dissolved as provided herein, the Fund shall continue
without limitation of time. Subject to the voting powers of the
Feeder Funds, the Fund may be dissolved at any time (a) by the
vote of Feeder Funds holding at least three-fourths of the
outstanding Shares of the Fund entitled to vote (except if such
dissolution is recommended by at least three-fourths of the total
number of Managers then in office and by at least three-fourths of
the total number of Continuing Managers then in office, the vote
of a majority of the outstanding Shares of the Fund shall be
sufficient authorization); or (b) by the Managers by written
notice to the Feeder Funds, provided that at least three-fourths
of the total number of Managers then in office and at least three-
fourths of the total number of Continuing Managers then in office
have approved such action. Upon dissolution of the Fund, after
paying or otherwise providing for all charges, taxes, expenses and
liabilities, whether due or accrued or anticipated, of the Fund as
may be determined by the Managers and in accordance with the Act
and this Agreement, the Fund shall, in accordance with such
procedures as the Managers consider appropriate, reduce the
remaining assets of the Fund to distributable form in cash or
Shares or other property, or any combination thereof, and
distribute the proceeds to the Feeder Funds in accordance with The
Capital Account Establishment and Maintenance Policies of the
Fund. Upon dissolution of the Fund, following completion of the
winding up of its business, the Managers shall cause a certificate
of cancellation of the Certificate to be filed in accordance with
the Act, which certificate of cancellation may be executed and
filed by any one of the Managers.
ARTICLE III
SHARES
Limited liability company interests in the Fund shall be
represented by Shares, all without par value, and the holders
thereof shall be designated Feeder Funds. The Fund shall have
authority to issue an unlimited number of Shares (including
fractional Shares).
Each Share shall be identical in all respects with every
other Share and shall represent an undivided interest in the
assets of the Fund; provided, however, that a fractional Share
shall carry proportionately all the rights and obligations of a
non-fractional Share, including rights and obligations with
respect to receipt of distributions, repurchase of Shares and
liquidation of the Fund. The Fund may from time to time divide
the Shares into a greater number of Shares of lesser value or
decrease the number of Shares into a lesser number of Shares of
greater value, provided that the proportionate interest of each
Feeder Fund shall not thereby be changed.
The ownership of Shares shall be recorded on the books of the
Fund or a transfer or similar agent. No certificates evidencing
the ownership of Shares shall be issued except as the Managers may
otherwise determine from time to time. The Managers may make such
rules as they consider appropriate for the issuance of Share
certificates, the transfer of Shares and similar matters. The
record books of the Fund as kept by the Fund or any transfer or
similar agent, as the case may be, shall be conclusive as to who
are the Feeder Funds of the Fund and as to the number of Shares of
the Fund held from time to time by each Feeder Fund.
The Shares shall be divided into transferable Shares of the
Fund as may be established from time to time by the Managers. The
Managers shall have full power and authority, in their sole
discretion and without obtaining the approval of the Feeder Funds,
to establish and to change in any manner Shares with such
preferences, terms of conversion, voting powers, rights and
privileges as the Managers may determine (but the Managers may not
change outstanding Shares in a manner materially adverse to the
Feeder Funds); to divide or combine the Shares into a greater or
lesser number; to issue Shares to acquire other assets (including
assets subject to, and in connection with, the assumption of
liabilities) and businesses; and to take such other action with
respect to the Shares as the Managers may deem desirable.
ARTICLE IV
INVESTMENT IN THE FUND
Section 4.1 Purchase of Shares. The Managers shall accept
investments in the Fund from such persons and admit each such
person as a Feeder Fund on such terms and for such consideration
as they may from time to time authorize. At the Managers'
discretion, such investments, subject to applicable law, may be in
the form of cash or securities valued as the Managers or this
Agreement may from time to time authorize. Investments in the
Fund shall be credited to the account of each Feeder Fund in the
form of full Shares at the Net Asset Value per Share next
determined after the investment is received or accepted as
described in the Prospectus under the heading "Net Asset Value";
provided, however, that the Managers may, in their sole
discretion, (a) impose a sales charge upon investments in the
Fund, (b) issue fractional Shares, (c) determine the Net Asset
Value per Share of the initial capital contribution or (d)
authorize the issuance of Shares at a price other than Net Asset
Value to the extent permitted by the 1940 Act. The Managers shall
have the right to refuse to accept investments at any time without
any cause or reason therefor whatsoever.
Section 4.2 No Preemptive Rights. Feeder Funds shall have no
preemptive or other right to subscribe to any additional Shares or
other securities issued by the Fund.
Section 4.3 Nonassessability of Shares. Upon receipt of the
consideration to purchase Shares, all such Shares so purchased
shall be fully paid and nonassessable.
Section 4.4 Net Asset Value of the Fund; Net Asset Value Per
Share. The Net Asset Value of the Fund and the Net Asset Value
per Share shall be determined as of the close of regular session
trading on the New York Stock Exchange on each day for all or part
of which such Exchange is open for unrestricted trading.
The Net Asset Value of the Fund means total assets of the
Fund (including accrued interest) less total Fund liabilities
determined in accordance with generally accepted accounting
principles, consistently applied. The Net Asset Value per Share
of the Fund equals the Net Asset Value of the Fund divided by the
number of outstanding Shares of the Fund.
Section 4.5 Valuation. For purposes of this Agreement, the
value of any portfolio security for which market quotations are
not available will be determined in accordance with the portfolio
valuation procedures adopted by the Managers, as such procedures
may be amended from time to time.
ARTICLE V
CAPITAL ACCOUNTS, TAX ACCOUNTS AND ALLOCATIONS
The provisions for establishing capital and tax accounts and
determining the allocations and adjustments to those accounts for
income tax accounting purposes are set forth in The Capital
Account Establishment and Maintenance Policies of the Fund. Those
policies are attached hereto as Exhibit A and are incorporated
herein by reference.
ARTICLE VI
ADVISORY SERVICES AND DISTRIBUTION
Section 6.1 Investment Advisory and Distribution Agreements.
Subject to a favorable vote of a majority of the outstanding
Shares of the Fund affected thereby, the Managers may, at any time
and from time to time, contract for exclusive or nonexclusive
advisory and/or management services relating to the Fund with any
corporation, trust, association or other organization (the
"Service Provider"), every such contract to comply with such
requirements and restrictions as may be set forth in the
Agreement; and any such contract may contain such other terms
interpretive of or in addition to said requirements and
restrictions as the Managers may determine, including, without
limitation, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Fund shall be held
uninvested and to make changes in the Fund's investments. The
Managers may also, at any time and from time to time, contract
with Service Provider, appointing it exclusive or nonexclusive
distributor or principal underwriter for the Shares, every such
contract to comply with such requirements and restrictions as may
be set forth in the Agreement; and any such contract may contain
such other terms interpretive of or in addition to said
requirements and restrictions as the Managers may determine.
The fact that:
(i) any of the Feeder Funds, Managers or officers of the Fund
is a shareholder, director, officer, partner, trustee,
employee, manager, adviser, principal underwriter or
distributor or agent of or for any Service Provider with
which an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer,
shareholder servicing or other agency contract may have
been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a
shareholder or has an interest in the Fund, or that
(ii) any Service Provider with which an advisory or management
contract or principal underwriter's or distributor's
contract, or transfer, shareholder servicing or other
agency contract may have been or may hereafter be made
also has an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer,
shareholder servicing or other agency contract with one
or more other corporations, trusts, associations, or
other organizations, or has other business or interests
shall not affect the validity of any such contract or
disqualify any Feeder Fund, Manager or officer of the
Fund from voting upon or executing the same or create any
liability or accountability to the Fund or its Feeder
Funds.
Section 6.2 Payment of Expenses by the Fund. Subject to the
provisions of Section 3.3 of this Agreement, the Managers are
authorized to pay, or to cause to be paid out of the assets of the
Fund all expenses, fees, charges, taxes and liabilities incurred
or arising in connection with the Fund, or in connection with the
management thereof, including, but not limited to, the
compensation of the Managers and such expenses and charges for the
services of the Fund's officers, employees, investment adviser,
principal underwriter, auditor, counsel, custodian, transfer
agent, shareholder servicing agent, and such other agents or
independent contractors and such other expenses and charges as the
Managers may deem necessary or proper to incur.
ARTICLE VII
BOARD OF MANAGERS
Section 7.1 Election of Managers. A Manager may be elected
in the manner set forth in the By-laws. Each Manager elected by
the Managers or the Feeder Funds shall serve until he retires,
resigns, is removed or dies or until the next meeting of Feeder
Funds called for the purpose of electing Managers and until the
election and qualification of his successor. The initial Manager,
who shall serve until the first meeting of Feeder Funds at which
Managers are elected, and until his successor is elected and
qualified, or until he sooner dies, resigns or is removed, shall
be William H. Belden III.
Section 7.2 Resignation of Manager. A Manager may resign as
Manager upon written notice to the other Managers.
Section 7.3 Removal of Manager. At any meeting called for
the purpose, a Manager may be removed by vote of the holders of
two-thirds of the outstanding Shares.
Section 7.4 Effect of Death, Resignation, Etc. of a Manager.
The death, declination, resignation, retirement, removal or
incapacity of Manager, or any one of them, shall not operate to
annul the Fund or to revoke any existing agency created pursuant
to the terms of this Agreement.
ARTICLE VIII
RIGHTS, DUTIES AND OBLIGATIONS OF THE MANAGERS
Section 8.1 Management of Fund Business. Subject to the
provisions of this Agreement and the By-laws, the business of the
Fund shall be managed by the Managers, and they shall have all
powers necessary or convenient to carry out that responsibility.
The Managers may elect and remove such officers and appoint and
terminate such agents as they consider appropriate; they may
employ one or more custodians of the assets of the Fund and may
authorize such custodians to employ subcustodians and to deposit
all or any part of such assets in a system or systems for the
central handling of securities, retain a transfer agent or a
shareholder servicing agent, or both, provide for the distribution
of Shares by the Fund, through one or more principal underwriters
or otherwise, set record dates for the determination of
shareholders with respect to various matters, and in general
delegate such authority as they consider desirable to any officer
of the Fund, and to any agent or employee of the Fund or to any
such custodian or underwriter.
Without limiting the foregoing, the Managers shall have power
and authority:
(a) To invest and reinvest cash, and to hold cash
uninvested;
(b) To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the
assets of the Fund except as otherwise provided in the
Agreement
(c) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or
property; and to execute and deliver proxies or powers of
attorney to such person or persons as the Managers shall
deem proper, granting to such person or persons such
power and discretion with relation to securities or
property as the Managers shall deem proper;
(d) To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of
securities;
(e) To hold any security or property in a form not
indicating any trust, whether in bearer, unregistered or
other negotiable form, or in the name of the Managers or
of the Fund or in the name of a custodian, subcustodian
or other depositary or a nominee or nominees or
otherwise;
(f) To consent to or participate in any plan for the
reorganization, consolidation or merger of any
corporation or issuer, any security of which is or was
held in the Fund; to consent to any contract, lease,
mortgage, purchase or sale of property by such
corporation or issuer, and to pay calls or subscriptions
with respect to any security held in the Fund;
(g) To join other security holders in acting through a
committee, depositary, voting trustee or otherwise, and
in that connection to deposit any security with, or
transfer any security to, any such committee, depositary
or trustee, and to delegate to them such power and
authority with relation to any security (whether or not
so deposited or transferred) as the Managers shall deem
proper, and to agree to pay, and to pay, such portion of
the expenses and compensation of such committee,
depositary or trustee as the Managers shall deem proper;
(h) To compromise, arbitrate or otherwise adjust claims
in favor of or against the Fund or any matter in
controversy, including but not limited to claims for
taxes;
(i) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) To borrow funds;
(k) To endorse or guarantee the payment of any notes or
other obligations of any person; to make contracts of
guaranty or suretyship, or otherwise assume liability for
payment thereof; and to mortgage and pledge Fund property
or any part thereof to secure any or all of such
obligations;
(l) To purchase and pay for entirely out of Fund property
such insurance as they may deem necessary or appropriate
for the conduct of the business of the Fund, including,
without limitation, insurance policies insuring the
assets of the Fund and payment of distributions and
principal on its portfolio investments, and insurance
policies insuring the Feeder Funds, Managers, officers,
employees, agents, investment advisers or managers,
principal underwriters, or independent contractors of the
Fund individually against all claims and liabilities of
every nature arising by reason of holding, being or
having held any such office or position, or by reason of
any action alleged to have been taken or omitted by any
such person as Feeder Fund, Manager, officer, employee,
agent, investment adviser or manager, principal
underwriter, or independent contractor, including any
action taken or omitted that may be determined to
constitute negligence, whether or not the Fund would have
the power to indemnify such person against such
liability;
(m) To pay pensions for faithful service, as deemed
appropriate by the Managers, and to adopt, establish and
carry out pension, profit-sharing, share bonus, share
purchase, savings, thrift and other retirement, incentive
and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a
means of providing such retirement and other benefits,
for any or all of the Managers, officers, employees and
agents of the Fund; and
(n) To purchase or otherwise acquire Shares.
The Board may take such other actions on behalf of the Fund
as the Board deems necessary or desirable to manage the business
of the Fund.
Section 8.2 Independent Activities of the Managers. The
Managers shall not be required to manage the Fund as their sole
and exclusive function and may have other business interests and
may engage in other activities in addition to those relating to
the Fund. No Manager shall be required to devote his full time or
business attention to the affairs of the Fund. The Managers shall
devote such time and services to the business of the Fund as may
reasonably be required. Neither the Fund nor any Feeder Fund
shall, by virtue of this Agreement or the relationship created
hereby, have any right in or to such other business interests or
activities or to the income, proceeds or profits derived therefrom
and the pursuit of such other business interests or activities,
even if competitive with the business of the Fund, shall not be
deemed wrongful or improper.
Section 8.3 Prospective Investors. The Managers shall have
full and sole discretion, power and authority to admit or refuse
to admit persons to the Fund as Feeder Funds.
Section 8.4 Federal and State Income Taxes. The Board, at
the expense of the Fund, shall arrange for the preparation and
timely filing of all tax returns of the Fund showing all income,
gains, deductions, and losses necessary for federal and state
income tax purposes, and shall furnish to the Feeder Funds within
60 days of the close of the taxable year the tax information
reasonably required for federal and state income tax reporting
purposes. The Board, in its sole discretion, shall have the
authority to cause the Fund to make or revoke any elections
(except an election to be treated as a corporation) permitted
under the Code, Regulations, or any state or local tax law,
including without limitation the election referred to in Section
754 of the Code.
Section 8.5 Restrictions on Transfers and Repurchases.
Anything else contained herein to the contrary notwithstanding,
the Managers may impose restrictions and limitations on the
transfer or redemption of Shares to the extent permitted by law
which may be necessary to prevent the Fund from becoming a
"publicly traded partnership" as defined in Section 7704 of the
Code, or in order to comply with any other applicable law. To the
extent possible, such restrictions and limitations shall be
applied uniformly to all Feeder Funds.
ARTICLE IX
COMPENSATION AND LIMITATION OF
LIABILITY OF MANAGERS
Section 9.1 Compensation. The Managers, as such, shall be
entitled to reasonable compensation from the Fund; they may fix
the amount of their compensation. Nothing herein shall in any way
prevent the employment of any Manager for advisory, management,
legal, accounting, investment banking or other services and
payment for the same by the Fund.
Section 9.2 Limitation of Liability. No Manager shall be
responsible or liable in any event for any neglect or wrongdoing
of such Manager or of any officer, agent, employee, or principal
underwriter of the Fund, nor shall any Manager be responsible for
the act or omission of any other Manager, but nothing herein
contained shall protect any Manager against any liability 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.
Every note, bond, contract, instrument, certificate or
undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Fund or the Managers or any of them in
connection with the Fund shall be conclusively deemed to have been
executed or done only in or with respect to their or his or her
capacity as Manager, and such Manager shall not be personally
liable thereon.
ARTICLE X
RIGHTS AND OBLIGATIONS OF THE FEEDER FUNDS
Section 10.1 Limited Liability. Shares shall be deemed to
be personal property giving only the rights provided in this
Agreement. Every Feeder Fund by virtue of having become a Feeder
Fund shall be held to have expressly assented and agreed to the
terms of this Agreement and to have become a party hereto. No
Feeder Fund shall be personally liable for the debts, liabilities,
obligations and expenses incurred by, contracted for, or otherwise
existing with respect to, the Fund. The death, incapacity,
dissolution, termination or bankruptcy of a Feeder Fund during the
continuance of the Fund shall not operate to dissolve the same nor
entitle the representative of any deceased Feeder Fund to an
accounting or to take any action in court or elsewhere against the
Fund or the Managers, but only to the rights of said Feeder Fund
under this Agreement. Ownership of Shares shall not entitle the
Feeder Fund to any title in or to the whole or any part of the
Fund property or right to call for a partition or division of the
same or for an accounting, nor shall the ownership of Shares
constitute the Feeder Funds partners. Neither the Fund nor the
Managers, nor any officer, employee or agent of the Fund shall
have any power to bind personally any Feeder Fund, nor except as
specifically provided herein to call upon any Feeder Fund for the
payment of any sum of money or assessment whatsoever other than
such as the Feeder Fund may at any time personally agree to pay.
Every written obligation of the Fund may contain a statement to
the effect that such obligation may only be enforced against the
assets of the Fund; however, the omission of such statement shall
not operate to bind or create personal liability for any Feeder
Fund or Manager.
Section 10.2 Repurchase of Shares. In order to provide
liquidity to Feeder Funds, the Managers will permit Feeder Funds
to request, subject to provisions of this Agreement, that the Fund
repurchase between 5% and 25% of the outstanding Shares on at
least a quarterly basis at the Net Asset Value per share of the
Fund as defined in Section 4.4 of this Agreement (a "Tender
Offer").
Section 10.3 Repurchase Offer Procedures. The Tender Offer
will begin upon notification by the Fund to the Feeder Funds. At
the beginning of each Tender Offer, the Feeder Funds will be
notified of the deadline for providing their repurchase requests
to the Fund (the "Repurchase Request Deadline"), which is the date
the Tender Offer ends. The time between the notification of the
Feeder Funds and the Repurchase Request Deadline may vary from no
more than six weeks to no less than three weeks. For each Tender
Offer the Fund will establish the Repurchase Request Deadline
based on factors, such as market conditions, liquidity of the
Fund's assets and other considerations. The repurchase price of
the Shares will be the Net Asset Value per Share on the date
designated by the Managers as the repurchase pricing date (the
"Repurchase Pricing Date"). It is anticipated that normally the
Repurchase Pricing Date will be the same date as the Repurchase
Request Deadline, and if so, the Repurchase Request Deadline will
be set for a time no later than the close of the New York Stock
Exchange on such date provided that, at the discretion of the
Managers, the Repurchase Pricing Date may occur no later than the
fourteenth day after the Repurchase Request Deadline or the next
business day if the fourteenth day is not a business day. Within
such fourteen day period, the Fund may use an earlier Repurchase
Pricing Date as permitted by Rule 23c-3 under the 1940 Act, and
any successor provision.
The Managers may establish other policies for repurchases of
Shares that are consistent with the 1940 Act and other pertinent
laws. Shares tendered by the Feeder Funds by any Repurchase
Request Deadline will be repurchased subject to the aggregate
repurchase amounts established for that Repurchase Request
Deadline. Repurchase proceeds will be paid to the Feeder Funds,
in cash, within seven days after each Repurchase Pricing Date.
The end of the seven days is referred to as the "Repurchase
Payment Deadline."
Section 10.4 Repurchase Amounts. The Managers, in their
sole discretion, will determine the number of Shares that the Fund
will offer to repurchase (the "Tender Offer Amount") for a given
Repurchase Request Deadline. However, the Tender Offer Amount
will be at least 5% and no more than 25% of the total number of
Shares outstanding on the Repurchase Request Deadline. Prior to
the notification of the Repurchase Request Deadline, the Managers
will determine in their sole discretion the percentage at which
the Tender Offer Amount will be set.
If the Feeder Funds tender more than the Tender Offer Amount
for a given Tender Offer, the Fund may repurchase an additional
amount of Shares up to 2% of the Shares outstanding on the
Repurchase Request Deadline. If the Fund determines not to
repurchase more than the Tender Offer Amount, or if the Fund
determines to repurchase the additional 2% of the Shares
outstanding, but the Feeder Funds tender Shares in an amount
exceeding the Repurchase Offer Amount plus 2% of the Shares
outstanding on the Repurchase Request Deadline, the Fund will
repurchase the Shares on a pro rata basis. The Managers may, in
their sole discretion, suspend, postpone or delay a Tender Offer,
provided, however, that the Managers (i) may not suspend or
postpone a Tender Offer without the approval of a majority of the
Disinterested Managers; and (ii) may not delay a Tender Offer
except as expressly permitted by Rule 23c-3 under the 1940 Act,
and any successor provision.
Section 10.5 Liquidity Requirements. The Fund must maintain
liquid assets in an amount reasonably likely to be sufficient to
repurchase the Tender Offer Amount during the three to six week
period following notification to the Feeder Funds of the Tender
Offer. The Managers will ensure that a percentage of the Fund's
net assets equal to at least a percentage reasonably comparable to
the Tender Offer Amount consists of (a) assets that can be sold or
disposed of in the ordinary course of business at approximately
the price at which the Managers have valued such assets, between
the time a Feeder Fund submits a repurchase request and the
payment deadline (seven days following receipt by the Manager of
the repurchase request) or (b) assets that mature by the time the
repurchase amount must be paid. The Managers must adopt policies
to ensure that the Fund's assets are sufficiently liquid so that
the Fund is able to repurchase shares in the manner described
above, and in their sole discretion, may liquidate other assets as
may be necessary to satisfy the liquidity requirements discussed
above.
ARTICLE XI
VOTING POWERS AND MEETINGS
Section 11.1 Voting Powers. Subject to the voting powers of
the Feeder Funds as set forth in this Agreement, the Feeder Funds
shall have power to vote only (i) for the election of Managers as
provided in Section 7.1, (ii) for the removal of Managers as
provided in Section 7.3, (iii) with respect to any termination of
the Fund to the extent and as provided in Section 2.1, (i) with
respect to any merger, consolidation or sale of assets of the Fund
to the extent and as provided in Section 15.6, (v) with respect to
any conversion of the Fund to the extent and as provided in
Section 15.7 (vi) with respect to any amendment of this Agreement
to the extent and as provided in Section 15.3, and (vii) with
respect to such additional matters relating to the Fund as may be
required by this Agreement, or any registration of the Fund with
the Securities and Exchange Commission (or any successor agency)
or any state, or as the Managers may consider necessary or
desirable. Each whole Share shall be entitled to one vote as to
any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote. On
any matter submitted to a vote of all Feeder Funds, all Shares of
the Fund then entitled to vote shall, except as otherwise provided
in the Agreement, be voted in the aggregate as a single class.
There shall be no cumulative voting in the election of Managers.
Shares may be voted in person or by proxy. A proxy with respect to
Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the
proxy the Fund receives a specific written notice to the contrary
from any one of them. A proxy purporting to be executed by or on
behalf of a Feeder Fund shall be deemed valid unless challenged at
or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. Until Shares are issued, the
Managers may exercise all rights of Feeder Funds and may take any
action required by law, this Agreement to be taken by Feeder
Funds.
Section 11.2 Meetings of Feeder Funds. Meetings of Feeder
Funds may be called by the Managers from time to time for the
purpose of taking action upon any matter requiring the vote or
authority of the Feeder Funds as herein provided or upon any other
matter deemed by the Managers to be necessary or desirable.
Written notice of any meeting of Feeder Funds shall be given or
caused to be given by the Managers by mailing such notice at least
seven days before such meeting, postage prepaid, stating the time,
place and purpose of the meeting, to each Feeder Fund entitled to
vote at such meeting at the Feeder Fund's address as it appears on
the records of the Fund. If the Managers shall fail to call or
give notice of any meeting of Feeder Funds for a period of 30 days
after written application by Feeder Funds holding at least 25% of
the then outstanding Shares entitled to vote at such meeting
requesting a meeting to be called for a purpose requiring action
by the Feeder Funds as provided herein or in the Agreement, then
Feeder Funds holding at least 25% of the then outstanding Shares
entitled to vote at such meeting may call and give notice of such
meeting, and thereupon the meeting shall be held in the manner
provided for herein in case of call thereof by the Managers.
Notice of a meeting need not be given to any Feeder Fund if a
written waiver of notice, executed by such Feeder Fund before or
after the meeting, is filed with the records of the meeting, or to
any Feeder Fund who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to such Feeder
Fund.
Section 11.3 Quorum and Required Vote. A majority of the
outstanding Shares entitled to vote on a particular matter shall
be a quorum for the transaction of business on that matter at a
Feeder Funds' meeting. Any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held,
within a reasonable time after the date set for the original
meeting, without the necessity of further notice. Except when a
different vote is required by any provision of this Agreement, a
majority of the Shares voted shall decide any questions and a
plurality shall elect a Manager.
Section 11.4 Action by Written Consent. Any action taken
by Feeder Funds may be taken without a meeting if a majority of
Shares entitled to vote on the matter (or such different
proportion thereof as shall be required by any express provision
of this Agreement) consent to the action in writing and such
written consents are filed with the records of the meetings of
Feeder Funds. Such consent shall be treated for all purposes as a
vote taken at a meeting of Feeder Funds.
ARTICLE XII
CUSTODY OF ASSETS; DEPOSITORIES
All assets of the Fund shall be held by the Custodian for the
benefit of the Fund. Cash or other property received from
subscribers pending admission as Feeder Funds shall be held by the
Custodian for the benefit of the Feeder Funds.
The Custodian may deposit funds of the Fund in such banks as
it deems advisable, under the supervision of the Managers. All
withdrawals therefrom shall be made by the Custodian at the
direction of the Managers or the Manager's authorized
representative. The Fund's account shall be segregated from any
other accounts maintained by the Custodian for other persons. All
Fund accounts shall be in the Fund's name or in the Custodian's
name for the benefit of the Fund.
ARTICLE XIII
DISTRIBUTIONS
Subject to the terms of this Agreement and the requirements
of the Act, the Managers may each year, or more frequently if they
so determine, distribute to the Feeder Funds such amounts as the
Managers may determine. Any such distribution to the Feeder Funds
shall be made to said Feeder Funds pro rata in proportion to the
number of Shares held by each of them. Such distributions shall
be made in cash or Shares or other property or a combination
thereof as determined by the Managers.
ARTICLE XIV
INDEMNIFICATION
Section 14.1 Managers, Officers, etc. The Fund shall
indemnify each of its Managers and officers (including persons who
serve at the Fund's request as directors, officers or Managers of
another organization in which the Fund has any interest as a
shareholder, creditor or otherwise) (hereinafter referred to as a
"Covered Person") against all liabilities and expenses, including,
but not limited to, amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees reasonably
incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil
or criminal, before any court or administrative or legislative
body, in which such Covered Person may be or may have been
involved as a party or otherwise or with which such Covered Person
may be or may have been threatened, while in office or thereafter,
by reason of being or having been such a Covered Person except
with respect to any matter as to which such Covered Person shall
have been finally adjudicated in any such action, suit or other
proceeding (a) not to have acted in good faith in the reasonable
belief that such Covered Person's action was in the best interests
of the Fund or (b) to be liable to the Fund or its Feeder Funds by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such
Covered Person's office. Expenses, including counsel fees so
incurred by any such Covered Person (but excluding amounts paid in
satisfaction of judgments, in compromise or as fines or
penalties), shall be paid from time to time by the Fund in advance
of the final disposition of any such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such Covered
Person to repay amounts so paid to the Fund if it is ultimately
determined that indemnification of such expenses is not authorized
under this Article; provided, however, that either (a) such
Covered Person shall have provided appropriate security for such
undertaking, (b) the Fund shall be insured against losses arising
from any such advance payments or (c) either a majority of the
Disinterested Managers acting on the matter (provided that a
majority of the Disinterested Managers then in office acts on the
matter), 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 be found entitled to
indemnification under this Article.
Section 14.2 Compromise Payment. As to any matter disposed
of (whether by a compromise payment, pursuant to a consent decree
or otherwise) without an adjudication by a court, or by any other
body before which the proceeding was brought, that such Covered
Person either (a) did not act in good faith in the reasonable
belief that his or her action was in the best interests of the
Fund or (b) is liable to the Fund or its Feeder Funds by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her
office, indemnification shall be provided if (a) approved as in
the best interests of the Fund, after notice that it involves such
indemnification, by at least a majority of the Disinterested
Managers acting on the matter (provided that a majority of the
Disinterested Managers then in office acts on the matter) upon a
determination, based upon a review of readily available facts (as
opposed to a full trial type inquiry), that such Covered Person
acted in good faith in the reasonable belief that his or her
action was in the best interests of the Fund and is not liable to
the Fund or its Feeder Funds 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) there has
been obtained an opinion in writing of independent legal counsel,
based upon a review of readily available facts (as opposed to a
full trial type inquiry), to the effect that such Covered Person
appears to have acted in good faith in the reasonable belief that
his or her action was in the best interests of the Fund and that
such indemnification would not protect such Covered Person against
any liability to the Fund 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. Any approval pursuant to this
Section 15.2 shall not prevent the recovery from any Covered
Person of any amount paid to such Covered Person in accordance
with this Section 15.2 as indemnification if such Covered Person
is subsequently adjudicated by a court of competent jurisdiction
not to have acted in good faith in the reasonable belief that such
Covered Person's action was in the best interests of the Fund or
to have been liable to the Fund or its Feeder Funds by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
Person's office.
Section 14.3 Indemnification Not Exclusive. The right of
indemnification hereby provided shall not be exclusive of or
affect any other rights to which such Covered Person may be
entitled. Nothing contained in this Article shall affect any
rights to indemnification to which personnel of the Fund, other
than Managers or officers, and other persons may be entitled by
contract or otherwise under law, nor the power of the Fund to
purchase and maintain liability insurance on behalf of any such
person.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Delaware applicable to contracts made and to be performed
therein.
Section 15.2 Entire Agreement. This document contains the
entire agreement among the parties and supersedes all prior
arrangements or understanding with respect thereto.
Section 15.3 Amendments. Subject to the voting powers of
the Feeder Funds, as set forth in this Agreement, the Agreement
may be amended at any time by an instrument in writing signed by a
majority of the then Managers when authorized to do so by vote of
Feeder Funds holding a majority of the Shares entitled to vote,
except that an amendment amending or affecting the provisions of
Section 1.3(h), 2.1, 11.1, 15.6 or 15.7, or this sentence shall
require the vote of Feeder Funds holding three-fourths of the
Shares entitled to vote if such amendment has not been recommended
by at least three-fourths of the total number of Managers then in
office and by at least three-fourths of the total number of
Continuing Managers then in office. Amendments having the purpose
of changing the name of the Fund or of supplying any omission,
curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision contained herein shall not
require authorization by Feeder Fund vote.
Section 15.4 Managers, Feeder Funds, etc. Not Personally
Liable; Notice. All persons extending credit to, contracting with
or having any claim against the Fund shall look only to the assets
of the Fund for payment under such credit, contract or claim, and
neither the Feeder Funds nor the Managers, nor any of the Fund's
officers, employees or agents, whether past, present or future,
shall be personally liable therefor. Nothing in this Agreement
shall protect any Manager against any liability to which such
Manager would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of Manager.
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Managers or by any officer or
officers may give notice that the Certificate is on file with the
Secretary of State of Delaware and may recite that the same was
executed or made by or on behalf of the Fund or on its behalf by
the Managers or an officer or officers in that capacity and not
individually, and that the obligations of such instrument are not
binding upon any Manager, officer or Feeder Fund individually but
are binding only upon the assets and property of the Fund, as
applicable, and may contain such further recital as such Manager,
officer or Feeder Fund may deem appropriate, but the omission
thereof shall not operate to bind any Manager, officer or Feeder
Fund individually.
Section 15.5 Manager's Good Faith Action, Expert Advice, No
Bond or Surety. The exercise by the Managers of their powers and
discretion hereunder shall be binding upon everyone interested. A
Manager shall be liable for his or her own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Manager, and for nothing
else. The Managers may take advice of counsel or other experts
with respect to the meaning and operation of this Agreement, and
shall be under no liability for any act or omission in accordance
with such advice. No Manager shall be liable for any failure to
follow the advice of counsel or other experts unless the failure
to follow such advice constitutes willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of the office of Manager. With the exception of the
security required in Section 14.1 herein, the Managers shall not
be required to give any bond as such, nor any surety if a bond is
required.
Section 15.6 Merger, Consolidation and Sale of Assets.
Subject to applicable law, the Fund may merge or consolidate with
any other corporation, association, partnership (limited or
general), trust or other entity or organization or may sell, lease
or exchange all or substantially all of its assets, including its
good will, upon such terms and conditions and for such
consideration when and as authorized at any meeting of Feeder
Funds called for the purpose, or may liquidate or dissolve when
and as authorized, by the affirmative vote of the holders of not
less than three-fourths of the Shares entitled to vote; provided,
however, that if such merger, consolidation, sale, lease,
exchange, liquidation or dissolution is recommended by at least
three-fourths of the total number of Managers then in office and
by at least three-fourths of the total number of Continuing
Managers then in office, the vote of a majority of the outstanding
Shares shall be sufficient authorization. Nothing contained
herein shall be construed as requiring approval of the Feeder
Funds for any sale of assets in the ordinary course of business of
the Fund. The provisions of this Section shall be subject to the
voting powers of the Feeder Funds as set forth in this Agreement.
Section 15.7 Conversion. Subject to the voting powers of
the Feeder Funds as set forth in this Agreement, the Fund may be
converted at any time from a "closed-end company" to an "open-end
company" upon the approval of such a proposal, together with any
necessary amendments to this Agreement to permit such a
conversion, by the holders of three-fourths of the Shares entitled
to vote; provided, however, that if such proposal is recommended
by at least three-fourths of the total number of Managers then in
office and by at least three-fourths of the total number of
Continuing Managers then in office, such proposal may be adopted
the vote of a majority of the outstanding Shares. Upon the
adoption of such proposal and related amendments by the Fund's
Feeder Funds as provided above, the Fund shall, upon complying
with any requirements of the 1940 Act and state law, become an
"open-end" company. Such affirmative vote or consent shall be in
addition to the vote or consent of the holders of the Shares
otherwise required by law, the Agreement or any agreement between
the Fund and any national securities exchange. If the Feeder
Funds are converted from closed-end to open-end companies, the
Fund shall also be so converted.
Section 15.8 Severability. If it is determined by a court
of competent jurisdiction that any provision of this Agreement is
invalid under applicable law, such provision will be ineffective
only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
Section 15.9 Benefit. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, administrators,
executors, successors, assigns and legal representatives. For
purposes of determining the rights of any Feeder Fund or assignee
hereunder, the Fund and the Managers may rely upon Fund records as
to who are Feeder Funds and assignees, and all Feeder Funds and
assignees agree that their rights shall be determined and they
shall be bound thereby.
Section 15.10 Tax Matters Member. Stein Roe Floating Rate
Income Fund is hereby designated as the tax matters member of the
Fund for purposes of Section 6231(a)(7) of the Code (the "Tax
Matters Member"). The Tax Matters Member shall have the power to
manage and control, on behalf of the Fund, any administrative
proceeding involving the Fund with the Internal Revenue Service
relating to the determination of any item of Fund income, gain,
loss, deduction or credit for federal income tax purposes. The
Tax Matters Member shall, within ten days of the receipt of any
notice from the Internal Revenue Service in any administrative
proceeding involving the Fund relating to the determination of any
Fund item of income, gain, loss, deduction or credit, mail a copy
of such notice to each member of the Board.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as of the day and year first above written.
STEIN ROE FLOATING RATE INCOME FUND
By: __________________________________
Name: Thomas W. Butch
Title: President
STEIN ROE INSTITUTIONAL FLOATING
RATE INCOME FUND
By: __________________________________
Name: Thomas W. Butch
Title: President
Agreed and Accepted as of the date first above written.
_____________________________ __________________________________
John A. Bacon, Jr. Douglas A. Hacker
_____________________________ __________________________________
William W. Boyd Janet Langford Kelly
_____________________________ __________________________________
Thomas W. Butch Charles R. Nelson
_____________________________ __________________________________
Lindsay Cook Thomas C. Theobald
<PAGE>
EXHIBIT A
AMENDED AND RESTATED CAPITAL ACCOUNT
ESTABLISHMENT AND MAINTENANCE
POLICIES OF
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY
(adopted as of November 3, 1998)
TABLE OF CONTENTS
Page
ARTICLE I --Definitions....................................1
ARTICLE II--Capital and Related Accounts...................4
2.1. Establishment and Maintenance of Accounts........4
2.2. Book Capital Accounts............................4
2.3. Tax Capital Accounts.............................5
2.4. Revaluation Accounts.............................5
ARTICLE III--Distributions.................................5
3.1. Distributions of Distributable Cash..............5
3.2. Division among Members...........................6
3.3. Distributions on Liquidation of the Fund.........6
3.4. Amounts Withheld.................................6
ARTICLE IV--Allocations....................................6
4.1. Allocations to Book Capital Accounts.............6
4.2. Allocations to Tax Capital Accounts..............6
4.3. Allocations to Revaluation Accounts..............7
4.4. Redemptions During the Fiscal Year...............8
ARTICLE V--Withdrawals and Redemptions.....................8
5.1. Withdrawals and Redemptions......................8
5.2. Payments.........................................8
5.3. Distributions in Kind............................8
ARTICLE VI--Liquidation....................................9
6.1. Liquidation Procedure............................9
6.2. Alternative Liquidation Procedure................9
6.3. Cash Distribution on Liquidation.................9
6.4. Treatment of Negative Book Capital Account
Balance..........................................9
<PAGE>
AMENDED AND RESTATED CAPITAL ACCOUNT
ESTABLISHMENT AND MAINTENANCE POLICIES
OF
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY
(adopted as of November 3, 1998)
ARTICLE I
Definitions
As used herein, the following terms shall have the respective
meanings set forth below:
"Act" means the Delaware Limited Liability Company Act, 6
Del. C. Sec. 18-101, et seq., as amended from time to time.
"Agreement" shall mean the Limited Liability Company
Agreement of Stein Roe Floating Rate Limited Liability Company
(the "Fund"), as amended from time to time.
"Book Capital Account" shall mean, for any Member, its
capital account maintained in accordance with Section 2.2 hereof.
"Book Income" and "Book Loss" for each day, Fiscal Year, or
other relevant period shall mean the amount of net income or loss,
respectively (including (1) Tax-Exempt Income, (2) income, gain,
loss, and deduction described in Treas. Reg. Section 1.704-1 (b)
(2) (iv) (g), and (3) any increase or decrease in Net Unrealized
Gain or Net Unrealized Loss, but excluding (4) income, gain, loss,
and deduction described in Treas. Reg. Section 1.704-1 (b) (4)
(i) and (5) any Recognized Gain and Recognized Loss), for such
period, determined under generally accepted accounting principles
consistently applied.
"Business Day" shall mean any day on which the New York Stock
Exchange is open for business and any other day on which the
Managers, in their sole discretion, decide that the net asset
value of the Fund should be determined.
"Capital Contribution" shall mean, with respect to any
Member's Share, the amount of money and the Fair Market Value of
any property (determined in accordance with Treas. Reg. Section
1.704-1 (b) (2) (iv) (d) ) contributed by the Member to the Fund's
capital from time to time (net of liabilities secured by such
property that the Fund is considered to assume or to take subject
to under Section 752 of the Code).
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor law.
"Distributable Cash" for any Fiscal Year shall mean the net
cash proceeds from the Fund's activities, less the portion thereof
used to pay or establish Reserves for the Fund, plus such portion
of the Reserves as the Managers, in their sole discretion, no
longer deem necessary to be held as Reserves. Distributable Cash
shall not be reduced by amortization or similar deductions or
allowances.
"Fair Market Value" of an asset shall mean a fair value of
the asset as determined in good faith by or on behalf of the
Managers, subject, in the case of property contributed to the
Fund's capital, to Treas. Reg. Section 1.704-1 (b) (2) (iv) (d).
"Member" shall mean a person or entity admitted as a member
of the Fund under the Agreement.
"Investments" shall mean all of the securities, instruments,
and other assets of whatever nature of the Fund, including all
equity and debt securities, options, futures contracts, forward
contracts, derivative securities, and other property obtained by
virtue of holding such assets.
"Manager" shall mean each individual who has been duly
elected or appointed and has qualified as a Manager of the Fund in
accordance with the terms of the Agreement and who is then in
office.
"Matched Income or Loss" shall mean items of Taxable Income,
Tax-Exempt Income, or Tax Loss comprising interest income and
expense, original issue and market discounts, bond premium,
dividends, and all other types of income or loss to the extent
same is recognized for federal income tax purposes at the same
time and in the same amount as it is accrued for purposes of
determining Book Income or Book Loss.
"Net Unrealized Gain" shall mean the excess, if any, of the
aggregate Fair Market Value of all Investments over their
aggregate adjusted basis for federal income tax purposes.
"Net Unrealized Loss" shall mean the excess, if any, of the
aggregate adjusted basis for federal income tax purposes of all
Investments over their aggregate Fair Market Value.
"Policies" shall mean these Capital Account Establishment and
Maintenance Policies, as they may be amended from time to time.
"Precontribution Gain" and "Precontribution Loss" shall mean,
respectively, the built-in gain or loss (as defined in Treas. Reg.
Section 1.704-3 (a) (3) (ii) ) on any Section 704 (c) Property at
the time of the contribution thereof to the capital of the Fund
(i.e., the difference, at such time, between such property's book
value and the contributing Member's adjusted tax basis thereof for
federal income tax purposes).
"Recognized Gain" and "Recognized Loss" shall mean,
respectively, the amount of gain or loss, whether constituting
ordinary income or losses or capital gain or loss, realized on the
sale or other disposition of any Investment, to the extent same is
recognized for federal income tax purposes.
"Redemption" shall mean the complete withdrawal of a Member's
Shares resulting in the reduction of such Member's Book Capital
Account balance to zero, and "Redeem" shall mean to effect a
Redemption.
"Reserves" shall mean, with respect to any Fiscal Year, funds
set aside or amounts allocated during such year to reserves that
shall be maintained in amounts deemed sufficient by the Managers
for working capital and to pay taxes, insurance, debt service,
renewals, or other expenses incident to ownership of the
Investments or the operations of the Fund.
"Revaluation Account" shall mean, for any Member, its account
on the books of the Fund maintained in accordance with Section 2.4
hereof.
"Section 704 (c) Property" shall mean any property
contributed by a Member to the capital of the Fund, at the time of
contribution, has a book value -- determined as contemplated by
Treas. Reg. Section 1.704-1 (b) (i.e., initially, the Fair Market
Value thereof and appropriately adjusted thereafter) -- that
differs from the contributing Member's adjusted tax basis for
federal income tax purposes.
"Share" means a "limited liability company interest" in the
Fund as that latter term is used in the Act, together with all of
the rights, preferences, powers and privileges as may be provided
under the Agreement.
"Tax Capital Account" shall mean, for any Member, its capital
account on the books of the Fund with respect to its Shares
maintained in accordance with Section 2.3 hereof.
"Tax-Exempt Income" shall mean income that is excludable from
gross income under Section 103 (a) of the Code.
"Taxable Income" and "Tax Loss" shall mean the taxable income
or tax loss of the Fund, respectively, determined in accordance
with Section 703 (a) of the Code, for each Fiscal Year, together
with each of the items of income, gain, loss, or deduction of the
Fund that is separately stated or otherwise not included in
computing taxable income and tax loss.
"Treasury Regulations" or "Treas. Reg." shall mean the Income
Tax Regulations promulgated under the Code, as they may be amended
from time to time (including corresponding provisions of
succeeding regulations).
Any capitalized term used herein that is not defined above
shall have the meaning ascribed to it in the Investment Company
Act of 1940, the Fund's then currently effective registration
statement as filed with the Securities and Exchange Commission,
and the Agreement, in that order of precedence. The terms
"hereof," "herein," and "hereunder," when used in this document,
shall be deemed to refer to this document in its entirety rather
than the article, section, or paragraph in which they appear.
ARTICLE II
Capital and Related Accounts
2.1. Establishment and Maintenance of Accounts. A Book
Capital Account, a Tax Capital Account, and a Revaluation Account
shall be established and maintained separately for each Member
pursuant to Sections 2.2, 2.3, and 2.4 hereof, respectively. Such
provisions are intended to comply with Sections 704 and 706 of the
Code and Treas. Reg. sections 1.704-1 (b) and - 3 and shall be
interpreted and applied in a manner consistent therewith. The
Managers shall make any appropriate modifications to these
Policies to comply with the Code and such Treasury Regulations,
provided that no such modification shall have a material effect on
the amounts Distributable to any Member on the liquidation of the
Fund pursuant to Article VI hereof. Any election or other decision
relating to the establishment and maintenance of such accounts and
allocations thereto shall be made by the Managers in any manner
that reasonably reflects the purpose and intention of these
Policies.
2.2. Book Capital Accounts. The balance of a Member's Book
Capital Account at any time in any Fiscal Year shall be the
balance thereof on the first day of the Fiscal Year (or, if later,
the date such Member acquired its Shares):
(a) increased by any Capital Contribution made by such
Member;
(b) increased by the amount of Book Income allocated to
such Member pursuant to Section 4.1 hereof;
(c) decreased by the amount of money and the Fair
Market Value of any property distributed to such Member by
the Fund (net of liabilities secured by such property that
such Member is considered to assume or to take subject to
under Section 752 of the Code), including any distribution to
effect a withdrawal or Redemption;
(d) decreased by expenditures of the Fund described in
Section 705 (a) (2) (B) of the Code allocated to such Member;
and
(e) decreased by the amount of Book Loss allocated to
such Member pursuant to Section 4.1 hereof.
2.3. Tax Capital Accounts. The balance of a Member's Tax
Capital Account at any time in any Fiscal Year shall be the
balance thereof on the first day of the Fiscal Year (or, if later,
the date such Member acquired its Shares):
(a) increased by the amount of money and the adjusted
basis, for federal income tax purposes, of any property
contributed by such Member to the capital of the Fund (net of
liabilities secured by such property that the Fund is
considered to assume or to take subject to under Section 752
of the Code) with respect to such Member's Shares;
(b) increased by the amount of Taxable Income
(including Recognized Gain) and Tax-Exempt Income allocated
to such Member pursuant to Section 4.2 hereof;
(c) decreased by the amount of money and the adjusted
basis, for federal income tax purposes, of any property
distributed to such Member by the Fund (net of liabilities
secured by such property that such Member is considered to
assume or to take subject to under Section 752 of the Code),
including any distribution to effect a withdrawal (determined
under Section 732(a) of the Code) or Redemption (determined
under Section 732 (b) of the Code); and
(d) decreased by the amount of Tax Loss (including
Recognized Loss) allocated to such Member pursuant to Section
4.2 hereof.
2.4. Revaluation Accounts. The balance of a Member's
Revaluation Account at any time in any Fiscal Year shall be the
balance thereof on the first day of the Fiscal Year (or, if later,
the date such Member acquired its Shares):
(a) increased each day by the amount of the increase in
Net Unrealized Gain or decrease in Net Unrealized Loss, and
decreased each day by the amount of the decrease in Net
Unrealized Gain or increase in Net Unrealized Loss, allocated
to such Member pursuant to Section 4.3 hereof; and
(b) decreased by the amount of any Recognized Gain, and
increased by the amount of any Recognized Loss, allocated to
such Member's Tax Capital Account on the disposition of any
Investment.
ARTICLE III
Distributions
3.1. Distributions of Distributable Cash. Except as
otherwise provided in Article VI hereof, and subject to the
provisions of Article XIII of the Agreement, Distributable Cash
for any Fiscal Year may be distributed to the Members at such
times and in such amounts as the Managers shall determine in their
sole discretion; provided that, the Managers shall distribute a
sufficient amount of Distributable Cash so that Members that are
regulated investment companies can comply with the distribution
requirement in Section 852 of the Code and can avoid any liability
for the excise tax imposed by Section 4982 of the Code.
3.2. Division among Members. All distributions pursuant to
Section 3.1 hereof with respect to any fiscal Year or shorter
period shall be made to the Members (a) in proportion to the
allocations to them of Taxable Income, Tax-Exempt Income, or Tax
Loss with respect to such Fiscal Year or shorter period or (b)
pursuant to such other reasonable and equitable method selected by
the Managers in their sole discretion.
3.3. Distributions on Liquidation of the Fund. On
liquidation of the Fund, the proceeds will be distributed to the
Members as provided in Article VI hereof.
3.4. Amounts Withheld. All amounts withheld pursuant to the
Code or any provision of any state or local tax law with respect
to any payment or distribution to the Members shall be treated as
amounts distributed to the Members pursuant to this Article for
all purposes of these Policies.
ARTICLE IV
Allocations
4.1. Allocations to Book Capital Accounts. The Managers
shall cause the Investments to be valued at the end of each
Business Day; such valuation shall be used in determining the
amount of any increase or decrease for that day in Net Unrealized
Gain and Net Unrealized Loss (components of Book Income and Book
Loss). Book Income and Book Loss for any Business Day shall be
allocated to the Members' Book Capital Accounts at the end of such
day in proportion to their respective Book Capital Account
Balances at the beginning of such day (adjusted for capital
contributions and withdrawals on such day). For purposes of the
foregoing, (a) Book Income and Book Loss for any non-Business Day
shall be treated as arising on the following Business Day, (b) an
Investment that is sold or otherwise disposed of during any
Business Day shall be deemed to be held through the end of such
day, with a Fair Market Value equal to the amount realized on such
disposition (so as to account for Net Unrealized Gain or Net
Unrealized Loss, as the case may be, attributable to such
Investment between the end of the preceding Business day and the
time of such disposition), and (c) the determination of the amount
of any increase or decrease in Net Unrealized Gain or Net
Unrealized Loss for any Business Day and the allocation thereof
among the Members' respective Book Capital Accounts shall be made
in accordance with Treas. Reg. Sections 1.704-1 (b) (2) (iv) (f)
and -3.
4.2. Allocations to Tax Capital Accounts.
(a) Matched Income or Loss. Items of Matched Income or
Loss accruing on any day shall be allocated at the end of
such day to the Members' Tax Capital Accounts in proportion
to, and to the extent of, corresponding allocations of Book
Income or Book Loss to the Members' Book Capital Accounts for
such day.
(b) Precontribution Gain and Precontribution Loss. On
the sale or other disposition of Section 704(c) Property on
which gain or loss is recognized, (i) an amount of Recognized
Gain or Recognized Loss up to but not exceeding the
Precontribution Gain or Precontribution Loss on such property
shall be allocated to the contributing Member's Tax Capital
Account in accordance with Section 704(c) of the Code and
Treas. Reg. Sections 1.704-3, and (ii) to the extent
necessary, the Members shall receive reasonable curative or
remedial allocations permitted by Treas. Reg. Section 1.704-
3(c) and (d). The amount of Recognized Gain or Recognized
Loss on such disposition in excess of such Precontribution
Gain or Precontribution Loss shall be allocated in accordance
with Section 4.2(c) hereof.
(c) Other Taxable Income and Tax Loss. Subject to
Section 4.2 (b) hereof, Taxable Income, Tax-Exempt Income, or Tax
Loss (other than Matched Income or Loss) for any Fiscal Year shall
be allocated at least annually to the Members' Tax Capital
Accounts as follows:
(i) Recognized Gain from the sale or other
disposition of Investments shall be allocated, at the
end of the day such gain is recognized for federal
income tax purposes, as follows: (1) first, to the Tax
Capital Accounts of Members with positive Revaluation
Account balances, an amount of such gain (not exceeding
the sum of such balances, in proportion to such
balances, after allocation of the increase or decrease
in Net Unrealized Gain or Loss for such day (as
determined in Section 4.3), and (2) any such gain
exceeding the sum of such balances, to the Tax Capital
Accounts of all Members in proportion to their
respective Book Capital Account Balances at the
beginning of such day (adjusted for capital
contributions and withdrawals on such day).
(ii) Recognized Loss from the sale or other
disposition of Investments shall be allocated at the
end of the day such loss is recognized for federal
income tax purposes, as follows: (1) first, to the Tax
Capital Accounts of Members with negative Revaluation
Account balances, an amount of such loss (not exceeding
the sum of such balances) in proportion to such
balances after allocation of the increase or decrease
in Net Unrealized Gain or Loss for such day (as
determined in Section 4.3), and (2) any such loss
exceeding the sum of such balances, to the Tax Capital
Accounts of all Members in proportion to their
respective Book Capital Account Balances at the
beginning of such day (adjusted for capital
contributions and withdrawals on such day).
(iii) Any other amounts remaining at the end of the
Fiscal Year shall be allocated to the Members' Tax
Capital Accounts at that time in proportion to their
respective daily average Book Capital Account balances
for such Fiscal Year.
4.3. Allocations to Revaluation Accounts. The increase or
decrease in Net Unrealized Gain or Net Unrealized Loss for any
Business Day (determined in accordance with Section 4.1 hereof)
shall be allocated to the Members' Revaluation Accounts at the end
of such day in proportion to their respective Book Capital Account
balances at the beginning of such day (adjusted for capital
contributions and withdrawals on such day).
4.4. Redemptions During the Fiscal Year. If a Redemption
occurs other than on the last day of a Fiscal Year, the Fund will
treat such Fiscal Year as ended on the date of such Redemption for
the purposes of computing the Redeeming Member's distributive
share of the Fund's items of income, gain, loss, and deduction and
allocation of all such items to such Member will be made as though
each Member were receiving its allocable share of such items at
such time. All items so allocated to such Redeeming Member will be
excluded from the items to be allocated among the other Members at
the actual end of the Fiscal Year. All items allocated among the
Redeeming and non-Redeeming Members will be made subject to the
rules of Sections 702, 704, 706, 708, and 752 of the Code and the
Treasury Regulations promulgated thereunder.
ARTICLE V
Withdrawals and Redemptions
5.1. Withdrawals and Redemptions. A Member shall be entitled
to Redeem its Interest in accordance with Section 10.2 of the
Agreement.
5.2. Payments. Payment for the withdrawal of part of an
Interest or for the Redemption of an Interest shall be made in
cash or, subject to any applicable rules and regulations of the
Securities and Exchange Commission, in whole or in part by a
distribution in kind of portfolio securities. If a Redeeming
Member contributed to the Fund's capital any property (other than
cash) that is held by the Fund at the time the Member requests the
Redemption, then at the Managers' election such property (a) shall
be sold by the Fund prior to effecting such Redemption or (b)
shall be distributed in kind to such Member. Not withstanding
anything herein or in the Agreement to the contrary, on the
Redemption of any Member's entire Interest, payments or other
distributions shall be made in accordance with the Members'
positive Book Capital Account balances, after adjusting Book
Capital Accounts for allocations made pursuant to Article IV
hereof (in accordance with the requirements described in Treas.
Reg. Section 1.704-1 (b) (2) (ii) (b) (2) ).
5.3. Distributions in Kind. If a Redeeming Member receives a
distribution in kind of property of the Fund, then unrealized
income, gain, loss, and deduction inherent in such property (to
the extent any of same has not previously been reflected in the
Members' Book Capital Accounts) shall be allocated among the
Members as if there had been a taxable disposition of such
property for its Fair Market Value on the date of distribution,
consistent with the requirements of Treas. Reg. Section 1.704- 1
(b) (2) (iv) (e).
ARTICLE VI
Liquidation
6.1. Liquidation Procedure. Subject to Section 6.4 hereof
and Article II of the Agreement, on the dissolution of the Fund
the Managers shall liquidate the assets of the Fund and apply and
distribute the proceeds thereof as follows:
(a) first to the payment of all debts and obligations
of the Fund to creditors, including the expenses of
liquidation, and to the setting up of any Reserves for
contingencies that may be necessary; and
(b) then in accordance with the Members' positive Book
Capital Account Balances, after adjusting Book Capital
Accounts for allocations made pursuant to Article IV hereof
(in accordance with the requirements described in Treas. Reg.
Section 1.704-1 (b) (2) (ii) (b) (2)).
6.2. Alternative Liquidation Procedure. Notwithstanding
Section 6.1 hereof, if the Managers determine that an immediate
sale of any or all of the assets of the Fund would cause undue
loss to the Members, then to avoid such loss the Manager may,
after notifying all the Members and the extent not then prohibited
by any applicable law, either (a) defer liquidation of, and
withhold from distribution for a reasonable time, any assets of
the Fund except those necessary to satisfy the debts and
obligations of the Fund or (b) distribute the assets of the Fund
to the Members in liquidation.
6.3. Cash Distribution on Liquidation. Except as provided in
Section 6.2 hereof, amounts distributed on liquidation of the Fund
shall be paid solely in cash.
6.4. Treatment of Negative Book Capital Account Balance. If
a Member has a negative Book Capital Account balance following the
liquidation of its Shares, after taking into account all capital
account adjustments of the Fiscal Year during which the
liquidation occurs, then such Member shall (and is unconditionally
obligated to) restore the amount of such negative balance to the
Fund by the later of the end of such Fiscal Year or 90 days after
the date of such liquidation. Such amount shall, on liquidation of
the Fund, be paid to its creditors or distributed to other Members
in accordance with their positive Book Capital Account balances.
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY
BY-LAWS
ARTICLE I. OPERATING AGREEMENT, LOCATION OF OFFICES AND SEAL...1
Section 1.01. Operating Agreement..............................1
Section 1.02. Principal Office.................................1
Section 1.03. Seal.............................................1
ARTICLE II. BOARD OF MANAGERS..................................1
Section 2.01. Number and Term of Office........................1
Section 2.02. Power to Declare Dividends.......................2
Section 2.03. Annual and Regular Meetings......................2
Section 2.04. Special Meetings.................................3
Section 2.05. Notice...........................................3
Section 2.06. Waiver of Notice.................................3
Section 2.07. Quorum and Voting................................3
Section 2.08. Action Without a Meeting.........................3
ARTICLE III. EXECUTIVE COMMITTEE AND OTHER COMMITTEES..........3
Section 3.01. How Constituted..................................3
Section 3.02. Powers of the Executive Committee................4
Section 3.03. Other Committees of the Board of Managers........4
Section 3.04. Proceedings, Quorum and Manner of Acting.........4
Section 3.05. Other Committees.................................4
Section 3.06. Action Without a Meeting.........................4
Section 3.07. Waiver of Notice.................................4
ARTICLE IV. OFFICERS...........................................5
Section 4.01. General..........................................5
Section 4.02. Election, Term of Office and Qualifications......5
Section 4.03. Resignation......................................5
Section 4.04. Removal..........................................5
Section 4.05. Vacancies and Newly Created Offices..............5
Section 4.06. Chairman of the Board............................6
Section 4.07. President........................................6
Section 4.08. Executive Vice-Presidents and Vice-Presidents....6
Section 4.09. Senior Vice-President............................6
Section 4.10. Treasurer and Assistant Treasurers...............7
Section 4.11. Secretary and Assistant Secretaries..............7
Section 4.12. Controller and Assistant Controllers.............7
Section 4.13. Subordinate Officers.............................7
Section 4.14. Remuneration.....................................7
Section 4.15. Surety Bonds.....................................8
ARTICLE V. CUSTODY OF SECURITIES...............................8
Section 5.01. Employment of a Custodian........................8
Section 5.02. Provisions of Custodian Contract.................8
Section 5.03. Action upon Termination of Custodian Contract....9
ARTICLE VI. EXECUTION OF INSTRUMENTS, RIGHTS AS SECURITY HOLDER.9
Section 6.01. General..........................................9
Section 6.02. Checks, Notes, Drafts, Etc......................10
Section 6.03. Rights as Security Holder.......................10
ARTICLE VII. SHARES OF BENEFICIAL INTEREST....................10
Section 7.01. Certificates....................................10
Section 7.02. Uncertificated Shares...........................10
Section 7.03. Transfers of Shares.............................10
Section 7.04. Registered Shareholders.........................11
Section 7.05. Transfer Agents and Registrars..................11
Section 7.06. Fixing of Record Date...........................11
Section 7.07. Lost, Stolen, or Destroyed Certificates.........12
Section 7.08. Resumption of Issuance of Certificates/
Cancellation of Certificates....................12
ARTICLE VIII. FISCAL YEAR, ACCOUNTANT.........................12
Section 8.01. Fiscal Year.....................................12
Section 8.02. Accountants.....................................12
ARTICLE IX. AMENDMENTS........................................12
Section 9.01. General.........................................12
Section 9.02. By Shareholders Only............................13
ARTICLE X. MISCELLANEOUS......................................13
Section 10.01. Restrictions and Limitations...................13
<PAGE>
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY
BY-LAWS
(By-Laws Adopted by Board of Managers on September 25, 1998)
ARTICLE I. OPERATING AGREEMENT, LOCATION OF OFFICES AND SEAL
Section 1.01. Operating Agreement These By-Laws shall be
subject to the Operating Agreement as now in effect or hereafter
amended of Stein Roe Floating Rate Limited Liability Company, a
Delaware limited liability company established by a Certificate of
Formation (the "Company").
Section 1.02. Principal Office. A principal office of the
Company shall be located in Wilmington, Delaware. The Company may
also maintain a principal office in the City of Chicago, State of
Illinois. The Company may, in addition, establish and maintain
such other offices and places of business as the Board of Managers
may from time to time determine.
Section 1.03. Seal. The seal of the Company shall be
circular in form and shall bear the name of the Company, the word
"Delaware," and the year of its organization. The form of the
seal shall be subject to alteration by the Board of Managers and
the seal may be used by causing it or a facsimile to be impressed
or affixed or printed or otherwise reproduced. Any officer or
Manager of the Company shall have authority to affix the seal of
the Company to any document requiring the same. Unless otherwise
required by the Board of Managers, the seal shall not be necessary
to be placed on, and its absence shall not impair the validity of,
any document, instrument or other paper executed and delivered by
or on behalf of the Company.
ARTICLE II. BOARD OF MANAGERS
Section 2.01. Number and Term of Office. The Board of
Managers shall initially consist of the initial sole Manager,
which number may be increased or subsequently decreased by a
resolution of a majority of the entire Board of Managers, provided
that the number of Managers shall not be less than one nor more
than twenty-one. Each Manager (whenever selected) shall hold
office until the next meeting of shareholders called for the
purposes of electing Managers and until his successor is elected
and qualified or until his earlier death, resignation, or removal.
Each Manager shall retire on December 31 of the year during which
the Manager becomes age 74. The initial Manager shall be the
person designated in the Operating Agreement.
Section 2.02. Power to Declare Dividends.
(a) The Board of Managers, from time to time as it may deem
advisable, may declare and pay dividends to the shareholders of
any series of the Company in cash or other property of that
series, out of any source available to that series for dividends,
according to the respective rights and interests of shareholders
of that series and in accordance with the applicable provisions of
the Operating Agreement.
(b) The Board of Managers may prescribe from time to time
that dividends declared on shares of a series may be payable at
the election of any of the shareholders of that series
(exercisable before the declaration of the dividend), either in
cash or in shares of that series; provided that the net asset
value of the shares received by a shareholder electing to receive
dividends in shares (determined as of such time as the Board of
Managers shall have prescribed in accordance with the Operating
Agreement) shall not exceed the full amount of cash to which the
shareholder would be entitled if he elected to receive cash.
(c) The Board of Managers shall cause any dividend payment to
shareholders of a series to be accompanied by a written statement
if wholly or partly from any source other than:
(i) such series' accumulated undistributed net income
(determined in accordance with generally accepted
accounting principles and the rules and regulations
then in effect of the Securities and Exchange
Commission or any other governmental body having
similar jurisdiction over the Company (the "SEC"))
and not including profits or losses realized upon the
sale of securities or other properties of the series;
or
(ii) the series' net income so determined for the current
or preceding fiscal year.
Such statement shall adequately disclose the source or sources of
such payment and the basis of calculation and shall be in such
form as the SEC may prescribe.
Section 2.03. Annual and Regular Meetings. Annual and
regular meetings of the Board of Managers may be held without call
or notice and at such places at such times as the Board of
Managers may from time to time determine provided that notice of
the first regular meeting following any such determination shall
be given to absent Managers. Members of the Board of Managers or
any committee designated thereby may participate in a meeting of
such Board or committee by means of a conference telephone or
other communications equipment, by means of which all persons
participating in the meeting can hear each other at the same time.
Participation by such means shall constitute presence in person at
a meeting; provided, however, that the Board of Managers shall not
enter into, renew, or perform any contract or agreement, written
or oral, whereby a person undertakes regularly to serve or act as
investment adviser with respect to any series of the Company
unless the terms of such contract or agreement and any renewal
thereof have been approved by the vote of a majority of Managers
who are not parties to such contract or agreement or interested
persons of any such party, which votes shall be cast at a meeting
called for the purpose of voting on such approval at which such
persons are physically present.
Section 2.04. Special Meetings. Special meetings of the
Board of Managers shall be held whenever called and at such place
and time determined by the President, Executive Vice-President or
Secretary (or, in the absence or disability of the President,
Executive Vice-President and Secretary, by any Vice-President), or
a majority of the Managers then in office, at the time and place
specified in the respective notices or waivers of notice of such
meetings.
Section 2.05. Notice. If notice of a meeting of the Board
of Managers is required or desired to be given, notice stating the
time and place shall be mailed to each Manager at his residence or
regular place of business at least five days before the day on
which the meeting is to be held or caused to be delivered to him
personally or to be transmitted to him by telephone, telegraph,
cable, or wireless at least one day before the meeting.
Section 2.06. Waiver of Notice. No notice required or
desired to be given of any meeting need be given to any Manager
who attends such meeting in person or to any Manager who waives
notice of such meeting in writing (which waiver shall be filed
with records of such meeting), whether before or after the time of
the meeting.
Section 2.07. Quorum and Voting. At all meetings of the
Board of Managers, the presence of one-third of the number of
Managers then in office shall constitute a quorum for the
transaction of business; provided, however, a quorum shall not be
less than the lesser of two Managers or 100% of all Managers then
in office. In the absence of a quorum, a majority of the Managers
present may adjourn the meeting without further notice, from time
to time, until a quorum shall be present. The action of a
majority of the Managers present at a meeting at which a quorum is
present shall be the action of the Board of Managers, unless the
concurrence of a greater proportion is required for such action by
law, by the Operating Agreement, or by these By- Laws.
Section 2.08. Action Without a Meeting. Any action required
or permitted to be taken at any meeting of the Board of Managers
may be taken without a meeting, if written consents thereto are
signed by a majority of the members of the Board, unless the
consent of a larger number is required pursuant to applicable law
in which case the consents of such number shall be required, and
such written consents are filed with the minutes of proceedings of
the Board of Managers.
ARTICLE III. EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 3.01. How Constituted. By resolution adopted by the
Board of Managers, the Board may designate one or more committees,
including an Executive Committee, each of which shall consist of
at least two Managers. Each member of a committee shall be a
Manager and shall hold office during the pleasure of the Board.
Section 3.02. Powers of the Executive Committee. Unless
otherwise provided by resolution of the Board of Managers, the
Executive Committee shall have and may exercise all powers of the
Board of Managers in the management of the business and affairs of
the Company that may lawfully be exercised by an executive
committee, except the power to recommend to shareholders any
matter requiring shareholder approval, amend the Operating
Agreement or By-Laws, or approve any merger or share exchange that
does not require shareholder approval.
Section 3.03. Other Committees of the Board of Managers. To
the extent provided by resolution of the Board, other committees
of the Board shall have and may exercise any of the powers that
may lawfully be granted to the Executive Committee.
Section 3.04. Proceedings, Quorum and Manner of Acting. In
the absence of appropriate resolution of the Board of Managers,
each committee may adopt such rules and regulations governing its
proceedings, quorum and manner of acting as it shall deem proper
and desirable, provided that the quorum shall not be less than two
Managers except that, in the case of a committee (other than the
Executive Committee) consisting of two Managers, one Manager shall
constitute a quorum unless the Board by resolution specifies that
a quorum for that committee shall consist of two Managers. In the
absence of any member of any such committee, the members thereof
present at any meeting, whether or not they constitute a quorum,
may appoint a member of the Board of Managers to act in the place
of such absent member.
Section 3.05. Other Committees. The Board of Managers may
appoint other committees, each consisting of one or more persons,
who need not be Managers. Each such committee shall have such
powers and perform such duties as may be assigned to it from time
to time by the Board of Managers, but shall not exercise any power
which may lawfully be exercised only by the Board of Managers or a
committee thereof.
Section 3.06. Action Without a Meeting. Any action required
or permitted to be taken at any meeting of any committee may be
taken without a meeting, if written consents thereto are signed by
a majority of the members of the committee unless the consent of a
larger number is required pursuant to applicable law in which case
the consents of such number shall be required, and such written
consents are filed with the minutes of proceedings of the Board of
Managers or of the committee.
Section 3.07. Waiver of Notice. Whenever any notice of the
time, place or purpose of any meeting of any committee is required
to be given under the provisions of any applicable law or under
the provisions of the Operating Agreement or these By-Laws, a
waiver thereof in writing, signed by the person or persons
entitled to such notice and filed with the records of the meeting,
whether before or after the holding of such meeting, or actual
attendance at the meeting in person, shall be deemed equivalent to
the giving of such notice to such persons.
ARTICLE IV. OFFICERS
Section 4.01. General. The officers of the Company shall be
a President, a Secretary, a Senior Vice-President, a Treasurer and
a Controller, and may include one or more Executive Vice-
Presidents, Vice-Presidents, Assistant Secretaries, Assistant
Treasurers or Assistant Controllers and such other officers as may
be appointed in accordance with the provisions of Section 4.13
hereof. The Board of Managers may elect, but shall not be
required to elect, a Chairman of the Board.
Section 4.02. Election, Term of Office and Qualifications.
The officers of the Company (except those appointed pursuant to
Section 4.13 hereof) shall be chosen by the Board of Managers at
its first meeting or such subsequent meetings as shall be held
prior to its first annual meeting and thereafter annually. If any
officers are not chosen at any annual meeting, such officers may
be chosen at any subsequent regular or special meeting of the
Board. Except as provided in Sections 4.03, 4.04 and 4.05 hereof,
each officer chosen by the Board of Managers shall hold office
until the next annual meeting of the Board of Managers and until
his successor shall have been chosen and qualified or until his
earlier death. Any person may hold one or more offices of the
Company except the offices of President and Vice-President, but no
officer shall execute, acknowledge, or verify an instrument in
more than one capacity, if such instrument is required by law, by
the Operating Agreement, or by these By-Laws to be executed,
acknowledged or verified by two or more officers. The Chairman of
the Board, if any, shall be chosen from among the Managers of the
Company and may hold such office only so long as he continues to
be a Manager. No other officer need be a Manager.
Section 4.03. Resignation. Any officer may resign his
office at any time by delivering a written resignation to the
Board of Managers, the President, the Secretary, or any Assistant
Secretary. Unless otherwise specified therein, such resignation
shall take effect upon delivery.
Section 4.04. Removal. Any officer may be removed from
office, whenever in the Board's judgment the best interest of the
Company will be served thereby, by the vote of a majority of the
Board of Managers given at any regular or special meeting. In
addition, any officer or agent appointed in accordance with the
provisions of Section 4.13 hereof may be removed, either with or
without cause, by any officer upon whom such power of removal
shall have been conferred by the Board of Managers.
Section 4.05. Vacancies and Newly Created Offices. If any
vacancy shall occur in any office by reason of death, resignation,
removal, disqualification, or other cause, or if any new office
shall be created, such vacancy or newly created office may be
filled by the Board of Managers at any regular or special meeting
or, in the case of any office created pursuant to Section 4.13
hereof, by any officer upon whom such power shall have been
conferred by the Board of Managers. An officer chosen by the
Board of Managers to fill a vacancy or a newly created office
shall serve until the next annual meeting of the Board of Managers
and until his successor shall have been chosen and qualified or
until his earlier death, resignation or removal.
Section 4.06. Chairman of the Board. In the absence or
disability of the President, the Chairman of the Board, if there
be such an officer, shall preside at all shareholders' meetings
and at all meetings of the Board of Managers. He shall have such
other powers and perform such other duties as may be assigned to
him from time to time by the Board of Managers.
Section 4.07. President. The President shall be the chief
executive officer and shall preside at all shareholders' meetings
and at all meetings of the Board of Managers. Subject to the
supervision of the Board of Managers, he shall have the general
charge of the business, affairs and property of the Company and
general supervision over its other officers, employees and agents.
Section 4.08. Executive Vice-Presidents and Vice-Presidents.
The Board of Managers may from time to time elect one or more
Executive Vice-Presidents and one or more Vice-Presidents, who
shall have such powers and perform such duties as from time to
time may be assigned to them by the Board of Managers or the
President. At the request of the President, the Executive Vice-
President, and if no Executive Vice-President is present or able,
the Vice-President may perform all the duties of the President
and, when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. If there are two or
more Executive Vice-Presidents or Vice-Presidents, the earliest
elected to the more senior office present and able shall perform
the duties of the President in his absence or disability.
Section 4.09. Senior Vice-President. The Senior Vice-
President shall be the principal financial officer of the Company
and shall have general charge of the finances and books of account
of the Company. Except as otherwise provided by the Board of
Managers, he shall have general supervision of the funds and
property of the Company and of the performance by the Custodian of
its duties with respect thereto. He shall render to the Board of
Managers, whenever directed by the Board, an account of the
financial condition of the Company and of all his transactions as
Senior Vice-President; and as soon as possible after the close of
each fiscal year he shall make and submit to the Board of Managers
a like report for such fiscal year. He shall perform all the acts
incidental to the office of Senior Vice-President, subject to the
control of the Board of Managers. At the request of any Executive
Vice-President, or if no Executive Vice-President is present or
able, the Senior Vice-President may perform all of the duties of
the Executive Vice-President (except to the extent that such
duties have otherwise been delegated by or pursuant to these By-
Laws) and, when so acting, shall have all the powers of and be
subject to all the restrictions upon the Executive Vice-President.
Section 4.10. Treasurer and Assistant Treasurers. The
Treasurer and any Assistant Treasurer may perform such duties of
the Senior Vice-President as the Senior Vice-President or the
Board of Managers may assign, and, in the absence of the Senior
Vice-President, may perform all the duties of the Senior Vice-
President.
Section 4.11. Secretary and Assistant Secretaries. The
Secretary shall attend to the giving and serving of all notices of
the Company and shall record all proceedings of the meetings of
the shareholders, Managers, the Executive Committee and other
committees, in a book to be kept for that purpose. He shall keep
in safe custody the seal of the Company, and shall have charge of
the records of the Company, including the share books and such
other books and papers as the Board of Managers may direct and
such books, reports, certificates and other documents required by
law to be kept, all of which shall, at all reasonable times, be
open to inspection by any Manager. He shall perform all the acts
incidental to the office of Secretary, subject to the control of
the Board of Managers.
Any Assistant Secretary may perform such duties of the
Secretary as the Secretary or the Board of Managers may assign,
and, in the absence of the Secretary, he may perform all the
duties of the Secretary.
Section 4.12. Controller and Assistant Controllers. The
Controller shall be the chief accounting officer of the Company.
He shall direct the preparation and maintenance, on a current
basis, of such accounting books, records and reports as may be
necessary to permit the directors, officers and executives of the
Company or as may be required by law. He shall perform all the
acts incidental to the office of Controller, subject to the
control of the Board of Managers, the Executive Vice-President or
the Senior Vice-President.
Any Assistant Controller may perform such duties of the
Controller as the Controller or the Board of Managers may assign,
of the Controller.
Section 4.13. Subordinate Officers. The Board of Managers
from time to time may appoint such other officers or agents as it
may deem advisable, each of whom shall have such title, hold
office for such period, have such authority and perform such
duties as the Board of Managers may determine. The Board of
Managers from time to time may delegate to one or more officers or
agents the power to appoint any such subordinate officers or
agents and to prescribe their respective rights, terms of office,
authorities and duties.
Section 4.14. Remuneration. The salaries, if any, or other
compensation of the officers of the Company shall be fixed from
time to time by resolution of the Board of Managers, except that
the Board of Managers may by resolution delegate to any person or
group of persons the power to fix the salaries or other
compensation of any subordinate officers or agents appointed in
accordance with the provisions of Section 4.13 hereof.
Section 4.15. Surety Bonds. The Board of Managers may
require any officer or agent of the Company to execute a bond to
the Company (including, without limitation, any bond required by
the Investment Company Act of 1940, or any rule or regulation
thereunder, all as now in effect or as hereafter amended or added
(the "1940 Act") and the rules and regulations of the SEC) in such
sum and with such surety or sureties as the Board of Managers may
determine, conditioned upon the faithful performance of his duties
to the Company, including responsibility for negligence and for
the accounting of any of the Company's property, funds, or
securities that may come into his hands.
ARTICLE V. CUSTODY OF SECURITIES
Section 5.01. Employment of a Custodian. The Company shall
place and at all times maintain in the custody of a Custodian
(including any sub-custodian for the Custodian) all securities
owned by the Company and cash representing the proceeds from sales
of securities owned by the Company and of capital stock or other
units of beneficial interest issued to the Company, payments of
principal upon securities owned by the Company, or capital
distribution in respect to capital stock or other units of
beneficial interest owned by the Company, pursuant to a written
contract with such Custodian. The Custodian shall be a bank or
trust company having not less than $2,000,000 aggregate capital,
surplus and undivided profits (as shown in its last published
report).
Section 5.02. Provisions of Custodian Contract. The
Custodian contract shall be upon such terms and conditions and may
provide for such compensation as the Board of Managers deems
necessary or appropriate, provided such contract shall further
provide that the Custodian shall deliver securities owned by the
Company only upon sale of such securities for the account of the
Company and receipt of payment therefor by the Custodian or when
such securities may be called, redeemed, retired, or otherwise
become payable. Such limitations shall not prevent:
(a) the delivery of securities for examination to the broker
selling the same in accord with the "street delivery" custom
whereby such securities are delivered to such broker in exchange
for a delivery receipt exchanged on the same day for an
uncertified check of such broker to be presented on the same day
for certification;
(b) the delivery of securities of an issuer in exchange for
or for conversion into other securities alone or cash and other
securities, pursuant to any plan of merger, consolidation,
reorganization, recapitalization, or readjustment of the
securities of such issuer;
(c) the conversion by the Custodian of securities owned by
the Company, pursuant to the provisions of such securities, into
other securities;
(d) the surrender by the Custodian of warrants, rights, or
similar securities owned by the Company in the exercise of such
warrants, rights, or similar securities, or the surrender of
interim receipts or temporary securities for definitive
securities;
(e) the delivery of securities as collateral on borrowing
effected by the Company; or
(f) the delivery of securities owned by the Company as a
redemption in kind of securities issued by the Company.
The Custodian shall deliver funds of the Company for the
purchase of securities for the portfolio of the Company only upon
the delivery of such securities to the Custodian, but such
limitation shall not prevent the release of funds by the Custodian
for redemption of shares issued by the Company, for payment of
interest, dividend disbursements, taxes or management fees, for
payments in connection with the conversion, exchange or surrender
of securities owned by the Company as set forth in subparagraphs
(b), (c) and (d) above or for operating expenses of the Company.
The term "security" shall be broadly construed and shall
include, without limitation, the various types of securities set
forth in Section 3(a)(10) of the Securities Exchange Act of 1934.
Section 5.03. Action upon Termination of Custodian Contract.
The contract of employment of the Custodian may be terminated by
either party on 60 days' written notice to the other party. Upon
termination of the Custodian contract, resignation of the
Custodian, or inability of the Custodian to continue to serve, the
Board of Managers shall use its best efforts to obtain a successor
custodian. If a successor custodian is found, the Company shall
require the retiring Custodian to deliver the cash and securities
owned by the Company directly to the successor custodian. In the
event that no successor custodian which has the required
qualifications and is willing to serve can be found, the Board of
Managers shall call a special meeting of the shareholders to
submit to the shareholders, before delivery of the cash and
securities owned by the Company to other than a successor
custodian, the question of whether the Company shall function
without a custodian or shall be liquidated.
ARTICLE VI. EXECUTION OF INSTRUMENTS, RIGHTS AS SECURITY HOLDER
Section 6.01. General. All deeds, documents, transfers,
contracts, agreements and other instruments requiring execution by
the Company shall be signed by the President, the Executive Vice-
President, the Senior Vice-President, the Controller, the
Secretary, or the Treasurer, or as the Board of Managers may
otherwise, from time to time, authorize. Any such authorization
may be general or confined to specific instances.
Section 6.02. Checks, Notes, Drafts, Etc. Except as
otherwise authorized by the Board of Managers, all checks and
drafts for the payment of money shall be signed in the name of the
Company by the Custodian, and all requisitions or orders for the
payment of money by the Custodian or for the issue of checks and
drafts therefor, all promissory notes, all assignments of shares
or securities standing in the name of the Company and all
requisitions or orders for the assignment of shares or securities
standing in the name of the Custodian or its nominee, or for the
execution of powers to transfer the same, shall be signed in the
name of the Company by not less than two of its officers.
Promissory notes, checks, or drafts payable to the Company may be
endorsed only to the order of the Custodian or its agent.
Section 6.03. Rights as Security Holder. Unless otherwise
ordered by the Board of Managers, any officer shall have full
power and authority on behalf of the Company to (1) exercise (or
waive) any and all rights, powers and privileges incident to the
ownership of any securities or other obligations which may be
owned by the Company; and (2) attend and to act and to vote, or in
the name of the Company to execute proxies to vote, at any meeting
of security holders of any company in which the Company may hold
securities. At any such meeting, any officer shall possess and
may exercise (in person or by proxy) any and all rights, powers
and privileges incident to the ownership of such securities.
ARTICLE VII. SHARES OF BENEFICIAL INTEREST
Section 7.01. Certificates. The Company shall not issue
share certificates unless the Managers so authorize. In the event
that certificates are issued, each certificate will be valid if
signed by the President or a Vice-President and countersigned by
the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer and sealed with the seal. The signatures may
be either manual or facsimile signatures and the seal may be
either facsimile or any other form of seal. In case any officer
who has signed any certificate ceases to be an officer of the
Company before the certificate was issued, the certificate
nevertheless has the same effect as if the officer had not ceased
to be such officer as of the date of its issue.
Section 7.02. Uncertificated Shares. The Company's share
ledger shall be deemed to represent and certify the number of full
and/or fractional shares of a series owned of record by a
shareholder in those instances where a certificate for such shares
has not been issued.
Section 7.03. Transfers of Shares. Shares of any series of
the Company shall be transferable on the books of the Company at
the request of the record holder thereof in person or by a duly
authorized attorney, upon presentation to the Company or its
transfer agent of a duly executed assignment or authority to
transfer, or proper evidence of succession, and, if the shares are
represented by a certificate, a duly endorsed certificate or
certificates of shares surrendered for cancellation, and with such
proof of the authenticity of the signatures as the Company or its
transfer agent may reasonably require, provided, whether or not
such shares are represented by any certificate or certificates of
shares, that:
(a) the Company has no duty to inquire into adverse claims or
has discharged any such duty;
(b) any applicable law relating to the collection of taxes
has been complied with; and
(c) the transfer is in fact rightful or is to a bona fide
purchaser.
The transfer shall be recorded on the books of the Company
and the old certificates, if any, shall be cancelled.
Section 7.04. Registered Shareholders. The Company shall be
entitled to treat the holder of record of shares of each series as
the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such
shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided
by the laws of State of Delaware.
Section 7.05. Transfer Agents and Registrars. The Board of
Managers may, from time to time, appoint or remove transfer agents
and/or registrars of transfers of shares of the Company, and it
may appoint the same person as both transfer agent and registrar.
Upon any such appointment being made, all certificates
representing shares thereafter issued shall be countersigned by
one of such transfer agents or by one of such registrars of
transfers or by both and shall not be valid unless so
countersigned. If the same person shall be both transfer agent
and registrar, only one countersignature by such person shall be
required.
Section 7.06. Fixing of Record Date. The Board of Managers
may fix in advance a date as a record date for the determination
of the shareholders of any series entitled to notice of or to vote
at any meeting of such shareholders or any adjournment thereof, or
to express consent to Company action in writing without a meeting,
or to receive payment of any dividend or other distribution or
allotment of any rights, or to exercise any rights in respect of
any change, conversion, or exchange of shares of such series, or
for the purpose of any other lawful action, provided that such
record date shall not be a date more than 60 days, and, in the
case of a meeting of shareholders, not less than 10 days, prior to
the date on which the particular action requiring such
determination of shareholders of such series is to be taken. In
such case only such shareholders as shall be shareholders of
record of such series on the record date so fixed shall be
entitled to such notice of, and to vote at, such meeting or
adjournment, or to give such consent, or to receive payment of
such dividend or other distribution, or to receive such allotment
of rights, or to exercise such rights, or to take such other
action, as the case may be, notwithstanding any transfer or
redemption of any shares of such series on the books of the
Company after any such record date. If no record date has been
fixed for the determination of shareholders, the record date for
the determination of shareholders entitled to notice of or to vote
at a meeting of shareholders shall be at the close of business on
the day on which notice of the meeting is mailed, which shall not
be more than 60 days before the meeting, or, if notice is waived
by all shareholders entitled thereto, at the close of business on
the tenth day before the day on which the meeting is held.
Section 7.07. Lost, Stolen, or Destroyed Certificates.
Before transferring on the books of the Company shares represented
by a certificate that is alleged to have been lost, stolen, or
destroyed, the Board of Managers or any officer authorized by the
Board may, in its or his discretion, require the owner of the
lost, stolen, or destroyed certificate (or his legal
representative) to give the Company a bond or other indemnity, in
such form and in such amount as of the Board or any such officer
may direct and with such surety or sureties as may be satisfactory
to the Board or any such officer, sufficient to indemnify the
Company against any claim that may be made against it on account
of the alleged loss, theft, or destruction of any such
certificate.
Section 7.08. Resumption of Issuance of
Certificates/Cancellation of Certificates. The Managers may at
any time resume the issuance of share certificates. The Managers
may, by written notice to each shareholder, require the surrender
of share certificates to the Company for cancellation. Such
surrender and cancellation shall not affect the ownership of
shares in the Company.
ARTICLE VIII. FISCAL YEAR, ACCOUNTANT
Section 8.01. Fiscal Year. The fiscal year of each series
of shares of the Company shall be established by the Board of
Managers.
Section 8.02. Accountants. For each series of the shares of
the Company, the Company shall employ an independent public
accountant or firm of independent public accountants as the
Accountant for such series to examine and certify or issue its
report on the financial statements of that series of the Company.
Each Accountant's certificates and reports shall be addressed both
to the Board of Managers and to the shareholders of the applicable
series.
ARTICLE IX. AMENDMENTS
Section 9.01. General. Except as provided in Section 9.02
hereof, all By-Laws of the Company, whether adopted by the Board
of Managers or the shareholders, shall be subject to amendment,
alteration, or repeal, and new By-Laws may be made, by the
affirmative vote of either:
(a) the holders of record of a majority of the votes
represented by outstanding shares of the Company entitled to vote
at any meeting, the notice or waiver of notice of which shall have
specified or summarized the proposed amendment, alteration,
repeal, or new By-Law; or
(b) a majority of the Managers, at any regular or special
meeting.
Section 9.02. By Shareholders Only.
(a) No amendment of any section of these By-Laws shall be
made except by the shareholders of the Company, if the By-Laws
provide that such section may not be amended, altered or repealed
except by the shareholders.
(b) From and after the issue of any shares of the Company to
the public, no amendment of this Article IX or Article X shall be
made except by the shareholders of the Company.
ARTICLE X. MISCELLANEOUS
Section 10.01. Restrictions and Limitations.
(a) Except as hereinafter provided, no officer or Manager of
the Company, no officer, director, or stockholder (or partner of a
stockholder) of the investment adviser of the Company (as that
term is defined in the 1940 Act) or of any underwriter of the
Company, and no investment adviser or underwriter of the Company
shall take long or short positions in the securities issued by the
Company. The foregoing provision shall not prevent the purchase
from the Company of shares of any series issued by the Company by
any person at the price available to shareholders of the Company
generally at the time of such purchase, or as described in the
current Prospectus of the Company, or prior to commencement of the
public offering of shares of the Company, at the net asset value
of such shares.
(b) The Company shall not lend assets of the Company to any
officer or Manager of the Company or to any officer, director, or
stockholder (or partner of a stockholder) of, or person
financially interested in, the investment adviser or any
underwriter of the Company, or to the investment adviser of the
Company or to any underwriter of the Company.
(c) The Company shall not restrict the transferability or
negotiability of the shares of the Company, except in conformity
with the statements with respect thereto contained in the
Company's Registration Statement, and not in contravention of such
rules and regulations as the SEC may prescribe.
(d) The Company shall not permit any officer or Manager of
the Company, or any officer, director, or stockholder (or partner
of a stockholder) of the investment adviser or any underwriter of
the Company to deal for or on behalf of the Company with himself
as principal or agent, or with any partnership, association, or
trust in which he has a financial interest; provided that the
foregoing provisions shall not prevent (1) officers and Managers
of the Company from buying, holding, redeeming, or selling shares
in the Company, or from being officers, directors, or stockholders
(or partners of a stockholder) of or otherwise financially
interested in the investment adviser or any underwriter of the
Company; (2) purchases or sales of securities or other property by
the Company from or to an affiliated person or to the investment
adviser or any underwriter of the Company, if such transactions
are not prohibited by the 1940 Act or have been exempted by SEC
order from the prohibitions of the 1940 Act; (3) purchases of
investments for the portfolio of the Company through a securities
dealer who is, or one or more of whose partners, stockholders,
officers, or directors is, an officer or Manager of the Company,
if such transactions are handled in the capacity of broker only
and commissions charged do not exceed customary brokerage charges
for such services; (4) employment of legal counsel, registrar,
transfer agent, dividend disbursing agent, or custodian who is, or
has a partner, stockholder, officer, or director who is, an
officer or Manager of the Company, if only customary fees are
charged for services to the Company; (5) sharing statistical,
research, legal and management expenses and office hire and
expenses with any other investment company in which an officer or
Manager of the Company is an officer, trustee, or director or
otherwise financially interested.
END OF BY-LAWS
MANAGEMENT AGREEMENT
BETWEEN
STEIN ROE FLOATING RATE LIMITED LIABILITY
COMPANY AND
STEIN ROE & FARNHAM INCORPORATED
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY, a Delaware
limited liability company under the Investment Company Act of 1940
("1940 Act") as a closed-end non-diversified management investment
company ("LLC"), hereby appoints STEIN ROE & FARNHAM INCORPORATED,
a Delaware corporation registered under the Investment Advisers
Act of 1940 as an investment adviser, of Chicago, Illinois
("Manager"), to furnish investment advisory and portfolio
management services with respect to its assets represented by the
shares of beneficial interest. LLC and Manager hereby agree that:
1. Investment Management Services. Manager shall manage the
investment operations of LLC, subject to the terms of this
Agreement and to the supervision and control of LLC's Board of
Managers ("Board"). Manager agrees to perform, or arrange for the
performance of, the following services for LLC:
(a) to obtain and evaluate such information relating to economies,
industries, businesses, securities and commodities markets,
and individual securities, commodities and indices as it may
deem necessary or useful in discharging its responsibilities
hereunder;
(b) to formulate and maintain a continuing investment program in a
manner consistent with and subject to (i) LLC's operating
agreement; (ii) LLC's investment objectives, policies, and
restrictions as set forth in written documents furnished by
the LLC to Manager; (iii) all securities, commodities, and tax
laws and regulations applicable to LLC; and (iv) any other
written limits or directions furnished by the Board to
Manager;
(c) unless otherwise directed by the Board, to determine from time
to time securities, commodities, interests or other
investments to be purchased, sold, retained or lent by LLC,
and to implement those decisions, including the selection of
entities with or through which such purchases, sales or loans
are to be effected;
(d) to use reasonable efforts to manage LLC so that it will
qualify as a regulated investment company under subchapter M
of the Internal Revenue Code of 1986, as amended;
(e) to make recommendations as to the manner in which voting
rights, rights to consent to LLC action, and any other rights
pertaining to LLC shall be exercised;
(f) to make available to LLC promptly upon request all of LLC's
records and ledgers and any reports or information reasonably
requested by LLC; and
(g) to the extent required by law, to furnish to regulatory
authorities any information or reports relating to the
services provided pursuant to this Agreement.
Except as otherwise instructed from time to time by the
Board, with respect to execution of transactions for LLC, Manager
shall place, or arrange for the placement of, all orders for
purchases, sales, or loans with issuers, brokers, dealers or other
counterparties or agents selected by Manager. In connection with
the selection of all such parties for the placement of all such
orders, Manager shall attempt to obtain most favorable execution
and price, but may nevertheless in its sole discretion as a
secondary factor, purchase and sell portfolio securities from and
to brokers and dealers who provide Manager with statistical,
research and other information, analysis, advice, and similar
services. In recognition of such services or brokerage services
provided by a broker or dealer, Manager is hereby authorized to
pay such broker or dealer a commission or spread in excess of that
which might be charged by another broker or dealer for the same
transaction if the Manager determines in good faith that the
commission or spread is reasonable in relation to the value of the
services so provided.
LLC hereby authorizes any entity or person associated with
Manager that is a member of a national securities exchange to
effect any transaction on the exchange for its account to the
extent permitted by and in accordance with Section 11(a) of the
Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder.
LLC hereby consents to the retention by such entity or person of
compensation for such transactions in accordance with Rule 11a-2-
2(T)(a)(iv).
Manager may, where it deems to be advisable, aggregate orders
for its other customers together with any securities of the same
type to be sold or purchased for LLC in order to obtain best
execution or lower brokerage commissions. In such event, Manager
shall allocate the shares so purchased or sold, as well as the
expenses incurred in the transaction, in a manner it considers to
be equitable and fair and consistent with its fiduciary
obligations to LLC and Manager's other customers.
Manager shall for all purposes be deemed to be an independent
contractor and not an agent of LLC and shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent LLC in any way.
2. Administrative Services. Manager shall supervise the
business and affairs of LLC and shall provide such services and
facilities as may be required for effective administration of LLC
as are not provided by employees or other agents engaged by LLC;
provided that Manager shall not have any obligation to provide
under this Agreement any such services which are the subject of a
separate agreement or arrangement between LLC and Manager, any
affiliate of Manager, or any third party administrator
("Administrative Agreements").
3. Use of Affiliated Companies and Subcontractors. In
connection with the services to be provided by Manager under this
Agreement, Manager may, to the extent it deems appropriate, and
subject to compliance with the requirements of applicable laws and
regulations and upon receipt of written approval of the Board,
make use of (i) its affiliated companies and their directors,
managers, trustees, officers, and employees and (ii)
subcontractors selected by Manager, provided that Manager shall
supervise and remain fully responsible for the services of all
such third parties in accordance with and to the extent provided
by this Agreement. All costs and expenses associated with
services provided by any such third parties shall be borne by
Manager or such parties.
4. Expenses Borne by LLC. Except to the extent expressly
assumed by Manager herein or under a separate agreement between
LLC and Manager and except to the extent required by law to be
paid by Manager, Manager shall not be obligated to pay any costs
or expenses incidental to the organization, operations or business
of LLC. Without limitation, such costs and expenses shall include
but not be limited to:
(a) all charges of depositories, custodians and other agencies for
the safekeeping and servicing of its cash, securities, and
other property;
(b) all charges for equipment or services used for obtaining price
quotations or for communication between Manager or LLC and the
custodian, transfer agent or any other agent selected by LLC;
(c) all charges for administrative and accounting services
provided to LLC by Manager, or any other provider of such
services;
(d) all charges for services of LLC's independent auditors and for
services to LLC by legal counsel;
(e) all compensation of Board, other than those affiliated with
Manager, all expenses incurred in connection with their
services to LLC, and all expenses of meetings of the Board or
committees thereof;
(f) all expenses incidental to holding meetings of holders of
units of interest in the LLC ("Unitholders"), including
printing and of supplying each record-date Unitholder with
notice and proxy solicitation material, and all other proxy
solicitation expense;
(g) all expenses of printing of annual or more frequent revisions
of LLC prospectus(es) and of supplying each then-existing
Unitholder with a copy of a revised prospectus;
(h) all expenses related to preparing and transmitting
certificates representing LLC shares;
(i) all expenses of bond and insurance coverage required by law or
deemed advisable by the Board;
(j) all brokers' commissions and other normal charges incident to
the purchase, sale, or lending of portfolio securities;
(k) all taxes and governmental fees payable to federal, state or
other governmental agencies, domestic or foreign, including
all stamp or other transfer taxes;
(l) all expenses of registering and maintaining the registration
of LLC under the 1940 Act and, to the extent no exemption is
available, expenses of registering LLC's shares under the 1933
Act, of qualifying and maintaining qualification of LLC and
its shares for sale under securities laws of various states or
other jurisdictions and of registration and qualification of
LLC under all other laws applicable to LLC or its business
activities;
(m) all interest on indebtedness, if any, incurred by LLC; and
(n) all fees, dues and other expenses incurred by LLC in
connection with membership of LLC in any trade association or
other investment company organization.
5. Allocation of Expenses Borne by LLC. Any expenses borne
by LLC that are attributable solely to the organization, operation
or business of LLC shall be paid solely out LLC's assets.
6. Expenses Borne by Manager. Manager at its own expense
shall furnish all executive and other personnel, office space, and
office facilities required to render the investment management and
administrative services set forth in this Agreement. Manager
shall pay all expenses of establishing, maintaining, and servicing
the accounts of Unitholders However, Manager shall not be
required to pay or provide any credit for services provided by
LLC's custodian or other agents without additional cost to LLC.
In the event that Manager pays or assumes any expenses of LLC
not required to be paid or assumed by Manager under this
Agreement, Manager shall not be obligated hereby to pay or assume
the same or similar expense in the future; provided that nothing
contained herein shall be deemed to relieve Manager of any
obligation to LLC under any separate agreement or arrangement
between the parties.
7. Management Fee. For the services rendered, facilities
provided, and charges assumed and paid by Manager hereunder, LLC
shall pay to Manager an annual fee of 0.85% of the average net
assets of LLC. The management fee shall accrue on each calendar
day, and shall be payable monthly on the first business day of the
next succeeding calendar month. The daily fee accrual shall be
computed by multiplying the fraction of one divided by the number
of days in the calendar year by the applicable annual rate of fee,
and multiplying this product by the net assets of LLC, determined
in the manner established by the Board, as of the close of
business on the last preceding business day on which LLC's net
asset value was determined.
8. Retention of Sub-Adviser. Subject to obtaining the
initial and periodic approvals required under Section 15 of the
1940 Act, Manager may retain one or more sub-advisers at Manager's
own cost and expense for the purpose of furnishing one or more of
the services described in Section 1 hereof with respect to LLC.
Retention of a sub-adviser shall in no way reduce the
responsibilities or obligations of Manager under this Agreement,
and Manager shall be responsible to LLC for all acts or omissions
of any sub-adviser in connection with the performance of Manager's
duties hereunder.
9. Non-Exclusivity. The services of Manager to LLC
hereunder are not to be deemed exclusive and Manager shall be free
to render similar services to others.
10. Standard of Care. Neither Manager, nor any of its
directors, officers, stockholders, agents or employees shall be
liable to LLC or its Unitholders for any error of judgment,
mistake of law, loss arising out of any investment, or any other
act or omission in the performance by Manager of its duties under
this Agreement, except for loss or liability resulting from
willful misfeasance, bad faith or gross negligence on Manager's
part or from reckless disregard by Manager of its obligations and
duties under this Agreement.
11. Amendment. This Agreement may not be amended as to LLC
without the affirmative votes (a) of a majority of the Board,
including a majority of those Managers who are not "interested
persons" of LLC or of Manager, voting in person at a meeting
called for the purpose of voting on such approval, and (b) of a
"majority of the outstanding shares" of LLC. The terms
"interested persons" and "vote of a majority of the outstanding
shares" shall be construed in accordance with their respective
definitions in the 1940 Act and, with respect to the latter term,
in accordance with Rule 18f-2 under the 1940 Act.
12. Effective Date and Termination. This Agreement shall
become effective as of the date hereof. This Agreement may be
terminated at any time, without payment of any penalty, by the
Board of LLC, or by a vote of a majority of the outstanding
shares, upon at least sixty (60) days' written notice to Manager.
This Agreement may be terminated by Manager at any time upon at
least sixty (60) days' written notice to LLC. This Agreement
shall terminate automatically in the event of its "assignment" (as
defined in the 1940 Act). Unless terminated as hereinbefore
provided, this Agreement shall continue in effect until June 30,
2000, and thereafter from year to year only so long as such
continuance is specifically approved at least annually (a) by a
majority of those Managers who are not interested persons of Board
or of Manager, voting in person at a meeting called for the
purpose of voting on such approval, and (b) by either the Board of
LLC or by a "vote of a majority of the outstanding shares" of LLC.
13. Ownership of Records; Interparty Reporting. All records
required to be maintained and preserved by LLC pursuant to the
provisions of rules or regulations of the Securities and Exchange
Commission under Section 31(a) of the 1940 Act or other applicable
laws or regulations which are maintained and preserved by Manager
on behalf of LLC and any other records the parties mutually agree
shall be maintained by Manager on behalf of LLC are the property
of LLC and shall be surrendered by Manager promptly on request by
LLC; provided that Manager may at its own expense make and retain
copies of any such records.
LLC shall furnish or otherwise make available to Manager such
copies of the financial statements, proxy statements, reports, and
other information relating to the business and affairs of each
Unitholder in LLC as Manager may, at any time or from time to
time, reasonably require in order to discharge its obligations
under this Agreement.
Manager shall prepare and furnish to LLC statistical data and
other information in such form and at such intervals as LLC may
reasonably request.
14. Non-Liability of Board and Unitholders. Any obligation
of LLC hereunder shall be binding only upon the assets of LLC and
shall not be binding upon any Manager, officer, employee, agent or
Unitholder of LLC. Neither the authorization of any action by the
Board or Unitholders of LLC nor the execution of this Agreement on
behalf of LLC shall impose any liability upon any Manager or any
Unitholder.
15. Use of Manager's Name. LLC may use the name "Stein Roe
_______ LLC" or any other name derived from the name "Stein Roe &
Farnham" only for so long as this Agreement or any extension,
renewal, or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded
to the business of Manager as investment adviser. At such time as
this Agreement or any extension, renewal or amendment hereof, or
such other similar agreement shall no longer be in effect, LLC
will cease to use any name derived from the name "Stein Roe &
Farnham" or otherwise connected with Manager, or with any
organization which shall have succeeded to Manager's business as
investment adviser.
16. References and Headings. In this Agreement and in any
such amendment, references to this Agreement and all expressions
such as "herein," "hereof," and "hereunder" shall be deemed to
refer to this Agreement as amended or affected by any such
amendments. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this Agreement.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
Dated: November 20, 1998
STEIN ROE FLOATING RATE LIMITED
LIABILITY COMPANY
Attest: By: THOMAS W. BUTCH
Thomas W. Butch
NICOLETTE D. PARRISH President
Nicolette D. Parrish
Assistant Secretary
STEIN ROE & FARNHAM INCORPORATED
Attest: By: THOMAS W. BUTCH
Thomas W. Butch
President, Mutual Funds
NICOLETTE D. PARRISH division
Nicolette D. Parrish
Assistant Secretary
CUSTODIAN CONTRACT
This Contract between Stein Roe Floating Rate Limited
Liability Company, a Delaware limited liability company having its
principal place of business at One South Wacker Drive, Chicago,
Illinois 60606 hereinafter called the "Fund", 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",
NOW THEREFORE, 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 Fund hereby employs the Custodian as the custodian
of the assets of the Fund, including securities which the
Fund 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 Declaration of Trust. The
Fund agrees to deliver to the Custodian all securities and
cash of the Fund, and all payments of income, payments of
principal or capital distributions received by it with
respect to all securities owned by the Fund from time to
time, and the cash consideration received by it for such new
or treasury shares of beneficial interest of the Fund
representing interests in the Fund, ("Shares") as may be
issued or sold from time to time. The Custodian shall not be
responsible for any property of the Fund held or received by
the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the
meaning of Article 5), the Custodian shall on behalf of the
Fund 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 Fund, and
provided that the Custodian shall have no more or less
responsibility or liability to the Fund 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 Fund's foreign
securities 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
Fund Held By the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of the Fund
all non-cash property, to be held by it in the United
States including all domestic securities owned by
the Fund, 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 (each, a U.S. Securities System") and (b)
commercial paper of an issuer for which State Street
Bank and Trust Company acts as issuing and paying agent
("Direct Paper") which is deposited and/or maintained
in the Direct Paper System of the Custodian (the
"Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release
and deliver domestic securities owned by the Fund held
by the Custodian or in a U.S. 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 from
the Fund, 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
Fund 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 Fund;
3) In the case of a sale effected through a U.S.
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 Fund;
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 Fund 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
delivered to the Custodian;
7) Upon the sale of such securities for the account of
the Fund, 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 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 Fund, but only against
receipt of adequate collateral as agreed upon from
time to time by the Custodian and the Fund, 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 Fund prior to the receipt of such
collateral;
11) For delivery as security in connection with any
borrowings by the Fund requiring a pledge of assets
by the Fund, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of
any agreement among the Fund, 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 Fund;
13) For delivery in accordance with the provisions of
any agreement among the Fund, 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 Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to
such Transfer Agent or to the holders of shares in
connection with distributions in kind, as may be
described from time to time in the currently
effective prospectus and statement of additional
information of the Fund, related to the Fund
("Prospectus"), in satisfaction of requests by
holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only
upon receipt of, in addition to Proper Instructions
from the Fund, a certified copy of a resolution of
the Board of Trustees or of the Executive Committee
signed by an officer of the Fund and certified by
the Secretary or an Assistant Secretary, specifying
the securities of the Fund 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 Fund or in the name
of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively
to the Fund, unless the Fund 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 Fund, 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 1. All securities
accepted by the Custodian on behalf of the Fund under
the terms of this Contract shall be in "street name" or
other good delivery form. If, however, the Fund
directs the Custodian to maintain securities in "street
name", the Custodian shall utilize its best efforts
only to timely collect income due the Fund on such
securities and to notify the Fund 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 Fund, 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 Fund, other than cash
maintained by the Fund in a bank account established
and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the
Custodian for the Fund 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 funds to be deposited
with each such bank or trust company shall on behalf of
the Fund be approved by vote of a majority of the Board
of Trustees of the Fund. Such funds 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 Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the
Fund, make federal funds available to the Fund as of
specified times agreed upon from time to time by the
Fund and the Custodian in the amount of checks received
in payment for Shares of the Fund which are deposited
into the Fund'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
registered domestic securities held hereunder to which
the Fund 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 bearer domestic securities if,
on the date of payment by the issuer, such securities
are held by the Custodian or its agent thereof and
shall credit such income, as collected, to Fund'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 Fund on securities loaned
pursuant to the provisions of Section 2.2 (10) shall be
the responsibility of the Fund. The Custodian will
have no duty or responsibility in connection therewith,
other than to provide the Fund with such information or
data as may be necessary to assist the Fund in
arranging for the timely delivery to the Custodian of
the income to which the Fund is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper
Instructions from the Fund, which may be continuing
instructions when deemed appropriate by the parties,
the Custodian shall pay out monies of the Fund 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 Fund 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 Fund 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 U.S. 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 Fund 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 Fund of
securities owned by the Custodian along with written
evidence of the agreement by the Custodian to
repurchase such securities from the Fund or (e) for
transfer to a time deposit account of the Fund 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 from the Fund as defined in
Article 5;
2) In connection with conversion, exchange or surrender
of securities owned by the Fund as set forth in
Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by
the Fund as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred
by the Fund, including but not limited to the
following payments for the account of the Fund:
interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the
Fund whether or not such expenses are to be in whole
or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the
Fund declared pursuant to the governing documents of
the Fund;
6) For payment of the amount of dividends received in
respect of securities sold short;
7) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions from the
Fund, a certified copy of a resolution of the Board
of Trustees or of the Executive Committee of the
Fund signed by an officer of the Fund 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 Fund is made by the Custodian in
advance of receipt of the securities purchased in the
absence of specific written instructions from the Fund
to so pay in advance, the Custodian shall be absolutely
liable to the Fund 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, 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 of its responsibilities or
liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems.
The Custodian may deposit and/or maintain securities
owned by the Fund 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 "U.S. Securities System" 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 keep securities of the Fund in
a U.S. Securities System provided that such
securities are represented in an account ("Account")
of the Custodian in the U.S. Securities System which
shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to
securities of the Fund which are maintained in a
U.S. Securities System shall identify by book-entry
those securities belonging to the Fund;
3) The Custodian shall pay for securities purchased for
the account of the Fund upon (i) receipt of
advice from the U.S. 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 Fund. The Custodian shall
transfer securities sold for the account of the
Fund upon (i) receipt of advice from the U.S.
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 Fund. Copies of all advices from the U.S.
Securities System of transfers of securities for the
account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be
provided to the Fund at its request. Upon request,
the Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund in
the form of a written advice or notice and shall
furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the
U.S. Securities System for the account of the Fund;
4) The Custodian shall provide the Fund with any report
obtained by the Custodian on the U.S. Securities
System's accounting system, internal accounting
control and procedures for safeguarding securities
deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on
the initial or annual certificate, as the case may
be, required by Article 14 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to
the Fund for any loss or damage to the Fund
resulting from use of the U.S. 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 U.S.
Securities System; at the election of the Fund, it
shall be entitled to be subrogated to the rights of
the Custodian with respect to any claim against the
U.S. Securities System or any other person which the
Custodian may have as a consequence of any such loss
or damage if and to the extent that the Fund has not
been made whole for any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper
System. The Custodian may deposit and/or maintain
securities owned by the Fund 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 from the Fund;
2) The Custodian may keep securities of the Fund 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 Fund which are maintained in
the Direct Paper System shall identify by book-entry
those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for
the account of the Fund 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 Fund. The Custodian shall transfer
securities sold for the account of the Fund 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 Fund;
5) The Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund, 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 Fund copies of
daily transaction sheets reflecting each day's
transaction in the U.S. Securities System for the
account of the Fund;
6) The Custodian shall provide the Fund with any report
on its system of internal accounting control as the
Fund may reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt
of Proper Instructions from the Fund establish and
maintain a segregated account or accounts 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 Fund, the Custodian and a broker-
dealer registered under the Exchange Act and a member
of the 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 Fund, (ii) for purposes of segregating cash or
government securities in connection with options
purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold
by the Fund, (iii) for the purposes of compliance by
the Fund with the procedures 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)
for other proper corporate purposes, but only, in the
case of clause (iv), upon receipt of, in addition to
Proper Instructions from the Fund, a certified copy of
a resolution of the Board of Trustees or of the
Executive Committee signed by an officer of the Fund
and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of
such segregated account and declaring such purposes to
be proper corporate purposes.
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 Fund held by
it and in 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 Fund or a nominee of the Fund,
all proxies, without indication of the manner in which
such proxies are to be voted, and shall promptly
deliver to the Fund 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 Fund for the Fund
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 Fund and the maturity of futures contracts
purchased or sold by the Fund) received by the
Custodian from issuers of the securities being held for
the Fund. With respect to tender or exchange offers,
the Custodian shall transmit promptly to the Fund all
written information received by the Custodian from
issuers of the securities whose tender or exchange is
sought and from the party (or his agents) making the
tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer
or any other similar transaction, the Fund shall notify
the Custodian at least three business days prior to the
date on which the Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of the
Fund Held Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby
authorizes and instructs the Custodian to employ as
sub-custodians for the Fund '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 5 of this
Contract, together with a certified resolution of the
Fund's Board of Trustees, the Custodian and the Fund
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
Fund may instruct the Custodian to cease the employment
of any one or more such sub-custodians for maintaining
custody of the Fund '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)(1) 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 Fund may determine to be reasonably
necessary to effect the Fund 's foreign securities
transactions. The Custodian shall identify on its
books as belonging to the Fund, the foreign securities
of the Fund held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be
agreed upon in writing by the Custodian and the Fund,
assets of the Fund shall be maintained in a
clearing agency which acts as a securities depository
or in a book-entry system for the central handling of
securities located outside the United States (each a
"Foreign Securities System") only through arrangements
implemented by the foreign banking institutions serving
as sub-custodians pursuant to the terms hereof (Foreign
Securities Systems and U.S. Securities Systems are
collectively referred to herein as the "Securities
Systems"). Where possible, such arrangements shall
include entry into agreements containing the provisions
set forth in Section 3.5 hereof.
3.4 Holding Securities. The Custodian may hold securities
and other non-cash property for all of its customers,
including the Fund, with a Foreign Sub-custodian in a
single account that is identified as belonging to the
Custodian for the benefit of its customers, provided
however, that (i) the records of the Custodian with
respect to securities and other non-cash property of
the Fund which are maintained in such account shall
identify by book-entry those securities and other non-
cash property belonging to the Fund and (ii) the
Custodian shall require that securities and other non-
cash property so held by the foreign sub-custodian be
held separately from any assets of the foreign sub-
custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each
agreement with a foreign banking institution shall
provide that: (a) the assets of the Fund 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 for the assets
of the Fund 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 Fund; (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 Fund, will be given access
to the books and records of the foreign banking
institution relating to its actions under its agreement
with the Custodian; and (e) assets of the Fund s held
by the foreign sub-custodian will be subject only to
the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon
request of the Fund, the Custodian will use its best
efforts to arrange for the independent accountants of
the Fund 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.
3.7 Reports by Custodian. The Custodian will supply to the
Fund from time to time, as mutually agreed upon,
statements in respect of the securities and other
assets of the Fund held by foreign sub-custodians,
including but not limited to an identification of
entities having possession of the Fund 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 of the Fund indicating, as to
securities acquired for the Fund, the identity of the
entity having physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as
otherwise provided in paragraph (b) of this Section
3.8, the provision of Sections 2.2 and 2.7 of this
Contract shall apply, mutatis mutandis to the foreign
securities of the Fund 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 Fund and delivery of
securities maintained for the account of the Fund 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 Fund agrees to
hold any such nominee harmless from any liability as a
holder of record of such securities.
3.9 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 Fund from and
against any loss, damage, cost, expense, liability or
claim arising out of or in connection with the
institution's performance of such obligations. At the
election of the Fund, 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 Fund
has not been made whole for any such loss, damage,
cost, expense, liability or claim.
3.10 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 3.13 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.
Notwithstanding the foregoing provisions of this
paragraph 3.10, in delegating custody duties to State
Street London Ltd., the Custodian shall not be relieved
of any responsibility to the Fund for any loss due to
such delegation, except such loss as may result from
(a) political risk (including, but not limited to,
exchange control restrictions, confiscation,
expropriation, nationalization, insurrection, civil
strife or armed hostilities) or (b) other losses
(excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due to Acts
of God, nuclear incident or other losses under
circumstances where the Custodian and State Street
London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the
Custodian to advance cash or securities for any purpose
for the benefit of Fund 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 Fund shall be security therefor and
should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available
cash and to dispose of the Fund's assets to the extent
necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall
furnish annually to the Fund, 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 Fund
in connection with the initial approval of this
Contract. In addition, the Custodian will promptly
inform the Fund 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 Fund 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 $200 million (in each case computed
in accordance with generally accepted U.S. accounting
principles).
3.13 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 Fund's 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.
(b) Cash held for the Fund in the
United Kingdom shall be maintained in an interest
bearing account established for the Fund with the
Custodian's London branch, which account shall be
subject to the direction of the Custodian, State Street
London Ltd. or both.
3.14 Tax Law. The Custodian shall have no responsibility or
liability for any obligations now or hereafter imposed
on the Fund or the Custodian as custodian of the Fund
by the tax law of the United States of America or any
state or political subdivision thereof. It shall be
the responsibility of the Fund to notify the Custodian
of the obligations imposed on the Fund or the Custodian
as custodian of the Fund by the tax law of
jurisdictions other than those mentioned in the above
sentence, including responsibility for withholding and
other taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax
law shall be to use reasonable efforts to assist the
Fund with respect to any claim for exemption or refund
under the tax law of jurisdictions for which the Fund
has provided such information.
4. Payments for Sales or Repurchases or Redemptions of
Shares of the Fund
The Custodian shall receive from the distributor for
the Shares or from the Transfer Agent of the Fund and
deposit into the account of the Fund such payments
as are received for Shares of the Fund issued or sold
from time to time by the Fund. The Custodian will provide
timely notification to the Fund and the Transfer Agent of
any receipt by it of payments for Shares of the Fund.
From such funds as may be available for the purpose but
subject to the limitations of the Declaration of Trust and
any applicable votes of the Board of Trustees of the Fund
pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available
for payment to holders of Shares who have delivered to the
Transfer Agent a request for redemption or repurchase of
their Shares. In connection with the redemption or
repurchase of Shares of the Fund, the Custodian is
authorized upon receipt of instructions from the Transfer
Agent to wire funds to or through a commercial bank
designated by the redeeming shareholders. In connection
with the redemption or repurchase of Shares of the Fund, the
Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the
Custodian in accordance with such procedures and controls as
are mutually agreed upon from time to time between the Fund
and the Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Contract
means a writing signed or initialled 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. 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
Fund 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 Trust accompanied by a detailed
description of procedures approved by the Board of Trustees,
Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices
provided that the Board of Trustees and the Custodian are
satisfied that such procedures afford adequate safeguards
for the Fund's 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.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express
authority from the Fund:
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
Fund;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments; and
4) 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 Fund except as
otherwise directed by the Board of Trustees of the
Fund.
7. 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 Fund. The
Custodian may receive and accept a certified copy of a vote
of the Board of Trustees of the Trust as conclusive evidence
(a) of the 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 Declaration 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.
8. 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 Fund to keep the books of account of the
Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to
do so by the Fund, shall itself keep such books of account
and/or compute such net asset value per share. If so
directed, the Custodian shall also calculate daily the net
income of the Fund as described in the Fund's currently
effective prospectus related to the Fund and shall advise
the Fund and the Transfer Agent daily of the total amounts
of such net income and, if instructed in writing by an
officer of the Fund 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 daily income of Fund shall be made
at the time or times described from time to time in the
Fund's currently effective prospectus related to the Fund.
9. Records
The Custodian shall with respect to the Fund
create and maintain all records relating to its activities
and obligations under this Contract in such manner as will
meet the obligations of the Fund under the Investment
Company Act of 1940, with particular attention to Section
31 thereof and Rules 31a-1 and 31a-2 thereunder. All such
records shall be the property of the Fund and shall at all
times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees
or agents of the Fund and employees and agents of the
Securities and Exchange Commission. The Custodian shall, at
the Fund's request, supply the Fund with a tabulation of
securities owned by the Fund and held by the Custodian
and shall, when requested to do so by the Fund and for such
compensation as shall be agreed upon between the Fund and
the Custodian, include certificate numbers in such
tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the
Fund may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent
accountants with respect to its activities hereunder in
connection with the preparation of the Fund's Form N-1A, and
Form N-SAR or other annual reports to the Securities and
Exchange Commission and with respect to any other
requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as
the Fund 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 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 Fund to provide reasonable
assurance that any material inadequacies would be disclosed
by such examination, and, if there are no such inadequacies,
the reports shall so state.
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 Fund 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 three-party futures or options agreement. The Custodian
shall be held to the exercise of reasonable care in carrying
out the provisions of this Contract, but shall be kept
indemnified by and shall be without liability to the Fund
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 Fund) on
all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence
or willful misconduct or the negligence or willful
misconduct of a sub-custodian or agent, the Custodian shall
be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or
circumstances beyond the reasonable control of the Custodian
or any sub-custodian or Securities System or any agent or
nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of
currency controls or restrictions, the interruption,
suspension or restriction of trading on or the closure of
any securities market, power or other mechanical or
technological failures or interruptions, computer viruses or
communications disruptions, acts of war or terrorism, riots,
revolutions, work stoppages, natural disasters or other
similar events or acts; (ii) errors by the Fund or the
Investment Advisor in their instructions to the Custodian
provided such instructions have been in accordance with this
Contract; (iii) the insolvency of or acts or omissions by a
Securities System; (iv) any delay or failure of any broker,
agent or intermediary, central bank or other commercially
prevalent payment or clearing system to deliver to the
Custodian's sub-custodian or agent securities purchased or
in the remittance or payment made in connection with
securities sold; (v) any delay or failure of any company,
corporation, or other body in charge of registering or
transferring securities in the name of the Custodian, the
Fund, the Custodian's sub-custodians, nominees or agents or
any consequential losses arising out of such delay or
failure to transfer such securities including non-receipt of
bonus, dividends and rights and other accretions or
benefits; (vi) delays or inability to perform its duties due
to any disorder in market infrastructure with respect to any
particular security or Securities System; and (vii) any
provision of any present or future law or regulation or
order of the United States of America, or any state thereof,
or any other country, or political subdivision thereof or of
any court of competent jurisdiction.
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.
If the Fund 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 Fund being liable for the payment of money or
incurring liability of some other form, the Fund, as a
prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and
form satisfactory to it.
If the Fund 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 Fund shall be security therefor and should the Fund
fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of the
Fund assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect,
special or consequential damages.
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 Fund has approved the initial use of a
particular Securities System by the Fund, as required by
Rule 17f-4 under the Investment Company Act of 1940, as
amended and that the Custodian shall not with respect to the
Fund act under Section 2.11 hereof in the absence of receipt
of 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 by the Fund; provided
further, however, that the Fund shall not amend or terminate
this Contract in contravention of any applicable federal or
state regulations, or any provision of the Declaration of
Trust, and further provided, that the Fund 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 Fund 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 for the Fund shall be
appointed by the Board of Trustees of the Fund, the
Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and
in the form for transfer, all securities of the Fund then
held by it hereunder and shall transfer to an account of the
successor custodian all of the securities of the Fund held
in a Securities System.
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 Fund, deliver
at the office of the Custodian and 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 on behalf of the Fund 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 securities of the Fund 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 Fund
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.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Fund 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 Declaration of Trust of the Fund. No
interpretive or additional provisions made as provided in
the preceding sentence shall be deemed to be an amendment of
this Contract.
17. Additional Funds
18. 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.
19. Prior Contracts
This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund and the
Custodian relating to the custody of the Fund's assets.
20. Reproduction of Documents
This Contract and all schedules, exhibits, attachments
and amendments hereto may be reproduced by any photographic,
photostatic, microfilm, micro-card, miniature photographic
or other similar process. The parties hereto all/each agree
that any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and
whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement,
facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
21. 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 Fund
to indicate whether it authorizes the Custodian to provide
the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund
tells the Custodian "no", the Custodian will not provide
this information to requesting companies. If the Fund tells
the Custodian "yes" or does not check either "yes" or "no"
below, the Custodian is required by the rule to treat the
Fund as consenting to disclosure of this information for all
securities owned by the Fund or accounts established by the
Fund. For the Fund's protection, the Rule prohibits the
requesting company from using the Fund's name and address
for any purpose other than corporate communications. Please
indicate below whether the Fund consents or objects by
checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's
name, address, and share positions.
NO [X] The Custodian is not authorized to release the
Fund's name, address, and share positions.
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 ____________, 1998.
ATTEST STEIN ROE FLOATING RATE LIMITED
LIABILITY COMPANY
______________________ By_________________________________
Assistant Secretary President
ATTEST STATE STREET BANK AND TRUST COMPANY
By _______________________________
Vice President
<PAGE>
Schedule A
The following foreign banking institutions and foreign
securities depositories have been approved by the Board of
Trustees of Stein Roe Trust for use as sub-custodians for the
Fund's securities and other assets:
(Insert banks and securities depositories)
INVESTOR SERVICE AGREEMENT
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY, a Delaware
Limited Liability Company registered under the Investment Company
Act of 1940 (the "Act") as a closed-end non-diversified management
investment company (the "LLC"), hereby appoints SteinRoe Services
Inc., a Massachusetts corporation, of Chicago, Illinois ("SSI"),
to furnish certain investor accounting, recordkeeping, and
administrative services for the assets of the LLC. In connection
therewith, LLC and SSI hereby agree that:
1. Portfolio Services.
A. Services. SSI will perform the services set forth in
Schedule A hereto relating to the establishment and maintenance of
accounts of holders of beneficial interests in the LLC. It is
understood that beneficial interests in the LLC will be held of
record only by investment companies, insurance company separate
accounts, common or commingled trust funds or similar
organizations, and that SSI's duties and responsibilities
hereunder shall relate only to such record investor accounts and
not to the accounts of holders of shares of, or interests in, such
institutions.
B. Maintenance of Records. SSI shall maintain all records
relating to the accounts of holders of beneficial interest in the
LLC which the LLC is required to maintain pursuant to Rule 31a-1
under the Act and shall preserve such records for the periods
prescribed by Rule 31a-2 thereunder. All such records are and
shall remain the property and under the control of the LLC and
shall upon request be made available during reasonable business
hours to LLC's Board of Managers or auditors at SSI's offices.
C. Uncontrollable Events. SSI shall not be liable for
damage, delays or errors occurring by reason of circumstances
beyond its control, including but not limited to acts of civil or
military authority, national emergencies, fires, flood or
catastrophe, acts of God, insurrection, war, riots or failure of
transportation, communication or power supply.
D. Fees and Charges. For the services rendered by SSI
pursuant to this Agreement, the LLC will pay SSI a fee in the
amount shown in Schedule A hereto.
E. Out-of-Pocket Expenses. LLC shall reimburse SSI for any
and all out-of-pocket expenses and charges in performing services
under this Agreement.
2. Maintenance of Records. All records maintained by SSI in
connection with the performance of its duties under this Agreement
with respect to the LLC will remain the property of the LLC and
will be preserved by SSI for the periods prescribed in Rule 31a-2
under the Act or such other applicable rules that may be adopted
from time to time under the Act. In the event of termination of
this Agreement, such records will be promptly delivered to LLC.
Such records may be inspected by LLC or its agents at reasonable
times.
3. Ownership of Software and Related Material. All computer
programs, magnetic tapes, written procedures, and similar items
developed and used by SSI in the performance of this Agreement
shall be the property of SSI and will not become the property of
the LLC.
4. Registration of SSI as Transfer Agent. SSI represents that it
is registered with the Securities and Exchange Commission as a
transfer agent under Section 17A of the Securities Exchange Act of
1934, as amended, and will notify the LLC promptly if such
registration is revoked or if any proceeding is commenced before
the Securities and Exchange Commission which may lead to such
revocation.
5. Instructions, Opinion of Counsel, and Signatures. At any
time, SSI may apply to an officer of the LLC for instructions and
may consult legal counsel for the LLC or its own legal counsel in
respect of any matter arising in connection with this Agreement,
and SSI shall not be liable for any action taken or omitted by it
in good faith in accordance with such instructions or with the
advice or opinion of such legal counsel. SSI shall be protected
in acting upon any such instruction, advice, or opinion and upon
any other paper or document delivered by the LLC or such legal
counsel reasonably believed by SSI to be genuine and to have been
signed by the proper person or persons and shall not be held to
have notice of any change of authority of any officer or agent of
the LLC until receipt of written notice thereof from the LLC.
6. Liability of SSI. SSI will at all times act in good faith in
the performance of its duties and obligations under this
Agreement, but assumes no responsibility and shall not be liable
for loss or damage unless caused by the negligence, bad faith, or
willful or wanton misconduct of SSI or its employees. SSI shall
in no event be liable for consequential damages, lost profits, or
other special damages, even if informed of the possibility of such
damage or loss.
7. Indemnification by LLC. The LLC will indemnify and hold SSI
harmless from all loss, cost, damage and expense, including
reasonable expenses for legal counsel, incurred by SSI arising
from: (i) any action or omission by SSI in the performance of its
duties hereunder, (ii) SSI's acting upon instructions believed by
it to have been executed by a duly authorized officer of the LLC
or (iii) SSI's acting upon information provided by the LLC in the
form and under policies agreed to by SSI and the LLC. SSI shall
not be entitled to such indemnification for loss, cost, damage or
expense arising from actions or omissions constituting negligence,
bad faith or willful or wanton misconduct of SSI or its agents.
Prior to confessing any claim against it which may be subject to
this indemnification, SSI shall give the LLC reasonable
opportunity to defend against said claim in its own name or in the
name of SSI.
8. Limitation of Liability of LLC. The term "Stein Roe Floating
Rate Limited Liability Company" means and refers to the LLC under
an Operating Agreement of the LLC dated August 14, 1998, as the
same may subsequently thereto have been or subsequently hereto be
amended. It is expressly agreed that the obligations of the LLC
hereunder shall not be binding upon any of the Managers,
shareholders, nominees, officers, agents or employees of the LLC
personally, but shall bind only the LLC property of the LLC, as
provided in the Operating Agreement of the LLC. The execution and
delivery of this Agreement have been authorized by the Managers of
the LLC and this Agreement has been signed by an authorized
officer of the LLC, acting as such, and neither such authorization
by such Managers or such execution and delivery by such officer
shall be deemed to have been made by any of them but shall bind
only the LLC property of the LLC as provided in the Operating
Agreement.
9. Indemnification by SSI. SSI will indemnify and hold the LLC
harmless from all loss, cost, damage and expense, including
reasonable expenses for legal counsel, incurred by the LLC because
of the negligence, bad faith or willful or wanton misconduct of
SSI or its agents.
10. Execution, Amendment, and Termination. The term of this
Agreement shall begin on the date hereof and continue until
terminated as herein provided. This Agreement may be modified or
amended from time to time by mutual agreement between the parties
hereto and may be terminated by at least 60 days' written notice
given by one party to the other. Upon termination hereof, the LLC
shall pay to SSI such compensation as may be due as of the date of
such termination, and shall likewise reimburse SSI for its costs,
expenses and disbursements payable under the Agreement to such
date.
11. SSI's Use of the Services of Others. SSI may, at its cost,
employ, retain or otherwise avail itself of the services or
facilities of other persons or organizations necessary,
appropriate or convenient for the discharge of SSI's duties and
obligations hereunder.
12. Assignment. This Agreement may not be assigned (as that term
is defined in the Act) by SSI without the prior written consent of
the LLC. The Agreement shall automatically and immediately
terminate in the event of its assignment without the prior written
consent of the LLC.
13. State Law. The Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Illinois.
14. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of
the provisions hereof or otherwise affect their construction or
effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of this 20th day of November, 1998.
STEINROE SERVICES INC.
By: THOMAS W. BUTCH
Attest: NICOLETTE D. PARRISH Thomas W. Butch, Vice President
Nicolette D. Parrish
Assistant Secretary
STEIN ROE FLOATING RATE LIMITED
LIABILITY COMPANY
By: THOMAS W. BUTCH
Attest: NICOLETTE D. PARRISH Thomas W. Butch, President
Nicolette D. Parrish
Assistant Secretary
<PAGE>
SCHEDULE A
The services to be performed by SSI with respect to the
beneficial interests in the LLC pursuant to paragraph 1 are as
follows:
1. Establishing and maintaining investor accounts as
instructed and reporting thereon;
2. Processing additions to and withdrawals of amounts in
investor accounts;
3. Reporting the amount of each investor's beneficial
interest in the LLC to the LLC and such investors on a daily
basis;
4. Providing such assistance as may be reasonably required
to enable the LLC and its properly authorized auditors, examiners,
and others designated by the LLC to properly understand and
examine all books, records, computer files, microfilm, magnetic
disks, and other items maintained pursuant to this Agreement, and
to assist as required in such examination; and
5. Any necessary or required tax reporting.
The fee for the foregoing services payable pursuant to
paragraph 1.D shall be $500 per month, payable in arrears on or
before the 10th day of each calendar month.
ACCOUNTING AND BOOKKEEPING AGREEMENT
This Agreement is made this 20th day of November, 1998, by and
between Stein Roe Floating Rate Limited Liability Company, a Delaware
Limited Liability Company, (hereinafter referred to as the "Fund") and
Stein Roe & Farnham Incorporated ("Stein Roe"), a Delaware corporation.
1. Appointment. The Fund hereby appoints Stein Roe to act as its
agent to perform the services described herein with respect to the
Fund. Stein Roe hereby accepts appointment as the Fund's agent
and agrees to perform the services described herein.
2. Accounting.
(a) Pricing. Stein Roe shall value all securities and other
assets of the Fund, and compute the net asset value per
share of the Fund, at such times and dates and in the
manner and by such methodology as is specified in the then
currently effective prospectus and statement of additional
information for the Fund, and pursuant to such other
written procedures or instructions furnished to Stein Roe
by the Fund. To the extent procedures or instructions
used to value securities or other assets of the Fund under
this Agreement are at any time inconsistent with any
applicable law or regulation, the Fund shall provide Stein
Roe with written instructions for valuing such securities
or assets in a manner which the Fund represents to be
consistent with applicable law and regulation.
(b) Net Income. Stein Roe shall calculate with such frequency
as the Fund shall direct, the net income of the Fund for
dividend purposes and on a per share basis. Such
calculation shall be at such times and dates and in such
manner as the Fund shall instruct Stein Roe in writing.
For purposes of such calculation, Stein Roe shall not be
responsible for determining whether any dividend or
interest accruable to the Fund is or will be actually
paid, but will accrue such dividend and interest unless
otherwise instructed by the Fund.
(c) Capital Gains and Losses. Stein Roe shall calculate gains
or losses of the Fund from the sale or other disposition
of assets as the Fund shall direct.
(d) Yields. At the request of the Fund, Stein Roe shall
compute yield for the Fund for such periods and using such
formula as shall be instructed by the Fund.
(e) Communication of Information. Stein Roe shall provide the
Fund, the Fund's transfer agent and such other parties as
directed by the Fund with the net asset value per share,
the net income per share and yields for the Fund at such
time and in such manner and format and with such frequency
as the parties mutually agree.
(f) Information Furnished by the Fund. The Fund shall furnish
Stein Roe with any and all instructions, explanations,
information, specifications and documentation deemed
necessary by Stein Roe in the performance of its duties
hereunder, including, without limitation, the amounts
and/or written formula for calculating the amounts, and
times of accrual of liabilities and expenses of the Fund.
The Fund shall also at any time and from time to time
furnish Stein Roe with bid, offer and/or market values of
securities owned by the Fund if the same are not available
to Stein Roe from a pricing or similar service designated
by the Fund for use by Stein Roe to value securities or
other assets. Stein Roe shall at no time be required to
commence or maintain any utilization of, or subscriptions
to, any such service which shall be the sole
responsibility and expense of the Fund.
3. Recordkeeping.
(a) Stein Roe shall, as agent for the Fund, maintain and keep
current and preserve the general ledger and other
accounts, books, and financial records of the Fund
relating to activities and obligations under this
Agreement in accordance with the applicable provisions of
Section 31(a) of the General Rules and Regulations under
the Investment Company Act of 1940, as amended (the
"Rules").
(b) All records maintained and preserved by Stein Roe pursuant
to this Agreement which the Fund is required to maintain
and preserve in accordance with the Rules shall be and
remain the property of the Fund and shall be surrendered
to the Fund promptly upon request in the form in which
such records have been maintained and preserved.
(c) Stein Roe shall make available on its premises during
regular business hours all records of the Fund for
reasonable audit, use and inspection by the Fund, its
agents and any regulatory agency having authority over the
Fund.
4. Instructions, Opinion of Counsel, and Signatures.
(a) At any time Stein Roe may apply to a duly authorized agent
of the Fund for instructions regarding the Fund, and may
consult counsel for the Fund or its own counsel, in
respect of any matter arising in connection with this
Agreement, and it shall not be liable for any action taken
or omitted by it in good faith in accordance with such
instructions or with the advice or opinion of such
counsel. Stein Roe shall be protected in acting upon any
such instruction, advice, or opinion and upon any other
paper or document delivered by the Fund or such counsel
believed by Stein Roe to be genuine and to have been
signed by the proper person or persons and shall not be
held to have notice of any change of authority of any
officer or agent of the Fund, until receipt of written
notice thereof from the Fund.
(b) Stein Roe may receive and accept a certified copy of a
vote of the Board of Trustees of the Fund as conclusive
evidence of (i) the authority of any person to act in
accordance with such vote or (ii) any determination or any
action by the Board of Trustees pursuant to its Agreement
and Declaration of Fund as described in such vote, and
such vote may be considered as in full force and effect
until receipt by Stein Roe of written notice to the
contrary.
5. Compensation. The Fund shall reimburse Stein Roe for any and
all out-of-pocket expenses and charges in performing services
under this Agreement. For the services provided under this
Agreement, the Fund shall pay Stein Roe an annual fee, calculated
and paid monthly, equal to $25,000 plus .0025 percent per annum of
the average daily net assets in excess of $50 million. Such fee
shall be paid within thirty days after receipt of monthly invoice.
Stein Roe shall invoice the Fund as soon as practicable after the
end of each calendar month, and the Fund shall promptly pay Stein
Roe the invoiced amount.
6. Confidentiality of Records. Stein Roe agrees not to disclose
any information received from the Fund to any other client of
Stein Roe or to any other person except its employees and agents,
and shall use its best efforts to maintain such information as
confidential. Upon termination of this Agreement, Stein Roe shall
return to the Fund all records in the possession and control of
Stein Roe related to the Fund's activities, other than Stein Roe's
own business records, it being also understood and agreed that any
programs and systems used by Stein Roe to provide the services
rendered hereunder will not be given to the Fund.
7. Liability and Indemnification.
(a) Stein Roe shall not be liable to the Fund for any action
taken or thing done by it or its employees or agents on
behalf of the Fund in carrying out the terms and
provisions of this Agreement if done in good faith and
without negligence or misconduct on the part of Stein Roe,
its employees or agents.
(b) The Fund shall indemnify and hold Stein Roe, and its
controlling persons, if any, harmless from any and all
claims, actions, suits, losses, costs, damages, and
expenses, including reasonable expenses for counsel,
incurred by it in connection with its acceptance of this
Agreement, in connection with any action or omission by it
or its employees or agents in the performance of its
duties hereunder to the Fund, or as a result of acting
upon instructions believed by it to have been executed by
a duly authorized agent of the Fund or as a result of
acting upon information provided by the Fund in form and
under policies agreed to by Stein Roe and the Fund,
provided that: (i) this indemnification shall not apply
to actions or omissions constituting negligence or
misconduct on the part of Stein Roe or its employees or
agents, including but not limited to willful misfeasance,
bad faith, or gross negligence in the performance of their
duties, or reckless disregard of their obligations and
duties under this Agreement; and (ii) Stein Roe shall give
the Fund prompt notice and reasonable opportunity to
defend against any such claim or action in its own name or
in the name of Stein Roe.
(c) Stein Roe shall indemnify and hold harmless the Fund from
and against any and all claims, demands, expenses and
liabilities which the Fund may sustain or incur arising
out of, or incurred because of, the negligence or
misconduct of Stein Roe or its agents or contractors, or
the breach by Stein Roe of its obligations under this
Agreement, provided that: (i) this indemnification shall
not apply to actions or omissions constituting negligence
or misconduct on the part of the Fund or its other agents
or contractors and (ii) the Fund shall give Stein Roe
prompt notice and reasonable opportunity to defend against
any such claim or action in its own name or in the name of
the Fund.
8. Further Assurances. Each party agrees to perform such further
acts and execute such further documents as are necessary to
effectuate the purposes hereof.
9. Dual Interests. It is understood and agreed that some person
or persons may be trustees, officers, or shareholders of both the
Fund and Stein Roe, and that the existence of any such dual
interest shall not affect the validity hereof or of any
transactions hereunder except as otherwise provided by specific
provision of applicable law.
10. Amendment and Termination. This Agreement may be modified or
amended from time to time, or terminated, by mutual agreement
between the parties hereto and may be terminated by at least one
hundred eighty (180) days' written notice given by one party to
the other. Upon termination hereof, the Fund shall pay to Stein
Roe such compensation as may be due from it as of the date of such
termination, and shall reimburse Stein Roe for its costs,
expenses, and disbursements payable under this Agreement to such
date. In the event that, in connection with termination, a
successor to any of the duties or responsibilities of Stein Roe
hereunder is designated by the Fund by written notice to Stein
Roe, Stein Roe shall promptly upon such termination and at the
expense of the Fund, deliver to such successor all relevant books,
records, and data established or maintained by Stein Roe under
this Agreement and shall cooperate in the transfer of such duties
and responsibilities, including provision, at the expense of the
Fund, for assistance from Stein Roe personnel in the establishment
of books, records, and other data by such successor.
11. Assignment. Any interest of Stein Roe under this Agreement
shall not be assigned or transferred either voluntarily or
involuntarily, by operation of law or otherwise, without prior
written notice to the Fund.
12. Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or sent by registered mail, postage
prepaid to the other party at such address as such other party may
designate for the receipt of such notices. Until further notice
to the other parties, it is agreed that the address of the Fund
and Stein Roe is One South Wacker Drive, Chicago, Illinois 60606,
Attention: Secretary.
13. Non-Liability of Trustees and Shareholders. Any obligation
of the Fund hereunder shall be binding only upon the assets of the
Fund, as provided in the Agreement and Declaration of Fund of the
Fund, and shall not be binding upon any trustee, officer,
employee, agent or shareholder of the Fund. Neither the
authorization of any action by the Trustees or the shareholders of
the Fund, nor the execution of this Agreement on behalf of the
Fund shall impose any liability upon any trustee or any
shareholder. Nothing in this Agreement shall protect any trustee
against any liability to which such trustee would otherwise be
subject by willful misfeasance, bad faith or gross negligence in
the performance of his duties, or reckless disregard of his
obligations and duties under this Agreement.
14. References and Headings. In this Agreement and in any such
amendment, references to this Agreement and all expressions such
as "herein," "hereof," and "hereunder," shall be deemed to refer
to this Agreement as amended or affected by any such amendments.
Headings are placed herein for convenience of reference only and
shall not be taken as part hereof or control or affect the
meaning, construction or effect of this Agreement. This Agreement
may be executed in any number of counterparts, each of which shall
be deemed an original.
15. Governing Law. This Agreement shall be governed by the laws
of the State of Illinois.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the day and year first above written.
STEIN ROE FLOATING RATE INCOME FUND
Attest: By: THOMAS W. BUTCH
Thomas W. Butch
NICOLETTE D. PARRISH President
Nicolette D. Parrish
Assistant Secretary
STEIN ROE & FARNHAM INCORPORATED
Attest: By: THOMAS W. BUTCH
Thomas W. Butch
President, Mutual Funds
NICOLETTE D. PARRISH division
Nicolette D. Parrish
Assistant Secretary
