EXHIBIT 99.2g
SALOMON BROTHERS HIGH INCOME FUND II INC
INVESTMENT MANAGEMENT AGREEMENT
May __, 1998
Salomon Brothers Asset Management Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This will confirm the agreement between the undersigned (the "Fund")
and you (the "Investment Manager") as follows:
1. The Fund is a closed-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Fund proposes to engage in the business of investing and
reinvesting its assets in the manner and in accordance with the investment
objectives and limitations specified in the Fund's Articles of Incorporation, as
amended from time to time (the "Articles"), in the Registration Statement on
Form N-2, as in effect from time to time (the "Registration Statement"), filed
with the Securities and Exchange Commission (the "SEC") by the Fund under the
1940 Act and the Securities Act of 1933, as amended, and in such manner and to
such extent as may from time to time be authorized by the Board of Directors of
the Fund. Copies of the documents referred to in the preceding sentence have
been furnished to the Investment Manager. Any amendments to these documents
shall be furnished to the Investment Manager.
2. The Fund employs the Investment Manager to (a) make investment
strategy decisions for the Fund, (b) manage the investing and reinvesting of the
Fund's assets as specified in paragraph 1, (c) place purchase and sale orders on
behalf of the Fund, (d) provide continuous supervision of the Fund's investment
portfolio, (e) provide or procure the provision of research and statistical data
in relation to investing and other matters within the scope of the investment
objectives and limitations of the Fund, and (f) provide the following services
for the Fund: (A) compliance with the rules and regulations of the SEC,
including record keeping, reporting requirements and preparation of registration
statements and proxies to the extent such records, reports and documents are not
maintained or furnished by the Fund's transfer agent, custodian, administrator
or other agents employed by the Fund;
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(B) supervision of Fund operations, including coordination of functions of the
transfer agent, custodian, accountants, counsel and other parties performing
services or operational functions for the Fund, (C) administrative and clerical
services, including accounting services, development of new shareholder services
and maintenance of books and records to the extent such services are not
otherwise provided by the Fund's transfer agent, custodian, administrator or
other agents employed by the Fund; and (D) services to Fund shareholders,
including responding to shareholder inquiries and maintaining a flow of
information to shareholders. The Investment Manager shall have the sole
ultimate discretion over investment decisions for the Fund. At the Investment
Manager's own expense and subject to its supervision, the Investment Manager may
delegate the performance of all or a part of its services under this agreement
to others.
3. (a) The Investment Manager shall, at its expense, (i) provide
the Fund with office space, office facilities and personnel reasonably necessary
for performance of the services to be provided by the Investment Manager
pursuant to this agreement, and (ii) provide the Fund with persons satisfactory
to the Fund's Board of Directors to serve as officers and employees of the Fund.
(b) Except as provided in subparagraph (a), the Fund shall be
responsible for all of the Fund's expenses and liabilities, including
organizational and offering expenses (which include out-of-pocket expenses, but
not overhead or employee costs of the Investment Manager); expenses for legal,
accounting and auditing services; taxes and governmental fees; dues and expenses
incurred in connection with membership in investment company organizations; fees
and expenses incurred in connection with listing the Fund's shares on any stock
exchange; costs of printing and distributing shareholder reports, proxy
materials, prospectuses, stock certificates and distribution of dividends;
charges of the Fund's custodians, sub-custodians, administrators and sub-
administrators, registrars, transfer agents, dividend disbursing agents and
dividend reinvestment plan agents; payment for portfolio pricing services to a
pricing agent, if any; fees of the SEC; expenses of registering or qualifying
securities of the Fund for sale; freight and other charges in connection with
the shipment of the Fund's portfolio securities; fees and expenses of non-
interested directors; travel expenses or an appropriate portion thereof of
directors and officers of the Fund who are directors, officers or employees of
the Investment Manager to the extent that such expenses relate to attendance at
meetings of the Board of Directors or any committee thereof; salaries of
shareholder relations personnel; costs of shareholders meetings; insurance;
interest; brokerage costs; litigation and other extraordinary or non-recurring
expenses.
4. As manager of the Fund's assets, the Investment Manager shall
make investments for the Fund's account in accordance with the investment
objectives and limitations set forth in the Articles, the Registration
Statement, the 1940 Act, the provisions of the Internal Revenue Code of 1986, as
amended relating to regulated investment companies, and policy decisions adopted
by the Fund's Board of Directors from time to time. The Investment Manager
shall advise the Fund's officers and Board of Directors, at such times as the
Fund's Board of Directors may specify, of investments made for the Fund's
account and shall, when requested by the Fund's officers or Board of Directors,
supply the reasons for making such investments.
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5. The Investment Manager may contract with or consult with such
banks, other securities firms, brokers or other parties, without additional
expense to the Fund, as it may deem appropriate regarding investment advice,
research and statistical data, clerical assistance, accounting services or
otherwise.
6. The Investment Manager is authorized on behalf of the Fund, from
time to time when deemed to be in the best interests of the Fund and to the
extent permitted by applicable law, to purchase and/or sell securities in which
the Investment Manager or any of its affiliates underwrites, deals in and/or
makes a market and/or may perform or seek to perform investment banking services
for issuers of such securities. The Investment Manager is further authorized,
to the extent permitted by applicable law, to select brokers for the execution
of trades for the Fund, which broker may be an affiliate of the Investment
Manager, provided that the affiliated broker's charge for the transaction is
reasonable and fair compared to the usual and customary levels charged by other
brokers in connection with comparable transactions involving similar securities.
7. The Investment Manager is authorized, for the purchase and sale
of the Fund's portfolio securities, to employ such dealers and brokers as may,
in the judgment of the Investment Manager, implement the policy of the Fund to
obtain the best net results taking into account such factors as price, including
dealer spread, the size, type and difficulty of the transaction involved, the
firm's general execution and operational facilities and the firm's risk in
positioning the securities involved. Consistent with this policy, the
Investment Manager is authorized to direct the execution of the Fund's portfolio
transactions to dealers and brokers furnishing statistical information or
research deemed by the Investment Manager to be useful or valuable to the
performance of its investment advisory functions for the Fund. Information so
received will be in addition to and not in lieu of the services required to be
performed by the Investment Manager. It is understood that the expenses of the
Investment Manager will not necessarily be reduced as a result of the receipt of
such information or research.
8. In consideration of the services to be rendered by the Investment
Manager under this agreement, the Fund shall pay the Investment Manager a
monthly fee in United States dollars on the first business day of each month for
the previous month at an annual rate of 1.00% of the value of the Fund's average
weekly net assets plus the proceeds of any outstanding borrowings used for
leverage ("average weekly net assets" means the average weekly value of the
total assets of the Fund, including the amount obtained from leverage and any
proceeds from the issuance of preferred stock, minus the sum of (i) accrued
liabilities of the Fund, (ii) any accrued and unpaid interest on outstanding
borrowings and (iii) accumulated dividends on shares of preferred stock),
commencing on the date of the first receipt by the Fund of the proceeds of the
sale of shares to the Underwriters as described in the Registration Statement.
For purposes of this calculation, average weekly net assets is determined at the
end of each month on the basis of the average net assets of the Fund for each
week during the month. The assets for each weekly period are determined by
averaging the net assets at the last business day of a week with the net assets
at the last business day of the prior week. If the fee payable to the
Investment Manager pursuant to this paragraph 8 begins to accrue before the end
of any month or if this agreement terminates before the end of any month, the
fee for the period from such date to the end of such month or from the
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beginning of such month to the date of termination, as the case may be, shall be
prorated according to the proportion which such period bears to the full month
in which such effectiveness or termination occurs.
9. In consideration of the Investment Manager's undertaking to
render the services described in this agreement, the Fund agrees that the
Investment Manager shall not be liable under this agreement for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the performance of this agreement, provided that nothing in this agreement
shall be deemed to protect or purport to protect the Investment Manager against
any liability to the Fund or its stockholders to which the Investment Manager
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties under this agreement or by reason of
its reckless disregard of its obligations and duties hereunder ("disabling
conduct"). The Fund will indemnify the Investment Manager against, and hold it
harmless from, any and all losses, claims, damages, liabilities or expenses,
including reasonable counsel fees and expenses and any amounts paid in
satisfaction of judgments, in compromise or as fines or penalties, not resulting
from disabling conduct by the Investment Manager. Indemnification shall be made
only following: (i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the Investment Manager was not
liable by reason of disabling conduct, or (ii) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that the
Investment Manager was not liable by reason of disabling conduct by (a) the vote
of a majority of a quorum of directors of the Fund who are neither "interested
persons" of the Fund nor parties to the proceeding ("disinterested non-party
directors"), or (b) an independent legal counsel in a written opinion. The
Investment Manager shall be entitled to advances from the Fund for payment of
the reasonable expenses incurred by it in connection with the matter as to which
it is seeking indemnification in the manner and to the fullest extent
permissible under law. The Investment Manager shall provide to the Fund a
written affirmation of its good faith belief that the standard of conduct
necessary for indemnification by the Fund has been met and a written undertaking
to repay any such advance if it should ultimately be determined that the
standard of conduct has not been met. In addition, at least one of the
following additional conditions shall be met: (a) the Investment Manager shall
provide security in form and amount acceptable to the Fund for its undertaking;
(b) the Fund is insured against losses arising by reason of the advance; or (c)
a majority of a quorum of disinterested non-party directors, or independent
legal counsel, in a written opinion, shall have determined, based on a review of
facts readily available to the Fund at the time the advance is proposed to be
made, that there is reason to believe that the Investment Manager will
ultimately be found to be entitled to indemnification. For purposes of this
paragraph 9 only, the term "Investment Manager" shall be deemed to include
affiliates of the Investment Manager to whom the Investment Manager has
delegated the exercise of all or any of its powers, discretion and duties under
this agreement.
10. This agreement shall continue in effect until 2 years from the
date hereof and thereafter for successive annual periods, provided that such
continuance is specifically approved at least annually (a) by the vote of a
majority of the Fund's outstanding voting securities (as defined in the 0000
Xxx) or by the Fund's Board of Directors and (b) by the vote, cast in person at
a meeting called for the purpose, of a majority of the Fund's
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directors who are not parties to this agreement or "interested persons" (as
defined in the 0000 Xxx) of any such party. This agreement may be terminated at
any time, without the payment of any penalty, by a vote of a majority of the
Fund's outstanding voting securities (as defined in the 0000 Xxx) or by a vote
of a majority of the Fund's entire Board of Directors on 60 days' written notice
to the Investment Manager or by the Investment Manager on 60 days' written
notice to the Fund. This agreement shall terminate automatically in the event
of its assignment (as defined in the 1940 Act). The respective agreements,
covenants, indemnities and other statements set forth in Section 9 hereof shall
remain in full force and effect regardless of any termination or cancellation of
this agreement. All property of the Fund shall be returned to the Fund as soon
as reasonably practicable after the termination of this agreement.
11. Upon expiration or earlier termination of this agreement, the
Fund shall, if reference to "Salomon Brothers" is made in the corporate name of
the Fund and if the Investment Manager requests in writing, as promptly as
practicable change its corporate name and the name of the Fund so as to
eliminate all reference to "Salomon Brothers", and thereafter the Fund shall
cease transacting business in any corporate name using the words "Salomon
Brothers" or any other reference to the Investment Manager or "Salomon
Brothers". The foregoing rights of the Investment Manager and obligations of
the Fund shall not deprive the Investment Manager, or any affiliate thereof
which has "Salomon Brothers" in its name, of, but shall be in addition to, any
other rights or remedies to which the Investment Manager and any such affiliate
may be entitled in law or equity by reason of any breach of this agreement by
the Fund, and the failure or omission of the Investment Manager to request a
change of the Fund's name or a cessation of the use of the name of "Salomon
Brothers" as described in this paragraph 11 shall not under any circumstances be
deemed a waiver of the right to require such change or cessation at any time
thereafter for the same or any subsequent breach.
12. Except to the extent necessary to perform the Investment
Manager's obligations under this agreement, nothing herein shall be deemed to
limit or restrict the right of the Investment Manager, or any affiliate of the
Investment Manager, or any employee of the Investment Manager, to engage in any
other business or to devote time and attention to the management or other
aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, firm, individual or
association. Nothing herein shall be construed as constituting the Investment
Manager an agent of the Fund.
13. This agreement shall be governed by the laws of the State of New
York.
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14. All notices hereunder shall be in writing and shall be delivered
in person or by telex or facsimile (followed by delivery in person to the
parties at the addresses set forth below).
If to the Fund:
Salomon Brothers High
Income Fund II Inc
c/o Salomon Brothers Asset
Management Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
If to the Investment Manager:
Salomon Brothers Asset
Management Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
or such other name or address as may be given in writing to the other party.
Unless specifically provided elsewhere, notice given as provided above
shall be deemed to have been given, if by personal delivery, on the day of such
delivery, and if by telex or facsimile and mail, on the date on which such telex
or facsimile is sent.
15. This agreement constitutes the entire agreement among the parties
hereto.
16. This agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
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If the foregoing correctly sets forth the agreement between the Fund
and the Investment Manager, please so indicate by signing and returning to the
Fund the enclosed copy hereof.
Very truly yours,
SALOMON BROTHERS HIGH INCOME
FUND II INC
By:
-------------------------
Name: Xxxxx X. XxXxxxxx
Title: Chairman of the
Board and President
ACCEPTED:
SALOMON BROTHERS ASSET
MANAGEMENT INC
By:
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
