EXHIBIT 99.G1
INVESTMENT MANAGEMENT AGREEMENT
TRAVELERS CORPORATE LOAN FUND INC.
__________, 1998
Mutual Management Corp.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Travelers Corporate Loan Fund Inc. (the "Fund"), a corporation
organized under the laws of the State of Maryland, confirms its agreement with
Mutual Management Corp. (the "Adviser"), as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the investment objective,
policies and limitations specified in its Articles of Incorporation, as amended
from time to time (the "Charter"), in the prospectus ("Prospectus") and (if
applicable) the statement of additional information (the "Statement") filed with
the Securities and Exchange Commission (the "SEC") as part of the Fund's
Registration Statement on Form N-2, as amended from time to time (the
"Registration Statement"), and in the manner and to the extent as may from time
to time be approved by the Board of Directors of the Fund (the "Board"). Copies
of the Prospectus, the Statement and the Charter have been or will be submitted
to the Adviser. The Fund agrees to provide copies of all amendments to the
Registration Statement and the Charter to the Adviser on an on-going basis. The
Fund desires to employ and hereby appoints the Adviser to act as the investment
manager and administrator to the Fund. The Adviser accepts the appointment and
agrees to furnish the services for the compensation set forth below.
2. SERVICES AS INVESTMENT ADVISER
Subject to the supervision, direction and approval of the Board, the
Adviser will (a) manage the Fund's holdings in accordance with the Fund's
investment objective and policies as stated in the Charter and the Registration
Statement; (b) make investment decisions for the Fund; (c) place purchase and
sale orders for portfolio transactions for the Fund; and (d) employ professional
portfolio managers and securities analysts who provide research services to the
Fund. In providing those services, the Adviser will conduct a continual program
of investment, evaluation and, if appropriate, sale and reinvestment of the
Fund's assets. The Adviser is hereby authorized to retain third parties and to
delegate some or all of its duties and obligations under this paragraph 2 to
such persons provided that such persons shall remain under the general
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supervision of the Adviser.
3. SERVICES AS ADMINISTRATOR
Subject to the supervision and direction of the Board, the Adviser
will: (a) supervise all aspects of the Fund's operations under the direction of
the Board and the Fund's officers; (b) supply the Fund with office facilities
(which may be in the Adviser's own offices), statistical and research data, data
processing services, clerical, accounting and bookkeeping services (including,
but not limited to, the calculation of the net asset value of shares of the
Fund), internal auditing and legal services, internal executive and
administrative services, and stationery and office supplies; and (c) prepare
reports to shareholders of the Fund, tax returns and reports to and filings with
the SEC and state blue sky authorities. These services are specified in greater
detail on Appendix A. The Adviser is hereby authorized to retain third parties
and to delegate some or all of its duties and obligations under this paragraph 3
to such persons provided that such persons shall remain under the general
supervision of the Adviser.
4. BROKERAGE
In selecting brokers or dealers to execute transactions on behalf of
the Fund, the Adviser will seek the best overall terms available. In assessing
the best overall terms available for any transaction, the Adviser will consider
factors it deems relevant, including, but not limited to, the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of the
commission, if any, for the specific transaction and on a continuing basis. In
selecting brokers or dealers to execute a particular transaction, and in
evaluating the best overall terms available, the Adviser is authorized to
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934), provided to the Fund
and/or other accounts over which the Adviser or its affiliates exercise
investment discretion.
5. INFORMATION PROVIDED TO THE FUND
The Adviser will keep the Fund informed of developments materially
affecting the Fund's holdings, and will, on its own initiative, furnish the Fund
from time to time with whatever information the Adviser believes is appropriate
for this purpose.
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6. STANDARD OF CARE
The Adviser shall exercise its best judgment in rendering the services
listed in paragraphs 2, 3, 4 and 5 above. The Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Adviser against any liability to the Fund or to its shareholders to which the
Adviser would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or by reason of
the Adviser's reckless disregard of its obligations and duties under this
Agreement.
7. COMPENSATION
In consideration of all of the investment advisory and administration
services rendered or provided pursuant to this Agreement, the Fund will pay the
Adviser on the first business day of each month a fee for the previous month at
the annual rate of 1.05% of the Fund's average daily net assets. The fee for
the period from the Effective Date (defined below) of this Agreement to the end
of the month during which the Effective Date occurs shall be prorated according
to the proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of a month, the fee for such part
of that month shall be prorated according to the proportion that such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
the Adviser, the value of the Fund's net assets shall be computed at the times
and in the manner specified in the Registration Statement.
8. EXPENSES
The Adviser will bear all expenses in connection with the performance
of its services under this Agreement. The Fund will bear all other expenses to
be incurred in its operation, including, but not limited to, the fees payable
under this Agreement; taxes, interest, brokerage fees and commissions, if any;
fees of the Board members of the Fund who are not officers, directors or
employees of Xxxxxxx Xxxxx Xxxxxx Inc., or any of its affiliates; SEC fees and
state blue sky qualification fees; charges of custodians and transfer and
dividend disbursing agents; the Fund's and its Board members' proportionate
share of insurance premiums, professional association dues and/or assessments;
outside auditing and legal expenses; costs of maintaining the Fund's existence;
costs attributable to investor services, including, without limitation,
telephone and personnel expenses; costs of preparing and printing Prospectuses
and Statements for regulatory purposes and, for distribution to existing
shareholders; costs of shareholders reports and meetings of the officers or
Board and any extraordinary expenses.
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS
The Fund understands that the Adviser now acts, will continue to act
and may in the future act as investment adviser to fiduciary and other managed
accounts, and as investment adviser and/or
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administrator to other investment companies, and the Fund has no objections to
the Adviser's so acting, provided that whenever the Fund and one or more other
clients advised by the Adviser have available funds for investment, investments
suitable and appropriate for each will be allocated in accordance with a formula
believed to be equitable to each client. The Fund recognizes that in some cases
this procedure may adversely affect the size of the position obtainable for the
Fund. In addition, the Fund understands that the persons employed by the Adviser
to assist in the performance of the Adviser's duties under this Agreement will
not devote their full time to such service and nothing contained in this
Agreement shall be deemed to limit or restrict the right of the Adviser or any
affiliate of the Adviser to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
10. TERM OF AGREEMENT
This Agreement shall become effective as of _______, 1998, (the
"Effective Date") and shall continue for an initial two-year term and shall
continue thereafter so long as such continuance is specifically approved at
least annually by (i) the Board or (ii) a vote of a majority of the Fund's
outstanding "voting securities" (as that term is defined in the Investment
Company Act of 1940, as amended (the "1940 Act")), provided that in either event
the continuance is also approved by a majority of the Board Members who are not
"interest persons" (as defined in the 0000 Xxx) of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board or by vote of holders of a majority of the Fund's shares,
or upon 90 days' written notice, by the Adviser. This Agreement will also
terminate automatically in the event of its "assignment" (as defined in the 1940
Act and the rules thereunder).
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the enclosed
copy of this Agreement.
Very truly yours,
TRAVELERS CORPORATE LOAN FUND INC.
By:_________________________________
Name:
Title:
Accepted:
MUTUAL MANAGEMENT CORP.
By:_________________________
Name:
Title:
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APPENDIX A
ADMINISTRATIVE SERVICES
Fund Accounting. Fund accounting services involve comprehensive accrual-based
---------------
recordkeeping and management information. They include maintaining a fund's
books and records in accordance with the 1940 Act, net asset value calculation,
daily dividend calculation, tax accounting and portfolio accounting.
The designated fund accountants interact with the Fund's custodian,
transfer agent and investment adviser daily. As required, the responsibilities
of each fund accountant may include:
. Cash Reconciliation - Reconcile prior day's ending cash balance per
-------------------
custodian's records and the accounting system to the prior day's
ending cash balance per fund accounting's cash availability report;
. Cash Availability - Combine all activity affecting the Fund's cash
-----------------
account and produce a net cash amount available for investment;
. Formal Reconciliations - Reconcile system-generated reports to prior
----------------------
day's calculations of interest, dividends, amortization, accretion,
distributions, capital stock and net assets;
. Trade Processing - Upon receipt of instructions from the investment
----------------
adviser review, record and transmit buys and sells to the custodian;
. Journal Entries - Input entries to the accounting system reflecting
---------------
shareholder activity and Fund expense accruals;
. Reconcile and Calculate N.O.A. (net other assets) - Compile all
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activity affecting asset and liability accounts other than investment
account;
. Calculate Net Income, Mil Rate and Yield for Daily Distribution Funds
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- Calculate income on purchase and sales, calculate change in income
due to variable rate change, combine all daily income less expenses to
arrive at net income, calculate mil rate and yields (1 day, 7 day and
30 day);
. Mini-Cycle (except for Money Market Funds) - Review intra day trial
------------------------------------------
balance and reports, review trial balance N.O.A.;
. Holdings Reconciliation - Reconcile the portfolio holdings per the
-----------------------
system to custodian records;
. Pricing - Determine N.A.V. for Fund using market value of all
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securities and currencies (plus N.O.A.), divided by the shares
outstanding, and investigate securities with significant price changes
(over 5%);
. System Check-Back - Verify the change in market value of
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securities which saw trading activity per the system;
. Net Asset Value Reconciliation - Identify the impact of current day's
------------------------------
Fund activity on a per share basis;
. Reporting of Price to NASDAQ - 5:30 P.M. is the final deadline for
-----------------------------
Fund prices being reported to the newspaper;
. Reporting of Price to Transfer Agent- N.A.V.s are reported to transfer
------------------------------------
agent upon total completion of above activities.
In addition, fund accounting personnel: communicate corporate actions of
portfolio holdings to portfolio managers; initiate notification to custodian
procedures on outstanding income receivables; provide information to the Fund's
treasurer for reports to shareholders, SEC, Board members, tax authorities,
statistical and performance reporting companies and the Fund's auditors;
interface with the Fund's auditors; prepare monthly reconciliation packages,
including expense pro forma; prepare amortization schedules for premium and
discount bonds based on the effective yield method; prepare vault reconciliation
reports to indicate securities currently "out-for-transfer;" and calculate daily
expenses based on expense ratios supplied by Fund's treasurer.
Financial Administration. The financial administration services made available
------------------------
to the Fund fall within three main categories: Financial Reporting; Statistical
Reporting; and Publications. The following is a summary of the services made
available to the Fund by the Financial Administration Division:
Financial Reporting
. Coordinate the preparation and review of the annual, semi-annual
and quarterly portfolio of investments and financial statements
included in the Fund's shareholder reports.
Statistical Reporting
. Total return reporting;
. SEC 30-day yield reporting
. Prepare dividend summary;
. Prepare quarter-end reports;
. Communicate statistical data to the financial media (Donoghue,
Lipper, Morningstar, et al.)
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Publications
. Coordinate the printing and mailing process with outside printers
for annual and semi-annual reports, prospectuses, statements of
additional information, proxy statements and special letters or
supplements;
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. Provide graphics and design assistance relating to the creation
of marketing materials and shareholder reports.
Treasury. The following is a summary of the treasury services available
--------
to the Fund:
. Provide a Treasurer and Assistant Treasurer for the Fund;
. Determine expenses properly chargeable to the Fund;
. Authorize payment of bills for expenses of the Fund;
. Establish and monitor the rate of expense accruals;
. Prepare financial materials for review by the Fund's Board (e.g.,
Rule 10f-3, 17a-7 and 17e-1 reports, repurchase agreement dealer
lists, securities transactions);
. Recommend dividends to be declared by the Fund's Board;
. Recommend valuation to be used for securities which are not
readily saleable;
. Function as a liaison with the Fund's outside auditors and
arrange for audits;
. Provide accounting, financial and tax support relating to
portfolio management and any contemplated changes in the Fund's
structure or operations;
. Prepare and file forms with the Internal Revenue Service:
. Form 8613
. Form 1120-RIC
. Board Members' and Shareholders' 1099s
. Mailings in connection with Section 852 and related
regulations.
Legal and Regulatory Services. The legal and regulatory services made available
-----------------------------
to the Fund fall within four main areas: SEC and Public Disclosure Assistance;
Corporate and Secretarial Services; Compliance Services; and Blue Sky
Registration. The following is a summary of the legal and regulatory services
available to the Fund:
SEC and Public Disclosure Assistance
. File annual amendments to the Fund's registration statements, if
necessary, including updating the Prospectus and Statement, if
applicable;
. File annual and semi-annual shareholder reports with the
appropriate regulatory agencies;
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. Prepare and file proxy statements;
. Review marketing material for SEC and NASD clearance;
. Provide legal assistance for shareholder communications.
Corporate and Secretarial Services
. Provide a Secretary and an Assistant Secretary for the Fund;
. Maintain general corporate calendar;
. Prepare agenda and background materials for Fund Board meetings,
make presentations where appropriate, prepare minutes and attend
to follow-up matters raised at Board meetings;
. Organize, attend and keep minutes of shareholder meetings;
. Maintain Charter and By-Laws of the Fund.
Legal Consultation and Business Planning
. Provide general legal advice on matters relating to portfolio
management, Fund operations and any potential changes in the
Fund's investment policies, operations or structure;
. Maintain continuing awareness of significant emerging regulatory
and legislative developments which may affect the Fund, update
the Fund's Board and the investment adviser on those developments
and provide related planning assistance where requested or
appropriate;
. Develop or assist in developing guidelines and procedures to
improve overall compliance by the Fund and its various agents;
. Manage Fund litigation matters and assume full responsibility for
the handling of routine Fund examinations and investigations by
regulatory agencies.
Compliance Services
The Compliance Department is responsible for preparing compliance
manuals, conducting seminars for fund accounting and advisory personnel and
performing on-going testing of the Fund's portfolio to assist the Fund's
investment adviser in complying with Prospectus guidelines and limitations, 1940
Act requirements
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State Securities Filings
The State Securities Filings Department operates in a fully automated
environment using blue sky registration software developed by Price Waterhouse.
In addition to being responsible for the initial and on-going filings in each
state, the Department acts as liaison between the Fund and state regulators, and
monitors and reports on shares sold and related matters.
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