Exhibit 99.2k1
ADMINISTRATION AGREEMENT
MAY __, 1998
MUTUAL MANAGEMENT CORP.
000 XXXXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
Dear Sirs:
Salomon Brothers High Income Fund II Inc (the "Fund"), a corporation
organized under the laws of the State of Maryland, confirms its agreement with
Mutual Management Corp. ("MMC"), 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 limitations specified in the
Articles of Incorporation of the Fund, as amended from time to time, in
its Registration Statement (the "Registration Statement") on Form N-2(File Nos.
333-48351 and 811-08709),and in such manner and to the extent as may from time
to time be approved by the Board of Directors of the Fund. Copies of the Fund's
Registration Statement and the Articles of Incorporation of the Fund have been
submitted to MMC. The Fund desires to employ and hereby appoints MMC as
administrator. MMC accepts this appointment and agrees to furnish services for
the compensation set forth below. MMC is hereby authorized to retain third
parties and is hereby authorized to delegate some or all of its duties and
obligations hereunder to such persons provided that such persons shall remain
under the general supervision of MMC.
2. SERVICES AS ADMINISTRATOR
Subject to the supervision and direction of the Board of Directors of
the Fund, MMC will (a) assist in supervising all aspects of the Fund's
operations except those performed by Salomon Brothers Asset Management Inc (the
"Adviser") under its investment advisory agreement with the Fund; (b) supply the
Fund with office facilities (which may be MMC's own offices) for providing its
services under this Agreement, 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, the
calculation of internal auditing and legal services, internal executive and
administrative services, and stationary and office supplies; and (c) prepare
Board materials, reports to the shareholders of the Fund, tax returns and
reports to and filings with the Securities and Exchange Commission (the "SEC")
and state blue sky authorities.
3. COMPENSATION
In consideration of services rendered pursuant to this Agreement, the
Fund will pay MMC on the first business day of each month a fee for the previous
month at an annual
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rate of 0.10% 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). 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. Upon any termination of this Agreement before the end of any month, the
fee for such part of the month shall be prorated according to the proportion
which 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 MMC, the value of the Fund's net assets shall be computed at the
times and in the manner specified in the Registration Statement as from time to
time in effect.
4. EXPENSES
MMC will bear all expenses in connection with the performance of its
services under this Agreement. The Fund shall be responsible for all of the
Fund's expenses and liabilities, including organizational and offering expenses
(which inc include out-of-pocket expenses, but not overhead or employee costs of
the Adviser); 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, investment adviser, any 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 Adviser 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.
5. STANDARD OF CARE
MMC shall exercise its best judgment in rendering the services listed
in paragraph 2 above. MMC 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 MMC against liability to the
Fund or to its shareholders to which MMC would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its
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part in the performance of its duties or by reason of MMC's reckless disregard
of its obligations and duties under this Agreement.
6. TERM OF AGREEMENT
This Agreement shall continue automatically (unless terminated as
provided herein) for two years from the date hereof and thereafter for
successive annual periods provided that such continuance is specifically
approved at least annually by the Board of Directors of the Fund. This Agreement
is terminable, without penalty, on 60 days' written notice, by the Board of
Directors of the Fund or by vote of holders of a majority of the Fund's shares,
or upon 90 days' written notice, by MMC.
7. SERVICE TO OTHER COMPANIES OR ACCOUNTS
The Fund understands that MMC now acts, will continue to act and may
act in the future as administrator to one or more other investment companies,
and the Fund has no objection to MMC's so acting. The Fund understands that the
persons employed by MMC to assist in the performance of MMC's duties hereunder
will not devote their full time to such service and nothing contained herein
shall be deemed to limit or restrict the right of MMC or any affiliate of MMC to
engage in and devote time and attention to other businesses or to render
services of whatever kind or nature.
[End of Text]
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If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
Salomon Brothers High Income Fund II Inc
By:
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Title:
Accepted:
Mutual Management Corp.
By:
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Title:
