MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT ("Agreement") is made this 1st day of December, 2005,
by and between Salomon Brothers Variable Series Funds Inc, a Maryland
corporation (the "Corporation") and Salomon Brothers Asset Management Inc, a
Delaware corporation (the "Manager").
WHEREAS, the Corporation is registered as a management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Manager is engaged primarily in rendering investment advisory,
management and administrative services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended;
WHEREAS, the Corporation wishes to retain the Manager to provide investment
advisory, management, and administrative services to the Corporation with
respect to the series of the Corporation designated in Schedule A annexed
hereto (the "Fund"); and
WHEREAS, the Manager is willing to furnish such services on the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed as follows:
1. The Corporation hereby appoints the Manager to act as investment
adviser and administrator of the Fund for the period and on the terms set
forth in this Agreement. The Manager accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. The Fund shall at all times keep the Manager fully informed with regard to
the securities owned by it, its funds available, or to become available, for
investment, and generally as to the condition of its affairs. It shall furnish
the Manager with such other documents and information with regard to its affairs
as the Manager may from time to time reasonably request.
3.(a) Subject to the supervision of the Corporation1s Board of Directors
(the "Board"), the Manager shall regularly provide the Fund with investment
research, advice, management and supervision and shall furnish a continuous
investment program for the Fund1s portfolio of securities and other investments
consistent with the Fund1s investment objectives, policies and restrictions, as
stated in the Fund's current Prospectus and Statement of Additional Information.
The Manager shall determine from time to time what securities and other
investments will be purchased, retained, sold or exchanged by the Fund and what
portion of the assets of the Fund's portfolio will be held in the various
securities and other investments in which the Fund invests, and shall implement
those decisions, all subject to the provisions of the Corporation1s Articles of
Incorporation, and By-Laws (collectively, the "Governing Documents"), the 1940
Act, and the applicable rules and regulations promulgated thereunder by the
Securities and Exchange Commission (the "SEC") and interpretive guidance issued
thereunder by the SEC staff and any other applicable federal and state law, as
well as the investment objectives, policies and restrictions of the Fund
referred to above, and any other specific policies adopted by the Board and
disclosed to the Manager. The Manager is authorized as the agent of
to give instructions to the custodian of the Fund as to deliveries of
securities and other investments and payments of cash for the account of the
Fund. Subject to applicable provisions of the 1940 Act and direction from the
Board, the investment program to be provided hereunder may entail the
investment of all or substantially all of the assets of a Fund in one or more
investment companies. The Manager will place orders pursuant to its
investment determinations for the Fund either directly with the issuer or
with any broker or dealer, foreign currency dealer, futures commission merchant
or others selected by it. In connection with the selection of such brokers or
dealers and the placing of such orders, subject to applicable law, brokers or
dealers may be selected who also provide brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) to the Funds and/or the other accounts over which the Manager or its
affiliates exercise investment discretion. The Manager is authorized to pay
a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for a Fund which is in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction if the Manager determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer. This determination
may be viewed in terms of either that particular transaction or the overall
responsibilities which the Manager and its affiliates have with respect to
accounts over which they exercise investment discretion. The Board may adopt
policies and procedures that modify and restrict the Manager's authority
regarding the execution of the Fund's portfolio transactions provided herein.
The Manager shall also provide advice and recommendations with respect to other
aspects of the business and affairs of the Fund, shall exercise voting rights,
rights to consent to corporate action and any other rights pertaining to a
Fund1s portfolio securities subject to such direction as the Board may provide,
and shall perform such other functions of investment management and supervision
as may be directed by the Board.
(b) Subject to the direction and control of the Board, the Manager shall
perform such administrative and management services as may from time to time
be reasonably requested by the Fund as necessary for the operation of the Fund,
such as (i) supervising the overall administration of the Fund, including
negotiation of contracts and fees with and the monitoring of performance and
xxxxxxxx of the Fund1s transfer agent, shareholder servicing agents, custodian
and other independent contractors or agents, (ii) providing certain compliance,
fund accounting, regulatory reporting, and tax reporting services, (iii)
preparing or participating in the preparation of Board materials, registration
statements, proxy statements and reports and other communications to
shareholders, (iv) maintaining the Fund's existence, and (v) during such times
as shares are publicly offered, maintaining the registration and qualification
of the Fund's shares under federal and state laws. Notwithstanding the
foregoing, the Manager shall not be deemed to have assumed any duties with
respect to, and shall not be responsible for, the distribution of the shares of
any Fund, nor shall the Manager be deemed to have assumed or have any
responsibility with respect to functions specifically assumed by any transfer
agent, fund accounting agent, custodian, shareholder servicing agent or other
agent, in each case employed by the Fund to perform such functions.
(c) The Fund hereby authorizes any entity or person associated with the Manager
which is a member of a national securities exchange to effect any transaction
on the exchange for the account of the Fund which is permitted by Section
11(a) of the Securities Exchange Act of 1934, as amended, and Rule 11a2-2(T)
thereunder, and the Fund hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv).
Notwithstanding the foregoing, the Manager agrees that it will not deal with
itself, or with members of the Board or any principal underwriter of the Fund,
as principals or agents in making purchases or sales of securities or other
property for the account of the Fund, nor will it purchase any securities
from an underwriting or selling group in which the Manager or its affiliates
is participating, or arrange for purchases and sales of securities between a
Fund and another account advised by the Manager or its affiliates, except in
each case as permitted by the 1940 Act and in accordance with such policies
and procedures as may be adopted by a Fund from time to time, and will comply
with all other provisions of the Governing Documents and the Fund's
then-current Prospectus and Statement of Additional Information relative to
the Manager and its directors and officers.
4. Subject to the Board1s approval, the Manager or the Fund may enter into
contracts with one or more investment subadvisers or subadministrators,
including without limitation, affiliates of the Manager, in which the
Manager delegates to such investment subadvisers or subadministrators any
or all its duties specified hereunder, on such terms as the Manager will
determine to be necessary, desirable or appropriate, provided that in each
case the Manager shall supervise the activities of each such subadviser or
subadministrator and further provided that such contracts impose on any
investment subadviser or subadministrator bound thereby all the conditions
to which the Manager is subject hereunder and that such contracts are
entered into in accordance with and meet all applicable requirements of
the 1940 Act.
5.(a) The Manager, at its expense, shall supply the Board and officers of the
Corporation with all information and reports reasonably required by them and
reasonably available to the Manager and shall furnish the Fund with office
facilities, including space, furniture and equipment and all personnel
reasonably necessary for the operation of the Fund. The Manager shall oversee
the maintenance of all books and records with respect to the Fund1s securities
transactions and the keeping of the Fund1s books of account in accordance with
all applicable federal and state laws and regulations. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Manager hereby agrees that
any records that it maintains for the Fund are the property of the Fund, and
further agrees to surrender promptly to the Fund any of such records upon the
Fund1s request. The Manager further agrees to arrange for the preservation of
the records required to be maintained by Rule 31a-1 under the 1940 Act for the
periods prescribed by Rule 31a-2 under the 1940 Act. The Manager shall
authorize and permit any of its directors, officers and employees, who may be
elected as Board members or officers of the Fund, to serve in the capacities
in which they are elected.
(b) The Manager shall bear all expenses, and shall furnish all necessary
services, facilities and personnel, in connection with its responsibilities
under this Agreement. Other than as herein specifically indicated, the Manager
shall not be responsible for the Fund1s expenses, including, without
limitation, advisory fees; distribution fees; interest; taxes; governmental
fees; voluntary assessments and other expenses incurred in connection with
membership in investment company organizations; organization costs of the Fund;
the cost (including brokerage commissions, transaction fees or charges, if any)
in connection with the purchase or sale of the Fund's securities and other
investments and any losses in connection therewith; fees and expenses of
custodians, transfer agents, registrars, independent pricing vendors or other
agents; legal expenses; loan commitment fees; expenses relating to share
certificates; expenses relating to the issuing and redemption or repurchase
of the Fund1s shares and servicing shareholder accounts; expenses of
registering and qualifying the Fund1s shares for sale under applicable federal
and state law; expenses of preparing, setting in print, printing and
distributing prospectuses and statements of additional information and any
supplements thereto, reports, proxy statements, notices and dividends to the
Fund1s shareholders; costs of stationery; website costs; costs of meetings
of the Board or any committee thereof, meetings of shareholders and other
meetings of the Fund; Board fees; audit fees; travel expenses of officers,
members of the Board and employees of the Fund, if any; and the Fund1s pro
rata portion of premiums on any fidelity bond and other insurance covering
the Fund and its officers, Board members and employees; litigation expenses
and any non-recurring or extraordinary expenses as may arise, including,
without limitation, those relating to actions, suits or proceedings to which
the Fund is a party and the legal obligation which the Fund may have to
indemnify the Fund's Board members and officers with respect thereto.
6. No member of the Board, officer or employee of the Corporation or Fund shall
receive from the Corporation or Fund any salary or other compensation as such
member of the Board, officer or employee while he is at the same time a
director, officer, or employee of the Manager or any affiliated company of the
Manager, except as the Board may decide. This paragraph shall not apply to
Board members, executive committee members, consultants and other persons who
are not regular members of the Manager1s or any affiliated company1s staff.
7. As compensation for the services performed and the facilities furnished and
expenses assumed by the Manager, including the services of any consultants
retained by the Manager, the Fund shall pay the Manager, as promptly as
possible after the last day of each month, a fee, computed daily at an annual
rate set forth opposite the Fund's name on Schedule A annexed hereto, provided
however, that if the Fund invests all or substantially all of its assets in
another registered investment company for which the Manager or an affiliate of
the Manager serves as investment adviser or investment manager, the annual fee
computed as set forth on such Schedule A shall be reduced by the aggregate
management fees allocated to that Fund for the Fund1s then-current fiscal year
from such other registered investment company. The first payment of the fee
shall be made as promptly as possible at the end of the month succeeding the
effective date of this Agreement, and shall constitute a full payment of the
fee due the Manager for all services prior to that date. If this Agreement is
terminated as of any date not the last day of a month, such fee shall be paid
as promptly as possible after such date of termination, shall be based on the
average daily net assets of the Fund in that period from the beginning of such
month to such date of termination, and shall be that proportion of such average
daily net assets as the number of business days in such period bears to the
number of business days in such month. The average daily net assets of the
Fund shall in all cases be based only on business days and be computed as of
the time of the regular close of business of the New York Stock Exchange, or
such other time as may be determined by the Board.
8. The Manager assumes no responsibility under this Agreement other than
to render the services called for hereunder, in good faith, and shall not be
liable for any error of judgment or mistake of law, or for any loss arising
out of any investment or for any act or omission in the execution of
securities transactions for a Fund, provided that nothing in this Agreement
shall protect the Manager against any liability to the Fund to which the
Manager 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 obligations and duties hereunder. As used
in this Section 8, the term "Manager" shall include any affiliates of the
Manager performing services for the Corporation or the Fund contemplated
hereby and the partners, shareholders, directors, officers and employees
of the Manager and such affiliates.
9. Nothing in this Agreement shall limit or restrict the right of any
director, officer, or employee of the Manager who may also be a Board
member, officer, or employee of the Corporation or the Fund, to engage
in any other business or to devote his time and attention in part to
the management or other aspects of any other business, whether of a
similar nature or a dissimilar nature, nor to limit or restrict the
right of the Manager to engage in any other business or to render
services of any kind, including investment advisory and management
services, to any other fund, firm, individual or association. If the
purchase or sale of securities consistent with the investment policies
of a Fund or one or more other accounts of the Manager is considered
at or about the same time, transactions in such securities will be
allocated among the accounts in a manner deemed equitable by the
Manager. Such transactions may be combined, in accordance with
applicable laws and regulations, and consistent with the Manager's
policies and procedures as presented to the Board from time to time.
10. For the purposes of this Agreement, the Fund1s "net assets" shall
be determined as provided in the Fund's then-current Prospectus and
Statement of Additional Information and the terms "assignment," "interested
person," and "majority of the outstanding voting securities" shall have the
meanings given to them by Section 2(a) of the 1940 Act, subject to such
exemptions as may be granted by the SEC by any rule, regulation or order.
11. This Agreement will become effective with respect to the Fund on
the date set forth opposite the Fund's name on Schedule A annexed hereto,
provided that it shall have been approved by the Corporation1s Board and
by the shareholders of the Fund in accordance with the requirements of
the 1940 Act and, unless sooner terminated as provided herein, will
continue in effect for two years from the above written date.
Thereafter, if not terminated, this Agreement shall continue in effect
with respect to the Fund, so long as such continuance is specifically
approved at least annually (i) by the Board or (ii) by a vote of a
majority of the outstanding voting securities of the Fund, provided that
in either event the continuance is also approved by a majority of the
Board members who are not interested persons of any party to this
Agreement, by vote cast in person at a meeting called for the purpose
of voting on such approval.
12. This Agreement is terminable with respect to the Fund without
penalty by the Board or by vote of a majority of the outstanding
voting securities of the Fund, in each case on not more than 60 days1
nor less than 30 days1 written notice to the Manager, or by the Manager
upon not less than 90 days1 written notice to the Fund, and will be
terminated upon the mutual written consent of the Manager and the
Corporation. This Agreement shall terminate automatically in the event
of its assignment by the Manager and shall not be assignable by the
Corporation without the consent of the Manager.
13. The Manager agrees that for services rendered to the Fund, or for any
claim by it in connection with services rendered to the Fund, it shall look
only to assets of the Fund for satisfaction and that it shall have no claim
against the assets of any other portfolios of the Corporation.
14. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination
is sought, and no material amendment of the Agreement shall be effective
until approved, if so required by the 1940 Act, by vote of the holders of a
majority of the Fund1s outstanding voting securities.
15. This Agreement embodies the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter hereof. Should any part
of this Agreement be held or made invalid by a court decision, statute,
rule or otherwise, the remainder of this Agreement shall not be affected
thereby. This Agreement shall be binding on and shall inure to the
benefit of the parties hereto and their respective successors.
16. This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
ATTEST: SALOMON BROTHERS VARIABLE SERIES FUNDS INC
By: _____________________________ By:_______________________________
R. Xxx Xxxxxx
Chairman
ATTEST: SALOMON BROTHERS ASSET MANAGEMENT INC
By: _____________________________ By:_______________________________
Xxxxxx Xxxxxxx
Managing Director
Schedule A
Salomon Brothers Variable All Cap Fund
First $1.50 billion 0.750%
Next $0.50 billion 0.700%
Next $0.50 billion 0.650%
Next $1.00 billion 0.600%
Over $3.50 billion 0.500%
