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 Corporation's 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 Fund's portfolio of securities and other
investments consistent with the Fund's 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 Corporation's 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 the Corporation
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 Fund's 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 Fund's 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 Board's 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 tosuch 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 Fund's securities
transactions and the keeping of the Fund's 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
Fund's 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 Fund's 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 Fund's shares and servicing shareholder accounts; expenses
of registering and qualifying the Fund's 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 Fund's 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
Fund's 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 Manager's or any affiliated company's 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 Fund's 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 Fund's "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 Corporation's 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 days' nor less than 30 days'
written notice to the Manager, or by the Manager upon not less than 90 days'
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 Fund's 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 Strategic Bond Fund
First $1.00 billion 0.650%
Next $1.00 billion 0.625%
Next $3.00 billion 0.600%
Next $5.00 billion 0.575%
Over $10.00 billion 0.550%
