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Exhibit 5(b)
MANAGEMENT CONTRACT
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
April 1996
Salomon Brothers Asset Management Inc
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This will confirm the agreement between the
undersigned (the "Company") and you (the "Investment Manager") as follows:
1. The Company is an open-end investment company
which currently has three investment portfolios -- Salomon Brothers
Institutional High Yield Bond Fund, Salomon Brothers Institutional Emerging
Markets Debt Fund and Salomon Brothers Institutional Asia Growth Fund. The
Company proposes to engage in the business of investing and reinvesting the
assets of Salomon Brothers Institutional Emerging Markets Debt Fund (the
"Emerging Markets Debt Fund" or the "Fund") in the manner and in accordance
with the investment objective and limitations specified in the Company's
Articles of Incorporation, as amended (the "Articles") and the currently
effective prospectus, including the documents incorporated by reference therein
(the "Prospectus"), relating to the Company and the Fund, included in the
Company's Registration Statement, as amended from time to time (the
"Registration Statement"), filed by the Company under the Investment Company
Act of 1940, as amended (the "1940 Act"), and the Securities Act of 1933, as
amended. 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 Company 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 and (d) provide continuous
supervision of the Fund's investment portfolio.
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, (ii) provide the Fund
with persons satisfactory to the Company's Board of Directors to serve as
officers and employees of the Fund and (iii) provide the office space,
facilities, equipment and
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personnel necessary to perform the following services for the Fund: (A) review
purchases and sales of portfolio instruments and review the Fund's portfolio to
assess compliance with the Fund's stated investment objective and limitations
and compliance with the 1940 Act and other applicable laws and regulations, (B)
record keeping and reporting to the extent such records and reports are not
maintained or furnished by the Fund's transfer agent, custodian, administrative
and accounting services agent, or other agents employed by the Fund, (C)
supervision of Fund operations, including coordination of functions of
administrator, transfer agent, custodian, administrative and accounting
services agent, accountants, counsel and other parties performing services or
operational functions for the Fund; and (D) certain administrative and clerical
services not otherwise provided by the Fund's transfer agent, custodian,
administrative and accounting services agent, or other agents employed by the
Fund.
(b) Except as provided in subparagraph (a), the
Company shall be responsible for all of the Fund's expenses and liabilities,
including organizational expenses; taxes; interest; fees (including fees paid
to its directors who are not affiliated with the Investment Manager or any of
its affiliates); fees payable to the Securities and Exchange Commission; state
securities qualification fees; costs of preparing and printing prospectuses for
regulatory purposes and for distribution to existing shareholders; advisory and
administration fees; charges of the custodian, transfer agent; administrative
and accounting services agent and any other agent employed by the Fund;
insurance premiums; auditing and legal expenses; costs of shareholders' reports
and shareholders' meetings; charges and expenses of any entity used for pricing
the Fund's portfolio securities and calculating the net asset value of the
Fund's shares; any extraordinary expenses; and brokerage fees and commissions,
if any, in connection with the purchase or sale of portfolio securities; and
payments to the Fund's distributor for activities intended to result in the
sale of Fund shares.
4. As manager of the Fund's assets, the
Investment Manager shall make investments for the Fund's account in accordance
with the investment objective and limitations set forth in the Articles, the
Prospectus, the 1940 Act, the provisions of the Internal Revenue Code of 1986,
as amended, relating to regulated investment companies, applicable banking laws
and regulations, and policy decisions adopted by the Company's Board of
Directors from time to time. The Investment Manager shall advise the Company's
officers and Board of Directors, at such times as the Company's Board of
Directors may specify, of investments made for the Fund's account and shall,
when requested by the Company's officers or Board of Directors, supply the
reasons for making such investments.
5. The Investment Manager is authorized on
behalf of the Company, from time to time when deemed to be in the best
interests of the Company and to the extent permitted by
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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 Company, which broker may be an affiliate of the Investment
Manager, provided that the best competitive execution price is obtained at the
time of the trade execution.
6. In consideration of the Investment Manager's
undertaking to render the services described in this agreement, the Company
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 Company
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 Company 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
Company who are neither "interested persons" of the Company 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
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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 6 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.
7. In consideration of the services to be
rendered by the Investment Manager under this agreement, the Company shall pay
the Investment Manager a monthly fee on the first business day of each month at
an annual rate of 0.70% of the average daily value (as determined on the days
and at the time set forth in the Prospectus for determining net asset value per
share) of the Fund's net assets during the preceding month. If the fee payable
to the Investment Manager pursuant to this paragraph 7 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 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. For purposes of
calculating each such monthly fee, the value of the Fund's net assets shall be
computed in the manner specified in the Prospectus and the Articles for the
computation of the value of the Fund's net assets in connection with the
determination of the net asset value of shares of the Fund's capital stock.
8. If the aggregate expenses incurred by, or
allocated to, the Fund in any fiscal year shall exceed the expense limitations
applicable to the Fund imposed by state securities laws or regulations
thereunder, as such limitations may be raised or lowered from time to time, the
Investment Manager shall reimburse the Fund for such excess. The Investment
Manager's reimbursement obligation will be limited to the amount of fees it
received under this agreement during the period in which such expense
limitations were exceeded, unless otherwise required by applicable laws or
regulations. With respect to portions of a fiscal year in which this contract
shall be in effect, the foregoing limitations shall be prorated according to
the proportion which that portion of the fiscal year bears to the full fiscal
year. Any payments required to be made by this paragraph 8 shall be made once
a year promptly after the end of the Company's fiscal year.
9. This agreement shall continue in effect until
two 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 1940 Act) or by the Company's Board of Directors and (b) by the
vote, cast in person at a meeting called for the purpose, of a majority of the
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Company's directors who are not parties to this agreement or "interested
persons" (as defined in the 1940 Act) 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 1940
Act) or by a vote of a majority of the Company'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 Company. 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 6 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.
10. Upon expiration or earlier termination of
this agreement, the Company shall, if reference to "Salomon Brothers" is made
in the corporate name of the Company or in the 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 Company and 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 Company 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 Company, and
the failure or omission of the Investment Manager to request a change of the
Company's or the Fund's name or a cessation of the use of the name of "Salomon
Brothers" as described in this paragraph 10 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.
11. 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.
12. This agreement shall be governed by the laws
of the State of New York.
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If the foregoing correctly sets forth the agreement
between the Company and the Investment Manager, please so indicate by signing
and returning to the Company the enclosed copy hereof.
Very truly yours,
SALOMON BROTHERS INSTITUTIONAL
SERIES FUNDS INC
By:
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Name: Xxxxxxx X. Xxxxxx
Title: President
ACCEPTED:
SALOMON BROTHERS ASSET
MANAGEMENT INC
By:
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Name: Xxxxxxx X. Xxxxxx
Title: President
