MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT ("Agreement") is made this 1st day of
December, 2005, by and between Salomon Brothers Capital Fund 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 (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 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 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 CAPITAL FUND INC
By: _____________________________ By:_______________________________
R. Xxx Xxxxxx
Chairman
ATTEST: SALOMON BROTHERS ASSET MANAGEMENT INC
By: _____________________________ By:_______________________________
Xxxxxx Xxxxxxx
Managing Director
Schedule A
Salomon Brothers Capital Fund Inc
First $100 million 1.000%
Next $100 million 0.750%
Next $200 million 0.625%
Over $400 million 0.500%
