MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT ("Agreement") is made this 1st day of
December, 2005, by and between The Salomon Brothers 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 March, June, September
and December, a fee consisting of a base fee plus a performance
adjustment as set forth 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 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 quarter 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 quarter, 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 quarter 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 quarter. 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: THE SALOMON BROTHERS FUND INC
By: _____________________________ By:_______________________________
R. Xxx Xxxxxx
Chairman
ATTEST: SALOMON BROTHERS ASSET MANAGEMENT INC
By: _____________________________ By:_______________________________
Xxxxxx Xxxxxxx
Managing Director
Schedule A
The Fund will pay the Manager quarterly a fee consisting of a base
fee as computed below (the "Base Fee") plus a performance adjustment.
The Base Fee shall be calculated as follows:
Average Daily Net Assets Quarterly Fee Rate
First $350 million 0.16250%
Next $150 million 0.13750%
Next $250 million 0.13125%
Next $250 million 0.12500%
Over $1.00 billion 0.11250%
The Base Fee shall be calculated using the daily net assets averaged
over the most recent quarter. For each percentage point by which the Fund's
investment performance exceeds or is exceeded by the investment record of the
Standard & Poor's Composite Index of 200 Stocks (the "S&P 500 Index") over the
one year period ending on the last day of each calendar quarter, the Base Fee
will be adjusted upward or downward by the product of (i) 1/4 of .01%
multiplied by (ii) the Fund's average daily net assets for the one year period
ending on the last day of each calendar quarter. If the amount by which the
Fund outperforms or underperforms the S&P 500 Index is not a whole percentage
point, a pro rata adjustment shall be made. However, there will be no
performance adjustment unless the Fund's investment performance exceeds or is
exceeded by the investment record of the S&P 500 Index by at least one
percentage pointover the same period. The maximum quarterly adjustment is 1/4
of .1%, which would occur if the Fund's performance exceeds or is exceeded by
the S&P 500 Index by ten or more percentage points.
The Fund's investment performance, for a period of one year, shall
mean the sum of (i) the change in the Fund's net asset value per share during
such period, (ii) the value of cash distributions per share accumulated to the
end of such period and (iii) the value of capital gains taxes per share paid
or payable on undistributed realized long-term capital gains accumulated to
the end of such period; expressed as a percentage of the Fund's net asset
value per share at the beginning of such period. For this purpose, the
value of distributions per share of realized capital gains, of dividends
per share paid from investment income and of capital gains taxes per share
paid or payable on undistributed realized long-term capital gains shall be
treated as reinvested in the Fund' shares at the net asset value per share
in effect at the close of business on the record date for the payment of
such distributions and dividends and the date on which provision is made
for such taxes, after giving effect to such distributions, dividends and
taxes.
The investment record of the S&P 500 Index, for a period of one year,
shall mean the sum of (i) the change in the level of the index during such
period and (ii) the value, computed consistently with the index, of cash
distributions made by companies whose securities comprise the index
accumulated to the end of such period; expressed as a percentage of the
index level at the beginning of such period. For this purpose, cash
distributions on the securities which comprise the index shall be treated
as reinvested in the index at least as frequently as the end of each
calendar quarter following the payment of the dividend.
