EXHIBIT 5(k)
SUBADVISORY AGREEMENT
Agreement, dated as of November 28, 1997 between Salomon
Brothers Asset Management Inc, a Delaware Corporation (the "Investment Manager")
and Salomon Brothers Asset Management Asia Pacific Limited (the "Subadviser"), a
company incorporated in Hong Kong and registered with the Hong Kong Securities
and Futures Commission as a investment adviser (registration number IAC 001015),
relating to the Salomon Brothers Asia Growth Fund (the "Fund"), an investment
portfolio of Salomon Brothers Series Funds Inc, an open-end investment company
(the "Company").
1. The Company proposes to engage in the business of investing
and reinvesting the assets of 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 by the
Investment Manager to the Subadviser. Any amendments to these documents shall be
furnished by the Investment Manager to the Subadviser.
2. Pursuant to Section 2 of the Investment Management
Agreement dated the date hereof between the Company and the Investment Manager
relating to the Fund (the "Investment Management Agreement"), the Investment
Manager hereby delegates the performance of certain of its services to the
Subadviser to the extent and on the terms set forth in this agreement. The
Subadviser accepts such delegation and agrees to render the services herein set
forth for the compensation herein provided.
3. The Subadviser shall (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.
The Subadviser shall, at its expense, (i) provide office space, office
facilities and personnel reasonably necessary for performance of the services to
be provided by the Subadviser pursuant to this agreement, and (ii) provide
persons satisfactory to the Company's Board of Directors to serve as officers
and employees of the Fund.
4. As manager of the Fund's assets, the Subadviser 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 Subadviser shall advise the Investment Manager, 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 Subadviser and/or
2
the Company's officers or Board of Directors, supply the reasons for making such
investments.
5. The Subadviser 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 applicable law, to purchase and/or sell securities in which
the Subadviser, Investment Manager or any of their 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 Subadviser 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
Subadviser and the Investment Manager, provided that the best competitive
execution price is obtained at the time of the trade execution.
6. In consideration of the Subadviser's undertaking to render
the services described in this agreement, the Investment Manager agrees that the
Subadviser shall not be liable under this agreement for any error of judgment or
mistake of law or for any loss suffered by the Company (including any Hong Kong
taxes or related expenses imposed on the Fund in relation to matters
contemplated by this agreement) in connection with the performance of this
agreement, provided that nothing in this agreement shall be deemed to protect or
purport to protect the Subadviser against any liability to the Company or its
stockholders to which the Subadviser 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"). To the extent the
Investment Manager obtains indemnification from the Fund, the Investment Manager
will indemnify the Subadviser against, and hold it harmless from, any and all
losses, claims, damages, liabilities or expenses (including any Hong Kong taxes
or related expenses imposed on the Fund in relation to the matters contemplated
by this agreement), 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 Subadviser.
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
Subadviser 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 Subadviser 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. To the extent the Investment Manager receives the same from the
Fund, the Subadviser shall be entitled to advances from the Investment Manager
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 Subadviser shall provide to the
Investment Manager, who in turn will provide to the Fund, a written affirmation
of the Subadviser's good faith belief that the standard of conduct necessary for
indemnification 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 Subadviser shall provide security in form and amount acceptable to
the Investment Manager
3
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 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 Subadviser will
ultimately be found to be entitled to indemnification.
7. In consideration of the services to be rendered by the
Subadviser under this agreement, the Investment Manager shall pay the Investment
Adviser, in respect of each quarter of its service, a lump sum fee in such
amount as shall be agreed between the parties hereto from time to time. Such
agreement may be recorded in an agreement substantially in the form of
Attachment A hereto. The quarterly fee referred to in the preceding sentence
shall be paid by the Investment Manager to the Subadviser in arrears. Any amount
payable to the Subadviser under this agreement shall be computed in U.S.
dollars. The fee due for any quarter during which this agreement remains in
effect for less than a full quarter will be determined on a pro rata basis.
8. 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 0000
Xxx) 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 Company's directors
who are not parties to this agreement or "interested persons" (as defined in the
0000 Xxx) of any such party. This agreement may be terminated at any time,
without the payment of any penalty, (i) by a vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), (ii) by a vote of a
majority of the Company's entire Board of Directors on 60 days' written notice
to the Investment Manager and the Subadviser or (iii) by either the Subadviser
or the Investment Manager on 60 days' written notice to the other party and the
Company. This agreement shall terminate automatically in the event of its
assignment (as defined in the 1940 Act). Termination of this agreement shall not
relieve either the Investment Manager nor the Subadviser from any liability or
obligation in respect of any matters, undertakings or conditions which shall not
have been done, observed or performed prior to such termination. 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
4
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. Each of the parties hereto undertakes to notify the other
of any material change in any information supplied in, or pursuant to, this
agreement within a reasonable time after such change. The Subadviser undertakes
(i) to notify the Investment Manager of any change in its directors within a
reasonable time after such change and (ii) to provide, on demand, such financial
and other information relating to itself or its business as the Investment
Manager may from time to time reasonably require. The Investment Manager
acknowledges that the Subadviser may be required by law or the rules of any
governmental or other regulatory authority to disclose information relating to
the Fund.
13. This agreement shall be governed by the laws of the State
of New York.
5
IN WITNESS WHEREOF, the parties hereto have caused this
agreement to be executed by their officers designated below as of the date
hereinabove written.
SALOMON BROTHERS ASSET
MANAGEMENT ASIA PACIFIC LIMITED
By:
------------------------
Name:
Title:
SALOMON BROTHERS ASSET
MANAGEMENT INC
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
6
Attachment A
From: Salomon Brothers Asset Management Asia Pacific Limited
To: Salomon Brothers Asset Management Inc
Date: _________________________
This confirms that the amount of the quarterly fee under paragraph 7 of our
agreement effective ________, 1997 for the period set forth below shall be as
follows:
Period: from ___________ to ____________
Amount of Quarterly Fee: ___________________
Please initial next to your name above and return to indicate your confirmation.