Salomon Funds Trust
Sub-Item 77Q1 (Advisory Agreement)
This MANAGEMENT AGREEMENT ("Agreement") is made this 1st day
of December, 2005, by and between Salomon Funds Trust, a
Massachusetts Business Trust (the "Trust") and Salomon Brothers
Asset Management Inc, a Delaware corporation (the "Manager").
WHEREAS, the Trust 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 Trust wishes to retain the Manager to provide
investment advisory, management, and administrative services
to the Trust with respect to the series of the Trust 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 Trust 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 Trust's
Board of Trustees (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 Trust's Declaration of Trust 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 Trust 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 Trust 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 Trust or Fund
shall receive from the Trust 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
uch 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
etermined 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 Trust
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 Trust 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 Trust'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 Trust.
This Agreement shall terminate automatically in the event of its
assignment by the Manager and shall not be assignable by the Trust
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
Trust. The undersigned officer of the Trust has executed this Agreement
not individually, but as an officer under the Trust's Declaration of
Trust and the obligations of this Agreement are not binding upon any
of the Trustees, officers or shareholders of the Trust individually
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.
[signature page to follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers thereunto duly authorized.
SALOMON FUNDS TRUST
By:_______________________________
Name: R. Xxx Xxxxxx
Title: Chairman
SALOMON BROTHERS ASSET MANAGEMENT INC
By:_______________________________
Name: Xxxxxx Xxxxxxx
Title: Managing Director
Schedule A
Salomon Brothers National Tax Free Bond Fund
Fee:
The following percentage of the Fund's average daily net assets:
0.50
Salomon Brothers California Tax Free Bond Fund
Fee:
The following percentage of the Fund's average daily net assets:
0.50
Salomon Brothers New York Tax Free Bond Fund
Fee:
The following percentage of the Fund's average daily net assets:
0.50
Salomon Brothers Mid Cap Fund
Fee:
The following percentage of the Fund's average daily net assets:
0.75
