MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT ("Agreement") is made this 1st day of December,
2005,by and between Salomon Brothers Variable Series Funds 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 with
respect to the series of the Corporation 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 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'spro 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 aspromptly 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 VARIABLE SERIES FUNDS INC
By: _____________________________ By:_______________________________
R. Xxx Xxxxxx
Chairman
ATTEST: SALOMON BROTHERS ASSET MANAGEMENT INC
By: _____________________________ By:_______________________________
Xxxxxx Xxxxxxx
Managing Director
Schedule A
Salomon Brothers Variable Small Cap Growth Fund 0.750%
