EXHIBIT 5(j)
MANAGEMENT CONTRACT
SALOMON BROTHERS SERIES FUNDS INC
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
November 28, 1997
Salomon Brothers Asset Management Inc
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This will confirm the agreement between the undersigned (the
"Company") and you (the "Investment Manager") as follows:
1. The Company is an open-end investment company which
currently has nine investment portfolios -- Salomon Brothers Cash Management
Fund, Salomon Brothers New York Municipal Money Market Fund, Salomon Brothers
Institutional Money Market Fund, Salomon Brothers National Intermediate
Municipal Fund, Salomon Brothers U.S. Government Income Fund, Salomon Brothers
High Yield Bond Fund, Salomon Brothers Strategic Bond Fund, Salomon Brothers
Total Return Fund and Salomon Brothers Asia Growth Fund. The Company proposes to
engage in the business of investing and reinvesting the assets of Salomon
Brothers Asia Growth Fund (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 to the
Investment Manager. Any amendments to these documents shall be furnished to the
Investment Manager.
2. The Company employs the Investment Manager to (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. At the Investment Manager's own expense and
subject to its supervision, the Investment Manager may delegate the performance
of all or a part of its services under this agreement to others.
3. (a) The Investment Manager shall, at its expense, (i)
provide the Fund with office space, office facilities and personnel reasonably
necessary for performance of the
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services to be provided by the Investment Manager pursuant to this Agreement,
(ii) provide the Fund with persons satisfactory to the Company's Board of
Directors to serve as officers and employees of the Fund and (iii) provide the
office space, facilities, equipment and personnel necessary to perform the
following services for the Fund: (A) review purchases and sales of portfolio
instruments and review the Fund's portfolio to assess compliance with the Fund's
stated investment objective and limitations and compliance with the 1940 Act and
other applicable laws and regulations, (B) record keeping and reporting to the
extent such records and reports are not maintained or furnished by the Fund's
transfer agent, custodian, administrative and accounting services agent, or
other agents employed by the Fund, (C) supervision of Fund operations, including
coordination of functions of transfer agent, custodian, administrative and
accounting services agent, accountants, counsel and other parties performing
services or operational functions for the Fund; and (D) certain administrative
and clerical services not otherwise provided by the Fund's transfer agent,
custodian, administrative and accounting services agent, or other agents
employed by the Fund.
(b) Except as provided in subparagraph (a), the Company shall
be responsible for all of the Fund's expenses and liabilities, including
organizational expenses; taxes; interest; fees (including fees paid to its
directors who are not affiliated with the Investment Manager or any of its
affiliates); fees payable to the Securities and Exchange Commission; state
securities qualification fees; costs of preparing and printing prospectuses for
regulatory purposes and for distribution to existing shareholders; advisory and
administration fees; charges of the custodian, transfer agent, administrative
and accounting services agent and any other agent employed by the Fund;
insurance premiums; auditing and legal expenses; costs of shareholders' reports
and shareholders' meetings; charges and expenses of any entity used for pricing
the Fund's portfolio securities and calculating the net asset value of the
Fund's shares; any extraordinary expenses; brokerage fees and commissions, if
any, in connection with the purchase or sale of portfolio securities; and
payments to the Fund's distributor for activities intended to result in the sale
of Fund shares.
4. As manager of the Fund's assets, the Investment Manager
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 Investment Manager shall advise 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
Company's officers or Board of Directors, supply the reasons for making such
investments.
5. The Investment Manager 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 Investment Manager or any of its 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 Investment Manager 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
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Investment Manager, provided that the best competitive execution price is
obtained at the time of the trade execution.
6. In consideration of the Investment Manager's undertaking to
render the services described in this agreement, the Company agrees that the
Investment Manager 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 Investment Manager against any liability to
the Company or its stockholders to which the Investment Manager 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"). The
Fund will indemnify the Investment Manager 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 Investment Manager.
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
Investment Manager 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 Investment Manager 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. The Investment Manager shall be entitled to
advances from the Fund 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 Investment Manager
shall provide to the Fund a written affirmation of its good faith belief that
the standard of conduct necessary for indemnification by the Fund 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 Investment
Manager shall provide security in form and amount acceptable to the Fund 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 Investment Manager
will ultimately be found to be entitled to indemnification. For purposes of this
paragraph 6 only, the term "Investment Manager" shall be deemed to include
affiliates of the Investment Manager to whom the Investment Manager has
delegated the exercise of all or any of its powers, discretion and duties under
this agreement.
7. In consideration of the services to be rendered by the
Investment Manager under this agreement, the Company shall pay the Investment
Manager a monthly fee on the first business day of each month at an annual rate
of 0.80% of the average daily value
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(as determined on the days and at the time set forth in the Prospectus for
determining net asset value per share) of the Fund's net assets during the
preceding month. If the fee payable to the Investment Manager pursuant to this
paragraph 7 begins to accrue before the end of any month or if this agreement
terminates before the end of any month, the fee for the period from such date to
the end of such month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the proportion
which such period bears to the full month in which such effectiveness or
termination occurs. For purposes of calculating each such monthly fee, the value
of the Fund's net assets shall be computed in the manner specified in the
Prospectus and the Articles for the computation of the value of the Fund's net
assets in connection with the determination of the net asset value of shares of
the Fund's capital stock.
8. If the aggregate expenses incurred by, or allocated to, the
Fund in any fiscal year shall exceed the expense limitations applicable to the
Fund imposed by state securities laws or regulations thereunder, as such
limitations may be raised or lowered from time to time, the Investment Manager
shall reimburse the Fund for such excess. The Investment Manager's reimbursement
obligation will be limited to the amount of fees it received under this
agreement during the period in which such expense limitations were exceeded,
unless otherwise required by applicable laws or regulations. With respect to
portions of a fiscal year in which this contract shall be in effect, the
foregoing limitations shall be prorated according to the proportion which that
portion of the fiscal year bears to the full fiscal year. Any payments required
to be made by this paragraph 8 shall be made once a year promptly after the end
of the Company's fiscal year.
9. 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 1940
Act) 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
1940 Act) of any such party. This agreement may be terminated at any time,
without the payment of any penalty, by a vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act) or by a vote of a
majority of the Company's entire Board of Directors on 60 days' written notice
to the Investment Manager or by the Investment Manager on 60 days' written
notice to the Company. This agreement shall terminate automatically in the event
of its assignment (as defined in the 1940 Act). 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
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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 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. This agreement shall be governed by the laws of the State
of New York.
If the foregoing correctly sets forth the agreement between
the Company and the Investment Manager, please so indicate by signing and
returning to the Company the enclosed copy hereof.
Very truly yours,
SALOMON BROTHERS SERIES FUNDS
INC
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: President
ACCEPTED:
SALOMON BROTHERS ASSET
MANAGEMENT INC
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: President
