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'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 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 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 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 Total Return Fund
First $1.00 billion 0.750%
Next $1.00 billion 0.725%
Next $3.00 billion 0.700%
Next $5.00 billion 0.675%
Over $10.00 billion 0.650%
