US Treasury Reserves Portfolio (Hub)
Master Portfolio Trust
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT (Agreement) is
made this 13th day of April, 2007, by and between
Xxxx Xxxxx Partners Fund Advisor, LLC, a Delaware
limited liability company (the Manager), and
Western Asset Management Company, a California
corporation (the Subadviser).
WHEREAS, the Manager has been retained by
Master Portfolio Trust (the Trust), a Maryland
business trust registered as a management investment
company under the Investment Company Act of 1940, as
amended (the 0000 Xxx) to provide investment
advisory, management, and administrative services to
the Trust with respect to certain series of the
Trust; and
WHEREAS, the Manager wishes to engage the
Subadviser to provide certain investment advisory
services to the Trust with respect to the series of
the Trust designated in Schedule A annexed hereto
(the Fund) and Subadviser 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. In accordance with and subject to the
Management Agreement between the Trust and the
Manager with respect to the Fund (the Management
Agreement), the Manager hereby appoints the
Subadviser to act as Subadviser with respect to the
Fund for the period and on the terms set forth in
this Agreement. The Subadviser accepts such
appointment and agrees to render the services herein
set forth, for the compensation herein provided.
2. The Manager shall cause the Subadviser to
be kept fully informed at all times with regard to
the securities owned by the Fund, its funds
available, or to become available, for investment,
and generally as to the condition of the Funds
affairs. The Manager shall furnish the Subadviser
with such other documents and information with regard
to the Funds affairs as the Subadviser may from time
to time reasonably request.
3. (a) Subject to the supervision of the
Trusts Board of Trustees (the Board) and the
Manager, the Subadviser shall regularly provide the
Fund with respect to such portion of the Funds
assets as shall be allocated to the Subadviser by the
Manager from time to time (the Allocated Assets)
with investment research, advice, management and
supervision and shall furnish a continuous investment
program for the Allocated Assets consistent with the
Funds investment objectives, policies and
restrictions, as stated in the Funds current
Prospectus and Statement of Additional Information.
The Subadviser shall, with respect to the Allocated
Assets, determine from time to time what securities
and other investments will be purchased (including,
as permitted in accordance with this paragraph, swap
agreements, options and futures), retained, sold or
exchanged by the Fund and what portion of the
Allocated Assets will be held in the various
securities and other investments in which the Fund
invests, and shall implement those decisions
(including the execution of investment
documentation), all subject to the provisions of the
Trusts 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
Subadviser. The Subadviser is authorized as the agent
of the Trust to give instructions with respect to the
Allocated Assets 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, 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 Subadviser 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, as amended (the Exchange Act)) to the
Fund and/or the other accounts over which the
Subadviser or its affiliates exercise investment
discretion. The Subadviser is authorized to pay a
broker or dealer who provides such brokerage and
research services a commission for executing a
portfolio transaction for the Fund which is in excess
of the amount of commission another broker or dealer
would have charged for effecting that transaction if
the Subadviser 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 Subadviser
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 Subadvisers authority regarding the
execution of the Funds portfolio transactions
provided herein. The Subadviser shall exercise voting
rights, rights to consent to corporate action and any
other rights pertaining to the Allocated Assets
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. The Subadviser may execute on behalf of the
Fund certain agreements, instruments and documents in
connection with the services performed by it under
this Agreement. These may include, without
limitation, brokerage agreements, clearing
agreements, account documentation, futures and
options agreements, swap agreements, other investment
related agreements, and any other agreements,
documents or instruments the Subadviser believes are
appropriate or desirable in performing its duties
under this Agreement.
(b) The Fund hereby authorizes any
entity or person associated with the Subadviser 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 Exchange Act 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 Subadviser 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 Subadviser
or its affiliates is participating, or arrange for
purchases and sales of securities between the Fund
and another account advised by the Subadviser 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 the Fund from time to
time, and will comply with all other provisions of
the Governing Documents and the Funds then-current
Prospectus and Statement of Additional Information
relative to the Subadviser and its directors and
officers.
4. The Subadviser may delegate to any other
one or more companies that the Subadviser controls,
is controlled by, or is under common control with, or
to specified employees of any such companies, certain
of the Subadvisers duties under this Agreement,
provided in each case the Subadviser will supervise
the activities of each such entity or employees
thereof, that such delegation will not relieve the
Subadviser of any of its duties or obligations under
this Agreement and provided further that any such
arrangements are entered into in accordance with all
applicable requirements of the 1940 Act.
5. The Subadviser agrees that it will keep
records relating to its services hereunder in
accordance with all applicable laws, and in
compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Subadviser 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
Funds request. The Subadviser 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.
6. (a) The Subadviser, at its expense,
shall supply the Board, the officers of the Trust,
and the Manager with all information and reports
reasonably required by them and reasonably available
to the Subadviser relating to the services provided
by the Subadviser hereunder.
(b) The Subadviser 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 Subadviser shall
not be responsible for the Funds 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 Funds 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 Funds shares and servicing shareholder
accounts; expenses of registering and qualifying the
Funds 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 Funds 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 Funds 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 Funds Board members and officers with respect
thereto.
7. 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 Subadviser or any affiliated company
of the Subadviser, 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
Subadvisers or any affiliated companys staff.
8. As compensation for the services
performed by the Subadviser, including the services
of any consultants retained by the Subadviser, the
Manager shall pay the Subadviser out of the
management fee it receives with respect to the Fund,
and only to the extent thereof, as promptly as
possible after the last day of each month, a fee,
computed daily at an annual rate set forth on
Schedule A annexed hereto. 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 Subadviser 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 or, if less, the portion thereof
comprising the Allocated Assets 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 or the portion thereof comprising the
Allocated Assets 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.
9. The Subadviser 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 the Fund,
provided that nothing in this Agreement shall protect
the Subadviser against any liability to the Manager
or the Fund to which the Subadviser 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 9, the term Subadviser shall include any
affiliates of the Subadviser performing services for
the Trust or the Fund contemplated hereby and the
partners, shareholders, directors, officers and
employees of the Subadviser and such affiliates.
10. Nothing in this Agreement shall limit or
restrict the right of any director, officer, or
employee of the Subadviser 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 Subadviser 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 the Fund
or one or more other accounts of the Subadviser 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 Subadviser. Such
transactions may be combined, in accordance with
applicable laws and regulations, and consistent with
the Subadvisers policies and procedures as presented
to the Board from time to time.
11. For the purposes of this Agreement, the
Funds net assets shall be determined as provided
in the Funds 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.
12. This Agreement will become effective with
respect to the Fund on the date set forth opposite
the Funds name on Schedule A annexed hereto,
provided that it shall have been approved by the
Trusts Board and, if so required by the 1940 Act, by
shareholders of the Fund in accordance with the
requirements of the 1940 Act and, unless sooner
terminated as provided herein, will continue in
effect through November 30, 2007. 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.
13. 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 Subadviser,
or by the Subadviser upon not less than 90 days
written notice to the Fund and the Manager, and will
be terminated upon the mutual written consent of the
Manager and the Subadviser. This Agreement shall
terminate automatically in the event of its
assignment by the Subadviser and shall not be
assignable by the Manager without the consent of the
Subadviser.
14. The Subadviser agrees that for any claim
by it against the Fund in connection with this
Agreement or the services rendered under this
Agreement, 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.
15. 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 Funds outstanding
voting securities.
16. This Agreement, and any supplemental
terms contained on Annex I hereto, if applicable,
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.
17. 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.
XXXX XXXXX
PARTNERS FUND
ADVISOR, LLC
By:
___________
___________
Name:
Title:
WESTERN ASSET
MANAGEMENT
COMPANY
By:
___________
___________
Name:
Title:
The foregoing is acknowledged:
The undersigned officer of the Trust has
executed this Agreement not individually but in
his/her capacity as an officer of the Trust. The
Trust does not hereby undertake, on behalf of the
Fund or otherwise, any obligation to the Subadviser.
MASTER PORTFOLIO
TRUST
By:
___________
___________
Name:
Title:
ANNEX I
Not applicable.
SCHEDULE A
U.S. Treasury Reserves Portfolio
Date:
April 13, 2007
Fee:
The sub-advisory fee will be 70% of the management
fee paid to Xxxx Xxxxx Partners Fund Advisor, LLC,
net of expense waivers and reimbursements.
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