MASTER PORTFOLIO TRUST
SMASh SERIES M HUB FUND
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT (Agreement) is made this 22
day of December, 2006, 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 Institutional
Portfolio (the Trust), a registered 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 the 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 Funds 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 certificates evidencing beneficial
interests; expenses relating to the issuing and redemption or
repurchase of the Funds beneficial interests and servicing
investor accounts; expenses of registering and qualifying the
Funds beneficial interests 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 distributions to investors; costs of stationery; website
costs; costs of meetings of the Board or any committee thereof,
meetings of investors 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. The Manager shall not pay the Subadviser any fee
hereunder. The Subadviser acknowledges and agrees that the Fund
is an integral part of separately managed account programs, and
that the Subadviser will be compensated directly or indirectly by
separately managed account sponsors for services rendered
hereunder. The Subadviser acknowledges and agrees that such
compensation is sufficient consideration hereunder.
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, investors, 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 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 the investors in the Fund in accordance with the requirements
of the 1940 Act and, unless sooner terminated as provided herein,
will continue in effect for an initial two year term. 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.
INSTITUTIONAL PORTFOLIO
By:
________________________
Name:
Title:
ANNEX I
Not applicable.
SCHEDULE A
SMASh Series M Portfolio
Date:
DCDOCS/672612.2
DCDOCS/672612.2
