SMASh EC Portfolio
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT (Agreement) is made
this 2nd day of September, 2008, by and between
Western Asset Management Company, a corporation
organized under the laws of California (the
Subadviser) and Western Asset Management Company
Ltd., a corporation organized under the laws of Japan
(Western Japan).
WHEREAS, the Subadviser has been retained by
▇▇▇▇ ▇▇▇▇▇ Partners Fund Advisor, LLC to provide
investment advisory, management, and administrative
services to ▇▇▇▇ ▇▇▇▇▇ Partners 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
▇▇▇▇ ▇▇▇) to provide investment advisory, management,
and administrative services to the Trust with respect
to the series of the Trust designated in Schedule A
annexed hereto (the Portfolio); and
WHEREAS, the Subadviser wishes to engage
Western Japan to provide certain investment advisory
services to the Portfolio, and Western Japan 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
Subadvisory Agreement between the Subadviser and ▇▇▇▇
▇▇▇▇▇ Partners Fund Advisor, LLC with respect to the
Portfolio (the Subadvisory Agreement), the Subadviser
hereby appoints Western Japan to act as a subadviser
with respect to the Portfolio for the period and on
the terms set forth in this Agreement. Western Japan
accepts such appointment and agrees to render the
services herein set forth, for the compensation
herein provided.
2. The Subadviser shall cause Western Japan
to be kept fully informed at all times with regard to
the securities owned by the Portfolio, its funds
available, or to become available, for investment,
and generally as to the condition of the Portfolios
affairs. The Subadviser shall furnish Western Japan
with such other documents and information with regard
to the Portfolios affairs as Western Japan may from
time to time reasonably request.
3. (a) Subject to the supervision of the Trusts
Board of Trustees (the Board), ▇▇▇▇ ▇▇▇▇▇ Partners
Fund Advisor, LLC and the Subadviser, Western Japan
shall regularly provide the Portfolio with respect to
such portion of the Portfolios assets as shall be
allocated to Western Japan by the Subadviser 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 Portfolios
investment objectives, policies and restrictions, as
stated in the Portfolios current Prospectus and
Statement of Additional Information. Western Japan
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 Portfolio and what portion of the
Allocated Assets will be held in the various
securities and other investments in which the
Portfolio 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
Portfolio referred to above, and any other specific
policies adopted by the Board and disclosed to
Western Japan. Western Japan is authorized as the
agent of the Trust to give instructions with respect
to the Allocated Assets to the custodian of the
Portfolio as to deliveries of securities and other
investments and payments of cash for the account of
the Portfolio. 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 Portfolio in
one or more investment companies. Western Japan will
place orders pursuant to its investment
determinations for the Portfolio 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 Portfolio
and/or the other accounts over which Western Japan or
its affiliates exercise investment discretion.
Western Japan is authorized to pay a broker or dealer
who provides such brokerage and research services a
commission for executing a portfolio transaction for
the Portfolio which is in excess of the amount of
commission another broker or dealer would have
charged for effecting that transaction if Western
Japan 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 Western Japan 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 Western Japans authority regarding the
execution of the Portfolios portfolio transactions
provided herein. Western Japan 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. Western Japan may execute on behalf of the
Portfolio 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 Western Japan believes are
appropriate or desirable in performing its duties
under this Agreement.
(b) The Portfolio hereby authorizes any
entity or person associated with Western Japan which
is a member of a national securities exchange to
effect any transaction on the exchange for the
account of the Portfolio which is permitted by
Section 11(a) of the Exchange Act and Rule 11a2-2(T)
thereunder, and the Portfolio hereby consents to the
retention of compensation for such transactions in
accordance with Rule 11a2-2(T)(a)(2)(iv).
Notwithstanding the foregoing, Western Japan agrees
that it will not deal with itself, or with members of
the Board or any principal underwriter of the
Portfolio, as principals or agents in making
purchases or sales of securities or other property
for the account of the Portfolio, nor will it
purchase any securities from an underwriting or
selling group in which Western Japan or its
affiliates is participating, or arrange for purchases
and sales of securities between the Portfolio and
another account advised by Western Japan 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 Portfolio from
time to time, and will comply with all other
provisions of the Governing Documents and the
Portfolios then-current Prospectus and Statement of
Additional Information relative to Western Japan and
its directors and officers.
4. Western Japan may delegate to any other
one or more companies that Western Japan controls, is
controlled by, or is under common control with, or to
specified employees of any such companies, certain of
Western Japans duties under this Agreement, provided
in each case Western Japan will supervise the
activities of each such entity or employees thereof,
that such delegation will not relieve Western Japan
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. Western Japan 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, Western Japan hereby agrees that any
records that it maintains for the Portfolio are the
property of the Portfolio, and further agrees to
surrender promptly to the Portfolio any of such
records upon the Portfolios request. Western Japan
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) Western Japan, at its expense,
shall supply the Board, the officers of the Trust,
▇▇▇▇ ▇▇▇▇▇ Partners Fund Advisor, LLC and the
Subadviser with all information and reports
reasonably required by them and reasonably available
to Western Japan relating to the services provided by
Western Japan hereunder.
(b) Western Japan 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, Western Japan shall
not be responsible for the Portfolios 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
Portfolio; the cost (including brokerage commissions,
transaction fees or charges, if any) in connection
with the purchase or sale of the Portfolios
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 Portfolios shares and
servicing shareholder accounts; expenses of
registering and qualifying the Portfolios 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 Portfolios shareholders; costs of stationery;
website costs; costs of meetings of the Board or any
committee thereof, meetings of shareholders and other
meetings of the Portfolio; Board fees; audit fees;
travel expenses of officers, members of the Board and
employees of the Portfolio, if any; and the
Portfolios pro rata portion of premiums on any
fidelity bond and other insurance covering the
Portfolio 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 Portfolio is a party and
the legal obligation which the Portfolio may have to
indemnify the Portfolios Board members and officers
with respect thereto.
7. No member of the Board, officer or
employee of the Trust or Portfolio shall receive from
the Trust or Portfolio 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 Western Japan or any
affiliated company of Western Japan, 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 Western Japans or any affiliated companys
staff.
8. The Manager shall not pay Western
Singapore any fee hereunder. Western Singapore
acknowledges and agrees that the Portfolio is an
integral part of separately managed account programs,
and that Western Singapore will be compensated
directly or indirectly by separately managed account
sponsors for services rendered hereunder. Western
Singapore acknowledges and agrees that such
compensation is sufficient compensation hereunder.
9. Western Japan 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
Portfolio, provided that nothing in this Agreement
shall protect Western Japan against any liability to
the Subadviser, ▇▇▇▇ ▇▇▇▇▇ Partners Fund Advisor, LLC
or the Portfolio to which Western Japan 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
Western Japan shall include any affiliates of Western
Japan performing services for the Trust or the
Portfolio contemplated hereby and the partners,
shareholders, directors, officers and employees of
Western Japan and such affiliates.
10. Nothing in this Agreement shall limit or
restrict the right of any director, officer, or
employee of Western Japan who may also be a Board
member, officer, or employee of the Trust or the
Portfolio, 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 Western Japan
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 Portfolio or one or more other accounts of
Western Japan is considered at or about the same
time, transactions in such securities will be
allocated among the accounts in a manner deemed
equitable by Western Japan. Such transactions may be
combined, in accordance with applicable laws and
regulations, and consistent with Western Japans
policies and procedures as presented to the Board
from time to time.
11. For the purposes of this Agreement, 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 Portfolio on the date set forth
opposite the Portfolios 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 shareholders of the Portfolio in accordance
with the requirements of the 1940 Act and, unless
sooner terminated as provided herein, will continue
in effect until the second anniversary of the date of
effectiveness. Thereafter, if not terminated, this
Agreement shall continue in effect with respect to
the Portfolio, 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 Portfolio,
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 Portfolio without penalty by the Board or by
vote of a majority of the outstanding voting
securities of the Portfolio, in each case on not more
than 60 days nor less than 30 days written notice to
Western Japan, or by Western Japan upon not less than
90 days written notice to the Portfolio and the
Subadviser, and will be terminated upon the mutual
written consent of the Subadviser and Western Japan.
This Agreement shall terminate automatically in the
event of its assignment by Western Japan and shall
not be assignable by the Subadviser without the
consent of Western Japan.
14. Western Japan agrees that for any claim
by it against the Portfolio in connection with this
Agreement or the services rendered under the
Agreement, it shall look only to assets of the
Portfolio 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 Portfolios
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.
WESTERN ASSET
MANAGEMENT
COMPANY
By: /s/
W.▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇.
Name:
W.▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇.
Title:
Manger, US Legal
and Corporate
Affairs
WESTERN ASSET
MANAGEMENT
COMPANY LTD.
By: /s/ ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
Title:
Manager,
International
Legal and
Compliance
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
Portfolio or otherwise, any obligation to Western
Asset Management Company Ltd.
▇▇▇▇ ▇▇▇▇▇
PARTNERS MASTER
PORTFOLIO TRUST
By: /s/ R.▇▇▇
▇▇▇▇▇▇
Name: R.▇▇▇
▇▇▇▇▇▇
Title:
Chairman,
President and
Chief Executive
Officer
SMASh Series EC Portfolio Signature Page
ANNEX I
This Annex I forms a part of the Subadvisory Agreement dated as of
September 2, 2008, by and between Western Asset Management Company, a
California corporation, and Western Asset Management Company Ltd. (Western
Japan), an entity authorized and regulated in Japan by the Japanese
Securities and Exchange Surveillance Commission (SESC).
1. Western Japan shall not offer any special benefit to the Subadviser in
connection with performance of this Agreement, and the Subadviser shall not
request any special benefit from Western Japan.
2. Section 9 of this Agreement shall not be deemed to limit Western Japans
obligations under the Japanese Financial Instruments and Exchange Law to
perform its duties to its customers faithfully and with the care of a prudent
manager.
3. The Subadviser shall be liable for any damages or losses suffered by
Western Japan due to the Subadvisers willful misconduct or gross negligence
or the Subadvisers failure to perform its duties hereunder.
SCHEDULE A
SMASh Series EC Portfolio Date: September 2, 2008
