N-SAR Exhibit: Sub-item 77Q1(e)
Xxxx Xxxxx Partners Variable Income Trust
Western Asset Core Plus VIT Portfolio
Sub-Advisory Agreement between Western Asset
Management Company and Western Asset
Management Company Ltd.
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT
("Agreement") is made this 15th day of April 2015, 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 Xxxx Xxxxx Partners Fund Advisor, LLC to provide
investment advisory, management, and administrative
services to Xxxx Xxxxx Partners Variable Income Trust
(the "Trust"), a Maryland statutory trust registered as a
management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act") 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 "Fund"); and
WHEREAS, the Subadviser wishes to engage
Western Japan to provide certain investment advisory
services to the Fund, 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
Xxxx Xxxxx Partners Fund Advisor, LLC with respect to
the Fund (the "Subadvisory Agreement"), the
Subadviser hereby appoints Western Japan to act as a
subadviser with respect to the Fund 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 Fund, its funds available,
or to become available, for investment, and generally as
to the condition of the Fund's affairs. The Subadviser
shall furnish Western Japan with such other documents
and information with regard to the Fund's affairs as
Western Japan may from time to time reasonably
request.
3. (a) Subject to the supervision of the Trust's
Board of Trustees (the "Board"), Xxxx Xxxxx Partners
Fund Advisor, LLC and the Subadviser, Western Japan
shall regularly provide the Fund with respect to such
portion of the Fund's 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 Fund's investment objectives,
policies and restrictions, as stated in the Fund's 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 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 Trust's 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 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 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. Western Japan 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 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 Fund 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 Japan's
authority regarding the execution of the Fund's 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 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
Western Japan believes are appropriate or desirable in
performing its duties under this Agreement.
(b) The Fund 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 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, Western
Japan 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 Western Japan or
its affiliates is participating, or arrange for purchases and
sales of securities between the Fund 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 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 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 Japan's 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 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. 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, Xxxx
Xxxxx 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 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.
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 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 Japan's or any affiliated company's
staff.
8. As compensation for the services
performed by Western Japan, including the services of
any consultants retained by Western Japan, the
Subadviser shall pay Western Japan out of the
subadvisory 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 Western Japan 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. 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 Fund, provided that nothing in this Agreement
shall protect Western Japan against any liability to the
Subadviser, Xxxx Xxxxx Partners Fund Advisor, LLC or
the Fund 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 0, xxx xxxx
"Xxxxxxx Xxxxx" shall include any affiliates of Western
Japan performing services for the Trust or the Fund
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 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 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 Fund 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 Japan's policies and procedures as presented to
the Board from time to time.
11. 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.
12. 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 Trust's
Board and, if so required by the 1940 Act, 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
until the second anniversary of the date of effectiveness.
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 Western Japan, or by
Western Japan upon not less than 90 days' written notice
to the Fund 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 Fund in connection with this Agreement
or the services rendered under the 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 Fund's 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/ Xxxxxxx X. Xxx Xxxxxxxxx
Name: Xxxxxxx X. Xxx Xxxxxxxxx
Title: Head of New York Operations/Client
Service/Marketing
WESTERN ASSET MANAGEMENT COMPANY
LTD.
By: /s/ Naoya Orime
Name: Naoya Orime
Title: Representative Director
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 Western Asset Management Company
Ltd.
XXXX XXXXX PARTNERS VARIABLE
INCOME TRUST
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President and CEO
ANNEX I
This Annex I forms a part of the Subadvisory
Agreement dated as of April 15, 2015, 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 Japan's 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 Subadviser's
willful misconduct or gross negligence or the
Subadviser's failure to perform its duties hereunder.
SCHEDULE A
Western Asset Core Plus VIT Portfolio
Date: April 15, 2015
Fee:
The sub-advisory fee will be the following percentage of
the Fund's Allocated Assets: 0.30%
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