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
Xxxx Xxxxx Partners Money Market 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.
XXXX XXXXX PARTNERS MONEY MARKET TRUST
By: _______________________________
Name:
Title:
ANNEX I
Not applicable.
SCHEDULE A
Western Asset Government Money Market Fund
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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