MASTER PORTFOLIO TRUST
SMASh SERIES M HUB PORTFOLIO
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT (Agreement) is made this 13th
day of April, 2007, by and between Western Asset Management
Company, a corporation organized under the laws of California (the
Subadviser), and Western Asset Management Company Limited, a
corporation organized under the laws of England and Wales
(WAML).
WHEREAS, the Subadviser has been retained by Xxxx Xxxxx
Partners Fund Advisor, LLC to provide investment advisory,
management and administrative services to Master Portfolio Trust
(the Trust), a registered management investment company under
the Investment Company Act of 1940, as amended (the 0000 Xxx)
with respect to certain series of the Trust; and
WHEREAS, the Subadviser wishes to engage WAML 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 WAML 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 WAML to act as a
subadviser with respect to the Fund for the period and on the
terms set forth in this Agreement. WAML accepts such appointment
and agrees to render the services herein set forth, for the
compensation herein provided.
2. The Subadviser shall cause WAML 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
Subadviser shall furnish WAML with such other documents and
information with regard to the Funds affairs as WAML may from
time to time reasonably request.
3. (a) Subject to the supervision of the Trusts Board
of Trustees (the Board), Xxxx Xxxxx Partners Fund Advisor, LLC
and the Subadviser, WAML shall regularly provide the Fund with
respect to such portion of the Funds assets as shall be allocated
to WAML 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 Funds investment
objectives, policies and restrictions, as stated in the Funds
current Prospectus and Statement of Additional Information. WAML
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 WAML. WAML 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. WAML 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 WAML or its
affiliates exercise investment discretion. WAML 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 WAML 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 WAML 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 WAMLs authority regarding the execution of
the Funds portfolio transactions provided herein. WAML 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. WAML 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 WAML believes are
appropriate or desirable in performing its duties under this
Agreement.
(b) The Fund hereby authorizes any entity or person
associated with WAML 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, WAML
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 WAML or
its affiliates is participating, or arrange for purchases and
sales of securities between the Fund and another account advised
by WAML 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 WAML and its directors and officers.
4. WAML may delegate to any other one or more companies
that WAML controls, is controlled by, or is under common control
with, or to specified employees of any such companies, certain of
WAMLs duties under this Agreement, provided in each case WAML
will supervise the activities of each such entity or employees
thereof, that such delegation will not relieve WAML 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. WAML 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,
WAML 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.
WAML 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) WAML, 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 WAML relating to the
services provided by WAML hereunder.
(b) WAML 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, WAML 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; 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 in the Fund;
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 WAML or any affiliated company of WAML, 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 WAMLs or any affiliated companys staff.
8. The Subadviser shall not pay WAML any fee hereunder.
WAML acknowledges and agrees that the Fund is an integral part of
separately managed account programs, and that WAML will be
compensated directly or indirectly by separately managed account
sponsors for services rendered hereunder. WAML acknowledges and
agrees that such compensation is sufficient consideration
hereunder.
9. WAML 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 WAML against any liability to the Subadviser, Xxxx
Xxxxx Partners Fund Advisor, LLC or the Fund to which WAML 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 WAML shall include any
affiliates of WAML performing services for the Trust or the Fund
contemplated hereby and the partners, investors, directors,
officers and employees of WAML and such affiliates.
10. Nothing in this Agreement shall limit or restrict the
right of any director, officer, or employee of WAML 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 WAML 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 WAML is considered at or about the same time,
transactions in such securities will be allocated among the
accounts in a manner deemed equitable by WAML. Such transactions
may be combined, in accordance with applicable laws and
regulations, and consistent with WAMLs 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 WAML,
or by WAML 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 WAML. This Agreement shall terminate
automatically in the event of its assignment by WAML and shall not
be assignable by the Subadviser without the consent of WAML.
14. WAML 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.
WESTERN ASSET MANAGEMENT
COMPANY
By:
________________________
Name:
Title:
WESTERN ASSET MANAGEMENT
COMPANY LIMITED
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 Western Asset Management
Company Limited.
MASTER PORTFOLIO TRUST
By:
________________________
Name:
Title:
ANNEX I
This Annex I forms a part of the Subadvisory Agreement dated
as of April 13, 2007 by and between Western Asset Management
Company (the Subadviser), a corporation organized under the laws
of California, and Western Asset Management Company Limited
(WAML), an entity authorized and regulated in the United Kingdom
by the Financial Services Authority (the FSA).
1. WAML represents, warrants and covenants that it is
authorized and regulated by the FSA.
2. WAML has classified the Fund as an Intermediate Customer
as defined by the FSA Rules.
SCHEDULE A
SMASh Series M Portfolio
Date: April 13, 2007
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Draft 5/21/06
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