ITEM 77E SA
INSTITUTIONAL PORTFOLIO
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT ("Agreement") is made this 1st day
of August, 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 "1940 Act") 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 Fund's affairs. Manager
shall furnish the Subadviser with such other documents and
information with regard to the Fund's affairs as the Subadviser
may from time to time reasonably request.
3. (a) Subject to the supervision of the Trust's Board of
Trustees (the "Board") and the Manager, the Subadviser shall
regularly provide the Fund with respect to such portion of the
Fund's 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 Fund's investment
objectives, policies and restrictions, as stated in the
Fund's 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 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 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 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
a 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 Subadviser's authority regarding the
execution of the Fund's 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.
(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 a 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 a 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 a Fund from
time to time, and will comply with all other provisions of the
Governing Documents and the Fund's then-current Prospectus and S
tatement 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 Subadviser's 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 Fund's 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 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 prorata 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 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 Subadviser's or
any affiliated company's 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 a 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 a 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 Subadviser'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
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 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.
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
Prime Cash Reserves Portfolio
Date:
August 1, 2006
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.
Institutional Enhanced Portfolio
Date:
August 1, 2006
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.
