Master Portfolio Trust
SMASh Series M Hub Fund
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT (Agreement) is made this 22
day of December, 2006, 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 Institutional
Portfolio (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.
INSTITUTIONAL PORTFOLIO
By:
______________________
_________
Name:
Title:
ANNEX I
This Annex I forms a part of the Subadvisory Agreement dated
as of December 22, 2006 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:
4
6
DCDOCS/672560.2
7
Draft 5/21/06
4
8
DCDOCS/672560.2
7
DCDOCS/672560.2
