77Q-1
LMP Variable Income Trust
LMP Variable Money Market Portfolio (N4H5)
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT (Agreement)
is made this 27th 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 Variable Income 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 the 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
VARIABLE INCOME
TRUST
By:
______________
_________________
Name:
Title:
ANNEX I
Not applicable.
SCHEDULE A
Xxxx Xxxxx Partners Variable Money Market Portfolio
Date:
April 27, 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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