Xxxx Xxxxx Partners Variable Money Market Portfolio
N4H5
Xxxx Xxxxx Partners Variable Income Trust
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 "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. The 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 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 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. 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 Fund's 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 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 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 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 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 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 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.
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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