Exhibit 5(b)(xii)
ADVISORY AGREEMENT
AGREEMENT made this 29th day of May, 1998, by and between LM
Institutional Advisors, Inc. ("Manager"), a Maryland corporation, and Western
Asset Global Management Limited ("WAGM"), a United Kingdom corporation, each of
which is registered as an investment adviser under the Investment Advisers Act
of 1940, as amended.
WHEREAS, the Manager is the manager of certain of the series of LM
Institutional Fund Advisors I, Inc. (the "Corporation"), an open-end, management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Manager wishes to retain Western to provide certain
investment advisory services in connection with the Manager's management of
Western Asset Core Plus Portfolio ("Fund"), a series of the Corporation; and
WHEREAS, WAGM 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. Appointment. The Manager hereby appoints WAGM as investment adviser
for the Fund for the period and on the terms set forth in this Agreement. WAGM
accepts such appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
2. Delivery of Documents. The Manager has furnished WAGM with copies
of each of the following:
(a) The Corporation's Articles of Incorporation and all amendments
thereto (such Articles of Incorporation, as presently in effect and as they
shall from time to time be amended, are herein called the "Articles");
(b) The Corporation's By-Laws and all amendments thereto (such By-Laws,
as presently in effect and as they shall from time to time be amended, are
herein called the "By-Laws");
(c) Resolutions of the Corporation's Board of Directors (the
"Directors") authorizing the appointment of the Manager as the manager and
Western as investment adviser and approving the Investment Management Agreement
between the Manager and the Corporation with respect to the Fund dated May 26,
1998 (the "Management Agreement") and this Agreement;
(d) The Corporation's most recently filed Post-Effective Amendment to
its Registration Statement on Form N-1A under the Securities Act of 1933, as
amended, and the 1940 Act, including all exhibits thereto, relating to shares of
common stock of the Fund, par value $.001 per share;
(e) The Fund's most recent prospectus (such prospectus, as presently in
effect, and all amendments and supplements thereto are herein called the
"Prospectus"); and
(f) The Fund's most recent statement of additional information (such
statement of additional information, as presently in effect, and all amendments
and supplements thereto are herein called the "Statement of Additional
Information").
The Manager will furnish WAGM from time to time with copies of all amendments of
or supplements to the foregoing.
3. Investment Advisory Services. (a) Subject to the supervision of the
Directors and the Manager, WAGM shall as requested by the Manager regularly
provide the Fund with investment research, advice, management and supervision
and shall furnish a continuous investment program for the Fund consistent with
the Fund's investment objectives, policies, and restrictions as stated in the
Fund's current Prospectus and Statement of Additional Information. WAGM shall
as requested by the Manager determine from time to time what securities or other
property will be purchased, retained or sold by the Fund, and shall implement
those decisions, all subject to the provisions of the Corporation's Articles of
Incorporation and By-Laws, the 1940 Act, the applicable rules and regulations of
the Securities and Exchange Commission, and other applicable federal and state
law, as well as the investment objectives, policies, and restrictions of the
Fund, as each of the foregoing may be amended from time to time. WAGM will as
requested by the Manager place orders pursuant to its investment determinations
for the Fund either directly with the issuer or with any broker, dealer or
futures commission merchant (collectively, a "broker"). In the selection of
brokers and the placing of orders for the purchase and sale of portfolio
investments for the Fund, WAGM shall seek to obtain for the Fund the most
favorable price and execution available, except to the extent it may be
permitted to pay higher brokerage commissions for brokerage and research
services as described below. In using its best efforts to obtain for the Fund
the most favorable price and execution available, WAGM, bearing in mind the
Fund's best interests at all times, shall consider all factors it deems
relevant, including, by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission, the
timing of the transaction taking into consideration market prices and trends,
the reputation, experience and financial stability of the broker involved and
the quality of service rendered by the broker in other transactions. Subject to
such policies as the Directors may determine and communicate to WAGM in writing,
WAGM shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its having caused the
Fund to pay a broker that provides brokerage and research services to Western or
any affiliated person of WAGM an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another broker
would have charged for effecting that transaction, if WAGM determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such broker, viewed in terms of
either that particular transaction or Western's overall responsibilities with
respect to the Fund and to other clients of Western and any affiliated person of
WAGM as to which WAGM or any affiliated person of WAGM exercises investment
discretion. WAGM shall also perform such other functions of management and
supervision as may be requested by the Manager and agreed to by WAGM.
(b) WAGM will as requested by the Manager oversee the maintenance of
all books and records with respect to the investment transactions of the Fund in
accordance with all applicable federal and state laws and regulations, and will
furnish the Directors with such periodic and special reports as the Directors or
the Manager reasonably may request.
(c) The Corporation hereby agrees that any entity or person associated
with WAGM (or with any affiliated person of WAGM) which is a member of a
national securities exchange is authorized to effect any transaction on such
exchange for the account of the Fund which is permitted by Section 11(a) of the
Securities Exchange Act of 1934, as amended, and Rule 11a2-2(T) thereunder, and
the Corporation hereby consents to the retention of compensation for such
transactions in accordance with Rule 11a2-2(T)(a)(2)(iv) or otherwise.
4. Services Not Exclusive. WAGM's services hereunder are not deemed to
be exclusive, and WAGM shall be free to render similar services to others. It is
understood that persons employed by
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Western to assist in the performance of its duties hereunder might not devote
their full time to such service. Nothing herein contained shall be deemed to
limit or restrict the right of Western or any affiliate of Western to engage in
and devote time and attention to other businesses or to render services of
whatever kind or nature.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, WAGM hereby agrees that all books and records which it
maintains for the Fund are property of the Fund and further agrees to surrender
promptly to the Fund or its agents any of such records upon the Fund's request.
WAGM further agrees to preserve for the periods prescribed by Rule 31a-2 under
the 1940 Act any such records required to be maintained by Rule 31a-1 under the
1940 Act.
6. Expenses. During the term of this Agreement, WAGM will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities and other property (including brokerage
commissions, if any) purchased for the Fund.
7. Compensation. For the services which WAGM will render to the
Manager and the Fund under this Agreement, the Manager will pay WAGM a fee,
computed daily and paid monthly, at an annual rate of 0.40% of the average daily
net assets of the Fund that WAGM manages. The average daily net assets of the
Fund 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 of Directors of the Corporation.
Fees due to Western hereunder shall be paid promptly to WAGM by the Manager
following its receipt of fees from the Fund. If this Agreement is terminated as
of any date not the last day of a calendar month, a final fee shall be paid
promptly after the date of termination and shall be based on the percentage of
days of the month during which the contract was still in effect.
8. Limitation of Liability. In the absence of willful misfeasance, bad
faith or gross negligence on the part of WAGM, or reckless disregard of its
obligations and duties hereunder, WAGM shall not be subject to any liability to
the Manager, the Fund or any shareholder of the Fund, for any act or omission in
the course of, or connected with, rendering services hereunder.
9. Definitions. As used in this Agreement, the terms "assignment,"
"interested person," "affiliated 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 and interpretations as may be granted by
the Securities and Exchange Commission by any rule, regulation or order; the
term "specifically approve at least annually" shall be construed in a manner
consistent with the 1940 Act and the rules and regulations thereunder; and the
term "brokerage and research services" shall have the meaning given in the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
10. Term. This Agreement shall become effective upon its execution, and
shall remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 12) until terminated as follows:
a. The Corporation may at any time terminate this Agreement by
not more than 60 days' written notice delivered or mailed by registered
mail, postage prepaid, to the Manager and WAGM, or
b. If (i) the Directors or the shareholders of the Fund by
vote of a majority of the outstanding voting securities of the Fund,
and (ii) a majority of the Directors who are not interested persons of
the Corporation, the Manager or WAGM, by vote cast in person at a
meeting called for the purpose of voting on such approval, do not
specifically approve at least annually the continuance of this
Agreement, then this Agreement shall automatically terminate at
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the close of business on the second anniversary of its execution, or
upon the expiration of one year from the effective date of the last
such continuance, whichever is later; provided, however, that if the
continuance of this Agreement is submitted to the shareholders of the
Fund for their approval and such shareholders fail to approve such
continuance of this Agreement as provided herein, WAGM may continue to
serve hereunder in a manner consistent with the 1940 Act and the rules
and regulations thereunder, or
c. The Manager may at any time terminate this Agreement by not
less than 60 days' written notice delivered or mailed by registered
mail, postage prepaid, to WAGM, and WAGM may at any time terminate this
Agreement by not less than 60 days' written notice delivered or mailed
by registered mail, postage prepaid, to the Manager.
Action by the Corporation under paragraph (a) of this Section 10 may be
taken either (i) by vote of a majority of the Directors, or (ii) by the vote of
a majority of the outstanding voting securities of the Fund.
11. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
12. No Assignment; Amendments. This Agreement shall terminate
automatically in the event of its assignment or in the event that the Management
Agreement shall have terminated for any reason. Any termination of this
Agreement pursuant to Section 10 shall be without the payment of any penalty.
This Agreement shall not be amended unless such amendment is approved by the
vote of a majority of the outstanding voting securities of the Fund (provided
that such shareholder approval is required by the 1940 Act and the rules and
regulations thereunder, giving effect to any interpretations of the Securities
and Exchange Commission and its staff) and by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Directors who are not interested persons of the Corporation, the Manager or
WAGM.
13. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. 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 and shall inure to the
benefit of the parties hereto and their respective successors.
14. Non-Exclusive Right. In the event this Agreement is terminated or
upon written notice from WAGM at any time, the Corporation hereby agrees that it
will eliminate from the Fund's name any reference to the name of "Western." The
Corporation, on behalf of the Fund, shall have the non-exclusive use of the name
"Western" in whole or in part only so long as this Agreement is effective or
until such notice is given.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
LM INSTITUTIONAL ADVISORS, INC.
Attest:
By: _______________________________ By: __________________________________
WESTERN ASSET MANAGEMENT COMPANY
Attest:
By: _______________________________ By: __________________________________
The foregoing is accepted by:
LM INSTITUTIONAL FUND ADVISORS I, INC.
Attest:
By: _______________________________ By: __________________________________
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