AMENDED AND RESTATED GLOBAL DISTRIBUTION AGREEMENT

Exhibit 10.9

AMENDED AND RESTATED GLOBAL DISTRIBUTION AGREEMENT

THIS AMENDED AND RESTATED GLOBAL DISTRIBUTION AGREEMENT dated as of October 3, 2005 (this “Agreement”), is made by and between Legg Mason, Inc., a Maryland corporation (“Legg Mason”), and Citigroup, Inc., a Delaware corporation (“Citigroup” and together with Legg Mason, the “Parties” and each, a “Party”).  

RECITALS:

WHEREAS, Legg Mason, through its Affiliates (as defined below), provides asset management, securities brokerage, investment banking and other related financial products and services;

WHEREAS, Citigroup is a diversified global financial services holding company that through its Affiliates, provides a broad range of financial services and products to consumer and corporate customers, including investment products and distribution services in respect thereof;

WHEREAS, Legg Mason and Citigroup have entered into a Transaction Agreement, dated as of June 23, 2005 (the “Transaction Agreement”), under which Citigroup is selling to Legg Mason substantially all of its global asset management business currently operated as Citigroup Asset Management (“CAM”) and Legg Mason is selling the PC/CM business, including the private client business of Legg Mason (“PC/CM Business”) to Citigroup (the “Transaction”);

WHEREAS, Legg Mason and Citigroup entered into a Distribution Agreement, dated as of June 23, 2005 (the “Original Distribution Agreement”), and wish to amend certain terms and conditions of the Original Distribution Agreement as set forth in this Agreement;

WHEREAS, the execution and delivery of the Original Distribution Agreement is a condition to the closing of the Transaction;  

WHEREAS, existing CAM Products currently have access to the distribution channels of the Citigroup Distributors (as each term is defined below);

WHEREAS, certain existing Legg Mason Products currently have access to the PC/CM Business Channels (as each term is defined below); and

WHEREAS, in connection with the Transaction, the Parties desire to enter into a relationship providing for the distribution by Citigroup Distributors of CAM Products and Legg Mason Products within the United States and internationally pursuant to the terms of this Agreement and for Citigroup’s access to certain Legg Mason Products as set forth herein.

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NOW THEREFORE, in consideration of the mutual covenants, agreements and promises contained in this Agreement, the Parties agree as follows:

Section 1.  Amendment and Restatement; Definitions

(a)

As of the date of this Agreement, the terms, agreements, representations and warranties contained in the Original Distribution Agreement shall be deemed amended and restated in their entirety as follows, and the Original Distribution Agreement shall be consolidated with and into and superseded by this Agreement.

(b)

For purposes of this Agreement, unless the context requires otherwise, the following terms will have the following meanings:

“1940 Act” means the Investment Company Act of 1940, as amended from time to time, and the rules and regulations promulgated under the Act by the SEC.

“Advisers Act” means the Investment Advisers Act of 1940, as amended from time to time, and the rules and regulations promulgated under the Act by the SEC.

“Access to Citigroup Distributors” has the meaning set out in Section 6(a) of this Agreement.

“Access to Legg Mason” has the meaning set out in Section 6(b) of this Agreement.

“Affiliate” means, with respect to any specified Person, any other Person that at the time of determination, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person.

“Agreement” means this Agreement and the schedules hereto, as amended from time to time.

“Applicable Standards and Practices” means, for Citigroup or Legg Mason or any of their respective Affiliates, the client service and relationship standards, business practices, ethical standards, confidentiality obligations and policies, customer privacy and protection policies and general service quality standards, product-selection standards, reputational considerations, industry standards and requirements of such Person as are generally applied by such Person at the time or on a consistent basis during the period in question.

“Business Day” means any day other than a Saturday, Sunday or day on which banking institutions in New York, New York are authorized or obligated pursuant to the Requirements of Law or executive order to be closed.

“CAM” has the meaning set forth in the recitals to this Agreement.

“CAM Products” means all of the investment products offered, sponsored, advised or subadvised by CAM or any of its Controlled Affiliates at any time on or after the date of this Agreement, including any such products acquired by Legg Mason pursuant to or after the

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Transaction, including any of such investment products as are RICs or other pooled investment vehicles, wrap fee programs (as defined in Rule 204-3 (g)(4) under the Advisers Act) or separately managed accounts.

“Citigroup” has the meaning set out in the preamble to this Agreement.

“Citigroup Distributor” means any Affiliate of Citigroup that at any time during the term hereof distributes investment products, including CAM Products, whether domestically or internationally.

“Commencement Date” means the later of (i) the date of the closing of the Transaction or (ii) Conversion.

“Confidential Information” means all confidential, proprietary or non-public information disclosed by either Party, its Affiliates and their respective representatives to the other Party, its Affiliates and their respective representatives; provided , however , that this term shall not include any information independently developed or obtained by the receiving Party or its Affiliates without violating any obligation under this Agreement, so long as such information was not obtained from a third party where the receiving Party knew or should have known that such information was misappropriated or otherwise wrongfully obtained.

“Control” (including its correlative meanings “Controlled by” and “under common Control with”) means the possession, directly or indirectly, of power to direct or cause the direction of the management or policies of a Person (whether through ownership of securities or partnership or other ownership interest, by contract or otherwise).

“Conversion” for purposes of the definition of Commencement Date means the first date on which Primary, I and FI shares of all Legg Mason Equity Funds are available on all Citigroup mutual fund distribution platforms, including TRAK, SBA and Asset One, and Legg Mason has in place a full sales support team (wholesalers, literature, etc.) for such distribution platforms.

“Covered Products” means the Legg Mason Products and the CAM Products.

“Exclusivity Period” means the period during which Citigroup shall have the exclusive right to distribute the Legg Mason Exclusive Equity Products under Section 4(b) of this Agreement.

 “Existing Legg Mason Distribution Arrangements” means the arrangements in effect as of the date of this Agreement to which Legg Mason or a Legg Mason Affiliate is a party relating to the distribution of Legg Mason Equity Funds existing as of such date and the amendment or renewal of any such arrangement, provided that any such amendment or renewal during the Exclusivity Period will not (i) add a Retail Share of any Legg Mason Equity Fund unless the distribution of a Retail Share of a Legg Mason Equity Fund is already permitted by the Distribution Agreement, or (ii) add or substitute for an existing party, a third party that is not affiliated with any existing party or (iii) materially alter the economic terms or geographic scope of any such arrangement.

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“FIS” means Legg Mason’s Fund Investors Services unit.

“Governmental Authority” means any federal, national, supranational, state, provincial, local, or similar government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body, including the SEC and any SRO within or outside the United States.  

“Legg Mason” has the meaning set out in the preamble to this Agreement.

“Legg Mason Equity Funds” means the funds in the family of open-end RICs known as the Legg Mason Funds that are LMCM Managed Products.  

“Legg Mason Exclusive Equity Products” means the following LMCM Managed Products, if and to the extent that they are made available during the Exclusivity Period: (i) Retail Shares of the Legg Mason Equity Funds, including Retail Shares of any new RIC launched by Legg Mason or its Affiliates after the date of this Agreement that is a LMCM Managed Product; (ii) any Retail SMA Program; (iii) interests in any hedge fund or similar pooled investment vehicle excepted from regulation as an investment company under the 1940 Act by Section 3(c)(1) of that Act; and (iv) securities of any closed-end RIC (as defined in Section 5(a)(2) of the 1940 Act) unless a Citigroup Distributor fails to offer to distribute such securities on terms that are substantially equivalent to terms offered to LMCM by any third party distributor after LMCM has provided Citigroup a right of first refusal and, if applicable, a right of last refusal before accepting an offer from a third party distributor.

For the avoidance of doubt, during the Exclusivity Period, any product not specifically identified above will not be considered a Legg Mason Exclusive Equity Product, including, but not limited to the following LMCM Managed Products:

(a)

Interests in products that are offered and sold to investors domiciled outside the U.S.

(b)

Non-Retail Shares of the Legg Mason Equity Funds that are sold on an investment only basis to a retirement plan (such as a 401(k) plan or similar defined contribution retirement plan).  Non-Retail Shares of the Legg Mason Equity Funds may be included in a “bundled retirement plan offering” so long as the Legg Mason Equity Funds offered do not exceed 50% of the total investment options in the bundled offering (including as a Legg Mason Equity Fund any lifestyle funds where one or more Legg Mason Equity Funds exceed 50% of the allocation).  Compliance with the 50% requirement is measured at the time a Legg Mason Equity Fund is added to the bundled offering.

(c)

LMCM Managed Products that serve as an investment option in a variable annuity so long as the LMCM Managed Products do not exceed 50% of the total investment options offered in the annuity (including as a LMCM Managed Product any lifestyle funds where one or more LMCM Managed Products exceed 50% of the allocation).  Compliance with the 50% requirement is measured at the time a LMCM Managed Product is added as an investment option.

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(d)

Legg Mason Equity Funds sold through any Existing Legg Mason Distribution Arrangement, provided, however, that Legg Mason will not (i) add the Legg Mason Value Trust or any Legg Mason Value Trust clone as an available fund to any Existing Legg Mason Distribution Arrangement if Legg Mason Value Trust is not presently available through such arrangement; or (ii) enter into any new relationships with a broker-dealer or mutual fund platform, including those serving registered investment advisers, in the United States.  Nothing herein shall prohibit a broker-dealer or mutual fund platform from assuming (e.g., through acquisition of a broker-dealer or mutual fund platform) the right to distribute Legg Mason Equity Funds under an Existing Legg Mason Distribution Arrangement through means other than amendment or renewal (which are addressed in the definition of Existing Legg Mason Distribution Arrangements), provided, that if a wirehouse assumes the rights of a regional broker-dealer, then the wirehouse may not materially alter the geographic scope of the Existing Legg Mason Distribution Arrangement.

(e)

Legg Mason Equity Funds sold through FIS, as provided in Section 6.18 of the Transaction Agreement.

(f)

Interests in any hedge fund or similar pooled investment vehicle excepted from regulation under the 1940 Act by Section 3(c)(7) of the Act, subject to the following conditions: (i) sales to institutional investors are permitted without limit; (ii) sales to knowledgeable employees of Legg Mason or any Legg Mason Affiliate and individuals with a pre-existing commercial or personal relationship with LMCM or its officers are permitted without limit; (iii) neither Legg Mason nor any Legg Mason Affiliate will solicit other individuals but may accept unsolicited sales from individuals without a pre-existing relationship with LMCM or its officers, provided that Legg Mason or the Legg Mason Affiliate, as applicable, will promptly notify Citigroup of each such individual’s identity and, if such individual has a pre-existing relationship with a broker-dealer or private bank that is a Citigroup Affiliate, will refer the individual to Citigroup; and (iv)  neither Legg Mason nor any Legg Mason Affiliate will distribute Section 3(c)(7) funds through a wirehouse or regional broker-dealer.

“Legg Mason Products” means all proprietary investment products offered, sponsored, advised or subadvised by Legg Mason or any of its Affiliates during the term of this Agreement, including any such investment products that are RICs or other pooled investment vehicles, wrap fee programs (as defined in Rule 204-3(g)(4) under the Advisers Act) and separately managed accounts, including without limitation, after the date of the closing of the Transaction, any CAM Product and Legg Mason Exclusive Equity Product.

“LMCM” means Legg Mason Capital Management, Inc.

“LMCM Managed Product” means any product investing primarily in equity securities managed by Legg Mason or a Legg Mason Affiliate, a portfolio manager of which at any time during the Exclusivity Period was an officer or employee of LMCM as of the date of the Original Distribution Agreement.  

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“NASD” means the National Association of Securities Dealers, Inc.

“Non-Retail Shares” means the Class FI, Class I and/or any comparable Class shares of the Legg Mason Equity Funds.

“Original Distribution Agreement” has the meaning set out in the recitals to this Agreement.

“Party” and “Parties” have the meanings set out in the preamble to this Agreement.

“PC/CM Business” has the meaning set out in the recitals to this Agreement.

“PC/CM Business Channel” means the product distribution business of Legg Mason to be acquired by Citigroup in the Transaction, including its private client business.

“Person” means any individual, corporation, business trust, partnership, association, limited liability company, unincorporated organization or similar organization, or any Governmental Authority.

“Qualifying Investments” has the meaning set out in Schedule B to this Agreement.

“Representatives” means directors, officers, employees, agents, advisors and other representatives of a Party.

“Requirement of Law” means, with respect to any Person, any domestic or foreign federal or state statute, law, ordinance, rule, administrative code, administrative interpretation, regulation, order, consent, writ, injunction, directive, judgment, decree, policy, ordinance, decision, guideline or other requirement of (or agreement with) any Governmental Authority (including any memorandum of understanding or similar arrangement with any Governmental Authority), in each case binding on that Person or its property or assets.

“Retail Shares” means the retail share classes (Class A, Class B, Class C, Primary Class, Signature Class, and/or any comparable Class shares, if available and as applicable) of the Legg Mason Equity Funds.

“Retail SMA Program” means any retail-oriented separately managed account program, including wrap fee programs (as defined by Rule 204-3(g)(4) under the Advisers Act) for which one or more Legg Mason Equity Funds, or any new RIC launched by Legg Mason or its Affiliates after the date of this Agreement that is a LMCM Managed Product, are investment options.  For purposes of this definition, a separately managed account or wrap fee program will be “retail-oriented” if it is primarily distributed to U.S. investors through registered representatives, registered investment advisers, or insurance agents who receive transactional or asset-based compensation for selling such product.

“RIC” means a U.S. investment management company registered under the 1940 Act and any class, series or portfolio thereof.

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“Sales Force” means, with respect to any Citigroup Distributor, the point of sale representatives and their direct supervisors utilized by such Citigroup Distributor or any of its Affiliates, whose job responsibility includes the distribution of the Covered Products in question or investment products that would generally be viewed as competitive with the applicable Covered Products in the channel in question.

“SEC” means the Securities and Exchange Commission.

“Selling Agreement” has the meaning set out in Section 7 of this Agreement.

“SRO” means the NASD, the National Futures Association, each national securities exchange in the United States and each other board or body, whether United States or foreign, that is charged with the supervision or regulation of brokers, dealers, commodity pool operators, commodity trading advisors, futures commission merchants, securities underwriting or trading, stock exchanges, commodities exchanges, insurance companies or agents, investment companies or investment advisers.

“Transaction” has the meaning set out in the recitals to this Agreement.

“Transaction Agreement” has the meaning set out in the recitals of this Agreement.

Section 2.

Representations and Warranties of Citigroup

Citigroup represents and warrants to Legg Mason as follows:

(a)

Each of Citigroup and each Citigroup Distributor (i) is duly organized, validly existing and, to the extent applicable, in good standing under the laws of its jurisdiction of organization; (ii) has the power and authority, and the legal right, to own its assets and to transact the business in which it is engaged; (iii) is duly qualified to do business and, to the extent applicable, is in good standing under the laws of each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification; and (iv) is in compliance in all material respects with all Requirements of Law.

(b)

Each of Citigroup and each Citigroup Distributor has all necessary power and authority to make, execute, deliver and perform this Agreement and each Selling Agreement to which it is or becomes a party and to perform all of the obligations to be performed by it under this Agreement or under such Selling Agreement.  The making, execution, delivery and performance by Citigroup and each Citigroup Distributor of this Agreement and each Selling Agreement to which it is or will become a party, and the consummation by Citigroup and such Citigroup Distributor of the transactions contemplated by this Agreement and by such Selling Agreement to which it is or will become a party, have been, or will be, duly and validly authorized by all necessary corporate action on the part of Citigroup and such Citigroup Distributor.  Subject to Section 10(i), except as shall have been obtained prior to execution thereof, no consent or authorization of, filing with, or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the execution, delivery, performance, validity or enforceability by or against Citigroup or any Citigroup

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Distributor of this Agreement and each Selling Agreement, to which it is, or will become, a Party.  

(c)

This Agreement has been duly and validly executed and delivered by Citigroup, and assuming the due authorization, execution and delivery by Legg Mason, this Agreement constitutes the valid, legal and binding obligation of Citigroup, enforceable against it in accordance with its terms, except as may be subject to applicable bankruptcy, insolvency, moratorium or other similar Requirement of Law, now or hereafter in effect, affecting the enforcement of rights of creditors generally and by legal and equitable limitations on the enforceability of specific remedies.  

(d)

Upon execution and delivery, and assuming the due authorization, execution and delivery by Legg Mason or any of its Affiliates, each Selling Agreement will constitute the valid, legal and binding obligation of the respective Citigroup Distributor which is a party thereto, enforceable against it in accordance with its terms, except as may be subject to applicable bankruptcy, insolvency, moratorium or other similar Requirement of Law now or hereafter in effect, affecting the enforcement of rights of creditors generally and by legal and equitable limitations on the enforceability of specific remedies.

(e)

Neither the execution and delivery of this Agreement nor any Selling Agreement by Citigroup or any Citigroup Distributor which is an Affiliate of Citigroup as of the date of this Agreement, respectively, nor the consummation of the transactions contemplated by this Agreement or by any such Selling Agreement, respectively, will (i) violate or conflict with any provision of the articles of incorporation or bylaws or other organizational documents of Citigroup or any such Citigroup Distributor, (ii) violate any of the terms, conditions, or provisions of any Requirement of Law or license to which Citigroup or any such Citigroup Distributor is subject or by which either one or any of their assets are bound, or (iii) violate, breach or constitute a default under any contract to which Citigroup or any such Citigroup Distributor is a party or by which either one or any of their assets is bound.

(f)

All CAM Products which are existing as of the date of this Agreement, and which will be existing as of the date of the closing of the Transaction are, and as of the date of the closing of the Transaction will be, offered in compliance with the Applicable Standards and Practice of Citigroup and its Affiliates.  

Section 3.

Representations and Warranties of Legg Mason

Legg Mason represents and warrants to Citigroup as follows:

(a)

Legg Mason and each of its Affiliates identified on Schedule A to this Agreement (i) is duly organized, validly existing and, to the extent applicable, in good standing under the laws of its jurisdiction of organization; (ii) has the power and authority, and the legal right, to own its assets and to transact the business in which it is engaged; (iii) is duly qualified to do business and, to the extent applicable, is in good standing under the laws of each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification; and (iv) is in compliance in all material respects with all Requirements of Law.

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(b)

Legg Mason and each of its Affiliates identified on Schedule A to this Agreement have all necessary power and authority to make, execute, deliver and perform this Agreement and each Selling Agreement, respectively, and to perform all of the obligations to be performed by it under this Agreement or under each such Selling Agreement.  The making, execution, delivery and performance by Legg Mason and each such Affiliate of this Agreement and each Selling Agreement, respectively, and the consummation by Legg Mason and each such Affiliate of the transactions contemplated by this Agreement and by each such Selling Agreement, respectively, have been, or will be, duly and validly authorized by all necessary corporate action on the part of Legg Mason and each such Affiliate.  Subject to Section 10(i), except as shall have been obtained prior to execution thereof, no consent or authorization of, filing with, or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the execution, delivery, performance, validity or enforceability by or against Legg Mason or any of such Affiliates of this Agreement and each Selling Agreement, respectively, to which it is, or will become, a Party.  

(c)

This Agreement has been duly and validly executed and delivered by Legg Mason, and assuming the due authorization, execution and delivery by Citigroup, this Agreement constitutes the valid, legal and binding obligation of Legg Mason, enforceable against it in accordance with its terms, except as may be subject to applicable bankruptcy, insolvency, moratorium or other similar Requirement of Law, now or hereafter in effect, affecting the enforcement of rights of creditors general