Exhibit 10.5

LETTER AGREEMENT

Date: September 23, 2008

Beneficiary:  Citi Institutional Liquidity Fund plc

Letter of Credit No. 63662892

We refer to (i) Letter of Credit no. 63662892 issued by Citibank, N.A.(“ Issuer ”) in favor of you dated as of September 23, 2008 (the “ Letter of Credit ”) for the account of LM Capital Support V, LLC, a Maryland limited liability company and Legg Mason, Inc., a Maryland corporation (collectively, “ we ” or the “ Applicants ”) and related to the Securities (as defined below) and (ii) the related Agreement for Standby Letters of Credit dated as of September 18, 2008 among us and Issuer (the “ Letter of Credit Agreement ”).

In consideration of the issuance of the Letter of Credit and our obligations in respect thereof under the Letter of Credit Agreement and other related agreements with the Issuer, you hereby covenant and agree as follows:

(1)

You shall immediately terminate the Letter of Credit in accordance with the terms thereof upon the occurrence of any of the following events prior to September 18, 2009:

(a)

You have sold or otherwise disposed of all commercial paper and other securities issued by Axon Financial Funding LLC in which you have invested (the “ Securities ”) and either have not realized any loss therefrom or have made draws under the Letter of Credit or either of (i) Letter of Credit number 61670749 issued by Citibank, N.A. in favor of you dated as of November 2, 2007, or (ii) Letter of Credit no. 68021884 issued by Bank of America, N.A. in favor of you dated as of November 21, 2007 (such other letters of credit, together the “ Other Letters of Credit ”) as a result of such sale or disposition in an aggregate amount equal to all such losses;

(b)

All Securities have been restructured, modified, refinanced, exchanged into or replaced by new debt rated at least “P-1” (or the then equivalent grade) by Moody’s (as defined below) or “A-1” (or the then equivalent grade) by S&P (as defined below) that is eligible to be held by a money market fund under Rule 2a-7 of the Investment Company Act of 1940 (each such transaction, a “ Transaction ”), of which the aggregate principal amount, plus the amount of any cash consideration received by you in respect thereof and any amounts drawn under the Letter of Credit or Other Letters of Credit as a result of such transaction, is no less than the amortized cost of the Securities that were so restructured, modified,

refinanced, exchanged or replaced on the date used in such Transaction to determine the amount of securities to be received in such Transaction;

(c)

You have been repaid in full in respect of all Securities;

(d)

Upon our request if (i) we have obtained guarantees, insurance, contractual rights or any other supporting obligations relating to the Securities to replace the Letter of Credit, which replacement would not cause a downgrade of your ratings or you to be placed on credit watch (a “ Ratings Event ”) by Moody’s Investors Service Inc. (“ Moody’s ”) or Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“ S&P ”) or (ii) we have received written confirmation from Moody’s and S&P that a termination of the Letter of Credit would not result in a Ratings Event; or

(e)

The Securities are rated “P-1” (or the then equivalent grade) or higher by Moody’s or “A-1” (or the then equivalent grade) or higher by S&P.

(2)

You agree that you will not make any drawings under the Letter of Credit (a “ Drawing ”) unless

(a)

the aggregate amount to be drawn in such Drawing plus the amounts drawn in any and all other Drawings does not exceed $162,500,000 (the “ Maximum Amount ”); and

(b)

one or more of the following events has occurred and is continuing:

(i)

you have realized a loss from a sale or other disposition of the Securities;

(ii)

All or any portion of the Securities has been restructured, modified, refinanced, exchanged into or replaced by new debt (each such transaction, a “ Transaction ”), of which the aggregate principal amount, plus the amount of any cash consideration received by you in respect thereof, is less than the amortized cost of the Securities so restructured, modified, refinanced, exchanged or replaced on the date used in such Transaction to determine the