This SUBADVISORY AGREEMENT ("Agreement") is made this 3rd day of
February, 2009, by and between Western Asset Management Company, a
corporation organized under the laws of California (the "Subadviser")
and Western Asset Management Company Xxx.Xxx, a corporation organized
under the laws of SINGAPORE ("WESTERN SINGAPORE").
WHEREAS, the Subadviser has been retained by Xxxx Xxxxx Partners
Fund Advisor, LLC to provide investment advisory, management, and
administrative services to WESTERN ASSET HIGH INCOME FUND II INC. (the
"Fund"), a registered management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Subadviser wishes to engage WESTERN SINGAPORE to
provide certain investment advisory services to the Fund, and WESTERN
SINGAPORE 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 Subadvisory Agreement
between the Subadviser and Xxxx Xxxxx Partners Fund Advisor, LLC with
respect to the Fund (the "Subadvisory Agreement"), the Subadviser
hereby appoints WESTERN SINGAPORE to act as a subadviser with respect
to the Fund for the period and on the terms set forth in this
Agreement. WESTERN SINGAPORE accepts such appointment and agrees to
render the services herein set forth, for the compensation herein
provided.
2. The Subadviser shall cause WESTERN SINGAPORE 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 Subadviser
shall furnish WESTERN SINGAPORE with such other documents and
information with regard to the Fund's affairs as WESTERN SINGAPORE may
from time to time reasonably request.
3. (a) Subject to the supervision of the Fund's Board of
Directors (the "Board"), Xxxx Xxxxx Partners Fund Advisor, LLC and the
Subadviser, WESTERN SINGAPORE shall regularly provide the Fund with
respect to such portion of the Fund's assets as shall be allocated to
WESTERN SINGAPORE by the Subadviser 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. WESTERN SINGAPORE 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 Fund's Articles of Incorporation 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 WESTERN SINGAPORE. WESTERN SINGAPORE is authorized as
the agent of the Fund 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. WESTERN SINGAPORE 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
WESTERN SINGAPORE or its affiliates exercise investment discretion.
WESTERN SINGAPORE 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 WESTERN SINGAPORE 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 WESTERN SINGAPORE 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 WESTERN SINGAPORE's authority regarding the
execution of the Fund's portfolio transactions provided herein. WESTERN
SINGAPORE 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.
(b) The Fund hereby authorizes any entity or person associated
with WESTERN SINGAPORE 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, WESTERN SINGAPORE
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 WESTERN SINGAPORE or its
affiliates is participating, or arrange for purchases and sales of
securities between the Fund and another account advised by WESTERN
SINGAPORE 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 WESTERN
SINGAPORE and its directors and officers.
4. WESTERN SINGAPORE may delegate to any other one or more
companies that WESTERN SINGAPORE controls, is controlled by, or is
under common control with, or to specified employees of any such
companies, certain of WESTERN SINGAPORE's duties under this Agreement,
provided in each case WESTERN SINGAPORE will supervise the activities
of each such entity or employees thereof, that such delegation will not
relieve WESTERN SINGAPORE 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. WESTERN SINGAPORE 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 0000 Xxx,
XXXXXXX XXXXXXXXX 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.
WESTERN SINGAPORE 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)WESTERN SINGAPORE, at its expense, shall supply the
Board, the officers of the Fund, Xxxx Xxxxx Partners Fund Advisor, LLC
and the Subadviser with all information and reports reasonably required
by them and reasonably available to WESTERN SINGAPORE relating to the
services provided by WESTERN SINGAPORE hereunder.
(b)WESTERN SINGAPORE 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, WESTERN SINGAPORE 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 Fund shall
receive from the 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 WESTERN SINGAPORE or any affiliated
company of WESTERN SINGAPORE, 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
WESTERN SINGAPORE's or any affiliated company's staff.
8. As compensation for the services performed by WESTERN
SINGAPORE,including the services of any consultants retained by WESTERN
SINGAPORE, the Subadviser shall pay WESTERN SINGAPORE out of the
subadvisory 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
WESTERN SINGAPORE 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. WESTERN SINGAPORE 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 WESTERN
SINGAPORE against any liability to the Subadviser, Xxxx Xxxxx Partners
Fund Advisor, LLC or the Fund to which WESTERN SINGAPORE 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 "WESTERN SINGAPORE" shall include any
affiliates of WESTERN SINGAPORE performing services for the Fund
contemplated hereby and the partners, shareholders, directors, officers
and employees of WESTERN SINGAPORE and such affiliates.
10. Nothing in this Agreement shall limit or restrict the right
of any director, officer, or employee of WESTERN SINGAPORE who may also
be a Board member, officer, or employee of 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
WESTERN SINGAPORE 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 WESTERN SINGAPORE is considered at or
about the same time, transactions in such securities will be allocated
among the accounts in a manner deemed equitable by WESTERN SINGAPORE.
Such transactions may be combined, in accordance with applicable laws
and regulations, and consistent with WESTERN SINGAPORE'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 Fund's
Board and, if so required by the 1940 Act, by the 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 WESTERN
SINGAPORE, or by WESTERN SINGAPORE upon not less than 90 days" written
notice to the Fund and the Subadviser, and will be terminated upon the
mutual written consent of the Subadviser and WESTERN SINGAPORE. This
Agreement shall terminate automatically in the event of its assignment
by WESTERN SINGAPORE and shall not be assignable by the Subadviser
without the consent of WESTERN SINGAPORE.
14. WESTERN SINGAPORE agrees that for any claim by it against
the Fund in connection with this Agreement or the services rendered
under the 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 Fund.
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.
WESTERN ASSET MANAGEMENT COMPANY
By: /s/W. Xxxxxxx Xxxxxxx, Xx.
Name: W. Xxxxxxx Xxxxxxx, Xx.
Title: Manager, US Legal and Corporate
Affairs
WESTERN ASSET MANAGEMENT COMPANY LTD.
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Manager, International Legal and
Compliance
The foregoing is acknowledged:
The undersigned officer of the Fund has executed this Agreement
not individually but in his/her capacity as an officer of the Fund. The
Fund does not hereby undertake, on behalf of the Fund or otherwise, any
obligation to Western Asset Management Company Pte. Ltd.
WESTERN ASSET HIGH INCOME FUND II INC.
By:/s/ R. Xxx Xxxxxx
_______________________________
Name: R. Xxx Xxxxxx
Title: Chairman, President and Chief
Executive Officer
SCHEDULE A
WESTERN ASSET HIGH INCOME FUND II INC.
February 3, 2009
Fee:
The sub-advisory fee will be the following percentage of Allocated
Assets: 0.30%
