ADVISORY AGREEMENT
AGREEMENT made this 25 day of November 2008, by and
between Xxxx Xxxxx Fund Adviser, Inc. ("Manager"), a Maryland
corporation, and Western Asset Management Company Pte. Limited
("WAML Singapore"), a corporation organized under the laws of
Singapore, 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 Western Asset Funds, 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 WAML Singapore to
provide certain investment advisory services in connection
with the Manager's management of Western Asset Core Plus Bond
Portfolio ("Fund"), a series of the Corporation; and
WHEREAS, WAML 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. Appointment. The Manager hereby appoints WAML
Singapore as investment adviser for the Fund for the period
and on the terms set forth in this Agreement. WAML Singapore
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
WAML Singapore 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 WAML Singapore as investment adviser and
approving the Investment Management Agreement between the
Manager and the Corporation with respect to the Fund dated
December 31, 2001 (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 WAML Singapore 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, WAML Singapore
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. WAML Singapore 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.
WAML Singapore 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, WAML
Singapore 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, WAML Singapore, 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 WAML Singapore in
writing, WAML Singapore 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 WAML Singapore or any affiliated person of WAML
Singapore 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 WAML Singapore 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 WAML Singapore's overall responsibilities with respect to
the Fund and to other clients of WAML Singapore and any
affiliated person of WAML Singapore as to which WAML Singapore
or any affiliated person of WAML Singapore exercises
investment discretion. WAML Singapore shall also perform such
other functions of management and supervision as may be
requested by the Manager and agreed to by WAML Singapore.
(b) WAML Singapore 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 WAML Singapore (or with any affiliated
person of WAML Singapore) 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. WAML Singapore's services
hereunder are not deemed to be exclusive, and WAML Singapore
shall be free to render similar services to others. It is
understood that persons employed by WAML Singapore 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 WAML
Singapore or any affiliate of WAML Singapore 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, WAML Singapore
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. WAML Singapore 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, WAML
Singapore 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 WAML
Singapore will render to the Manager and the Fund under this
Agreement, the Manager will pay WAML Singapore a fee, computed
monthly and paid monthly, equal to the product of (i) the
Baseline Amount for the current calendar month and (ii) the
average of the Subadviser Fraction for the current calendar
month and the Subadviser Fraction for the preceding calendar
month. The Baseline Amount for a given calendar month shall
be the total amount paid to the Manager by the Corporation
pursuant to the Management Agreement in respect of such
calendar month. The Subadviser Fraction for a given calendar
month shall be a fraction, the numerator of which is the net
assets of the Fund managed by WAML Singapore, and the
denominator of which is the net assets of the Fund, in each
case computed as of the time of the regular close of business
of the New York Stock Exchange on the last Business Day of
such calendar month, or such other time as may be determined
by the Board of Directors of the Corporation. A Business Day
shall be any day on which the New York Stock Exchange is open.
Fees due to WAML Singapore hereunder shall be paid promptly to
WAML Singapore 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 Baseline Amount for that portion of the month during
which the contract was still in effect and the Subadviser
Fraction as of the time of the regular close of business of
the New York Stock Exchange on the date of termination (or, if
the date of termination is not a Business Day, the Business
Day immediately preceding the date of termination).
8. Limitation of Liability. In the absence of
willful misfeasance, bad faith or gross negligence on the part
of WAML Singapore, or reckless disregard of its obligations
and duties hereunder, WAML Singapore 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 WAML Singapore, 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 WAML Singapore, 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 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,
WAML Singapore 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 WAML Singapore, and WAML Singapore 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 WAML Singapore.
13. Non-Exclusive Right. In the event this
Agreement is terminated or upon written notice from WAML
Singapore 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.
14. 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.
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.
Attest: XXXX XXXXX FUND ADVISER, INC.
By: _______________ By:
_______________________________________
Name: _______________
Title: _______________
Attest: WESTERN ASSET MANAGEMENT COMPANY
PTE LIMITED
By: _______________ By:
______________________________________
Name: _______________
Title: _______________
The foregoing is accepted by:
Attest: WESTERN ASSET FUNDS, INC.
By: _______________ By:
______________________________________
Name: _______________
Title: _______________
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