Western Asset Municipal High Income Fund Inc.
MANAGEMENT AGREEMENT
Xxxx Xxxxx Partners Fund Advisor, LLC
This MANAGEMENT AGREEMENT ("Agreement") is made this 1st day
of August, 2006, by and between Municipal High Income Fund
Inc. (the "Fund") and Xxxx Xxxxx Partners Fund Advisor,
LLC, a Delaware limited liability company (the "Manager").
WHEREAS, the Fund is registered as a management investment
company under the Investment Company Act of 1940, as
amended (the "1940 Act");
WHEREAS, the Manager is engaged primarily in rendering
investment advisory, management and administrative services
and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended;
WHEREAS, the Fund wishes to retain the Manager to provide
investment advisory, management, and administrative services
to the Fund; and
WHEREAS, the Manager 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.The Fund hereby appoints the Manager to act as investment adviser
and administrator of the Fund for the period and on the terms set
forth in this Agreement. The Manager accepts such appointment and
agrees to render the services herein set forth, for the compensation
herein provided.
2.The Fund shall at all times keep the Manager fully informed with regard
to the securities owned by it, its funds available, or to become available,
for investment, and generally as to the condition of its affairs. It
shall furnish the Manager with such other documents and information
with regard to its affairs as the Manager may from time to time
reasonably request.
3.(a) Subject to the supervision of the Fund's Board of Directors
(the "Board"), the Manager shall regularly provide the Fund with
investment research, advice, management and supervision and shall
furnish a continuous investment program for the Fund's portfolio of
securities and other investments consistent with the Fund's investment
objectives, policies and restrictions, as stated in the Fund's Prospectus
and Statement of Additional Information. The Manager shall determine from
time to time what securities and other investments will be purchased,
retained, sold or exchanged by the Fund and what portion of the assets
of the Fund's portfolio will be held in the various securities and other
investments in which the Fund invests, and shall implement those decisions,
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 the Manager. The
Manager is authorized as the agent of the Fund to give
instructions 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 and direction from the Board, 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. The Manager 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 the Manager or its affiliates exercise investment
discretion. The Manager 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
the Manager 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 the Manager 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 the Manager's authority regarding the execution of
the Fund's portfolio transactions provided herein. The Manager
shall also provide advice and recommendations with respect to
other aspects of the business and affairs of the Fund, shall
exercise voting rights, rights to consent to corporate action
and any other rights pertaining to the Fund's portfolio
securities 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) Subject to the direction and control of the
Board, the Manager shall perform such administrative and
management services as may from time to time be reasonably
requested by the Fund as necessary for the operation of the
Fund, such as (i) supervising the overall administration of the
Fund, including negotiation of contracts and fees with and the
monitoring of performance and xxxxxxxx of the Fund's transfer
agent, shareholder servicing agents, custodian and other
independent contractors or agents, (ii) providing certain compliance,
fund accounting, regulatory reporting, and tax reporting services,
(iii) preparing or participating in the preparation of Board materials,
registration statements, proxy statements and reports and other
communications to shareholders, (iv) maintaining the Fund's
existence, and (v) during such times as shares are publicly
offered, maintaining the registration and qualification of the
Fund's shares under federal and state laws. Notwithstanding the
foregoing, the Manager shall not be deemed to have assumed any
duties with respect to, and shall not be responsible for, the
distribution of the shares of the Fund, nor shall the Manager
be deemed to have assumed or have any responsibility with respect
to functions specifically assumed by any transfer agent, fund
accounting agent, custodian, shareholder servicing agent or other
agent, in each case employed by the Fund to perform such functions.
(c)The Fund hereby authorizes any entity or person associated with
the Manager 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 of 1934 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, the Manager
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 the Manager or its affiliates is participating, or
arrange for purchases and sales of securities between the Fund and another
account advised by the Manager 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 Prospectus and Statement of Additional Information relative to
the Manager and its directors and officers.
4.Subject to the Board's approval, the Manager or the Fund may enter
into contracts with one or more investment subadvisers or
subadministrators, including without limitation, affiliates
of the Manager, in which the Manager delegates to such investment
subadvisers or subadministrators any or all its duties specified
hereunder, on such terms as the Manager will determine to be necessary,
desirable or appropriate, provided that in each case the Manager shall
supervise the activities of each such subadviser or subadministrator
and further provided that such contracts impose on any investment
subadviser or subadministrator bound thereby all the conditions to
which the Manager is subject hereunder and that such contracts are
entered into in accordance with and meet all applicable requirements
of the 1940 Act.
5.(a) The Manager, at its expense, shall supply the Board and officers
of the Fund with all information and reports reasonably required by them
and reasonably available to the Manager and shall furnish the Fund with
office facilities, including space, furniture and equipment and all
personnel reasonably necessary for the operation of the Fund. The Manager
shall oversee the maintenance of all books and records with respect to
the Fund's securities transactions and the keeping of the Fund's books
of account in accordance with all applicable federal and state laws
and regulations. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Manager 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. The Manager 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. The Manager shall authorize and permit any of its
directors, officers and employees, who may be elected as Board
members or officers of the Fund, to serve in the capacities in
which they are elected.
(b) The Manager 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, the Manager 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.
0.Xx 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 the Manager or any
affiliated company of the Manager, 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 the Manager's or any affiliated company's staff.
0.Xx compensation for the services performed and the facilities
furnished and expenses assumed by the Manager, including the
services of any consultants retained by the Manager, the Fund
shall pay the Manager, 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, provided however, that if the
Fund invests all or substantially all of its assets in another
registered investment company for which the Manager or an affiliate
of the Manager serves as investment adviser or investment manager,
the annual fee computed as set forth on such Schedule A shall be
reduced by the aggregate management fees allocated to that Fund for
the Fund's then-current fiscal year from such other registered
investment company. 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 the Manager 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 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 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.
8.The Manager 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 the Manager
against any liability to the Fund to which the Manager 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 8, the term "Manager" shall include any
affiliates of the Manager performing services for the Fund
contemplated hereby and the partners, shareholders, directors,
officers and employees of the Manager and such affiliates.
9.Nothing in this Agreement shall limit or restrict the right of
any director, officer, or employee of the Manager 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 the Manager 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 the Manager is
considered at or about the same time, transactions in such securities
will be allocated among the accounts in a manner deemed equitable by
the Manager. Such transactions may be combined, in accordance with
applicable laws and regulations, and consistent with the Manager's
policies and procedures as presented to the Board from time to time.
10. For the purposes of this Agreement, the Fund's "net assets"
shall be determined as provided in the Fund's 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.
11.This Agreement will become effective with respect to the Fund on the
date set forth on Schedule A annexed hereto, provided that it shall
have been approved by the Fund's Board and 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
until 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.
12.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 the Manager, or by the Manager upon not less than 90 days'
written notice to the Fund, and will be terminated upon the mutual written
consent of the Manager and the Fund. This Agreement shall terminate
automatically in the event of its assignment by the Manager and shall
not be assignable by the Fund without the consent of the Manager.
00.Xx 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.
14.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. 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.
15.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.
MUNICIPAL HIGH INCOME FUND INC.
By:
Name:
Title:
XXXX XXXXX PARTNERS FUND ADVISOR, LLC
By:
Name:
Title:
