INVESTMENT ADVISORY AGREEMENT
XXXX XXXXX INVESTMENT GRADE INCOME PORTFOLIO
AGREEMENT made this 19th day of June, 1987 by and between Xxxx Xxxxx
Fund Adviser, Inc. ("Manager"), a Maryland corporation, and Western Asset
Management Company ("WAMC"), a California corporation, each of which is
registered as an investment adviser under the Investment Advisers Act of 1940.
WHEREAS, Manager is the manager of Xxxx Xxxxx Income Trust, Inc. (the
"Corporation"), an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), and
WHEREAS, Manager wishes to retain WAMC to provide it with certain
investment advisory services in connection with Manager's management of the Xxxx
Xxxxx Investment Grade Income Portfolio ("Fund"), a series of shares of the
Corporation; and
WHEREAS, WAMC 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. Manager hereby appoints WAMC investment adviser for the
Fund for the period and on the terms set forth in this Agreement. WAMC accepts
such appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
2. Delivery of Documents. Manager has furnished WAMC with copies
properly certified or authenticated of each of the following:
(a) The Corporation's Articles of Incorporation, as filed with
the State Department of Assessments and Taxation of the State of
Maryland on April 28, 1987 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
authorizing the appointment of Manager as the manager and WAMC as
investment adviser and approving the Management Agreement between
Manager and the Fund dated June 19, 1987 (the "Management Agreement")
and this Agreement;
(d) The Corporation's Notification of Registration on Form
N-8A under the 1940 Act as filed with the Securities and Exchange
Commission on February 18, 1987 and all amendments thereto;
(e) The Corporation's Registration Statement on Form N-1A
under the Securities Act of 1933, as amended, and the 1940 Act (File
No. 33-12092) as filed with the Securities and Exchange Commission on
February 18, 1987, including all exhibits thereto, relating to shares
of common stock of the Fund, par value $.001 per share (herein called
"Shares") and all amendments thereto;
(f) The Fund's most recent prospectus (such prospectus, as
presently in effect and all amendments and supplements thereto are
herein called the "Prospectus"). Manager will furnish WAMC from time to
time with copies of all amendments of or supplements to the foregoing;
and
(g) 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").
Manager will furnish WAMC 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
Corporation's Board of Directors and the Manager, WAMC 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
consistent with the Fund's investment objective, policies, and limitations as
stated in the Fund's current Prospectus and Statement of Additional Information.
WAMC shall determine from time to time what securities 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 objective, policies, and limitations of the Fund. WAMC will place
orders pursuant to its investment determinations for the Fund either directly
with the issuer or with any broker or dealer. In placing orders with brokers and
dealers, WAMC will attempt to obtain the best net price and the most favorable
execution of its orders; however, WAMC may, in its discretion, purchase and sell
portfolio securities from and to brokers and dealers who provide the Fund with
research, analysis, advice and similar services, and WAMC may pay to these
brokers, in return for research and analysis, a higher commission than may be
charged by other brokers. In no instance will portfolio securities be purchased
from or sold to WAMC or any affiliated person thereof except in accordance with
the rules, regulations or orders promulgated by the Securities and Exchange
Commission pursuant to the 1940 Act. WAMC shall also perform such other
functions of management and supervision as may be requested by the Manager and
agreed to by WAMC.
(b) WAMC will oversee the maintenance of all books and records with
respect to the securities transactions of the Fund in accordance with all
applicable federal and state laws and regulations, and will furnish the Board of
Directors of the Corporation with such periodic and special reports as the Board
or the Manager reasonably may request.
4. Services Not Exclusive. WAMC's services hereunder are not deemed to
be exclusive, and WAMC shall be free to render similar services to others. It is
understood that persons employed by WAMC 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 WAMC or any
affiliate of WAMC 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, WAMC 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.
WAMC 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.
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6. Expenses. During the term of this Agreement, WAMC will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commissions, if any)
purchased for the Fund.
7. Compensation. For the services which WAMC will render to Manager and
the Fund under this Agreement, Manager will pay WAMC a fee, computed daily and
paid monthly, at an annual rate equal to 40% of the fee received by the Manager
from the Fund. Fees due to WAMC hereunder shall be paid promptly to WAMC 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
percentage of days of the month during which the contract was still in effect.
8. Limitation of Liability. WAMC will not be liable for any error of
judgment or mistake of law or for any loss suffered by Manager or by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations or duties under this Agreement.
9. Definitions. As used in this Agreement, the terms "securities" and
"net assets" shall have the meanings ascribed to them in the Articles of
Incorporation of the Corporation; 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 Securities and Exchange Commission by any
rule, regulation or order.
10. Duration and Termination. This Agreement will become effective June
19, 1987, provided that it shall have been approved by the Corporation's Board
of Directors and by the shareholders of the Fund in accordance with the
requirements of the 1940 Act and, unless sooner terminated as provided for
herein, shall continue in effect until June 19, 1989. Thereafter, if not
terminated, this Agreement shall continue in effect for successive annual
periods, provided that such continuance is specifically approved at least
annually (i) by the Corporation's Board of Directors or (ii) by a vote of a
majority (as defined in the 0000 Xxx) of the outstanding voting securities of
the Fund, provided that in either event the continuance is also approved by a
majority of the Corporation's Directors who are not interested persons (as
defined in the 0000 Xxx) of the Corporation or of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable without penalty, by vote of the
Corporation's Board of Directors, by vote of a majority (as defined in the 0000
Xxx) of the outstanding voting securities of the Fund, by the Manager or by
WAMC, on not less than 60 days' notice to the Fund and/or the other party(ies)
and will be terminated immediately upon any termination of the Management
Agreement with respect to the Fund or upon the mutual written consent of WAMC,
the Manager, and the Fund. Termination of this Agreement with respect to the
Fund shall in no way affect continued performance with regard to any other
portfolio of the Corporation. This Agreement will automatically and immediately
terminate in the event of its assignment.
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. Amendments. 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 this Agreement shall be
effective until approved by vote of the holders of a majority of the Fund's
outstanding voting securities.
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13. 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.
[SEAL] XXXX XXXXX FUND ADVISER, INC.
Attest:
By: /s/Xxxx X. Xxxxx By: /s/Xxxxxx X. Xxxxxx
[SEAL] WESTERN ASSET MANAGMENT COMPANY
Attest:
By: By: /s/ W. Xxxxxx Xxxxxxxxxx, III
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