Managed High Income Portfolio Inc.
New SubAdvisory Agreement
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT ("Agreement") is made this 1st day of
August, 2006, by and between Xxxx Xxxxx Partners Fund Advisor,
LLC, a Delaware limited liability company(the "Manager"),
and Western Asset Management Company, a California corporation
(the "Subadviser").
WHEREAS, the Manager has been retained by Managed High Income
Portfolio Inc. (the "Fund"), a registered management investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act") to provide investment advisory, management,
and administrative services to the Fund; and
WHEREAS, the Manager wishes to engage the Subadviser to provide
certain investment advisory services to the Fund, and the
Subadviser 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:
0.Xx accordance with and subject to the Management Agreement
between the Fund and the Manager (the "Management Agreement"),
the Manager hereby appoints the Subadviser to act as Subadviser
with respect to the Fund for the period and on the terms set forth
in this Agreement. The Subadviser accepts such appointment and agrees
to render the services herein set forth, for the compensation herein
provided.
2.The Manager shall cause the Subadviser 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. Manager shall furnish
the Subadviser with such other documents and information with regard
to the Fund's affairs as the Subadviser may from time to
time reasonably request.
3.(a) Subject to the supervision of the Fund's Board of Directors
(the "Board") and the Manager, Subadviser shall regularly provide
the Fund with respect to such portion of the Fund's assets as shall
be allocated to the Subadviser by the Manager 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 Prospectus and Statement of Additional
Information. The Subadviser 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 the
Subadviser. The Subadviser 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. The Subadviser 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 Subadviser or
its affiliates exercise investment discretion. The Subadviser 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 Subadviser 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 Subadviser 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 Subadviser's authority regarding the execution of
the Fund's portfolio transactions provided herein. The Subadviser
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 the Subadviser 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, the Subadviser 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 Subadviser or its affiliates is participating, or
arrange for purchases and sales of securities between the Fund
and another account advised by the Subadviser 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 Subadviser and its directors and officers.
4.The Subadviser may delegate to any other one or more companies
that the Subadviser controls, is controlled by, or is under common
control with, or to specified employees of any such companies,
certain of the Subadviser's duties under this Agreement, provided
in each case the Subadviser will supervise the activities of each
such entity or employees thereof, that such delegation will not
relieve the Subadviser 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.The Subadviser 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 1940 Act,
the Subadviser 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 Subadviser 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) The Subadviser, at its expense, shall supply the Board,
the officers of the Fund, and the Manager with all information
and reports reasonably required by them and reasonably available
to the Subadviser relating to the services provided by the
Subadviser hereunder.
(b) The Subadviser 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 Subadviser 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 Subadviser
or any affiliated company of the Subadviser, 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 Subadviser's or any
affiliated company's staff.
0.Xx compensation for the services performed by the Subadviser,
including the services of any consultants retained by the Subadviser,
the Manager shall pay the Subadviser out of the management 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
the Subadviser 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.The Subadviser 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 Subadviser
against any liability to the Manager or the Fund to which the
Subadviser 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 "Subadviser" shall include any affiliates of the
Subadviser performing services for the Fund contemplated
hereby and the partners, shareholders, directors, officers
and employees of the Subadviser and such affiliates.
10.Nothing in this Agreement shall limit or restrict
the right of any director, officer, or employee of the
Subadviser 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 Subadviser 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 Subadviser 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 Subadviser. Such transactions may be
combined, in accordance with applicable laws and regulations,
and consistent with the Subadviser'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 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 the Subadviser,
or by the Subadviser upon not less than 90 days' written notice
to the Fund and the Manager, and will be terminated upon the
mutual written consent of the Manager and the Subadviser. This
Agreement shall terminate automatically in the event of its
assignment by the Subadviser and shall not be assignable by
the Manager without the consent of the Subadviser.
14.The Subadviser agrees that for any claim by it against
the Fund in connection with this Agreement or the services
rendered under this 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.
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.
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.
XXXX XXXXX PARTNERS FUND ADVISOR, LLC
By: _______________________________
Name:
Title:
WESTERN ASSET MANAGEMENT COMPANY
By: _______________________________
Name:
Title:
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 the Subadviser.
MANAGED HIGH INCOME PORTFOLIO INC.
By: _______________________________
Name:
Title:
ANNEX I
Not applicable.
SCHEDULE A
Managed High Income Portfolio Inc.
Date:
August 1, 2006
Fee:
The sub-advisory fee will be 70% of the management
fee paid to Xxxx Xxxxx Partners Fund Advisor, LLC,
net of expense waivers and reimbursements.
