77Q - IMF
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT ("Agreement") is made this 2nd day of
September, 2008, by and between Western Asset Management Company, a
corporation organized under the laws of California (the "Subadviser") and
Western Asset Management Company Ltd., a corporation organized under the laws
of Japan ("Western Japan").
WHEREAS, the Subadviser has been retained by Xxxx Xxxxx Partners Fund
Advisor, LLC to provide investment advisory, management, and administrative
services to Xxxx Xxxxx Partners Income Trust (the "Trust"), a Maryland
business trust registered as a 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 Trust
with respect to the series of the Trust designated in Schedule A annexed
hereto (the "Fund"); and
WHEREAS, the Subadviser wishes to engage Western Japan to provide
certain investment advisory services to the Fund, and Western Japan 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 Japan to act as a subadviser with respect to the Fund for the period
and on the terms set forth in this Agreement. Western Japan accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. The Subadviser shall cause Western Japan 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
Japan with such other documents and information with regard to the Fund"s
affairs as Western Japan may from time to time reasonably request.
3. (a) Subject to the supervision of the Trust"s Board of Trustees (the
"Board"), Xxxx Xxxxx Partners Fund Advisor, LLC and the Subadviser, Western
Japan shall regularly provide the Fund with respect to such portion of the
Fund"s assets as shall be allocated to Western Japan 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 Japan 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 Trust"s Declaration of
Trust 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 Japan. Western Japan is authorized as the agent of
the Trust 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 Japan 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 Japan or its affiliates
exercise investment discretion. Western Japan 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 Japan 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 Japan 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 Japan"s
authority regarding the execution of the Fund"s portfolio transactions
provided herein. Western Japan 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. Western Japan may execute on behalf of the Fund
certain agreements, instruments and documents in connection with the services
performed by it under this Agreement. These may include, without limitation,
brokerage agreements, clearing agreements, account documentation, futures and
options agreements, swap agreements, other investment related agreements, and
any other agreements, documents or instruments Western Japan believes are
appropriate or desirable in performing its duties under this Agreement.
(b) The Fund hereby authorizes any entity or person associated
with Western Japan 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 Japan 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 Japan or its affiliates is
participating, or arrange for purchases and sales of securities between the
Fund and another account advised by Western Japan 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 Japan and its directors and officers.
4. Western Japan may delegate to any other one or more companies
that Western Japan controls, is controlled by, or is under common control
with, or to specified employees of any such companies, certain of Western
Japan"s duties under this Agreement, provided in each case Western Japan will
supervise the activities of each such entity or employees thereof, that such
delegation will not relieve Western Japan 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 Japan 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, Western Japan 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 Japan 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 Japan, at its expense, shall supply the Board, the
officers of the Trust, Xxxx Xxxxx Partners Fund Advisor, LLC and the
Subadviser with all information and reports reasonably required by them and
reasonably available to Western Japan relating to the services provided by
Western Japan hereunder.
(b) Western Japan 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 Japan 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 Trust or Fund
shall receive from the Trust or 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 Japan or any affiliated company of
Western Japan, 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 Japan"s or any affiliated company"s
staff.
8. As compensation for the services performed by Western Japan,
including the services of any consultants retained by Western Japan, the
Subadviser shall pay Western Japan 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 Japan 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 Japan 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 Japan against any liability to the
Subadviser, Xxxx Xxxxx Partners Fund Advisor, LLC or the Fund to which
Western Japan 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 0, xxx xxxx "Xxxxxxx Xxxxx" shall include any affiliates of
Western Japan performing services for the Trust or the Fund contemplated
hereby and the partners, shareholders, directors, officers and employees of
Western Japan and such affiliates.
10. Nothing in this Agreement shall limit or restrict the right of
any director, officer, or employee of Western Japan who may also be a Board
member, officer, or employee of the Trust or 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 Japan 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 Japan 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 Japan. Such transactions may be combined, in accordance with
applicable laws and regulations, and consistent with Western Japan"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 Trust"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 until the second anniversary of the date of
effectiveness. 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 Japan, or by Western Japan 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
Japan. This Agreement shall terminate automatically in the event of its
assignment by Western Japan and shall not be assignable by the Subadviser
without the consent of Western Japan.
14. Western Japan 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 Trust.
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 Trust has executed this Agreement not
individually but in his/her capacity as an officer of the Trust. The Trust
does not hereby undertake, on behalf of the Fund or otherwise, any obligation
to Western Asset Management Company Ltd.
XXXX XXXXX PARTNERS INCOME TRUST
By: /s/_R. Xxx
Gerken______________________________
Name: R. Jay Gerken___
Title: Chairman, President and
Chief Executive Officer
Xxxx Xxxxx Partners Inflation Management Fund Signature Page
ANNEX I
This Annex I forms a part of the Subadvisory Agreement dated as of
September 2, 2008, by and between Western Asset Management Company, a
California corporation, and Western Asset Management Company Ltd. ("Western
Japan"), an entity authorized and regulated in Japan by the Japanese
Securities and Exchange Surveillance Commission (SESC).
1. Western Japan shall not offer any special benefit to the Subadviser in
connection with performance of this Agreement, and the Subadviser shall not
request any special benefit from Western Japan.
2. Section 9 of this Agreement shall not be deemed to limit Western Japan's
obligations under the Japanese Financial Instruments and Exchange Law to
perform its duties to its customers faithfully and with the care of a prudent
manager.
3. The Subadviser shall be liable for any damages or losses suffered by
Western Japan due to the Subadviser"s willful misconduct or gross negligence
or the Subadviser"s failure to perform its duties hereunder.
SCHEDULE A
Xxxx Xxxxx Partners Inflation Management Fund Date: September 2, 2008
Fee:
The sub-advisory fee will be the following percentage of the Fund"s Allocated
Assets: 0.30%
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