Western Asset Intermediate Muni Fund Inc.
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
Intermediate Muni Fund 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, a
ny obligation to the Subadviser.
INTERMEDIATE MUNI FUND INC.
By: _______________________________
Name:
Title:
ANNEX I
Not applicable.
SCHEDULE A
Intermediate Muni Fund 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.
