Item 77Q1(e) - SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT ("Agreement") is made this 30th day
of November, 2006, by and between Western Asset Management Company, a
corporation organized under the laws of California (the 'Subadviser")
and Western Asset Management Company Limited, a corporation organized
under the laws of England and Wales ("WAML").
WHEREAS, the Subadviser has been retained by Xxxx Xxxxx Partners
Fund Advisor, LLC to provide investment advisory, management, and
administrative services to LMP Capital and Income Fund Inc. (the
"Fund"), a registered management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Subadviser wishes to engage WAML to provide certain
investment advisory services to the Fund, and WAML 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 WAML to act as a subadviser with
respect to the Fund for the period and on the terms set forth in this
Agreement. WAML accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. The Subadviser shall cause WAML 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 WAML with such other documents and information with
regard to the Fund's affairs as WAML may from time to time reasonably
request.
3. (a) Subject to the supervision of the Fund's Board of
Directors (the "Board"), Xxxx Xxxxx Partners Fund Advisor, LLC and
the Subadviser, WAML shall regularly provide the Fund with respect to
such portion of the Fund's assets as shall be allocated to WAML 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. WAML 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 WAML. WAML 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. WAML 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 WAML or its affiliates exercise investment discretion.
WAML 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 WAML 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 WAML 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 WAML's authority regarding the execution of
the Fund's portfolio transactions provided herein. WAML 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 WAML 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, WAML 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 WAML or its affiliates is
participating, or arrange for purchases and sales of securities
between the Fund and another account advised by WAML 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 WAML and its
directors and officers.
4. WAML may delegate to any other one or more companies that
WAML controls, is controlled by, or is under common control with, or
to specified employees of any such companies, certain of WAML's
duties under this Agreement, provided in each case WAML will
supervise the activities of each such entity or employees thereof,
that such delegation will not relieve WAML 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. WAML 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,
WAML 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.
WAML 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) WAML, at its expense, shall supply the Board, the
officers of the Fund, Xxxx Xxxxx Partners Fund Advisor, LLC and the
Subadviser with all information and reports reasonably required by
them and reasonably available to WAML relating to the services
provided by WAML hereunder.
(b) WAML 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, WAML 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 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 WAML or any affiliated company of
WAML, 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 WAML's or any affiliated
company's staff.
8. As compensation for the services performed by WAML,
including the services of any consultants retained by WAML, the
Subadviser shall pay WAML 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 WAML 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. WAML 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 WAML against any
liability to the Subadviser, Xxxx Xxxxx Partners Fund Advisor, LLC or
the Fund to which WAML 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 "WAML" shall include any affiliates of WAML performing services
for the Fund contemplated hereby and the partners, shareholders,
directors, officers and employees of WAML and such affiliates.
10. Nothing in this Agreement shall limit or restrict the
right of any director, officer, or employee of WAML 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 WAML 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 WAML is considered at or about
the same time, transactions in such securities will be allocated
among the accounts in a manner deemed equitable by WAML. Such
transactions may be combined, in accordance with applicable laws and
regulations, and consistent with WAML'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
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 WAML, or by
WAML 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 WAML. This Agreement shall terminate automatically
in the event of its assignment by WAML and shall not be assignable by
the Subadviser without the consent of WAML.
14. WAML 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 Fund.
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: _______________________________
Name:
Title:
WESTERN ASSET MANAGEMENT COMPANY LIMITED
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 Western Asset Management Company
Limited.
LMP CAPITAL AND INCOME FUND INC.
By: _______________________________
Name:
Title:
ANNEX I
This Annex I forms a part of the Subadvisory Agreement dated as
of November 30, 2006 by and between Western Asset Management Company,
a California corporation, and Western Asset Management Company
Limited ("WAML"), an entity authorized and regulated in the United
Kingdom by the Financial Services Authority (the "FSA").
1. WAML represents, warrants and covenants that it is authorized
and regulated by the FSA.
2. WAML has classified the Fund as an Intermediate Customer as
defined by the FSA Rules.
SCHEDULE A
LMP Capital and Income Fund Inc.
Date:
November 30, 2006
Fee:
The sub-advisory fee will be the following percentage of Allocated
Assets: 0.30%
