SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT ("Agreement") is made this 30th
day of October, 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 Xxxx Xxxxx Partners
World Funds, Inc. (the "Corporation"), a registered management
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act") with respect to the series of the
Corporation designated in Schedule A annexed hereto (the "Fund");
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 Corporation'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 Corporation'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
Corporation 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 Corporation, 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
Corporation or Fund shall receive from the Corporation 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 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 Corporation or 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 Corporation 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 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 Corporation'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 Corporation.
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 Corporation has executed this
Agreement not individually but in his/her capacity as an officer
of the Corporation. The Corporation does not hereby undertake, on
behalf of the Fund or otherwise, any obligation to Western Asset
Management Company Limited.
XXXX XXXXX PARTNERS WORLD FUNDS,
INC.
By:
_______________________________
Name:
Title:
ANNEX I
This Annex I forms a part of the Subadvisory Agreement dated
as of October 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
Xxxx Xxxxx Partners Inflation Management Fund
Date:
October 30, 2006
Fee:
The subadvisory fee will be the following percentage of Allocated
Assets: 0.30%
