INVESTMENT ADVISORY AGREEMENT
XXXX XXXXX U.S. GOVERNMENT MONEY MARKET PORTFOLIO
AGREEMENT made this 1st day of November, 1988 by and between Xxxx Xxxxx
Fund Adviser, Inc. ("Manager"), a Maryland corporation, and Western Asset
Management Company ("Western"), a California corporation, each of which is
registered as an investment adviser under the Investment Advisers Act of 1940.
WHEREAS, Manager is the manager of Xxxx Xxxxx U.S. Government Money
Market Portfolio ("Fund") of Xxxx Xxxxx Income Trust, Inc. (the "Corporation"),
an open-end, diversified management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and
WHEREAS, Manager wishes to retain Western to provide it with certain
investment advisory services in connection with Manager's management of the
Fund; and
WHEREAS, Western 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. Appointment. Manager hereby appoints Western investment adviser for
the Fund for the period and on the terms set forth in this Agreement. Western
accepts such appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
2. Delivery of Documents. Manager has furnished Western with copies
properly certified or authenticated of each of the following:
(a) The Corporation's Articles of Incorporation, as filed with
the State Department of Assessments and Taxation of the State of
Maryland on April 28, 1987, all amendments thereto and Articles
Supplementary filed with such Department (such Articles of
Incorporation and Articles Supplementary, as presently in effect and as
they shall from time to time be amended, are herein called the
"Articles");
(b) The Corporation's By-Laws and all amendments thereto (such
By-Laws, as presently in effect and as they shall from time to time be
amended, are herein called the "By-Laws");
(c) Resolutions of the Corporation's Board of Directors
authorizing the appointment of Manager as the manager and Western as
investment adviser with respect to the Fund and approving the
Management Agreement between Manager and the Corporation with respect
to the Fund dated November 1, 1988 (the "Management Agreement") and
this Agreement;
(d) The Corporation's Notification of Registration on Form
N-8A under the 1940 Act as filed with the Securities and Exchange
Commission on February 18, 1987 and all amendments thereto;
(e) The Corporation's post-effective amendments to its
Registration Statement on Form N-1A under the Securities Act of 1933,
as amended, and the 1940 Act (File No. 33-12092) as filed with the
Securities and Exchange Commission on September 2, 1988 and October __,
1988, including all exhibits thereto, relating to shares of common
stock of the Fund, par value $.001 per share (herein called "Shares");
(f) The Fund's most recent prospectus (such prospectus, as
presently in effect and all amendments and supplements thereto are
herein called the "Prospectus"); and
(g) The Fund's most recent statement of additional information
(such statement of additional information, as presently in effect and
all amendments and supplements thereto are herein called the "Statement
of Additional Information").
Manager will furnish Western from time to time with copies of all amendments of
or supplements to the foregoing.
3. Investment Advisory Services. (a) Subject to the supervision of the
Corporation's Board of Directors and the Manager, Western shall regularly
provide the Fund with investment research, advice, management and supervision
and shall furnish a continuous investment program for the Fund's portfolio of
securities consistent with the Fund's investment objective, policies, and
limitations as stated in the Fund's current Prospectus and Statement of
Additional Information. Western shall determine from time to time what
securities will be purchased, retained or sold by the Fund, and shall implement
those decisions, all subject to the provisions of the Corporation's Articles of
Incorporation and By-Laws, the 1940 Act, the applicable rules and regulations of
the Securities and Exchange Commission, and other applicable federal and state
law, as well as the investment objective, policies, and limitations of the Fund.
Western will place orders pursuant to its investment determinations for the Fund
either directly with the issuer or with any broker or dealer. In placing orders
with brokers and dealers, Western will attempt to obtain the best net price and
the most favorable execution of its orders; however, Western may, in its
discretion, purchase and sell portfolio securities from and to brokers and
dealers who provide the Fund with supplemental investment market research,
securities and economic analyses, advice and similar services, and Western may
pay these brokers and dealers, in return for research and analysis, a higher
brokerage commission or spread than may be charged by other brokers and dealers.
In no instance will portfolio securities be purchased from or sold to Western or
any affiliated person thereof except in accordance with the 1940 Act or the
rules, regulations or orders promulgated thereunder by the Securities and
Exchange Commission. Western shall also perform such other functions of
management and supervision as may be requested by the Manager and agreed to by
Western.
(b) Western will oversee the maintenance of all books and records with
respect to the securities transactions of the Fund in accordance with all
applicable federal and state laws and regulations, and will furnish the Board of
Directors of the Corporation with such periodic and special reports as the Board
or the Manager reasonably may request.
4. Services Not Exclusive. Western's services hereunder are not deemed
to be exclusive, and Western shall be free to render similar services to others.
It is understood that persons employed by Western to assist in the performance
of its duties hereunder might not devote their full time to such service.
Nothing herein contained shall be deemed to limit or restrict the right of
Western or any affiliate of Western to engage in and devote time and attention
to other businesses or to render services of whatever kind or nature.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Western hereby agrees that all books and records which it
maintains for the Fund are property of the Fund and further agrees to surrender
promptly to the Fund or its agents any of such records upon the
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Fund's request. Western further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act, any such records required to be maintained by
Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement, Western will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commissions, if any)
purchased for the Fund.
7. Compensation. For the services which Western will render to Manager
and the Fund under this Agreement, Manager will pay Western a fee, computed
daily and paid monthly, at an annual rate equal to 30% of the fee received by
the Manager from the Fund pursuant to the Management Agreement. Fees due to
Western hereunder shall be paid promptly to Western by the Manager following its
receipt of fees from the Fund. If this Agreement is terminated as of any date
not the last day of a calendar month, a final fee shall be paid promptly after
the date of termination and shall be based on the fee payable to Fund Adviser by
the fund for the period from the beginning of such month to the date of
termination.
8. Limitation of Liability. Western will not be liable for any error of
judgment or mistake of law or for any loss suffered by Manager or by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or losses resulting from willful misfeasance, bad faith or gross
negligence on Western's part in the performance of its duties or from reckless
disregard by it of its obligations or duties under this Agreement.
9. Definitions. As used in this Agreement, the terms "securities,"
"series" and "net assets" shall have the meanings ascribed to them in the
Articles of Incorporation of the Corporation; 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 Securities and Exchange Commission by any
rule, regulation or order.
10. Duration and Termination. This Agreement will become effective on
November 1, 1988, provided that it shall have been approved by the Corporation's
Board of Directors , including a majority of the Directors who are not
"interested persons" of the Corporation, Western or the Manager, by vote cast in
person at a meeting called for the purpose of voting on such approval and by the
shareholders of the Fund in accordance with the requirements of the 1940 Act
and, unless sooner terminated as provided for herein, shall continue in effect
until November 1, 1990. Thereafter, if not terminated, this Agreement shall
continue in effect for successive annual periods, provided that such continuance
is specifically approved at least annually (i) by the Corporation's Board of
Directors 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 Corporation's Directors who are not "interested persons" of the
Corporation, Western or the Manager, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable without
penalty, by vote of the Corporation's Board of Directors, by vote of a majority
of the outstanding voting securities of the Fund, by the Manager or by Western,
on not less than 60 days' notice to the Fund and/or the other party(ies) and
will be terminated immediately upon any termination of the Management Agreement
with respect to the Fund or upon the mutual written consent of Western, the
Manager, and the Corporation. Termination of this Agreement with respect to the
Fund shall in no way affect continued performance of Western with regard to any
other portfolio of the Corporation. This Agreement will automatically and
immediately terminate in the event of its assignment.
11. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
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12. Amendments. 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 this Agreement shall be
effective until approved by vote of the holders of a majority of the Fund's
outstanding voting securities.
13. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. 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 and shall inure to the
benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
[SEAL] XXXX XXXXX FUND ADVISER, INC.
Attest:
By: /s/Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxx
[SEAL] WESTERN ASSET MANAGMENT COMPANY
Attest:
By:/s/ Xxxxxx Xxxxxx-Xxx By: /s/ W. Xxxxxx Xxxxxxxxxx, III
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