Item 77Q1
Xxxx Xxxxx Partners Intermediate Maturity New York Municipals Fund
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT (Agreement) is made this 13th day of
April, 2007, by and between Xxxx Xxxxx Partners Fund Advisor, LLC, a Delaware
limited liability company (the Manager), and Western Asset Management
Company, a California company (the Subadviser).
WHEREAS, the Manager has been retained by 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
0000 Xxx) to provide investment advisory, management, and administrative
services to the Trust with respect to certain series of the Trust; and
WHEREAS, the Manager wishes to engage the Subadviser to provide certain
investment advisory services to the Trust with respect to the series of the
Trust designated in Schedule A annexed hereto (the Fund) and 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:
1. In accordance with and subject to the Management Agreement
between the Trust and the Manager with respect to the Fund (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 Funds affairs. The Manager shall furnish the Subadviser
with such other documents and information with regard to the Funds affairs
as the Subadviser may from time to time reasonably request.
3. (a) Subject to the supervision of the Trusts Board of Trustees
(the Board) and the Manager, the Subadviser shall regularly provide the
Fund with respect to such portion of the Funds 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 Funds investment objectives, policies and restrictions, as stated
in the Funds current 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
Trusts 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 the Subadviser. The
Subadviser 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 a 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 Subadvisers authority regarding the
execution of the Funds 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. The Subadviser 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 the Subadviser believes are
appropriate or desirable in performing its duties under this Agreement.
(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
Funds then-current 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
Subadvisers 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 Funds 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 Trust, 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 Funds 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 Funds 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 Funds 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 Funds 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 Funds 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 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 Subadvisers or any affiliated
companys staff.
8. As 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 Trust or 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 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 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 Subadvisers
policies and procedures as presented to the Board from time to time.
11. For the purposes of this Agreement, the Funds net assets shall
be determined as provided in the Funds 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 Funds name on Schedule A annexed hereto,
provided that it shall have been approved by the Trusts Board and, if so
required by the 1940 Act, by 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
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 Funds 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 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 the Subadviser.
XXXX XXXXX PARTNERS INCOME TRUST
By: _______________________________
Name:
Title:
ANNEX I
Not applicable.
SCHEDULE A
Xxxx Xxxxx Partners Intermediate Maturity New York Municipals Fund
Date:
April 13, 2007
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.
1
7
BUSDOCS/1636458.2
BUSDOCS/1636458.2
BUSDOCS/1636458.2
BUSDOCS/1636458.2
