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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 corporation (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 "1940 Act") 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 Fund's affairs. The 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
Trust's Board of Trustees (the "Board") and the Manager,
the 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
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 Trust's 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
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. 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
Fund's 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
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 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 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 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
Subadviser's or any affiliated company's 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
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 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 Trust's 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 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 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 Managed 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.
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