Xxxx Xxxxx Partners Intermediate Maturity California Municipals Fund
Item 77Q1(e)
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 Intermediate Maturity California 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.
