SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT ("Agreement") is made
this 27th day of April, 2007, 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 Variable Income Trust (the "Trust"), a
registered management investment company under the
Investment Company Act of 1940, as amended (the "1940
Act") with respect to the series of the Trust 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 Trust's
Board of Trustees (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 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 WAML. WAML 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 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. WAML 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 WAML believes are appropriate or desirable in
performing its duties under this Agreement.
(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 Trust, 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 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 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 Trust 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 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 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 Trust'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 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.
WESTERN ASSET MANAGEMENT
COMPANY
By:
___________________
____________
Name:
Title:
WESTERN ASSET MANAGEMENT
COMPANY LIMITED
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 Western Asset Management Company Limited.
XXXX XXXXX PARTNERS
VARIABLE INCOME TRUST
By:
___________________
____________
Name:
Title:
ANNEX I
This Annex I forms a part of the Subadvisory
Agreement dated as of April 27, 2007 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 Variable High Income Portfolio
Date:
April 27, 2007
Fee:
The sub-advisory fee will be the following percentage of
the Fund's Allocated Assets: 0.30%
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