Western Asset Zenix Income Fund Inc.
New SubAdvisory Agreement
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT ("Agreement") is made this 1st day of
August, 2006, 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 Zenix Income Fund
Inc. (the "Fund"), a registered 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 Fund; and
WHEREAS, the Manager wishes to engage the Subadviser to
provide certain investment advisory services to the Fund,
and the 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:
0.Xx accordance with and subject to the Management
Agreement between the Fund and the Manager (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. 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 Fund's
Board of Directors (the "Board") and the Manager,
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 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 Fund's Articles of Incorporation
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 Fund
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. 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.
(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
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 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 Fund, 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.
0.Xx member of the Board, officer or employee of the Fund shall
receive from the 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 l
ess, 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 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
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 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 Fund'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 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 Fund.
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 d
uly 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 Fund has executed this
Agreement not individually but in his/her capacity as
an officer of the Fund. The Fund does not hereby undertake,
on behalf of the Fund or otherwise, any obligation to the Subadviser.
ZENIX INCOME FUND INC.
By: _______________________________
Name:
Title:
ANNEX I
Not applicable.
SCHEDULE A
Zenix Income Fund Inc.
Date:
August 1, 2006
Fee:
The sub-advisory fee will be 70% of the management fee paid to
the Manager, net of expense waivers and reimbursements.
