Western Asset Managed Municipals Portfolio Inc
Sub-Item 77Q
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 Managed Municipals
Portfolio 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 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 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.
0.Xx 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 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.
00.Xx 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 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.
MANAGED MUNICIPALS PORTFOLIO INC.
By: _______________________________
Name:
Title:
ANNEX I
Not applicable.
SCHEDULE A
Managed Municipals Portfolio Inc.
Date:
August 1, 2006
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.
