SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT ("Agreement") is made this 30th day of
November, 2006, 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 Western Asset Emerging Markets Income Fund II Inc. (the "Fund"),
a registered management investment company under the Investment Company Act
of 1940, as amended (the "1940 Act"); 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:
0.Xx 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 Fund"s Board of Directors (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 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
WAML. WAML 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. 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.
(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 Fund, 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.
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 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.
0.Xx 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 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 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 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 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 Fund.
15No 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 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
Western Asset Management Company Limited.
WESTERN ASSET EMERGING MARKETS INCOME
FUND II INC.
By: _______________________________
Name:
Title:
ANNEX I
This Annex I forms a part of the Subadvisory Agreement dated as of
November 30, 2006 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
Western Asset Emerging Markets Income Fund II Inc.
Date:
November 30, 2006
Fee:
The sub-advisory fee will be the following percentage of Allocated Assets:
0.30%
- 7 -
WF&G Draft 11/30/06
Privileged & Confidential
Attorney-Client Communication
