This SUBADVISORY AGREEMENT ("Agreement") is made this 3rd day of
February, 2009, 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 ("WESTERN LONDON").
WHEREAS, the Subadviser has been retained by Xxxx Xxxxx Partners
Fund Advisor, LLC to provide investment advisory, management, and
administrative services to WESTERN ASSET HIGH INCOME FUND 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 WESTERN LONDON to
provide certain investment advisory services to the Fund, and WESTERN
LONDON 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 WESTERN LONDON to act as a subadviser with respect to
the Fund for the period and on the terms set forth in this Agreement.
WESTERN LONDON accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. The Subadviser shall cause WESTERN LONDON 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 WESTERN LONDON with such other documents and information
with regard to the Fund's affairs as WESTERN LONDON 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, WESTERN LONDON shall regularly provide the Fund with
respect to such portion of the Fund's assets as shall be allocated to
WESTERN LONDON 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. WESTERN LONDON 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 WESTERN LONDON. WESTERN LONDON 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. WESTERN LONDON 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 WESTERN LONDON
or its affiliates exercise investment discretion. WESTERN LONDON 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
WESTERN LONDON 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 WESTERN LONDON 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
WESTERN LONDON's authority regarding the execution of the Fund's
portfolio transactions provided herein. WESTERN LONDON 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 WESTERN LONDON 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, WESTERN LONDON 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 WESTERN LONDON or its affiliates is
participating, or arrange for purchases and sales of securities between
the Fund and another account advised by WESTERN LONDON 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 WESTERN LONDON and its
directors and officers.
4. WESTERN LONDON may delegate to any other one or more
companies that WESTERN LONDON controls, is controlled by, or is under
common control with, or to specified employees of any such companies,
certain of WESTERN LONDON's duties under this Agreement, provided in
each case WESTERN LONDON will supervise the activities of each such
entity or employees thereof, that such delegation will not relieve
WESTERN LONDON 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. WESTERN LONDON 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,
WESTERN LONDON 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.
WESTERN LONDON 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)WESTERN LONDON, 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 WESTERN LONDON relating to the services
provided by WESTERN LONDON hereunder.
(b)WESTERN LONDON 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, WESTERN LONDON 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 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 WESTERN LONDON or any affiliated
company of WESTERN LONDON, 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
WESTERN LONDON's or any affiliated company's staff.
8. As compensation for the services performed by WESTERN LONDON,
including the services of any consultants retained by WESTERN LONDON,
the Subadviser shall pay WESTERN LONDON 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 WESTERN LONDON 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. WESTERN LONDON 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 WESTERN LONDON against any
liability to the Subadviser, Xxxx Xxxxx Partners Fund Advisor, LLC or
the Fund to which WESTERN LONDON 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
"WESTERN LONDON" shall include any affiliates of WESTERN LONDON
performing services for the Fund contemplated hereby and the partners,
shareholders, directors, officers and employees of WESTERN LONDON and
such affiliates.
10. Nothing in this Agreement shall limit or restrict the right
of any director, officer, or employee of WESTERN LONDON 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
WESTERN LONDON 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 WESTERN LONDON is considered at or about
the same time, transactions in such securities will be allocated among
the accounts in a manner deemed equitable by WESTERN LONDON. Such
transactions may be combined, in accordance with applicable laws and
regulations, and consistent with WESTERN LONDON'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 WESTERN LONDON,
or by WESTERN LONDON 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 WESTERN LONDON. This Agreement shall
terminate automatically in the event of its assignment by WESTERN
LONDON and shall not be assignable by the Subadviser without the
consent of WESTERN LONDON.
14. WESTERN LONDON 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.
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: /s/W. Xxxxxxx Xxxxxxx, Xx.
Name: W. Xxxxxxx Xxxxxxx, Xx.
Title: Manager, US Legal and Corporate Affairs
WESTERN ASSET MANAGEMENT COMPANY LTD.
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Manager, International Legal and Compliance
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 HIGH INCOME FUND INC.
By:/s/ R. Xxx Xxxxxx
Name: R. Xxx Xxxxxx
Title: Chairman, President and Chief Executive Officer
ANNEX I
This Annex I forms a part of the Subadvisory Agreement dated as of
February 3, 2009 by and between Western Asset Management Company, a
California corporation, and Western Asset Management Company Limited
("Western London), an entity authorized and regulated in the United
Kingdom by the Financial Services Authority (the "FSA").
1. Western London represents, warrants and covenants that it is
authorized and regulated by the FSA.
2. Western London has classified the Fund as an Intermediate
Customer as defined by the FSA Rules.
SCHEDULE A
WESTERN ASSET HIGH INCOME FUND INC.
February 3, 2009
Fee:
The sub-advisory fee will be the following percentage of Allocated
Assets: 0.30%
