77Q-1
LMP INCOME TRUST
LMP HIGH INCOME FUND (N4J7)
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT (Agreement) is
made this 13th 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 Income Trust (the
Trust), a Maryland business trust registered as a
management investment company under the Investment
Company Act of 1940, as amended (the 0000 Xxx) to
provide investment advisory, management, and
administrative services to the Trust 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 Funds affairs. The
Subadviser shall furnish WAML with such other
documents and information with regard to the Funds
affairs as WAML may from time to time reasonably
request.
3. (a) Subject to the supervision of the
Trusts 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 Funds 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 Funds investment
objectives, policies and restrictions, as stated in
the Funds 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
Trusts 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 WAMLs authority regarding the execution of
the Funds 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 Funds 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 WAMLs
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 Funds 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 Funds 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 Funds 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 Funds shares and
servicing shareholder accounts; expenses of
registering and qualifying the Funds 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 Funds 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 Funds 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 Funds 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 WAMLs or any affiliated companys
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 WAMLs policies and procedures as
presented to the Board from time to time.
11. For the purposes of this Agreement, the
Funds net assets shall be determined as provided
in the Funds 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 Funds name on Schedule A annexed hereto,
provided that it shall have been approved by the
Trusts 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 Funds 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 INCOME
TRUST
By:
___________
_________________
___
Name:
Title:
ANNEX I
This Annex I forms a part of the Subadvisory
Agreement dated as of April
13, 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 High Income Fund
Date:
April 13, 2007
Fee:
The sub-advisory fee will be the following percentage
of the Funds Allocated
Assets: 0.30%
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