XXXX XXXXX PARTNERS INSTITUTIONAL TRUST
CITI INSTITUTIONAL CASH RESERVES
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT (Agreement) is made
this 13th day of April, 2007, 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 Xxxx Xxxxx
Partners Institutional 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 certain series of the Trust; and
WHEREAS, the Manager wishes to engage the Subadviser to
provide certain investment advisory services to the Trust with respect to
the series of the Trust designated in Schedule A annexed hereto (the
Fund) and 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:
1. In accordance with and subject to the Management
Agreement between the Trust and the Manager with respect to the Fund
(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 Funds affairs. The Manager shall furnish the
Subadviser with such other documents and information with regard to the
Funds affairs as the Subadviser may from time to time reasonably
request.
3. (a) Subject to the supervision of the Trusts Board
of Trustees (the Board) and the Manager, the Subadviser shall
regularly provide the Fund with respect to such portion of the Funds
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 Funds investment
objectives, policies and restrictions, as stated in the Funds current
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 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 the Subadviser. The Subadviser 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 a 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 Subadvisers authority regarding the execution of the Funds
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. The
Subadviser 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
the Subadviser believes are appropriate or desirable in performing its
duties under this Agreement.
(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 Funds then-current
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 Subadvisers 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 Funds 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 Trust, 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 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 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 Subadvisers or any affiliated companys 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 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 Trust or 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 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 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 Subadvisers 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 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 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.
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 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 the Subadviser.
XXXX XXXXX
PARTNERS
INSTITUTIONAL
TRUST
By:
_____________
__________________
Name:
Title:
ANNEX I
Not applicable.
SCHEDULE A
Citi Institutional Cash Reserves
Date:
April 13, 2007
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.
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