Citi Tax Free Reserves
77Q1
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 Money Market 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 MONEY
MARKET TRUST
By:
__________
________________
_____
Name:
Title:
ANNEX I
Not applicable.
SCHEDULE A
Citi Tax Free 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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