77Q1 Citi Institutional Enhanced Income Fund
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 CitiFunds 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 Fund?s 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 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 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 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 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 Enhanced Income Fund
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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