LMP Institutional Trust
SMASh Series M (Spoke) Fund
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT (Agreement) is made this
22nd day of December, 2006, 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 CitiFunds
Institutional Trust (the Trust), a registered management
investment company under the Investment Company Act of 1940, as
amended (the 0000 Xxx) with respect to certain series of the
Trust; and
WHEREAS, the Subadviser wishes to engage WAML 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 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. The Subadviser shall not pay WAML any fee
hereunder. WAML acknowledges and agrees that the Fund is an
integral part of separately managed account programs, and that
WAML will be compensated directly or indirectly by separately
managed account sponsors for services rendered hereunder. WAML
acknowledges and agrees that such compensation is sufficient
consideration hereunder.
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 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 for an initial two
year term. 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 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.
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.
CITIFUNDS INSTITUTIONAL
TRUST
By: _____________________
Name:
Title:
ANNEX I
This Annex I forms a part of the Subadvisory Agreement
dated as of December 22, 2006 by and between Western Asset
Management Company (the Subadviser), a corporation organized
under the laws of California, 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
SMASh Series M Fund
Date:
4
7
BUSDOCS/1586627.5
7
Draft 5/21/06
4
9
BUSDOCS/1586627.5
8
BUSDOCS/1586627.5
