CITIFUNDS PREMIUM TRUST
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT ("Agreement") is
made this 1st day of August, 2006, 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 Premium Trust (the "Trust"), a
registered management investment company
under the Investment Company Act of 1940, as
amended (the "1940 Act") 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 Fund's affairs. Manager shall furnish
the Subadviser with such other documents and information
with regard to the Fund's affairs as the Subadviser may
from time to time reasonably request.
3. (a) Subject to the supervision
of the Trust's Board of Trustees (the "Board")
and the Manager, the Subadviser shall
regularly provide the Fund with respect
to such portion of the Fund's 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 Fund's investment objectives,
policies and restrictions, as stated in the
Fund's 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 Trust's 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 Funds
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 a 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
thatmodify and restrict the Subadviser's authority
regarding the execution of the Fund's 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.
(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 a 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
a 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 a Fund from time to time,
and will comply with all other provisions of the
Governing Documents and the Fund's 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 Subadviser's 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 Fund's 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 Fund's shares and servicing
shareholder accounts; expenses of registering and qualifying
the Fund's 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 Fund's 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 Subadviser's or
any affiliated company's 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 a 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 a 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 Subadviser's policies and procedures as presented to
the Board from time to time.
11. For the purposes of this Agreement, the Fund's
"net assets" shall be determined as provided in the
Fund's 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 Fund's
name on Schedule A annexed hereto, provided that it
shall have been approved by the
Trust's 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 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 Fund's
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.
CITIFUNDS PREMIUM TRUST
By: _______________________________
Name:
Title:
ANNEX I
Not applicable.
SCHEDULE A
Citi Premium Liquid Reserves
Date:
August 1, 2006
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.
Citi Premium U.S. Treasury Reserves
Date:
August 1, 2006
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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