CITIFUNDS INSTITUTIONAL 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 Institutional 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 that modify 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 prorata 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 INSTITUTIONAL TRUST
By: _______________________________
Name:
Title:
ANNEX I
Not applicable.
SCHEDULE A
Citi Institutional Cash 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 Institutional Enhanced Income Fund
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 Institutional 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 Institutional Tax Free 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 Institutional 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.
