MANAGEMENT AGREEMENT
Xxxx Xxxxx Partners Fund Advisor, LLC
This MANAGEMENT AGREEMENT ("Agreement") is made this 26th day of March,
2009, by and between Western Asset Municipal Defined Opportunity Trust Inc.
(the "Fund") and Xxxx Xxxxx Partners Fund Advisor, LLC, a Delaware limited
liability company (the "Manager").
WHEREAS, the Fund is registered as a management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Manager is engaged primarily in rendering investment
advisory, management and administrative services and is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended;
WHEREAS, the Fund wishes to retain the Manager to provide investment
advisory, management, and administrative services to the Fund; and
WHEREAS, the Manager 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. The Fund hereby appoints the Manager to act as investment adviser
and administrator of the Fund for the period and on the terms set forth in
this Agreement. The Manager accepts such appointment and agrees to render
the services herein set forth, for the compensation herein provided.
2. The Fund shall at all times keep the Manager fully informed with
regard to the securities owned by it, its funds available, or to become
available, for investment, and generally as to the condition of its affairs.
It shall furnish the Manager with such other documents and information with
regard to its affairs as the Manager may from time to time reasonably
request.
3. (a) Subject to the supervision of the Fund's Board of Directors
(the "Board"), the Manager shall regularly provide the Fund with investment
research, advice, management and supervision and shall furnish a continuous
investment program for the Fund's portfolio of securities and other
investments consistent with the Fund's investment objectives, policies and
restrictions, as stated in the Fund's Prospectus and Statement of Additional
Information. The Manager shall determine from time to time what securities
and other investments will be purchased, retained, sold or exchanged by the
Fund and what portion of the assets of the Fund's portfolio will be held in
the various securities and other investments in which the Fund invests, and
shall implement those decisions, all subject to the provisions of the Fund's
Articles of Incorporation 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 Manager. The
Manager is authorized as the agent of the Fund to give instructions 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 and direction from the Board, 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. The Manager 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 Manager or its affiliates exercise investment discretion. The
Manager 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 Manager
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 Manager 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 Manager's authority regarding the execution of the
Fund's portfolio transactions provided herein. The Manager shall also
provide advice and recommendations with respect to other aspects of the
business and affairs of the Fund, shall exercise voting rights, rights to
consent to corporate action and any other rights pertaining to the Fund's
portfolio securities 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) Subject to the direction and control of the Board, the Manager
shall perform such administrative and management services as may from time to
time be reasonably requested by the Fund as necessary for the operation of
the Fund, such as (i) supervising the overall administration of the Fund,
including negotiation of contracts and fees with and the monitoring of
performance and xxxxxxxx of the Fund's transfer agent, shareholder servicing
agents, custodian and other independent contractors or agents, (ii) providing
certain compliance, fund accounting, regulatory reporting, and tax reporting
services, (iii) preparing or participating in the preparation of Board
materials, registration statements, proxy statements and reports and other
communications to shareholders, (iv) maintaining the Fund's existence, and
(v) during such times as shares are publicly offered, maintaining the
registration and qualification of the Fund's shares under federal and state
laws. Notwithstanding the foregoing, the Manager shall not be deemed to have
assumed any duties with respect to, and shall not be responsible for, the
distribution of the shares of the Fund, nor shall the Manager be deemed to
have assumed or have any responsibility with respect to functions
specifically assumed by any transfer agent, fund accounting agent, custodian,
shareholder servicing agent or other agent, in each case employed by the Fund
to perform such functions.
(c) The Fund hereby authorizes any entity or person associated with
the Manager 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 of 1934 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 Manager 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 Manager or its affiliates is
participating, or arrange for purchases and sales of securities between the
Fund and another account advised by the Manager 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 Fund's
Prospectus and Statement of Additional Information relative to the Manager
and its directors and officers.
4. Subject to the Board's approval, the Manager or the Fund may enter
into contracts with one or more investment subadvisers or subadministrators,
including without limitation, affiliates of the Manager, in which the Manager
delegates to such investment subadvisers or subadministrators any or all its
duties specified hereunder, on such terms as the Manager will determine to be
necessary, desirable or appropriate, provided that in each case the Manager
shall supervise the activities of each such subadviser or subadministrator
and further provided that such contracts impose on any investment subadviser
or subadministrator bound thereby all the conditions to which the Manager is
subject hereunder and that such contracts are entered into in accordance with
and meet all applicable requirements of the 1940 Act.
5. (a) The Manager, at its expense, shall supply the Board and
officers of the Fund with all information and reports reasonably required by
them and reasonably available to the Manager and shall furnish the Fund with
office facilities, including space, furniture and equipment and all personnel
reasonably necessary for the operation of the Fund. The Manager shall
oversee the maintenance of all books and records with respect to the Fund's
securities transactions and the keeping of the Fund's books of account in
accordance with all applicable federal and state laws and regulations. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Manager 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 Manager 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. The Manager shall authorize and permit any of its directors,
officers and employees, who may be elected as Board members or officers of
the Fund, to serve in the capacities in which they are elected.
(b) The Manager 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 Manager 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.
6. No member of the Board, officer or employee of the Fund shall
receive from the 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 Manager or any affiliated company of the Manager, 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 Manager's or any affiliated company's staff.
7. As compensation for the services performed and the facilities
furnished and expenses assumed by the Manager, including the services of any
consultants retained by the Manager, the Fund shall pay the Manager, 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, provided however,
that if the Fund invests all or substantially all of its assets in another
registered investment company for which the Manager or an affiliate of the
Manager serves as investment adviser or investment manager, the annual fee
computed as set forth on such Schedule A shall be reduced by the aggregate
management fees allocated to that Fund for the Fund's then-current fiscal
year from such other registered investment company. 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 Manager 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 Managed Assets of the Fund in that period from the beginning
of such month to such date of termination, and shall be that proportion of
such Managed Assets as the number of business days in such period bears to
the number of business days in such month. The Managed Assets of the Fund
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. "Managed Assets" means the
total assets of the Fund (including assets financed through the creation of
tender option bond trusts) minus the sum of accrued liabilities (other than
Fund liabilities representing financial leverage).
8. The Manager 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 Manager against any liability to the Fund to which the
Manager 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 8, the term "Manager" shall include any affiliates of the
Manager performing services for the Fund contemplated hereby and the
partners, shareholders, directors, officers and employees of the Manager and
such affiliates.
9. Nothing in this Agreement shall limit or restrict the right of any
director, officer, or employee of the Manager who may also be a Board member,
officer, or employee of 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 Manager 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 Manager 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 Manager. Such transactions
may be combined, in accordance with applicable laws and regulations, and
consistent with the Manager's policies and procedures as presented to the
Board from time to time.
10. For the purposes of this Agreement, the Fund's "Managed Assets"
shall be determined as provided in the Fund's 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.
11. This Agreement will become effective with respect to the Fund on the
date set forth on Schedule A annexed hereto, provided that it shall have been
approved by the Fund's Board and 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 until March 24, 2011.
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.
12. 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 Manager, or by the Manager upon not less than
90 days' written notice to the Fund, and will be terminated upon the mutual
written consent of the Manager and the Fund. This Agreement shall terminate
automatically in the event of its assignment by the Manager and shall not be
assignable by the Fund without the consent of the Manager.
13. 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.
14. This Agreement 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.
15. 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 MUNICIPAL DEFINED
OPPORTUNITY TRUST INC.
By:
Name:
Title:
XXXX XXXXX PARTNERS FUND ADVISOR, LLC
By:
Name:
Title:
Schedule A
Western Asset Municipal Defined Opportunity Trust Inc.
Date:
March 26, 2009
Fee:
The following percentage of the Fund's Managed Assets: 0.60%
"Managed Assets" means the total assets of the Fund (including assets
financed through the creation of tender option bond trusts) minus the sum of
accrued liabilities (other than Fund liabilities representing financial
leverage).
