Exhibit 2k.2
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ADMINISTRATION AGREEMENT
This ADMINSTRATION AGREEMENT, made as of the ( ) day of ( ) 2002 between
Western Asset Management Company, a California corporation ("Western"),
Princeton Administrators L.P., a Delaware limited partnership (the
"Administrator") and Western Asset Premier Bond Fund, a Massachusetts business
trust (the "Trust").
WITNESSETH:
WHEREAS, Western has been retained by the Trust as investment adviser and
manager for the purpose of investing the Trust's assets in securities and
desires to retain the Administrator for certain administrative services, and the
Administrator is willing to furnish such administrative services on the terms
and conditions hereinafter set forth, and
WHEREAS, the Trust is a diversified closed-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act") and is a party to this agreement solely for the
purpose of section 3.
NOW, THEREFORE, the parties hereto agree as follows:
1. Duties of the Administrator. Western hereby retains the Administrator to
act as administrator of the Trust, subject to the supervision and
directions of Western as herein set forth. The Administrator shall perform
or arrange for the performance of the following administrative and clerical
services:
(a) Calculate or arrange for the calculation and publication of
the Trust's net asset value weekly (or more frequently as
requested by the Trust) in accordance with the Trust's policy
as adopted from time to time by the Board of Trustees;
(b) Maintain, or arrange for the maintenance of, certain books and
records of the Trust, as mutually agreed upon between the
parties hereto, that are required under the Investment Company
Act of 1940;
(c) Provide the Trust with administrative offices and data
processing facilities as well as the services of persons
competent to perform such administrative and clerical
functions as are necessary to provide effective operation of
the Trust;
(d) Maintain the Trust's expense budget and monitor expense
accruals;
(e) Arrange for payment of the Trusts' expenses, including
calculation of various contractual expenses of the Trust's
service providers, and the review and approval of invoices for
the Trust's account and submission to a Trust officer for
authorization of payment in a manner to be agreed upon;
(f) Oversee and review calculations of fees paid to the
administrator, the investment advisers, the custodian and the
transfer agent;
(g) Compute the Trust's yield, total return, expense ratios and
portfolio turnover rate as well as various Trust statistical
data as reasonably requested;
(h) Prepare for review and approval by officers of the Trust,
financial information for the Trust's semi-annual and annual
reports, proxy statements and other communications with
shareholders required or otherwise to be sent to Trust
shareholders, and arrange for the printing and dissemination
of such reports and communications to shareholders;
(i) Prepare such reports as may reasonably be requested by the
Board of Trustees of the Trust or the investment advisers
relating to the business and affairs of the Trust as may be
mutually agreed upon and not otherwise appropriately prepared
by the Trust's investment advisers, custodian, counsel or
auditors;
(j) Prepare, or arrange for preparation, for review, approval and
execution by officers of the Trust, the Trust's federal, state
and local income tax returns, and any other required tax
returns, as may be mutually agreed upon;
(k) Calculate the Trust's periodic dividend distributions and
annual net investment income (including net realized
short-term capital gain) and net realized long-term capital
gain to determine the Trust's appropriate level of dividend
distributions and the minimum annual distributions to
shareholders and the tax and accounting treatment of such
distributions on a per share basis, to be reviewed by the
Trust's auditors;
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(l) Prepare for review by an officer of the Trust the Trust's
periodic financial reports required to be filed with the
Securities and Exchange Commission (the "SEC") on Form N-SAR
and Form N-2 and such other reports, forms or filings, as may
be mutually agreed upon;
(m) Prepare such financial information and reports as may be
required by any stock exchange or exchanges on which the
Trust's shares are listed, and such other information and
reports required by such stock exchanges as may be mutually
agreed upon;
(n) Prepare such financial information and reports as may be
required by any banks from which the Trust borrows funds;
(o) Monitor and report on the Trust's issuance of preferred
shares, including performing the 1940 Act Asset Coverage Test
(as defined in the Trust's Registration Statement) and prepare
maintenance reports, as required by rating agencies;
(p) Assist in the preparation and filing of Forms 3, 4 and 5
pursuant to Section 16 of the Securities Exchange Act of 1934
and Section 30(f) of the Investment Company Act for the
officers and trustees of the Trust, such filings to be based
on information provided by those persons and the Trust's
investment advisers;
(q) Coordinate the performance of administrative and professional
services rendered to the Trust by others, including its
custodian, registrar, transfer agent, dividend disbursing
agent and dividend reinvestment plan agent, as well as
accounting, auditing and such other services as may from time
to time be mutually agreed;
(r) Consult as necessary with the Trust's officers, independent
accountants, legal counsel, investment advisers, custodian,
accounting agent and transfer and dividend disbursing agent in
establishing the accounting policies of the Trust;
(s) Review implementation of any stock purchase or dividend
reinvestment programs authorized by the Board of Trustees;
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(t) Provide such assistance to the investment advisers, the
custodian and the Trust's legal counsel and auditors as
generally may reasonably be required to properly carry on the
business and operations of the Trust, which may include
attendance at Board meetings as requested by the Trust's
investment advisers and;
(u) Respond to, or refer to the Trust's officers or transfer
agent, shareholder inquiries relating to the Trust.
Western agrees to deliver or cause the custodian and any investment
advisers to deliver, on a timely basis, such information to the
Administrator as may be necessary or appropriate for the
Administrator's performance of its duties and responsibilities
hereunder, including but not limited to, daily records of
transactions, valuation of investments in United States dollars (which
may be based on information provided by a pricing service) and
expenses borne by the Trust, the Trust management letter to
stockholders and such other information necessary for the
Administrator to prepare the above referenced reports and filings, and
the Administrator shall be entitled to rely on the accuracy and
completeness of such information in performing its duties hereunder.
All services are to be furnished through the medium of any officer or
employee of the Administrator as the Administrator deems appropriate
in order to fulfill its obligations hereunder.
Each party shall bear all its own expenses incurred in connection with
this Agreement. Printing and dissemination expenses, such as those for
reports to shareholders and proxy statements, shall be expenses of the
Trust.
2. Compensation of the Administrator. Western will pay the Administrator a fee
on the first business day of each calendar month for the previous month
equal to the greater of (i) $150,000 per annum ($12,500 per month), or (ii)
at an annual rate equal to .125% of the average weekly value of the Trust's
Total Managed Assets as defined in the Trust's Registration Statement (as
defined below). For the purposes of determining fees payable to the
Administrator, the value of the Trust's assets shall be computed at the
times and in the manner specified in the Trust's registration statement on
Form N-2, as amended from time to time (the "Registration Statement") or as
otherwise directed by the Trust. Compensation by Western of the
Administrator shall commence on the date of the first receipt by the Trust
of the proceeds of the sale of its shares to the Underwriters as described
in the Registration Statement, and the fee for the period from the date the
Trust shall receive the proceeds of the sale of its shares to the
Underwriters as aforesaid to the end of the month during which such
proceeds are so received, shall be pro-rated according to the proportion
that such period bears to the full monthly
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period. Upon termination of this Agreement before the end of a month, the
fee for such part of that month shall be pro-rated according to the
proportion that such period bear to the full monthly period and shall be
payable within (7) days after the date of termination of this Agreement.
3. Limitation of Liability of the Administrator, Indemnification
(a) The Administrator may, with respect to questions of law, apply for and
obtain the advice and opinion of legal counsel, and with respect to
the application of generally accepted accounting principles or Federal
Tax accounting principles, apply for and obtain the advice and opinion
of accounting experts, at the reasonable expense of the Trust. The
Administrator shall provide prior notice to the Trust if the
Administrator applies for the advice and opinion of legal or
accounting experts at the expense of the Trust. The Administrator
shall be fully protected with respect to any action taken or omitted
by it in good faith in conformity with such advice or opinion,
provided such advice or opinion has been shared with the Trust prior
to its use.
(b) The Administrator shall not be liable to Western or the Trust for any
action taken or omitted to be taken by the Administrator in connection
with the performance of any of its duties or obligations under this
Agreement, and the Trust shall indemnify the Administrator and hold it
harmless from and against all damages, liabilities, costs and expenses
(including reasonable attorneys' fees and amounts reasonably paid in
settlement) incurred by the Administrator in or by reason of any
pending, threatened or contemplated action, suit, investigation or
other proceeding (including an action or suit by or in the right of
the Trust or its security holders) arising out of or otherwise based
upon any action actually or allegedly taken or omitted to be taken by
the Administrator in connection with the performance of any of its
duties or obligations under this Agreement; provided, however, that
nothing contained herein shall protect or be deemed to protect the
Administrator against (or with respect to the Trust only, entitle or
be deemed to entitle the Administrator to indemnification in respect)
of any liability to Western, the Trust or its security holders to
which the Administrator would otherwise be subject by reason of
willful misfeasance, bad faith or negligence in the performance of its
duties, or by reason of its reckless disregard of its duties and
obligations under this Agreement. Such expenses shall be paid by the
Trust in advance of the final disposition of such matter upon invoice
by the Administrator and receipt by the Trust of an undertaking from
the Administrator to repay such amounts if it shall ultimately be
established that the Administrator is not entitled to payment of such
expenses hereunder.
(c) As used in this Paragraph 3, the term "Administrator" shall include
any affiliates of the Administrator performing services for the Trust
contemplated hereby, and trustees, officers, and employees of the
Administrator and such affiliates.
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4. Activities of the Administrator.
The services of the Administrator hereunder are not exclusive and nothing
in this Agreement shall limit or restrict the right of the Administrator to
engage in any other business or to render services of any kind to any other
corporation, firm, individual or association. The Administrator shall be
deemed to be an independent contractor, unless otherwise expressly provided
or authorized by this Agreement.
5. Duration and termination of this Agreement.
This Agreement shall become effective as of the date on which the Trust's
Registration Statement on Form N-2 shall be declared effective by the SEC
and shall thereafter continue in effect unless terminated as herein
provided. This Agreement may be terminated by any party hereto (without
penalty) at any time upon not less than 60 days' prior written notice to
any other party hereto.
6. Amendments of this Agreement.
This Agreement may be amended by the parties hereto only if such amendment
is set forth in a written instrument executed by each of the parties
hereto.
7. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of California without reference to choice of law
principles thereof and in accordance with the Investment Company Act. In
the case of any conflict, the Investment Company Act shall control.
8. Counterparts.
This Agreement may be executed by the parties hereto in counterparts, and
if executed in more than one counterpart, the separate instruments shall
constitute one agreement.
9. Any notice of other communication required to be given in writing pursuant
to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to the Administrator at X.X. Xxx
0000, Xxxxxxxxx, Xxx Xxxxxx 00000-0000, Attention: Xxxxxx X. Xxxxx, (2) to
the Trust or Western at 000 Xxxx Xxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxx
00000 Attention: Xxxxx X. Xxxxxx
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10. This Agreement sets forth the agreement and understanding of the parties
hereto solely with respect to the matters covered hereby and the
relationship between Western and Princeton Administrators L.P. as
Administrator. Nothing in this Agreement shall govern, restrict or limit in
any respect any other business dealings between the parties hereto unless
otherwise expressly provided herein.
11. This Agreement shall not be assigned by either party without the prior
written consent of the other, except that either party may assign the
agreement to another party if such assignment is to a party controlling,
controlled by or under common control with the assigning party.
12. Limitation of Liability.
A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Agreement has been executed on behalf of
the Trust by an officer of the Trust as an officer and not individually and
the obligations of or arising out of this Agreement are not binding upon
any of the Trustees, officers or shareholders of the Trust individually but
are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
WESTERN ASSET MANAGEMENT COMPANY
By ___________________________________________________
Title: _______________________________________________
PRINCETON ADMINISTRATORS, L.P.
By ___________________________________________________
Title: _______________________________________________
WESTERN ASSET PREMIER BOND FUND (solely with respect
to Section 3)
By ___________________________________________________
Title: _______________________________________________
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