Exhibit 2g.1
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INVESTMENT MANAGEMENT AGREEMENT
This INVESTMENT MANAGEMENT AGREEMENT, made this 20th day of March,
2002, by and between Western Asset Premier Bond Fund, a Massachusetts business
trust (the "Trust"), and Western Asset Management Company, a California
corporation (the "Manager").
WHEREAS, the Trust is registered as a closed-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust wishes to retain the Manager to provide certain
investment advisory, management and administrative services; 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 Trust hereby appoints Western Asset Management Company as
Manager of the Trust 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 Trust shall at all times keep the Manager fully informed with
regard to the securities and other property 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 Trust's Board of Trustees (the
"Trustees"), the Manager shall regularly provide the Trust with investment
research, advice, management and supervision and shall furnish a continuous
investment program for the Trust consistent with the Trust's investment
objectives, policies and restrictions. The Manager shall determine from time to
time what securities or other property will be purchased, retained or sold by
the Trust, and shall implement those decisions, all subject to the provisions of
the Trust's Declaration of Trust and By-Laws, the 1940 Act, the applicable rules
and regulations of the Securities and Exchange Commission, and other applicable
federal and state law, as well as the investment objectives, policies and
restrictions of the Trust, as each of the foregoing may be amended from time to
time. The Manager will place orders pursuant to its investment determinations
for the Trust either directly with the issuer or with any broker, dealer or
futures commission merchant (collectively, a "broker"). In the selection of
brokers and the placing of orders for the purchase and sale of portfolio
investments for the Trust, the Manager shall seek to obtain the most
favorable price and execution available, except to the extent it may be
permitted to pay higher brokerage commissions for brokerage and research
services as described below. In using its best efforts to obtain for the Trust
the most favorable price and execution available, the Manager, bearing in mind
the Trust's best interests at all times, shall consider all factors it deems
relevant, including, by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission, the
timing of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker involved and the
quality of service rendered by the broker in other transactions. Subject to such
policies as the Trustees may determine, the Manager shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Trust to pay, on behalf of
the Trust, a broker that provides brokerage and research services to the Manager
or any affiliated person of the Manager an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker would have charged for effecting that transaction, if the Manager
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker, viewed in terms of either that particular transaction or the Manager's
overall responsibilities with respect to the Trust and to other clients of the
Manager and any affiliated person of the Manager as to which the Manager or any
affiliated person of the Manager exercises investment discretion. The Manager
shall also provide advice and recommendations with respect to other aspects of
the business and affairs of the Trust, and shall perform such other functions of
management and supervision, as may be directed by the Trustees.
(b) The Trust hereby agrees with the Manager and with any investment
adviser appointed pursuant to Paragraph 4 below (an "Investment Adviser") that
any entity or person associated with the Manager or Investment Adviser (or with
any affiliated person of the Manager or Investment Adviser) that is a member of
a national securities exchange is authorized to effect any transaction on such
exchange for the account of the Trust which is permitted by Section 11(a) of the
Securities Exchange Act of 1934, as amended, and Rule 11a2-2(T) thereunder, and
the Trust hereby consents to the retention of compensation for such transactions
in accordance with Rule 11a2-2(T)(a)(2)(iv) or otherwise.
4. The Manager may enter into a contract ("Portfolio Management
Agreement") with one or more investment advisers in which the Manager delegates
to such investment adviser or investment advisers any or all of its duties
specified in Paragraph 3 hereunder. Such Portfolio Management Agreement must
meet all requirements of the 1940 Act and the rules and regulations thereunder.
5. (a) The Manager, at its expense, shall supply the Board of Trustees
and officers of the Trust with statistical information and reports reasonably
requested by them and reasonably available to the Manager and shall furnish the
Trust with office facilities, including space, furniture and equipment and all
personnel reasonably necessary for the operation of the Trust. The Manager shall
oversee the maintenance of all books and records with respect to the Trust's
portfolio transactions and the keeping of the Trust's books of account in
accordance with all applicable federal and state laws and regulations and shall
perform such other administrative,
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bookkeeping or clerical duties as may be agreed upon by the parties. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, the Manager
hereby agrees that any records which it maintains for the Trust are the property
of the Trust, and further agrees to surrender promptly to the Trust or its
agents any of such records upon the Trust'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 Trustees or officers of the Trust, to serve in
the capacities in which they are elected. The Manager may enter into a contract
with one or more other parties in which the Manager delegates to such party or
parties any or all of the duties specified in this Paragraph 5(a).
(b) Other than as herein specifically indicated, the Manager shall not
be responsible for the expenses of the Trust. Specifically (but without
limitation), the Manager will not be responsible, except to the extent of the
reasonable compensation of employees of the Trust whose services may be used by
the Manager hereunder, for any of the following expenses of the Trust, which
expenses shall be borne by the Trust: advisory fees; distribution fees;
interest; taxes; governmental fees; fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; the cost (including brokerage commissions or charges, if any) of
securities or other property purchased or sold by the Trust and any losses in
connection therewith; fees of custodians, transfer agents, registrars,
administrators or other agents; legal expenses; expenses of preparing share
certificates; expenses relating to the redemption or repurchase of the Trust's
shares; expenses of registering and qualifying shares of the Trust for sale
under applicable federal and state law; expenses of preparing, setting in print,
printing and distributing prospectuses, reports, notices and dividends to Trust
shareholders; costs of stationery; costs of shareholders' and other meetings of
the Trust; Trustees' fees; audit fees; travel expenses of officers, Trustees and
employees of the Trust, if any; and the Trust's pro rata portion of premiums on
any fidelity bond and other insurance covering the Trust and/or its officers and
Trustees.
6. No Trustee, officer or employee of the Trust shall receive from the
Trust any salary or other compensation as such Trustee, officer or employee
while he or she is at the same time a director, officer, or employee of the
Manager or any affiliated company of the Manager. This Paragraph 6 shall not
apply to Trustees, 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, investment advisers or other parties retained by the Manager, the
Trust shall pay the Manager a monthly fee in arrears at an annual rate equal to
0.55% of the average weekly value of the Trust's Total Managed Assets. "Total
Managed Assets" means the total assets of the Trust (including any assets
attributable to leverage) minus the sum of accrued liabilities (other than
liabilities representing leverage). 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. For any period less than a month during which this Agreement is
in effect, the fee shall be prorated according to the proportion which such
period bears to a full month of 28, 29, 30 or 31 days, as the case may be. For
purposes of this
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Agreement, the Total Managed Assets of the Trust shall be calculated pursuant to
procedures adopted by the Trustees of the Trust for calculating the value of the
Trust's assets or delegating such calculations to third parties. In the event
that the expenses of the Trust exceed any expense limitation which the Manager
may, by written notice to the Trust, voluntarily declare to be effective with
respect to the Trust, subject to such terms and conditions as the Manager may
prescribe in such notice, the compensation due the Manager shall be reduced,
and, if necessary, the Manager shall bear the Trust's expenses to the extent
required by such expense limitation.
8. In the absence of willful misfeasance, bad faith or gross negligence
on the part of the Manager, or reckless disregard of its obligations and duties
hereunder, the Manager shall not be subject to any liability to the Trust or to
any shareholder of the Trust, for any act or omission in the course of, or
connected with, rendering services hereunder.
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 Trustee,
officer, or employee of the Trust to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar nature, or 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 trust, firm, individual or association.
10. As used in this Agreement, the terms "assignment," "interested
person," "affiliated 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 and interpretations as may be granted, issued or
adopted by the Securities and Exchange Commission or its staff by any rule,
regulation, order or interpretive position; the term "specifically approve at
least annually" shall be construed in a manner consistent with the 1940 Act and
the rules and regulations thereunder; and the term "brokerage and research
services" shall have the meaning given in the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder.
11. This Agreement shall become effective upon its execution, and shall
remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Paragraph 12 below) until terminated as follows:
(a) Either party hereto may at any time terminate this
Agreement by not more than sixty days' written notice delivered or
mailed by registered mail, postage prepaid, to the other party, or
(b) If (i) the Trustees or the shareholders of the Trust by
the vote of a majority of the outstanding voting securities of the
Trust, and (ii) a majority of the Trustees who are not interested
persons of the Trust or of the Manager, by vote cast in person at a
meeting called for the purpose of voting on such approval, do not
specifically approve at least annually the continuance of this
Agreement, then this Agreement shall automatically terminate at the
close of business on the second anniversary of its execution, or upon
the expiration of one year from the effective date of the last such
continuance, whichever is
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later; provided, however, that if the continuance of this Agreement is
submitted to the shareholders of the Trust for their approval and such
shareholders fail to approve such continuance of this Agreement as
provided herein, the Manager may continue to serve hereunder in a
manner consistent with the 1940 Act and the rules and regulations
thereunder.
Action by the Trust under paragraph (a) of this Paragraph 11 may be
taken either (i) by vote of a majority of the Trustees, or (ii) by the vote of a
majority of the outstanding voting securities of the Trust.
12. Except as otherwise provided herein, this Agreement shall terminate
automatically in the event of its assignment by the Manager and shall not be
assignable by the Trust without the consent of the Manager. Any termination of
this Agreement pursuant to Paragraph 11 shall be without the payment of any
penalty. This Agreement shall not be amended unless such amendment is approved
by the vote of a majority of the outstanding voting securities of the Trust
(provided that such shareholder approval is required by the 1940 Act and the
rules and regulations thereunder, giving effect to any interpretations of the
Securities and Exchange Commission and its staff), and by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of a
majority of the Trustees who are not interested persons of the Trust or of the
Manager.
13. In the event this Agreement is terminated by either party or upon
written notice from the Manager at any time, the Trust hereby agrees that it
will eliminate from its corporate name any reference to the name of "Western."
The Trust shall have the non-exclusive use of the name "Western" in whole or in
part only so long as this Agreement is effective or until such notice is given.
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 and shall inure to the benefit of the parties hereto
and their respective successors.
15. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
Attest: WESTERN ASSET PREMIER BOND FUND
By: ________________ By: _______________________________________
Attest: WESTERN ASSET MANAGEMENT COMPANY
By: ________________ By: _______________________________________
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