Exhibit 2a.
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WESTERN ASSET CORE PLUS BOND TRUST I
AGREEMENT AND DECLARATION OF TRUST
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December 17, 2001
WESTERN ASSET CORE PLUS BOND TRUST I
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AGREEMENT AND DECLARATION OF TRUST
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AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts, this 17th
day of December, 2001, by the Trustees hereunder, and by the holders of shares
of beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business of an
investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the pro rata benefit of the holders from time
to time of Shares in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Name
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Section 1. This Trust shall be known as "Western Asset Core Plus Bond Trust I"
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and the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
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Definitions
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Section 2. Whenever used herein, unless otherwise required by the context or
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specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established
by this Declaration, as amended or restated from time to time;
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article IV;
(c) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be divided
from time to time or, if more than one class or series of Shares is
authorized by the Trustees, the equal proportionate transferable units into
which each class or series of shares shall be divided from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940, and
the rules and regulations thereunder, all as amended from time to time,
subject to such exemptions and interpretations as may be granted by the
Securities and Exchange Commission by any rule, regulation or order;
(f) The terms "Affiliated Person", "Interested Person" and "Principal
Underwriter" shall have the applicable meanings given them in the 1940 Act;
(g) "Declaration" shall mean this Agreement and Declaration of Trust,
as amended or restated from time to time;
(h) "Bylaws" shall mean the Bylaws of the Trust as amended or restated
from time to time;
(i) The term "class," when used in connection with Shares, refers to
the division of Shares into two or more classes as provided in Article III,
Section 1 hereof; the term "Class," when used in connection with the
Trustees, refers to the division of Trustees into two or more Classes as
provided in Article IV, Section 1 hereof;
(j) The term "series" or "series of Shares" refers to the division of
Shares representing any class into two or more series as provided in
Article III, Section 1 hereof; and
(k) The term "Continuing Trustee" shall have the meaning given to such
term in Article IV, Section 2 hereof.
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ARTICLE II
PURPOSE
The purpose of the Trust is to provide investors a managed investment
primarily in securities, debt instruments and other instruments and rights of a
financial character and to carry on such other business as the Trustees may from
time to time determine pursuant to their authority under this Declaration.
ARTICLE III
SHARES
Division of Beneficial Interest
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Section 1. The Trustees may, without Shareholder approval, authorize one or
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more classes of Shares (which classes may be divided into two or more series),
Shares of each such class or series having such par value and such preferences,
voting powers, terms of redemption, if any, and special or relative rights or
privileges (including conversion rights, if any) as the Trustees may determine.
Subject to applicable law, the Trustees may, without Shareholder approval,
authorize the Trust to issue subscription or other rights representing interests
in Shares to existing Shareholders or other persons subject to such terms and
conditions as the Trustees may determine. The number of Shares of each class or
series authorized shall be unlimited, except as the Bylaws may otherwise
provide, and the Shares so authorized may be represented in part by fractional
shares. The Trustees may from time to time divide or combine the Shares of any
class or series into a greater or lesser number without thereby changing the
proportionate beneficial interest in the class or series.
Ownership of Shares
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Section 2. The ownership of Shares shall be recorded on the books of the
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Trust or a transfer or similar agent. Except as provided in the Bylaws or as the
Trustees may otherwise determine from time to time, no certificates certifying
the ownership of Shares shall be issued. The Trustees may make such rules as
they consider appropriate for the issuance of Share certificates, the transfer
of Shares and similar matters. The record books of the Trust as kept by the
Trust or any transfer or similar agent, as the case may be, shall be conclusive
as to who are the Shareholders of each class and series and as to the number of
Shares of each class and series held from time to time by each Shareholder.
Investments in the Trust
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Section 3. The Trustees shall accept investments in the Trust from such
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persons and on such terms and, subject to any requirements of law, for such
consideration, which may consist of cash or tangible or intangible property or a
combination thereof, as the Trustees or the Bylaws from time to time authorize.
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No Preemptive Rights
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Section 4. Shareholders shall have no preemptive or other right to receive,
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purchase or subscribe for any additional Shares or other securities issued by
the Trust.
Derivative Claims
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Section 5. No Shareholder shall have the right to bring or maintain any
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court action, proceeding or claim on behalf of the Trust or any series or class
of Shares without first making demand on the Trustees requesting the Trustees to
bring or maintain such action, proceeding or claim. Such demand shall not be
excused under any circumstances, including claims of alleged interest on the
part of the Trustees, unless the plaintiff makes a specific showing that
irreparable nonmonetary injury to the Trust or series or class of Shares would
otherwise result. Such demand shall be mailed to the Secretary of the Trust at
the Trust's principal office and shall set forth with particularity the nature
of the proposed court action, proceeding or claim and the essential facts relied
upon by the Shareholder to support the allegations made in the demand. The
Trustees shall consider such demand within 45 days of its receipt by the Trust.
In their sole discretion, the Trustees may submit the matter to a vote of
Shareholders of the Trust or a series or class of Shares, as appropriate. Any
decision by the Trustees to bring, maintain or settle (or not to bring, maintain
or settle) such court action, proceeding or claim, or to submit the matter to a
vote of Shareholders, shall be binding upon the Shareholders. Any decision by
the Trustees to bring or maintain a court action, proceeding or suit on behalf
of the Trust or a series or class of Shares shall be subject to the right of the
Shareholders under Article V hereof to vote on whether or not such court action,
proceeding or suit should or should not be brought or maintained.
Direct Claims
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Section 6. No group of Shareholders shall have the right to bring or
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maintain a direct action or claim for monetary damages against the Trust or the
Trustees predicated upon an express or implied right of action under this
Declaration or the 1940 Act (excepting rights of action permitted under section
36(b) of the 1940 Act), nor shall any single Shareholder, who is similarly
situated to one or more other Shareholders with respect to the alleged injury,
have the right to bring such an action, unless such group of Shareholders or
such Shareholder has obtained authorization from the Trustees to bring the
action. The requirement of authorization shall not be excused under any
circumstances, including claims of alleged interest on the part of the Trustees.
A request for authorization shall be mailed to the Secretary of the Trust at the
Trust's principal office and shall set forth with particularity the nature of
the proposed court action, proceeding or claim and the essential facts relied
upon by the group of Shareholders or Shareholder to support the allegations made
in the request. The Trustees shall consider such request within 45 days of its
receipt by the Trust. In their sole discretion, the Trustees may submit the
matter to a vote of Shareholders of the Trust or series or class of Shares, as
appropriate. Any decision by the Trustees to settle or to authorize (or not to
settle or not to authorize) such court action, proceeding or claim, or to submit
the matter to a vote of Shareholders, shall be binding upon the group of
Shareholders or Shareholder seeking authorization. Any decision by the Trustees
to authorize a court action, proceeding or suit by a group of Shareholders shall
be subject to the
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right of the Shareholders under Article V hereof to vote on whether or not such
court action, proceeding or suit should or should not be brought or maintained.
Status of Shares and Limitation of Personal Liability
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Section 7. Shares shall be deemed to be personal property giving only the
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rights provided in this Declaration or the Bylaws. Every Shareholder by virtue
of having become a Shareholder shall be held to have expressly assented and
agreed to the terms of this Declaration and the Bylaws and to have become a
party hereto and thereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the same nor entitle the representative
of any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle the
Shareholder to any title in or to the whole or any part of the Trust property or
right to call for a partition or division of the same or for an accounting, nor
shall the ownership of Shares constitute the Shareholders partners. Neither the
Trust nor the Trustees, nor any officer, employee or agent of the Trust, shall
have any power to bind personally any Shareholder, nor except as specifically
provided herein to call upon any Shareholder for the payment of any sum of money
or assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay.
ARTICLE IV
THE TRUSTEES
Number and Classes of Trustees and Term of Office
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Section 1. Subject to the voting powers of one or more classes or series of
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Shares as set forth in the Bylaws, the number of Trustees shall be such number
as shall be fixed from time to time by a written instrument signed by a majority
of the Trustees; provided, however, that the number of Trustees shall in no
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event be less than three (3) from and after the date when Shares are first sold
pursuant to a registered public offering. Xxxxxxx X. Xxxx and such other persons
as the Trustee or Trustees then in office shall, prior to any sale of Shares
pursuant to a registered public offering, elect, shall serve until the first
meeting of Shareholders at which Trustees are elected and until his or her
successor is elected and qualified, or until he or she sooner dies, resigns,
retires or is disqualified or removed from office, subject in each case to the
Classes of Trustees and terms created pursuant to this Article IV.
An initial annual meeting of Shareholders or special meeting in lieu
thereof shall be called to be held not more than fifteen months after Shares are
first sold pursuant to a registered public offering; subsequent annual meetings
of Shareholders or special meetings in lieu thereof (each an "annual meeting")
shall be held as specified in the Bylaws. Prior to any sale of Shares pursuant
to a registered public offering, the Trustees shall be classified, with respect
to the time for which they severally hold office, into the following three
classes: Class I, whose term expires at the initial annual meeting; Class II,
whose term expires at the next succeeding annual meeting after the initial
annual meeting (the "second annual meeting"); and Class III, whose term
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expires at the next succeeding annual meeting after the second annual meeting.
Each Class shall consist, as nearly as may be possible, of one-third of the
total number of Trustees constituting the entire Board of Trustees. At each
annual meeting beginning with the initial annual meeting, the successors of the
Class of Trustees whose term expires at that meeting shall be elected to hold
office for a term expiring at the annual meeting held in the third year
following the year of their election, with each Trustee holding office until the
expiration of the term of the relevant Class and the election and qualification
of his or her successor, or until he or she sooner dies, resigns, retires, or is
disqualified or removed from office.
The Trustees shall assign by resolution from their number Trustees to each
of the three Classes. The Trustees may also determine by resolution those
Trustees in each class that shall be elected by Shareholders of a particular
class of Shares (e.g., by a class of preferred Shares issued by the Fund). If
the number of Trustees is changed, any increase or decrease shall be apportioned
among the Classes, as of the annual meeting of Shareholders next succeeding any
such change, so as to maintain a number of Trustees in each Class as nearly
equal as possible, with the result that, to the extent a Trustee is assigned to
a new Class, his or her term as Trustee shall coincide with that of his or her
newly assigned Class. No reduction in the number of Trustees shall have the
effect of removing any Trustee from office prior to the expiration of his or her
term unless the Trustee is specifically removed pursuant to Section 3 of this
Article at the time of the decrease. Except as provided in this Section 1 or
Section 3 of this Article, after the initial registered public offering of the
Shares, Trustees shall be elected only at an annual meeting of Shareholders.
Continuing Trustee; Definition
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Section 2. For purposes of this Declaration and the Bylaws, the term
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"Continuing Trustee" shall mean any member of the Board of Trustees who either
(a) has been a member of the Board of Trustees for a period of at least thirty-
six months (or since immediately after the registered public offering of the
Trust's Shares, if less than thirty-six months) or (b) was nominated to serve as
a member of the Board of Trustees by a majority of the Continuing Trustees then
members of the Board of Trustees.
Vacancies; Resignation; Removal
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Section 3. From and after the date when Shares are first sold pursuant to a
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registered public offering and subject to any voting powers of one or more
classes or series of Shares as set forth in this Declaration or in the Bylaws or
by resolution of the Board of Trustees, any vacancies occurring in the Board of
Trustees may be filled by the Trustees as set forth below. Prior to the date
when Shares are first sold pursuant to a registered public offering, subject to
any limitations imposed by the 1940 Act or other applicable law, any vacancies
occurring in the Board of Trustees may be filled by the Trustees without any
action by or meeting of Shareholders.
From and after the date when Shares are first sold pursuant to a registered
public offering and subject to any voting powers of one or more classes or
series of Shares as set forth in this
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Declaration or in the Bylaws or by resolution of the Board of Trustees, and
subject to any limitations imposed by the 1940 Act or other applicable law, any
vacancy occurring in the Board of Trustees that results from an increase in the
number of Trustees may be filled by a majority of the entire Board of Trustees,
and any other vacancy occurring in the Board of Trustees may be filled by a
majority of the Trustees then in office, whether or not sufficient to constitute
a quorum, or by a sole remaining Trustee; provided, however, that if the
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Shareholders of any class or series of Shares are entitled separately to elect
one or more Trustees, a majority of the remaining Trustees elected by that class
or series or the sole remaining Trustee elected by that class or series may fill
any vacancy among the number of Trustees elected by that class or series. A
Trustee elected by the Board of Trustees (or a group of Trustees or a single
Trustee, as the case may be, as provided herein) to fill any vacancy occurring
in the Board of Trustees shall serve until the next annual meeting of
Shareholders and until his successor shall be elected and shall qualify,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office. At any annual meeting of Shareholders, any Trustee elected
to fill any vacancy occurring in the Board of Trustees that has arisen since the
preceding annual meeting of Shareholders (whether or not any such vacancy has
been filled by election of a new Trustee by the Board of Trustees (or a group of
Trustees or a single Trustee, as the case may be, as provided herein)) shall
hold office for a term which coincides with the remaining term of the Class of
Trustee to which such office was previously assigned, if such vacancy arose
other than by an increase in the number of Trustees, and until his successor
shall be elected and shall qualify. In the event such vacancy arose due to an
increase in the number of Trustees, any Trustee so elected to fill such vacancy
at an annual meeting shall hold office for a term which coincides with that of
the Class of Trustee to which such office has been apportioned as heretofore
provided, and until his successor shall be elected and shall qualify or until he
or she sooner dies, resigns, retires, or is disqualified or removed from office.
Any Trustee may resign his trust or retire as a Trustee (without need for
prior or subsequent accounting except in the event of removal) by an instrument
in writing signed by him and delivered to the President or Secretary of the
Trust (or, if prior to any sale of Shares pursuant to a registered public
offering, delivered to the remaining Trustee or Trustees), and such resignation
or retirement shall be effective upon such delivery, or at a later date
according to the terms of the instrument. Subject to any voting powers of one
or more classes or series of Shares as set forth in this Declaration or in the
Bylaws or by resolution of the Board of Trustees, any Trustee may be removed
from office only for "Cause" (as hereinafter defined) and only (i) by action of
at least seventy-five percent (75%) of the outstanding Shares of the classes or
series of Shares entitled to vote for the election of such Trustee, at a meeting
called for the purpose, or (ii) by written instrument, signed by at least
seventy-five percent (75%) of the remaining Trustees, specifying the date when
such removal shall become effective. "Cause" for these purposes shall require
willful misconduct, dishonesty or fraud on the part of the Trustee in the
conduct of his or her office or such Trustee being convicted of a felony.
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Effect of Death, Resignation, etc. of a Trustee
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Section 4. The death, declination, resignation, retirement, removal,
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disqualification or incapacity of the Trustees, or any one of them, shall not
operate to annul the Trust or to revoke any existing agency created pursuant to
the terms of this Declaration.
Powers
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Section 5. Subject to the provisions of this Declaration, the business of
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the Trust shall be managed by the Trustees, and they shall have all powers
necessary or convenient to carry out that responsibility. Without limiting the
foregoing, the Trustees may adopt Bylaws not inconsistent with this Declaration
providing for the conduct of the business of the Trust and may amend and repeal
them to the extent and as provided in Article IX, Section 7(c) of this
Declaration. Subject to the voting power of one or more classes or series of
Shares as set forth in this Declaration or in the Bylaws or by resolution of the
Board of Trustees, the Trustees may fill vacancies in or add to their number,
including vacancies resulting from increases in their number, and may elect and
remove such officers and appoint and terminate such agents as they consider
appropriate; they may appoint from their own number, and terminate, any one or
more committees consisting of one or more Trustees, including an executive
committee which may, when the Trustees are not in session, exercise some or all
of the power and authority of the Trustees as the Trustees may determine; they
may appoint an advisory board, the members of which shall not be Trustees and
need not be Shareholders; they may employ one or more custodians of the assets
of the Trust and may authorize such custodians to employ subcustodians and to
deposit all or any part of such assets in a system or systems for the central
handling of securities; they may retain a transfer agent or a shareholder
servicing agent, or both, and provide for the distribution of Shares by the
Trust, through one or more principal underwriters or otherwise; they may set
record dates for the determination of Shareholders with respect to various
matters; and they may in general delegate such authority as they consider
desirable to any officer of the Trust, to any committee of the Trustees and to
any agent or employee of the Trust or to any such custodian or underwriter.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, write options
on and lease any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustees shall deem proper;
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(d) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in the
name of the Trustees or of the Trust or in the name of a custodian,
subcustodian or other depository or a nominee or nominees or
otherwise;
(f) To the extent necessary or appropriate to give effect to the
preferences, special or relative rights or privileges of any classes
or series of Shares, to allocate assets, liabilities, income and
expenses of the Trust to a particular class or classes or series of
Shares or to apportion the same among two or more classes or series;
(g) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security of
which is or was held in the Trust; and to consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or
issuer, and to pay calls or subscriptions with respect to any security
held in the Trust ;
(h) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such
committee, depositary or trustee, and to delegate to them such power
and authority with relation to any security (whether or not so
deposited or transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees
shall deem proper;
(i) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust on any matter in controversy, including but not
limited to claims for taxes;
(j) To enter into joint ventures, general or limited partnerships, limited
liability companies, and any other combinations or associations;
(k) To borrow funds;
(l) To endorse or guarantee the payment of any notes or other obligations
of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and
pledge the Trust property or any part thereof to secure any of or all
of such obligations;
(m) To purchase and pay for entirely out of Trust property such insurance
as they may deem necessary or appropriate for the conduct of the
business of the Trust, including, without limitation, insurance
policies insuring the assets of the Trust and payment of distributions
and principal on its portfolio investments, and insurance policies
insuring the Shareholders, Trustees, officers, employees, agents,
investment advisers, subadvisers or managers, principal underwriters
or independent contractors of the Trust
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individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such office or
position, or by reason of any action alleged to have been taken or
omitted by any such person as Shareholder, Trustee, officer, employee,
agent, investment adviser, subadviser or manager, principal
underwriter or independent contractor, including any action taken or
omitted that may be determined to constitute negligence, whether or
not the Trust would have the power to indemnify such person against
such liability;
(n) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-
sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions,
including the purchasing of life insurance and annuity contracts as a
means of providing such retirement and other benefits, for any or all
of the Trustees, officers, employees and agents of the Trust;
(o) To purchase or otherwise acquire Shares; and
(p) To engage in any other lawful act or activity in which business
corporations organized under the laws of The Commonwealth of
Massachusetts may engage.
The foregoing enumeration of the powers and authority of the Trustees
shall be read as broadly and liberally as possible, it being the intent of the
foregoing to in no way limit the Trustees' powers and authority.
The Trustees shall not in any way be bound or limited by any present
or future law or custom in regard to investments by trustees. Except as
otherwise provided herein or from time to time in the Bylaws, any action to be
taken by the Trustees may be taken by a majority of the Trustees present at a
meeting of the Trustees (a quorum being present), within or without
Massachusetts. Except as otherwise provided herein or from time to time in the
Bylaws, any action to be taken by the Trustees may be taken at a meeting held by
means of a conference telephone or other communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time and participation by such means shall constitute presence in person at a
meeting, or by written consents of a majority of the Trustees then in office (or
such greater number as may be required by this Declaration, the Bylaws or
applicable law).
Payment of Expenses by the Trust
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Section 6. The Trustees are authorized to pay, or to cause to be paid out
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of the principal or income of the Trust, or partly out of principal and partly
out of income, as they deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, investment adviser, subadviser or manager, principal
underwriter, auditor, counsel, custodian,
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transfer agent, shareholder servicing agent, and such other agents or
independent contractors and such other expenses and charges as the Trustees may
deem necessary or proper to incur.
Ownership of Assets of the Trust
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Section 7. Title to all of the assets of the Trust and each series and
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class of Shares shall at all times be considered as vested in the Trustees.
Advisory, Management and Distribution
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Section 8. The Trustees may, at any time and from time to time, contract
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for exclusive or nonexclusive advisory and/or management services with any
corporation, trust, association or other organization (the "Manager"), every
such contract to comply with such requirements and restrictions as may be set
forth in the Bylaws; and any such contract may provide for one or more
subadvisers or other agents who shall perform all or part of the obligations of
the Manager under such contract and contain such other terms interpretive of or
in addition to said requirements and restrictions as the Trustees may determine,
including, without limitation, authority to determine from time to time what
investments shall be purchased, held, sold, or exchanged and what portion, if
any, of the assets of the Trust shall be held uninvested and to make changes in
the Trust's investments. The Trustees may also, at any time and from time to
time, contract with the Manager or any other corporation, trust, association or
other organization, appointing it exclusive or nonexclusive distributor or
principal underwriter for the Shares, every such contract to comply with such
requirements and restrictions as may be set forth in the Bylaws; and any such
contract may contain such other terms interpretive of or in addition to said
requirements and restrictions as the Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
manager, adviser, subadviser, principal underwriter or distributor or
agent of or for any corporation, trust, association or other
organization, or of or for any parent or affiliate of any
organization, with which an advisory, subadvisory or management
contract, or principal underwriter's or distributor's contract or
transfer, shareholder servicing or other agency contract may have been
or may hereafter be made or that any such organization, or any parent
or affiliate thereof, is a Shareholder or has an interest in the
Trust, or that
(ii) any corporation, trust, association or other organization
with which an advisory, subadvisory or management contract or
principal underwriter's or distributor's contract or transfer,
shareholder servicing or other agency contract may have been or may
hereafter be made also has an advisory, subadvisory or management
contract, or principal underwriter's or distributor's contract or
transfer, shareholder servicing or other agency contract with one or
more other
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corporations, trusts, associations or other organizations, or has
other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
General
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Section 1. Except as otherwise provided in this Article V or elsewhere in
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this Declaration, Shareholders shall have such power to vote as is provided for
in, and shall and may hold meetings and take actions pursuant to, the provisions
of the Bylaws.
Voting Powers as to Certain Transactions
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Section 2.
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(a) Except as otherwise provided in paragraph (b) of this Section 2, the
affirmative vote or consent of at least seventy-five percent (75%) of the
Trustees of the Trust and at least seventy-five percent (75%) of the Shares
outstanding and entitled to vote thereon shall be necessary to authorize any of
the following actions:
(i) the merger or consolidation or share exchange of the Trust or
any series or class of Shares with or into any other person or
company (including, without limitation, a partnership, corporation,
joint venture, business trust, common law trust or any other business
organization) or of any such person or company with or into the Trust
or any series or class of Shares;
(ii) the issuance or transfer by the Trust or any series or class of
Shares of any securities issued by the Trust or such series or class
to any other person or entity for cash, securities or other property
(or combination thereof), excluding (i) sales of any securities of
the Trust or a series or class in connection with a public offering
thereof and (ii) issuance of securities of the Trust or a series or
class pursuant to a dividend reinvestment plan adopted by the
Trustees;
(iii) a sale, lease, exchange, mortgage, pledge, transfer or other
disposition by the Trust or any series or class of Shares (in one or
a series of transactions in any twelve-month period) to or with any
person of any assets of the Trust or such series or class having an
aggregate fair market value of $1,000,000 or more, except for
transactions in securities effected by the Trust or a series or class
in the ordinary course of business;
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(iv) any Shareholder proposal as to specific investment decisions
made or to be made with respect to the assets of the Trust or a
series or class of Shares.
(b) Notwithstanding anything to the contrary in paragraph (a) of this
Section 2, so long as each action is approved by both a majority of the entire
Board of Trustees and seventy-five percent (75%) of the Continuing Trustees, and
so long as all other conditions and requirements, if any, provided for in the
Bylaws and applicable law have been satisfied, then no Shareholder vote or
consent shall be necessary or required to approve any of the actions listed in
paragraphs (a)(i), (a)(ii), (a)(iii) or (a)(iv) of this Section 2, except to the
extent such Shareholder vote or consent is required by the 1940 Act or other
applicable law.
Conversion to Open-End Company
------------------------------
Section 3. Notwithstanding any other provisions in this Declaration or the
----------
Bylaws, the conversion of the Trust or any series of Shares from a "closed-end
company" to an "open-end company," as those terms are defined in Sections
5(a)(2) and 5(a)(1), respectively, of the 1940 Act (as in effect on the date of
this Declaration), together with any necessary amendments to this Declaration to
permit such a conversion, shall require the affirmative vote or consent of at
least seventy-five percent (75%) of each class of Shares outstanding and
entitled to vote on the matter, unless a majority of the Trustees and seventy-
five percent (75%) of the Continuing Trustees entitled to vote on the matter
approve such conversion and related actions. In the event of such approval by
the Trustees and the Continuing Trustees as referred to in the preceding
sentence, the 1940 Act shall govern whether and to what extent a vote or consent
of Shares shall be required to approve such conversion and related actions. Any
affirmative vote or consent required under this Section 3 shall be in addition
to the vote or consent of the Shareholders otherwise required by law or by any
agreement between the Trust and any national securities exchange.
ARTICLE VI
DISTRIBUTIONS AND DETERMINATION OF NET ASSET VALUE
Distributions
-------------
Section 1. The Trustees may each year, or more frequently if they so
----------
desire, but need not, distribute to the Shareholders of any or all classes or
series of Shares such income and gains, accrued or realized, as the Trustees may
determine, after providing for actual and accrued expenses and liabilities
(including such reserves as the Trustees may establish) determined in accordance
with good accounting practices and subject to the preferences, special or
relative rights or privileges of the various classes or series of Shares. The
Trustees shall have full discretion to determine which items shall be treated as
income and which items as capital and their determination shall be binding upon
the Shareholders. Distributions of income for each year or other period, if any
be made, may be made in one or more payments, which shall be in Shares, in cash
or otherwise and on a date or dates and as of a record date or dates determined
by
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the Trustees. At any time and from time to time in their discretion, the
Trustees may distribute to the Shareholders as of a record date or dates
determined by the Trustees, in Shares, in cash or otherwise, all or part of any
gains realized on the sale or disposition of property or otherwise, or all or
part of any other principal of the Trust. Each distribution pursuant to this
Section 1 to the Shareholders of a particular class or series shall be made
ratably according to the number of Shares of such class or series held by the
several Shareholders on the applicable record date thereof, provided that no
distribution need be made on Shares purchased pursuant to orders received, or
for which payment is made, after such time or times as the Trustees may
determine. Any such distribution paid in Shares will be paid at the net asset
value thereof as determined in accordance with Section 2 of this Article VI, or
at such other value as may be specified by the Bylaws or as the Trustees may
from time to time determine, subject to applicable laws and regulations then in
effect.
Any other provisions of this Declaration or the Bylaws notwithstanding, the
Trustees may not distribute to the Shareholders (in one or a series of
distributions) during any twelve-month period any property (in cash, Shares or
otherwise) with an aggregate fair market value in excess of 110% of the income
and gains (accrued or realized) of the Trust during such twelve-month period
(the "Distribution Limit"); provided, however, a distribution in excess of the
Distribution Limit may be made if such distribution shall have been approved by
the vote or consent of a majority of the Trustees and seventy-five percent (75%)
of the Continuing Trustees.
Determination of Net Asset Value
--------------------------------
Section 2. The net asset value per share of each class and each series of
----------
Shares of the Trust shall be determined in accordance with the 1940 Act and any
related procedures adopted by the Trustees from time to time. Determinations
made under and pursuant to this Section 2 in good faith and in accordance with
the provisions of the 1940 Act shall be binding on all parties concerned.
ARTICLE VII
COMPENSATION AND LIMITATION
OF LIABILITY OF TRUSTEES
Compensation
------------
Section 1. The Trustees as such shall be entitled to reasonable
----------
compensation from the Trust; they may fix the amount of their compensation.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking, underwriting,
brokerage or other services and payment for the same by the Trust.
Limitation of Liability
-----------------------
Section 2. The Trustees shall not be responsible or liable in any event
----------
for any neglect or wrongdoing of any officer, agent, employee, adviser,
subadviser, manager or principal
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underwriter of the Trust, nor shall any Trustee be responsible for the act or
omission of any other Trustee, but nothing herein contained shall protect any
Trustee against any liability to which he or she would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate, Share or undertaking
and every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in or with respect to
their or his or her capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
ARTICLE VIII
INDEMNIFICATION
Trustees, Officers etc.
-----------------------
Section 1. The Trust shall indemnify each of its Trustees and officers
----------
(including persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise) (hereinafter referred to as a "Covered
Person") against all liabilities and expenses, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Covered Person, except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in a decision on the merits
in any such action, suit or other proceeding (a) not to have acted in good faith
in the reasonable belief that such Covered Person's action was in the best
interests of the Trust or (b) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office.
Expenses, including counsel fees so incurred by any such Covered Person (but
excluding amounts paid in satisfaction of judgments, in compromise or as fines
or penalties), shall be paid from time to time by the Trust in advance of the
final disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay amounts so paid to
the Trust if it is ultimately determined that indemnification of such expenses
is not authorized under this Article, provided, that (a) such Covered Person
-------- ----
shall provide security for his or her undertaking, (b) the Trust shall be
insured against losses arising by reason of such Covered Person's failure to
fulfill his or her undertaking, or (c) a majority of the Trustees who are
disinterested persons and who are not Interested Persons of the Trust (provided
that a majority of such Trustees then in office act on the matter), or
independent legal counsel in a written opinion shall determine, based on a
review of readily available facts (but not a full trial-type inquiry), that
there is reason to believe such Covered Person ultimately will be entitled to
indemnification.
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Compromise Payment
------------------
Section 2. As to any matter disposed of (whether by a compromise payment,
----------
pursuant to a consent decree or otherwise) without an adjudication in a decision
on the merits by a court, or by any other body before which the proceeding was
brought, that such Covered Person either (a) did not act in good faith in the
reasonable belief that such Covered Person's action was in the best interests of
the Trust or (b) is liable to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's office, indemnification shall
be provided if (x) approved as in the best interest of the Trust, after notice
that it involves such indemnification, by at least a majority of the Trustees
who are disinterested persons and are not Interested Persons of the Trust
(provided that a majority of such Trustees then in office act on the matter),
upon a determination, based upon a review of readily available facts (but not a
full trial-type inquiry) that such Covered Person acted in good faith in the
reasonable belief that such Covered Person's action was in the best interests of
the Trust and is not liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office, or (y) there has
been obtained an opinion in writing of independent legal counsel, based upon a
review of readily available facts (but not a full trial-type inquiry), to the
effect that such Covered Person appears to have acted in good faith in the
reasonable belief that such Covered Person's action was in the best interests of
the Trust and that such indemnification would not protect such Covered Person
against any liability to the Trust to which such Covered Person would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office.
Any approval pursuant to this Section 2 shall not prevent the recovery from any
Covered Person of any amount paid to such Covered Person in accordance with this
Section 2 as indemnification if such Covered Person is subsequently adjudicated
by a court of competent jurisdiction not to have acted in good faith in the
reasonable belief that such Covered Person's action was in the best interests of
the Trust or to have been liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office.
Rebuttable Presumption
----------------------
Section 3. For purposes of the determination or opinion referred to in
----------
clause (c) of Section 1 of this Article VIII or clauses (x) or (y) of Section 2
of this Article VIII, the majority of Trustees who are disinterested persons and
who are not Interested Persons of the Trust acting on the matter or independent
legal counsel, as the case may be, shall be entitled to rely upon a rebuttable
presumption that the Covered Person has acted in good faith in the reasonable
belief that such Covered Person's action was in the best interests of the Trust
and has not engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office.
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Indemnification Not Exclusive
-----------------------------
Section 4. The right of indemnification hereby provided shall not be
----------
exclusive of or affect any other rights to which any such Covered Person may be
entitled. As used in this Article VIII, the term "Covered Person" shall include
such person's heirs, executors and administrators, and a "disinterested person"
is a person against whom none of the actions, suits or other proceedings in
question or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this Article VIII
shall affect any rights to indemnification to which personnel of the Trust,
other than Trustees and officers, and other persons may be entitled by contract
or otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of such person; provided, however, that the Trust
-------- -------
shall not purchase or maintain any such liability insurance in contravention of
the 1940 Act or other applicable law.
Shareholders
------------
Section 5. In case any Shareholder or former Shareholder shall be held to
----------
be personally liable solely by reason of his or her being or having been a
Shareholder and not because of his or her acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled to
be held harmless from and indemnified against all loss and expense arising from
such liability.
ARTICLE IX
MISCELLANEOUS
Trustees, Shareholders etc. Not Personally Liable; Notice
---------------------------------------------------------
Section 1. All persons extending credit to, contracting with or having any
----------
claim against the Trust or a particular series or class of Shares shall look
only to the assets of the Trust or the assets of that particular series or class
of Shares for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of the Trust's officers, employees or
agents, whether past, present or future, shall be personally liable therefor.
Nothing in this Declaration shall protect any Trustee against any liability to
which such Trustee would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officer or officers shall give notice that this
Declaration is on file with the Secretary of State of The Commonwealth of
Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust or by them as Trustee or Trustees or as officer or officers
and not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, and may contain such further recital as he or
she or they may deem appropriate, but the
-17-
omission thereof shall not operate to bind any Trustee or Trustees or officer or
officers or Shareholder or Shareholders individually.
Trustees and Officers Good Faith Action, Expert Advice, No Bond or Surety
-------------------------------------------------------------------------
Section 2. The exercise by the Trustees of their powers and discretions
----------
hereunder shall be binding upon everyone interested. A Trustee or officer shall
be liable for his or her own willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee or officer, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees or officers may take advice
of counsel or other experts with respect to the meaning and operation of this
Declaration, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice. The Trustees
and officers shall not be required to give any bond as such, nor any surety if a
bond is required.
Liability of Third Persons Dealing with Trustees
------------------------------------------------
Section 3. No person dealing with the Trustees shall be bound to make any
----------
inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
Duration and Termination of Trust
---------------------------------
Section 4. Unless terminated as provided herein, the Trust shall continue
----------
without limitation of time. Subject to the voting powers of one or more classes
or series of Shares as set forth in the Bylaws, the Trust may be terminated at
any time (i) by vote or consent of Shareholders holding at least seventy-five
percent (75%) of the Shares entitled to vote or (ii) by vote or consent of
majority of the entire Board of Trustees and seventy-five percent (75%) of the
Continuing Trustees upon written notice to the Shareholders. Any series or
class of Shares may be terminated at any time (x) by vote or consent of
Shareholders holding at least seventy-five percent (75%) of the Shares of such
series of class entitled to vote or (y) by vote or consent of majority of the
entire Board of Trustees and seventy-five percent (75%) of the Continuing
Trustees upon written notice to the Shareholders of such series or class. For
the avoidance of any doubt and notwithstanding anything to the contrary in this
Declaration, Shareholders shall have no separate right to vote with respect to
the termination of the Trust or a series of class of Shares if the Trustees
(including the Continuing Trustees) exercise their right to terminate the Trust
or such series or class pursuant to clauses (ii) and (y) of this Section 4.
Upon termination of the Trust or of any one or more series or classes of
Shares, after paying or otherwise providing for all charges, taxes, expenses and
liabilities, whether due or accrued or anticipated, of the Trust or of the
particular series or class, as may be determined by the Trustees, the Trust
shall in accordance with such procedures as the Trustees consider appropriate
reduce the remaining assets to distributable form in cash or shares or other
property, or any combination thereof, and distribute the proceeds to the
Shareholders of the series or class(es) involved, ratably according to the
number of Shares of such series or class held by the
-18-
several Shareholders on the date of termination, except to the extent otherwise
required or permitted by the preferences and special or relative rights or
privileges of any classes or series of Shares. For these purposes, "ratably"
shall refer to the proceeds themselves and shall not prevent different
Shareholders from receiving different forms of property.
Filing of Copies, References, Headings
--------------------------------------
Section 5. The original or a copy of this instrument and of each amendment
---------
hereto shall be kept at the office of the Trust, where it may be inspected by
any Shareholder. A copy of this instrument and of each amendment hereto shall
be filed by the Trust with the Secretary of State of The Commonwealth of
Massachusetts and with the Boston City Clerk (or the Clerk of any city or town
within the Commonwealth), if required, as well as any other governmental office
where such filing may from time to time be required. Anyone dealing with the
Trust may rely on a certificate by an officer of the Trust as to whether or not
any such amendments have been made and as to any matters in connection with the
Trust hereunder; and, with the same effect as if it were the original, may rely
on a copy certified by an officer of the Trust to be a copy of this instrument
or of any such amendments. In this instrument and in any such amendment,
references to this instrument, and all expressions like "herein," "hereof," and
"hereunder," shall be deemed to refer to this instrument as amended or affected
by any such amendments. Headings are placed herein for convenience of reference
only and shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. This instrument may be executed in
any number of counterparts, each of which shall be deemed an original.
Applicable Law
--------------
Section 6. This Declaration is made in The Commonwealth of Massachusetts,
---------
and it is created under and is to be governed by and construed and administered
according to the laws of said Commonwealth. The Trust shall be of the type
commonly called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
Amendments
----------
Section 7. (a) Except to the extent that the Bylaws or applicable law may
---------
require a higher vote or the separate vote of one or more classes or series of
Shares, and except as provided in paragraph (b) of this Section 7, this
Declaration may be amended at any time by an instrument in writing signed by a
majority of the then Trustees (1) when authorized so to do by a vote or consent
of Shareholders holding a majority of the Shares entitled to vote or (2) without
Shareholder approval as may be necessary or desirable in order to authorize one
or more classes or series of Shares as in Section 1 of Article III. Amendments
having the purpose of changing the name of the Trust or of supplying any
omission, curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision contained herein shall not require
authorization by Shareholder vote.
-19-
(b) Except to the extent that the Bylaws or applicable law may require a
higher vote or the separate vote of one or more classes or series of Shares, no
amendment may be made under this Section 7 which shall amend, alter, change or
repeal any of the provisions of Article I, Section 2; Article III, Sections 4,
5, 6 or 7; Article IV, Sections 1, 2, 3 or 4; each Section of Article V; Article
VI, Section 1; Article VII, Section 2; each Section of Article VIII; or this
Article IX, Sections 1, 2, 3, 4, 7(b) or 7(c) unless, in each case, the
amendment effecting such amendment, alteration, change or repeal shall be
effected by an instrument in writing signed by a majority of the then Trustees
and seventy-five percent (75%) of the Continuing Trustees and shall receive the
affirmative vote or consent of Shareholders holding a majority of the Shares
entitled to vote; provided, however, that such affirmative vote or consent shall
-------- -------
be in addition to the vote or consent of the Shareholders otherwise required by
applicable law or by the terms of any agreement between the Trust and any
national securities exchange.
(c) Except to the extent that the Bylaws or applicable law requires a vote
or consent of Shareholders, the Board of Trustees shall have the sole power and
authority to adopt, amend, alter, change or repeal any Bylaw of the Trust, if
the resolution or writing adopting, amending, altering, changing or repealing
any such Bylaw is approved or signed by a majority of the Board of Trustees;
provided, however, that any amendment, alteration, change or repeal of Section
10 of the Bylaws shall require the approval of a majority of the Board of
Trustees and seventy-five percent (75%) of the Continuing Trustees.
-20-
IN WITNESS HEREOF, all of the Trustees as aforesaid do hereto set their
hands this 17th day of December, 2001.
________________________________
Xxxxxxx X. Xxxx
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF SUFFOLK )
Then personally appeared before me Xxxxxxx X. Xxxx, who acknowledges the
foregoing instrument to be his free act and deed.
_________________________________
Notary Public
My commission expires on:
December 17, 2001
Trustee and Address
-------------------
Xxxxxxx X. Xxxx
c/o Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Trust Address
-------------
Western Asset Core Plus Bond Trust I
c/o Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
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