Exhibit 2g.2
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PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 20/th/ day of March, 2002, by and between Western
Asset Management Company (the "Manager"), a California corporation, and Western
Asset Management Company Limited ("WAML"), a corporation organized under the
laws of the United Kingdom, each of which is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended.
WHEREAS, the Manager is the manager of Western Asset Premier Bond Fund
(the "Trust"), a closed-end, management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Manager wishes to retain WAML to provide certain
investment advisory services in connection with the Manager's management of the
Trust; and
WHEREAS, WAML 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. Appointment. The Manager hereby appoints WAML as portfolio
manager for the Trust for the period and on the terms set forth in this
Agreement. WAML accepts such appointment and agrees to furnish the services
herein set forth for the compensation herein provided.
2. Delivery of Documents. The Manager has furnished WAML with
copies of each of the following:
(a) The Trust's Declaration of Trust and all amendments thereto (such
Declaration of Trust, as presently in effect and as it shall from time to time
be amended, is herein called the "Declaration");
(b) The Trust's By-Laws and all amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees (the "Trustees")
authorizing the appointment of the Manager as the manager and WAML as investment
adviser and approving the Investment Management Agreement between the Manager
and the Trust with respect to the Trust dated March 20, 2002 (the "Management
Agreement") and this Agreement;
(d) The Trust's most recently filed Amendment to its Registration
Statement on Form
N-2 under the Securities Act of 1933, as amended, and the 1940 Act, including
all exhibits thereto, relating to common shares of beneficial interest of the
Trust, no par value;
(e) The Trust's most recent prospectus (such prospectus, as presently
in effect, and all amendments and supplements thereto are herein called the
"Prospectus"); and
(f) The Trust's most recent statement of additional information (such
statement of additional information, as presently in effect, and all amendments
and supplements thereto are herein called the "Statement of Additional
Information").
The Manager will furnish WAML from time to time with copies of all amendments of
or supplements to the foregoing.
3. Investment Advisory Services. (a) Subject to the supervision
of the Trustees and the Manager, WAML shall as requested by the Manager
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 as
stated in the Trust's current Prospectus and Statement of Additional
Information. WAML shall as requested by the Manager 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 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. WAML will as requested by the Manager 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, WAML shall seek to obtain for the Trust 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, WAML, 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 consideration 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 and communicate to WAML in writing,
WAML 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 a broker that provides brokerage and research services to WAML or
any affiliated person of WAML 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 WAML 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 WAML's overall responsibilities with
respect to the Trust and to other clients of WAML and any affiliated person
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of WAML as to which WAML or any affiliated person of WAML exercises investment
discretion. WAML shall also perform such other functions of management and
supervision as may be requested by the Manager and agreed to by WAML.
(b) WAML will as requested by the Manager oversee the maintenance of
all books and records with respect to the investment transactions of the Trust
that it implements in accordance with all applicable federal and state laws and
regulations, and will furnish the Trustees with such periodic and special
reports as the Trustees or the Manager reasonably may request.
(c) The Trust hereby agrees that any entity or person associated with
WAML (or with any affiliated person of WAML) which 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. Services Not Exclusive. WAML's services hereunder are not
deemed to be exclusive, and WAML shall be free to render similar services to
others. It is understood that persons employed by WAML to assist in the
performance of its duties hereunder might not devote their full time to such
service. Nothing herein contained shall be deemed to limit or restrict the right
of WAML or any affiliate of WAML to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.
5. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, WAML hereby agrees that all books and records which it
maintains for the Trust are 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. WAML further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any such records required to be maintained by Rule
31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement, WAML will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities and other property (including brokerage
commissions, if any) purchased for the Trust.
7. Compensation. For the services which WAML will render to the
Manager and the Trust under this Agreement, the Manager shall pay WAML a monthly
fee in arrears at an annual rate equal to 0.425% of the average weekly value of
the Trust's Total Managed Assets that WAML manages. "Total Managed Assets" means
the total assets of the Trust (including any such assets attributable to
leverage) minus the sum of accrued liabilities (other than liabilities
representing leverage). For purposes of this 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. Fees due to WAML hereunder shall be paid promptly
to WAML by the Manager following its receipt of fees from the Trust. For any
period less than a month during which this Agreement is in effect, the fee
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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.
8. Limitation of Liability. In the absence of willful
misfeasance, bad faith or gross negligence on the part of WAML, or reckless
disregard of its obligations and duties hereunder, WAML shall not be subject to
any liability to the Manager, the Trust or any shareholder of the Trust, for any
act or omission in the course of, or connected with, rendering services
hereunder.
9. Definitions. 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.
10. Term. 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 Section 12) until terminated as
follows:
a. The Trust may at any time terminate this Agreement by
not more than 60 days' written notice delivered or mailed by registered
mail, postage prepaid, to the Manager and WAML, or
b. If (i) the Trustees or the shareholders of the Trust
by 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, the Manager or WAML, 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 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, WAML may continue to
serve hereunder in a manner consistent with the 1940 Act and the rules
and regulations thereunder, or
c. The Manager may at any time terminate this Agreement
by not less than 60 days' written notice delivered or mailed by
registered mail, postage prepaid, to WAML, and WAML may at any time
terminate this Agreement by not less than 60 days' written notice
delivered or mailed by registered mail, postage prepaid, to the
Manager.
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Action by the Trust under paragraph (a) of this Section 10 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.
11. Further Actions. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
12. No Assignment; Amendments. This Agreement shall terminate
automatically in the event of its assignment or in the event that the Management
Agreement shall have terminated for any reason. Any termination of this
Agreement pursuant to Section 10 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, the Manager or WAML.
13. Miscellaneous. 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. The
captions in this Agreement are included for convenience of reference only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect. 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.
14. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
Attest: WESTERN ASSET MANAGEMENT COMPANY
By: ________________ By: _______________________________________
Attest: WESTERN ASSET MANAGEMENT COMPANY LIMITED
By: ________________ By: _______________________________________
The foregoing is accepted by:
Attest: WESTERN ASSET PREMIER BOND FUND
By: ________________ By: _______________________________________
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