Exhibit 99(g)(1)
INVESTMENT MANAGEMENT AGREEMENT
This INVESTMENT MANAGEMENT AGREEMENT, made this ____ day of _________,
2003, by and between Western Asset/Claymore U.S. Treasury Inflation Protected
Securities 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 Agreement and 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. 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, 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
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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 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 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 an annual fee,
payable on a monthly basis, at the annual rate of 0.40% of the Trust's average
weekly assets. "Average Weekly Assets" means the average weekly value of the
total assets of the Trust (including any assets attributable to leverage) minus
accrued liabilities (other than liabilities representing leverage). For purposes
of calculating Average Weekly Assets, neither the liquidation preference of any
preferred shares of beneficial interest outstanding nor any liabilities
associated with any instruments or transactions used by the Manager to leverage
the Trust's portfolio (whether or not such instruments or transactions are
"covered" within the meaning of the 1940 Act and the rules and regulations
thereunder, giving effect to any interpretations of the Securities and Exchange
Commission and its staff) is considered a liability. In addition, with respect
to reverse repurchase or dollar roll transactions ("Repurchase Transactions")
entered into by the Trust, Average Weekly Assets includes (a) any proceeds from
the sale of an asset (the "Underlying Asset") of the Trust to a
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counterparty in a Repurchase Transaction and (b) the value of such Underlying
Asset as of the relevant measuring date. 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 Agreement and except as otherwise provided herein,
the Average Weekly 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 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 as may be granted, issued or adopted by the Securities and Exchange
Commission or its staff by any rule, regulation, or order; 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
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(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 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 Trust's Agreement and Declaration of Trust, as amended,
is on file with the Secretary 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
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of the Trustees, officers or shareholders of the Trust individually but are
binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
Attest: WESTERN ASSET/CLAYMORE U.S. TREASURY
INFLATION PROTECTED SECURITIES FUND
By: By:
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Attest: WESTERN ASSET MANAGEMENT COMPANY
By: By:
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