Exhibit k.3
-----------
WESTERN ASSET PREMIER BOND FUND
-----------------------------------------------
AUCTION AGENCY AGREEMENT
dated as of [ ], 2002
Relating to
Taxable Auction Market Preferred Shares
Series M and Series W
of
WESTERN ASSET PREMIER BOND FUND
----------------------------------------------
DEUTSCHE BANK TRUST COMPANY AMERICAS
as Auction Agent
AUCTION AGENCY AGREEMENT
This Auction Agency Agreement (this "Agreement"), dated as of
[_______], 2002, is by and between Western Asset Premier Bond Fund (the "Trust")
and Deutsche Bank Trust Company Americas ("Deutsche Bank Trust Company"), a New
York banking corporation.
The Trust proposes to issue an aggregate of [ ] preferred shares, no
par value per share, liquidation preference $25,000 per share, designated as
Taxable Auction Market Preferred Shares, Series M and Series W (collectively,
the "AMPS"), pursuant to the Amended Bylaws (as defined below).
The Trust desires that Deutsche Bank Trust Company perform certain
duties as agent in connection with each Auction (as defined below), and as the
transfer agent, registrar, dividend paying agent and redemption agent with
respect to the AMPS (in all such capacities, the "Auction Agent"), upon the
terms and conditions of this Agreement, and the Trust hereby appoints Deutsche
Bank Trust Company as said Auction Agent.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Trust and the Auction Agent agree as follows:
1. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1 Terms Defined By Reference to the Amended Bylaws.
Capitalized terms not defined herein shall have the respective
meanings specified in the Amended Bylaws.
1.2 Terms Defined Herein.
As used herein and in the Settlement Procedures, the following terms
shall have the following meanings, unless the context otherwise requires:
(a) "Agent Member" of any Person shall mean the member of, or
participant in, the Securities Depository that will act on behalf of a Bidder.
(b) "Agreement" shall mean the Agreement relating to one or more
series of AMPS.
(c) "Amended Bylaws" shall mean the Bylaws of the Trust, as
amended by Amendment No. 1 to the Bylaws relating to the AMPS, as the same may
be further amended, supplemented or modified from time to time.
(d) "AMPS" shall mean the preferred shares, no par value per
share, of the Trust designated as its "Taxable Auction Market Preferred Shares"
and bearing such further designation as to series as the Board of Trustees of
the Trust or any committee thereof shall specify.
(e) "Auction" shall have the meaning specified in Section 2.1
hereof.
(f) "Auction Procedures" shall mean the auction procedures
included in Part II of Section 12.1 of the Amended Bylaws.
(g) "Authorized Officer" of the Auction Agent shall mean each
Managing Director, Vice President, Assistant Vice President or Associate of the
Auction Agent assigned to its Corporate Trust and Agency Services and every
other Person designated as an "Authorized Officer" for purposes hereof in a
communication to the Trust.
(h) "Broker-Dealer Agreement" shall mean each agreement between
the Auction Agent and a Broker-Dealer substantially in the form attached hereto
as Exhibit A.
(i) "Settlement Procedures" shall mean the Settlement Procedures
attached hereto as Exhibit B.
(j) "Trust Officer" shall mean the Chairman and Chief Executive
Officer, the President, each Vice President (whether or not designated by a
number or word or words added before or after the title "Vice President"), the
Secretary, the Treasurer, each Assistant Vice President, each Assistant
Secretary and each Assistant Treasurer of the Trust and every other officer or
employee of the Trust designated as a "Trust Officer" for purposes hereof in a
communication to the Auction Agent.
1.3 Rules of Construction.
Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of the Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience
of reference and shall not constitute a part of the Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof", "herein", "hereto" and other words of
similar import refer to the Agreement as a whole.
2
(d) All references herein to a particular time of day shall be to
New York City time.
2. THE AUCTION.
2.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) The Board of Trustees of the Trust has adopted a resolution
appointing Deutsche Bank Trust Company as Auction Agent for purposes of the
Auction Procedures. The Auction Agent hereby accepts such appointment and agrees
that, on each Auction Date, it shall follow the procedures set forth in this
Section 2 and the Auction Procedures for the purpose of determining the
Applicable Rate for any Subsequent Rate Period of any series of AMPS for which
the Applicable Rate is to be determined by auction. Each periodic operation of
such procedures is hereinafter referred to as an "Auction."
(b) All of the provisions contained in the Auction Procedures and
the Settlement Procedures are incorporated herein by reference in their entirety
and shall be deemed to be a part hereof to the same extent as if such provisions
were fully set forth herein.
2.2 Preparation for Each Auction; Maintenance of Registry of
Beneficial Owners.
(a) Not later than seven days prior to the first Auction Date for
the first series of AMPS subject to an Auction, the Trust shall provide the
Auction Agent with a list of the Broker-Dealers. Not later than seven days prior
to any Auction Date for any series of AMPS for which any change in such list of
Broker-Dealers is to be effective, the Trust will notify the Auction Agent in
writing of such change and, if any such change involves the addition of a
Broker-Dealer to such list, shall cause to be delivered to the Auction Agent for
execution by the Auction Agent a Broker-Dealer Agreement signed by such
Broker-Dealer. The Auction Agent and the Trust shall have entered into a
Broker-Dealer Agreement with each Broker-Dealer prior to the participation of
any such Broker-Dealer in any Auction.
(b) In the event that any Auction Date for any series of AMPS
shall be changed after the Auction Agent shall have given the notice referred to
in paragraph (a) of the Settlement Procedures, or after the notice referred to
in Section 2.3 hereof, if applicable, the Auction Agent, by such means as the
Auction Agent deems practicable, shall give notice of such change to the
Broker-Dealers for such series not later than the earlier of 9:15 A.M. on the
new Auction Date or 9:15 A.M. on the old Auction Date.
(c) (i) The Auction Agent shall maintain a current registry of
the beneficial owners of the AMPS of each series who shall constitute Existing
Holders of AMPS of such series for purposes of Auctions and shall indicate
thereon the identity of the respective Broker-Dealer of each Existing Holder, if
any, on whose behalf such Broker-Dealer submitted the most recent Order in any
Auction which resulted in such Existing Holder continuing to hold or purchasing
AMPS of such series. The Auction Agent shall keep such registry current and
accurate based on the information provided to it from time to time by the
Broker-Dealer. The Trust shall use commercially reasonable efforts to provide or
cause to be provided to the Auction Agent at or prior to the Date of Original
Issue of the AMPS of each series a list of the initial Existing Holders of the
shares of each such series of AMPS, the number of shares purchased by each such
Existing Holder and the respective Broker-Dealer of each such Existing Holder or
the affiliate thereof through which each such Existing Holder purchased such
shares. The Auction Agent may rely upon, as conclusive evidence of the
identities of the Existing Holders of AMPS of any series (A) such list, (B) the
results of Auctions, (C) notices from any Broker-Dealer as described in the
first sentence of Section 2.2(c)(iii) hereof and (D) the results of any
procedures approved by both the Trust and the Auction Agent that have been
devised for the purpose of determining the identities of Existing Holders in
situations where AMPS may have been transferred without compliance with any
restriction on the transfer thereof set forth in the Auction Procedures.
3
(ii) In the event of any partial redemption of any series of
AMPS, the Auction Agent shall, at least two Business Days prior to the next
Auction for such series, request the Securities Depository of each Existing
Holder of AMPS of such series to disclose to the Auction Agent (upon selection
by the Securities Depository of the Existing Holders whose share are to be
redeemed) the number of AMPS of such series, if any, of such Existing Holder
which are subject to such redemption, provided the Auction Agent has been
furnished, at least three Business Days prior to such Auction, with the name and
telephone number of a person or department at the Agent Member from which it
shall request such information. In the absence of receiving any such information
with respect to an Existing Holder, from such Existing Holder's Agent Member of
otherwise, the Auction Agent may continue to treat such Existing Holder as the
beneficial owner of the number of AMPS of such series shown in the Auction
Agent's registry.
(iii) The Auction Agent shall be required to register a transfer
of AMPS of any series from an Existing Holder of such AMPS only if such transfer
is to another Existing Holder, or to another Person if permitted by the Trust,
and only if such transfer is made (A) pursuant to an Auction, (B) if such
transfer is made other than pursuant to an Auction, the Auction Agent has been
notified in writing (I) in a notice substantially in the form of Exhibit B to
the Broker-Dealer Agreements by a Broker-Dealer of such transfer or (II) in a
notice substantially in the form of Exhibit C to the Broker-Dealer Agreements by
the Broker-Dealer of any Existing Holder, or other Person if permitted by the
Trust, that purchased or sold such AMPS in an Auction of the failure of such
AMPS to be transferred as a result of such Auction or (C) pursuant to procedures
approved by both the Trust and the Auction Agent that have been devised for the
purpose of determining the identities of Existing Holders in situations where
AMPS may have been transferred without compliance with any restriction on the
transfer thereof set forth in the Auction Procedures. The Auction Agent is not
required to accept any such notice for an Auction unless it is received by the
Auction Agent by 3:30 P.M. on the Business Day preceding such Auction. The
Auction Agent shall rescind a transfer made on the registry of the Existing
Holders of any Preferred Shares if the Auction Agent has been notified in
writing by the Broker'Dealer of any Person that (i) purchase any AMPS and the
seller failed to deliver such shares or (ii) sold any AMPS and the purchaser
failed to make payment to such Person upon delivery to the purchaser of such
shares.
(d) The Auction Agent may request the Broker-Dealers, as set
forth in the Broker-Dealer Agreements, to provide the Auction Agent with a list
of Persons who such Broker-Dealer believes should be Existing Holders based upon
inquiries of those Persons such Broker-Dealer believes are Beneficial Owners as
a result of the most recent Auction and with respect to each such Person, the
number of shares of such series of AMPS such Broker-Dealer believes to be owned
by such Person. The Auction Agent shall keep confidential such registry of
Existing Holders and shall not disclose the identities of the Existing Holders
of such AMPS to any Person other than the Trust and the Broker-Dealer that
provided such information; provided, however, that the Auction Agent reserves
the right and is authorized to disclose any such information if (a) it is
ordered to do so by a court of competent jurisdiction or a regulatory body,
judicial or quasi-judicial agency or authority having the authority to compel
such disclosure, (b) it is advised by its legal counsel that its failure to do
so would be unlawful or (c) failure to do so would expose the Auction Agent to
loss, liability, claim, damage or expense for which it has not received
indemnity or security satisfactory to it.
4
2.3 Auction Schedule.
The Auction Agent shall conduct Auctions in accordance with the
schedule set forth below. Such schedule may be changed by the Auction Agent with
the consent of the Trust, which consent shall not be unreasonably withheld. The
Auction Agent shall give written notice of any such change to each
Broker-Dealer. Such notice shall be given prior to the close of business on the
Business Day next preceding the first Auction Date on which any such change
shall be effective.
Time Event
---- -----
By 9:30 A.M. Auction Agent advises the Trust and
Broker-Dealers of the applicable Maximum Rate
and the Reference Rate(s) and Treasury Index
Rate(s), as the case may be, used in
determining such Maximum Rate as set forth in
Section 2.7 hereof.
9:30 A.M. - 1:30 P.M. Auction Agent assembles information
communicated to it by Broker-Dealers as
provided in Paragraph 1(a) of the Auction
Procedures. Submission Deadline is 1:30 P.M.
Not earlier than 1:30 P.M. Auction Agent makes determinations pursuant to
Section 3(b) of the Auction Procedures.
By approximately 3:30 P.M. Auction Agent advises Trust of results of the
Auction as provided in Paragraph 3(b) of the
Auction Procedures.
Submitted Bids and Submitted Sell Orders are
accepted and rejected and AMPS allocated as
provided in Paragraph 4 of the Auction
Procedures. Auction Agent gives notice of
Auction results as set forth in Paragraph 2.4
hereof.
The Auction Agent shall follow the notification procedures set forth in
paragraph (a) of the Settlement Procedures.
2.4 Notice of Auction Results.
The Auction Agent will advise each Broker-Dealer who submitted a Bid
or Sell Order in an Auction whether such Bid or Sell Order was accepted or
rejected in whole or in part and of the Applicable Rate for the next Dividend
Period for the related AMPS by telephone or through its Auction Processing
System as set forth in paragraph (a) of the Settlement Procedures.
2.5 Broker-Dealers.
(a) Not later than 12:00 Noon on each Auction Date for any series
of AMPS, the Trust shall pay to the Auction Agent an amount in cash equal to the
aggregate fees payable to the Broker-Dealers for such series pursuant to Section
2.6 of the Broker-Dealer Agreements for such series. The Auction Agent shall
apply such moneys as set forth in Section 2.6 of each such Broker-Dealer
Agreement.
5
(b) The Trust shall obtain the consent of the Auction Agent prior to
selecting any Person to act as a Broker-Dealer, which consent shall not be
unreasonably withheld. The Trust may designate an Affiliate of ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated to act as a Broker-Dealer.
(c) The Auction Agent shall terminate any Broker-Dealer Agreement as
set forth therein if so directed by the Trust, provided that at least one
Broker-Dealer Agreement would be in effect for each series of AMPS after such
termination.
(d) Subject to the Auction Agent's having consented to the selection
of the relevant Broker-Dealer pursuant to Section 2.5(b) hereof, the Auction
Agent shall from time to time enter into such Broker-Dealer Agreements with one
or more Broker-Dealers as the Trust shall request, and shall enter into such
schedules to any such Broker-Dealer Agreements as the Trust shall request, which
schedules, among other things, shall set forth the series of AMPS to which such
Broker-Dealer Agreement relates.
2.6 Special Rate Periods.
The provisions contained in Paragraph 3 of Part I of Section 12.1 of the
Amended Bylaws concerning Special Rate Periods and the notification of a Special
Rate Period will be followed by the Trust and, to the extent applicable, the
Auction Agent, and the provisions contained therein are incorporated herein by
reference in their entirety and shall be deemed to be a part of this Agreement
to the same extent as if such provisions were set forth fully herein.
2.7 Determination of Maximum Rate.
(a) (i) On each Auction Date, the Auction Agent shall determine the
initial dividend rate and the Maximum Rate. If any "AA" Financial Composite
Commercial Paper Rate, Treasury Index Rate or Reference Rate, as the case may
be, is not quoted on an interest or bond equivalent, as the case may be, basis,
the Auction Agent shall convert the quoted rate to the interest or bond
equivalent thereof as set forth in the definition of such rate in the Amended
Bylaws if the rate obtained by the Auction Agent is quoted on a discount basis,
or if such rate is quoted on a basis other than an interest or bond equivalent
or discount basis the Auction Agent shall convert the quoted rate to an interest
or bond equivalent rate after consultation with the Trust as to the method of
such conversion.
(i) If any "AA" Financial Composite Commercial Paper Rate
is to be based on rates supplied by Commercial Paper Dealers and one or more of
the Commercial Paper Dealers shall not provide a quotation for the determination
of such "AA" Financial Composite Commercial Paper Rate, the Auction Agent shall
immediately notify the Trust so that the Trust can determine whether to select a
substitute Commercial Paper Dealer or substitute Commercial Paper Dealers to
provide the quotation or quotations not being supplied by any Commercial Paper
Dealer or Commercial Paper Dealers. The Trust shall promptly advise the Auction
Agent of any such selection.
(ii) If any Treasury Index Rate is to be based on rates
supplied by U.S. Government Securities Dealers and one or more of the U.S.
Government Securities Dealers shall not provide a quotation for the
determination of such Treasury Index Rate, the Auction Agent shall immediately
notify the Trust so that the Trust can determine whether to select a substitute
U.S. Government Securities Dealer or substitute U.S. Government Securities
Dealers to provide the quotation or quotations not being supplied by any U.S.
Government Securities Dealer or U.S. Government Securities Dealers. The Trust
shall promptly advise the Auction Agent of any such selection.
2.8 Ownership of Shares of AMPS.
6
The Trust shall notify the Auction Agent if the Trust or, to the knowledge
of the Trust, any affiliate of the Trust acquires any AMPS of any series.
Neither the Trust nor any affiliate of the Trust shall submit any Order in any
Auction for AMPS, except as set forth in the next sentence. Any Broker-Dealer
that is an affiliate of the Trust may submit Orders in Auctions, but only if
such Orders are not for its own account. For purposes of this Section 2.8, a
Broker-Dealer shall not be deemed to be an affiliate of the Trust solely because
one or more of the directors or executive officers of such Broker-Dealer or of
any Person controlled by, in control of or under common control with such
Broker-Dealer is also a director of the Trust. The Auction Agent shall have no
duty or liability with respect to enforcement of this Section 2.8.
2.9 Access to and Maintenance of Auction Records.
The Auction Agent shall afford to the Trust, its agents, independent public
accountants and counsel and the Broker-Dealers access at reasonable times during
normal business hours to review and make extracts or copies of all books,
records, documents and other information concerning the conduct and results of
Auctions (at no cost to the Auction Agent), provided that any such agent,
accountant, counsel or Broker-Dealer shall furnish the Auction Agent with a
letter from the Trust requesting that the Auction Agent afford such person
access. The Auction Agent shall maintain records relating to any Auction for a
period of four years after such Auction, and such records shall, in reasonable
detail, accurately and fairly reflect the actions taken by the Auction Agent
hereunder.
3. THE AUCTION AGENT AS DIVIDEND AND REDEMPTION PRICE DISBURSING AGENT.
The Auction Agent, as dividend and redemption price disbursing agent, shall
pay to the Holders of AMPS of any series (i) on each Dividend Payment Date for
such series, dividends on the AMPS of such series, (ii) on any date fixed for
redemption of AMPS of any series, the Redemption Price of any shares of such
series called for redemption and (iii) any Late Charge related to any payment of
dividends or Redemption Price, in each case after receipt of the necessary funds
from the Trust with which to pay such dividends, Redemption Price or Late
Charge. The amount of dividends for any Rate Period for any series of AMPS to be
paid by the Auction Agent to the Holders of such shares of such series will be
determined by the Trust as set forth in Paragraph 1 of Part I of Section 12.1 of
the Amended Bylaws with respect to such series. The Redemption Price of any
shares to be paid by the Auction Agent to the Holders will be determined by the
Trust as set forth in Paragraph 8 of Part I of Section 12.1 of the Amended
Bylaws with respect to such series. The Trust shall notify the Auction Agent in
writing of a decision to redeem shares of any series of AMPS at least five days
prior to the date a notice of redemption is required to be mailed to the Holders
of the shares to be redeemed by Paragraph 8(c) of Part I of Section 12.1 of the
Amended Bylaws. Such notice by the Trust to the Auction Agent shall contain the
information required by Paragraph 8(c) of Part I of Section 12.1 of the Amended
Bylaws to be stated in the notice of redemption required to be mailed by the
Trust to such Holders.
4. THE AUCTION AGENT AS TRANSFER AGENT AND REGISTRAR.
4.1 Issue of Stock or Shares Certificates.
Upon the Date of Original Issue of each series of AMPS, one or more
certificates representing all of the shares of such series issued on such date
shall be issued by the Trust and, at the request of the Trust, registered in the
name of Cede & Co., as nominee of the Securities Depository, and countersigned
by the Auction Agent.
4.2 Registration of Transfer of Shares.
7
Shares of each series of AMPS shall be registered solely in the name of the
Securities Depository or its nominee.
4.3 Removal of Legend on Restricted Shares.
All requests for removal of legends on AMPS of any series indicating
restrictions on transfer shall be accompanied by an opinion of counsel stating
that such legends may be removed and such shares freely transferred free of the
restrictions described in such legend, such opinion to be delivered under cover
of a letter from a Trust Officer authorizing the Auction Agent to remove the
legend on the basis of said opinion.
4.4 Lost Stock or Share Certificates.
The Auction Agent shall issue and register replacement certificates for
certificates represented to have been lost, stolen or destroyed upon the
fulfillment of such requirements as shall be deemed appropriate by the Trust and
the Auction Agent, subject at all times to provisions of law, the Amended Bylaws
of the Trust governing such matters and resolutions adopted by the Trust with
respect to lost securities. The Auction Agent may issue new certificates at the
expense of the Trust in exchange for and upon the cancellation of mutilated
certificates. Any request by the Trust to the Auction Agent to issue a
replacement or new certificate pursuant to this Section 4.4 shall be deemed to
be a representation and warranty by the Trust to the Auction Agent that such
issuance will comply with such provisions of law and the Amended Bylaws and
resolutions of the Board of Trustees.
4.5 Disposition of Cancelled Certificates; Record Retention.
The Auction Agent shall retain all stock or share certificates which have
been cancelled in transfer or exchange and all accompanying documentation in
accordance with applicable rules and regulations of the Securities and Exchange
Commission for at least six calendar years. The Trust shall also undertake to
furnish to the Securities and Exchange Commission, upon demand, at either the
principal office or at any regional office, complete, correct and current hard
copies of any and all such records. The Auction Agent, upon written request from
the Trust, shall afford to the Trust, its agents and counsel access at
reasonable times during normal business hours to review and make extracts or
copies of such certificates and accompanying documentation. Upon the expiration
of this six-year period, the Auction Agent shall deliver to the Trust the
canceled certificates and accompanying documentation.
4.6 Stock or Record Books.
For so long as the Auction Agent is acting as the transfer agent for any
series of AMPS pursuant to the Agreement, it shall maintain a stock or record
book containing a list of the Holders of the AMPS of each such series. In case
of any request or demand for the inspection of the stock or record books of the
Trust or any other books in the possession of the Auction Agent, the Auction
Agent will notify the Trust and secure instructions as to permitting or refusing
such inspection. The Auction Agent reserves the right, however, to exhibit the
stock or record books or other books to any Person if (a) it is ordered to do so
by a court of competent jurisdiction or a regulatory body, judicial or
quasi-judicial agency or authority having the authority to compel such
disclosure, (b) it is advised by its counsel that its failure to do so would be
unlawful or (c) failure to do so would expose the Auction Agent to loss,
liability, claim, damage or expense for which it has not received indemnity or
security satisfactory to it.
4.7 Return of Funds.
8
Any funds deposited with the Auction Agent hereunder by the Trust for any
reason, including but not limited to redemption of AMPS of any series, that
remain unpaid after ninety days shall be repaid to the Trust upon the written
request of the Trust.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Representations and Warranties of the Trust.
The Trust represents and warrants to the Auction Agent that:
(a) the Trust is duly organized and existing business trust in good
standing under the laws of the State of its incorporation or organization and
has full corporate power or all requisite power to execute and deliver the
Agreement and to authorize, create and issue the AMPS of each series, and the
AMPS of each series when issued, will be duly authorized, validly issued, fully
paid and nonassessable;
(b) the Agreement has been duly and validly authorized, executed and
delivered by the Trust and constitutes the legal, valid and binding obligation
of the Trust;
(c) the form of the certificate evidencing the AMPS of each series
complies or will comply with all applicable laws of the State of its
incorporation or organization;
(d) when issued, the AMPS of each series will have been duly
registered under the Securities Act of 1933, as amended, and no further action
by or before any governmental body or authority of the United States or of any
state thereof is required in connection with the execution and delivery of the
Agreement or will have been required in connection with the issuance of AMPS of
each series;
(e) the execution and delivery of the Agreement and the issuance and
delivery of the AMPS of each series do not and will not conflict with, violate
or result in a breach of, the terms, conditions or provisions of, or constitute
a default under, the Agreement and Declaration of Trust (as amended by one or
more Amendments) or the Amended Bylaws of the Trust, any law or regulation, any
order or decree of any court or public authority having jurisdiction, or any
mortgage, indenture, contract, agreement or undertaking to which the Trust is a
party or by which it is bound the effect of which conflict, violation, default
or breach would be material to the Trust or the Trust and its subsidiaries taken
as a whole.
5.2 Representations and Warranties of the Auction Agent.
The Auction Agent represents and warrants to the Trust that:
(i) the Auction Agent is duly organized and is validly existing
as a banking corporation in good standing under the laws of the State
of New York and has the corporate power to enter into and perform its
obligations under this Agreement; and
(ii) this Agreement has been duly and validly authorized,
executed and delivered by the Auction Agent and constitutes the legal,
valid and binding obligation of the Auction Agent, enforceable against
the Auction Agent in accordance with its terms, subject to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equitable
principles.
9
6. THE AUCTION AGENT.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any Person, other than the Trust, by
reason of the Agreement.
(b) The Auction Agent undertakes to perform such duties and only such
duties as are specifically set forth in the Agreement, and no implied covenants
or obligations shall be read into the Agreement against the Auction Agent.
(c) In the absence of bad faith or negligence on its part, the Auction
Agent shall not be liable for any action taken, suffered, or omitted by it or
for any error of judgment made by it in the performance of its duties under the
Agreement.
6.2 Rights of the Auction Agent.
(a) The Auction Agent may rely upon and shall be fully protected in
acting or refraining from acting upon any communication authorized hereby and
upon any written instruction, notice, request, direction, consent, report,
certificate, share certificate or other instrument, paper or document believed
in good faith by it to be genuine. The Auction Agent shall not be liable for
acting upon any telephone communication authorized hereby which the Auction
Agent believes in good faith to have been given by the Trust or by a
Broker-Dealer. The Auction Agent may record telephone communications with the
Trust or with the Broker-Dealers or with both.
(b) The Auction Agent may consult with counsel of its choice and the
advice of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reasonable reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or risk
its own funds or otherwise incur or become exposed to financial liability in the
performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys.
6.3 Auction Agent's Disclaimer
The Auction Agent makes no representation as to and shall have no liability
with respect to the correctness of the recitals in, the validity with respect to
parties other than the Auction Agent, or the adequacy of this Agreement, the
Broker-Dealer Agreements or the AMPS of any series, or any Official Statement or
other offering material used in connection with the offer and sale of the AMPS
or otherwise.
6.4 Compensation, Expenses and Indemnification.
(a) The Trust shall pay the Auction Agent from time to time reasonable
compensation for all services rendered by it under the Agreement and the
Broker-Dealer Agreements as shall be set forth in a separate writing signed by
the Trust and the Auction Agent, subject to adjustments if the AMPS no longer
are held of record by the Securities Depository or its nominee or if there shall
be such other change as shall increase or decrease materially the Auction
Agent's obligations hereunder or under the Broker-Dealer Agreements.
10
(b) The Trust shall reimburse the Auction Agent upon its request
for all reasonable out-of-pocket expenses, disbursements and advances incurred
or made by the Auction Agent in accordance with any provision of the Agreement
and the Broker-Dealer Agreements (including the reasonable compensation and the
reasonable expenses and disbursements of its agents and counsel), except any
expense or disbursement attributable to its negligence or bad faith.
(c) The Trust shall indemnify the Auction Agent for and hold it
harmless against any loss, liability or expense incurred without negligence or
bad faith on the part of the Auction Agent, arising out of or in connection with
its agency under the Agreement and the Broker-Dealer Agreements, including the
costs and expenses of defending itself against any such claim or liability in
connection with its exercise or performance of any of its duties hereunder and
thereunder, except such as may result from its negligence or bad faith.
7. MISCELLANEOUS.
7.1 Term of Agreement.
(a) Unless the AMPS are no longer outstanding, the term of the
Agreement is unlimited unless it shall be terminated as provided in this Section
7.1. The Trust may terminate the Agreement at any time by so notifying the
Auction Agent, provided that, if any AMPS are outstanding, the Trust has entered
into an agreement with substantially the same terms as this Agreement with a
successor auction agent. The Auction Agent may terminate the Agreement upon
prior written notice to the Trust on the date specified in such notice, which
date shall be no earlier than 60 days after the date of delivery of such notice
or 30 days if the Auction Agent has not been paid.
(b) Except as otherwise provided in this paragraph (b), the
respective rights and duties of the Trust and the Auction Agent under the
Agreement with respect to any series of AMPS shall cease upon termination of the
Agreement with respect to such series. The Trust's representations, warranties,
covenants and obligations to the Auction Agent under Section 5 hereof shall
survive the termination of the Agreement with respect to any series of AMPS. The
Auction Agent's covenants and obligations to the Trust under Section 7.8 hereof
shall survive the termination of this Agreement. Upon termination of the
Agreement with respect to any series of AMPS, the Auction Agent shall, at the
Trust's request, promptly deliver to the Trust copies of all books and records
maintained by it with respect to AMPS in connection with its duties hereunder.
Upon termination of the Agreement, the Auction Agent shall (i) resign as Auction
Agent under the Broker-Dealer Agreements, (ii) at the Trust's request, deliver
promptly to the Trust copies of all books and records maintained by it in
connection with its duties hereunder, and (iii) at the request of the Trust,
transfer promptly to the Trust or to any successor auction agent any funds
deposited by the Trust with the Auction Agent pursuant to this Agreement which
have not been distributed previously by the Auction Agent in accordance with the
Agreement.
7.2 Communications.
Except for (i) communications authorized to be by telephone pursuant
to the Agreement or the Auction Procedures and (ii) communications in connection
with Auctions (other than those expressly required to be in writing), all
notices, requests and other communications to any party hereunder shall be in
writing (including telecopy or similar writing) and shall be given to such
party, addressed to it, at its address or telecopy number set forth below:
If to the Trust: Western Asset Premier Bond Fund
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
11
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
If to the Auction Agent: Deutsche Bank Trust Company Americas
Corporate Trust and Agency Services
▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Auction Rate Group
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
or such other address or telecopy number as such party hereafter may
specify for such purpose by notice to the other party. Each such notice, request
or communication shall be effective when delivered at the address specified
herein. Communications shall be given on behalf of the Trust by a Trust Officer
and on behalf of the Auction Agent by telephone (confirmed by telecopy or in
writing) by an Authorized Officer.
7.3 Entire Agreement.
The Agreement contains the entire agreement between the parties
relating to, and superseding any prior agreement between the parties relating
to, the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof except for agreements
relating to the compensation of the Auction Agent.
7.4 Benefits.
Nothing herein, express or implied, shall give to any Person, other
than the Trust, the Auction Agent and their respective successors and assigns,
any benefit of any legal or equitable right, remedy or claim hereunder.
7.5 Amendment; Waiver.
(a) The Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part, except
by a written instrument signed by a duly authorized representative of the party
to be charged.
(b) Failure of either party hereto to exercise any right or
remedy hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
7.6 Successors and Assigns.
The Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the respective successors and assigns of each of the Trust and
the Auction Agent. The Agreement may not be assigned by either party hereto
absent the prior written consent of the other party, which consent shall not be
unreasonably withheld.
7.7 Severability.
12
If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or
unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.
7.8 Disclosure of Information; Regulatory Compliance.
The Auction Agent agrees that it will not disclose or use any
"non-public personal information" about the Trust's shareholders other than such
uses or disclosures as are permitted by Regulation S-P under Section 504 of the
▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇ Act ("Regulation S-P"). "Nonpublic personal information" about
a shareholder shall mean: (i) personally identifiable financial information;
(ii) any list, description, or other grouping of consumers that is derived from
using any personally identifiable information that is not publicly available;
and (iii) any other information that a Customer or the Transfer Agent is
prohibited from using or disclosing pursuant to Regulation S-P. The Auction
Agent also agrees to comply with all federal and state anti-money laundering
laws applicable to such party, including, to the extent applicable, the USA
PATRIOT Act of 2001 and any implementing rules, regulations and authoritative
guidelines of any applicable regulatory agency thereunder.
7.9 Governing Law.
The Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
7.10 Execution in Counterparts.
The Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
7.11 Limitation of Liability.
The Trust's Agreement and Declaration of Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. This Agreement is
executed on behalf of the Trust by the Trust's officers as officers and not
individually and the obligations imposed upon the Trust by this Agreement are
not binding upon any of the Trust's Trustees, officers or shareholders
individually but are binding only upon the assets and property of the Trust.
WESTERN ASSET PREMIER BOND FUND
By: __________________________________
Name
Title
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: __________________________________
Name
Title
13
EXHIBIT A
================================================================================
FORM OF BROKER-DEALER AGREEMENT
among
DEUTSCHE BANK TRUST COMPANY AMERICAS
as Auction Agent
[ _]
as Broker-Dealer
Dated as of [ ], 2002
Relating to
TAXABLE AUCTION MARKET PREFERRED SHARES
SERIES M and SERIES W
of
WESTERN ASSET PREMIER BOND FUND
================================================================================
BROKER-DEALER AGREEMENT dated as of [ ], 2002 (this "Agreement"),
among (i) Deutsche Bank Trust Company Americas, a New York banking corporation,
as auction agent (the "Auction Agent") (not in its individual capacity but
solely as agent of Western Asset Premier Bond Fund, a Massachusetts business
trust (the "Trust")) pursuant to authority granted to it in the Auction Agency
Agreement and (ii) the Broker-Dealer whose name appears on the signature page
hereof, as Broker-Dealer (together with its successors and assigns as such
hereinafter referred to as "BD").
The Trust intends to issue two series of Taxable Auction Market
Preferred Shares, no par value per share, liquidation preference $25,000 per
share, designated Series M and Series W. The shares of each series of AMPS (as
defined below) shall be issued in book-entry form through the facilities of the
Securities Depository. References to "Shares of AMPS" or "AMPS" in this
Agreement shall refer only to the beneficial interests in the AMPS unless the
context otherwise requires.
The Auction Procedures require the participation of a Broker-Dealer.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Auction Agent, the Trust and BD
agree as follows:
8. Definitions and Rules of Construction
8.1 Terms Defined by Amended Bylaws of the Trust. Capitalized terms
not defined herein shall have the respective meanings specified in the Amended
Bylaws.
8.2 Terms Defined Herein. As used herein and in the Settlement
Procedures, the following terms shall have the following meanings, unless the
context otherwise requires:
(a) "Agent Member" of any Person shall mean the member of, or
participant in, the Securities Depository that will act on behalf of a Bidder.
(b) "Amended Bylaws" shall mean the Bylaws of the Trust, as
amended by Amendment No. 1 to the Bylaws relating to the AMPS, as the same may
be amended, supplemented or modified from time to time.
(c) "AMPS" shall mean the preferred shares, no par value per
share, of the Trust designated as its "Taxable Auction Market Preferred Shares"
and bearing such further designation as to series as the Board of Trustees, as
the case may be, of the Trust or any committee thereof shall specify.
(d) "Auction" shall have the meaning specified in Section 2.1
hereof.
(e) "Auction Agency Agreement" shall mean the Auction Agency
Agreement dated as of [_______], 2002 between the Auction Agent and the Trust.
(f) "Auction Procedures" shall mean the auction procedures
included in Part II of Section 12.1 of the Amended Bylaws.
(g) "Authorized Officer" of the Auction Agent shall mean each
Managing Director, Vice President, Assistant Vice President or Associate of the
Auction Agent assigned to its Corporate Trust and Agency Services and every
Person designated as an "Authorized Officer" for purposes hereof in a
communication to the Trust.
(h) "Settlement Procedures" shall mean the Settlement Procedures
attached to the Auction Agency Agreement as Exhibit B.
(i) "Trust Officer" shall mean the Chairman and Chief Executive
Officer, the President, each Vice President (whether or not designated by a
number or word or words added before or after the title "Vice President"), the
Secretary, the Treasurer, each Assistant Vice President, each Assistant
Secretary and each Assistant Treasurer of the Trust and every other officer or
employee of the Trust designated as a "Trust Officer" for purposes hereof in a
notice to the Auction Agent.
8.3 Rules of Construction. Unless the context or use indicates another
or different meaning or intent, the following rules shall apply to the
construction of this Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience
of reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.
(d) All references herein to a particular time of day shall be
to New York City time.
(e) This Agreement shall apply separately but equally to all
series of AMPS that may be issued. Section 1 and 2 hereof shall be read in
conjunction with the Amended Bylaws and in the event of any conflict with the
Amended Bylaws, the Amended Bylaws shall take precedence.
8.4 Warranties of a Broker Dealer. A Broker-Dealer (or "BD") hereby
represents and warrants that this Agreement has been duly authorized, executed
and delivered by BD and that, assuming the due authorization, execution and
delivery hereof by the Auction Agent, this Agreement constitutes a valid and
binding agreement of BD, enforceable against it in accordance with its terms.
BD's representations and warranties in this Section 1.4 shall survive the
termination of this Agreement.
9. The Auctions.
9.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) On each Auction Date, the provisions of the Auction
Procedures will be followed by the Auction Agent for the purpose of determining
the Applicable Rate for the AMPS for the next Dividend Period. Each periodic
implementation of such procedures is hereinafter referred to as an "Auction."
(b) All of the provisions contained in the Auction Procedures
and the Settlement Procedures are incorporated herein by reference in their
entirety and shall be deemed to be a part of this Agreement to the same extent
as if such provisions were fully set forth herein.
(c) BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in the Amended Bylaws may execute a
Broker-Dealer Agreement and participate as Broker-Dealers in Auctions.
-2-
(d) BD acknowledges and agrees that each provision of the
Auction Procedures that requires BD to perform an obligation or procedure is
hereby incorporated herein by reference and that this Agreement shall constitute
the Trust's instruction, and BD hereby agrees, to perform such obligations and
procedures without further request by or instructions from the Trust.
(e) BD may participate in Auctions for its own account.
9.2 Preparation for Each Auction.
(a) Not later than 9:30 a.m. on each Auction Date, the Auction
Agent shall advise BD by telephone or other electronic means, to be confirmed in
writing by the Auction Agent, of the Maximum Rate, Reference Rate(s) and
Treasury Index Rate(s).
(b) BD shall cause the Maximum Rate to be communicated as
promptly as practicable to its customers who hold or may be interested in
acquiring AMPS.
(c) If required by applicable law, or requested by the Auction
Agent, BD shall provide a list of Existing Holders based upon inquiries of those
Persons such Broker-Dealer believes are Beneficial Owners as a result of the
most recent Auction to the Auction Agent promptly after any date so requested by
the Auction Agent. The Auction Agent shall keep confidential any such
information, including information received as to the identity of Bidders in any
Auction, and shall not disclose any such information so provided to any Person
other than the other party hereto, provided that the Auction Agent each reserves
the right to disclose any such information if (a) it is ordered to do so by a
court of competent jurisdiction or a regulatory, judicial or quasi-judicial
agency, (b) it is advised by its counsel that its failure to do so would be
unlawful or (c) failure to do so would expose the Auction Agent to loss,
liability, claim, damage or expense for which it has not received indemnity
satisfactory to it.
(d) BD agrees to maintain a list of customers relating to a
series of AMPS and to use its best efforts, subject to existing laws and
regulations, to contact the customers on such list whom BD believes may be
interested in participating in the Auction on each Auction Date, as a Potential
Holder or a Potential Beneficial Owner, for the purposes set forth in the
Auction Procedures. Nothing herein shall require BD to submit an Order for any
customer in any Auction.
(e) The Auction Agent's registry of Existing Holders of shares
of a series of AMPS shall be conclusive and binding on BD. BD may inquire of the
Auction Agent between 3:00 P.M. on the Business Day preceding an Auction for
shares of a series of AMPS and 9:30 A.M. on the Auction Date for such Auction to
ascertain the number of shares of such series in respect of which the Auction
Agent has determined BD to be an Existing Holder. If BD believes it is the
Existing Holder of fewer shares of such series than specified by the Auction
Agent in response to BD's inquiry, BD may so inform the Auction Agent of that
belief. BD shall not, in its capacity as Existing Holder of shares of such
series, submit Orders in such Auction in respect of shares of such series
covering in the aggregate more than the number of shares of such series
specified by the Auction Agent in response to BD's inquiry.
9.3 Auction Schedule; Method of Submission of Orders.
(a) The Auction Agent shall conduct Auctions in accordance with
the schedule set forth below. Such schedule may be changed at any time by the
Auction Agent with the consent of the Trust, which consent shall not be
unreasonably withheld. The Auction Agent shall give written notice of any such
change to BD which shall have the right to review such change. Such notice shall
be received one Business Day prior to the first Auction Date on which any such
change shall be effective.
-3-
Time Event
---- -----
By 9:30 a.m. Auction Agent advises the Trust and the BD of the
applicable Maximum Rate and the Reference Rate(s)
and Treasury Index Rate(s) as set forth in
Section 2.2(a) hereof.
9:30 a.m. - 1:30 p.m. Auction Agent assembles information communicated
to it by BD as provided in Paragraph 1(a) of the
Auction Procedures. Submission Deadline is 1:30
p.m.
Not earlier than Auction Agent makes determinations pursuant to
1:30 p.m. Paragraph 3(a) of the Auction Procedures.
By approximately Auction Agent advises the Trust of results of
3:30 p.m. Auction as provided in Paragraph 3(b) of the
Auction Procedures. Submitted Bids and Submitted
Sell Orders are accepted and rejected in whole or
in part and AMPS are allocated as provided in
Paragraph 4 of the Auction Procedures. Auction
Agent gives notice of Auction results as set
forth in Section 2.4(a) hereof.
(b) BD may designate one or more individuals in its organization
who will coordinate its procedures in connection with Auctions and purchases and
sales of shares of any series of AMPS.
(c) BD agrees to handle its customers' orders in accordance with
its duties under applicable securities laws and rules.
(d) To the extent that pursuant to Paragraph [4] of the Auction
Procedures of the Trust, BD continues to hold, sells or purchases a number of
shares that is fewer than the number of shares in an Order submitted by BD to
the Auction Agent in which BD designated itself as an Existing Holder or
Potential Holder in respect of customer Orders, BD shall make appropriate pro
rata allocations among its customers for which it submitted Orders of similar
tenor. If as a result of such allocations, any Beneficial Owner would be
entitled or required to sell, or any Beneficial Owner would be entitled or
required to purchase, a fraction of a Share of AMPS on any Auction Date, BD
shall, in such manner as it shall determine in its sole discretion, round up or
down the number of AMPS to be purchased or sold on such Auction Date by any
Beneficial Owner or Potential Beneficial Owner on whose behalf BD submitted an
Order so that the number of shares so purchased or sold by each such Beneficial
Owner or Potential Beneficial Owner on such Auction Date shall be whole shares.
(e) BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A. BD shall submit separate
Orders to the Auction Agent for each Potential Holder or Existing Holder on
whose behalf BD is submitting an Order and shall not net or aggregate the Orders
of Potential Holders or Existing Holders on whose behalf BD is submitting
Orders.
(f) BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of AMPS
made through BD by an Existing Holder to another
-4-
Person other than pursuant to an Auction and (ii) a written notice,
substantially in the form attached hereto as Exhibit C, of the failure of any
AMPS to be transferred to or by any Person that purchased or sold AMPS through
BD pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:30 p.m. on the
Business Day next preceding the applicable Auction Date.
9.4 Notices.
(a) On each Auction Date, the Auction Agent shall notify BD by
telephone or facsimile (or other electronic means acceptable to both parties) of
the results of the Auction as set forth in paragraph (a) of the Settlement
Procedures. By approximately 11:30 A.M. on the Business Day next succeeding such
Auction Date, the Auction Agent shall notify BD in writing of the disposition of
all Orders submitted by BD in the Auction held on such Auction Date.
(b) BD shall notify each Existing Holder or Potential Holder on
whose behalf BD has submitted an Order as set forth in paragraph (b) of the
Settlement Procedures and take such other action as is required of BD pursuant
to the Settlement Procedures.
9.5 Notification of Dividend.
The provisions contained in Paragraph 3 of Part I of Section 12.1
of the Amended Bylaws concerning the notification of a Special Rate Period will
be followed by the Auction Agent and BD, and the provisions contained therein
are incorporated herein by reference in their entirety and shall be deemed to be
a part of this Agreement to the same extent as if such provisions were set forth
fully herein.
9.6 Service Charge to Be Paid to BD.
(a) No later than 12:00 noon on each Dividend Payment Date, the
Auction Agent after each Auction will pay a service charge from funds provided
by the Trust to each Broker-Dealer on the basis of the purchase price of AMPS
placed by such Broker-Dealer at such Auction. The service charge shall be (i) in
the case of any Auction Date immediately preceding a Dividend Period of less
than one year, the product of (A) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the date of
original issue of such shares to but excluding the next succeeding dividend
payment date of such shares) and the denominator of which is 360, times (B) 1/4
of 1%, times (C) $25,000 times (D) the sum of the aggregate number of shares of
outstanding AMPS for which the Auction is conducted and (ii) in the case of any
Special Dividend Period the amount determined by mutual consent of the Trust and
any such Broker-Dealers and shall be based upon a selling concession that would
be applicable to an underwriting of fixed or variable rate AMPS with a similar
final maturity or variable rate dividend period, respectively, at the
commencement of the Dividend Period with respect to such Auction.
(b) If the Trust determines to change the rate at which the
service charge payable to BD pursuant to Section 2.6(a) accrues, the Trust shall
mail to the Auction Agent a notice thereof within two Business Days of such
change. Any change in such service charge shall be effective on the Auction Date
next succeeding the Auction Agent's receipt of notice of such change.
9.7 Settlement.
(a) If any Existing Holder selling AMPS in an Auction fails to
deliver such AMPS (by authorized book-entry), the BD of any Person that was to
have purchased AMPS in such Auction may deliver to such Person a number of
Shares of AMPS that is less than the number of Shares of AMPS that
-5-
otherwise were to be purchased by such Person. In such event, the number of
Shares of AMPS to be so delivered shall be determined by BD. Delivery of such
lesser number of Shares of AMPS shall constitute good delivery. Upon the
occurrence of any such failure to deliver Shares of AMPS, BD shall deliver to
the Auction Agent the notice required by Section 2.3(f)(ii) hereof.
Notwithstanding the foregoing provisions of this Section 2.7(a), any delivery or
non-delivery of AMPS which represents any departure from the results of an
Auction, as determined by the Auction Agent, shall be of no effect unless and
until the Auction Agent shall have been notified of such delivery or
non-delivery in accordance with the terms of Section 2.3(f) hereof. The Auction
Agent shall have no duty or liability with respect to enforcement of this
Section 2.7(a).
(b) Neither the Auction Agent nor the Trust shall have any
responsibility or liability with respect to the failure of an Existing Holder, a
Potential Holder or an Agent Member or any of them to deliver AMPS or to pay for
AMPS sold or purchased pursuant to the Auction Procedures or otherwise.
(c) Notwithstanding any provision of the Auction Procedures or the
Settlement Procedures to the contrary, in the event BD is an Existing Holder
with respect to shares of a series of AMPS and the Auction procedures provide
that BD shall be deemed to have submitted a Sell Order in an Auction with
respect to such shares if BD fails to submit an Order in that Auction with
respect to such shares, BD shall have no liability to any Person for failing to
sell such shares pursuant to such a deemed Sell Order if (i) such shares were
transferred by the beneficial owner thereof without notification of such
transfer in compliance with the Auction Procedures or (ii) BD has indicated to
the Auction Agent pursuant to Section 2.2(e) of this Agreement that, according
to BD's records, BD is not the Existing Holder of such shares.
(d) Notwithstanding any provision of the Auction Procedures or the
Settlement Procedures to the contrary, in the event an Existing Holder or
Beneficial Owner of shares of a series of AMPS with respect to whom a
Broker-Dealer submitted a Bid to the Auction Agent for such shares that was
accepted in whole or in part, or submitted or is deemed to have submitted a Sell
Order for such shares that was accepted in whole or in part, fails to instruct
its Agent Member to deliver such shares against payment therefore, partial
deliveries of AMPS that have been made in respect of Potential Holders' or
Potential Beneficial Owners' Submitted Bids for shares of such series that have
been accepted in whole or in part shall constitute good delivery to such
Potential Holders and Potential Beneficial Owners.
10. The Auction Agent
10.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Trust
hereunder and owes no duties, fiduciary or otherwise, to any other Person by
reason of this Agreement.
(b) The Auction Agent undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement, the Auction
Procedures or the Settlement Procedures against the Auction Agent.
(c) In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered, or omitted by
it or for any error of judgment made by it in the performance of its duties
under this Agreement.
10.2 Rights of the Auction Agent.
-6-
(a) The Auction Agent may rely upon and shall be fully protected
in acting or refraining from acting upon any communication authorized by this
Agreement and upon any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or document
reasonably believed by it to be genuine. The Auction Agent shall not be liable
for acting upon any communication authorized by this Agreement (including, but
not limited to, any made by telephone, telecopier or other means of electronic
communication acceptable to the parties hereto) which the Auction Agent
reasonably believes in good faith to have been given by the Trust or by BD. The
Auction Agent may record telephone communications with BD.
(b) The Auction Agent may consult with counsel of its own choice,
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its
rights hereunder either directly or by or through agents or attorneys.
10.3 Auction Agent's Disclaimer. The Auction Agent makes no
representation as to and shall have no liability with respect to the correctness
of the recitals in, the validity with respect to parties other than the Auction
Agent, or the adequacy of this Agreement, the Broker-Dealer Agreements or the
AMPS, or any Official Statement or other offering material used in connection
with the offer and sale of the AMPS or otherwise.
11. Miscellaneous
11.1 Termination.
(a) Any party may terminate this Agreement at any time upon five
(5) days written notice to the other parties, which notice may be given by
facsimile as provided in Section 4.3 hereof. This Agreement shall automatically
terminate upon the redemption of all outstanding AMPS or upon termination of the
Auction Agency Agreement.
(b) BD represents that it (or if BD does not act as Agent Member,
one of its affiliates) shall make all dividend payments on the AMPS available in
same-day funds on each Dividend Payment Date to customers that use BD or
affiliate as Agent Member.
11.2 Agent Member. BD is, and shall remain for the term of this
Agreement, a member of, or participant in, the Securities Depository (or an
affiliate of such a member or participant).
11.3 Communications. Except for (i) communications authorized to be
made by telephone pursuant to this Agreement or the Auction Procedures and (ii)
communications in connection with the Auctions (other than those expressly
required to be in writing), all notices, requests and other communications to
any party hereunder shall be in writing (for the purposes of this Agreement,
telecopy or other means of electronic communication acceptable to the parties
shall be deemed to be in writing) and shall be given to such party, addressed to
it, at its address, telecopy number set forth below and, where appropriate
reference the particular Auction to which such notice relates:
If to BD,
addressed:
-7-
Attention: ________________
Telephone No.: _____________
Facsimile No.: _____________
If to the Auction Deutsche Bank Trust Company Americas
Agent, addressed: Corporate Trust and Agency Services
▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Auction Rate Group
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
If to the Trust,
Addressed: Western Asset Premier Bond Fund
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
or such other address or facsimile number as such party may hereafter specify
for such purpose by notice to the other parties. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer, on behalf of the
Auction Agent by an Authorized Officer and on behalf of the Trust by a Trust
Officer. Telephone communications may be recorded.
11.4 Entire Agreement. This Agreement contains the entire agreement
between the parties relating to the subject matter hereof, and there are no
other representations, endorsements, promises, agreements or understandings,
oral, written or implied, between the parties relating to the subject matter
hereof.
11.5 Benefits. Nothing in this Agreement, express or implied, shall
give to any person, other than the Trust, which is a third-party beneficiary of
this Agreement, the Auction Agent, and the BD and their respective successors
and permitted assigns, any benefit of any legal or equitable right, remedy or
claim under this Agreement.
11.6 Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part, except
by a written instrument signed by a duly authorized representative of each of
the parties hereto and with the prior written consent of the Trust, such consent
not to be unreasonably withheld.
(b) Failure of any party to this Agreement to exercise any right
or remedy hereunder in the event of a breach of this Agreement by any other
party shall not constitute a waiver of any such right or remedy with respect to
any subsequent breach.
-8-
11.7 Successors and Assigns. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the respective successors and
permitted assigns of each of the parties hereto. This Agreement may not be
assigned by any party hereto absent the prior written consent of the other
parties.
11.8 Severability. If any clause, provision or section of this
Agreement shall be ruled invalid or unenforceable by any court of competent
jurisdiction, the invalidity or unenforceability of such clause, provision or
section shall not affect any remaining clause, provision or section hereof.
11.9 Execution in Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
11.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
ANY PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW, OTHER THAN SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW OF NEW YORK).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the date first above written.
DEUTSCHE BANK TRUST COMPANY AMERICAS
as Auction Agent
By:________________________
Name:
Title:
[ ]
as Broker-Dealer
By:________________________
Name:
Title:
-9-
Exhibit A
To BROKER-DEALER
AGREEMENT
AUCTION BID FORM
(Submit only one Order on this Order Form)
WESTERN ASSET PREMIER BOND FUND
Taxable Auction Market Preferred Shares ("AMPS")
To: [_______________] Date of Auction _____________
Series of AMPS (indicate by
Number Designation)
-------
The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:
Name of Bidder: __________________________________
Bidder placed the Order listed below covering the number of
shares indicated
(complete only one blank):
_________________ number of Shares of AMPS now held by
Bidder (an Existing Holder), and the Order is a (check one):
[_] Hold Order; or
[_] Bid at a rate of ____%; or
[_] Sell Order;
- or -
_________________ number of Shares of AMPS not now held
by Bidder (a Potential Holder), and the Order is
a Bid at a rate of ______%
Notes:
(1) If submitting more than one Bid for one Bidder, use additional Order Forms.
(2) If one or more Bids covering in the aggregate more than the outstanding
number of Shares of AMPS held by any Existing Holder are submitted, such
Bids shall be considered valid in the order of priority set forth in the
Auction Procedures.
(3) A Hold or Sell Order may be placed only by an Existing Holder covering a
number of Shares of AMPS not greater than the number of Shares of AMPS
currently held by such Existing Holder.
(4) Potential Holders may make Bids only, each of which must specify a rate. If
more than one Bid is submitted on behalf of any Potential Holder, each Bid
submitted shall be a separate Bid with the rate specified.
(5) Bids may contain no more than three figures to the right of the decimal
point (.001 of 1%).
(6) An Order must be submitted in whole Shares of AMPS with an aggregate
liquidation preference of $25,000.
Name of Broker-Dealer: _________________________
By: ____________________________________________
A-1
Exhibit B
To BROKER-DEALER
AGREEMENT
(To be used only for transfers made other than
pursuant to an Auction)
TRANSFER FORM
WESTERN ASSET PREMIER BOND FUND
Taxable Auction Market Preferred Shares ("AMPS")
Series _____ AMPS
(indicate by Number Designation)
We are (check one):
[_] the Existing Holder named below; or
[_] the Broker-Dealer for such Existing Holder; or
[_] the Agent Member for such Existing Holder.
We hereby notify you that such Existing Holder will transfer
___ Shares of AMPS to ____________________.
WESTERN ASSET PREMIER BOND FUND
--------------------------------------------------------------------------------
By: _______________________________
Name:
Title:
________________________________________________________________________________
(Name of Existing Holder)
________________________________________________________________________________
(Name of Broker-Dealer)
________________________________________________________________________________
(Name of Agent Member)
________________________________________________________________________________
By: _______________________________
Name:
Title:
B-1
Exhibit C
To BROKER-DEALER
AGREEMENT
(To be used only for failures to deliver
AMPS sold pursuant to an Auction)
NOTICE OF A FAILURE TO DELIVER
WESTERN ASSET PREMIER BOND FUND
Taxable Auction Market Preferred Shares ("AMPS")
Series _____ AMPS
(indicate by Number Designation)
Complete either I. or II.
I. We are a Broker-Dealer for ______________ (the "Purchaser"), which
purchased ____ Shares of AMPS in the Auction held on __________________
from the seller of such AMPS.
II. We are a Broker-Dealer for _____________ (the "Seller"), which sold ____
Shares of AMPS in the Auction held on ____________________ to the
purchaser of such AMPS.
We hereby notify you that (check one):
__________ the Seller failed to deliver such AMPS to the Purchaser; or
__________ the Purchaser failed to make payment to the Seller upon delivery of
such AMPS.
Name: _____________________________
(Name of Broker-Dealer)
--------------------------------------------------------------------------------
By: _______________________________
Printed Name:
Title:
C-1
Capitalized terms used in this letter, unless otherwise defined herein,
shall have the meanings set forth in the Bylaws of the Trust, as amended by
Amendment No. 1 to the Bylaws, and as further amended from time to time.
(Name of Purchaser)
By:___________________________________
Name:
Title:
Address:______________________________
______________________________________
______________________________________
Dated:
A-1
EXHIBIT B
SETTLEMENT PROCEDURES
The following summary of Settlement Procedures sets forth the procedures
expected to be followed in connection with the settlement of each Auction and
will be incorporated by reference in the Auction Agency Agreement and each
Broker-Dealer Agreement. Nothing contained in this Exhibit constitutes a
representation by the Trust that in each Auction each party referred to herein
will actually perform the procedures described herein to be performed by such
party.
(a) On each Auction Date, the Auction Agent shall notify by telephone,
telecopier or other means of electronic communication acceptable to the
Broker-Dealers that participated in the Auction held on such Auction Date and
submitted an Order on behalf of any Beneficial Owner or Potential Beneficial
Owner of:
(i) the Applicable Rate fixed for the next succeeding Dividend
Period;
(ii) whether Sufficient Clearing Bids existed for the
determination of the Applicable Rate;
(iii) if such Broker-Dealer (a "Seller's Broker-Dealer") submitted
a Bid or Sell Order on behalf of an Beneficial Owner, the number of
shares, if any, of AMPS to be sold by such Beneficial Owner;
(iv) if such Broker-Dealer (a "Buyer's Broker-Dealer") submitted
a Bid on behalf of a Potential Beneficial Owner, the number of shares, if
any, of AMPS to be purchased by such Potential Beneficial Owner;
(v) if the aggregate number of AMPS to be sold by all Beneficial
Owners on whose behalf such Broker-Dealer submitted a Bid or a Sell Order
exceeds the aggregate number of AMPS to be purchased by all Potential
Beneficial Owners on whose behalf such Broker-Dealer submitted a Bid, the
name or names of one or more Buyer's Broker-Dealers (and the name of the
Agent Member, if any, of each such Buyer's Broker-Dealer) acting for one
or more purchasers of such excess number of AMPS and the number of such
shares to be purchased from one or more Beneficial Owners on whose behalf
such Broker-Dealer acted by one or more Potential Beneficial Owners on
whose behalf each of such Buyer's Broker-Dealers acted;
(vi) if the aggregate number of AMPS to be purchased by all
Potential Beneficial Owners on whose behalf such Broker-Dealer submitted
a Bid exceeds the aggregate number of AMPS to be sold by all Beneficial
Owners on whose behalf such Broker-Dealer submitted a Bid or a Sell
Order, the name or names of one or more Seller's Broker Dealers ( and the
name of the Agent Member, if any, of each such Seller's Broker-Dealer)
acting for one or more sellers of such excess number of AMPS and the
number of such shares to be sold to one or more Potential Beneficial
Owners on whose behalf such Broker-Dealer acted by one or more Beneficial
Owners on whose behalf each of such Seller's Broker-Dealers acted; and
(vii) the Auction Date of the next succeeding Auction with respect
to the AMPS.
(b) On each Auction Date, each Broker-Dealer that submitted an Order on
behalf of any Beneficial Owner or Potential Beneficial Owner shall:
(i) in the case of a Broker-Dealer that is a Buyer's
Broker-Dealer, instruct each Potential Beneficial Owner on whose behalf
such Broker-Dealer submitted a Bid that was accepted, in whole or in
part, to instruct such Potential Beneficial Owner's Agent Member to pay
to such Broker-Dealer (or its Agent Member) through the Securities
Depository the amount necessary to purchase the number of AMPS to be
purchased pursuant to such Bid against receipt of such shares and advise
such Potential Beneficial Owner of the Applicable Rate for the next
succeeding Dividend Period;
(ii) in the case of a Broker-Dealer that is a Seller's
Broker-Dealer, instruct each Beneficial Owner on whose behalf such
Broker-Dealer submitted a Sell Order that was accepted, in whole or in
part, or a Bid that was accepted, in whole or in part, to instruct such
Beneficial Owner's Agent Member to deliver to such Broker-Dealer (or its
Agent Member) through the Securities Depository the number of AMPS to be
sold pursuant to such Order against payment therefor and advise any such
Beneficial Owner that will continue to hold AMPS of the Applicable Rate
for the next succeeding Dividend Period;
(iii) advise each Beneficial Owner on whose behalf such
Broker-Dealer submitted a Hold Order of the Applicable Rate for the next
succeeding Dividend Period;
(iv) advise each Beneficial Owner on whose behalf such
Broker-Dealer submitted an Order of the Auction Date for the next
succeeding Auction; and
(v) advise each Potential Beneficial Owner on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or in part, of
the Auction Date for the next succeeding Auction.
(c) On the basis of the information provided to it pursuant to (a) above,
each Broker-Dealer that submitted a Bid or a Sell Order on behalf of a Potential
Beneficial Owner or an Beneficial Owner shall, in such manner and at such time
or times as in its sole discretion it may determine, allocated any funds
received by it pursuant to (b)(i) above and any AMPS received by it pursuant to
(b)(ii) above among the Potential Beneficial Owners, if any, on whose behalf
such Broker-Dealer submitted Bids, the Beneficial Owners, if any, on whose
behalf such Broker-Dealer submitted Bids that were accepted or Sell Orders, and
any Broker-Dealer or Broker-Dealers identified to it by the Auction Agent
pursuant to (a)(v) or (a)(vi) above.
(d) On each Auction Date:
(i) each Potential Beneficial Owner and Beneficial Owner shall
instruct its Agent Member as provided in (b)(i) or (ii) above, as the
case may be;
(ii) each Seller's Broker-Dealer which is not an Agent Member of
the Securities Depository shall instruct its Agent Member to (A) pay
through the Securities Depository to the Agent Member of the Beneficial
Owner delivering shares to such Broker-Dealer pursuant to (b)(ii) above
the amount necessary to purchase such shares
against receipt of such shares, and (B) deliver such shares through the
Securities Depository to a Buyer's Broker-Dealer (or its Agent Member)
identified to such Seller's Broker-Dealer pursuant to (a)(v) above
against payment therefor; and
(iii) each Buyer's Broker-Dealer which is not an Agent Member of
the Securities Depository shall instruct its Agent Member to (A) pay
through the Securities Depository to a Seller's Broker-Dealer (or its
Agent Member) identified pursuant to (a) (vi) above the amount necessary
to purchase the shares to be purchased pursuant to (b) (i) above against
receipt of such shares, and (B) deliver such shares through the
Securities Depository to the Agent Member of the purchaser thereof
against payment therefor.
(e) On the day after the Auction Date:
(i) each Bidder's Agent Member referred to in (d) (i) above
shall instruct the Securities Depository to execute the transactions
described in (b)(i) or (ii) above, and the Securities Depository shall
execute such transactions;
(ii) each Seller's Broker-Dealer or its Agent Member shall
instruct the Securities Depository to execute the transactions described
in (d)(ii) above, and the Securities Depository shall execute such
transactions; and
(iii) each Buyer's Broker-Dealer or its Agent Member shall
instruct the Securities Depository to execute the transactions described
in (d)(iii) above, and the Securities Depository shall execute such
transactions.
(f) If an Beneficial Owner selling AMPS in an Auction fails to deliver
such shares (by authorized book-entry), a Broker-Dealer may deliver to the
Potential Beneficial Owner on behalf of which it submitted a Bid that was
accepted a number of whole AMPS that is less than the number of shares that
otherwise was to be purchased by such Potential Beneficial Owner. In such event,
the number of AMPS to be so delivered shall be determined solely by such
Broker-Dealer. Delivery of such lesser number of shares shall constitute good
delivery. Notwithstanding the foregoing terms of this paragraph (f), any
delivery or non-delivery of shares which shall represent any departure from the
results of an Auction, as determined by the Auction Agent, shall be of no effect
unless and until the Auction Agent shall have been notified of such delivery or
non-delivery in accordance with the provisions of the Auction Agent Agreement
and the Broker-Dealer Agreements.
