Exhibit 99.(g.2)
INVESTMENT MANAGEMENT AGREEMENT
This INVESTMENT MANAGEMENT AGREEMENT made this ___ day of ___________, by
and between Claymore Advisors, LLC (the "Advisor"), a Delaware limited liability
company, and Western Asset Management Company ("WAM"), a California corporation,
each of which is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended.
WHEREAS, the Advisor is the adviser of Western Asset/Claymore U.S. Treasury
Inflation Protected Securities Fund 2 (the "Trust"), a closed-end, management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Advisor wishes to retain WAM to provide certain investment
advisory services in connection with the Advisor's management of the Trust; and
WHEREAS, WAM is willing to furnish such services on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. APPOINTMENT. The Advisor hereby appoints WAM as investment manager for
the Trust for the period and on the terms set forth in this Agreement. WAM
accepts such appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Advisor has furnished WAM with copies of
each of the following:
(a) The Trust's Agreement and Declaration of Trust and all amendments
thereto (such Declaration of Trust, as presently in effect and as it shall from
time to time be amended, is herein called the "Declaration");
(b) The Trust's By-Laws and all amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees (the "Trustees")
authorizing the appointment of the Advisor as the adviser and WAM as investment
manager and approving the Investment Advisory Agreement between the Advisor and
the Trust with respect to the Trust dated February __, 2004 (the "Advisory
Agreement") and this Agreement;
(d) The Trust's most recently filed Amendment to its Registration Statement
on Form
N-2 under the Securities Act of 1933, as amended, and the 1940 Act, including
all exhibits thereto, relating to common shares of beneficial interest of the
Trust, no par value;
(e) The Trust's most recent prospectus (such prospectus, as presently in
effect, and all amendments and supplements thereto are herein called the
"Prospectus"); and
(f) The Trust's most recent statement of additional information (such
statement of additional information, as presently in effect, and all amendments
and supplements thereto are herein called the "Statement of Additional
Information").
The Advisor will furnish WAM from time to time with copies of all amendments of
or supplements to the foregoing.
3. INVESTMENT ADVISORY SERVICES. (a) Subject to the supervision of the
Trustees and the Advisor, WAM shall as requested by the Advisor regularly
provide the Trust with investment research, advice, management and supervision
and shall furnish a continuous investment program for the Trust consistent with
the Trust's investment objectives, policies, and restrictions as stated in the
Trust's current Prospectus and Statement of Additional Information. WAM shall as
requested by the Advisor determine from time to time what securities or other
property will be purchased, retained or sold by the Trust, and shall implement
those decisions, all subject to the provisions of the Trust's Declaration and
By-Laws, the 1940 Act, the applicable rules and regulations of the Securities
and Exchange Commission, and other applicable federal and state law, as well as
the investment objectives, policies, and restrictions of the Trust, as each of
the foregoing may be amended from time to time. WAM will as requested by the
Advisor 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, WAM
shall seek to obtain for the Trust the most favorable price and execution
available, except to the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described below. In using its
best efforts to obtain for the Trust the most favorable price and execution
available, WAM, bearing in mind the Trust's best interests at all times, shall
consider all factors it deems relevant, including, by way of illustration,
price, the size of the transaction, the nature of the market for the security,
the amount of the commission, the timing of the transaction taking into
consideration market prices and trends, the reputation, experience and financial
stability of the broker involved and the quality of service rendered by the
broker in other transactions. Subject to such policies as the Trustees may
determine and communicate to WAM in writing, WAM shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Trust to pay a broker that
provides brokerage and research services to WAM or any affiliated person of WAM
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 WAM 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 WAM's overall responsibilities with respect to the Trust and to
other clients of WAM and any affiliated person
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of WAM as to which WAM or any affiliated person of WAM exercises investment
discretion. WAM shall also perform such other functions of management and
supervision as may be requested by the Advisor and agreed to by WAM.
(b) WAM will as requested by the Advisor oversee the maintenance of all
books and records with respect to the investment transactions of the Trust that
it implements in accordance with all applicable federal and state laws and
regulations, and will furnish the Trustees with such periodic and special
reports as the Trustees or the Advisor reasonably may request.
(c) The Trust hereby agrees that any entity or person associated with WAM
(or with any affiliated person of WAM) which is a member of a national
securities exchange is authorized to effect any transaction on such exchange for
the account of the Trust which is permitted by Section 11(a) of the Securities
Exchange Act of 1934, as amended, and Rule 11a2-2(T) thereunder, and the Trust
hereby consents to the retention of compensation for such transactions in
accordance with Rule 11a2-2(T)(a)(2)(iv) or otherwise.
4. SERVICES NOT EXCLUSIVE. WAM's services hereunder are not deemed to be
exclusive, and WAM shall be free to render similar services to others. It is
understood that persons employed by WAM to assist in the performance of its
duties hereunder might not devote their full time to such service. Nothing
herein contained shall be deemed to limit or restrict the right of WAM or any
affiliate of WAM to engage in and devote time and attention to other businesses
or to render services of whatever kind or nature.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, WAM hereby agrees that all books and records which it
maintains for the Trust are property of the Trust and further agrees to
surrender promptly to the Trust or its agents any of such records upon the
Trust's request. WAM further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any such records required to be maintained by Rule
31a-1 under the 1940 Act.
6. EXPENSES. During the term of this Agreement, WAM will pay all expenses
incurred by it in connection with its activities under this Agreement other than
the cost of securities and other property (including brokerage commissions, if
any) purchased for the Trust.
7. COMPENSATION. For the services which WAM will render to the Advisor
and the Trust under this Agreement, the Advisor shall pay WAM an annual fee,
payable on a monthly basis, at the annual rate of 0.27% 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 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
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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 counterparty in a Repurchase Transaction
and (b) the value of such Underlying Asset as of the relevant measuring date.
Fees due to WAM hereunder shall be paid promptly to WAM by the Advisor following
its receipt of fees from the Trust. 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.
8. LIMITATION OF LIABILITY. In the absence of willful misfeasance, bad
faith or gross negligence on the part of WAM, or reckless disregard of its
obligations and duties hereunder, WAM shall not be subject to any liability to
the Advisor, the Trust or any shareholder of the Trust, for any act or omission
in the course of, or connected with, rendering services hereunder.
9. DEFINITIONS. As used in this Agreement, the terms "assignment,"
"interested person," "affiliated person," and "majority of the outstanding
voting securities" shall have the meanings given to them by Section 2(a) of the
1940 Act, subject to such exemptions 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.
10. TERM. This Agreement shall become effective upon its execution, and
shall remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 12) until terminated as follows:
a. The Trust may at any time terminate this Agreement by 60 days'
written notice delivered or mailed by registered mail, postage prepaid, to
the Advisor and WAM, or
b. If (i) the Trustees or the shareholders of the Trust by vote of a
majority of the outstanding voting securities of the Trust, and (ii) a
majority of the Trustees who are not interested persons of the Trust, the
Advisor or WAM, 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, WAM may continue to serve
hereunder in a manner consistent with the 1940 Act and the rules and
regulations thereunder, or
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c. WAM may at any time terminate this Agreement by 60 days' written
notice delivered or mailed by registered mail, postage prepaid, to the
Advisor.
Action by the Trust under paragraph (a) of this Section 10 may be taken
either (i) by vote of a majority of the Trustees, or (ii) by the vote of a
majority of the outstanding voting securities of the Trust.
11. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
12. NO ASSIGNMENT; AMENDMENTS. This Agreement shall terminate
automatically in the event of its assignment or in the event that the Advisory
Agreement shall have terminated for any reason. Any termination of this
Agreement pursuant to Section 10 shall be without the payment of any penalty.
This Agreement shall not be amended unless such amendment is approved by the
vote of a majority of the outstanding voting securities of the Trust (provided
that such shareholder approval is required by the 1940 Act and the rules and
regulations thereunder, giving effect to any interpretations of the Securities
and Exchange Commission and its staff) and by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Trustees who are not interested persons of the Trust, the Advisor or WAM.
13. NON-EXCLUSIVE RIGHT. WAM hereby grants to the Trust the nonexclusive
right and license to use the ▇▇▇▇ "Western" (the "Licensed ▇▇▇▇") in the Trust's
name and in connection with the formation, issuance, marketing, promotion and
operations of, or disclosure related to, the Trust. WAM agrees that it shall
receive no compensation for any such use by the Trust. WAM hereby warrants and
represents that it has filed applications and/or owns rights in the Licensed
▇▇▇▇ sufficient to grant this license. No right, title, or interest in the
Licensed ▇▇▇▇, except the right to use the Licensed ▇▇▇▇ as provided in this
Agreement, is or will be transferred to the Trust by this Agreement. Should this
Agreement be terminated, the Trust agrees that it will take reasonably necessary
steps to change its name to a name not including the word "Claymore."
14. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. Should any part of this Agreement be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors.
15. LIMITATION OF LIABILITY. A copy of the Trust's Agreement and
Declaration of Trust 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
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binding upon any of the Trustees, officers or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
Attest: CLAYMORE ADVISORS, LLC
By: By:
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Attest: WESTERN ASSET MANAGEMENT COMPANY
By: By:
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The foregoing is accepted by:
Attest: WESTERN ASSET/CLAYMORE U.S. TREASURY
INFLATION PROTECTED SECURITIES FUND 2
By: By:
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