ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, made this 31st day of August, 1990, by and
between Western Asset Trust, Inc., a Maryland Corporation, ("Fund"), and Xxxx
Xxxxx Fund Adviser, Inc., a Maryland corporation (the "Administrator"), having
its principal place of business at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000.
WHEREAS, the Fund is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940 ("1940 Act") and has
registered its shares of common stock for sale to the public under the
Securities Act of 1933; and
WHEREAS, the Fund initially has established four separate portfolios
known as the Full Range Duration Portfolio, the Long Duration Portfolio, the
Limited Duration Portfolio and the Money Market Portfolio, and may establish
additional portfolios in the future (all present and future portfolios referred
to herein as the "Portfolios"); and
WHEREAS, the Fund wishes to retain the Administrator to provide
administrative services to the Fund on behalf of each Portfolio; and
1
WHEREAS, the Administrator is willing to furnish such services on the
terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. The Fund hereby appoints Xxxx Xxxxx Fund Adviser, Inc. as
Administrator of the Fund and each Portfolio for the period and on the terms set
forth in this Agreement. The Administrator accepts such appointment and agrees
to render the services herein set forth, for the compensation herein provided.
2. The Fund shall at all times keep the Administrator fully informed
with regard to the securities owned by it, its funds available, or to become
available, for investment, and generally as to the condition of its affairs. It
shall furnish the Administrator with such other documents and information with
regard to its affairs as the Administrator may from time to time reasonably
request.
3. Services on a Continuing Basis.
(a) Subject always to the control of the Board of Directors of
the Fund (the "Board") and to such policies as the Board may determine, the
Administrator agrees, at its expense, (1) to furnish the management and
administrative services
2
necessary for the operation of the Fund and handling its shareholder relations,
including overseeing bookkeeping and accounting services and the calculation and
publication of each Portfolio's net asset value, providing office space,
equipment and facilities, data processing, internal auditing and clerical
services (excluding determination of net asset value); preparing reports to the
Fund's shareholders and tax returns; reports to and filing with governmental
bodies; and conducting relations on behalf of the Fund with custodians,
depositories, transfer agents, registrar and dividend disbursing and
reinvestment plan agents, accountants, attorneys, underwriters, insurers and
banks, (ii) to pay all salaries, fees and expenses of officers and directors of
the Fund who are affiliated persons of the Administrator (except to the extent
such persons are employees of the Corporation's investment adviser), and (iii)
to furnish all necessary management facilities, including salaries of personnel,
required for it to execute its duties faithfully.
(b) The Administrator shall oversee the maintenance of all
books and records required by the Investment Company Act of 1940 and the rules
and regulations thereunder, as well as all other applicable federal and state
laws and regulations. In compliance with the requirements of Rule 31a-3 under
the Investment Company Act of 1940, the Administrator hereby agrees that any
records which it maintains for the Fund are the property of the Fund and further
agrees to surrender promptly to the Fund
3
any of such records upon the Fund's request. The Administrator further agrees to
arrange for the preservation of the records required to be maintained by Rule
31a-1 under the Investment Company Act of 1940 for the periods prescribed by
Rule 31a-2 under said Act.
(c) In the performance of its duties under this Contract, the
Administrator will comply with the provisions of the Articles of Incorporation
and By-laws of the Fund and the stated investment objectives, policies and
restrictions of each Portfolio, and will use its best efforts to safeguard and
promote the welfare of the Fund, and to comply with other policies which the
Board may from time to time determine.
(d) The Administrator shall act as liaison with the Fund's
independent public accountants and shall provide account analyses, fiscal year
summaries, and other audit related schedules. The Administrator shall take all
reasonable action in the performance of its obligations under this Agreement to
assure that the necessary information is made available to such accountants for
the expression of their opinion, as such may be required by the Fund from time
to time.
4. (a) The Administrator, at its own expense, shall provide
a system whereby information is supplied to shareholders concerning their
accounts and the operation of the Fund. The
4
Administrator shall also provide, at its own expense, a system whereby orders
for purchases and redemption of Fund shares which are received by the Fund or
its distributor, Xxxx Xxxxx Xxxx Xxxxxx, Incorporated, are promptly processed
and transmitted to the Fund's transfer agent. The Administrator may delegate
some or all of the functions specified in this subparagraph to Xxxx Xxxxx Xxxx
Xxxxxx, Incorporated or another appropriate person. The Administrator shall not
have the right to use any list of shareholders of the Fund or any other list of
investors which it obtains in connection with its provisions of services under
this Agreement, nor shall the Administrator sell or knowingly provide such list
or lists to any unaffiliated person.
(b) Other than as specifically indicated in this Agreement, the
Administrator shall not be responsible for the Fund's expenses. Specifically,
the Administrator will not be responsible, except to the extent of the
reasonable compensation of employees of the Fund whose services may be used by
the Administrator hereunder, for any of the following expenses of the Fund,
which expenses shall be borne by the Fund: organizational expenses; legal
expenses; interest; taxes; governmental fees; fees, voluntary assessments and
other expenses incurred in connection with membership in investment company
organizations; the cost (including brokerage commissions or charges, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; distribution fees, if any; fees of
5
custodians, subcustodians, transfer agents, registrars or other agents for all
services to the Fund; expenses relating to the redemption or repurchase of the
Fund's shares; expenses of registering and qualifying Fund shares for sale under
applicable federal and state law and maintaining such registrations and
qualifications; expenses or preparing, setting in print, printing and
distributing prospectuses, proxy statements, reports, notices, stock
certificates and dividends to Fund shareholders; costs of stationery; costs of
stockholders' and other meetings of the Fund; compensation of officers and
directors who are not affiliated persons of Fund Adviser; fees and expenses of
independent auditors; traveling expenses of directors of the Fund, if any;
expenses for fidelity bonds and other insurance covering the Fund and its
officers and directors; costs of indemnification; and any extraordinary
expenses.
(c) The Administrator shall authorize and permit any of its directors,
officers and employees, who may be elected as directors or officers of the Fund,
to serve in the capacities in which they are elected, and shall bear their
salary or other compensation and expenses, if any.
5. No director, officer or employee of the Fund shall receive from the
Fund any salary or other compensation as such director, officer or employee
while he is at the same time a director, officer or employee of the
Administrator or any
6
affiliated company of the Administrator.
6. As compensation for the services performed and the facilities
furnished and expenses assumed by the Administrator, including the services of
any consultants or agents retained by the Administrator, the Fund shall pay the
Administrator, as promptly as possible after the last day of each month, a fee,
calculated daily, of 0.1% annually of the daily net assets of each Portfolio.
In the event that the Administrator's right to such fee from a
Portfolio commences on a date other than the first day of the month, the fee
from such Portfolio for such month shall be based on the average daily net
assets of that Portfolios in that period from the date of commencement to the
last day of the month. If this Agreement is terminated with respect to a
Portfolio as on any date not the last day of a month, the fee from such
Portfolio shall be paid as promptly as possible after such date of termination,
and shall be based on the average daily net assets of that Portfolio in that
period from the beginning of such month to such date of termination. The average
daily net assets of each Portfolio shall in all cases be computed as of such
time as may be determined by the Board of Directors of the Fund. The manner of
calculating each Portfolio's average daily net assets for the purpose of this
Agreement shall be determined by the Fund's Board of Directors and shall be
binding on the parties.
7
7. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with
performance of this Agreement, except a loss resulting from willful misfeasance,
bad faith, or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties hereunder.
8. Nothing in this Agreement shall limit or restrict the right of any
director, officer, or employee of the Administrator who may also be a director,
officer, or employee of the Fund, to engage in other business or to devote his
time and attention in part to the management or other aspects of any other
business, whether or a similar nature or a dissimilar nature, or limit or
restrict the right of the Administrator to engage in any other business or to
render services of any kind, including investment advisory and management
services, to any other corporation, firm, individual or association.
9. The Fund acknowledges that the Administrator may make payments from
the fees paid to it under this Agreement, from past profits or from any other
source available to it to other persons, including but not limited to Western
Asset Management Company and Xxxx Xxxxx Xxxx Xxxxxx, Incorporated, for
shareholder, administrative, advisory, recordkeeping and distribution services
provided by such persons in connection with the Fund's shares.
8
10. As used in this Agreement, the terms "assignment", "interested
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 by the Securities and Exchange Commission by any
rule, regulation or order.
11. This Agreement will become effective on the date first set forth
above, provided that it shall have been approved by the Fund's Board of
Directors and, unless sooner terminated as provided for herein, shall continue
in effect for two years from the date of its execution and for successive annual
periods, provided that its continuance is specifically approved annually by the
Fund's Board of Directors, including a majority of the directors of the Fund who
are not parties to this Agreement or "interested" persons as defined by the 1940
Act, of any such party ("Disinterested Directors") cast in person at a meeting
called for the purpose of voting on such Agreement.
This Agreement is terminable without penalty, by vote of the Fund's
Board of Directors, by vote of a majority (as defined in the 0000 Xxx) of the
outstanding voting securities of the Fund or by the Administrator, on not less
than 60 days' notice to the other party and may be terminated immediately upon
the mutual written consent of the Administrator and the Fund. This Agreement
will automatically and immediately terminate in the
9
event of its assignment.
12. No provision of this Agreement may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
13. If any provision of this Agreement shall 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 upon and shall
inure to the benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
[SEAL] WESTERN ASSET TRUST, INC.
Attest:
By: /s/ Xxxx X. Xxxxx By: /s/ W. Xxxxxx Xxxxxxxxxx
[SEAL] XXXX XXXXX FUND ADVISER, INC.
Attest:
By: /s/ Xxxxx X. Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx, III
10
