Exhibit 99.k.7
FINANCIAL ADMINISTRATION AGREEMENT
Agreement dated as of December __, 2003, among Western Asset/Claymore U.S.
Treasury Inflation Protected Securities Fund (the "Trust"), State Street Bank
and Trust Company (the "Financial Administrator"), a Massachusetts trust
company, and Xxxx Xxxxx Fund Adviser, Inc., a Maryland corporation (the
"Administrator") (the "Agreement").
WHEREAS, the Administrator has entered into an Administrative Services
Agreement, dated September 25, 2003, with the Trust concerning the provision of
administrative services for the Trust (the "Administrative Services Agreement");
WHEREAS, the Administrator desires to retain the Financial Administrator to
furnish certain administrative services with respect to the Trust, and the
Financial Administrator is willing to perform such services, on the terms and
conditions hereinafter set forth; and
WHEREAS, the Trust is registered as a diversified, closed-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and consents to the retention of the Financial Administrator by the
Administrator in accordance with the terms set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF FINANCIAL ADMINISTRATOR
The Administrator hereby appoints the Financial Administrator to act as
financial administrator with respect to the Trust for purposes of providing
certain administrative services for the period and on the terms set forth in
this Agreement. The Financial Administrator accepts such appointment and agrees
to render the services stated herein.
2. DELIVERY OF DOCUMENTS
The Administrator will promptly deliver to the Financial Administrator
copies of each of the following documents and all future amendments and
supplements, if any, to the extent such amendments and supplements relate to the
Trust's preferred shares:
a. The Trust's Agreement and Declaration of Trust (the "Declaration") and
Second Amended and Restated Bylaws (the "Bylaws");
b. The currently effective registration statement under the Securities
Act of 1933, as amended (the "1933 Act"), and the 1940 Act for the
Trust, the prospectus and statement of additional information relating
to the Trust and all amendments and supplements thereto as in effect
from time to time; and
c. Upon request, such other certificates, documents or opinions which the
Financial Administrator may, in its reasonable discretion, deem
necessary or appropriate in the proper performance of its duties.
3. REPRESENTATIONS AND WARRANTIES OF THE FINANCIAL ADMINISTRATOR
The Financial Administrator represents and warrants to the other parties
hereto that:
a. It is a Massachusetts trust company, duly organized and existing under
the laws of The Commonwealth of Massachusetts;
b. It has the corporate power and authority to carry on its business in
The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or
threatened which would materially impair the Financial Administrator's
ability to perform its duties and obligations under this Agreement;
and
e. Its entrance into this Agreement shall not cause a material breach of
or be in material conflict with any other agreement or obligation of
the Financial Administrator or any law or regulation applicable to it.
4. REPRESENTATIONS AND WARRANTIES OF THE ADMINISTRATOR AND THE TRUST
The Administrator represents and warrants to the other parties hereto that:
a. The Administrator is a Maryland corporation, duly organized and
existing under the laws of the State of Maryland;
b. It has the corporate power and authority under applicable laws and by
its charter and bylaws to enter into and perform this Agreement;
c. All requisite proceedings have been taken to authorize it to enter
into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or
threatened which would impair the Administrator's ability to perform
its duties and obligations under this Agreement; and
e. Its entrance into this Agreement will not cause a material breach or
be in material conflict with any other agreement or obligation of the
Administrator or any law or regulation applicable to it.
The Trust hereby represents and warrants to the other parties that:
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a. It is a business trust, duly organized, existing and in good standing
under the laws of The Commonwealth of Massachusetts;
b. It is an investment company registered under the 1940 Act;
c. A registration statement under the 1940 Act has been filed and will be
effective and remain effective during the term of this Agreement;
d. As of the close of business on the date of this Agreement, the Trust
is authorized to issue shares of beneficial interest;
e. It has the corporate power and authority under applicable laws and by
its charter and bylaws to enter into and perform its obligations
under this Agreement; and
f. All requisite proceedings have been taken to authorize it to enter
into and perform this Agreement;
5. FINANCIAL ADMINISTRATION SERVICES
The Financial Administrator shall provide the following services, in each
case, subject to the control, supervision and direction of the Administrator and
subject to any necessary review and comment by the Trust's auditors and legal
counsel and in accordance with procedures or policies that may be established
from time to time by and between the Administrator and the Financial
Administrator (the "Compliance Procedures"):
a. Complete monthly (and at such other times as is required by the
Bylaws) calculation of the preferred shares asset coverage test (the
"1940 Act Preferred Shares Asset Coverage Test") following the
Compliance Procedures;
b. Complete weekly (and at such other times as is required by the Bylaws)
calculation of the preferred shares basic maintenance amount test (the
"Preferred Shares Basic Maintenance Amount Test") following the
Compliance Procedures; and
c. In connection with its provision of the 1940 Act Preferred Shares
Asset Coverage Test and the Preferred Shares Basic Maintenance Amount
Test (collectively, the "Tests"), the Financial Administrator shall
(i) complete the
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Tests with data as of the last Friday of each calendar month (or, if
such day is not a business day (as such day is defined in the Bylaws),
the immediately preceding business day) and deliver such Tests to the
Administrator for delivery to the Trust's designated auction agent;
(ii) complete the Tests with data as of each quarterly valuation date
(as such date is defined in the Bylaws) and deliver such Tests to the
Administrator for delivery to each of Fitch Ratings, Ltd. ("Fitch")
and Xxxxx'x Investors Service, Inc. ("Moody's") on the third business
day after such date; and (iii) complete the Tests with data as of the
date of original issue of any preferred shares (as such date is
defined in the Bylaws) and deliver such Tests to the Administrator for
delivery to each of Fitch and Moody's on the first business day after
such date.
The Financial Administrator shall provide the office facilities and
personnel required by it to perform the services contemplated herein at no
additional cost to the Trust or the Administrator.
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Financial Administrator shall receive from the Administrator such
compensation for the Financial Administrator's services provided pursuant to
this Agreement as may be agreed to from time to time in a written fee schedule
approved by the parties and initially set forth in the Fee Schedule to this
Agreement. The fees are accrued daily and billed monthly and shall be due and
payable upon receipt of the invoice. Upon the termination of this Agreement
before the end of any month, the fee for the part of the month before such
termination shall be prorated according to the proportion which such part bears
to the full monthly period and shall be payable upon the date of termination of
this Agreement. In addition, the Administrator shall reimburse the Financial
Administrator for its reasonable out-of-pocket costs incurred in connection with
this Agreement.
The Administrator agrees promptly to reimburse the Financial Administrator
for any equipment or supplies specially ordered by or for the Administrator
through the Financial Administrator and for any other expenses not contemplated
by this Agreement that the Financial Administrator may incur at the
Administrator's request or with the Administrator's consent.
The Financial Administrator is authorized to and may employ or associate
with such person or persons as the Financial Administrator may deem desirable to
assist it in performing its duties under this Agreement; provided, however, that
the compensation of such person or persons shall be paid by the Financial
Administrator and that the Financial Administrator shall be as fully responsible
to the Administrator for the acts and omissions of any such person or persons as
it is for its own acts and omissions.
7. INSTRUCTIONS AND ADVICE
At any time, the Financial Administrator may apply to the Administrator for
instructions with respect to any matter arising in connection with the services
to be performed by the Financial Administrator under this Agreement. The
Financial Administrator shall not be liable, and shall be indemnified by the
Administrator, for any action taken or omitted by it in good faith without
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negligence in reliance upon any such instructions or advice or upon any paper or
document believed by it to be genuine and to have been signed by the
Administrator. The Financial Administrator shall not be held to have notice of
any change of authority of any officer or individual of the Administrator until
receipt of written notice thereof from the Administrator. Nothing in this
Section shall be construed as imposing upon the Financial Administrator any
obligation to seek such instructions.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Financial Administrator, in its capacity as such, shall be responsible
for the performance of only such duties as are set forth in this Agreement, and,
except as otherwise provided under Section 6, shall have no responsibility for
the actions or activities of any other party, including other service providers.
The Financial Administrator shall have no liability for any error of judgment or
mistake of law or for any loss or damage resulting from the performance or
nonperformance of its duties hereunder, to the extent caused by or resulting
from the negligence, reckless disregard, bad faith or willful misconduct of the
Financial Administrator, its officers or employees and those parties
contemplated under Section 6 of the Agreement. The Financial Administrator shall
not be liable for any special, indirect, incidental, or consequential damages of
any kind whatsoever (including, without limitation, attorneys' fees relating
thereto) under any provision of this Agreement or for any such damages
arising out of any act or failure to act hereunder. In any event, for any
liability or loss suffered by the Administrator, the Financial
Administrator's total cumulative liability under this Agreement shall be
limited to such amount as may be agreed upon from time to time by the
Administrator.
The Financial Administrator, and those parties contemplated under Section 6
of the Agreement, shall not be responsible or liable for any failure or delay in
performance of their obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond the reasonable control of the
Financial Administrator or its agents, including without limitation, work
stoppage, power or other mechanical failure, computer virus, natural disaster,
governmental action or communication disruption.
The Administrator shall indemnify and hold the Financial Administrator
harmless from all loss, cost, damage and expense, including reasonable fees and
expenses for counsel, incurred by the Financial Administrator resulting from any
claim, demand, action or suit in connection with the Financial Administrator's
acceptance of this Agreement, any action or omission by the Financial
Administrator in the performance of its duties hereunder, or as a result of the
Financial Administrator's acting upon any instructions reasonably believed by it
to have been duly authorized by the Administrator, provided that this
indemnification shall not apply to actions or omissions of the Financial
Administrator, its officers or employees or other agents in cases of its or
their own negligence, reckless disregard, willful misconduct, or bad faith.
The limitation of liability and indemnification contained herein shall
survive the termination of this Agreement.
9. CONFIDENTIALITY
The Financial Administrator agrees that, except as otherwise required by
law or in connection with any required disclosure to a banking or other
regulatory authority, it will keep
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confidential all records and information in its possession relating to the
Trust, the Administrator or the Trust's shareholders or shareholder accounts and
will not disclose the same to any person except at the written request or with
the written consent of the Trust or the Administrator.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
The Trust assumes full responsibility for complying with all securities,
tax, commodities and other laws, rules and regulations applicable to it.
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Financial Administrator agrees that all records which it maintains for the Trust
shall at all times remain the property of the Trust, shall be readily accessible
during normal business hours, and shall be promptly surrendered upon the
termination of the Agreement or otherwise on written request. The Financial
Administrator further agrees that all records which it maintains for the Trust
pursuant to Rule 31a-1 under the 1940 Act will be preserved for the periods
prescribed by Rule 31a-2 under the 1940 Act unless any such records are earlier
surrendered as provided above. Records shall be surrendered in usable
machine-readable form.
11. SERVICES NOT EXCLUSIVE
The services of the Financial Administrator to the Administrator on behalf
of the Trust are not to be deemed exclusive, and the Financial Administrator
shall be free to render similar services to others. The Financial Administrator
shall be deemed to be an independent contractor and, unless otherwise expressly
provided herein or authorized by the Administrator from time to time, shall have
no authority to act or represent the Trust or the Administrator in any way or
otherwise be deemed an agent of the Trust or the Administrator.
12. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective as of the date first above written.
The Agreement shall remain in effect unless terminated by any party on sixty
(60) days' prior written notice. This Agreement and any schedule hereto may be
modified or amended from time to time by mutual written agreement of the parties
hereto.
Upon termination of this Agreement, the Administrator shall pay to the
Financial Administrator such compensation and any reasonable and fully
documented and agreed upon out-of-pocket or other reimbursable expenses which
may become due or payable under the terms hereof as of the date of termination
or after the date that the provision of services ceases, whichever is later.
13. NOTICES
Any notice or other communication authorized or required by this Agreement
to be given to either party shall be in writing and deemed to have been given
when delivered in person or by confirmed facsimile, or posted by certified mail,
return receipt requested, to the following address (or such other address as a
party may specify by written notice to the other): if to the Administrator: 000
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attn: Funds Accounting; if to the
Trust: 000 Xxxx Xxxxxxxx
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Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, Attn: Xxxxxxx X. XxXxxx; and if to the
Financial Administrator: State Street Bank and Trust Company, Xxx Xxxxxxx
Xxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attn: Fund Administration
Department, Fax: 000-000-0000.
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by any party hereto without the prior
consent in writing of the other parties, except that the Administrator or
Financial Administrator may assign this Agreement to a successor of all or a
substantial portion of its business, or to a party controlling, controlled by or
under common control with the Administrator or Financial Administrator.
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of the
Trust, the Administrator and the Financial Administrator and their respective
successors and permitted assigns.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties hereto
with respect to the subject matter hereof and supersedes all previous
representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing; PROVIDED, however, that the
duties and responsibilities of the Administrator referred to herein shall be
deemed to be part of the administrative services to be provided by the
Administrator pursuant to Section 3 of the Administrative Services Agreement and
subject to any conditions and standards of care set forth in the Administrative
Services Agreement.
17. WAIVER
The failure of a party to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver nor shall it deprive
such party of the right thereafter to insist upon strict adherence to that term
or any term of this Agreement. Any waiver must be in writing signed by the
waiving party.
18. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the balance
of the Agreement shall remain in effect, and if any provision is inapplicable to
any person or circumstance it shall nevertheless remain applicable to all other
persons and circumstances.
19. GOVERNING LAW
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
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20. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
21. SPECIAL PROVISIONS APPLICABLE TO THE TRUST
Notwithstanding anything herein to the contrary, the parties hereto
understand and agree that the Trust is a party to this Agreement solely for the
purposes of Paragraphs 4 and 9 through 21 to the extent such provisions are
expressly applicable to the Trust. Without limiting the generality of the
foregoing, it is further understood and agreed that (i) the Administrator shall
remain liable to the Trust for the acts and omissions of the Financial
Administrator as if they were the Administrator's own acts and omissions
under the Administrative Services Agreement, and (ii) the Financial
Administrator shall look solely to the Administrator, and not to the Trust,
for satisfaction of any claims that the Financial Administrator may have
arising out of the performance of its duties under this Agreement.
A copy of the Trust's Declaration is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this Agreement is
executed on behalf of the Trust by an officer or Trustee of the Trust in his or
her capacity as an officer or Trustee of the Trust and not individually and that
the obligations of or arising out of this Agreement are not binding upon any of
the Trustees, officers or shareholders individually but are binding only upon
the assets and property of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
STATE STREET BANK AND TRUST COMPANY
By:
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Name: Xxxx X. Xxxxxx
Title: Senior Vice President
XXXX XXXXX FUND ADVISER, INC.
By:
-------------------------------------------
Name:
Title:
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WESTERN ASSET/CLAYMORE U.S. TREASURY
INFLATION PROTECTED SECURITIES FUND
By:
-------------------------------------------
Name:
Title:
0
XXXXX XXXXXX XXXX AND TRUST COMPANY
FINANCIAL ADMINISTRATION FEE SCHEDULE FOR
WESTERN ASSET/CLAYMORE U.S. TREASURY INFLATION
PROTECTED SECURITIES FUND
I. FINANCIAL ADMINISTRATION SERVICES
Services to be performed by State Street Bank and Trust Company ("State
Street") shall include the 1940 Act Preferred Shares Asset Coverage Test
and the Preferred Shares Basic Maintenance Amount Test, as those tests are
defined and more fully described in the Financial Administration Agreement
dated December __, 2003 (the "Financial Administration Agreement") among
State Street, Xxxx Xxxxx Fund Adviser, Inc. and Western Asset/Claymore U.S.
Treasury Inflation Protected Securities Fund (the "Trust").
ANNUAL FEE PER FUND
Financial Administration Service Fee $35,000
State Street has agreed to waive the annual fee for the Trust. Such waiver
shall remain in effect until this fee schedule is amended pursuant to the
terms of Section 12 of the
Financial Administration Agreement.
II. SPECIAL ARRANGEMENTS
Fees for activities of a non-recurring nature (such as reorganizations
and/or preparation of special reports) will be subject to negotiation.
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III. TERM OF THE CONTRACT
The parties agree that this fee schedule shall remain in effect until it is
revised as a result of an amendment pursuant to Section 12 of the
Financial
Administration Agreement.
XXXX XXXXX FUND ADVISER, INC. STATE STREET BANK AND TRUST COMPANY
By: By:
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Name: Name:
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Title: Title:
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