Exhibit 99(h)(5)
ADDITIONAL COMPENSATION AGREEMENT
ADDITIONAL COMPENSATION AGREEMENT (the "Agreement"), dated as of ,
2003, between Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx") and Western Asset Management Company ("WAM").
WHEREAS, Western Asset/Claymore U.S. Treasury Inflation Protected
Securities Fund (including any successor by merger or otherwise, the "Fund") is
a newly organized, diversified, closed-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), and its common shares are registered under the Securities Act of 1933, as
amended; and
WHEREAS, WAM is the investment advisor of the Fund;
WHEREAS, Xxxxxxx Xxxxx is acting as lead underwriter in an offering of the
Fund's common shares;
WHEREAS, WAM desires to retain Xxxxxxx Xxxxx to provide after-market
support services designed to maintain the visibility of the Fund on an ongoing
basis, and Xxxxxxx Xxxxx is willing to render such services for the compensation
set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual terms and conditions set
forth below, the parties hereto agree as follows:
1. (a) WAM hereby employs Xxxxxxx Xxxxx, for the period and on the terms and
conditions set forth herein, to provide the following services at the
reasonable request of WAM:
(1) after-market support services designed to maintain the
visibility of the Fund on an ongoing basis;
(2) relevant information, studies or reports regarding general
trends in the closed-end investment company and asset management
industries, if reasonably obtainable, and consult with
representatives of WAM in connection therewith; and
(3) information to and consult with WAM with respect to applicable
strategies designed to address market value discounts, if any.
(b) At the request of WAM, Xxxxxxx Xxxxx shall limit or cease any action or
service provided hereunder to the extent and for the time period
requested by WAM; provided, however, that pending termination of this
Agreement as provided for in Section 5 hereof, any such limitation or
cessation shall not relieve WAM of its payment obligations pursuant to
Section 2 hereof.
(c) To the best of Xxxxxxx Xxxxx'x knowledge, the Information to be
furnished by Xxxxxxx Xxxxx when delivered, will be true and correct in
all material respects and will not contain any material misstatement of
fact or omit to state any material fact necessary to make the
statements contained therein not misleading. Xxxxxxx Xxxxx will
promptly notify WAM if it learns of any material inaccuracy or
misstatement in, or material omission from, any written information, as
of the date such information was published, provided by Xxxxxxx Xxxxx
to
WAM in connection with the performance of services by Xxxxxxx Xxxxx
under this Agreement.
2. WAM shall pay Xxxxxxx Xxxxx a fee computed weekly and payable quarterly in
arrears commencing , 2003 at an annualized rate of 0.15% of the Fund's
average weekly assets for a term as described in Section 5 hereof; provided
that the sum total amount of the fee hereunder, any compensation paid to
Claymore Securities, Inc. pursuant to the Underwriter Participation
Agreement among the Fund, WAM and Claymore Securities, Inc. dated as of
September [ ], 2003, plus the amount of the expense reimbursement of $0.005
per common share payable by the Fund to the underwriters pursuant to the
Purchase Agreement, dated , 2003, by and among the Fund, WAM and each
of the underwriters named therein (the "Purchase Agreement"), shall not
exceed 4.5% of the total price (including all Initial Securities and Option
Securities as such terms are described in the Purchase Agreement) to the
public of the Fund's common shares offered by the Prospectus. All quarterly
fees payable hereunder shall be paid to Xxxxxxx Xxxxx within 15 days
following the end of each calendar quarter.
3. WAM acknowledges that the services of Xxxxxxx Xxxxx provided for hereunder
do not include any advice as to the value of securities or regarding the
advisability of purchasing or selling any securities for the Fund's
portfolio. No provision of this Agreement shall be considered as creating,
nor shall any provision create, any obligation on the part of Xxxxxxx
Xxxxx, and Xxxxxxx Xxxxx is not hereby agreeing, to: (i) furnish any advice
or make any recommendations regarding the purchase or sale of portfolio
securities or (ii) render any opinions, valuations or recommendations of
any kind or to perform any such similar services in connection with
providing the services described in Section 1 hereof.
4. Nothing herein shall be construed as prohibiting Xxxxxxx Xxxxx or its
affiliates from providing similar or other services to any other clients
(including other registered investment companies or other investment
managers), so long as Xxxxxxx Xxxxx'x services to WAM are not impaired
thereby.
5. The term of this Agreement shall commence upon the date referred to above
and shall be in effect so long as WAM acts as the investment manager to the
Fund pursuant to the Investment Management Agreement (as such term is
defined in the Purchase Agreement) or other subsequent advisory agreement.
6. WAM will xxxxxxx Xxxxxxx Xxxxx with such information as Xxxxxxx Xxxxx
reasonably requests in connection with performing its services hereunder
(all such information so furnished being the "Information"). WAM recognizes
and confirms that Xxxxxxx Xxxxx (a) will use and rely primarily on the
Information and on information available from generally recognized public
sources in performing the services contemplated by this Agreement without
having independently verified the same and (b) does not assume
responsibility for the accuracy or completeness of the Information and such
other information. To the best of WAM's knowledge, the Information to be
furnished by WAM when delivered, will be true and correct in all material
respects and will not contain any material misstatement of fact or omit to
state any material fact necessary to make the statements contained therein
not misleading. WAM will promptly notify Xxxxxxx Xxxxx if it learns of any
material inaccuracy or misstatement in, or material omission from, any
Information delivered to Xxxxxxx Xxxxx pursuant to this Section 6.
7. It is understood that Xxxxxxx Xxxxx is being engaged hereunder solely to
provide the services described above to WAM and that Xxxxxxx Xxxxx is not
acting as an agent or fiduciary of, and shall have no duties or liability
to the current or future shareholders of the Fund or any other third
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party in connection with its engagement hereunder, all of which are hereby
expressly waived; provided, however, that this Agreement shall in no way
limit or modify the terms of, or the obligations of either party pursuant
to, the Purchase Agreement.
8. Each party hereto agrees that the other party hereto shall have no
liability to it for any act or omission to act by such party in the course
of its performance under this Agreement, in the absence of bad faith, gross
negligence or willful misconduct on the part of such party. Each party
agrees to the indemnification set forth in the Indemnification Agreement
attached hereto, the provisions of which are incorporated herein by
reference and shall survive the termination, expiration or supersession of
this Agreement.
9. This Agreement and any claim, counterclaim or dispute of any kind or nature
whatsoever arising out of or in any way relating to this Agreement
("Claim") shall be governed by and construed in accordance with the laws of
the State of New York.
10. No Claim may be commenced, prosecuted or continued in any court other than
the courts of the State of New York located in the City and County of
New York or in the United States District Court for the Southern District
of New York, which courts shall have exclusive jurisdiction over the
adjudication of such matters, and WAM and Xxxxxxx Xxxxx consent to the
jurisdiction of such courts and personal service with respect thereto. Each
party waives all right to trial by jury in any proceeding (whether based
upon contract, tort or otherwise) in any way arising out of or relating to
this Agreement. Each party agrees that a final judgment in any proceeding
or counterclaim brought in any such court shall be conclusive and binding
upon such party and may be enforced in any other courts to the jurisdiction
of which such party is or may be subject, by suit upon such judgment.
11. This Agreement may not be assigned by either party without the prior
written consent of the other party.
12. This Agreement (including the attached Indemnification Agreement) embodies
the entire agreement and understanding between the parties hereto with
respect to the matters contemplated hereby and supersedes all prior
agreements and understandings relating to the subject matter hereof;
provided, however, that the Agreement shall in no way limit or modify the
terms of, or the obligations of either party pursuant to, the Purchase
Agreement. If any provision of this Agreement is determined to be invalid
or unenforceable in any respect, such determination will not affect such
provision in any other respect or any other provision of this Agreement,
which will remain in full force and effect. This Agreement may not be
amended or otherwise modified or waived except by an instrument in writing
signed by both Xxxxxxx Xxxxx and WAM.
13. All notices required or permitted to be sent under this Agreement shall be
sent, if to WAM:
Western Asset Management Company
000 Xxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. XxXxxx
or if to Xxxxxxx Xxxxx:
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
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Debt and Equity New Issues
4 World Financial Center
New York, New York 10080
Attention: Xxxx Xxxx
or such other name or address as may be given in writing to the other
parties. Any notice shall be deemed to be given or received on the third
day after deposit in the US mail with certified postage prepaid or when
actually received, whether by hand, express delivery service or facsimile
transmission, whichever is earlier.
14. This Agreement may be executed in separate counterparts, each of which is
deemed to be an original and all of which taken together constitute one and
the same agreement.
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IN WITHESS WHEREOF, the parties hereto have duly executed this Additional
Compensation Agreement as of the date first above written.
WESTERN ASSET MANAGEMENT COMPANY XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
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XXXXXXX XXXXX & CO. INDEMNIFICATION AGREEMENT
, 2003
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In connection with the engagement of Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") to advise and assist the
undersigned (together with its subsidiaries, referred to as the "Company") with
the matters set forth in the Additional Compensation Agreement dated ,
2003 between the Company and Xxxxxxx Xxxxx (the "Agreement"), in the event that
Xxxxxxx Xxxxx becomes involved in any capacity in any claim, suit, action,
proceeding, investigation or inquiry (including, without limitation, any
shareholder or derivative action or arbitration proceeding) (collectively, a
"Proceeding") in connection with any matter in any way relating to or referred
to in the Agreement or arising out of the matters contemplated by the Agreement,
including, without limitation, related services and activities prior to the date
of the Agreement, the Company agrees to indemnify, defend and hold Xxxxxxx Xxxxx
harmless to the fullest extent permitted by law, from and against any losses,
claims, damages, liabilities and expenses in connection with any matter in any
way relating to or referred to in the Agreement or arising out of the matters
contemplated by the Agreement, including, without limitation, related services
and activities prior to the date of the Agreement, except to the extent that it
shall be determined by a court of competent jurisdiction that such losses,
claims, damages, liabilities and expenses resulted solely from the bad faith,
gross negligence or willful misconduct of Xxxxxxx Xxxxx. In addition, in the
event that Xxxxxxx Xxxxx becomes involved in any capacity in any Proceeding in
connection with any matter in any way relating to or referred to in the
Agreement or arising out of the matters contemplated by the Agreement,
including, without limitation, related services and activities prior to the date
of the Agreement, the Company will reimburse Xxxxxxx Xxxxx for its reasonable
legal and other expenses reasonably incurred in connection therewith. If such
indemnification were not to be available for any reason, the Company agrees to
contribute to the losses, claims, damages, liabilities and expenses involved (i)
in the proportion appropriate to reflect the relative benefits received or
sought to be received by the Company and its stockholders and affiliates and
other constituencies, on the one hand, and Xxxxxxx Xxxxx, on the other hand, in
the matters contemplated by the Agreement or (ii) if (but only if and to the
extent) the allocation provided for in clause (i) is for any reason held
unenforceable, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) but also the relative fault of the
Company and its stockholders and affiliates and other constituencies, on the one
hand, and the party entitled to contribution, on the other hand, as well as any
other relevant equitable considerations. The Company agrees that for the
purposes of this paragraph the relative benefits received, or sought to be
received, by the Company and its stockholders and affiliates, on the one hand,
and the party entitled to contribution, on the other hand, of a transaction as
contemplated shall be deemed to be in the same proportion that the total value
received or paid or contemplated to be received or paid by the Company or its
stockholders or affiliates and other constituencies, as the case may be, as a
result of or in connection with the Agreement bears to the fees paid to Xxxxxxx
Xxxxx under the Agreement; provided, that in no event shall the Company
contribute less than the amount necessary to assure that Xxxxxxx Xxxxx is not
liable for losses, claims, damages, liabilities and expenses in excess of the
amount of fees actually received by Xxxxxxx Xxxxx pursuant to the Agreement.
Relative fault shall be determined by reference to,
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among other things, whether any alleged untrue statement or omission or any
other alleged conduct relates to Information (as defined in the Agreement)
provided by the Company or other conduct by the Company (or its employees or
other agents), on the one hand, or by Xxxxxxx Xxxxx, on the other hand. The
Company will not settle any Proceeding in respect of which indemnity may be
sought hereunder, whether or not Xxxxxxx Xxxxx is an actual or potential party
to such Proceeding, without Xxxxxxx Xxxxx'x prior written consent. For purposes
of this Indemnification Agreement, Xxxxxxx Xxxxx shall include Xxxxxxx Xxxxx &
Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, any of its affiliates,
each other person, if any, controlling Xxxxxxx Xxxxx or any of its affiliates,
their respective officers, current and former directors, employees and agents,
and the successors and assigns of all of the foregoing persons. The foregoing
indemnity and contribution agreement shall be in addition to any rights that any
indemnified party may have at common law or otherwise.
The Company agrees that neither Xxxxxxx Xxxxx nor any of its affiliates,
directors, agents, employees or controlling persons shall have any liability to
the Company or any person asserting claims on behalf of or in right of the
Company in connection with or as a result of either Xxxxxxx Xxxxx'x engagement
under the Agreement or any matter referred to in the Agreement, including,
without limitation, related services and activities prior to the date of the
Agreement, except to the extent that it shall be determined by a court of
competent jurisdiction that any losses, claims, damages, liabilities or expenses
incurred by the Company resulted solely from the bad faith, gross negligence or
willful misconduct of Xxxxxxx Xxxxx in performing the services that are the
subject of the Agreement.
This Indemnification Agreement shall in no way limit or modify the terms
of, or the obligations of either party pursuant to, the Purchase Agreement.
Notwithstanding any provision contained herein, in no event shall Xxxxxxx Xxxxx
be entitled to indemnification from the Company hereunder from and against any
liens, claims, damages, liabilities or expenses in respect of which indemnify
may be sought under the Purchase Agreement.
Notwithstanding the foregoing or anything to the contrary herein, the
Company's indemnification obligations shall not apply to any losses, claims,
damages, liabilities or expenses (including legal expenses) arising out of or
relating to limitations on or the reasonableness or characterization of the
compensation payable by the Company under the Agreement, including as a result
of any violation of applicable rules of the National Association of Securities
Dealers, Inc. or other applicable law.
THIS INDEMNIFICATION AGREEMENT AND ANY CLAIM, COUNTERCLAIM OR DISPUTE OF
ANY KIND OR NATURE WHATSOEVER ARISING OUT OF OR IN ANY WAY RELATING TO THIS
AGREEMENT ("CLAIM"), DIRECTLY OR INDIRECTLY, SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS SET FORTH BELOW,
NO CLAIM MAY BE COMMENCED, PROSECUTED OR CONTINUED IN ANY COURT OTHER THAN THE
COURTS OF THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WHICH
COURTS SHALL HAVE EXCLUSIVE JURISDICTION OVER THE ADJUDICATION OF SUCH MATTERS,
AND THE COMPANY AND XXXXXXX XXXXX CONSENT TO THE JURISDICTION OF SUCH COURTS AND
PERSONAL SERVICE WITH RESPECT THERETO. THE COMPANY HEREBY CONSENTS TO PERSONAL
JURISDICTION, SERVICE AND VENUE IN ANY COURT IN WHICH ANY CLAIM ARISING OUT OF
OR IN ANY WAY RELATING TO THIS AGREEMENT IS BROUGHT BY ANY THIRD PARTY AGAINST
XXXXXXX XXXXX OR ANY INDEMNIFIED PARTY. EACH OF XXXXXXX XXXXX AND THE COMPANY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING OR CLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR IN ANY WAY RELATING TO THIS
AGREEMENT. EACH PARTY AGREES THAT A FINAL JUDGMENT IN ANY PROCEEDING OR CLAIM
ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT BROUGHT IN ANY SUCH
COURT
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SHALL BE CONCLUSIVE AND BINDING UPON SUCH PARTY AND MAY BE ENFORCED IN ANY OTHER
COURTS TO THE JURISDICTION OF WHICH SUCH PARTY IS OR MAY BE SUBJECT, BY SUIT
UPON SUCH JUDGMENT.
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The foregoing Indemnification Agreement shall remain in full force and
effect notwithstanding any termination of the Agreement. This Indemnification
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
agreement.
Very truly yours,
WESTERN ASSET MANAGEMENT COMPANY
By:
-----------------------
Name:
Title:
Accepted and agreed to as of
the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By
----------------------
Name:
Title:
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