Exhibit (k)(3)
SERVICING AGREEMENT
Agreement made as of January 28, 2003, between F & C/ Claymore
Preferred Securities Income Fund Incorporated, a Maryland Corporation (the
"Fund") and Claymore Securities, Inc., a Kansas corporation ("Claymore").
WHEREAS, the Fund intends to operate as a closed-end management
investment company, and is so registered under the Investment Company act of
1940, as amended (the "1940 Act");
WHEREAS, the Fund has authorized the issuance of its common stock, par
value $.01 per share (the "Common Shares") and a class of preferred shares with
preference rights, the relative rights, terms and preferences of which are to be
determined in the future by the Board of Directors of the Fund (the "Preferred
Shares") (holders of the Common Shares and Preferred Shares are referred to
collectively herein as the "Shareholders");
WHEREAS, the Fund wishes to retain Claymore to provide certain
services to the Fund, under the terms and conditions stated below, and Claymore
is willing to provide such services for the compensation set forth below:
NOW, THEREFORE, In consideration of the premises and mutual covenants
contained herein, the parties agree as follows:
1. APPOINTMENT. The Fund hereby appoints Claymore as Servicing Agent
of the Fund, and Claymore accepts such appointment and agrees
that it will furnish the services set forth in paragraph 2 below.
2. SERVICES AND DUTIES OF CLAYMORE. Subject to the supervision of
the Fund's Board of Directors (the "Board"), Claymore will:
(a) Reply to requests for information concerning the Fund
from Shareholders or prospective shareholders, brokers
or the public;
(b) Aid in the secondary market support of the Fund through
regular written and oral communications with the Fund's
New York Stock Exchange specialist, the closed end fund
analyst community and various information providers
specializing in the dissemination of closed end fund
information;
(c) Assist in the preparation of reports to be sent to the
Fund Shareholders, and assist in the printing and
dissemination of such reports to Shareholders;
(d) Assist in the preparation of all reports required to be
filed with the Securities and Exchange Commission (the
"SEC") on Form N-SAR, or such other form as the SEC may
substitute for Form N-SAR, and file such completed form
with the SEC;
(e) Assist in the dissemination to Shareholders of the
Fund's proxy materials and assist in the filing of such
materials with the Fund's regulators, and oversee the
tabulation of proxies by the Fund's transfer agent;
(f) Assist in analyzing the amounts available for
distribution as dividends and distributions to be paid
by the Fund to its Shareholders and in the preparation
of materials relevant to the Fund's Dividend
Reinvestment Plan;
(l) Establish and maintain a dedicated toll-free number for
sales support and marketing requests on an ongoing
basis;
(m) Assist in the production of marketing and road-show
materials for the offerings of the Fund's Common Shares
and Preferred Shares;
(n) Develop and maintain a website for the Fund which will
provide quarterly updates and monthly distribution
notifications, as well as hyperlinks to the websites of
Claymore and Xxxxxxxx & Xxxxxxxx Incorporated (the
"Adviser") for added information;
(o) Make the Adviser aware of trading strategies that might
be used for the Fund and communicate to the investment
community any changes made to the Fund's trading
strategies;
(p) Assist in the provision of materials regarding the Fund
to the investment community and current and prospective
investors;
(q) Assist in the review of materials made available to
shareholders and prospective investors to assure
compliance with applicable laws, rules and regulations;
(r) Assist in the filing of advertisements and sales
materials, including information on the Fund's website,
as necessary, with the Securities and Exchange
Commission ("SEC"), the New York Stock Exchange, the
National Association of Securities Dealers and any
regulatory bodies having jurisdiction over the Fund and
its operations;
(s) Assist in the dissemination of the Fund's net asset
value, market price and discount;
(t) Host analyst meetings as appropriate;
(u) Provide persons to serve as officers and directors of
the Fund, as the Fund may request;
(v) Maintain ongoing contact with brokers in branch offices
whose clients hold Fund shares or whose clients may
have an interest in acquiring Fund shares, including
providing, among other things, progress reports on the
Fund, dividend announcements and performance updates;
(w) Assist in the drafting of press releases to the public;
(x) Make such reports and recommendations to the Board as
the Board reasonably requests or deems appropriate; and
(y) Provide such other services as the parties may mutually
agree from time to time.
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3. COMPLIANCE WITH THE FUND'S GOVERNING DOCUMENTS AND
APPLICABLE LAW. In all matters pertaining to the performance
of this Agreement, the Servicing Agent will act in
conformity with the Fund's Articles of Incorporation,
By-Laws and registration statements of the Fund and with the
directions of the Board and Fund executive officers and will
conform to and comply with the requirements of the 1940 Act
and the rules and regulations thereunder and all other
applicable federal or state laws and regulations.
4. SERVICE NOT EXCLUSIVE. The Servicing Agent's services
hereunder are not deemed to be exclusive, and the Servicing
Agent is free to render such services to other funds or
clients as long as the Servicing Agent's services under this
Agreement are not impaired thereby.
5. REPRESENTATIONS AND WARRANTIES OF CLAYMORE
(a) Claymore represents and warrants that it has obtained
all necessary registrations, licenses and approvals in
order to perform the services provided in this
Agreement. Claymore covenants to maintain all necessary
registrations, licenses and approvals in effect during
the term of this Agreement.
(b) Claymore represents that it has adopted a written Code
of Ethics in compliance with Rule 17j-1 under the 1940
Act and will provide the Fund with any amendments to
such Code and any certifications required by Rule
17j-1.
(c) Claymore agrees that it shall promptly notify the Fund
(i) in the event that the SEC or any other regulatory
authority has censured its activities, functions or
operations; suspended or revoked any registration,
license or approval; or has commenced proceedings or an
investigation that may result in any of these actions,
and (ii) in the event that there is a change in
Claymore, financial or otherwise, that adversely
affects its ability to perform services under this
Agreement.
(d) The Fund shall be given access to the records of
Claymore at reasonable times solely for the purpose of
monitoring compliance with the terms of this Agreement.
Claymore agrees to cooperate with the Fund and their
representatives in connection with any such monitoring
efforts.
6. COMPENSATION. As compensation for its services, the Fund
pays the Servicing Agent a fee computed and paid monthly at
the annual rate of 0.025% on the first $200 million of the
Fund's average weekly total managed assets, 0.10% on the
next $300 million of the Fund's average weekly total managed
assets and 0.15% on the Fund's average weekly total managed
assets above $500 million. Total managed assets means the
net asset value Of the outstanding Common Shares plus the
liquidation preferences of any outstanding Preferred Shares.
7. LIMITATION OF LIABILITY OF THE SERVICING AGENT. The
Servicing Agent will not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund or
its Shareholders in connection with the performance of its
duties under this Agreement, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless
disregard by it of its duties under this Agreement
("disabling conduct").
Claymore agrees to indemnify, defend and hold the Fund,
the Adviser, their several officers and directors, and any
person who controls the Fund or the Adviser within the
meaning of Section 15 of the Securities Act of 1933
(collectively, "Fund Indemnified Persons"), free and
harmless from and against any and all claims, demands,
liabilities and expenses (including the costs of
investigating or defending such claims,
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demands or liabilities and any reasonable counsel fees
incurred in connection therewith) which Fund Indemnified
Persons may incur, but only to the extent that such
liability or expense incurred by the Fund Indemnified
Persons or resulting from such claims or demands shall arise
out of or be based upon (a) any disabling conduct with
respect to the provision of services under this Agreement,
(b) any violation of law relating to the provision of
services under this Agreement or (c) the breach by Claymore
of this Agreement.
8. LIMITATION OF LIABILITY OF THE DIRECTORS AND SHAREHOLDERS OF
THE FUND. Pursuant to the provisions of the Fund's Articles
of Incorporation, this Agreement is entered into by the
Board not individually, but as Directors and the obligations
of the Fund hereunder is not binding upon any such Directors
or Shareholders of the Fund, but binds only the Fund itself.
9. DURATION AND TERMINATION. This Agreement shall continue for
an initial period of two years and thereafter shall continue
automatically for successive annual periods, provided such
continuance is specifically approved at least annually by
(a) a vote of a majority of the Fund's Board and (b) a vote
of a majority of the Fund's Board members who are not
interested persons (as defined in the 0000 Xxx) of any party
to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. This
Agreement is terminable (a) by the Fund, without penalty, on
thirty (30) days' written notice, by a vote of a majority of
the Fund's Board, or (b) on sixty (60) days' written notice
by Claymore. This Agreement shall automatically terminate in
the event of its assignment as the term is defined in the
1940 Act.
10. AMENDMENT OF THIS AGREEMENT. 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 or discharge or
termination is sought.
11. LICENSE.
Claymore hereby grants to the Fund the nonexclusive
right and license to use the xxxx "Claymore" (the "Licensed
Xxxx") in the Fund's name and in connection with the
formation, issuance, marketing, and/or promotion of, or
disclosure related to, the Fund. Claymore agrees that it
shall receive no compensation for any such use by the Fund.
Claymore hereby warrants and represents that it has filed
applications and/or owns rights in the Licensed Xxxx
sufficient to grant this license. No right, title or
interest in the Licensed Xxxx, except the right to use the
Licensed Xxxx as provided in this Agreement, is or will be
transferred to the Fund by this Agreement. Should this
Agreement be terminated, the Fund agrees that it will take
necessary steps to change its name to a name not including
the word "Claymore."
12. CONFIDENTIALITY.
Claymore agrees on behalf of itself and its employees
to treat confidentially and as proprietary information of
the Fund all records and other information relative to the
Fund, the Adviser and all prior, current or potential
shareholders of the Fund and not to use such records and
information for any purpose other than the performance of
its duties hereunder. Claymore also agrees that, without the
prior written consent of the Fund, it will not disclose
personal information of any Shareholders of the Fund
("Personal Shareholder Information"), including to its
affiliates, unless it is required by law to disclose the
information to the recipient of such information. Claymore
further agrees, represents and warrants that (a) only those
employees of Claymore who need to do so in carrying out
their job responsibilities may access Personal Shareholder
Information; (b) it maintains physical, electronic and
procedural safeguards that comply with federal
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standards to protect confidentiality; and (c) it may use
Personal Shareholder Information only for the purposes set
forth in this Agreement.
13. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Maryland and the
1940 Act, without giving effect to the principles of
conflicts of law thereof. To the extent that the applicable
laws of the State of Maryland conflict with the applicable
provisions of the 1940 Act, the latter shall control.
14. BOOKS AND RECORDS
(a) In compliance with the requirements of the 1940 Act,
Claymore hereby agrees that all records which it
maintains for the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any of
such records upon request. Claymore further agrees to
preserve for the periods prescribed under the 1940 Act
the records required to be maintained under the 0000
Xxx.
(b) Claymore hereby agrees to furnish to regulatory
authorities having the requisite authority any
information or reports in connection with services that
Claymore renders pursuant to this Agreement which may
be requested in order to ascertain whether the
operations of the Fund are being conducted in a manner
consistent with applicable laws and regulations.
15. MISCELLANEOUS. The captions of 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. 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.
16. NOTICES.
All notices required or permitted to be sent under this
Agreement shall be sent, if to the Fund, to:
F&C/Claymore Preferred Securities Income Fund Incorporated
c/o Flaherty & Xxxxxxxx Incorporated
000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx, Chief Executive Officer
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Or if to Claymore, to:
Claymore Securities, Inc.
000 X. Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxx, COO and General Counsel
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
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IN WITNESS WHEREOF, the parties hereto have caused the instrument to be
executed by their officers designated below as of the day and year
first above written.
Attest: F & C / Claymore Preferred Securities Income
Fund Incorporated
/s/ Xxxx X. Xxxxx /s/ Xxxxxx X. Xxxxxxxx
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Attest: Claymore Securities, Inc.
/s/ Xxxx X. Xxxxx /s/ Xxxxxxxx Xxxxxxx
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