UNDERWRITER PARTICIPATION AGREEMENT
This Agreement, dated as of August [ ], 2003, is entered into among
MBIA Capital Management Corp. (the "Investment Adviser"), MBIA Capital/Claymore
Managed Duration Investment Grade Municipal Fund (the "Fund") and Claymore
Securities, Inc. ("Claymore") with respect to certain distribution assistance to
be provided by Claymore to the Fund, limited exclusively to providing offering
and marketing materials and additional information to registered broker-dealers
who are part of the underwriting syndicate publicly offering common (the "Common
Shares") and at a later date preferred shares of the Fund (collectively, the
"Shares"). In consideration of their mutual promises and in consideration of the
parties entering into a certain servicing agreement, dated as of August __,
2003, between the Fund and Claymore (the "Servicing Agreement"), the parties
agree as follows:
1. STATUS OF CLAYMORE
(a) Claymore represents and warrants to the Investment Adviser and the
Fund that:
(i) It is a broker-dealer registered as such with the Securities and
Exchange Commission (the "SEC") and is registered or qualified
in all capacities and jurisdictions required by reason of any
participation in the distribution of Shares by it while
providing the services described above and each employee or
agent of Claymore who participates in the distribution of Shares
has all necessary licenses and qualifications in all capacities
and jurisdictions required by reason of any participation in a
distribution of Shares pursuant to this Agreement.
Claymore is a registered broker-dealer and is a member of the
National Association of Securities Dealers, Inc. (the "NASD")
and it agrees to abide by all of the rules and regulations of
the NASD in connection with the participation in the
distribution of Shares including, without limitation, the NASD
Conduct Rules. Claymore agrees to notify the Investment Adviser
and the Fund in writing immediately in the event of (1) its
expulsion or suspension from the NASD, or (2) its being found to
have violated any applicable federal or state law, rule or
regulation arising out of its activities as a broker-dealer or
in connection with this Agreement, or which may otherwise affect
in any material way its ability to act in accordance with the
terms of this Agreement. Claymore's expulsion from the NASD will
automatically terminate this Agreement immediately without
notice. Suspension of Claymore from the NASD for violation of
any applicable federal or state law, rule or regulation will
terminate this Agreement effective immediately upon the Fund's
or the Investment Adviser's written notice of termination to
Claymore.
(ii) Claymore is familiar with and understands the requirements of
the Securities Act of 1933, as amended (the "1933 Act"), and has
substantial experience with offers and sales of securities by
issuers involving a public offering under the 1933 Act.
Claymore also represents and warrants to the Fund that it is a
corporation duly organized and validly existing in good standing
under the laws of the jurisdiction in which it is organized.
(b) The Fund assumes no obligation or responsibility as to Claymore's
right to participate in the distribution of the Fund's Shares in any
jurisdiction. If Claymore, while performing the services it provides the Fund
hereunder, becomes subject to the laws of any non-U.S. jurisdiction, Claymore
will take, at its own expense, such action, if any, as may be necessary to
comply with the laws of such non-U.S. jurisdictions.
(c) Claymore agrees that it will maintain the registrations,
qualifications, exemptions and memberships referred to in paragraphs (a) and (b)
in good standing and in full force and effect throughout the term of this
Agreement.
2. CLAYMORE'S COVENANTS.
(a) Claymore covenants and agrees that, in connection with providing the
services as described above, Claymore will engage in the permitted activities
solely with registered broker-dealers, and will not participate in any
distribution of Shares to any person that is not a registered broker-dealer, and
will not offer Shares, or solicit offers for Shares, of the Fund.
(b) Claymore covenants and agrees that it will not make any
representations or provide any information to any person concerning the Fund
other than those contained in the Fund's registration statement on Form N-2 (the
"Registration Statement") or any marketing materials approved by the Fund and
the Investment Adviser,
(c) Claymore covenants and agrees to use information provided by the Fund
or the Investment Adviser only in the manner intended (e.g., documents marked
"internal use only" will not be disseminated to any person other than a
registered broker-dealer).
(d) Claymore covenants that the execution and delivery of this Agreement
and the performance of its services contemplated hereby (i) have been duly
authorized by all necessary action and all other authorizations and approvals
(if any) required for its lawful execution and delivery of this Agreement and
its performance hereunder have been obtained and (ii) does not and will not
violate any federal or state laws, rules or regulations.
3. INDEPENDENT CONTRACTOR.
Neither the Investment Adviser nor the Fund shall be liable for any
acts of Claymore or any employee or agent of Claymore, and nothing contained
herein shall be construed as creating, or be deemed to create, the relationship
of employer and employee between the parties, nor any agency, joint venture, or
partnership. Claymore shall at all times be and be deemed to be an independent
contractor. Claymore, its employees and agents shall, under no circumstances,
have any authority to act for or to bind the Investment Adviser or the Fund in
2
any way or to sign the name of the Investment Adviser or the Fund or to
represent that the Investment Adviser or the Fund is in any way responsible for
the acts or omissions of Claymore. Claymore shall not be required to devote any
minimum amount of time to performing its obligations under this Agreement,
4. REPRESENTATIONS AND WARRANTIES BY THE FUND. The Fund represents and
warrants to Claymore as of the date hereof as follows:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the Registration
Statement and any Rule 462(b) Registration Statement has become effective under
the 1933 Act and no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued under the
1933 Act, or order of suspension or revocation of registration of the Fund
pursuant to Section 8(e) has been issued under the Investment Company Act of
1940, as amended (the "1940 Act"), and no proceedings for any such purpose have
been instituted or are pending or, to the knowledge of the Fund, are
contemplated by the SEC, and any request on the part of the SEC for additional
information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective, the Registration Statement, the Rule 462(b) Registration Statement,
the Fund's notification of Form N-8A and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of the
1933 Act and the 1940 Act and did not and will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. Neither the
final prospectus (including the statement of additional information) with
respect to the Shares filed pursuant to Rule 497(h) under the 1933 Act (the
"Prospectus") nor any amendments or supplements thereto, as of their respective
dates, included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, PROVIDED, that the representations and warranties in this
paragraph do not apply to statements in or omissions made in reliance upon and
in conformity with information relating to the Underwriters or Claymore
furnished to the Fund in writing by or on behalf of the Underwriters or
Claymore, respectively, expressly for use therein..
The Prospectus filed pursuant to Rule 497 under the 1933 Act, complied
when so filed in all material respects with the 1933 Act and each preliminary
prospectus and the Prospectus delivered to Claymore for use in connection with
the offering of the Shares was identical to the electronically transmitted
copies thereof filed with the SEC via XXXXX, except to the extent permitted by
Regulation S-T. If a Rule 462(b) Registration Statement is required in
connection with the offering and sale of the Common Shares, the Fund has
complied or will comply with the requirements of Rule 111 under the 1933 Act
relating to the payment of filing fees thereof.
(b) INDEPENDENT ACCOUNTANTS. The accountants who certified the statement
of assets and liabilities included in the Registration Statement have
represented to the Fund that they are independent public accountants as required
by the 1933 Act.
3
(c) FINANCIAL STATEMENTS. The statement of assets and liabilities included
in the Registration Statement and the Prospectus, together with the related
notes, presents fairly in all material respects the financial position of the
Fund at the date indicated; and said statement has been prepared in conformity
with U.S. generally accepted accounting principles ("GAAP").
(d) NO MATERIAL ADVERSE CHANGE. Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (i) there has been no material adverse change in the
condition, financial or otherwise, or assets of the Fund, whether or not arising
in the ordinary course of business (a "Material Adverse Effect"), (ii) except as
disclosed in the Registration Statement, there have been no transactions entered
into by the Fund, other than those in the ordinary course of business, which are
material with respect to the Fund, and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Fund on any class of its
capital stock.
(e) GOOD STANDING OF THE FUND. The Fund has been duly formed and is
validly existing as a statutory trust in good standing under the laws of the
State of Delaware and has statutory trust power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement;
and the Fund is duly qualified as a foreign corporation to transact business and
is in good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(f) NO SUBSIDIARIES. The Fund has no subsidiaries.
(g) INVESTMENT COMPANY STATUS. The Fund is duly registered with the SEC
under the 1940 Act as a closed-end, diversified management investment company,
and no order of suspension or revocation of such registration has been issued or
proceedings therefor initiated or, to the Fund's knowledge, threatened by the
Commission.
(h) CAPITALIZATION. The authorized, issued and outstanding shares of
beneficial interest of the Fund are as set forth in the Prospectus as of the
date thereof in the Statement of Assets and Liabilities as of August __, 2003.
All issued and outstanding shares of beneficial interest of the Fund have been
duly authorized and validly issued and are fully paid and non-assessable, and
have been offered and sold or exchanged by the Fund in compliance with all
applicable laws (including, without limitation, federal and state securities
laws); none of the outstanding shares of beneficial interest of the Fund were
issued in violation of the preemptive or other similar rights of any
securityholder of the Fund.
(i) DESCRIPTION OF COMMON SHARES. The Common Shares conform in all
material respects to all statements relating thereto contained in the Prospectus
and such description conforms in all material respects to the rights set forth
in the instruments defining the same; no holder of the Common Shares will be
subject to personal liability by reason of being such a holder; and the issuance
of the Common Shares is not subject to the preemptive or other similar rights of
any securityholder of the Fund.
(j) ABSENCE OF DEFAULTS AND CONFLICTS. The Fund is not in violation of its
Amended
4
and Restated Agreement and Declaration of Trust (the "Declaration") or by-laws,
or in default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or instrument to
which it is a party or by which it may be bound, or to which any of the property
or assets of the Fund is subject (collectively, "Agreements and Instruments")
except for such violations or defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein and in the
Registration Statement and compliance by the Fund with its obligations hereunder
have been duly authorized by all necessary action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Fund (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the Declaration or
by-laws of the Fund or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Fund or any of its assets,
properties or operations (except for such violations that would not result in a
Material Adverse Effect).
(k) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding, inquiry
or investigation before or brought by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Fund, threatened,
against or affecting the Fund, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect performance by the
Fund of its obligations hereunder. The aggregate of all pending legal or
governmental proceedings to which the Fund is a party or of which any of its
property or assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the business,
could not reasonably be expected to result in a Material Adverse Effect.
(l) ACCURACY OF EXHIBITS. There are no contracts or documents which are
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits thereto by the 1933 Act or the 1940 Act which have not been
so described and filed as required.
(m) POSSESSION OF INTELLECTUAL PROPERTY. The Fund owns or possesses, or
can acquire on reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business of the Fund as described in the Registration Statement, and the Fund
has not received any notice or is not otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Fund therein, and
which infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the aggregate,
would result in a Material Adverse Effect.
5
(n) ABSENCE OF FURTHER REQUIREMENTS. Except as disclosed in the
Registration Statement, no filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the consummation
of the transactions contemplated by this Agreement, except such as have been
already obtained or as may be required under the 1933 Act, the 1940 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or under the rules
of the NASD.
(o) POSSESSION OF LICENSES AND PERMITS. The Fund possesses such permits,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary to operate its properties and to
conduct the business as contemplated in the Prospectus except where the failure
to so possess would not, singly or in the aggregate, have a Material Adverse
Effect; the Fund is in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not, singly
or in the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have a Material Adverse Effect; and the Fund has
not received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect.
(p) SUBCHAPTER M. The Fund intends to direct the investment of the
proceeds of the offering described in the Registration Statement in such a
manner as to comply with the requirements of Subchapter M of the Internal
Revenue Code of 1986, as amended ("Subchapter M of the Code" and the "Code,"
respectively), and intends to qualify as a regulated investment company under
Subchapter M of the Code.
(q) ACCOUNTING CONTROLS. The Fund maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization and with the applicable requirements of the 1940 Act and the Code;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets and to maintain compliance with the books and
records requirements under the 1940 Act; (iii) access to assets is permitted
only in accordance with the management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(r) ABSENCE OF UNDISCLOSED PAYMENTS. To the Fund's knowledge, neither the
Fund nor any employee or agent of the Fund has made any payment of funds of the
Fund or received or retained any funds, which payment, receipt or retention of
funds is of a character required to be disclosed in the Prospectus and is not
disclosed therein.
(s) REGISTRATION RIGHTS. There are no persons with registration rights or
other similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Fund under the 1933 Act.
6
(t) NYSE LISTING. The Common Shares have been duly authorized for listing,
upon notice of issuance, on the New York Stock Exchange ("NYSE') and the Fund's
registration statement on Form 8-A under the 1934 Act has become effective.
5. REPRESENTATIONS AND WARRANTIES BY THE INVESTMENT ADVISER. The Investment
Adviser represents and warrants to Claymore as of the date hereof as
follows:
(a) GOOD STANDING OF THE INVESTMENT ADVISER. The Investment Adviser has
been duly incorporated and is validly existing and in good standing as a
corporation under the laws of the State of Delaware with full corporation power
and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, except where such failure
of being to be duly organized, qualified or in good standing should not be
expected to have a material adverse effect on the ability of the Investment
Adviser to perform its obligations under this Agreement and the investment
advisory agreement to which it is a party with the Fund (an "Adviser Material
Adverse Effect").
(b) INVESTMENT ADVISOR STATUS. The Investment Adviser is duly registered
with the SEC as an investment advisor under the Investment Advisors Act of 1940
(the "Advisers Act"), and is not prohibited by the Advisers Act or the 1940 Act,
or the rules and regulations under such Acts, from acting under the investment
advisory agreement for the Fund as contemplated by the Prospectus.
(c) DESCRIPTION OF INVESTMENT ADVISER. The description of the Investment
Adviser in the Registration Statement and the Prospectus (and any amendment or
supplement to either of them) complied and complies in all material respects
with the provisions of the 1933 Act, the 1940 Act, the Advisers Act and the
Advisers Act rules and regulations and does not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) CAPITALIZATION. The Investment Adviser has the financial resources
available to it necessary for the performance of its services and obligations as
contemplated in the Prospectus, this Agreement and under the investment advisory
agreement to which it is a party with the Fund.
(e) AUTHORIZATION OF AGREEMENTS, ABSENCE OF DEFAULTS AND CONFLICTS. This
Agreement and the investment advisory agreement to which it is a party with the
Fund have each been duly authorized, executed and delivered by the Investment
Adviser, and the investment advisory agreement to which it is a party with the
Fund constitutes a valid and binding obligation of the Investment Adviser,
enforceable in accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law); and neither
the execution and delivery of this Agreement or the investment advisory
agreement to which it is a party with the Fund nor the performance by the
Investment Adviser of its obligations hereunder or thereunder will conflict
with, or result in a
7
breach of any of the terms and provisions of, or constitute, with or without the
giving of notice or lapse of time or both, a default under, any agreement or
instrument to which the Investment Adviser is a party or by which it is bound,
the organizational documents of the Investment Adviser, or to the Investment
Adviser's knowledge, any law, order, decree, rule or regulation applicable to it
of any jurisdiction, court, federal or state regulatory body, administrative
agency or other governmental body, stock exchange or securities association
having jurisdiction over the Investment Adviser or its properties or operations,
except where such conflict, breach or default should not be reasonably expected
to have an Adviser Material Adverse Effect; and no consent, approval,
authorization or order of any court or governmental authority or agency is
required for the consummation by the Investment Adviser of the transactions
contemplated by this Agreement or the investment advisory agreement to which it
is a party with the Fund, except as have been obtained or may be required under
the 1933 Act, the 1940 Act, the 1934 Act or state securities laws.
(f) NO MATERIAL ADVERSE CHANGE. Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
otherwise stated therein, there has not occurred any event which should
reasonably be expected to have an Adviser Material Adverse Effect.
(g) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding, inquiry
or investigation before or brought by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Investment
Adviser, threatened against or affecting the Investment Adviser or any
"affiliated person" of the Investment Adviser (as such term is defined in the
0000 Xxx) or any partners, directors, officers or employees of the foregoing,
whether or not arising in the ordinary course of business, which should
reasonably be expected to have an Adviser Material Adverse Effect, or which is
required to be disclosed in the Registration Statement and the Prospectus and is
not so disclosed.
(h) ABSENCE OF VIOLATION OR DEFAULT. The Investment Adviser is not in
violation of its articles of incorporation or by-laws or in default under any
material agreement, indenture or instrument except for such defaults that would
not result in an Adviser Material Adverse Effect.
6. COVENANTS OF THE FUND.
(a) The Fund covenants with Claymore as follows:
(i) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Fund, subject to Section 6(a)(ii), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will
notify Claymore immediately, and confirm the notice in writing,
(A) when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the
Prospectus or any amended prospectus shall have been filed, (B)
of the receipt of any comments from the SEC, (C) of any request
by the SEC for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus and (D) of the
issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or of any
8
order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the
Common Shares for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of
such purposes. The Fund will effect the filings necessary
pursuant to Rule 497 within the time periods contained therein
and will take such steps as it deems necessary to ascertain
promptly whether the form of Prospectus transmitted for filing
under Rule 497 was received for filing by the SEC and, in the
event that it was not, it will promptly file such Prospectus.
(ii) FILING OF AMENDMENTS. The Fund will give Claymore notice of its
intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any term
sheet or any amendment, supplement or revision to the
Prospectus included in the Registration Statement at the time
it became effective, and will furnish Claymore with copies of
any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be.
(iii) DELIVERY OF REGISTRATION STATEMENTS. The Fund has furnished or
will deliver to Claymore, without charge, signed copies of the
Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to
Claymore, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto
(without exhibits). The copies of the Registration Statement
and each amendment thereto furnished to Claymore will be
identical to the electronically transmitted copies thereof
filed with the SEC via XXXXX, except to the extent permitted by
Regulation S-T.
(iv) DELIVERY OF PROSPECTUSES. The Fund has delivered to Claymore,
without charge, as many copies of each preliminary prospectus
as Claymore reasonably requested, and the Fund hereby consents
to the use of such copies for purposes permitted by the 1933
Act, except as provided in Section 2(a) of this Agreement. The
Fund will furnish to Claymore, without charge, during the
period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as Claymore may
reasonably request. The Prospectus and any amendments or
supplements thereto furnished to Claymore will be identical to
the electronically transmitted copies thereof filed with the
SEC via XXXXX, except to the extent permitted by Regulation
S-T.
(v) CONTINUED COMPLIANCE WITH SECURITIES LAWS. If at any time it
shall be necessary, in the opinion of the Fund's counsel, to
amend the
9
Registration Statement or amend or supplement the Prospectus in
order to comply with the requirements of the 1933 Act, the Fund
will promptly prepare and file with the SEC, such amendment or
supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Fund will
furnish to Claymore such number of copies of such amendment or
supplement as Claymore may reasonably request.
(vi) BLUE SKY QUALIFICATIONS. The Fund will use its best efforts, in
cooperation with Claymore and the Fund's underwriters, to
qualify the Common Shares for offering and sale under the
applicable securities laws of such states and other
jurisdictions of the United States as Claymore may designate
and to maintain such qualifications in effect for a period of
not less than one year from the later of the effective date of
the Registration Statement and any Rule 462(b) Registration
Statement; provided, however, that the Fund shall not be
obligated to file any general consent to service of process or
to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business
in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Common Shares have been so
qualified, the Fund will file such statements and reports as
may be required by the laws of such jurisdiction to continue
such qualification in effect for a period of not less than one
year from the effective date of the Registration Statement and
any Rule 462(b) Registration Statement.
(vii) RULE 158. As soon as practicable, the Fund will make generally
available to its security holders an earnings statement, which
need not be audited, which earnings statement shall satisfy the
provisions of Section 11(a) of the 1933 Act and Rule 158 of the
1933 Act Rules and Regulations.
(viii) USE OF PROCEEDS. The Fund will use the net proceeds received by
it from the sale of the Common Shares in the manner specified
in the Prospectus under "Use of Proceeds."
(ix) LISTING. The Fund will use its reasonable best efforts to
effect the listing of the Common Shares on the NYSE, subject to
notice of issuance, concurrently with the effectiveness of the
Registration Statement.
(x) REPORTING REQUIREMENTS. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, will file all documents required to be filed with
the SEC pursuant to the 1940 Act and the 1934 Act within the
time periods required by
10
the 1940 Act and the 1934 Act and the rules and regulations of
the SEC thereunder, respectively.
(xi) RULE 462(b) REGISTRATION STATEMENT. If the Fund elects to rely
upon Rule 462(b), the Fund shall file a Rule 462(b)
Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date
of this Agreement, and the Fund shall at the time of filing
either pay to the SEC the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the 1933 Act.
7. STANDARD OF CARE.
Claymore shall perform its duties and obligations hereunder as a
reasonable person in like circumstances would perform such duties and
obligations.
8. INDEMNIFICATION.
(a) Claymore shall indemnify and hold harmless the Fund, the Investment
Adviser and their respective affiliates, shareholders, officers, trustees,
directors, agents and employees from and against any losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees and expenses) to
which they may become subject insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or are
based upon: (i) any breach by Claymore of any provision of this Agreement; (ii)
any willful misfeasance or gross negligence by Claymore in the performance of
its duties and obligations hereunder, (iii) any violation of any applicable law
by Claymore, its employees, agents or representatives; or (iv) any acts or
omissions of the Investment Adviser or the Fund and their respective affiliates,
partners, shareholders, officers, directors, agents and employees taken or not
taken, as the case may be, in reliance upon any untrue statement or alleged
untrue statement of a material fact contained in the Fund's Registration
Statement or any amendment thereto, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading, or arising out of any untrue statement or
alleged untrue statement of a material fact included in any preliminary
prospectus or final prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, regarding Claymore and the services it provides the
Fund and the Investment Adviser.
(b) The Fund shall indemnify and hold harmless Claymore and its
affiliates, shareholders, officers, directors, agents and employees from and
against any and all losses, claims, damages, liabilities or expenses (including
reasonable attorneys' fees and expenses) to which it may become subject insofar
as such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon: (i) any breach by the Fund of any
provision of this Agreement; (ii) any willful misfeasance or gross negligence by
the Fund in the performance of its duties and obligations hereunder; or (iii)
any violation of any applicable law by the Fund, its employees, agents or
representatives.
11
(c) The Investment Adviser shall indemnify and hold harmless Claymore and
its affiliates, shareholders, officers, directors, agents and employees from and
against any and all losses, claims, damages, liabilities or expenses (including
reasonable attorneys' fees and expenses) to which it may become subject insofar
as such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon: (i) any breach by the Investment
Adviser of any provision of this Agreement; or (ii) any willful misfeasance or
gross negligence by the Investment Adviser in the performance of its duties and
obligations hereunder; or (iii) any violation of any applicable law by the
Investment Adviser, its employees, agents or representatives.
(d) The indemnified party (the "Indemnified Party") shall give notice to
the other party (the "Indemnifying Party") promptly after the summons or other
first legal process is served on the Indemnified Party for any claim, notice of
claim or arbitration demand as to which indemnity may be sought pursuant to
paragraphs (a), (b) and (c) of this Section 8. The Indemnifying Party may assume
the defense of any such claim or any litigation resulting from it, provided that
the Indemnified Party may participate in such defense at its own expense. The
failure of the Indemnified Party to give notice as provided in this paragraph
(d) shall not relieve the Indemnifying Party from any liability unless such
failure to give proper notice materially prejudices the Indemnifying Party's
ability to defend the claim. No Indemnifying Party, in the defense of any such
claim or litigation, shall, without the consent of the Indemnified Party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term the giving by the claimant or plaintiff to the
Indemnified Party of a release from all liability in respect of such claim or
litigation.
(e) The provisions of this Section 8 shall survive the termination of this
Agreement.
9. FEES.
Claymore shall be compensated as follows: if (A) the aggregate
organizational and offering costs and expenses (other than the sales load) with
respect to the Fund and (B) the aggregate travel and marketing costs and
expenses of the parties and the Underwriters of the Common Share offering (the
aggregate costs and expenses in (A) and (B) being the "Total Expenses") are less
than $0.03 per Common Share sold in the offering (including all shares sold
pursuant to the exercise of any over-allotment option granted to the
Underwriters) (the "Reimbursement Cap"), the Fund (and not the Investment
Adviser) will pay to Claymore as payment for distribution assistance up to 0.10%
of the net proceeds of the offering up to, but not exceeding, the difference
between the Total Expenses and the Reimbursement Cap. At no time will the Fund
be responsible for all or any portion of this payment if the Total Expenses
exceed the Reimbursement Cap.
10. NOTICES.
Except as otherwise specifically provided in this Agreement, notices
required or permitted to be given pursuant to this Agreement shall be given in
writing and delivered by personal delivery or by postage prepaid, registered or
certified first class mail, return receipt requested, nationally recognized
overnight courier service, or by facsimile, electronic mail or similar means of
same day delivery (with a confirming copy by mail as provided herein). Unless
12
otherwise notified in writing, all notices to the Fund, the Investment Adviser
and Claymore shall be given or sent to the addresses set forth below.
If to the Fund:
MBIA Capital/Claymore Managed Duration
Investment Grade Municipal Fund
c/o MBIA Capital Management Corp.
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx, President
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
If to the Investment Adviser:
MBIA Capital Management Corp.
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx, President
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
If to Claymore:
Claymore Securities, Inc.
000 X. Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
tel: 000.000.0000
fax: 000.000.0000
e-mail: xxxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
11. TERMINATION AND AMENDMENT.
(a) This Agreement shall become effective as of the date set forth above
and may be terminated by the Fund or the Investment Adviser upon 30 days notice
in writing to Claymore; provided, that this Agreement shall be deemed
automatically terminated upon the termination of the Servicing Agreement.
(b) This Agreement may be amended only by a writing signed by the parties
hereto.
12. MISCELLANEOUS.
(a) This Agreement sets forth the entire Agreement between the parties
hereto and replaces and supersedes all other understandings, commitments, and
agreements relating to the subject matter hereto.
13
(b) This Agreement may be assigned only with the prior written consent of
the other parties hereto.
(c) No waiver of any provision of this Agreement or the performance
thereof shall be effective unless in writing signed by the party making such
waiver or shall be deemed to be a waiver of any other provision or the
performance thereof or of any future performance.
(d) If any provision of this Agreement is determined to be unenforceable,
the remaining provisions shall remain enforceable to the extent permissible.
(e) This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
(f) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without reference to the conflict of laws
principles thereof.
14
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the date first set forth above.
MBIA CAPITAL/CLAYMORE MANAGED DURATION
INVESTMENT GRADE MUNICIPAL FUND
By:
--------------------------------------------------
Name:
Title:
CLAYMORE SECURITIES, INC.
By:
--------------------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Senior Managing Director and General Counsel
MBIA CAPITAL MANAGEMENT CORP.
By:
--------------------------------------------------
Name:
Title:
