Exhibit 99.(g)(ii)
Exhibit(g)(ii)
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT (the "Agreement") dated as of
___________, 2004, among Madison/Claymore Covered Call Fund, a Delaware
statutory trust (the "Trust"), Claymore Advisors, LLC, a Delaware limited
liability company (the "Investment Adviser"), and Madison Asset Management, LLC,
a Wisconsin limited liability company (the "Investment Manager").
WHEREAS, the Investment Adviser has agreed to furnish investment
management and advisory services to the Trust, a closed-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act") with respect to the Trust Assets (defined below);
WHEREAS, the investment advisory agreement between the Investment
Adviser and the Trust dated as of _______________, 2004 (such agreement or the
most recent successor agreement between such parties relating to advisory
services to the Trust is referred to herein as the "Investment Advisory
Agreement") contemplates that the Investment Adviser may sub-contract investment
advisory services with respect to the Trust to a sub-adviser(s) pursuant to a
sub-advisory agreement(s) agreeable to the Trust and approved in accordance with
the provisions of the 1940 Act;
WHEREAS, the Investment Adviser wishes to retain the Investment
Manager to provide certain sub-advisory services;
WHEREAS, the Investment Manager is registered as a registered
investment adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"); and
WHEREAS, this Agreement has been approved in accordance with the
provisions of the 1940 Act, and the Investment Manager is willing to furnish
such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed by and between the parties hereto as
follows:
1. APPOINTMENT. The Investment Adviser hereby appoints the
Investment Manager to act as a sub-adviser with respect to the Trust as set
forth in this Agreement and the Investment Manager accepts such appointment and
agrees to render the services herein set forth for the compensation herein
provided.
2. SERVICES OF THE INVESTMENT MANAGER. Subject to the succeeding
provisions of this section, the oversight and supervision of the Investment
Adviser and the direction and control of the Trust's Board of Trustees, the
Investment Manager will perform certain of the day-to-day operations of the
Trust which may include one or more of the following services at the request of
the Investment Adviser: (i) managing the investment and
reinvestment of the Trust Assets in accordance with the investment policies of
the Trust; (ii) arranging, subject to the provisions of paragraph 3 hereof, for
the purchase and sale of securities and other assets for the Trust; (iii)
providing investment research and credit analysis concerning the Trust Assets;
(v) placing orders for purchases and sales of Trust Assets, (vi) maintaining the
books and records as are required to support Trust investment operations, and
(vii) monitoring on a daily basis the investment activities and portfolio
holdings relating of the Trust. At the request of the Investment Adviser, the
Investment Manager will also, subject to the oversight and supervision of the
Investment Adviser and the direction and control of the Trust's Board of
Trustees, consult with the Investment Adviser as to the overall management of
the Trust Assets and the investment policies and practices of the Trust,
including (but not limited to) the use by the Trust of financial leverage and
elements (e.g., form, amount and costs) relating to such financial leverage and
the utilization by the Trust of any interest rate or other hedging or risk
management transactions in connection therewith, and will perform any of the
services described in the Investment Advisory Agreement. In addition, the
Investment Manager will keep the Trust and the Investment Adviser informed of
developments materially affecting the Trust and shall, on its own initiative,
furnish to the Trust all information relevant to such developments. The
Investment Manager will periodically communicate to the Investment Adviser, at
such times as the Investment Adviser may direct, information concerning the
purchase and sale of securities for the Trust, including: (i) the name of the
issuer, (ii) the amount of the purchase or sale, (iii) the name of the broker or
dealer, if any, through which the purchase or sale is effected, (iv) the CUSIP
number of the instrument, if any, and (v) such other information as the
Investment Adviser may reasonably require for purposes of fulfilling its
obligations to the Trust under the Investment Advisory Agreement. The Investment
Manager will provide the services rendered by it under this Agreement in
accordance with the Trust's investment objective, policies and restrictions (as
currently in effect and as they may be amended or supplemented from time to
time) as stated in the Trust's Prospectus filed with the SEC as part of the
Trust's Registration Statement on Form N-2 and the resolutions of the Trust's
Board of Trustees.
3. COVENANTS. In the performance of its duties under this
Agreement, the Investment Manager:
(a) shall at all times comply and act in accordance with: (i) the
provisions of the 1940 Act and the Advisers Act and all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC"); (ii) any
other applicable provision of law; (iii) the provisions of the Agreement and
Declaration of Trust and By-Laws of the Trust, as such documents are amended
from time to time; (iv) the investment objectives, policies and restrictions of
the Trust as set forth in the Trust's Prospectus filed with the SEC as part of
the Trust's Registration Statement on Form N-2; and (v) any policies,
determinations and/or resolutions of the Board of Trustees of the Trust or the
Investment Adviser;
(b) will place orders either directly with the issuer or with any
broker or dealer. Subject to the other provisions of this paragraph, in placing
orders with brokers and dealers, the Investment Manager will obtain the best
price and the most favorable execution of its orders. In placing orders, the
Investment Manager will consider the experience and skill of the firm's
securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, the Investment
Manager may select brokers on the basis of the research, statistical and pricing
services they provide to the Trust and other clients of
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the Investment Adviser or the Investment Manager, as the case may be.
Information and research received from such brokers will be in addition to, and
not in lieu of, the services required to be performed by the Investment Manager
hereunder. A commission paid to such brokers may be higher than that which
another qualified broker would have charged for effecting the same transaction,
provided that the Investment Manager determines in good faith that such
commission is reasonable in terms either of the transaction or the overall
responsibility of the Investment Adviser and the Investment Manager to the Trust
and their other clients and that the total commissions paid by the Trust will be
reasonable in relation to the benefits to the Trust over the long-term. In no
instance, however, will the Trust's securities be purchased from or sold to the
Investment Adviser, the Investment Manager or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) maintain books and records with respect to the Trust's
securities transactions and render to the Investment Adviser and the Trust's
Board of Trustees such periodic and special reports as they may request; and
(d) treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust, and the Trust's prior,
current or potential shareholders, and will not use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder.
4. SERVICES NOT EXCLUSIVE. Nothing in this Agreement shall prevent
the Investment Manager or any officer, employee or other affiliate thereof from
acting as investment adviser for any other person, firm or corporation, or from
engaging in any other lawful activity, and shall not in any way limit or
restrict the Investment Manager or any of its officers, employees or agents from
buying, selling or trading any securities for their own accounts or for the
accounts of others for whom it or they may be acting; provided, however, that
the Investment Manager will not undertake any activities which will adversely
affect the performance of its obligations under this Agreement.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Investment Manager hereby agrees that all records
which it maintains for the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any such records upon the Trust's
request. The Investment Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. AGENCY CROSS TRANSACTIONS. From time to time, the Investment
Manager or brokers or dealers affiliated with the Investment Manager may find
themselves in a position to buy for certain of their brokerage clients (each an
"Account") securities which the Investment Manager's investment advisory clients
wish to sell, and to sell for certain of their brokerage clients securities
which advisory clients wish to buy. Where one of the parties is an advisory
client, the Investment Manager or the affiliated broker or dealer cannot
participate in this type of transaction (known as a cross transaction) on behalf
of an advisory client and retain commissions from both parties to the
transaction without the advisory client's consent. This is because in a
situation where a Investment Manager is making the investment decision (as
opposed to a brokerage client who makes his own investment decisions), and the
Investment
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Manager or an affiliate is receiving commissions from one or both sides of the
transaction, there is a potential conflicting division of loyalties and
responsibilities on the Investment Manager's part regarding the Advisory client.
The SEC has adopted a rule under the Advisers Act which permits a Investment
Manager or its affiliates to participate on behalf of an Account in agency cross
transactions if the Advisory client has given written consent in advance. By
execution of this Agreement, the Trust authorizes the Investment Manager or its
affiliates to participate in agency cross transactions involving an Account. The
Trust may revoke its consent at any time by written notice to the Investment
Manager.
7. EXPENSES. During the term of this Agreement, the Investment
Manager will bear all costs and expenses of its employees and any overhead
incurred by the Investment Manager in connection with their duties hereunder and
shall bear the costs of any salaries or trustees fees of any officers or
trustees of the Trust who are affiliated persons (as defined in the 0000 Xxx) of
the Investment Manager.
8. COMPENSATION.
(a) The Trust agrees to pay to the Investment Manager and the
Investment Manager agrees to accept as full compensation for all services
rendered by the Investment Manager as such, a monthly fee (the "Investment
Management Fee") in arrears at an annual rate equal to [0.50%] of the average
daily value of the Trust's Managed Assets. "Managed Assets" means the total
assets of the Trust (including the assets attributable to the proceeds from any
financial leverage) minus the sum of the accrued liabilities (other than the
aggregate indebtedness constituting financial leverage). The liquidation
preference of any preferred shares of the Trust, if any, constituting financial
leverage shall not be considered a liability of the Trust. For any period less
than a month during which this Agreement is in effect, the fee shall be prorated
according to the proportion which such period bears to a full month of 28, 29,
30 or 31 days, as the case may be.
(b) For purposes of this Agreement, the total assets of the Trust
shall be calculated pursuant to the procedures adopted by resolutions of the
Trustees of the Trust for calculating the value of the Trust's assets or
delegating such calculations to third parties.
9. CERTAIN INFORMATION. The Investment Manager shall promptly
notify the Investment Adviser in writing of the occurrence of any of the
following events: (a) the Investment Manager shall fail to be registered as an
investment adviser under the Advisers Act, (b) the Investment Manager shall have
been served or otherwise have notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board or
body, involving the affairs of the Trust, (c) there is a change in control of
the Investment Manager or any parent of the Investment Manager within the
meaning of the 1940 Act, or (d) there is an adverse change in the business or
financial position of the Investment Manager.
10. LIMITATION ON LIABILITY.
(a) The Investment Manager will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Investment Manager,
the Investment Adviser or
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by the Trust in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or 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.
(b) The Trust may, but shall not be required to, make advance
payments to the Investment Manager in connection with the expenses of the
Investment Manager in defending any action with respect to which damages or
equitable relief might be sought against the Investment Manager under this
Section (which payments shall be reimbursed to the Trust by the Investment
Manager as provided below) if the Trust receives (i) a written affirmation of
the Investment Manager's good faith belief that the standard of conduct
necessary for the limitation of liability in this Section has been met and (ii)
a written undertaking to reimburse the Trust whether or not the Investment
Manager shall be deemed to have liability under this Section, such reimbursement
to be due upon (1) a final decision on the merits by a court or other body
before whom the proceeding was brought as to whether or not the Investment
Manager is liable under this Section or (2) in the absence of such a decision,
upon the request of the Investment Manager for reimbursement by a majority vote
of a quorum consisting of trustees of the Trust who are neither "interested
persons" of the Trust (as defined in Section 2(a)(19) of the 0000 Xxx) nor
parties to the proceeding ("Disinterested Non-Party Trustees"). In addition, at
least one of the following conditions must be met: (A) the Investment Manager
shall provide a security for such Investment Manager undertaking, (B) the Trust
shall be insured against losses arising by reason of any lawful advance, or (C)
a majority of a quorum of the Disinterested Non-Party Trustees of the Trust or
an independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Investment Manager ultimately will be
found not to be liable under this Section.
12. DURATION AND TERMINATION. This Agreement shall become effective
as of the date hereof and shall continue (unless terminated automatically as set
forth below) in effect for a period of two years. Thereafter, if not terminated,
this Agreement shall continue in effect with respect to the Trust for successive
periods of 12 months, provided such continuance is specifically approved at
least annually by both (a) the vote of a majority of the Trust's Board of
Trustees or a vote of a majority of the outstanding voting securities of the
Trust at the time outstanding and entitled to vote and (b) by the vote of a
majority of the Trustees, who are not parties to this Agreement or interested
persons (as such term is defined in the 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the Trust,
without the payment of any penalty, upon giving the Investment Manager 60 days'
notice (which notice may be waived by the Investment Manager), provided that
such termination by the Trust shall be directed or approved by the vote of a
majority of the Trustees of the Trust in office at the time or by the vote of
the holders of a majority of the voting securities of the Trust at the time
outstanding and entitled to vote, or by the Investment Manager on 60 days'
written notice (which notice may be waived by the Trust), and will terminate
automatically upon any termination of the Investment Advisory Agreement between
the Trust and the Investment Adviser. This Agreement will also immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meanings of such terms in the 1940 Act.)
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13. NOTICES. Any notice under this Agreement shall be in writing to
the other party at such address as the other party may designate from time to
time for the receipt of such notice and shall be deemed to be received on the
earlier of the date actually received or on the fourth day after the postmark if
such notice is mailed first class postage prepaid.
14. 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,
discharge or termination is sought. Any amendment of this Agreement shall be
subject to the 1940 Act.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware for contracts to
be performed entirely therein without reference to choice of law principles
thereof and in accordance with the applicable provisions of the 1940 Act.
16. USE OF THE NAME MADISON. The Investment Manager has consented to
the use by the Trust of the name or identifying word "Madison" in the name of
the Trust. Such consent is conditioned upon the employment of the Investment
Manager as the investment sub-adviser to the Trust. The names or identifying
words "Madison" may be used from time to time in other connections and for other
purposes by the Investment Manager and any of its affiliates. The Investment
Manager may require the Trust to cease using "Madison" in the name of the Trust
if the Trust or the Investment Adviser ceases to employ, for any reason, the
Investment Manager, any successor thereto or any affiliate thereof as investment
sub-adviser of the Trust.
17. MISCELLANEOUS. The captions in 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 other wise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding on, and shall inure to the
benefit of the parties hereto and their respective successors.
18. COUNTERPARTS. This Agreement may be executed in counter parts
by the parties hereto, each of which shall constitute an original counterpart,
and all of which, together, shall constitute one Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers designated below as of the day and
year first above written.
CLAYMORE ADVISORS, LLC
By:
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Xxxxxxxx Xxxxxxx
Senior Managing Director and
General Counsel
MADISON ASSET MANAGEMENT, LLC
By:
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Name:
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Title:
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MADISON/CLAYMORE COVERED CALL FUND
By:
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Xxxxxxxxxx Xxxxxxxxx
Secretary
C-1
