INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, dated April 23, 2003, between Advent Claymore Convertible
Securities and Income Fund, a Delaware statutory trust (the "Trust"), and Advent
Capital Management, LLC, a Delaware limited liability company (the "Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory services to the
Trust, a closed-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, this Agreement has been approved in accordance with the provisions
of the 1940 Act, and the Advisor 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. IN GENERAL. The Advisor agrees, all as more fully set forth herein,
to act as investment advisor to the Trust with respect to the investment of the
Trust's assets and to supervise and arrange for the day-to-day investment
operations of the Trust, which includes the purchase of securities for and the
sale of securities held in the investment portfolio of the Trust.
2. DUTIES AND OBLIGATIONS OF THE ADVISOR WITH RESPECT TO INVESTMENT OF
ASSETS OF THE TRUST. Subject to the succeeding provisions of this section and
subject to the direction and control of the Trust's Board of Trustees, the
Advisor shall (i) act as investment advisor for and supervise and manage the
investment and reinvestment of the Trust's assets and in connection therewith
have complete discretion in purchasing and selling securities and other assets
for the Trust and in voting, exercising consents and exercising all other rights
appertaining to such securities and other assets on behalf of the Trust; (ii)
supervise continuously the investment program of the Trust and the composition
of its investment portfolio; (iii) arrange, subject to the provisions of
paragraph 3 hereof, for the purchase and sale of securities and other assets
held in the investment portfolio of the Trust; (iv) provide investment research
to the Trust and (v) monitor the net asset calculation of the Trust.
3. COVENANTS. (a) In the performance of its duties under this
Agreement, the Advisor shall at all times conform to, and act in accordance
with, any requirements imposed by: (i) the provisions of the 1940 Act and the
Investment Advisers Act of 1940, as amended, 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 and policies of the Trust as
set forth in its Registration Statement on Form N-2; and (v) any policies and
determinations of the Board of Trustees of the Trust.
In addition, the Advisor:
(a) 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 Advisor will attempt to obtain the
best price and the most favorable execution of its orders. In placing orders,
the Advisor 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 Advisor may select brokers on
the basis of the research, statistical and pricing services they provide to the
Trust and other clients of the Advisor. 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 Advisor 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 Advisor determines in good
faith that such commission is reasonable in terms either of the transaction or
the overall responsibility of the Advisor to the Trust and its 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 addition, the Advisor is
authorized to take into account the sale of shares of the Trust in allocating
purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the Advisor), provided
that the Advisor believes that the quality of the transaction and the commission
are comparable to what they would be with other qualified firms. In no instance,
however, will the Trust's securities be purchased from or sold to the Advisor,
or any affiliated person thereof, except to the extent permitted by the SEC or
by applicable law; and
(b) will 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, except after prior notification to and approval in writing
by the Trust, which approval shall not be unreasonably withheld and may not be
withheld where the Advisor may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Trust.
4. SERVICES NOT EXCLUSIVE. Nothing in this Agreement shall prevent the
Advisor or any officer, employee or other affiliate thereof from acting as
investment advisor 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
Advisor or any of its officers, employees or agents from buying, selling or
trading any securities for its or their own accounts or for the accounts of
others for whom it or they may be acting; provided, however, that the Advisor
will undertake no activities which, in its judgment, 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 Advisor 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
Advisor 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. EXPENSES. During the term of this Agreement, the Advisor will bear
all costs and expenses of its employees and any overhead incurred in connection
with its 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 Advisor; provided that the Board of Trustees of
the Trust may approve reimbursement to the Advisor of the pro rata portion of
the salaries, bonuses, health insurance, retirement benefits and all similar
employment costs for the time spent on Trust operations (other than the
provision of investment advice required to be provided hereunder) of all
personnel employed by the Advisor who devote substantial time to Trust
operations.
7. COMPENSATION OF THE ADVISOR. (1) The Trust agrees to pay to the
Advisor and the Advisor agrees to accept as full compensation for all services
rendered by the Advisor as such, a monthly fee (the "Investment Advisory Fee")
in arrears at an annual rate equal to 0.54% of the average weekly value of the
Trust's Managed Assets (if the average weekly value of the Trust's Managed
Assets (calculated monthly) is greater than $250 million) or 0.55% of the
average weekly value of the Trust's Managed Assets (if the average weekly value
of the Trust's Managed Assets (calculated monthly) is $250 million or less).
"Managed Assets" means the total assets of the Trust minus the sum of the
accrued liabilities (other than the aggregate indebtedness constituting
financial leverage). 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 net 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. The Advisor will monitor the net
asset calculation of any third party making such calculation.
8. INDEMNITY. (a) The Trust hereby agrees to indemnify the Advisor, and
each of the Advisor's directors, officers, employees, agents, associates and
controlling persons and the directors, partners, members, officers, employees
and agents thereof (including any individual who serves at the Advisor's request
as director, officer, partner, member, trustee or the like of another entity)
(each such person being an "Indemnitee") against any liabilities and expenses,
including amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees (all as provided in accordance with applicable
state law) reasonably incurred by such Indemnitee in connection with the defense
or disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or investigative body in which such
Indemnitee may be or may have been involved as a party or otherwise or with
which such Indemnitee may be or may have been threatened, while acting in any
capacity set forth herein or thereafter by reason of such Indemnitee having
acted in any such capacity, except with respect to any matter as to which such
Indemnitee shall have been adjudicated not to have acted in good faith in the
reasonable belief that such Indemnitee's action was in the best interest of the
Trust and furthermore, in the case of any criminal proceeding, so long as such
Indemnitee had no reasonable cause to believe that the conduct was unlawful;
provided, however, that (1) no Indemnitee shall be indemnified hereunder against
any liability to the Trust or its shareholders or any expense of such Indemnitee
arising by reason of (i) willful misfeasance, (ii) bad faith, (iii) gross
negligence or (iv) reckless disregard of the duties involved in the conduct of
such Indemnitee's position (the conduct referred to in such clauses (i) through
(iv) being sometimes referred to herein as "disabling conduct"), (2) as to any
matter disposed of by settlement or a compromise payment by such Indemnitee,
pursuant to a consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless there has been a
determination that such settlement or compromise is in the best interests of the
Trust and that such Indemnitee appears to have acted in good faith in the
reasonable belief that such Indemnitee's action was in the best interest of the
Trust and did not involve disabling conduct by such Indemnitee and (3) with
respect to any action, suit or other proceeding voluntarily prosecuted by any
Indemnitee as
plaintiff, indemnification shall be mandatory only if the prosecution of such
action, suit or other proceeding by such Indemnitee was authorized by a majority
of the full Board of Trustees of the Trust.
(b) The Trust shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Trust receives a written affirmation of the Indemnitee's
good faith belief that the standard of conduct necessary for indemnification has
been met and a written undertaking to reimburse the Trust unless it is
subsequently determined that such Indemnitee is entitled to such indemnification
and if the trustees of the Trust determine that the facts then known to them
would not preclude indemnification. In addition, at least one of the following
conditions must be met: (A) the Indemnitee shall provide a security for such
Indemnitee-undertaking, (B) the Trust shall be insured against losses arising by
reason of any lawful advance, or (C) a majority 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") 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 Indemnitee ultimately will be found entitled to indemnification.
(c) All determinations with respect to indemnification hereunder
shall be made (1) by a final decision on the merits by a court or other body
before whom the proceeding was brought that such Indemnitee is not liable or is
not liable by reason of disabling conduct, or (2) in the absence of such a
decision, by (i) a majority vote of a quorum of the Disinterested Non-Party
Trustees of the Trust, or (ii) if such a quorum is not obtainable or, even if
obtainable, if a majority vote of such quorum so directs, independent legal
counsel in a written opinion. All determinations that advance payments in
connection with the expense of defending any proceeding shall be authorized
shall be made in accordance with the immediately preceding clause (2) above.
The rights accruing to any Indemnitee under these provisions
shall not exclude any other right to which such Indemnitee may be lawfully
entitled.
9. LIMITATION ON LIABILITY. (a) The Advisor will not be liable for any
error of judgment or mistake of law or for any loss suffered by Advisor or 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) Notwithstanding anything to the contrary contained in this
Agreement, the parties hereto acknowledge and agree that, as provided in Section
5.1 of Article V of the Declaration of Trust, this Agreement is executed by the
Trustees and/or officers of the Trust, not individually but as such Trustees
and/or officers of the Trust, and the obligations hereunder are not binding upon
any of the Trustees or Shareholders individually but bind only the estate of the
Trust.
10. DURATION AND TERMINATION. This Agreement shall become effective as of
the date hereof and, unless sooner terminated with respect to the Trust as
provided herein, shall continue 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 the 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 of any party to this Agreement, 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 at any time,
without the payment of any penalty, upon giving the Advisor 60 days' notice
(which notice may be waived by the Advisor), 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 Advisor on 60 days' written notice (which notice may
be waived by the Trust). 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.)
11. 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.
12. 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.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York 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.
14. USE OF THE NAME ADVENT. The Advisor has consented to the use by the
Trust of the name or identifying word "Advent" in the name of the Trust. Such
consent is conditioned upon the employment of the Advisor as the investment
advisor to the Trust. The name or identifying word "Advent" may be used from
time to time in other connections and for other purposes by the Advisor and any
of its affiliates. The Advisor may require the Trust to cease using "Advent" in
the name of the Trust if the Trust ceases to employ, for any reason, the
Advisor, any successor thereto or any affiliate thereof as investment advisor of
the Trust.
15. 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 otherwise, 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.
16. COUNTERPARTS. This Agreement may be executed in counterparts by the
parties hereto, each of which shall constitute an original counterpart, and all
of which, together, shall constitute one Agreement.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument
to be executed by their duly authorized officers, all as of the day and the year
first above written.
ADVENT CLAYMORE
CONVERTIBLE SECURITIES AND
INCOME FUND
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Secretary
ADVENT CAPITAL MANAGEMENT, LLC
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: General Counsel
