INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT (the "Agreement"),
dated as of April [ ], 2004, by and among Advent Claymore Global Convertible &
Income Fund, a Delaware statutory trust (the "Trust"), Claymore Advisors, LLC,
a Delaware limited liability company (the "Claymore"), and Advent Capital
Management, LLC, a Delaware limited liability company (the "Investment
Manager").
WHEREAS, Claymore has agreed to furnish investment advisory
services and certain administrative servics 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 assets of the Trust;
WHEREAS, the investment advisory agreement between Claymore
and the Trust, dated the date hereof (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 Claymore may sub-contract the provision of investment
advisory services with respect to the Trust to an investment manager(s)
pursuant to an investment management agreement(s) agreeable to the Trust and
approved in accordance with the provisions of the 1940 Act;
WHEREAS, Claymore wishes to retain the Investment Manager to
provide certain investment management services to the Trust, as contemplated
in the Investment Advisory Agreement;
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. Claymore and the Trust hereby appoint the Investment
Manager to act as investment manager with respect to the assets of 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 Claymore and the
direction and control of the Trust's Board of Trustees (the "Board"), the
Investment Manager is hereby appointed as the Trust's agent and
attorney-in-fact with authority to negotiate, execute and deliver all
documents and agreements on behalf of the Trust and to do or take all related
acts, with the power of substitution, and will perform certain of the
day-to-day operations of the Trust, which shall include the following
services: (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; and (iv) provide
investment research to the Trust . At the request of Claymore, the Investment
Manager will also, subject to the oversight and supervision of Claymore and
the direction and control of the Board, consult with Claymore as to the
overall management of the Trust's 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
may perform any of the services described in the Investment Advisory
Agreement. In addition, the Investment Manager will keep the Trust and
Claymore 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
Claymore, at such times as Claymore 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
Claymore 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 set
forth in the Trust's Registration Statement on Form N-2 and in accordance with
the resolutions adopted by the Trust's Board.
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 Amended and
Restated Agreement and Declaration of Trust and Amended and Restated 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 Registration Statement on Form N-2; and (v) any policies,
determinations and/or resolutions of the Board;
(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 seek to
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 the Advisor 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 Advisor 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
Claymore, 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 Claymore and the Board 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.
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, Claymore, the
Investment Manager or brokers or dealers affiliated with Claymore or 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 and/or Claymore's investment advisory clients wish to sell, and to
sell for certain of their brokerage clients securities which such advisory
clients wish to buy. Where one of the parties is an advisory client, the
Investment Manager, Claymore 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 such advisory client's consent. This is because in a
situation where an investment adviser is making the investment decision (as
opposed to a brokerage client who makes his own investment decisions), and the
Investment Manager, Claymore 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 and/or Claymore's
part regarding the advisory client. The SEC has adopted a rule under the
Advisers Act which permits an investment adviser 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, Claymore 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 and Claymore.
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 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 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 payable in arrears
at an annual rate equal to 0.51% of the average weekly value of the Trust's
Managed Assets (the "Investment Management Fee"). "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.
9. CERTAIN INFORMATION.
(a) The Investment Manager shall promptly notify Claymore in
writing of the occurrence of any of the following events: (i) the Investment
Manager shall fail to be registered as an investment Advisor under the
Advisers Act; (ii) 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; (iii) 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 (iv) there is an adverse change in the business or financial position
of the Investment Manager.
(b) Claymore shall promptly notify the Investment Manager in
writing of the occurrence of any of the following events: (i) Claymore shall
fail to be registered as an investment Advisor under the Advisers Act; (ii)
Claymore 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; (iii) there
is a change in control of Claymore or any parent of Claymore within the
meaning of the 1940 Act; or (iv) there is an adverse change in the business or
financial position of Claymore.
10. INDEMNITY.
(a) The Trust hereby agrees to indemnify the Investment Manager,
and each of the Investment Manager'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 Investment Manager'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.
(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: (i) the Indemnitee shall provide a
security for such Indemnitee-undertaking; (ii) the Trust shall be insured
against losses arising by reason of any lawful advance; or (iii) 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: (i) 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 (ii) in the absence of such a
decision, by (A) a majority vote of a quorum of the Disinterested Non-Party
Trustees of the Trust, or (B) 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 (ii) above.
(d) The rights accruing to any Indemnitee under these provisions
shall not exclude any other right to which such Indemnitee may be lawfully
entitled.
11. 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 Claymore 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 Amended and Restated Agreement and Declaration of Trust of
the 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.
12. DURATION AND TERMINATION. This Agreement shall become effective
as of the date hereof and, unless sooner terminated by the Trust or the
Investment Manager 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 Board 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 Investment
Manager 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 Investment Manager 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 given to
such terms in the 1940 Act.
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 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.
16. USE OF THE NAME ADVENT. The Investment Manager 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
Investment Manager and any of its affiliates. The Investment Manager may
require the Trust to cease using "Advent" in the name of the Trust if the
Trust ceases to employ, for any reason, the Investment Manager, any successor
thereto or any affiliate thereof as investment advisor 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.
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
ADVENT CAPITAL MANAGEMENT, LLC
By:
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Xxxx Xxxxxx
General Counsel
ADVENT CLAYMORE GLOBAL CONVERTIBLE & INCOME FUND
By:
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Xxxx Xxxxxx
Secretary
