CORPORATE FINANCE SERVICES AND CONSULTING AGREEMENT
This CORPORATE FINANCE SERVICES AND CONSULTING AGREEMENT (the
"Agreement"), dated as of August ___, 2003, between X.X. Xxxxxxx & Sons, Inc.
("X.X. Xxxxxxx") and MBIA Capital Management Corp. ("MBIA Capital Management").
WHEREAS, MBIA Capital/Claymore Managed Duration Investment Grade
Municipal Fund (the "Fund") is a diversified, closed-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), and its common shares of beneficial interest, par value $0.001 per
share (the "Common Shares"), are registered under the Securities Act of 1933, as
amended;
WHEREAS, X.X. Xxxxxxx has acted as lead underwriter in the public
offering of the Fund's Common Shares (the "Offering");
WHEREAS, MBIA Capital Management is the investment adviser of the Fund;
WHEREAS, MBIA Capital Management desires to retain X.X. Xxxxxxx to
provide, directly or (in part) through a Delegation Party (as defined below),
certain corporate finance and consulting services to MBIA Capital Management and
to the Fund on an ongoing basis, and X.X. Xxxxxxx is willing to render such
services; and
WHEREAS, MBIA Capital Management desires to provide compensation to X.X.
Xxxxxxx and, as applicable, any Delegation Party for providing such services;
NOW, THEREFORE, in consideration of the mutual terms and conditions set
forth below, the parties hereto agree as follows:
1. (a) MBIA Capital Management hereby employs X.X. Xxxxxxx, for the
period and on the terms and conditions set forth herein, to
provide the following services: (i) Provide relevant
information, studies or reports regarding general trends in the
closed-end investment company and asset management industries,
if reasonably obtainable, and consult with representatives of
MBIA Capital Management in connection therewith; (ii) At the
request of MBIA Capital Management, provide certain economic
research and statistical information and reports, if reasonably
obtainable, on behalf of MBIA Capital Management or the Fund and
consult with representatives of MBIA Capital Management or the
Fund, and/or Trustees of the Fund in connection therewith, which
information and reports shall include: (a) statistical and
financial market information with respect to the Fund's market
performance; and (b) comparative information regarding the Fund
and other closed-end management investment companies with
respect to (x) the net asset value of their respective shares
(as made publicly available by the Fund and such investment
companies), (y) the respective market performance of the Fund
and such other companies, and (z) other relevant performance
indicators; and (iii) Provide MBIA Capital Management with such
other services in connection with the Common Shares relating to
the trading price and market price thereof upon which MBIA
Capital Management and X.X. Xxxxxxx shall, from time to time,
agree, including after-market services designed to maintain the
visibility of the Fund in the market.
(b) At the request of MBIA Capital Management, X.X. Xxxxxxx and, as
applicable, any Delegation Party, shall limit or cease any
action or service provided hereunder to the extent and for the
time period requested by MBIA Capital Management; provided,
however, that pending termination of this Agreement as provided
for in Section 7 hereof, any such limitation or cessation shall
not relieve MBIA Capital Management of its payment obligations
pursuant to Section 3 hereof.
(c) X.X. Xxxxxxx and, as applicable, any Delegation Party, will
promptly notify MBIA Capital Management in writing if it learns
of any material inaccuracy or misstatement in, or material
omission from, any written information provided by X.X. Xxxxxxx
or any Delegation Party to MBIA Capital Management in connection
with the performance of services by X.X. Xxxxxxx or any
Delegation Party under this Agreement. X.X. Xxxxxxx and, as
applicable, each Delegation Party, agrees that in performing its
services under this Agreement, it shall comply in all material
respects with all applicable laws, rules and regulations.
2. X.X. Xxxxxxx may delegate a portion of its rights and obligations under
this Agreement to other persons (each, a "Delegation Party"), certain of
whom may be Underwriters (as defined in the Underwriting Agreement dated
August ___, 2003 between X.X. Xxxxxxx, the Fund, MBIA Capital Management
and each of the Underwriters named therein) or other participants, or
affiliates of such participants, in the offering and distribution of the
Common Shares; provided that X.X. Xxxxxxx shall have obtained the prior
written consent of MBIA Capital Management if such person is not an
Underwriter of the offering and distribution of the Common Shares. X.X.
Xxxxxxx shall give notice to MBIA Capital Management of each such
delegation and of each such Delegation Party prior to delegation in the
form attached as Annex A hereto. Such notice shall state the fees
otherwise payable to X.X. Xxxxxxx hereunder which shall instead be
payable by MBIA Capital Management directly to such Delegation Party and
shall be appended to and become a part of this Agreement. Each
Delegation Party shall be a registered broker-dealer under the
Securities Exchange Act of 1934, as amended, and shall not be otherwise
prohibited by law from providing services to MBIA Capital Management
hereunder.
3. MBIA Capital Management shall pay to X.X. Xxxxxxx (or, as applicable
with respect to a portion of such fee payable instead to a Delegation
Party pursuant to Section 2 above, the appropriate Delegation Party) a
fee payable quarterly in arrears commencing on the date hereon at an
annualized rate of 0.100% of the Fund's average daily net assets
(including assets acquired from the sale of any preferred shares), plus
the proceeds of any outstanding borrowings used for financial leverage
("Managed Assets") though September 1, 2008, 0.125% of the Fund's
Managed Assets from September 2, 2008 through September 1, 2009 and
0.150% of the Fund's Managed Assets after September 1, 2009, for a term
as described in Section 7 hereof. All quarterly fees payable hereunder
shall be paid to X.X. Xxxxxxx or, as applicable, the appropriate
Delegation Party within 15 days following the end of each quarter.
2
4. MBIA Capital Management acknowledges that the services of X.X. Xxxxxxx
(and, as applicable, any Delegation Party) provided for hereunder do not
include any advice as to the value of securities or regarding the
advisability of purchasing or selling any securities, in each case for
the Fund's portfolio. No provision of this Agreement shall be considered
as creating, nor shall any provision create, any obligation on the part
of X.X. Xxxxxxx or any Delegation Party, and neither X.X. Xxxxxxx nor
any Delegation Party is agreeing, to: (i) furnish any advice or make any
recommendations regarding the purchase or sale of portfolio securities
or (ii) render any opinions, valuations of portfolio securities or
recommendations of any kind in connection with providing the services
described in Section 1 hereof, to the extent that any such services
would constitute investment advisory or investment banking services, it
being understood between the parties hereto that any such investment
advisory or investment banking services if, and to the extent, agreed to
be performed by X.X. Xxxxxxx or any Delegation Party, shall be the
subject of a separate agreement with MBIA Capital Management.
5. Nothing herein shall be construed as prohibiting X.X. Xxxxxxx, any
Delegation Party or any of their respective affiliates from providing
similar or other services to any other clients (including other
registered investment companies or other investment advisers), so long
as X.X. Xxxxxxx'x or the applicable Delegation Party's services to MBIA
Capital Management are not impaired thereby. Neither this Agreement nor
the performance of the services contemplated hereunder shall be
considered to constitute a partnership, association or joint venture
between X.X. Xxxxxxx or any Delegation Party and MBIA Capital
Management. In addition, nothing in this Agreement shall be construed to
constitute X.X. Xxxxxxx or any Delegation Party as the agent or employee
of MBIA Capital Management or MBIA Capital Management as the agent or
employee of X.X. Xxxxxxx or any Delegation Party, and neither party
shall make any representation to the contrary. It is understood that
X.X. Xxxxxxx and, as applicable, each Delegation Party are being engaged
hereunder solely to provide the services described above to MBIA Capital
Management and that neither X.X. Xxxxxxx nor any Delegation Party is
acting as an agent or fiduciary of, and neither X.X. Xxxxxxx nor any
Delegation Party shall have any duties or liability to the current or
future shareholders of the Fund or any other third party in connection
with its engagement hereunder, all of which are hereby expressly waived
to the extent MBIA Capital Management has the authority to waive such
duties and liabilities.
6. MBIA Capital Management will furnish X.X. Xxxxxxx and, as applicable,
any Delegation Party with such information as such party reasonably
believes appropriate to the performance of its obligations hereunder
(all such information so furnished being the "Information"). MBIA
Capital Management recognizes and confirms that X.X. Xxxxxxx and, as
applicable, any Delegation Party (a) will use and rely primarily on the
Information and on information available from generally recognized
public sources in performing the services contemplated by this Agreement
without having independently verified the same and (b) does not assume
responsibility for the accuracy or completeness of the Information and
such other information. To the best of MBIA Capital Management's
knowledge, the Information to be furnished by MBIA Capital Management
when delivered, will be true and correct in all material respects and
will not contain any material misstatement of fact or omit to state any
material fact. MBIA
3
Capital Management will promptly notify X.X. Xxxxxxx or any Delegation
Party if it learns of any material inaccuracy or misstatement in, or
material omission from, any Information delivered to such party.
7. The term of this Agreement shall commence upon the date referred to
above and shall be in effect only so long as MBIA Capital Management (or
any affiliate or successor in interest) acts as the investment adviser
to the Fund pursuant to the Advisory Agreement (as such term is defined
in the Underwriting Agreement, dated [ ], 2003, by and among the Fund,
MBIA Capital Management and each of the Underwriters named therein), as
such Advisory Agreement (or other subsequent advisory agreement with
MBIA Capital Management or any successor thereto) may be renewed from
time to time pursuant to the 1940 Act; provided, that the term of this
Agreement may be terminated by X.X. Xxxxxxx or by any Delegation Party
(but only with regards to the respective rights and obligations of X.X.
Xxxxxxx or such Delegation Party) upon 60 days' notice to MBIA Capital
Management in the event that the services to be rendered, and the
payments to be received, hereunder by X.X. Xxxxxxx or any such
Delegation Party shall be determined to be subject to any limitations as
may then be applicable, including any sales charge limitations, under
the rules of the National Association of Securities Dealers, Inc. as
then in effect.
8. MBIA Capital Management agrees that neither X.X. Xxxxxxx nor any
Delegation Party shall have any liability to MBIA Capital Management or
the Fund for any act or omission to act by X.X. Xxxxxxx or any
Delegation Party in the course of its performance under this Agreement,
in the absence of gross negligence or willful misconduct on the part of
X.X. Xxxxxxx or such Delegation Party. X.X. Xxxxxxx shall have no
liability for any acts or omissions of any Delegation Party. MBIA
Capital Management agrees that it shall provide indemnification to X.X.
Xxxxxxx and each Delegation Party as set forth in the Indemnification
Agreement appended hereto.
9. This Agreement and any claim, counterclaim or dispute of any kind or
nature whatsoever arising out of or in any way relating to this
Agreement ("Claim") shall be governed by and construed in accordance
with the laws of the State of New York.
10. No Claim may be commenced, prosecuted or continued in any court other
than the courts of the State of New York located in the City and County
of New York or in the United States District Court for the Southern
District of New York, which courts shall have exclusive jurisdiction
over the adjudication of such matters, and MBIA Capital Management, X.X.
Xxxxxxx and, as applicable, each Delegation Party consent to the
jurisdiction of such courts and personal service with respect thereto.
Each of MBIA Capital Management, X.X. Xxxxxxx and, as applicable, each
Delegation Party waives all right to trial by jury in any proceeding
(whether based upon contract, tort or otherwise) in any way arising out
of or relating to this Agreement. Each of MBIA Capital Management, X.X.
Xxxxxxx and, as applicable, each Delegation Party agrees that a final
judgment in any proceeding or counterclaim brought in any such court
shall be conclusive and binding upon such party and may be enforced in
any other courts to the jurisdiction of which such party is or may be
subject, by suit upon such judgment.
4
11. Except as provided in Section 2 hereof, this Agreement may not be
assigned by either party without the prior written consent of the other
party.
12. This Agreement embodies the entire agreement and understanding between
the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. If any provision
of this Agreement is determined to be invalid or unenforceable in any
respect, such determination will not affect such provision in any other
respect or any other provision of this Agreement, which will remain in
full force and effect. This Agreement may not be amended or otherwise
modified or waived except by an instrument in writing signed by MBIA
Capital Management, X.X. Xxxxxxx and, as applicable, each Delegation
Party.
13. All notices required or permitted to be sent under this Agreement shall
be sent, if to MBIA Capital Management:
MBIA Capital Management Corp.
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxx
or if to X.X. Xxxxxxx:
X.X. Xxxxxxx & Sons, Inc.
Xxx Xxxxx Xxxxxxxxx
Xx. Xxxxx, XX 00000
Attention: Xxxxxxx Xxxx
or if to any Delegation Party, to the name and address specified in the
relevant Notice of Delegation or such other name or address as may be
given in writing to the other parties. Any notice shall be deemed to be
given or received on the third day after deposit in the U.S. mail with
certified postage prepaid or when actually received, whether by hand,
express delivery service or facsimile transmission, whichever is
earlier.
14. This Agreement may be executed in separate counterparts, each of which
is deemed to be an original and all of which taken together constitute
one and the same agreement.
5
IN WITNESS WHEREOF, the parties hereto have duly executed this Corporate
Finance Services and Consulting Agreement as of the date first above written.
MBIA CAPITAL MANAGEMENT CORP. X.X. XXXXXXX & SONS, INC.
By: By:
------------------------------ ------------------------------
Name: Name:
Title: Title:
6
ANNEX A
NOTICE OF DELEGATION
X.X. Xxxxxxx & Sons, Inc. ("X.X. Xxxxxxx") hereby delegates a portion of
its obligations under that certain Corporate Finance Services and Consulting
Agreement (the "Agreement"), dated August ___ 2003 between X.X. Xxxxxxx and MBIA
Capital Management Corp. ("MBIA Capital Management"), to _____________ (the
"Delegation Party"). The Delegation Party hereby agrees to provide such services
to MBIA Capital Management and MBIA Capital/Claymore Managed Duration Investment
Grade Municipal Fund (the "Fund") as MBIA Capital Management and the Delegation
Party shall from time to time agree.
X.X. Xxxxxxx hereby agrees to instruct MBIA Capital Management to pay to
the Delegation Party a portion of the total fees payable under the Agreement
equal to [__]% of [__]% of the Fund's Managed Assets through September 1, 2008,
and [__]% of [__]% of the Fund's Managed Assets thereafter. The Delegation Party
agrees that by executing this Notice of Delegation, it shall become a party to
the Agreement and shall abide by the terms and conditions thereof.
All notices required or permitted to be sent under this Notice of
Delegation or the Agreement shall be sent to the Delegation Party at the
following address:
[ ]
Agreed to and accepted by:
X.X. Xxxxxxx & Sons, Inc. [ ]
----------------------------- ------------------------------
By: Xxxxxxx Xxxx By:
Title: Director Title:
7
INDEMNIFICATION AGREEMENT
X.X. Xxxxxxx & Sons, Inc.
on behalf of itself and each
Delegation Party
c/o X.X. Xxxxxxx & Sons, Inc.
Xxx Xxxxx Xxxxxxxxx
Xx. Xxxxx, XX 00000
Ladies and Gentlemen:
In connection with the engagement of X.X. Xxxxxxx and, as applicable,
each Delegation Party (as defined in the Agreement referred to below) to provide
services to the undersigned (together with its affiliates and subsidiaries,
referred to as the "Company") in connection with the matters set forth in the
Corporate Finance Services and Consulting Agreement dated August ___, 2003 (the
"Agreement"), between the Company, X.X. Xxxxxxx & Sons, Inc. and, as applicable,
each Delegation Party (any Delegation Parties, together with X.X. Xxxxxxx &
Sons, Inc., are referred to herein as the "Service Providers"), in the event
that any Service Provider becomes involved in any capacity in any claim, suit,
action, proceeding, investigation or inquiry (including, without limitation, any
shareholder or derivative action or arbitration proceeding) (collectively, a
"Proceeding") in connection with any matter in any way relating to or referred
to in the Agreement or arising out of the matters contemplated by the Agreement,
including, without limitation, related services and activities prior to the date
of the Agreement, the Company agrees to indemnify, defend and hold each Service
Provider harmless to the fullest extent permitted by law, from and against any
losses, claims, damages, liabilities and expenses in connection with any matter
in any way relating to or referred to in the Agreement or arising out of the
matters contemplated by the Agreement, including, without limitation, related
services and activities prior to the date of the Agreement, except to the extent
that it shall be determined by a court of competent jurisdiction in a judgment
that has become final in that it is no longer subject to appeal or other review,
that such losses, claims, damages, liabilities and expenses resulted from the
gross negligence or willful misconduct of such Service Provider. In addition, in
the event that any Service Provider becomes involved in any capacity in any
Proceeding in connection with any matter in any way relating to or referred to
in the Agreement or arising out of the matters contemplated by the Agreement,
including, without limitation, related services and activities prior to the date
of the Agreement, the Company will reimburse such Service Provider for its
reasonable legal and other expenses (including the reasonable cost of any
investigation and preparation) as such expenses are reasonably incurred by such
Service Provider in connection therewith. If such indemnification were not to be
available for any reason, the Company agrees to contribute to the losses,
claims, damages, liabilities and expenses involved (i) in the proportion
appropriate to reflect the relative benefits received or sought to be received
by the Company and its shareholders and affiliates and other constituencies, on
the one hand, and the Service Providers, on the other hand, in the matters
contemplated by the Agreement or (ii) if (but only if and to the extent) the
allocation provided for in clause (i) is for any reason held unenforceable, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the
8
Company and its shareholders and affiliates and other constituencies, on the one
hand, and the party entitled to contribution, on the other hand, as well as any
other relevant equitable considerations. The Company agrees that for the
purposes of this paragraph the relative benefits received, or sought to be
received, by the Company and its shareholders and affiliates, on the one hand,
and the party entitled to contribution, on the other hand, of a transaction as
contemplated shall be deemed to be in the same proportion that the total value
received or paid or contemplated to be received or paid by the Company or its
shareholders or affiliates and other constituencies, as the case may be, as a
result of or in connection with the transaction (whether or not consummated) for
which the Service Providers have been retained to perform services bears to the
fees paid to the Service Providers under the Agreement; provided, that in no
event shall the Company contribute less than the amount necessary to assure that
no Service Provider is liable for losses, claims, damages, liabilities and
expenses in excess of the amount of fees actually received by such Service
Provider pursuant to the Agreement. Relative fault shall be determined by
reference to, among other things, whether any alleged untrue statement or
omission or any other alleged conduct relates to information provided by the
Company or other conduct by the Company (or its employees or other agents), on
the one hand, or by the relevant Service Provider, on the other hand. The
Company shall not be liable under this Indemnification Agreement to any Service
Provider regarding any settlement or compromise or consent to the entry of any
judgment with respect to any Proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the Company is an actual or
potential party to such Proceeding) unless such settlement, compromise or
judgment is consented to by the Company. The Company shall not, without the
prior written consent of each Service Provider, settle or compromise or consent
to the entry of any judgment with respect to any Proceeding in respect of which
indemnification or contribution could be sought under this Indemnification
Agreement (whether or not any Service Provider is an actual or potential party
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each Service Provider from all liability arising out of
such Proceeding and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any Service Provider.
For purposes of this Indemnification Agreement, each Service Provider shall
include any of its affiliates, each other person, if any, controlling such
Service Provider or any of its affiliates, their respective officers, current
and former directors, employees and agents, and the successors and assigns of
all of the foregoing persons. The foregoing indemnity and contribution agreement
shall be in addition to any rights that any indemnified party may have at common
law or otherwise.
The Company agrees that neither any Service Provider nor any of its
affiliates, directors, agents, employees or controlling persons shall have any
liability to the Company or any person asserting claims on behalf of or in right
of the Company in connection with or as a result of either such Service
Provider's engagement under the Agreement or any matter referred to in the
Agreement, including, without limitation, related services and activities prior
to the date of the Agreement, except to the extent that it shall be determined
by a court of competent jurisdiction in a judgment that has become final in that
it is no longer subject to appeal or other review that any losses, claims,
damages, liabilities or expenses incurred by the Company resulted from the gross
negligence or willful misconduct of such Service Provider in performing the
services that are the subject of the Agreement.
9
Notwithstanding any provision contained herein, in no event shall any
Service Provider be entitled to indemnification by the Company hereunder from
and against any losses, claims, damages, liabilities or expenses in respect of
which indemnity may be sought under Section 8 of the Underwriting Agreement,
dated August , 2003, among the Company, MBIA Managed Duration Investment Grade
Municipal Fund and X.X. Xxxxxxx & Sons, Inc., as managing representative of the
several underwriters named therein.
For clarification, the parties to this Indemnification Agreement agree
that the term "affiliate" as used in the definition of "Company" herein does not
include any registered investment company for which MBIA Capital Management
Corp. serves as investment adviser.
THIS INDEMNIFICATION AGREEMENT AND ANY CLAIM, COUNTERCLAIM OR DISPUTE OF
ANY KIND OR NATURE WHATSOEVER ARISING OUT OF OR IN ANY WAY RELATING TO THIS
AGREEMENT ("CLAIM"), DIRECTLY OR INDIRECTLY, SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS SET FORTH BELOW,
NO CLAIM MAY BE COMMENCED, PROSECUTED OR CONTINUED IN ANY COURT OTHER THAN THE
COURTS OF THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WHICH
COURTS SHALL HAVE EXCLUSIVE JURISDICTION OVER THE ADJUDICATION OF SUCH MATTERS,
AND THE COMPANY AND EACH SERVICE PROVIDER CONSENT TO THE JURISDICTION OF SUCH
COURTS AND PERSONAL SERVICE WITH RESPECT THERETO. THE COMPANY HEREBY CONSENTS TO
PERSONAL JURISDICTION, SERVICE AND VENUE IN ANY COURT IN WHICH ANY CLAIM ARISING
OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT IS BROUGHT BY ANY THIRD PARTY
AGAINST ANY SERVICE PROVIDER OR ANY INDEMNIFIED PARTY. EACH SERVICE PROVIDER AND
THE COMPANY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING OR CLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR IN ANY WAY
RELATING TO THIS AGREEMENT. THE COMPANY AGREES THAT A FINAL JUDGMENT IN ANY
PROCEEDING OR CLAIM ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT
BROUGHT IN ANY SUCH COURT SHALL BE CONCLUSIVE AND BINDING UPON THE COMPANY AND
MAY BE ENFORCED IN ANY OTHER COURTS TO THE JURISDICTION OF WHICH THE COMPANY IS
OR MAY BE SUBJECT, BY SUIT UPON SUCH JUDGMENT.
10
The foregoing Indemnification Agreement shall remain in full force and
effect notwithstanding any termination of any Service Provider's engagement.
This Indemnification Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which shall constitute one and
the same agreement.
Very truly yours,
MBIA CAPITAL MANAGEMENT CORP.
By:
----------------------
Name:
Title:
Accepted and agreed to as of
the date first above written:
X.X. XXXXXXX & SONS, INC.
By:
-------------------------
Name:
Title:
11
