Exhibit 99.(g)(i)
Exhibit (g)(i)
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement"), dated as of
______________, 2004, between Madison/Claymore Covered Call Fund, a Delaware
statutory trust (the "Trust"), and Claymore Advisors, LLC, a Delaware limited
liability company (the "Investment Adviser").
WHEREAS, the Investment Adviser 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 Investment Adviser 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 Investment Adviser agrees, all as more fully set forth
herein, to act as investment adviser to the Trust with respect to the investment
of the Trust's assets and to supervise and arrange for the day-to-day operations
of the Trust and the purchase of securities for and the sale of securities held
in the investment portfolio of the Trust.
2. DUTIES AND OBLIGATIONS OF THE INVESTMENT ADVISER 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 Investment Adviser shall (i) act as investment adviser 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 the investment program of the Trust and the
composition of its investment portfolio; and (iii) arrange, subject to the
provisions of paragraph 4 hereof, for the purchase and sale of securities and
other assets held in the investment portfolio of the Trust. In performing its
duties under this Section 2, the Investment Adviser may delegate some or all of
its duties and obligations under this Agreement to one or more sub-investment
advisers; provided, however, that any such delegation shall be pursuant to an
agreement with terms agreed upon by the Trust and approved in a manner
consistent with the 1940 Act and provided, further, that no such delegation
shall relieve the Investment Adviser from its duties and obligations of
management and supervision of the management of the Trust's assets pursuant to
this Agreement and to applicable law.
3. DUTIES AND OBLIGATIONS OF THE INVESTMENT ADVISER WITH RESPECT TO THE
ADMINISTRATION OF THE TRUST. The Investment Adviser also agrees
to furnish office facilities and equipment and clerical, bookkeeping and
administrative services (other than such services, if any, provided by the
Trust's Custodian, Transfer Agent, Administrator and Dividend Disbursing Agent
and other service providers) for the Trust. To the extent requested by the
Trust, the Investment Adviser agrees to provide the following administrative
services:
(a) Oversee the determination and publication of the Trust's net asset
value in accordance with the Trust's policy as adopted from time to time by
the Board of Trustees;
(b) Oversee the maintenance by the Trust's Custodian and Transfer Agent and
Dividend Disbursing Agent of certain books and records of the Trust as
required under Rule 31a-1(b)(4) of the 1940 Act and maintain (or oversee
maintenance by the Trust's Administrator or such other persons as approved
by the Board of Trustees) such other books and records required by law or
for the proper operation of the Trust;
(c) Oversee the preparation and filing of the Trust's federal, state and
local income tax returns and any other required tax returns;
(d) Review the appropriateness of and arrange for payment of the Trust's
expenses;
(e) Prepare (or oversee the preparation) for review and approval by
officers of the Trust financial information for the Trust's semi-annual and
annual reports, proxy statements and other communications with shareholders
required or otherwise to be sent to Trust shareholders, and arrange for the
printing and dissemination of such reports and communications to
shareholders;
(f) Prepare (or oversee the preparation) for review by an officer of the
Trust the Trust's periodic financial reports required to be filed with the
Securities and Exchange Commission ("SEC") on Form N-SAR, N-CSR and such
other reports, forms and filings, as may be mutually agreed upon;
(g) Prepare reports relating to the business and affairs of the Trust as
may be mutually agreed upon and not otherwise appropriately prepared by the
Trust's Custodian, counsel or auditors;
(h) Prepare (or oversee the preparation of) such information and reports as
may be required by any stock exchange or exchanges on which the Trust's
shares are listed;
(i) Make such reports and recommendations to the Board of Trustees
concerning the performance of the independent accountants as the Board of
Trustees may reasonably request or deems appropriate;
(j) Make such reports and recommendations to the Board of Trustees
concerning the performance and fees of the Trust's Custodian, Transfer
Agent, Administrator and Dividend Disbursing Agent as the Board of Trustees
may reasonably request or deems appropriate;
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(k) Oversee and review calculations of fees paid to the Trust's service
providers;
(l) Oversee the Trust's portfolio and perform necessary calculations as
required under Section 18 of the 1940 Act;
(m) Consult with the Trust's officers, independent accountants, legal
counsel, Custodian, Administrator or other accounting agent, Transfer Agent
and Dividend Disbursing Agent in establishing the accounting policies of
the Trust and monitor financial and shareholder accounting services;
(n) Review implementation of any share purchase programs authorized by the
Board of Trustees;
(o) Determine the amounts available for distribution as dividends and
distributions to be paid by the Trust to its shareholders; prepare and
arrange for the printing of dividend notices to shareholders; and provide
the Trust's Dividend Disbursing Agent and Custodian with such information
as is required for such parties to effect the payment of dividends and
distributions and to implement the Trust's dividend reinvestment plan;
(p) Prepare such information and reports as may be required by any banks
from which the Trust borrows funds;
(q) Provide such assistance to the Custodian and the Trust's counsel and
auditors as generally may be required to properly carry on the business and
operations of the Trust;
(r) Assist in the preparation and filing of Forms 3, 4, and 5 pursuant to
Section 16 of the Securities Exchange Act of 1934, as amended, and Section
30(f) of the 1940 Act for the officers and trustees of the Trust, such
filings to be based on information provided by those persons;
(s) Respond to or refer to the Trust's officers or Transfer Agent,
shareholder (including any potential shareholder) inquiries relating to the
Trust; and
(t) Supervise any other aspects of the Trust's administration as may be
agreed to by the Trust and the Investment Adviser.
All services are to be furnished through the medium of any directors, officers
or employees of the Investment Adviser or its affiliates as the Investment
Adviser deems appropriate in order to fulfill its obligations hereunder. The
Trust will reimburse the Investment Adviser or its affiliates for all out-of-
pocket expenses incurred by them in connection with the performance of the
administrative services described in this paragraph 3.
4. COVENANTS. In the performance of its duties under this Agreement, the
Investment Adviser:
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(a) 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, as amended and restated, 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;
(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 Adviser will attempt to
obtain the best price and the most favorable execution of its orders. In
placing orders, the Investment Adviser 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 Adviser may select brokers on the basis of the
research, statistical and pricing services they provide to the Trust and
other clients of the Investment Adviser. 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 Adviser 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 Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility
of the Investment Adviser 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 no instance, however, will the
Trust's securities be purchased from or sold to the Investment Adviser, or
any affiliated person thereof, except to the extent permitted by the SEC or
by applicable law; and
(c) 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 Investment Adviser 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.
5. SERVICES NOT EXCLUSIVE. Nothing in this Agreement shall prevent the
Investment Adviser 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 Adviser 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 Investment Adviser will undertake no activities which, in its judgment,
will adversely affect the performance of its obligations under this Agreement.
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6. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Adviser 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 Adviser 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.
7. AGENCY CROSS TRANSACTIONS. From time to time, the Investment Adviser or
brokers or dealers affiliated with it may find themselves in a position to buy
for certain of their brokerage clients (each an "Account") securities which the
Investment Adviser'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 Adviser 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 one or both parties to the transaction without the advisory
client's consent. This is because in a situation where the Investment Adviser is
making the investment decision (as opposed to a brokerage client who makes his
own investment decisions), and the Investment Adviser or an affiliate is
receiving commissions from both sides of the transaction, there is a potential
conflicting division of loyalties and responsibilities on the Investment
Adviser's part regarding the advisory client. The Securities and Exchange
Commission has adopted a rule under the Investment Advisers Act of 1940, as
amended, which permits the 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 Adviser 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 Adviser.
8. EXPENSES. During the term of this Agreement, the Investment Adviser 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 Investment Adviser.
9. COMPENSATION OF THE INVESTMENT ADVISER. (a) The Trust agrees to pay to
the Investment Adviser and the Investment Adviser agrees to accept as full
compensation for all services rendered by the Investment Adviser as such, a
monthly fee (the "Investment Advisory 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.
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10. LIMITATION ON LIABILITY. (a) The Investment Adviser will not be liable
for any error of judgment or mistake of law or for any loss suffered by
Investment Adviser 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) The Trust may, but shall not be required to, make advance payments to
the Investment Adviser in connection with the expenses of the Investment Adviser
in defending any action with respect to which damages or equitable relief might
be sought against the Investment Adviser under this Section (which payments
shall be reimbursed to the Trust by the Investment Adviser as provided below) if
the Trust receives (i) a written affirmation of the Investment Adviser'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 Adviser 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 Adviser is liable under this Section
or (2) in the absence of such a decision, upon the request of the Investment
Adviser 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 Adviser shall provide a security for such Investment
Adviser 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 Adviser ultimately will be found not to be liable under this Section.
11. 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 Investment Adviser 60 days'
notice (which notice may be waived by the Investment Adviser), 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 Adviser 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
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securities," "interested person" and "assignment" shall have the same meanings
of 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 Delaware for contracts to be per formed
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 CLAYMORE. The Investment Adviser has consented to the
use by the Trust of the name or identifying word "Claymore" in the name of the
Trust. Such consent is conditioned upon the employment of the Investment Adviser
as the investment adviser to the Trust. The name or identifying word "Claymore"
may be used from time to time in other connections and for other purposes by the
Investment Adviser and any of its affiliates. The Investment Adviser may require
the Trust to cease using "Claymore" in the name of the Trust if the Trust ceases
to employ, for any reason, the Investment Adviser, any successor thereto or any
affiliate thereof as investment 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 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.
18. 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.
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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.
MADISON/CLAYMORE COVERED CALL FUND
By:
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Name: Xxxxxxxxxx Xxxxxxxxx
Title: Secretary
CLAYMORE ADVISORS, LLC
By:
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Name: Xxxxxxxx Xxxxxxx
Title: Senior Managing Director
and General Counsel
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