ADDITIONAL COMPENSATION AGREEMENT

ADDITIONAL COMPENSATION AGREEMENT

ADDITIONAL COMPENSATION AGREEMENT (the "Agreement"), dated as of October [•], 2010, by and among Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), Guggenheim Funds Investment Advisors, LLC ("Guggenheim Funds") and Guggenheim Partners Asset Management, LLC ("GPAM," and together with Guggenheim Funds, the "Advisers").

WHEREAS, Guggenheim Build America Bonds Managed Duration Trust (including any successor by merger or otherwise, the "Trust") is a newly organized, diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and its common shares are registered under the Securities Act of 1933, as amended;

WHEREAS, the Trust and the Advisers have entered into an underwriting agreement (the "Underwriting Agreement"), dated October [•], 2010 with Xxxxxxx Xxxxx and the other underwriters named therein (the "Underwriters");

WHEREAS, Guggenheim Funds is the investment adviser of the Trust;

WHEREAS, GPAM is the investment sub-adviser of the Trust;

WHEREAS, Xxxxxxx Xxxxx is acting as the lead underwriter in an offering of the Trust’s common shares; and

WHEREAS, the Advisers desire to provide additional compensation to Xxxxxxx Xxxxx for providing the advice and services described below;

NOW, THEREFORE, in consideration of the mutual terms and conditions set forth below, the parties hereto agree as follows:

1.   In consideration of Xxxxxxx Xxxxx’x providing advice relating to the structure and design and the organization of the Trust as well as services related to the sale and distribution of the Trust’s common shares, the Advisers shall pay Xxxxxxx Xxxxx an aggregate fee equal to [▪]% of the total price to the public of the Trust’s common shares sold by the Trust pursuant to the prospectus dated October [•], 2010 (the "Prospectus") (including all Initial Securities and Option Securities as such terms are described in the Underwriting Agreement) (the "Fee"), $[•] of which will be paid by the Adviser, and $[•] of which will be paid by the Sub-Adviser.  The Fee shall be paid within 30 days of the Closing Date (as defined in the Underwriting Agreement) and any Date of Delivery (as defined in the Underwriting Agreement), if applicable, in an aggregate amount equal to [▪]% of the total price to the public of the common shares issued by the Trust on such Closing Date or Date of Delivery, as the case may be, or as otherwise agreed to by the parties.  The Fee hereunder shall not exceed [▪]% of the total price to the public of the Trust’s common shares sold by the Trust pursuant to the Prospectus.  The sum of the fees payable to Xxxxxxx Xxxxx, Citigroup Global Markets Inc., Xxxxxx Xxxxxxx & Co. Incorporated, Xxxxx Fargo Securities, LLC, Xxxxxxx Xxxxx & Associates, Inc. and [Guggenheim Funds Distributors, Inc.] (excluding the sales load), the amount of the expense reimbursement of $.[▪] per common share payable by the Trust to the underwriters pursuant to the Underwriting Agreement, plus the underwriter’s counsel fees payable by the Trust, shall not exceed [4.5]% of the aggregate initial offering price of the Trust’s common shares offered by the Prospectus. The sum total of all compensation to or reimbursement of underwriters in connection with the offering, including sales load and all forms of additional compensation, shall not exceed 9% of the total price of the Trust’s common shares sold in the offering.

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2.   Nothing herein shall be construed as prohibiting Xxxxxxx Xxxxx or its affiliates from acting as an underwriter to any other client (including other registered investment companies).

3.   The Advisers acknowledge that Xxxxxxx Xxxxx did not provide and is not providing any advice hereunder as to the value of securities or regarding the advisability of purchasing or selling any securities for the Trust’s portfolio. No provision of this Agreement shall be considered as creating, nor shall any provision create, any obligation on the part of Xxxxxxx Xxxxx, and Xxxxxxx Xxxxx is not hereby agreeing, to: (i) furnish any advice or make any recommendations regarding the purchase or sale of portfolio securities or (ii) render any opinions, valuations or recommendations of any kind or to perform any such similar services in connection with acting as lead underwriter in an offering of the Trust’s common shares.

4.   This Agreement shall terminate upon the payment of the entire amount of the Fee, as specified in Paragraph 1 hereof.

5.   The Advisers will xxxxxxx Xxxxxxx Xxxxx with such information as Xxxxxxx Xxxxx believes appropriate to its assignment hereunder (all such information so furnished being the "Information").  The Advisers recognize and confirm that Xxxxxxx Xxxxx (a) has used and relied 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 the Advisers' knowledge, the Information furnished by the Advisers, when delivered, was true and correct in all material respects and did not contain any material misstatement of fact or omit to state any material fact necessary to make the statements contained therein not misleading.  The Advisers will promptly notify Xxxxxxx Xxxxx if they learn of any material inaccuracy or misstatement in, or material omission from, any Information delivered to Xxxxxxx Xxxxx.

6.   The Advisers agree that Xxxxxxx Xxxxx shall have no liability to the Advisers or the Trust for any act or omission to act by Xxxxxxx Xxxxx in the course of its performance under this Agreement, in the absence of gross negligence or willful misconduct on the part of Xxxxxxx Xxxxx.  The Advisers agree to the terms set forth in the Indemnification Agreement attached hereto, the provisions of which are incorporated herein by reference and shall survive the termination, expiration or supersession of this Agreement.

7.   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.

8.   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 Guggenheim Funds, GPAM and Xxxxxxx Xxxxx consent to the jurisdiction of such courts and personal service with respect thereto.  Each of Xxxxxxx Xxxxx and the Advisers 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 Adviser agrees that a final judgment in any proceeding or counterclaim brought in any such court shall be conclusive and binding upon that Adviser and may be enforced in any other courts to the jurisdiction of which the Adviser is or may be subject, by suit upon such judgment.

9.   This Agreement may not be assigned by any parties without the prior written consent of the other parties.

10.   This Agreement (including the attached Indemnification 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 Xxxxxxx Xxxxx and the Advisers.

11.   All notices required or permitted to be sent under this Agreement shall be sent, if to Guggenheim Funds:

Guggenheim Funds Investment Advisors, LLC

[•]

Attention:  [•]

or if to GPAM:

Guggenheim Partners Asset Management, LLC

[•]

Attention:  [•]

or if to Xxxxxxx Xxxxx:

Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx

Incorporated

Xxx Xxxxxx Xxxx

Xxx Xxxx, Xxx Xxxx 00000

Attention:  [•]

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.

12.   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.

[signatures on following  page]

IN WITNESS WHEREOF, the parties hereto have duly executed this Additional Compensation Agreement as of the date first above written.

GUGGENHEIM FUNDS INVESTMENT                                                                                XXXXXXX LYNCH, PIERCE, XXXXXX &

ADVISORS, LLC                                                                                                       XXXXX INCORPORATED

By: _____________________________ By: _____________________________

 Name:  Name:

 Title:  Title:

GUGGENHEIM PARTNERS ASSET

MANAGEMENT, LLC

By: _____________________________

 Name:

 Title:

Xxxxxxx Xxxxx & Co. Indemnification Agreement

October [•], 2010

Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx

Incorporated

Xxx Xxxxxx Xxxx

Xxx Xxxx, Xxx Xxxx  00000

Ladies and Gentlemen:

In connection with the engagement of Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") to advise and assist the undersigned (together with their affiliates and subsidiaries, referred to as the "Companies") with the matters set forth in the Additional Compensation Agreement dated October [•], 2010  among each of the Companies and Xxxxxxx Xxxxx (the "Agreement"), in the event that Xxxxxxx Xxxxx 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, the Companies agree to jointly and severally indemnify, defend and hold Xxxxxxx Xxxxx 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, 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 solely from the gross negligence or willful misconduct of Xxxxxxx Xxxxx.  In addition, in the event that Xxxxxxx Xxxxx 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, the Companies shall jointly and severally reimburse Xxxxxxx Xxxxx for its legal and other expenses (including the cost of any investigation and preparation) as such expenses are incurred by Xxxxxxx Xxxxx in connection therewith.  If such indemnification were not to be available for any reason, each Company agrees to, jointly and severally with the other Company, 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 that Company and its stockholders and affiliates and other constituencies, on the one hand, and Xxxxxxx Xxxxx, 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 that Company and its stockholders 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.  Each Company agrees that for the purposes of this paragraph the relative benefits received, or sought to be received, by that Company and its stockholders 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 stockholders 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 Xxxxxxx Xxxxx has been retained to perform financial services bears to the fees paid to Xxxxxxx Xxxxx under the Agreement; provided, that in no event shall the Company contribute less than the amount necessary to assure that Xxxxxxx Xxxxx is not liable for losses, claims, damages, liabilities and expenses in excess of the amount of fees actually received by Xxxxxxx Xxxxx 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 a Company or other conduct by that Company (or its employees or other agents), on the one

hand, or by Xxxxxxx Xxxxx, on the other hand.  

No Company will settle any Proceeding in respect of which indemnity may be sought hereunder, whether or not Xxxxxxx Xxxxx is an actual or potential party to such Proceeding, without Xxxxxxx Xxxxx’x prior written consent.  For purposes of this Indemnification Agreement, Xxxxxxx Xxxxx shall include Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, any of its affiliates, each other person, if any, controlling Xxxxxxx Xxxxx 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 Companies agree that neither Xxxxxxx Xxxxx nor any of its affiliates, directors, agents, employees or controlling persons shall have any liability to the Companies or any person asserting claims on behalf of or in right of the Companies in connection with or as a result of either Xxxxxxx Xxxxx’x 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 Companies resulted solely from the gross negligence or willful misconduct of Xxxxxxx Xxxxx in performing the services that are the subject of the Agreement.

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 COMPANIES AND XXXXXXX XXXXX CONSENT TO THE JURISDICTION OF SUCH COURTS AND PERSONAL SERVICE WITH RESPECT THERETO.  THE COMPANIES HEREBY CONSENT 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 XXXXXXX XXXXX OR ANY INDEMNIFIED PARTY.  EACH OF XXXXXXX XXXXX AND THE COMPANIES WAIVE 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.  EACH 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 THAT COMPANY AND MAY BE ENFORCED IN ANY OTHER COURTS TO THE JURISDICTION OF WHICH THAT COMPANY IS OR MAY BE SUBJECT, BY SUIT UPON SUCH JUDGMENT.

The foregoing Indemnification Agreement shall remain in full force and effect notwithstanding any termination of Xxxxxxx Xxxxx’x 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,

GUGGENHEIM FUNDS INVESTMENT

ADVISORS, LLC

By: ______________________

Name:

Title:

GUGGENHEIM PARTNERS ASSET MANAGEMENT, LLC

By: ______________________

Name:

Title:

Accepted and agreed to as of

the date first above written:

XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX

INCORPORATED

By  ______________________

Name:

Title: