INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT (the "Agreement") dated as of
March 1, 2010, among Claymore Exchange-Traded Fund Trust, a Delaware statutory
trust (the "Trust"), Claymore Advisors, LLC, a Delaware limited liability
company (the "Investment Adviser"), and Guggenheim Partners Asset Management,
Inc., a Delaware corporation (the "Investment Sub-Adviser").
WHEREAS, the Investment Adviser has agreed to furnish investment
management and advisory services to the Trust, an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act") with respect to the Trust's assets;
WHEREAS, the Investment Adviser has entered into an investment advisory
agreement between the Investment Adviser and the Trust dated as of September 28,
2009 (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");
WHEREAS, the Investment Adviser wishes to retain the Investment
Sub-Adviser to provide certain sub-advisory services to the funds specified in
Appendix A hereto, as amended from time to time, each a series of the Trust
(each a "Fund" and collectively, the "Funds"), in the manner and on the terms
hereinafter set forth;
WHEREAS, the Investment Sub-Adviser is 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 Sub-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. APPOINTMENT. The Investment Adviser hereby appoints the Investment
Sub-Adviser to act as a sub-adviser for each Fund, subject to the supervision
and oversight of the Investment Adviser and the Trustees of the Trust, and in
accordance with the terms and conditions set forth in this Agreement. The
Investment Sub-Adviser accepts such appointment and agrees to render the
services herein set forth for the compensation herein provided.
2. SERVICES OF THE INVESTMENT SUB-ADVISER. Subject to the succeeding
provisions of this section, the oversight and supervision of the Investment
Adviser and the direction and control of the Trust's Board of Trustees, the
Investment Sub-Adviser will provide certain services in support of the
performance of the day-to-day
operations of each Fund, which may include one or more of the following services
at the request of the Investment Adviser: (i) determining the composition of a
Fund's assets, including the designation of the identity and weighting of the
Index constituents to be held by a Fund in accordance with the terms of this
Agreement and such Fund's Registration Statement; (ii) managing the investment
and reinvestment of all or a portion of a Fund's assets in accordance with the
investment policies of the Fund; (iii) arranging, subject to the provisions of
paragraph 4 hereof, for the purchase and sale of securities and other assets for
a Fund; (iv) placing orders for purchases and sales of a Fund's assets, (v)
designating the identity and weighting of the Fund securities in the Deposit
Securities and the Fund Securities (as such terms are defined in a Fund's
Registration Statement), (vi) promptly notifying the Investment Adviser of
securities in a Fund for which fair valuation may be required or of significant
events that the Investment Sub-Adviser feels may require fair value pricing of
all or a portion of a Fund's portfolio, and if requested by the Investment
Adviser shall provide assistance in determining the fair value of the securities
and other investments/assets in a Fund, as necessary (vii) maintaining the books
and records as are required to support Fund investment operations, (viii)
monitoring on a daily basis the investment activities and portfolio holdings
relating to the Fund, and (ix) voting proxies relating to the Fund's portfolio
securities in accordance with the proxy voting policies and procedures of the
Investment Sub-Adviser. In addition, the Investment Sub-Adviser will keep each
Fund and the Investment Adviser informed of developments of which it is aware
materially affecting the Funds and shall, upon request, furnish to the Funds all
information relevant to such developments. To the extent the Investment
Sub-Adviser is requested to place orders on behalf of a Fund, the Investment
Sub-Adviser will periodically communicate to the Investment Adviser, at such
times as the Investment Adviser 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 the Investment Adviser
may reasonably require for purposes of fulfilling its obligations to the Trust
under the Investment Advisory Agreement. The Investment Sub-Adviser will provide
the services rendered by it under this Agreement in accordance with each Fund's
investment objective, policies and restrictions (as currently in effect and as
they may be amended or supplemented from time to time) as stated in the Trust's
exemptive application, each Fund's Prospectus filed with the SEC as part of the
Trust's Registration Statement on Form N-1A and the resolutions of the Trust's
Board of Trustees. The Trust shall maintain its books and records, and the
Investment Sub-Adviser shall have no responsibility with respect thereto, other
than its obligations under the 1940 Act, the Advisers Act or other applicable
law. To the extent the Investment Sub-Adviser is requested to place orders for a
Fund, the Investment Sub-Adviser may, to the extent permitted by the 1940 Act,
the Advisers Act and other applicable law, aggregate purchase and sale orders
being made simultaneously for other accounts managed by the Investment
Sub-Adviser or its affiliates and allocate the securities so purchased or sold,
as well as expenses incurred in the transaction, among the applicable Fund and
other accounts in an equitable manner.
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3. USE OF SUBSIDIARIES AND AFFILIATES. The Investment Sub-Adviser may
perform any or all of the services contemplated hereunder, including but not
limited to providing investment advice to a Fund and, to the extent requested,
placing orders for the purchase and sale of portfolio securities or other
investments for a Fund, directly or through such of its subsidiaries or other
affiliates, as the Investment Sub-Adviser shall determine; provided, however,
that performance of such services through such subsidiaries or other affiliates
shall have been approved, when required by the 1940 Act, by (i) a vote of a
majority of the Trustees who are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of a party to this Agreement, other than
as Board members ("Independent Trustees"), cast in person at a meeting called
for the purpose of voting on such approval, and/or (ii) a vote of a majority of
that Fund's outstanding voting securities.
4. COVENANTS. In the performance of its duties under this Agreement,
the Investment Sub-Adviser:
(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") thereunder;
(ii) any other applicable provision of law; (iii) the provisions of the
Agreement and Declaration of Trust and By-Laws of the Trust, as such documents
are amended from time to time; (iv) the investment objectives, policies and
restrictions of each Fund as set forth in the Trust's exemptive application and
each Fund's Prospectus filed with the SEC as part of the Trust's Registration
Statement on Form N-1A; and (v) any policies, determinations and/or resolutions
of the Board of Trustees of the Trust or the Investment Adviser communicated to
the Investment Sub-Adviser;
(b) to the extent the Investment Sub-Adviser is requested to place
orders on behalf of a Fund, the Investment Sub-Adviser 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 Sub-Adviser will obtain the best price and the most favorable
execution of its orders. In placing orders, the Investment Sub-Adviser will
consider the experience and skill of the firm's securities traders as well as
the firm's financial responsibility and administrative efficiency. In no
instance, however, will a Fund's securities be purchased from or sold to the
Investment Adviser, the Investment Sub-Adviser or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) to the extent the Investment Sub-Adviser is requested to place
orders on behalf of a Fund, maintain books and records with respect to the
Fund's securities transactions and render to the Investment Adviser and the
Trust's Board of Trustees such periodic and special reports as they may
reasonably request; and
(d) treat confidentially and as proprietary information of the Trust
all non-public records and other information relative to the Trust, and each
Fund'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.
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4. SERVICES NOT EXCLUSIVE. Nothing in this Agreement shall prevent the
Investment Sub-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 Sub-Adviser 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; provided, however, that
any of the foregoing activities are consistent with applicable law and the
Investment Sub-Adviser's fiduciary obligations to the Trust.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Sub-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 Sub-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.
6. AGENCY CROSS TRANSACTIONS. From time to time, the Investment
Sub-Adviser or brokers or dealers affiliated with the Investment Sub-Adviser may
find themselves in a position to buy for certain of their brokerage clients
(each an "Account") securities which the Investment Sub-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 Sub-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 both
parties to the transaction without the advisory client's consent. This is
because in a situation where a Investment Sub-Adviser is making the investment
decision (as opposed to a brokerage client who makes his own investment
decisions), and the Investment Sub-Adviser 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
Sub-Adviser's part regarding the Advisory client. The SEC has adopted a rule
under the Advisers Act which permits an Investment Sub-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 Sub-Adviser or its affiliates to
participate in agency cross transactions involving an Account, consistent with
any policies and procedures that may be adopted by the Board of Trustees of the
Trust, and this Agreement shall constitute executed, written consent of the
Trust for the Investment Sub-Adviser engaging in agency cross transactions. The
Trust may revoke its consent at any time by written notice to the Investment
Sub-Adviser.
7. EXPENSES. During the term of this Agreement, the Investment
Sub-Adviser will bear all costs and expenses of its employees and any overhead
incurred by the Investment Sub-Adviser in connection with their duties hereunder
and shall bear the costs of any salaries or trustees, fees of any officers or
trustees of the Trust who are
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affiliated persons (as defined in the 0000 Xxx) of the Investment Sub-Adviser.
The Investment Sub-Adviser shall not be responsible for any expenses of the
Investment Adviser or the Trust not specifically set forth in Section 8 or
otherwise in any written agreement between the Investment Sub-Adviser and the
Trust or the Investment Adviser, as the case may be.
8. COMPENSATION.
(a) The Investment Advisor agrees to pay to the Investment Sub-Adviser
and the Investment Sub-Adviser agrees to accept as full compensation for all
services rendered by the Investment Sub-Adviser as such, a monthly fee as set
forth in Appendix B.
(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.
9. CERTAIN INFORMATION. The Investment Sub-Adviser shall promptly
notify the Investment Adviser in writing of the occurrence of any of the
following events: (a) the Investment Sub-Adviser failing to be registered as an
investment adviser under the Advisers Act, (b) the Investment Sub-Adviser having
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, (c) the occurrence of any change in
control of the Investment Sub-Adviser or any parent of the Investment
Sub-Adviser within the meaning of the 1940 Act, or (d) the occurrence of any
material adverse change in the business or financial position of the Investment
Sub-Adviser.
10. LIMITATION ON LIABILITY.
(a) The Investment Sub-Adviser will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Investment Adviser or
by the Trust (or their respective agents) 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 Sub-Adviser in connection with the expenses of the Investment
Sub-Adviser in defending any action with respect to which damages or equitable
relief might be sought against the Investment Sub-Adviser under this Section
(which payments shall be reimbursed to the Trust by the Investment Sub-Adviser
as provided below) if the Trust receives (i) a written affirmation of the
Investment Sub-Adviser's good faith belief that the standard of conduct
necessary for the limitation of liability in this Section has been
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met and (ii) a written undertaking to reimburse the Trust whether or not the
Investment Sub-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 Sub-Adviser is liable under this Section or (2) in the absence of
such a decision, upon the request of the Investment Sub-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 Sub-Adviser shall provide a security for such
Investment Sub-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 a
reasonable belief that the Investment Sub-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 shall continue (unless terminated automatically as set
forth below) 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 a vote of a majority of the outstanding voting securities of a Fund
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 (as
such term is defined in the 0000 Xxx) of any such party, 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, without the payment of
any penalty, upon giving the Investment Sub-Adviser 60 days' notice (which
notice may be waived by the Investment Sub-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 a Fund at the time outstanding and
entitled to vote, or by the Investment Sub-Adviser on 60 days' written notice
(which notice may be waived by the Trust), and will terminate automatically upon
any termination of the Investment Advisory Agreement between the Trust and the
Investment Adviser. This Agreement will also immediately terminate in the event
of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" shall have
the same meanings of such terms in the 1940 Act.)
12. 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.
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13. 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.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware 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.
15. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or 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.
16. COUNTERPARTS. This Agreement may be executed in counterparts by the
parties hereto, each of which shall constitute an original counterpart, and all
of which, together, shall constitute one Agreement.
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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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Xxxxx X. Xxxxxxxx
Senior Managing Director and
General Counsel
GUGGENHEIM PARTNERS ASSET
MANAGEMENT, INC.
By:
-------------------------------
CLAYMORE EXCHANGE-TRADED FUND TRUST
By:
-------------------------------
Xxxxxxx X. Xxxxxx
Secretary
APPENDIX A
Wilshire 5000 Total Market ETF
Wilshire 4500 Completion ETF
Wilshire US REIT ETF
Wilshire 5000 Equal-Weighted ETF
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APPENDIX B
As consideration for the Investment Sub-Adviser's services to each of the Funds
listed below, the Investment Sub-Adviser shall receive from the Investment
Adviser a fee of the following percentage of the Investment Adviser's monthly
net advisory fee.
Wilshire 5000 Total Market ETF 50%
Wilshire 4500 Completion ETF 50%
Wilshire US REIT ETF 50%
Wilshire 5000 Equal-Weighted ETF 50%
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