FORM
OF
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT (the "Agreement") dated as of [ ],
2005, among Old Mutual/Claymore Long-Short Fund, a Massachusetts business trust
(the "Trust"), Claymore Advisors, LLC, a Delaware limited liability company
("Claymore" or the "Adviser"), and Analytic Investors, Inc., a California
corporation ("Analytic" or the "Sub-Adviser").
WHEREAS, the Adviser has agreed to furnish investment management and
advisory services 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 trust assets;
WHEREAS, the investment advisory agreement between the Adviser and the
Trust dated as of [ ], 2005 (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 the
Adviser may sub-contract investment advisory services with respect to the Trust
to one or more sub-adviser(s) pursuant to sub-advisory agreement(s) agreeable to
the Trust and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Adviser wishes to retain the Sub-Adviser to provide certain
investment management services to the Trust, as contemplated in the Investment
Advisory Agreement;
WHEREAS, the 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 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 Adviser hereby appoints the Sub-Adviser to act as
sub-adviser with respect to the assets of the Trust as set forth in this
Agreement and the Sub-Adviser accepts such appointment and agrees to render the
services herein set forth for the compensation herein provided. In connection
with such appointment, the Adviser has or will cause to be furnished (or shall,
as such documents become available or are amended, promptly furnish or cause to
be furnished) to the Sub-Adviser copies of each of the following:
(a) The Trust's Agreement and Declaration of Trust and all
amendments thereto (such agreement, as presently in effect and as it
shall from time to time be amended, is herein called the "Agreement and
Declaration of Trust");
(b) The Trust's By-Laws and all amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are
herein called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees (the "Trustees")
authorizing the appointment of the Adviser as the investment manager and
Sub-Adviser as investment sub-adviser and approving the Investment
Advisory Agreement and this Agreement;
(d) The Trust's most recently filed Amendment to its Registration
Statement on Form N-2 under the Securities Act of 1933, as amended, and
the 1940 Act, including all exhibits thereto, relating to common shares
of beneficial interest of the Trust;
(e) The Trust's most recent prospectus (such prospectus, as
presently in effect, and all amendments and supplements thereto are
herein called the "Prospectus");
(f) The Trust's most recent statement of additional information
(such statement of additional information, as presently in effect, and
all amendments and supplements thereto are herein called the "Statement
of Additional Information"); and
(g) The Investment Advisory Agreement.
2. SERVICES OF THE SUB-ADVISER. Subject to the succeeding provisions of
this section, the oversight and supervision of the Adviser and the direction and
control of the Trust's Board of Trustees (the "Board"), the Sub-Adviser shall
regularly provide the Trust with investment research, advise management and
supervision and shall furnish a continuous investment program for the Trust
consistent with the Trust's investment objectives, policies, and restrictions as
stated in the current Prospectus ad Statement of Additional Information, monitor
on a daily basis the investment activities and portfolio holdings of the Trust,
shall have full investment discretion to determine from time to time what
securities or other property will be purchased, retained or sold by the Trust,
and to vote proxies on behalf of the Trust. Subject to the provisions of
paragraph 3 hereof, the Sub-Adviser shall place orders for purchases and sales
of portfolio securities, options and other investments for the Trust. The
Sub-Adviser will keep the Trust and the Adviser informed of developments
materially adversely affecting the Trust's portfolio and shall furnish to the
Trust all information relevant to such developments. The Sub-Adviser will
periodically communicate to the Adviser, at such times as the Adviser may
reasonably direct, information concerning the purchase and sale of securities
for the Trust's portfolio, 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,
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(v) monitoring on a daily basis the investment activities and portfolio
holdings of the Trust, and (vi) such other information as the Adviser may
reasonably require for purposes of fulfilling its obligations to the Trust
under the Investment Advisory Agreement. At the request of the Adviser, the
Sub-Adviser will also, subject to the supervision of the Trust's Board of
Trustees, consult with the Adviser as to the overall management of the
Trust's assets and the investment polices and practices of the Trust. The
Sub-Adviser will provide the services rendered by it under this Agreement in
accordance with the Trust's investment objectives, 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 Prospectus filed with the SEC as part of
the Trust's Registration Statement on Form N-2 and the resolutions of the
Trust's Board of Trustees as and when communicated to the Sub-Adviser.
Subject to the Investment Advisory Agreement among the Trust and the
Adviser and subject to the direction and control of the Trust's Board of
Trustees, the Adviser has been 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.
3. COVENANTS. In the performance of its duties under this Agreement, the
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");
(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 (provided that a copy of such
amendments have been furnished to the Sub-Adviser); (iv) the investment
objectives, policies and restrictions of the Trust as set forth in the
Trust's Registration Statement on Form N-2 (provided that a copy of such
amendments have been furnished to the Sub-Adviser); and (v) any policies,
determinations and/or resolutions of the Board or the Adviser as and when
communicated to the Sub-Adviser;
(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 Sub-Adviser will seek to
obtain the best price and the most favorable execution of its orders,
except to the extent permitted and described below. In placing orders,
the Sub-Adviser will consider the experience and skill of the
broker-dealer's securities traders as well as the broker-dealer's
financial responsibility and administrative efficiency. Consistent with
this obligation, the Sub-Adviser may select brokers on the basis of the
research, statistical and pricing services they provide to the Trust and
other clients of the Adviser or the Sub-Adviser, 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
Sub-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 Sub-Adviser determines in good
faith that such commission is reasonable in terms either of the
transaction or the overall responsibility of the Adviser and the
Sub-Adviser to the Trust
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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 the Adviser, the Sub-Adviser or any
affiliated person thereof, except to the extent permitted by the SEC
or by applicable law;
(c) will maintain books and records with respect to the Trust's
portfolio securities transactions and render to the Adviser and the
Trust's Board of Trustees such periodic and special reports as they may
reasonably request; and
(d) 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 (i) with the prior written
approval by the Trust or (ii) where such information is required to be
disclosed by applicable law.
4. SERVICES NOT EXCLUSIVE. Nothing in this Agreement shall prevent the
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
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 the Sub-Adviser will not
undertake any activities which, in its reasonable judgment, would be reasonably
likely to materially and adversely affect the performance of its obligations
under this Agreement.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the 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
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 Adviser, the
Sub-Adviser or brokers or dealers affiliated with the Adviser or the Sub-Adviser
may find themselves in a position to buy for certain of their brokerage clients
(each an "Account") securities which the Sub-Adviser's and/or the 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 Adviser, the 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 an investment adviser is making
the investment decision (as opposed to a brokerage client who makes his own
investment decisions), and the Adviser, the 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
Sub-Adviser's and/or the Adviser's part regarding the advisory
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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
Sub-Adviser, the 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 Sub-Adviser and the Adviser.
7. EXPENSES. During the term of this Agreement, the Sub-Adviser will bear
all costs and expenses of its employees and any overhead incurred by the
Sub-Adviser 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 Sub-Adviser (and who are
not also such affiliated persons of the Adviser).
8. COMPENSATION.
(a) The Adviser agrees to pay to the Sub-Adviser and the Sub-Adviser
agrees to accept as full compensation for all services rendered hereunder
by the Sub-Adviser as such, a monthly fee (the "Sub-Advisory Fee") in
arrears at the annual rate equal to 0.50% of the average daily value of
the Trust's total managed assets. "Total managed assets" means (i) the
net assets of the Trust (including assets attributable to any preferred
shares that may be outstanding) plus (ii) any additional total assets of
the Trust attributable to borrowings of money, the use of reverse
repurchase agreements or dollar rolls or the issuance of debt securities
(together "external borrowings"), without deducting liabilities
representing external borrowings. 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 Investment
Sub-Advisory 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.
9. CERTAIN INFORMATION. The Sub-Advisers shall promptly notify the
Adviser in writing of the occurrence of any of the following events: (a) the
Sub-Adviser shall fail to be registered as an investment adviser under the
Advisers Act, (b) the Sub-Adviser 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, (c) there is a change in control of the Sub-Adviser or any parent of
the Sub-Adviser within the meaning of the 1940 Act, or (d) there is an adverse
change in the business or financial position of the Sub-Adviser which would be
reasonably likely to have a materially adverse effect on its ability to perform
its obligations under this Agreement.
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10. LIMITATION ON LIABILITY.
(a) The Sub-Adviser will not be liable for any error of judgment or
mistake of law or for any loss suffered by the Sub-Adviser, the Adviser
or by the Trust (including, without limitation, by reason of the
purchase, sale or retention of any investments for the Trust) in
connection with the performance of the Sub-Adviser's obligations under
this Agreement, except a loss resulting from the Sub-Adviser's breach of
fiduciary duty with respect to the Sub-Adviser's 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 Sub-Adviser in connection with the expenses of the
Sub-Adviser in defending any action with respect to which damages or
equitable relief might be sought against the Sub-Adviser under this
Section (which payments shall be reimbursed to the Trust by the
Sub-Adviser as provided below) if the Trust receives (i) a written
affirmation of the Sub-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 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 Sub-Adviser is liable under this Section or (2) in the absence
of such a decision, upon the request of the 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 Sub-Adviser shall provide a security for
such 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 reason to believe that the 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 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 (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 or
the Adviser at any time, without the payment of any penalty, upon giving the
Sub-Adviser 60
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days' notice (which notice may be waived by the Sub-Adviser), provided that
such termination by the Trust or the Adviser 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 Sub-Adviser on
60 days' written notice (which notice may be waived by the Trust and the
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.
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 Commonwealth of Massachusetts 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. USE OF THE NAME. Old Mutual (US) Holdings, Inc. ("Old Mutual"), an
affiliate of the Sub-Adviser, has consented to the use by the Trust of the name
or identifying word "Old Mutual" in the name of the Trust. Such consent is
conditioned upon the employment of the Sub-Adviser as the sub-adviser to the
Trust. The parties acknowledge that "Old Mutual" and any derivative thereof are
and remain the property of the Sub-Adviser or its affiliates and that neither
the Sub-Adviser nor such affiliates are hereby granting to any party hereto a
license or franchise with respect to the use of such names. The Trust and the
Adviser each agrees not to use the name "Analytic" or "Old Mutual" in any sales
material without first presenting such document to the Sub-Adviser and/or Old
Mutual and obtaining the applicable entity's consent prior to use. It is
understood that the names or identifying words "Old Mutual" or "Analytic" and
any derivatives thereof may be used from time to time in other connections and
for other purposes by the Sub-Adviser and any of its affiliates. Old Mutual may
require the Trust to cease using "Old Mutual" in the name of the Trust if the
Trust or the Adviser ceases to employ, for any reason, the Sub-Adviser, any
successor thereto or any affiliate thereof as sub-adviser of the Trust. No press
release shall be issued with respect to the Trust without the prior consent of
Old Mutual and the Sub-Adviser, and the Adviser and the Trust shall consult with
Old Mutual and the Sub-Adviser before making any public disclosure that may be
required by applicable law.
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16. MISCELLANEOUS.
(a) 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.
(b) The parties hereto are each independent contactors. No party is,
nor may any party represent itself as, an employee, agent, representative
or partner of the other parties, except to the extent that the Adviser
and Sub-Adviser may represent that they act as investment adviser and
sub-adviser, respectively, of the Trust. This Agreement is not intended
to create an association, joint venture, or partnership between the
parties, or to impose any partnership liability upon any party, and each
party hereby disclaims any such liability.
17. 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.
A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of State of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of an officer of the
Trust as an officer and not individually and that the obligations of this
instrument are not binding upon any of the Trustees, officers or shareholders
individually but are binding only upon the assets and property of the Trust.
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.
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CLAYMORE ADVISORS, LLC
By:
------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Senior Managing Director
and General Counsel
ANALYTIC INVESTORS, INC.
By:
------------------------------------
Name:
Title:
OLD MUTUAL/CLAYMORE LONG-SHORT FUND
By:
------------------------------------
Name: Xxxxxxxxxx Xxxxxxxxx
Title: Secretary
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