FORM
OF
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement"), dated as of [ ],
2005, between Old Mutual/Claymore Long-Short Fund, a Massachusetts business
trust (the "Trust"), and Claymore Advisors, LLC, a Delaware limited liability
company (the "Adviser").
WHEREAS, the 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 Adviser is willing to furnish such services
upon the terms and conditions herein set forth;
WHEREAS, the Adviser will delegate certain of its duties and obligations
under Section 2 hereof to Analytic Investors Inc., the Trust's sub-adviser (the
"Sub-Adviser"), pursuant to an investment sub-advisory agreement among the
Adviser, the Sub-Adviser and the Trust, dated the date hereof;
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 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 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
"Board"), the Adviser is hereby 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, and 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 Adviser may delegate some or all of its duties
and obligations under this Agreement to one or more sub-investment advisers or
investment managers, including, without limitation, the Sub-Adviser; 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 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 ADVISER WITH RESPECT TO THE ADMINISTRATION
OF THE TRUST. The 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 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;
(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) 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, Form
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 concerning
the performance of the independent accountants as the Board may
reasonably request or deems appropriate;
(j) Make such reports and recommendations to the Board concerning
the performance and fees of the Trust's Custodian, Transfer Agent,
Administrator and Dividend Disbursing Agent as the Board may reasonably
request or deems appropriate;
(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;
(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 Adviser.
All services are to be furnished through the medium of any directors,
officers or employees of the Adviser or its affiliates as the Adviser deems
appropriate in order to fulfill its obligations hereunder. The Trust will
reimburse the 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
Adviser:
(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 (as currently in effect and as they
may be amended or supplemented from time to time); and (v) any policies,
determinations and/or resolutions of the Board;
(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 Adviser will attempt to
obtain the best price and the most favorable execution of its orders. In
placing orders, the 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
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. 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 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 Adviser determines in good faith
that such commission is reasonable in terms either of the transaction or
the overall responsibility of the 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 Adviser, or any affiliated person thereof, except to the
extent permitted by the SEC or by applicable law;
(c) will maintain or cause to be maintained books and records with
respect to the Trust's portfolio securities transactions and render to
the Board such periodic and special reports as they may reasonably
request;
(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 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 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
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
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 Adviser
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations under this Agreement.
6. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the 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
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 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
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 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 Adviser is making the investment decision (as
opposed to a brokerage client who makes his own investment decisions), and the
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 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 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 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 Adviser.
8. EXPENSES. During the term of this Agreement, the 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 Adviser.
9. COMPENSATION OF THE ADVISER.
(a) The Trust agrees to pay to the Adviser and the Adviser agrees to
accept as full compensation for all services rendered by the Adviser as
such, a monthly fee (the "Investment Advisory Fee") in arrears at the
annual rate equal to 1.00% 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 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.
10. LIMITATION ON LIABILITY. (a) The Adviser will not be liable for any
error of judgment or mistake of law or for any loss suffered by 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 Adviser in connection with the expenses of the Adviser in
defending any action with respect to which damages or equitable relief
might be sought against the Adviser under this Section (which payments
shall be reimbursed to the Trust by the Adviser as provided below) if the
Trust receives (i) a written affirmation of the 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 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 Adviser is liable under
this Section or (2) in the absence of such a decision, upon the request
of the 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 Adviser shall
provide a security for such 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 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 Board 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 Adviser 60 days' notice (which notice may be waived by
the 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 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 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 per formed 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 CLAYMORE. The 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 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 Adviser and any
of its affiliates. The 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 Adviser, any successor thereto or
any affiliate thereof as investment adviser of the Trust.
16. 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.
17. 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.
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 the foregoing
instrument to be executed by their duly authorized officers, all as of the day
and the year first above written.
OLD MUTUAL/CLAYMORE LONG-SHORT 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
