INVESTMENT ADVISORY AGREEMENT
CLAYMORE EXCHANGE-TRADED FUND TRUST
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement"), dated as of September 28,
2009, between Claymore Exchange-Traded Fund Trust, a Delaware statutory trust
(the "Trust"), and Claymore Advisors, LLC, a Delaware limited liability company
(the "Adviser").
WHEREAS, the Trust, an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), is authorized
to issue an unlimited number of shares with each series; and in separate series
representing interests in a separate portfolio of securities and other assets;
and
WHEREAS, the Trust intends to offer its shares in one or more such series, as
listed in Exhibit A or B hereto, which may be amended from time to time to add
or remove a series (each, a "Fund"), and invest the proceeds in securities,
WHEREAS, the Trust had previously retained the Adviser to render investment
advisory services with respect to each Fund pursuant to an Investment Advisory
Agreement between the Trust and the Adviser dated as of August 16, 2006 (May 27,
2008 with respect to the Claymore/Xxxxxxx James SB-1 Equity ETF), as amended as
of May 4, 2009 (collectively, the "Prior Agreement");
WHEREAS, the Prior Agreement was terminated as a result of its assignment under
the 1940 Act, whereupon the Trust and the Adviser entered into an Interim
Investment Advisory Agreement as of September 28, 2009;
WHEREAS, the Trust wishes to continue to have the Adviser furnish investment
advisory services to each Fund on an ongoing basis;
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;
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 each
Fund's assets and to supervise and arrange for the day-to-day operations of each
Fund and the purchase of securities for and the sale of securities held in the
investment portfolio of each Fund.
2. Duties and Obligations of the Adviser with Respect to Investment of
Assets of each Fund. Subject to the succeeding provisions of this section and
subject to the direction and control of the Trust's Board of Trustees, the
Adviser shall (i) act as investment adviser for and supervise and manage the
investment and reinvestment of each Fund's assets and, in connection therewith,
have complete discretion in purchasing and selling securities and other assets
for each Fund and in voting, exercising consents and exercising all other rights
appertaining to such securities and other assets on behalf of each Fund; (ii)
supervise the investment program of each Fund and the composition of its
investment portfolio; and (iii) arrange, subject to the provisions of paragraph
3 hereof, for the purchase and sale of securities and other assets held in the
investment portfolio of each Fund. 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 investment sub- advisers, including but not limited to
delegating the voting of proxies relating to
a Fund's portfolio securities in accordance with the proxy voting policies and
procedures of such investment 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 each Fund's
assets pursuant to this Agreement and to applicable law. The Adviser shall
initially determine and make such modifications to the identity and number of
shares of the securities to be accepted pursuant to each Fund's benchmark index
in exchange for "Creation Units" for each Fund and the securities that will be
applicable that day to redemption requests received for each Fund as may be
necessary as a result of rebalancing adjustments and corporate action events
(and may give directions to the Trust's custodian with respect to such
designations).
3. 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
Declaration of Trust and By-Laws of the Trust, as such documents are
amended from time to time; (iv) the investment objectives and policies
of each Fund as set forth in the Trust's Registration Statement on Form
N-1A; 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 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 each Fund
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 each Fund and its other clients and
that the total commissions paid by such Fund will be reasonable in
relation to the benefits to the Fund over the long-term. In no
instance, however, will a Fund'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; and
(c) will treat confidentially and as proprietary information
of each Fund all records and other information relative to each Fund,
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, except after prior
notification to and approval in writing by the applicable Fund, 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
such Fund.
4. 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
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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.
5. 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 each Fund 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.
6. 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.
7. 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.
During the term of this Agreement for each Fund issued on Exhibit A
hereto, the Adviser shall pay all of the expenses of the Fund, except for the
fee payments under this Agreement, payments under the Fund's 12b-1 plan, if any,
brokerage expenses, taxes, interest, litigation expenses and other extraordinary
expenses.
8. Compensation of the Adviser. Each Fund 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 fee accrued daily and paid monthly in arrears at an
annual rate equal to the percentage of the Fund's average daily net assets set
forth on Exhibit A or B hereto, as applicable. 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.
9. 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
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negligence on its part in the performance of its duties or from
reckless disregard by it of its duties under this Agreement.
(b) Each Fund 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 applicable Fund by the Adviser as
provided below) if the Fund 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 applicable Fund 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) each Fund 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.
10. Duration and Termination. This Agreement shall become effective
with respect to each Fund as of the date (the "Effective Date") this Agreement
has been approved by (a) 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
and (b) the vote of a majority of the outstanding voting securities of each Fund
at the time outstanding and entitled to vote. Unless sooner terminated with
respect to each Fund as provided herein, this Agreement shall continue in effect
for a period of two years from the Effective Date. Thereafter, if not
terminated, this Agreement shall continue in effect with respect to each Fund
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 each Fund at the time outstanding and entitled to vote, and (b) 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
each Fund 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.)
As additional series, other than the Funds, are established, the
Agreement shall become effective with respect to each such series listed in
Exhibit A or B, as applicable, at the annual fee set forth in such Exhibit upon
the initial public offering of such new series, provided that the Trust has
previously approved this Agreement for continuation as provided in this Section
10.
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11. 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.
12. Amendment of this Agreement. This Agreement may only be amended by
an instrument in writing signed by the parties hereto. Any amendment of this
Agreement shall be subject to the 1940 Act.
13. 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.
14. Use of the Name Claymore. The Adviser has consented to the use by
each Fund of the name or identifying word "Claymore" in the name of each Fund.
Such consent is conditioned upon the employment of the Adviser as the investment
adviser to each Fund. 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 a Fund to cease using "Claymore" in
the name of the Fund if such Fund ceases to employ, for any reason, the Adviser,
any successor thereto or any affiliate thereof as investment adviser of such
Fund.
15. Additional Limitation of Liability. The parties hereto are
expressly put on notice that a Certificate of Trust, referring to the Trust's
Agreement and Declaration of Trust (the "Certificate"), is on file with the
Secretary of the state of Delaware. The Certificate was executed by a trustee of
the Trust on behalf of the Trust as trustee, and not individually, and, as
provided in the Trust's Declaration of Trust, the obligations of the Trust are
not binding on the Trust's trustees, officers or shareholders individually but
are binding only upon the assets and property of the Trust, or the particular
series in question, as the case may be.
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.
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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.
CLAYMORE EXCHANGE-TRADED FUND
TRUST
By: _______________________
Name:
Title:
CLAYMORE ADVISORS, LLC
By: _______________________
Name:
Title:
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EXHIBIT A
As consideration for the Adviser's services to each of the Funds listed below,
the Adviser shall receive from each Fund a unitary fee of the following annual
percentages of the Fund's average daily net assets during the month.
Annual Advisory Fee
Name of Series (as a % of average daily net assets)
-------------- ------------------------------------
Claymore/Xxxxxxx James SB-1 Equity ETF 0.75%
Claymore/BNY Mellon International Small Cap LDRs ETF 0.45%
Wilshire 5000 Total Market ETF 0.12%
Wilshire 4500 Completion ETF 0.18%
Wilshire US REIT ETF 0.32%
Wilshire 5000 Equal-Weighted ETF 0.25%
EXHIBIT B
CLAYMORE EXCHANGE-TRADED FUND TRUST
Annual Advisory Fee
Name of Series (as a % of average daily net assets)
-------------- ------------------------------------
Claymore/BNY Mellon BRIC ETF 0.50%
Claymore/Zacks Sector Rotation ETF 0.50%
Claymore/Zacks Multi-Asset Income Index ETF 0.50%
Claymore/Sabrient Insider ETF 0.50%
Claymore/Sabrient Stealth ETF 0.50%
Claymore/Beacon Spin-Off ETF 0.50%
Claymore/Ocean Tomo Patent ETF 0.50%
Claymore/Sabrient Defender ETF 0.50%
Claymore/S&P Global Dividend Opportunities Index ETF 0.50%
Claymore/Ocean Tomo Growth Index ETF 0.50%
Claymore/Zacks Mid-Cap Core ETF 0.50%
Claymore/Morningstar Information Super Sector Index ETF 0.40%
Claymore/Morningstar Services Super Sector Index ETF 0.40%
Claymore/Morningstar Manufacturing Super Sector Index ETF 0.40%
Claymore/Zacks Dividend Rotation ETF 0.50%
Claymore U.S. Capital Markets Bond ETF 0.20%
Claymore U.S. Capital Markets Micro-Term Fixed Income ETF 0.20%
Claymore US-1 - The Capital Markets Index ETF 0.25%
