INVESTMENT SUB-ADVISORY AGREEMENT
CLAYMORE/FIDUCIARY STRATEGIC EQUITY FUND
THIS INVESTMENT SUB-ADVISORY AGREEMENT (the "Agreement") dated as of
_________________, 2005, among Claymore/Fiduciary Strategic Equity Fund, (the
"Fund") a series of Claymore Equity Trust, a Delaware statutory trust (the
"Trust"), Claymore Advisors, LLC, a Delaware limited liability company (the
"Investment Adviser"), and Fiduciary Asset Management, LLC, a limited liability
company (the "Investment Sub-Adviser").
WHEREAS, the Investment Adviser has agreed to furnish investment
management and advisory services to the Fund, a series of an open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act");
WHEREAS, the investment advisory agreement between the Investment
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 Investment Adviser may sub-contract investment
advisory services with respect to the Trust to a sub-adviser(s) pursuant to a
sub-advisory agreement(s) agreeable to the Trust and approved in accordance with
the provisions of the 1940 Act;
WHEREAS, the Investment Adviser wishes to retain the Investment
Sub-Adviser to provide certain sub-advisory services;
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 with respect to the Fund as set forth in
this Agreement and 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 perform certain of the day-to-day operations of the
Fund which may include one or more of the following services at the request of
the Investment Adviser: (i) managing the investment and reinvestment of the
assets of the Fund in accordance with the investment policies of the Fund; (ii)
arranging, subject to the provisions of paragraph 3 hereof, for the purchase and
sale of securities and other assets for the Fund; (iii) providing investment
research and credit analysis concerning the Fund's
assets; (v) placing orders for purchases and sales of Fund assets, (vi)
maintaining the books and records as are required to support Fund investment
operations, and (vii) monitoring on a daily basis the investment activities and
portfolio holdings relating to the Fund. At the request of the Investment
Adviser, the Investment Sub-Adviser will also, subject to the oversight and
supervision of the Investment Adviser and the direction and control of the
Trust's Board of Trustees, consult with the Investment Adviser as to the overall
management of the Fund and the investment policies and practices of the Fund,
including (but not limited to) the utilization by the Fund of any interest rate
or other hedging or risk management transactions in connection therewith, and
will perform any of the services described in the Investment Advisory Agreement.
In addition, the Investment Sub-Adviser will keep the Fund and the Investment
Adviser informed of developments materially affecting the Fund and shall, on its
own initiative, furnish to the Fund all information relevant to such
developments. 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 Fund,
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 Fund under the Investment Advisory
Agreement. The Investment Sub-Adviser will provide the services rendered by it
under this Agreement in accordance with the 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 Fund's prospectus filed with
the SEC as part of the Fund's registration statement on Form N-1A (the
"Registration Statement") and the resolutions of the Trust's Board of Trustees.
3. 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"); (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
the Fund as set forth in the Fund's prospectus filed with the SEC as part of the
Registration Statement; and (v) any policies, determinations and/or resolutions
of the Board of Trustees of the Trust or the Investment 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 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. Consistent with this obligation, the Investment
Sub-Adviser may select brokers on the basis of the research, statistical and
pricing services they provide to the Fund and other clients of the Investment
Adviser or the Investment 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 Investment Sub-Adviser hereunder. A
commission paid to such brokers may be higher than that which another qualified
broker would
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have charged for effecting the same transaction, provided that the
Investment Sub-Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Investment Adviser and the Investment Sub-Adviser to the Fund and their
other clients and that the total commissions paid by the Fund will be reasonable
in relation to the benefits to the Fund over the long term. In no instance,
however, will the 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) 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 request; and
(d) treat confidentially and as proprietary information of the Fund all
records and other information relative to the Fund and the 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.
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
the Investment Sub-Adviser will not undertake any activities which 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 Investment Sub-Adviser hereby agrees that all records
which it maintains for the 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 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 an 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
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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. 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 affiliated persons (as defined in the 0000 Xxx) of
the Investment Sub-Adviser.
8. Compensation.
The Fund 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 fee accrued daily and paid monthly in
arrears at an annual rate equal to [ ]% of the Fund's average daily net assets.
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. 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 shall fail to be registered as
an investment adviser under the Advisers Act, (b) the Investment 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 Investment Sub-Adviser or any parent of the Investment
Sub-Adviser within the meaning of the 1940 Act, or (d) there is an 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
Sub-Adviser, the Investment 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 Fund 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 Fund by the Investment Sub-Adviser as
provided below) if the Fund 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 met and (ii) a written
undertaking to reimburse the Fund whether or not the Investment Sub-Adviser
shall be deemed to have liability under this
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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 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 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 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 a vote of a majority of the outstanding voting securities of the
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 (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 the 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 Fund 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.
13. 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.
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
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without reference to choice of law principles thereof and in accordance with the
applicable provisions of the 1940 Act.
15. Use of the Name Fiduciary. The Investment Sub-Adviser has consented
to the use by the Fund of the name or identifying word "Fiduciary" in the name
of the Fund. Such consent is conditioned upon the employment of the Investment
Sub-Adviser as the investment sub-adviser to the Fund. The names or identifying
words "Fiduciary" may be used from time to time in other connections and for
other purposes by the Investment Sub-Adviser and any of its affiliates. The
Investment Sub-Adviser may require the Fund to cease using "Fiduciary" in the
name of the Fund if the Fund or the Investment Adviser ceases to employ, for any
reason, the Investment Sub-Adviser, any successor thereto or any affiliate
thereof as investment sub-adviser of the Fund.
16. 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 Agreement and 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.
17. 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.
18. 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: _____________________________________
Xxxxxxxx Xxxxxxx
Senior Managing Director and
General Counsel
FIDUCIARY ASSET MANAGEMENT, LLC
By: _____________________________________
Name:_______________________________
Title:______________________________
CLAYMORE EQUITY TRUST ON BEHALF OF
CLAYMORE/FIDUCIARY STRATEGIC EQUITY FUND
By: _____________________________________
Name:_______________________________
Title: Vice President
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