DISTRIBUTION AGREEMENT
AGREEMENT made this ___ day of ________________, 2005, between CLAYMORE
EQUITY TRUST, a Delaware statutory trust (the "Fund"), and CLAYMORE SECURITIES,
INC., a Kansas corporation ("Claymore").
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints Claymore to act as distributor of shares of
beneficial interest (hereinafter called "shares") of the Fund in jurisdictions
wherein shares of the Fund may legally be offered for sale; provided, however,
that the Fund in its absolute discretion may (a) issue or sell shares directly
to holders of shares of the Fund upon such terms and conditions and for such
consideration, if any, as it may determine, whether in connection with the
distribution of subscription or purchase rights, the payment or reinvestment of
dividends or distributions, or otherwise; (b) issue or sell shares at net asset
value to the shareholders of any other investment company, for which Claymore
shall act as exclusive distributor, who wish to exchange all or a portion of
their investment in shares of such other investment company for shares of the
Fund; or (c) issue shares in connection with the merger or consolidation of any
other investment company with the Fund or the Fund's acquisition, by purchase or
otherwise, of all or substantially all of the assets of any other investment
company or all or substantially all of the outstanding shares of any such
company. Claymore shall appoint various financial service firms ("Firms") to
provide distribution services to investors. The Firms shall provide such office
space and equipment, telephone facilities, personnel, literature distribution,
advertising and promotion as is necessary or beneficial for providing
information and distribution services to existing and potential clients of the
Firms. Claymore may also provide some of the above services for the Fund.
Claymore accepts such appointment as distributor and agrees to render
such services and to assume the obligations herein set forth for the
compensation herein provided. Claymore shall for all purposes herein provided be
deemed to be an independent contractor and, unless expressly provided herein or
otherwise authorized, shall have no authority to act for or represent the Fund
in any way. Claymore, by separate agreement with the Fund, may also serve the
Fund in other capacities. The services of Claymore to the Fund under this
Agreement are not to be deemed exclusive, and Claymore shall be free to render
similar services or other services to others so long as its services hereunder
are not impaired thereby.
In carrying out its duties and responsibilities hereunder, Claymore
will, pursuant to separate written contracts, appoint various Firms to provide
advertising, promotion and other distribution services contemplated hereunder
directly to or for the benefit of existing and potential shareholders who may be
clients of such Firms. Such Firms shall at all times be deemed to be independent
contractors retained by Claymore and not the Fund.
Claymore shall use its best efforts with reasonable promptness to sell
such part of the authorized shares of the Fund as from time to time shall be
effectively registered under the Securities Act of 1933 ("Securities Act"), at
prices determined as hereinafter provided and on terms hereinafter set forth,
all subject to applicable federal and state laws and regulations and to
1
the Fund's organizational documents, provided, however, that Claymore may in its
discretion refuse to accept orders for shares from any particular applicant.
2. Claymore shall sell shares of the Fund to or through qualified Firms
in such manner, not inconsistent with the provisions hereof and the Fund's
currently effective registration statement, including the prospectus and
statement of additional information and any supplements or amendments thereto
("Registration Statement"), as Claymore may determine from time to time,
provided that no Firm or other person shall be appointed or authorized to act as
agent of the Fund without prior consent of the Fund. In addition to sales made
by it as agent of the Fund, Claymore may, in its discretion, also sell shares of
the Fund as principal to persons with whom it does not have selling group
agreements.
Shares of any class of any series of the Fund offered for sale or sold
by Claymore shall be so offered or sold at a price per share determined in
accordance with the Registration Statement. The price the Fund shall receive for
all shares purchased from it shall be the net asset value used in determining
the public offering price applicable to the sale of such shares. Any excess of
the sales price over the net asset value of the shares of the Fund sold by
Claymore as agent shall be retained by Claymore as a commission for its services
hereunder. Claymore may compensate Firms for sales of shares at the commission
levels provided in the Registration Statement from time to time. Claymore may
pay other commissions, fees or concessions to Firms, and may pay them to others
in its discretion, in such amounts as Claymore shall determine from time to
time. Claymore shall be entitled to receive and retain any applicable contingent
deferred sales charge as described in the Registration Statement. Claymore shall
also receive any distribution services fee payable by the Fund as provided in
the Fund's Rule 12b-1 Plan, as amended from time to time (the "Plan").
Claymore will require each Firm to conform to the provisions hereof and
the Registration Statement with respect to the public offering price or net
asset value, as applicable, of the Fund's shares, and neither Claymore nor any
such Firms shall withhold the placing of purchase orders so as to make a profit
thereby.
3. The Fund will use its best efforts to keep effectively registered
under the Securities Act shares for sale as herein contemplated. Notwithstanding
any other provision hereof, the Fund may terminate, suspend or withdraw the
offering of shares whenever, in its sole discretion, it deems such action to be
desirable.
4. The Fund will execute any and all documents and furnish any and all
information that may be reasonably necessary in connection with the
qualification of its shares for sale (including the qualification of the Fund as
a dealer where necessary or advisable) in such states as Claymore may reasonably
request (it being understood that the Fund shall not be required without its
consent to comply with any requirement which in its opinion is unduly
burdensome). The Fund will furnish to Claymore from time to time such
information with respect to the Fund and its shares as Claymore may reasonably
request for use in connection with the sale of shares of the Fund.
5. Claymore shall issue and deliver or shall arrange for various Firms
to issue and deliver on behalf of the Fund such confirmations of sales made by
it pursuant to this Agreement
2
as may be required. At or prior to the time of issuance of shares, Claymore will
pay or cause to be paid to the Fund the amount due the Fund for the sale of such
shares. Certificates shall be issued or shares registered on the transfer books
of the Fund in such names and denominations as Claymore may specify.
6. Claymore shall order shares of the Fund from the Fund only to the
extent that it shall have received purchase orders therefor. Claymore will not
make, or authorize Firms or others to make (a) any short sales of shares of the
Fund; or (b) any sales of such shares to any Board member or officer of the Fund
or to any officer or Board member of Claymore or of any corporation or
association furnishing investment advisory, managerial or supervisory services
to the Fund, or to any corporation or association, unless such sales are made in
accordance with the Registration Statement relating to the sale of such shares.
Claymore, as agent of and for the account of the Fund, may repurchase the shares
of the Fund at such prices and upon such terms and conditions as shall be
specified in the Registration Statement. In selling or reacquiring shares of the
Fund for the account of the Fund, Claymore will in all respects conform to the
requirements of all state and federal laws and the Conduct Rules of the National
Association of Securities Dealers, relating to such sale or reacquisition, as
the case may be. Claymore will observe and be bound by all the provisions of the
Fund's organizational documents (and of any fundamental policies adopted by the
Fund pursuant to the Investment Company Act of 1940, as amended (the "Investment
Company Act"), which at the time in any way require, limit, restrict, prohibit
or otherwise regulate any action on the part of Claymore hereunder.
Claymore agrees to indemnify and hold harmless the Fund and each of its
Board members and officers and each person, if any, who controls the Fund within
the meaning of Section 15 of the Securities Act, against any and all losses,
claims, damages, liabilities or litigation (including legal and other expenses)
to which the Fund or such Board members, officers, or controlling persons may
become subject under such Act, under any other statute, at common law or
otherwise, arising out of the acquisition of any shares by any person which (i)
may be based upon any wrongful act by Claymore or any of Claymore's employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not misleading if such
statement or omission was made in reliance upon information furnished to the
Fund by Claymore, or (iii) may be incurred or arise by reason of Claymore's
acting as the Fund's agent instead of purchasing and reselling shares as
principal in distributing the shares to the public, provided, however, that in
no case (i) is Claymore's indemnity in favor of a Board member or officer or any
other person deemed to protect such Board member or officer or other person
against any liability to which any such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of his duties or by reason of his reckless disregard of obligations and duties
under this Agreement or (ii) is Claymore to be liable under the indemnity
agreement contained in this paragraph with respect to any claim made against the
Fund or any person indemnified unless the Fund or such person, as the case may
be, shall have notified Claymore in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claims shall have been served upon the Fund or upon such person (or after the
Fund or such person shall have received notice of such service on any designated
agent), but failure to notify Claymore of any such claim shall not relieve
Claymore from any liability which Claymore may have to the Fund or any person
against whom
3
such action is brought otherwise than on account of Claymore's indemnity
agreement contained in this paragraph. Claymore shall be entitled to
participate, at Claymore's own expense, in the defense, or, if Claymore so
elects, to assume the defense of any suit brought to enforce any such liability,
but if Claymore elects to assume the defense, such defense shall be conducted by
counsel chosen by Claymore and satisfactory to the Fund, to its officers and
Board members, or to any controlling person or persons, defendant or defendants
in the suit. In the event that Claymore elects to assume the defense of any such
suit and retain such counsel, the Fund, such officers and Board members or
controlling person or persons, defendant or defendants in the suit shall bear
the fees and expenses of any additional counsel retained by them, but, in case
Claymore does not elect to assume the defense of any such suit, Claymore will
reimburse the Fund, such officers and Board members or controlling person or
persons, defendant or defendants in such suit for the reasonable fees and
expenses of any counsel retained by them. Claymore agrees to notify the Fund
promptly of the commencement of any litigation or proceedings against it in
connection with the issue and sale of any shares. The Fund shall not, without
the prior written consent of Claymore, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which the Fund is or could
have been a party and indemnity has or could have been sought hereunder by the
Fund, unless such settlement includes an unconditional release of Claymore from
all liability on claims that are the subject matter of such action, suit or
proceeding.
The Fund agrees to indemnify and hold harmless Claymore and each of
Claymore's directors and officers and each person, if any, who controls Claymore
within the meaning of Section 15 of the Securities Act, against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses) to which Claymore or such directors, officers or controlling persons
may become subject under such Act, under any other statute, at common law or
otherwise, arising out of the acquisition of any shares by any person which (i)
may be based upon any wrongful act by the Fund or any of its employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such statement or omission was not made in reliance upon information furnished
to Claymore by the Fund; provided, however, that in no case (i) is the Fund's
indemnity in favor of a director or officer or any other person deemed to
protect such director or officer or other person against any liability to which
any such person would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of his duties or by reason of his
reckless disregard of obligations and duties under this Agreement or (ii) is the
Fund to be liable under its indemnity agreement contained in this paragraph with
respect to any claims made against Claymore or any such director, officer or
controlling person unless Claymore or such director, officer or controlling
person, as the case may be, shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon Claymore or
upon such director, officer or controlling person (or after Claymore or such
director, officer or controlling person shall have received notice of such
service on any designated agent), but failure to notify the Fund of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Fund will be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the
4
defense of any suit brought to enforce any such liability, but if the Fund
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to Claymore, its directors, officers, or controlling
person or persons, defendant or defendants in the suit. In the event that the
Fund elects to assume the defense of any such suit and retain such counsel,
Claymore, its directors, officers or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any additional
counsel retained by them, but, in case the Fund does not elect to assume the
defense of any such suit, it will reimburse Claymore or such directors, officers
or controlling person or persons, defendant or defendants in the suit, for the
reasonable fees and expenses of any counsel retained by them. The Fund agrees to
notify Claymore promptly of the commencement of any litigation or proceedings
against it or any of its officers or directors in connection with the issuance
or sale of any shares. Claymore shall not, without the prior written consent of
the Fund, effect any settlement of any pending or threatened action, suit or
proceeding in respect of which either Claymore is or could have been a party and
indemnity has or could have been sought hereunder by Claymore, unless such
settlement includes an unconditional release of the Fund from all liability on
claims that are the subject matter of such action, suit or proceeding.
7. The Fund shall assume and pay all charges and expenses of its
operations not specifically assumed or otherwise to be provided by Claymore
under this Agreement or the Plan. The Fund will pay (or will enter into
arrangements providing that others will pay) all fees and expenses in connection
with the registration of the Fund and its shares under the United States
securities laws and the registration and qualification of shares for sale in the
various jurisdictions in which the Fund shall determine it advisable to qualify
such shares for sale (including registering the Fund as a broker or dealer or
any officer of the Fund or other person as agent or salesman of the Fund in any
such jurisdictions) ("Blue Sky expenses"). In addition, Claymore will pay all
expenses (other than expenses which one or more Firms may bear pursuant to any
agreement with Claymore) incident to the sale and distribution of the shares
issued or sold hereunder, including, without limiting the generality of the
foregoing, all (a) expenses of printing and distributing any prospectus and of
preparing, printing and distributing or disseminating any other literature,
advertising and selling aids in connection with the offering of the shares for
sale (except that such expenses need not include expenses incurred by the Fund
in connection with the preparation, typesetting, printing and distribution of
any registration statement or prospectus, report or other communication to
shareholders in their capacity as such), and (b) expenses of advertising in
connection with such offering.
No transfer taxes, if any, which may be payable in connection with the
issue or delivery or shares sold as herein contemplated or of the certificates
for such shares shall be borne by the Fund, and Claymore will bear all such
transfer taxes.
8. This Agreement shall become effective on the date hereof and shall
continue until ________________; and shall continue from year to year thereafter
only so long as such continuance is approved in the manner required by the
Investment Company Act.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Fund or by Claymore on sixty (60) days' written notice to the other
party. The indemnity provisions contained herein shall remain operative and in
full force and effect regardless of any termination of this Agreement. The Fund
may effect termination with respect to any class of any series of the Fund by a
vote of
5
(i) a majority of the Board members who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan, this Agreement, or in any other agreement related to the Plan, or (ii) a
majority of the outstanding voting securities of such series or class. Without
prejudice to any other remedies of the Fund, the Fund may terminate this
Agreement at any time immediately upon Claymore's failure to fulfill any of its
obligations hereunder.
All material amendments to this Agreement must be approved by a vote of
a majority of the Board, and of the Board members who are not interested persons
of the Fund and who have no direct or indirect financial interest in the
operation of the Plan, this Agreement or in any other agreement related to the
Plan, cast in person at a meeting called for such purpose.
The terms "assignment," "interested person" and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the
Investment Company Act and the rules and regulations thereunder.
Claymore shall receive such compensation for its services as set forth
in the Plan. Termination of this Agreement shall not affect the right of
Claymore to receive payments on any unpaid balance of the compensation earned
prior to such termination, as set forth in the Plan.
Notwithstanding anything in this Agreement to the contrary, Claymore
shall be contractually bound hereunder by the terms of any publicly announced
waiver of or cap on the compensation received for its distribution services
under the Plan or by the terms of any written document provided to the Board of
the Fund announcing a waiver or cap, as if such waiver or cap were fully set
forth herein.
9. Claymore will not use or distribute, or authorize the use,
distribution or dissemination by Firms or others in connection with the sale of
Fund shares any statements other than those contained in the Registration
Statement, except such supplemental literature or advertising as shall be lawful
under federal and state securities laws and regulations. Claymore will furnish
the Fund with copies of all such material.
10. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
11. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
12. The parties hereto are expressly put on notice that a Certificate
of Trust, referring to the Fund'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 Fund on behalf of the Fund as
trustee, and not individually, and, as provided in the Fund's Agreement and
Declaration of Trust, the obligations of the Fund are not binding on the Fund's
trustees, officers or shareholders individually but are binding only upon the
assets and property of the Fund, or the particular series in question, as the
case may be.
6
13. 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 provision of the 1940 Act.
14. This Agreement is the entire contract between the parties relating
to the subject matter hereof and supersedes all prior agreements between the
parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the Fund and Claymore have caused this Agreement to
be executed as of the day and year first above written.
CLAYMORE EQUITY TRUST
By: ____________________________________
CLAYMORE SECURITIES, INC.
By: ____________________________________
7
