UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Co-Registrants [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
CLAYMORE EXCHANGE-TRADED FUND TRUST
CLAYMORE EXCHANGE-TRADED FUND TRUST 2
FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND
MADISON/CLAYMORE COVERED CALL & EQUITY STRATEGY FUND
OLD MUTUAL/CLAYMORE LONG-SHORT FUND
TS&W/CLAYMORE TAX-ADVANTAGED BALANCED FUND
WESTERN ASSET/CLAYMORE INFLATION-LINKED OPPORTUNITIES & INCOME FUND
(Names of Co-Registrants As Specified in their Charters)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
PRELIMINARY PROXY STATEMENT - SUBJECT TO COMPLETION
[CLAYMORE LOGO]
CLAYMORE FUNDS
2455 CORPORATE WEST DRIVE
LISLE, ILLINOIS 60532
November [o], 2009
Dear Shareholder:
I am writing to inform you that Claymore Group Inc. ("Claymore Group")
has merged with an indirect subsidiary of Guggenheim Partners, LLC (the
"Transaction"). As a result of the Transaction, Claymore Group, and its
associated entities, including Claymore Advisors, LLC (the "Adviser"), are now
indirect subsidiaries of Guggenheim Partners, LLC. The Adviser is the investment
adviser to each exchange-traded fund series (each, an "ETF" and, together, the
"ETFs") of Claymore Exchange-Traded Fund Trust and Claymore Exchange-Traded Fund
Trust 2 (each, a "Trust" and, together, the "Trusts"). The Adviser is also the
investment adviser to certain closed-end funds (each, a "Closed-End Fund" and,
together, the "Closed-End Funds"). With respect to each Closed-End Fund and
certain ETFs (such ETFs, together with the Closed-End Funds, the "Sub-Advised
Funds"), one or more independent investment sub-advisers or investment managers
(each, a "Sub-Adviser") was retained in connection with the management of each
Sub-Advised Fund's investment portfolio. Upon the closing of the Transaction,
each investment advisory agreement between the Adviser and (a) each Trust, on
behalf of each respective ETF, and (b) each Closed-End Fund, automatically
terminated pursuant to its terms. In addition, consummation of the Transaction
and the termination of the advisory agreements resulted in the termination of
each sub-advisory agreement of the Sub-Advised Funds pursuant to its terms.
The Adviser and the Sub-Advisers continue to provide services to the
ETFs and Closed-End Funds (each, a "Fund" and, together, the "Funds") on an
interim basis, as permitted by the Investment Company Act of 1940. However, in
order for Claymore and the Sub-Advisers to continue to provide services to the
Funds beyond the interim period, Shareholders of each Fund are being asked to
approve a new investment advisory agreement between Claymore and their Fund and
Shareholders of each Sub-Advised Fund are being asked to approve one or more new
investment sub-advisory agreements or investment management agreements for their
Fund. Important facts about the Transaction are:
o The Transaction has no effect on the number of Fund Shares you
own or the value of those Shares.
o Subject to Shareholder approval, Claymore will continue to
provide investment advisory services to the Funds, and the
Sub-Advisers will continue to provide investment sub-advisory
or investment management services to the Sub-Advised Funds.
o Your Fund's contractual advisory fee rate and, if applicable,
sub-advisory fee rate(s), will not increase.
o There are no material differences between the terms of each
Fund's proposed new investment advisory agreement and the
terms of such Fund's prior investment advisory agreement and
between the terms of each Sub-Advised Fund's proposed new
investment sub-advisory agreement(s) and terms of such Fund's
prior investment sub-advisory agreement(s).
The enclosed Notice of Joint Special Meeting of Shareholders and Proxy
Statement set forth information relating to the proposals to be addressed at the
joint special meeting of Shareholders of the Funds. The Board of Trustees of
each Fund believes that the proposals set forth in the Notice of Joint Special
Meeting of Shareholders are important and recommends that you read the enclosed
materials carefully. AFTER CAREFUL CONSIDERATION, THE BOARD OF TRUSTEES OF YOUR
FUND HAS APPROVED EACH APPLICABLE PROPOSAL AND RECOMMENDS THAT YOU VOTE "FOR"
EACH PROPOSAL APPLICABLE TO YOUR FUND.
Your vote is important. I encourage all Shareholders to participate in
the governance of their Funds. Please take a moment now to vote--either by
completing and returning the enclosed proxy card(s) in the enclosed postage-paid
return envelope, by telephone or through the Internet.
Claymore has retained The Altman Group, a professional proxy
solicitation firm, to assist in the solicitation of proxies. As the meeting date
approaches, if you do NOT vote, you may receive a phone call from them asking
you to vote. If you have any questions concerning the proxy, please feel free to
call (800) - .
Respectfully,
David C. Hooten
Chairman
Claymore Group Inc.
[CLAYMORE LOGO]
CLAYMORE FUNDS
2455 CORPORATE WEST DRIVE
LISLE, ILLINOIS 60532
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 12, 2010
Notice is hereby given to Shareholders of:
Fiduciary/Claymore MLP Opportunity Fund ("FMO")
Madison/Claymore Covered Call & Equity Strategy Fund ("MCN")
Old Mutual/Claymore Long-Short Fund ("OLA")
TS&W/Claymore Tax-Advantaged Balanced Fund ("TYW")
Western Asset/Claymore Inflation-Linked Opportunities & Income Fund
("WIW")
Each series of Claymore Exchange-Traded Fund Trust
Claymore/Beacon Spin-Off ETF ("CSD")
Claymore/Zacks Multi-Asset Income Index ETF ("CVY")
Claymore/Zacks Mid-Cap Core ETF ("CZA")
Claymore/Sabrient Defensive Equity Index ETF ("DEF")
Claymore/BNY Mellon BRIC ETF ("EEB")
Claymore/Zacks Dividend Rotation ETF ("IRO")
Claymore/S&P Global Dividend Opportunities Index ETF ("LVL")
Claymore/Morningstar Manufacturing Super Sector Index ETF
("MZG")
Claymore/Morningstar Information Super Sector Index ETF
("MZN")
Claymore/Morningstar Services Super Sector Index ETF ("MZO")
Claymore/Sabrient Insider ETF ("NFO") Claymore/Ocean Tomo
Patent ETF ("OTP")
Claymore/Ocean Tomo Growth Index ETF ("OTR")
Claymore/Raymond James SB-1 Equity ETF ("RYJ"),
Claymore/Sabrient Stealth ETF ("STH")
Claymore U.S. Capital Markets Bond ETF ("UBD")
Claymore U.S. Capital Markets Micro-Term Fixed Income ETF
("ULQ")
Claymore U.S.-1 - The Capital Markets Index ETF ("UEM")
Claymore/BNY Mellon International Small Cap LDRs ETF ("XGC")
Claymore/Zacks Sector Rotation ETF ("XRO")
Each series of Claymore Exchange-Traded Fund Trust 2
Claymore S&P Global Water Index ETF ("CGW")
Claymore/Zacks Country Rotation ETF ("CRO")
Claymore/Beacon Global Timber Index ETF ("CUT")
Claymore/BNY Mellon EW Euro-Pacific LDRs ETF ("EEN")
Claymore/SWM Canadian Energy Income Index ETF ("ENY")
Claymore/Beacon Global Exchanges, Brokers & Asset Managers
Index ETF ("EXB")
Claymore/NYSE Arca Airline ETF ("FAA")
Claymore/BNY Mellon Frontier Markets ETF ("FRN")
Claymore/AlphaShares China Small Cap Index ETF ("HAO")
Claymore/Zacks International Multi-Asset Income Index ETF
("HGI")
Claymore/Robb Report Global Luxury Index ETF ("ROB")
Claymore/Delta Global Shipping Index ETF ("SEA")
Claymore/MAC Global Solar Energy Index ETF ("TAN")
Claymore/AlphaShares China Real Estate ETF ("TAO")
(each a "Fund" and, collectively, the "Funds")
that a joint special meeting of Shareholders of the Funds (the "Meeting") will
be held at the offices of Claymore Securities, Inc., 2455 Corporate West Drive,
Lisle, Illinois 60532, on January 12, 2010, at [o] [a.m./p.m.] Central time. The
Meeting is
being held for the following purposes:
1. For Shareholders of each Fund, to approve a new investment
advisory agreement between your Fund and Claymore Advisors,
LLC (the "Adviser").
2. For Shareholders of certain Funds, to approve one or more new
investment sub-advisory agreements or investment management
agreements for your Fund, in the following manner:
(a) For FMO, to approve a new investment sub-advisory
agreement among the Fund, the Adviser and Fiduciary
Asset Management, LLC.
(b) For MCN, to approve a new investment management
agreement among the Fund, the Adviser and Madison
Asset Management, LLC.
(c) For OLA, to approve a new investment sub-advisory
agreement among the Fund, the Adviser and Analytic
Investors LLC.
(d) For TYW, to approve (i) a new investment sub-advisory
agreement among the Fund, the Adviser and Thompson,
Siegel & Walmsley LLC; and (ii) a new investment
sub-advisory agreement among the Fund, the Adviser
and SMC Fixed Income Management, LP.
(e) For WIW, to approve (i) a new investment management
agreement between the Adviser and Western Asset
Management Company ("Western"), (ii) a new investment
management agreement among the Adviser, Western and
Western Asset Management Company Pte. Ltd.
(Singapore), (iii) a new investment management
agreement among the Adviser, Western and Western
Asset Management Company Limited (London), and (iv) a
new investment management agreement among the
Adviser, Western and Western Asset Management Company
Ltd. (Japan).
(f) For each of UBD, ULQ and UEM, to approve a new
investment sub-advisory agreement between the Adviser
and Mellon Capital Management Corporation.
3. To transact such other business as may properly come before
the Meeting or any adjournments or postponements thereof.
THE BOARD OF TRUSTEES OF EACH FUND (EACH A "BOARD" AND, COLLECTIVELY,
THE "BOARDS"), INCLUDING THE INDEPENDENT TRUSTEES, RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF YOUR FUND'S NEW INVESTMENT ADVISORY AGREEMENT AND FOR YOUR FUND'S
NEW INVESTMENT SUB-ADVISORY AGREEMENT(S) OR INVESTMENT MANAGEMENT AGREEMENT(S),
IF APPLICABLE.
The Board of each Fund has fixed the close of business on November 13,
2009 as the record date for the determination of Shareholders entitled to notice
of, and to vote at, the Meeting. We urge you to complete, sign, date and mail
the enclosed proxy in the postage-paid envelope provided or record your voting
instructions via telephone or the Internet so you will be represented at the
Meeting.
/s/ [o]
[o]
on behalf of the Board of Trustees
of each Fund
Lisle, Illinois
November [o], 2009
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING IN PERSON OR
BY PROXY. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE BY
TELEPHONE, INTERNET OR MAIL. IF YOU ARE VOTING BY MAIL PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. IF
YOU WISH TO ATTEND THE MEETING AND VOTE IN PERSON, YOU WILL BE ABLE TO DO SO
AND YOUR VOTE AT THE MEETING WILL REVOKE ANY PROXY YOU MAY HAVE SUBMITTED.
MERELY ATTENDING THE MEETING, HOWEVER,
WILL NOT REVOKE ANY PREVIOUSLY
SUBMITTED PROXY. YOUR VOTE IS EXTREMELY IMPORTANT. NO MATTER HOW MANY OR HOW
FEW SHARES YOU OWN, PLEASE SEND IN YOUR PROXY CARD (OR VOTE BY TELEPHONE OR
THROUGH THE INTERNET PURSUANT TO THE INSTRUCTIONS CONTAINED ON THE
PROXY CARD) TODAY.
(This page has been left blank intentionally)
CLAYMORE FUNDS
----------------------
PROXY STATEMENT
----------------------
FOR THE JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 12, 2010
This joint proxy statement (the "Proxy Statement") is furnished to
Shareholders of each of the funds listed below.
CLOSED-END FUNDS
Fiduciary/Claymore MLP Opportunity Fund ("FMO")
Madison/Claymore Covered Call & Equity Strategy Fund ("MCN")
Old Mutual/Claymore Long-Short Fund ("OLA")
TS&W/Claymore Tax-Advantaged Balanced Fund ("TYW")
Western Asset/Claymore Inflation-Linked Opportunities & Income Fund
("WIW") (each closed-end fund listed above is sometimes
referred to herein as a "Closed-End Fund," and collectively as
the "Closed-End Funds")
EXCHANGE-TRADED FUNDS
Claymore Exchange-Traded Fund Trust
Claymore/Beacon Spin-Off ETF ("CSD")
Claymore/Zacks Multi-Asset Income Index ETF ("CVY")
Claymore/Zacks Mid-Cap Core ETF ("CZA")
Claymore/Sabrient Defensive Equity Index ETF ("DEF")
Claymore/BNY Mellon BRIC ETF ("EEB")
Claymore/Zacks Dividend Rotation ETF ("IRO")
Claymore/S&P Global Dividend Opportunities Index ETF ("LVL")
Claymore/Morningstar Manufacturing Super Sector Index ETF ("MZG")
Claymore/Morningstar Information Super Sector Index ETF ("MZN")
Claymore/Morningstar Services Super Sector Index ETF ("MZO")
Claymore/Sabrient Insider ETF ("NFO") Claymore/Ocean Tomo Patent ETF
("OTP")
Claymore/Ocean Tomo Growth Index ETF ("OTR") Claymore/Raymond
James SB-1 Equity ETF ("RYJ")
Claymore/Sabrient Stealth ETF ("STH")
Claymore U.S. Capital Markets Bond ETF ("UBD")
Claymore U.S. Capital Markets Micro-Term Fixed Income ETF ("ULQ")
Claymore U.S.-1 - The Capital Markets Index ETF ("UEM")
Claymore/BNY Mellon International Small Cap LDRs ETF ("XGC")
Claymore/Zacks Sector Rotation ETF ("XRO")
Claymore Exchange-Traded Fund Trust 2
Claymore S&P Global Water Index ETF ("CGW")
Claymore/Zacks Country Rotation ETF ("CRO")
Claymore/Beacon Global Timber Index ETF ("CUT")
Claymore/BNY Mellon EW Euro-Pacific LDRs ETF ("EEN")
Claymore/SWM Canadian Energy Income Index ETF ("ENY")
Claymore/Beacon Global Exchanges, Brokers & Asset Managers Index ETF
("EXB")
1
Claymore/NYSE Arca Airline ETF ("FAA")
Claymore/BNY Mellon Frontier Markets ETF ("FRN")
Claymore/AlphaShares China Small Cap Index ETF ("HAO")
Claymore/Zacks International Multi-Asset Income Index ETF ("HGI")
Claymore/Robb Report Global Luxury Index ETF ("ROB")
Claymore/Delta Global Shipping Index ETF ("SEA")
Claymore/MAC Global Solar Energy Index ETF ("TAN")
Claymore/AlphaShares China Real Estate ETF ("TAO")
(each series of Claymore Exchange-Traded Fund Trust and
Claymore Exchange-Traded Fund Trust 2 (each a "Trust," and,
together, the "Trusts") listed above is sometimes referred to
herein as an "ETF," and collectively as the "ETFs")
The Closed-End Funds together with the ETFs are sometimes referred to
herein collectively as the "Funds" and each one as a "Fund." Each Share, common
Share or preferred Share, as applicable (collectively, the "Shares"), of each
Fund is entitled to vote on each Proposal pertaining to that Fund. Holders of
Shares of the Funds are referred to herein as "Shareholders." The Proxy
Statement is furnished in connection with the solicitation by the Board of
Trustees of each Fund (each a "Board" and, collectively, the "Boards") of
proxies to be voted at the joint special meeting of Shareholders of the Funds to
be held on January 12, 2010, and any adjournments or postponements thereof (the
"Meeting"). The Meeting will be held at the offices of Claymore Advisors, LLC.,
2455 Corporate West Drive, Lisle, Illinois 60532, on January 12, 2010 at [o]
[a.m./p.m.] Central time.
This Proxy Statement gives you information you need to vote on the
matters listed on the accompanying Notice of Joint Special Meeting of
Shareholders ("Notice of Meeting"). Much of the information in this Proxy
Statement is required under rules of the Securities and Exchange Commission
("SEC"). If there is anything you don't understand, please contact us at our
toll-free number: (800) - - .
EACH FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF THE FUND'S MOST
RECENT ANNUAL REPORT AND SEMI-ANNUAL REPORT TO SHAREHOLDERS TO ANY SHAREHOLDER
UPON REQUEST. REQUESTS SHOULD BE DIRECTED TO CLAYMORE SECURITIES, INC., 2455
CORPORATE WEST DRIVE, LISLE, ILLINOIS 60532, (800) - - .
The Notice of Meeting, this Proxy Statement and the enclosed proxy card
are first being sent to Shareholders on or about November [o], 2009.
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INFORMATION TO HELP YOU UNDERSTAND
AND VOTE ON THE PROPOSALS
While we strongly encourage you to read the full text of this Proxy
Statement, we are also providing you the following brief overview of the
proposals addressed in this Proxy Statement (the "Proposals"), in a Question and
Answer format, to help you understand and vote on the Proposals. Your vote is
important. Please vote--either by completing and returning the enclosed proxy
card(s) in the enclosed postage-paid return envelope, by telephone or through
the Internet.
o WHY ARE YOU SENDING ME THIS INFORMATION?
You are receiving these materials because on November 13, 2009 (the
"Record Date") you owned Shares of one or more of the Funds and, as a
result, have a right to vote on the Proposal(s) applicable to your Fund
and are entitled to be present and to vote at the Meeting or any
adjournments or postponements thereof. Each Share of each Fund is
entitled to one vote on each Proposal pertaining to that Fund.
o WHY IS A SPECIAL MEETING OF SHAREHOLDERS BEING HELD?
Claymore Group Inc. ("Claymore Group") is the parent of Claymore
Advisors, LLC ("Claymore" or the "Adviser"). The Adviser is the
investment adviser to each of the ETFs and each of the Closed-End
Funds. With respect to the Closed-End Funds and the following three
ETFs: UBD, ULQ and UEM (such ETFs, the "Sub-Advised ETFs" and, together
with the Closed-End Funds, the "Sub-Advised Funds"), one or more
independent investment sub-advisers or investment managers (each, a
"Sub-Adviser") was retained in connection with the management of each
such Fund's investment portfolio, pursuant to an investment
sub-advisory agreement or investment management agreement (each, a
"Prior Sub-Advisory Agreement").
Claymore Group entered into an agreement and plan of merger pursuant to
which Claymore Group would merge with an indirect wholly-owned
subsidiary of Guggenheim Partners, LLC ("Guggenheim"), with Claymore
Group being the surviving company and becoming an indirect subsidiary
of Guggenheim (the "Transaction"). The Transaction was completed on
October 14, 2009 (the "Closing Date"), at which time Claymore Group and
its associated entities, including the Adviser, became indirect
subsidiaries of Guggenheim. The Transaction constituted an
"assignment," as defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), of each investment advisory agreement between
the Adviser and the respective Trusts, on behalf of each ETF, and each
respective Closed-End Fund (each, a "Prior Advisory Agreement"), which
resulted in the automatic termination of each Prior Advisory Agreement
pursuant to its terms. The Transaction and the termination of the Prior
Advisory Agreements also resulted in the termination of each Prior
Sub-Advisory Agreement pursuant to its terms.
As permitted pursuant to Rule 15a-4 under the 1940 Act, each Board
(including, with respect to each agreement, a majority of the trustees
who are not parties to such agreement or interested persons of any such
party (with respect to each respective agreement, the "Independent
Trustees")) has approved an interim investment advisory agreement
between the Adviser and (a) each respective Trust, on behalf of each
ETF, and (b) each respective Closed-End Fund (each, an "Interim
Advisory Agreement"), and each Board (including a majority of the
Independent Trustees) of each Sub-Advised Fund has approved an interim
investment sub-advisory agreement or investment management agreement
for each Sub-Adviser to the respective Sub-Advised Fund (each an
"Interim Sub-Advisory Agreement"). Each Interim Advisory Agreement and
Interim Sub-Advisory Agreement became effective on the Closing Date.
Pursuant to such agreements, the Adviser and the Sub-Adviser(s), if
applicable, may continue to serve a Fund in such capacities on an
interim basis for up to 150 days following the Closing Date, pending
receipt of Shareholder approval of new agreement(s) for such Fund.
Therefore, in order for the Adviser to continue serving as a Fund's
investment adviser and each Sub-Adviser to continue serving as
investment sub-adviser or investment manager of the applicable
Sub-Advised Fund(s) following the expiration of the 150 day interim
period, Shareholders must approve:
3
(i) with respect to such Fund, a new investment advisory agreement
between the Adviser and the respective Trust, on behalf of
each ETF, or the respective Closed-End Fund (each, a "New
Advisory Agreement");
(ii) with respect to such Sub-Advised Fund, a new investment
sub-advisory agreement or investment management agreement for
each Sub-Adviser to the respective Sub-Advised Fund (each, a
"New Sub-Advisory Agreement").
o HOW DOES THE TRANSACTION AFFECT YOUR FUND?
Your investment in your Fund does not change as a result of the
Transaction. You still own the same Shares in the Fund, and the net
asset value of your investment does not change as a result of the
Transaction. Further, the Transaction does not result in any change in
your Fund's investment objectives or principal investment strategies.
o HOW DOES YOUR FUND'S NEW ADVISORY AGREEMENT COMPARE WITH ITS PRIOR
ADVISORY AGREEMENT?
Your Fund's New Advisory Agreement, if approved by Shareholders of your
Fund, will still be with the Adviser and there will be no material
differences between the terms of your Fund's New Advisory Agreement and
the terms of your Fund's Prior Advisory Agreement.
o HOW DOES YOUR FUND'S NEW SUB-ADVISORY AGREEMENT(S) COMPARE WITH ITS
PRIOR SUB-ADVISORY AGREEMENT(S)?
If you are a Shareholder of a Sub-Advised Fund, your Fund's New
Sub-Advisory Agreement(s), if approved by Shareholders of your Fund,
will still be with the same Sub-Adviser(s) and there will be no
material differences between the terms of your Fund's New Sub-Advisory
Agreement(s) and the terms of the corresponding Prior Sub-Advisory
Agreement.
o WILL YOUR FUND'S FEES FOR INVESTMENT ADVISORY SERVICES INCREASE?
No. The advisory fee rate currently payable by your Fund to the Adviser
and the sub-advisory fee rates payable to your Fund's Sub-Adviser(s),
if applicable, will not change.
o WILL THE TRANSACTION RESULT IN ANY CHANGE IN THE SUB-ADVISER(S) TO YOUR
FUND?
No. If you are a Shareholder of a Sub-Advised Fund, the Transaction
does not affect the management or control of the Sub-Adviser(s) to your
Fund.
o WILL YOUR VOTE MAKE A DIFFERENCE?
YES! Your vote is important to ensure that the Proposal(s) can be acted
upon with respect to your Fund. Additionally, your immediate response
will help save on the costs of any future solicitations of Shareholder
votes for the Meeting. We encourage all Shareholders to participate in
the governance of their Funds.
o WHO IS ASKING FOR YOUR VOTE?
The enclosed proxy is solicited by the Board of your Fund for use at
the Meeting to be held on January 12, 2010, and, if the Meeting is
adjourned or postponed, at any later meetings, for the purposes stated
in the Notice of Meeting.
4
o HOW DOES YOUR FUND'S BOARD RECOMMEND THAT SHAREHOLDERS VOTE ON THE
PROPOSAL(S)?
Your Fund's Board, including the Independent Trustees of your Fund,
recommends that you vote "FOR" approval of the New Advisory Agreement
for your Fund and, with respect to the Sub-Advised Funds, "FOR"
approval of each New Sub-Advisory Agreement for your Fund.
O HOW DO YOU CAST YOUR VOTE?
Whether or not you plan to attend the Meeting, we urge you to complete,
sign, date, and return the enclosed proxy card in the postage-paid
envelope provided or record your voting instructions via telephone or
the Internet so your Shares will be represented at the Meeting.
Information regarding how to vote via telephone or the Internet is
included on the enclosed proxy card. The required control number for
Internet and telephone voting is printed on the enclosed proxy card.
The control number is used to match proxy cards with Shareholders'
respective accounts and to ensure that, if multiple proxy cards are
executed, Shares are voted in accordance with the proxy card bearing
the latest date.
If you wish to attend the Meeting and vote in person, you will be able
to do so. You may contact [o] at (800) - - to obtain directions to the
site of the Meeting.
Shares represented by duly executed proxies will be voted in accordance
with your instructions. If you sign the proxy, but do not fill in a
vote, your Shares will be voted in accordance with the Board's
recommendations. If any other business is brought before the Meeting,
your Shares will be voted at the proxies' discretion.
Shareholders who execute proxies or record their voting instructions
via telephone or the Internet may revoke them at any time before they
are voted by filing with the Secretary of the appropriate Fund a
written notice of revocation, by delivering (including via telephone or
the Internet) a duly executed proxy bearing a later date or by
attending the Meeting and voting in person. Merely attending the
Meeting, however, will not revoke any previously submitted proxy.
Broker-dealer firms holding Shares in "street name" for the benefit of
their customers and clients will request the instructions of such
customers and clients on how to vote their Shares on the Proposal.
Under current interpretations of the New York Stock Exchange (the
"NYSE"), broker-dealers that are members of the NYSE and that have not
received instructions from a customer may not vote such customer's
Shares on a Proposal. A signed proxy card or other authorization by a
beneficial owner of Shares that does not specify how the beneficial
owner's Shares are to be voted on a Proposal will be deemed to be an
instruction to vote such Shares in favor of such Proposal. If any other
business is brought before the Meeting, your Shares will be voted at
your proxy holder's discretion.
Therefore, if you beneficially own Shares that are held in "street
name" through a broker-dealer or that are held of record by a service
organization, and if you have not given or do not give voting
instructions for your Shares, your Shares may not be voted at all or
may be voted in a manner that you may not intend. You are strongly
encouraged to be sure your broker-dealer or service organization has
instructions as to how your Shares are to be voted.
Preferred shares held in "street name" as to which voting instructions
have not been received from the beneficial owners or persons entitled
to vote as of one business day before the Meeting, or, if adjourned,
one business day before the day to which the Meeting is adjourned, and
that would otherwise be treated as "broker non-votes" may, pursuant to
Rule 452 of the New York Stock Exchange, be voted by the broker on the
Proposal in the same proportion as the votes cast by all preferred
Shareholders of such Fund who have voted on that item. Rule 452 permits
proportionate voting of preferred shares with respect to a particular
Proposal if, among other things, (i) a minimum of 30% of the preferred
shares outstanding has been voted by the holders of such preferred
shares with respect to such Proposal and (ii) less than 10% of the
preferred shares outstanding has been voted by the holders of such
preferred shares against such item. For the purpose of meeting the 30%
test, abstentions will be treated as Shares voted
5
and for the purpose of meeting the 10% test, abstentions will not be
treated as Shares voted against the item.
o WHAT VOTE IS REQUIRED TO APPROVE THE PROPOSALS?
To be approved with respect to a particular Fund, the New Advisory
Agreement and each New Sub-Advisory Agreement, if applicable, must be
approved by a vote of a majority of the outstanding voting securities
of that Fund. The "vote of the majority of the outstanding voting
securities" is defined in the 1940 Act as the lesser of the vote of (i)
67% or more of the voting securities of a Fund entitled to vote thereon
present at the Meeting or represented by proxy if holders of more than
50% of the Fund's outstanding voting securities are present or
represented by proxy; or (ii) more than 50% of the outstanding voting
securities of the Fund entitled to vote thereon. With respect to TYW,
holders of common Shares and preferred Shares will vote together as a
single class.
o WHY IS A JOINT MEETING BEING HELD?
The Proposals are similar for each Fund and management of the Funds has
concluded that it is cost-effective to hold a joint special meeting and
to have a joint proxy statement. Shareholders of each Fund will vote
separately on the Proposals with respect to their Fund. An unfavorable
vote on a Proposal by the Shareholders of one Fund will not affect the
implementation of such Proposal by another Fund if such Proposal is
approved by Shareholders of that Fund.
6
PROPOSAL 1: APPROVAL OF NEW ADVISORY AGREEMENTS
BACKGROUND AND THE TRANSACTION
The Adviser serves as the investment adviser for each Fund and is
responsible for each Fund's management. The Adviser is a wholly-owned subsidiary
of Claymore Group, a privately-held financial services company offering unique
investment solutions for financial advisors and their valued clients. Based in
Lisle, Illinois, Claymore Group entities have provided supervision, management
and/or servicing on approximately $13.3 billion in assets, as of September 30,
2009.
On July 17, 2009, Claymore Group entered into an agreement and plan of
merger which governs the Transaction (the "Merger Agreement"), subsequently
amended on August 18, 2009, with two newly formed, wholly-owned subsidiaries of
Guggenheim, GuggClay Acquisition, Inc. ("Acquisition Corporation") and an
intermediate holding company ("Holdings," Holdings and Acquisition Corporation
being collectively referred to as the "Acquisition Subsidiaries"). On August 18,
2009, Guggenheim also agreed to arrange for substantial additional equity and
debt financing to Claymore Group, in an aggregate of up to approximately $37
million, which was intended to be available prior to and regardless of whether
the Transaction was consummated. The equity financing, which closed in September
2009, consisted of approximately $11.7 million for newly-issued common stock of
Claymore Group representing, on a fully diluted basis, 24.9% of the outstanding
common stock of Claymore Group. The debt financing consisted of up to $25
million of subordinated loans, which was in addition to the up to $20 million of
subordinated loans to Claymore Group previously arranged by affiliates of
Guggenheim as interim financing for working capital and for inventory purchases
in connection with Claymore Group's investment supervisory business (all such
subordinated loans being collectively referred to as the "Debt Financing"). The
Debt Financing could be drawn upon by Claymore Group pursuant to its terms and
is due three years from the issuance date, provided, however, that any such Debt
Financing drawn upon by Claymore Group shall become immediately due upon certain
breaches of covenants and upon any change of control of Claymore Group.
On the Closing Date, October 14, 2009, the Transaction was consummated
and Claymore Group and its associated entities, including the Adviser, became
indirect subsidiaries of Guggenheim. Acquisition Corporation merged with and
into Claymore Group, with Claymore Group being the surviving corporation. All
Shares of Claymore Group common stock issued and outstanding immediately prior
to the Transaction (except those held by the Acquisition Subsidiaries or
dissenting stockholders or held in treasury) were cancelled and converted into
the right to receive an aggregate cash payment of approximately $39 million. All
Shares of Claymore Group common stock held prior to the Transaction by the
Acquisition Subsidiaries or held in treasury immediately prior to the
Transaction were cancelled without payment. All Shares of Acquisition
Corporation were converted into common stock of Claymore Group.
GUGGENHEIM
Guggenheim is a global, independent, privately held, diversified
financial services firm with more than $100 billion in assets under supervision
and 800 dedicated professionals. Headquartered in Chicago and New York, the firm
operates through offices in 20 cities in the U.S., Europe and Asia. Guggenheim
operates businesses in investment management, capital markets, wealth management
and merchant banking. Within the investment and wealth management businesses,
Guggenheim specializes in fixed income and alternative investments, and in
providing sophisticated wealth advisory and family office services. Within
capital markets, it specializes in providing debt financing and structured
finance solutions to clients. Merchant banking activities include its portfolio
of investments in funds managed by it, joint venture business investments, and
new business launch activities not integrated into other primary operating
businesses.
PRIOR ADVISORY AGREEMENTS
The Adviser served as the investment adviser for each Fund pursuant to
each Fund's respective Prior Advisory Agreement. The date of each Fund's Prior
Advisory Agreement, the date such agreement was last approved by Shareholders of
such Fund, the date the continuation of such agreement was last approved by the
Board of such Fund and the advisory fee rate payable thereunder is set forth in
Appendix C hereto.
7
Each Prior Advisory Agreement provided for its automatic termination in
the event of an "assignment," as defined in the 1940 Act. The closing of the
Transaction resulted in a change in control of Claymore Group and, ultimately,
its subsidiary the Adviser, which was deemed an "assignment" of each Prior
Advisory Agreement resulting in its termination. The Transaction is not,
however, expected to result in a change in the persons responsible for the
management of the Funds or in the operations of the Funds or in any changes in
the investment approach of the Funds.
INTERIM ADVISORY AGREEMENTS
Rule 15a-4 under the 1940 Act permits each Board (including a majority
of the Independent Trustees) to approve and enter into an Interim Advisory
Agreement pursuant to which the Adviser may serve as investment adviser to the
Fund for up to 150 days following the Closing Date, pending receipt of
Shareholder approval of the Fund's New Advisory Agreement.
Based upon the considerations described below under "--Board
Considerations," each Board, including the Independent Trustees, approved the
Interim Advisory Agreement for the respective Fund on the date set forth in
Appendix C. In approving the Interim Advisory Agreement, each Board, including a
majority of the Independent Trustees, determined that the scope and quality of
services to be provided to each respective Fund under the Interim Advisory
Agreement would be at least equivalent to the scope and quality of services
provided under the Prior Advisory Agreement. The compensation to be received by
the Adviser under each Fund's Interim Advisory Agreement is not greater than the
compensation the Adviser would have received under such Fund's Prior Advisory
Agreement.
Each Fund's Interim Advisory Agreement became effective upon the
Closing Date. There are no material differences between the terms of each Fund's
Interim Advisory Agreement and the terms of such Fund's Prior Advisory Agreement
and New Advisory Agreement, except for those provisions in the Interim Advisory
Agreement which are necessary to comply with the requirements of Rule 15a-4
under the 1940 Act. The provisions of each Interim Advisory Agreement required
by Rule 15a-4 under the 1940 Act include:
(i) the Interim Advisory Agreement terminates upon the earlier of
the 150th day following the Closing Date or the effectiveness
of the New Advisory Agreement;
(ii) the Board or a majority of the Fund's outstanding voting
securities may terminate the Interim Advisory Agreement at any
time, without the payment of any penalty, on not more than 10
calendar days' written notice to the Adviser;
(iii) the compensation earned by the Adviser under the Interim
Advisory Agreement will be held in an interest-bearing escrow
account with the Fund's custodian or a bank;
(iv) if a majority of the Fund's outstanding voting securities
approve the Fund's New Advisory Agreement by the end of the
150-day period, the amount in the escrow account (including
interest earned) will be paid to the Adviser; and
(v) if a majority of the Fund's outstanding voting securities do
not approve the Fund's New Advisory Agreement, the Adviser
will be paid, out of the escrow account, the lesser of (a) any
costs incurred in performing the Interim Advisory Agreement
(plus interest earned on that amount while in escrow), or (b)
the total amount in the escrow account (plus interest earned).
NEW ADVISORY AGREEMENTS
It is proposed that the Adviser and (a) each respective Trust, on
behalf of each ETF, and (b) each respective Closed-End Fund enter into a New
Advisory Agreement, to become effective upon the date of Shareholder approval.
Under Section 15(a) of the 1940 Act, each New Advisory Agreement requires the
approval of (i) the Board, including a majority of the Independent Trustees, of
the respective Fund and (ii) the Shareholders of the respective Fund. It was a
condition of the Merger Agreement that the Boards, including a majority of the
Independent Trustees, approve the New Advisory Agreements, on terms no less
favorable to the Adviser, taken as a whole, than the Prior Advisory Agreements.
In the event that the Shareholders of any Fund do not approve the respective New
Advisory Agreement, the Adviser may continue to act as the investment adviser
for such Fund pursuant to the Interim Advisory Agreement
8
for a period of up to 150 days following the Closing Date. In such event, the
respective Board will determine a course of action believed by such Board to be
in the best interests of such Fund and its Shareholders.
Based upon the considerations described below under "--Board
Considerations," each Board, including the Independent Trustees, approved the
New Advisory Agreement on the date set forth in Appendix C.
There are no material differences between the terms of each Fund's New
Advisory Agreement and the terms of such Fund's Prior Advisory Agreement. Forms
of the New Advisory Agreements are attached in Appendix I hereto and the
description of the New Advisory Agreements is qualified in its entirety by
reference to Appendix I hereto.
Duties and Obligations. Each Fund's New Advisory Agreement provides
that subject to the direction and control of the Fund's Board, the Adviser shall
(i) act as investment adviser for and supervise and manage the investment and
reinvestment of the Fund's assets, (ii) supervise the investment program of the
Fund and the composition of its investment portfolio, and (iii) arrange for the
purchase and sale of securities and other assets held in the investment
portfolio of the Fund. Each Fund's New Advisory Agreement provides that in
performing its duties, the Adviser may delegate some or all of its duties and
obligations under the New Advisory Agreement to one or more investment
sub-advisers or investment managers. In addition, each Fund's New Advisory
Agreement provides that the Adviser shall furnish office facilities and
equipment and clerical, bookkeeping, shareholder servicing and administrative
services (other than such services, if any, provided by the Fund's other service
providers), as described in the New Advisory Agreement, to the extent requested
by the Fund. Each Trust's New Advisory Agreement also provides that 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 ETF's benchmark
index in exchange for "Creation Units" for each ETF and the securities that will
be applicable that day to redemption requests received for each ETF as may be
necessary as a result of rebalancing adjustments and corporate action events and
may given directions to the Trust's custodian with respect to such designations.
The duties and obligations of the Adviser under each Fund's New Advisory
Agreement are identical to the duties and obligations of the Adviser under such
Fund's Prior Advisory Agreement.
Compensation. Each Fund's New Advisory Agreement does not result in any
change in the advisory fee rate paid by such Fund. Pursuant to each Fund's New
Advisory Agreement, each Fund pays to the Adviser as full compensation for all
services rendered by the Adviser as such, a monthly fee at an annual rate equal
to a specified percentage of the Fund's assets, as set forth in the respective
agreement. The Adviser bears all costs and expenses of its employees and any
overhead incurred in connection with its duties under the New Advisory Agreement
and bears the costs of any salaries or trustees fees of certain officers or
trustees of the Fund affiliated with the Adviser. Certain ETFs (specifically
EEN, RYJ and XGC) pay to the Adviser a unitary management fee for the services
and facilities it provides payable on a monthly basis at the annual rate equal
to a specified percentage of the ETF's assets. For such ETFs, out of the unitary
management fee, the Adviser pays substantially all expenses of the ETF,
including the cost of transfer agency, custody, fund administration, legal,
audit and other services, except for the fee payments under the advisory
agreement, distribution fees, if any, brokerage expenses, taxes, interest,
litigation expenses and other extraordinary expenses. These provisions of each
Fund's New Advisory Agreement are identical to provisions of such Fund's Prior
Advisory Agreement. The advisory fee rate and the asset base on which such fee
is payable is the same between each Fund's Prior Advisory Agreement, Interim
Advisory Agreement and New Advisory Agreement. Each Fund's advisory fee rate
under such Fund's Prior Advisory Agreement, Interim Advisory Agreement and New
Advisory Agreement is set forth in Appendix C hereto. The amount of advisory
fees paid by each Fund to the Adviser during the Fund's last fiscal year is set
forth in Appendix E hereto.
Term and Termination. Assuming approval by Shareholders, each Fund's
New Advisory Agreement shall continue for an initial term of one year, provided,
however, that each Board intends to consider the continuation of the New
Advisory Agreement during such one year term. Thereafter, each Fund's New
Advisory Agreement shall continue in effect from year to year after the initial
term if approved annually (i) by the Fund's Board or the holders of a majority
of the outstanding voting securities of the Fund and (ii) by a majority of the
trustees who are not "interested persons" of any party to the Fund's New
Advisory Agreement, by vote cast in person at a meeting called for the purpose
of voting on such approval. Each Fund's New Advisory Agreement may be terminated
(i) by the Fund at any time, without the payment of any penalty, upon giving the
Adviser 60 days' written notice, or (ii) by the Adviser on 60 days' written
notice. Each Fund's New Advisory Agreement will also immediately terminate in
the event of its assignment, as defined in the 1940 Act. The length of the
initial term of each Prior Advisory Agreement was generally two years. Except
with respect to the length of the initial term, these provisions of each Fund's
New Advisory
9
Agreement are identical to provisions of such Fund's Prior Advisory Agreement.
Limitation of Liability. Each Fund's New Advisory Agreement provides
that the Adviser will not be liable for any error of judgment or mistake of law
or for any loss suffered by the Adviser or by the Fund in connection with the
performance of the New Advisory Agreement, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by the Adviser of its
duties under the New Advisory Agreement or, with respect to certain funds, a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services. These provisions of each Fund's New Advisory
Agreement are identical to provisions of such Fund's Prior Advisory Agreement.
Use of the Name "Claymore." Each Fund's New Advisory Agreement provides
that the Adviser has consented to the use by the Fund of the name or identifying
word "Claymore" in the name of the Fund and that the Adviser may require the
Fund to cease using "Claymore" in the name of the Fund if the Fund ceases to
employ, for any reason, the Adviser, or, with respect to certain Funds, any
successor thereto or any affiliate thereof as investment adviser of the Fund.
These provisions of each Fund's New Advisory Agreement are identical to
provisions of such Fund's Prior Advisory Agreement.
SECTION 15(F) OF THE 1940 ACT
Section 15(f) of the 1940 Act provides that, when a change in control
of an investment adviser occurs, the investment adviser or any of its affiliated
persons may receive any amount or benefit in connection with the change in
control as long as two conditions are met. The first condition specifies that no
"unfair burden" may be imposed on the investment company as a result of a
transaction relating to the change in control, or any express or implied terms,
conditions or understandings. The term "unfair burden," as defined in the 1940
Act, includes any arrangement during the two-year period after the change in
control transaction whereby the investment adviser (or predecessor or successor
adviser), or any interested person of any such investment adviser, receives or
is entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory or other services) or from any person in connection with the
purchase or sale of securities or other property to, from, or on behalf of the
investment company (other than fees for bona fide principal underwriting
services). The second condition specifies that, during the three-year period
immediately following consummation of the change of control transaction, at
least 75% of the investment company's board of directors or trustees must not be
"interested persons" (as defined in the 1940 Act) of the investment adviser or
predecessor adviser.
Consistent with the first condition of Section 15(f), the Adviser and
the Acquisition Subsidiaries have agreed that they will use their reasonable
best efforts to ensure that there is no "unfair burden" imposed on the Funds as
a result of the Transaction. With respect to the second condition of Section
15(f), the Adviser and the Acquisition Subsidiaries have agreed that they will
use their reasonable best efforts to comply with and cause each Fund to conduct
its business to ensure that for a period of three years after the closing of the
Transaction at least 75% of the trustees of each Fund will not be "interested
persons" (as defined in the 1940 Act) of the Adviser or Guggenheim. The Funds
currently meet this condition. Therefore, the Adviser and the Acquisition
Subsidiaries represented to each Board that that no unfair burden would be
imposed on the respective Fund as a result of the Transaction.
BOARD CONSIDERATIONS
Prior Advisory Agreements. The date of each Fund's Prior Advisory
Agreement and the date on which it was last approved by such Fund's Board,
including the Independent Trustees, is provided in Appendix C. As part of its
review process, a Committee of each Board, consisting solely of the Independent
Trustees (each sometimes referred to in this Section as the "Committee" and
together as the "Committees"), was represented by independent legal counsel.
Each Board reviewed materials received from the Adviser and independent legal
counsel. Each Board also had previously received, throughout the year, Board
meeting information regarding performance and operating results of each Fund it
oversees.
In preparation for its review of the applicable Prior Advisory
Agreements, each Committee communicated with independent legal counsel regarding
the nature of information to be provided, and independent legal counsel, on
behalf of each Committee, sent a formal request for information. The Adviser
provided extensive information in response to each request. Among other
information, the Adviser provided general information to assist the Committees
10
in assessing the nature and quality of services provided by the Adviser and
information comparing the investment performance, advisory fees and total
expenses of each Fund to other funds, information about the profitability of
Prior Advisory Agreement to the Adviser and the compliance program of the
Adviser.
Based upon its review, each Committee and each Board concluded that it
was in the best interest of the respective Fund to renew such Fund's Prior
Advisory Agreement. In reaching this conclusion for each Fund, no single factor
was determinative in the Board's analysis, but rather each Board considered a
variety of factors, including the nature, extent and quality of services
provided by the Adviser, advisory fees, performance, profitability, economies of
scale and other benefits to the Adviser. In approving each Fund's Prior Advisory
Agreement, each respective Board considered separately the best interests of
each Fund overseen by such Board. The specific factors considered by each Board
are described in further detail in each respective Fund's annual report or
semi-annual report to Shareholders. Each Fund will furnish, without charge, a
copy of such annual report and semi-annual report to Shareholders to any
Shareholder upon request. Requests should be directed to Claymore Securities,
Inc., 2455 Corporate West Drive, Lisle, Illinois 60532, (800) ___-____.
Interim Advisory Agreements and New Advisory Agreements. Provided below
is an overview of the primary factors the Boards considered in connection with
the review of the respective Interim Advisory Agreements and the New Advisory
Agreements. In determining whether to approve the Interim Advisory Agreement and
the New Advisory Agreement for a Fund, each Board considered separately the best
interests of each Fund overseen by such Board. Each Board, including the
Independent Trustees, approved the respective Fund's Interim Advisory Agreement
and New Advisory Agreement.
Each Board reviewed materials received from the Adviser, Guggenheim and
independent legal counsel. Each Board also had previously received, throughout
the year, Board meeting information regarding performance and operating results
of the respective Fund. Earlier this year, the Adviser informed the Boards that
it was in discussions with Guggenheim concerning a strategic transaction,
including a potential sale of a controlling interest in the Adviser. The Adviser
provided periodic reports to representatives of each Board as to the status and
nature of such discussions with Guggenheim and the Adviser's operating and
financial results. In the spring of 2009, the Adviser informed the Boards that
Guggenheim had arranged up to $20 million of subordinated loans to Claymore
Group as interim financing for working capital and for inventory purchases in
connection with its business of creating, distributing and supervising unit
investment trusts and other investment products.
Following the execution of the Merger Agreement, a telephonic meeting
was held on July 28, 2009 and attended by certain members of each Board, the
chief executive officer of Claymore Group and the chief executive officer of
Guggenheim. Such executive officers summarized the principal terms of the Merger
Agreement, and described the Transaction, the business plans for the Adviser
following the consummation of the Transaction and answered such questions as
were raised at the meeting. Representatives of the Boards requested additional
information regarding the Transaction, Guggenheim and the impact of the
Transaction on the Shareholders of the Funds.
During the third quarter of 2009, the Committees received reports on
the progress of the Transaction, including the Debt Financing and additional
equity financing arranged by Guggenheim. As part of its review process, each
respective Committee was represented by independent legal counsel. Each
Committee reviewed materials received from the Adviser, Guggenheim and
independent legal counsel. The Adviser and Guggenheim provided, among other
information, information regarding the terms of the Transaction and potential
benefits to the Adviser from the Transaction. The information provided regarding
Guggenheim included (i) financial information, (ii) information regarding senior
executives of the firm, (iii) information regarding other Guggenheim affiliated
investment managers, (iv) information regarding litigation and regulatory
matters and (v) potential conflicts of interest. The Adviser and Guggenheim also
provided information regarding Guggenheim's and the Adviser's intentions for the
business, operations and personnel of the Adviser following the closing of the
Transaction. The Committees met and discussed the Transaction and the Interim
Advisory Agreement and the New Advisory Agreement in September 2009. Additional
supplemental information regarding the Transaction and Guggenheim was provided
by the Adviser and Guggenheim and reviewed by the Committees.
Subsequent to these meetings, each Board met in person to consider the
Interim Advisory Agreement and the New Advisory Agreement at meetings held in
late September 2009. Each such Board meeting involved the Boards of
11
one or more Funds, but not necessarily all Boards, and over the course of such
meetings each Board met with representatives of the Adviser and Guggenheim to
discuss the Transaction. Representatives from the Adviser and Guggenheim
discussed the Transaction with, and answered questions from, the Boards. The
date of each such meeting, and the date on which each Fund's Interim Advisory
Agreement and New Advisory Agreement was approved by its Board, is set forth in
Appendix C hereto. The Committees met in executive session to discuss the
Transaction and the information provided at the Board meetings. The respective
Committee for each Fund concluded that it was in the best interest of such Fund
to approve the Fund's Interim Advisory Agreement and New Advisory Agreement and,
accordingly, recommended to the respective Board the approval of such Fund's
Interim Advisory Agreement and New Advisory Agreement. The respective Board
subsequently approved each Fund's Interim Advisory Agreement and approved each
Fund's New Advisory Agreement for a one-year term. Each Board also determined to
consider the continuation of the agreement during the course of the one-year
term by conducting a thorough review of the various information that is part of
each Board's regular annual consideration of the continuation of each Fund's
advisory agreements. In reaching the conclusion to approve the Interim Advisory
Agreement and New Advisory Agreement for each Fund, no single factor was
determinative in its Board's analysis, but rather each Board considered a
variety of factors. Provided below is an overview of the primary factors the
Boards considered in connection with the review of the Interim Advisory
Agreements and the New Advisory Agreements.
In connection with each Board's consideration of the Interim Advisory
Agreement and the New Advisory Agreement, the respective Trustees considered,
among other information, the following factors, in addition to other factors
noted in this Proxy Statement:
o within the last year, the Board had engaged in a thorough
review of the various factors, including fees and performance,
that are part of the decision whether to continue an advisory
agreement;
o Board approval of each Fund's New and Interim Advisory
Agreement was a condition to the closing of the Transaction;
o Claymore's statement to the Board that the manner in which the
Funds' assets are managed will not change as a result of the
Transaction;
o the aggregate advisory fee rate payable by each Fund will not
change under such Fund's Interim Advisory Agreement or New
Advisory Agreement;
o there are no material differences between the terms of each
Fund's Interim Advisory Agreement and New Advisory Agreement
and the terms of such Fund's Prior Advisory Agreement;
o the capabilities of the Adviser's personnel who will provide
advisory (if applicable), management and administrative
services to the Funds are not expected to change, and the key
personnel who currently provide advisory (if applicable),
management and administrative services to the Funds are
expected to continue to do so after the Transaction;
o the assurance from the Adviser and Guggenheim that following
the Transaction there will not be any diminution in the
nature, quality and extent of services provided to the Funds;
o the Adviser's current financial condition;
o the impact of the Transaction on the Adviser's day-to-day
operations;
o the reputation, capabilities, experience, organizational
structure and financial resources of Guggenheim;
o the long-term business goals of Guggenheim and the Adviser
with regard to the business and operations of the Adviser;
12
o that Shareholders of the Funds will not bear any costs in
connection with the Transaction, inasmuch as the Adviser will
bear the costs, fees and expenses incurred by the Funds in
connection with this Proxy Statement and any other costs of
the Funds associated with the Transaction; and
o that the Adviser and the Acquisition Subsidiaries have agreed
to refrain from imposing or seeking to impose, for a period of
two years after the Closing, any "unfair burden" (within the
meaning of Section 15(f) of 1940 Act) on the Funds.
Nature, Extent and Quality of Services Provided by the Adviser. Each
Board noted that key investment (if applicable) and management personnel
servicing the Funds are expected to remain with the Adviser following the
Transaction and that the services provided to the Funds by the Adviser are not
expected to change. Each Board also considered the Adviser's and Guggenheim's
representations to the Boards that Guggenheim intends for the Adviser to
continue to operate following the closing of the Transaction in much the same
manner as it operates today, and that the impact of the Transaction on the
day-to-day operations of the Adviser would be neutral or positive. Each Board
also considered Guggenheim's statement that the Adviser's compliance policies
and procedures, disaster recovery plans, information security controls and
insurance program would not change materially following consummation of the
Transaction. Based on this review, each Board concluded that the range and
quality of services provided by the Adviser to the Funds were expected to
continue under the Interim Advisory Agreement and the New Advisory Agreement at
the same or improved levels.
Advisory Fees. Each Board also considered the fact that the advisory
fee rates payable to the Adviser would be the same under each Fund's Interim
Advisory Agreement and New Advisory Agreement as they are under such Fund's
Prior Advisory Agreement, which had within the last year been determined to be
reasonable. The Boards concluded that these factors supported approval of each
Fund's Interim Advisory Agreement and New Advisory Agreement.
Performance. With respect to the performance of the Funds, the Boards
considered that, for those Funds for which the Adviser has delegated
responsibility for the management of the Funds' portfolios to sub-advisers,
those sub-advisers would continue to manage the portfolios following the closing
of the Transaction, subject to Shareholder approval of the respective New
Sub-Advisory Agreement. For those ETFs for which the Adviser has retained
responsibility for the management of the portfolios (i.e. all ETFs other than
the Sub-Advised ETFs), the Boards considered that the portfolio management
personnel currently responsible for the management of the portfolios were
expected to continue to manage the portfolios following the closing of the
Transaction with at least the same or improved resources. The Boards concluded
that these factors supported approval of each Interim Advisory Agreement and New
Advisory Agreement.
Profitability. Each Board noted that it was too early to predict how
the Transaction may affect the Adviser's future profitability from its
relationship with the Funds, but concluded that this matter would be given
further consideration on an annual basis going forward. Each Board also noted
that Adviser's fee rates under each Fund's Interim Advisory Agreement and New
Advisory Agreement are the same as those assessed under such Fund's Prior
Advisory Agreement.
Economies of Scale. Each Board considered any potential economies of
scale that may result from the Transaction. Each Board further noted
Guggenheim's statement that such economies of scale could not be predicted in
advance of the closing of the Transaction.
Other Benefits. Each Board noted its prior determination that the
advisory fees were reasonable, taking into consideration other benefits to the
Adviser (including the receipt by Claymore of an administrative fee, if
applicable). Each Board also considered other benefits to the Adviser,
Guggenheim and their affiliates expected to be derived from their relationships
with the Funds as a result of the Transaction and noted that no additional
benefits were reported by the Adviser or Guggenheim as a result of the
Transaction. Therefore, the Boards concluded that the advisory fees continued to
be reasonable, taking into consideration other benefits.
ADDITIONAL INFORMATION ABOUT THE ADVISER
Principal Executive Officer and Board of Directors. The Chairman and
Chief Executive Officer of Claymore
13
Group is David C. Hooten. The Board of Directors of Claymore Group consists of
David C. Hooten, Michael J. Rigert, Vice Chairman of Claymore Group, Anthony J.
DiLeonardi, Vice Chairman of Claymore Group, and Bruce R. Albelda, Chief
Financial Officer of Claymore Group and Scott Minerd, Chief Investment Officer
of Guggenheim.
Relationships with the Fund. No Trustee of any Fund is an officer,
employee, director, general partner or Shareholder of the Adviser or has any
material direct or indirect interest in the Adviser any other person
controlling, controlled by or under common control with the Adviser. Following
the closing of the Transaction, Nicholas Dalmaso, a former equity owner of
Claymore Group, resigned from the Board of each Fund for which he served as a
trustee (WIW, TYW, OLA and each Trust).
Certain officers of the Funds, as identified on Appendix G, are
employees or officers of the Adviser.
The Adviser also serves as administrator to certain Funds, as described
under "Additional Information--Administrator." It is expected that the Adviser
will continue to provide administrative services to such Funds following
consummation of the Transaction.
SHAREHOLDER APPROVAL
To be approved with respect to a particular Fund, a New Advisory
Agreement must be approved by a vote of a majority of the outstanding voting
securities of such Fund. The "vote of the majority of the outstanding voting
securities" is defined in the 1940 Act as the lesser of the vote of (i) 67% or
more of the voting securities of a Fund entitled to vote thereon present at the
Meeting or represented by proxy if holders of more than 50% of the Fund's
outstanding voting securities are present or represented by proxy; or (ii) more
than 50% of the outstanding voting securities of the Fund entitled to vote
thereon. The holders of the Shares of each Fund will have equal voting rights
(i.e. one vote per Share). With respect to TYW, holders of common Shares and
preferred Shares will vote together as a single class.
Abstentions and "broker non-votes" (i.e. Shares held by brokers or
nominees as to which (i) instructions have not been received from the beneficial
owner or the persons entitled to vote and (ii) the broker does not have
discretionary voting power on a particular matter) will have the same effect as
votes against Proposal 1.
BOARD RECOMMENDATION
The Board of your Fund, including the Independent Trustees of your
Board, recommends that you vote "FOR" approval of your Fund's New Advisory
Agreement.
14
PROPOSAL 2: APPROVAL OF SUB-ADVISORY AGREEMENTS
BACKGROUND
With respect to the Sub-Advised Funds, one or more independent
Sub-Advisers was retained in connection with the management of each such Fund's
investment portfolio, pursuant to investment sub-advisory agreements or
investment management agreements. The Sub-Advised Funds, Sub-Advisers and Prior
Sub-Advisory Agreements are:
FUND SUB-ADVISER(S) PRIOR SUB-ADVISORY AGREEMENT
---- -------------- ----------------------------
UBD ......... Mellon Capital Management Investment Sub-Advisory Agreement between the
Corporation ("Mellon") Adviser and Mellon
ULQ ......... Mellon Investment Sub-Advisory Agreement between the
Adviser and Mellon
UEM ......... Mellon Investment Sub-Advisory Agreement between the
Adviser and Mellon
FMO ......... Fiduciary Asset Management, LLC Investment Sub-Advisory Agreement among FMO, the
("FAMCO") Adviser and FAMCO
MCN ......... Madison Asset Management, LLC Investment Management Agreement among MCN, the
("Madison") Adviser and Madison
OLA ......... Analytic Investors LLC ("Analytic") Investment Sub-Advisory Agreement among OLA, the
Adviser and Analytic
TYW ......... Thompson, Siegel & Walmsley LLC Investment Sub-Advisory Agreement among TYW, the
("TS&W") Adviser and TS&W
SMC Fixed Income Management, LP Investment Sub-Advisory Agreement among TYW, the
("SMC") Adviser and SMC
WIW ......... Western Asset Management Company Investment Management Agreement between the Adviser
("Western") and Western
Western Asset Management Company Investment Management Agreement between Western and
Pte. Ltd. (Singapore) ("Western Western Singapore
Singapore")
Western Asset Management Company Investment Management Agreement between Western and
Limited (London) ("Western London") Western London
Western Asset Management Company Investment Management Agreement between Western and
Ltd. (Japan) ("Western Japan" and Western Japan
collectively with Western
Singapore and Western London, the
"Western Affiliates")
PRIOR SUB-ADVISORY AGREEMENTS
The Sub-Advisers served as investment sub-adviser or investment manager
to one or more Sub-Advised Funds pursuant to the respective Prior Sub-Advisory
Agreements. The date of each Sub-Advised Fund's Prior Sub-Advisory Agreement,
the date such agreement was last approved by Shareholders of such Fund and the
date such agreement was last approved by the Board of such Fund, and the
sub-advisory fee rate payable thereunder is set forth in Appendix D hereto.
The consummation of the Transaction and the automatic termination of
each Fund's Prior Advisory Agreement resulted in the termination of each Prior
Sub-Advisory Agreement pursuant to its terms. The Transaction
15
does not, however, involve any of the Sub-Advisers. The Transaction will not
result in any change of the management or control of any Sub-Adviser or any
change in the personnel of any Sub-Adviser responsible for providing portfolio
management services to a Sub-Advised Fund.
INTERIM SUB-ADVISORY AGREEMENTS
Rule 15a-4 under the 1940 Act permits the Board (including a majority
of the Independent Trustees) of each Sub-Advised Fund to approve and enter into
an Interim Sub-Advisory Agreement pursuant to which the Sub-Adviser may serve as
investment sub-adviser to a Sub-Advised Fund for up to 150 days following the
Closing Date, pending receipt of Shareholder approval of the New Sub-Advisory
Agreement.
Based upon the considerations described below under "--Board
Considerations," the Board, including the Independent Trustees, of each
Sub-Advised Fund approved each Interim Sub-Advisory Agreement for the respective
Sub-Advised Fund on the date set forth in Appendix D. In approving the Interim
Sub-Advisory Agreement(s), each Board, including a majority of the Independent
Trustees, determined that the scope and quality of services to be provided to
each respective Sub-Advised Fund under the respective Interim Sub-Advisory
Agreement would be at least equivalent to the scope and quality of services
provided under the corresponding Prior Sub-Advisory Agreement. The compensation
to be received by the Sub-Adviser under each Sub-Advised Fund's Interim
Sub-Advisory Agreement is not greater than the compensation such Sub-Adviser
would have received under the corresponding Prior Sub-Advisory Agreement.
Each Interim Sub-Advisory Agreement became effective upon the Closing
Date. There are no material differences between the terms of each Sub-Advised
Fund's Interim Sub-Advisory Agreement and the terms of the corresponding Prior
Sub-Advisory Agreement and New Sub-Advisory Agreement, except for those
provisions in the Interim Sub-Advisory Agreement which are necessary to comply
with the requirements of Rule 15a-4 under the 1940 Act. The provisions of each
Interim Sub-Advisory Agreement required by Rule 15a-4 under the 1940 Act
include:
(i) the Interim Sub-Advisory Agreement terminates upon the earlier
of the 150th day following the Closing Date or the
effectiveness of the New Sub-Advisory Agreement;
(ii) the Board or a majority of the Fund's outstanding voting
securities may terminate the Interim Sub-Advisory Agreement at
any time, without the payment of any penalty, on not more than
10 calendar days' written notice to the Sub-Adviser;
(iii) the compensation earned by the Sub-Adviser under the Interim
Sub-Advisory Agreement will be held in an interest-bearing
escrow account with the Fund's custodian or a bank;
(iv) if a majority of the Fund's outstanding voting securities
approve the New Sub-Advisory Agreement by the end of the
150-day period, the amount in the escrow account (including
interest earned) will be paid to the Sub-Adviser; and
(v) if a majority of the Fund's outstanding voting securities do
not approve the New Sub-Advisory Agreement, the Sub-Adviser
will be paid, out of the escrow account, the lesser of (a) any
costs incurred in performing the Interim Sub-Advisory
Agreement (plus interest earned on that amount while in
escrow), or (b) the total amount in the escrow account (plus
interest earned).
With respect to WIW, each of the Interim Sub-Advisory Agreements
between Western and its affiliates, Western Singapore, Western London and
Western Japan, also differs from the corresponding Prior Sub-Advisory Agreements
in that the Adviser, in its capacity as investment adviser to WIW, is a party to
the Interim Sub-Advisory Agreements.
NEW SUB-ADVISORY AGREEMENTS
It is proposed that New Sub-Advisory Agreements be entered into with
each Sub-Adviser, to become effective upon the date of Shareholder approval.
Under Section 15(a) of the 1940 Act, each New Sub-Advisory Agreement requires
the approval of (i) the Board, including a majority of the Independent Trustees,
of the respective Fund and (ii) the Shareholders of the respective Fund. In the
event that the Shareholders of any Sub-Advised Fund do
16
not approve the respective New Sub-Advisory Agreement, the Sub-Adviser may
continue to act as the investment sub-adviser for such Fund pursuant to the
Interim Sub-Advisory Agreement for a period of up to 150 days following the
Closing Date. In such event, the respective Board will determine a course of
action believed by such Board to be in the best interests of such Fund and its
Shareholders.
Based upon the considerations described below under "--Board
Considerations," each Board, including the Independent Trustees, approved the
New Sub-Advisory Agreement on the date set forth in Appendix D.
There are no material differences in the terms of each Fund's New
Sub-Advisory Agreement and the terms of such Fund's Prior Sub-Advisory
Agreement. Forms of the New Sub-Advisory Agreements are attached in Appendix J
hereto and the description of the New Sub-Advisory Agreements is qualified in
its entirety by reference to Appendix J hereto.
Duties and Obligations. Under each New Sub-Advisory Agreement, the
Sub-Adviser is retained to provide investment sub-advisory services with respect
to all or a portion of the Fund's investment portfolio. The services to be
provided by the Sub-Adviser typically include certain of the day-to-day
operations of the Fund subject to the oversight and supervision of the Adviser
or a Sub-Adviser and the direction and control of the Board. Such services
generally may include with respect to the portion of the Fund managed (i)
managing the investment and reinvestment of the Fund's assets in accordance with
the Fund's investment objective and policies, (ii) arranging for the purchase
and sale of securities and other assets, (iii) providing investment research and
credit analysis concerning the Fund's assets, (iv) maintaining books and records
required to support the Fund's investment operations, (v) monitoring on a daily
basis the investment activities and portfolio holdings of the Fund and (vi)
voting proxies relating to the Fund's portfolio securities in accordance with
the Sub-Adviser's proxy voting policies and procedures. The services provided by
each Sub-Adviser pursuant to the respective New Sub-Advisory Agreement are
identical to the services provided by such Sub-Adviser pursuant to the
corresponding Prior Sub-Advisory Agreement.
Compensation. Each New Sub-Advisory Agreement does not result in any
change in the sub-advisory fee rate paid to the Sub-Adviser. Pursuant to each
New Sub-Advisory Agreement, the Sub-Adviser receives, as full compensation for
all services rendered by the Sub-Adviser as such, a monthly fee at an annual
rate equal to a specified percentage of the Fund's assets or the assets managed
by the Sub-Adviser, as set forth in the respective New Sub-Advisory Agreement.
With respect to MCN, the sub-advisory fee is paid directly to the Sub-Adviser by
the Fund. With respect to WIW, the sub-advisory fee is paid to Western by the
Adviser and to Western's affiliated Sub-Advisers (Western Singapore, Western
London and Western Japan) by Western. With respect to all other Sub-Advised
Funds, the sub-advisory fee is paid to the Sub-Adviser by the Adviser. The
Sub-Adviser generally bears all costs and expenses incurred in providing
services under the New Sub-Advisory Agreement, including for certain funds the
costs of any salaries or trustees fees of certain officers or trustees of the
Fund affiliated with the Sub-Adviser. The applicable provisions of each New
Sub-Advisory Agreement are identical to provisions of the corresponding Prior
Sub-Advisory Agreement. The sub-advisory fee rate and the asset base on which
such fee is payable is the same between each corresponding Prior Sub-Advisory
Agreement, Interim Sub-Advisory Agreement and New Sub-Advisory Agreement. The
sub-advisory fee rates under each Sub-Advised Fund's Prior Sub-Advisory
Agreement, Interim Sub-Advisory Agreement and New Sub-Advisory Agreement are set
forth in Appendix D hereto. The amount of sub-advisory fees paid to each
Sub-Adviser during the Fund's last fiscal year are set forth in Appendix E
hereto.
Term and Termination. Assuming approval by Shareholders, each New
Sub-Advisory Agreement shall continue for an initial term of one year, provided,
however, that each Board intends to consider the continuation of the New
Sub-Advisory Agreement during such one year term. Thereafter, each New
Sub-Advisory Agreement shall continue in effect from year to year after the
initial term if approved annually (i) by the Fund's Board or the holders of a
majority of the outstanding voting securities of the Fund and (ii) by a majority
of the trustees who are not "interested persons" of any party to the New
Sub-Advisory Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. Each New Sub-Advisory Agreement may be
terminated (i) by the Fund at any time, without the payment of any penalty, upon
giving the Sub-Adviser 60 days' written notice, or (ii) by the Sub-Adviser on 60
days' written notice. Each New Sub-Advisory Agreement will also immediately
terminate in the event of its assignment, as defined in the 1940 Act. The New
Sub-Advisory Agreements for each Sub-Advised Fund, except TYW and OLA, also
terminate upon the termination of such Fund's Advisory Agreement, or in the case
of the Sub-Advisory Agreements of the Western affiliates upon the termination of
Western's Sub-Advisory Agreement. The length of the initial term of each Prior
Sub-Advisory Agreement was generally two years. Except with respect to the
length of the
17
initial term, these provisions of each New Sub-Advisory Agreement are identical
to provisions of the corresponding Prior Sub-Advisory Agreement.
Limitation of Liability. Each New Sub-Advisory Agreement provides that
the Sub-Adviser will not be liable for any error of judgment or mistake of law
or for any loss suffered by the Adviser, by the Fund, or, in certain cases, by
another Sub-Adviser in connection with the performance of the New Sub-Advisory
Agreement, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Sub-Adviser in the performance of its duties or
from reckless disregard by the Sub-Adviser of its duties under the New
Sub-Advisory Agreement or, with respect to certain Funds, a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services. These provisions of each New Sub-Advisory Agreement are identical to
provisions of the corresponding Prior Sub-Advisory Agreement.
Use of the Sub-Adviser's Name. The New Sub-Advisory Agreements
generally provides that the Sub-Adviser has consented to the use by the Fund of
the name of the Sub-Adviser or other identifying words subject to certain
conditions and that the Sub-Adviser may require the Fund to cease using such
name or words if the Fund ceases to employ, for any reason, the Sub-Adviser.
These provisions of each New Sub-Advisory Agreement are identical to provisions
of the corresponding Prior Sub-Advisory Agreement.
Other Matters. With respect to WIW, each of the New Sub-Advisory
Agreements between Western and its affiliated Sub-Advisers (Western Singapore,
Western London and Western Japan), also differs from the corresponding Prior
Sub-Advisory Agreement in that the Adviser, in its capacity as investment
adviser to WIW, is a party to the New Sub-Advisory Agreements.
BOARD CONSIDERATIONS
Prior Sub-Advisory Agreements. The date of each Prior Sub-Advisory
Agreement and the date on which it was last approved by the applicable Board,
including the Independent Trustees, is provided in Appendix D. As part of its
review process, a Committee of each Board, consisting solely of the Independent
Trustees (each sometimes referred to in this Section as the "Committee" and
together as the "Committees"), was represented by independent legal counsel.
Each Board reviewed materials regarding the Sub-Adviser. With respect to the
approval of each Sub-Advisory Agreement, each Board also had previously
received, throughout the year, Board meeting information regarding performance
and operating results of each Sub-Advised Fund it oversees.
In preparation for its review of the continuance of the applicable
Prior Sub-Advisory Agreements (for all Prior Sub-Advisory Agreements other than
those of the Western Affiliates), each Committee communicated with independent
legal counsel regarding the nature of information to be provided, and
independent legal counsel, on behalf of each Committee, sent a formal request
for information. Each Sub-Adviser provided extensive information in response to
each applicable request. Among other information, each Committee received
general information to assist the Committees in assessing the nature and quality
of services provided by the Sub-Adviser and information comparing the investment
performance, advisory fees and total expenses of the applicable Sub-Advised Fund
to other funds, information about the profitability from the Prior Sub-Advisory
Agreement to the Sub-Adviser and the compliance program of the Sub-Adviser.
In connection with its initial approval of the Prior Sub-Advisory
Agreements for the Western Affiliates, the Committee for WIW drew on its
knowledge of and experience with Western, its personnel, the quality of the
services it had provided to WIW and its investment philosophy and performance,
as well as additional information relating to each Western Affiliate. The
Committee noted that the addition of the Western Affiliates as Sub-Advisers
would provide WIW with greater global investment management and trading
resources. The Committee noted that although the Western Affiliates are separate
legal entities from Western, senior investment personnel at Western have
supervisory oversight responsibility over the investment decisions made by each
Western Affiliate. Finally, the Committee noted that the management fee paid by
WIW would not change because Western would pay the sub-advisory fee of each
Western Affiliate.
Based upon its review of the Prior Sub-Advisory Agreements, each
Committee and each Board concluded that it was in the best interest of the
respective Fund to approve or renew such Fund's Prior Sub-Advisory Agreement. In
reaching this conclusion for each Fund, no single factor was determinative in
the Board's analysis, but rather each
18
Board considered a variety of factors, including, with respect to those Prior
Sub-Advisory Agreements that were being renewed, rather than initially approved,
the nature, extent and quality of services provided by the Sub-Adviser, advisory
fees, performance, profitability, economies of scale and other benefits to the
Sub-Adviser. In approving each Fund's Prior Sub-Advisory Agreement, each
respective Board considered separately the best interests of each Fund overseen
by such Board. The specific factors considered by each Board are described in
further detail in each respective Fund's annual report or semi-annual report to
Shareholders. Each Fund will furnish, without charge, a copy of such annual
report and semi-annual report to Shareholders to any Shareholder upon request.
Requests should be directed to Claymore Securities, Inc., 2455 Corporate West
Drive, Lisle, Illinois 60532, (800) ___-____.
New Sub-Advisory Agreement and Interim Sub-Advisory Agreements. In
conjunction with the consideration of the Transaction and the approval of a New
Advisory Agreement and Interim Advisory Agreement, each Board, including the
Independent Trustees, also considered the respective Fund's New Sub-Advisory
Agreement and Interim Sub-Advisory Agreement. Each Board noted that while the
closing of the Transaction would result in the termination of each Prior
Sub-Advisory Agreement pursuant to its terms, no Sub-Adviser was a party to the
Transaction and the operations of each Sub-Adviser and the services to be
provided by each Sub-Adviser would be unaffected by the Transaction. Each Board
determined that there were no material differences between the terms of each
Interim Sub-Advisory Agreement and the corresponding Prior Sub-Advisory
Agreement, except with respect to those provisions required to comply with Rule
15a-4 under the 1940 Act, and that there were no material differences between
the terms of each New Sub-Advisory Agreement and the corresponding Prior
Sub-Advisory Agreement. Each Board noted that the compensation to be received by
the Sub-Adviser under each Sub-Advised Fund's Interim Sub-Advisory Agreement and
New Sub-Advisory Agreement is not greater than the compensation such Sub-Adviser
would have received under the corresponding Prior Sub-Advisory Agreement. Each
Board noted that the scope and quality of services to be provided to each
respective Sub-Advised Fund under the respective Interim Sub-Advisory Agreement
and New Sub-Advisory Agreement would be at least equivalent to the scope and
quality of services provided under the corresponding Prior Sub-Advisory
Agreement. Each Board noted that, within the last year, it had engaged in a
thorough review of the various factors, including fees and performance, that are
part of the evaluation of the renewal or approval of a sub-advisory agreement.
Each Board noted that the factors previously considered with respect to approval
of each Prior Sub-Advisory Agreement continued to support the approval of the
corresponding New Sub-Advisory Agreement and Interim Sub-Advisory Agreement.
Each Board also determined to consider such factors again within one year of the
execution of each New Sub-Advisory Agreement. Based upon its review, each Board
concluded that it was in the best interest of each Fund it oversees to approve
each New Sub-Advisory Agreement and Interim Sub-Advisory Agreement.
ADDITIONAL INFORMATION ABOUT THE SUB-ADVISERS
Additional information regarding each Sub-Adviser is set forth in
Appendix F hereto.
SHAREHOLDER APPROVAL
To be approved with respect to a particular Fund, a New Sub-Advisory
Agreement must be approved by a vote of a majority of the outstanding voting
securities of such Fund. The "vote of the majority of the outstanding voting
securities" is defined in the 1940 Act as the lesser of the vote of (i) 67% or
more of the voting securities of a Fund entitled to vote thereon present at the
Meeting or represented by proxy if holders of more than 50% of the Fund's
outstanding voting securities are present or represented by proxy; or (ii) more
than 50% of the outstanding voting securities of the Fund entitled to vote
thereon. The holders of the Shares of each Fund will have equal voting rights
(i.e. one vote per Share). With respect to TYW, holders of common Shares and
preferred Shares will vote together as a single class.
Abstentions and "broker non-votes" (i.e. Shares held by brokers or
nominees as to which (i) instructions have not been received from the beneficial
owner or the persons entitled to vote and (ii) the broker does not have
discretionary voting power on a particular matter) will have the same effect as
votes against Proposal 2.
BOARD RECOMMENDATION
The Board of your Fund, including the Independent Trustees of your
Fund, recommends that you vote "FOR" approval of your Fund's New Sub-Advisory
Agreement(s).
19
ADDITIONAL INFORMATION
FURTHER INFORMATION ABOUT VOTING AND THE MEETING
Whether or not you plan to attend the Meeting, we urge you to complete,
sign, date, and return the enclosed proxy card in the postage-paid envelope
provided or record your voting instructions via telephone or the Internet so
your Shares will be represented at the Meeting. Information regarding how to
vote via telephone or the Internet is included on the enclosed proxy card. The
required control number for Internet and telephone voting is printed on the
enclosed proxy card. The control number is used to match proxy cards with
Shareholders' respective accounts and to ensure that, if multiple proxy cards
are executed, Shares are voted in accordance with the proxy card bearing the
latest date.
If you wish to attend the Meeting and vote in person, you will be able
to do so. You may contact [o] at (800) ___-____. to obtain directions to the
site of the Meeting.
Fifty percent (50%) of the Shares of each Fund (except WIW and OLA)
entitled to vote on a proposal must be present in person or by proxy to have a
quorum for that Fund to conduct business at the meeting with respect to such
proposal. Thirty percent (30%) of the Shares of each WIW and OLA entitled to
vote on a proposal must be present in person or by proxy to have a quorum for
that Fund to conduct business at the meeting with respect to such proposal.
Abstentions and broker non-votes will be counted as Shares present at the
Meeting for quorum purposes.
All properly executed proxies received prior to the Meeting will be
voted at the Meeting in accordance with the instructions marked thereon or
otherwise as provided therein. IF NO SPECIFICATION IS MADE ON A PROPERLY
EXECUTED PROXY CARD, IT WILL BE VOTED FOR THE PROPOSAL(S) APPLICABLE TO YOUR
FUND.
Broker-dealer firms holding Shares in "street name" for the benefit of
their customers and clients will request the instructions of such customers and
clients on how to vote their Shares on the Proposals. Under current
interpretations of the New York Stock Exchange (the "NYSE"), broker-dealers that
are members of the NYSE and that have not received instructions from a customer
may not vote such customer's Shares on a Proposal. A signed proxy card or other
authorization by a beneficial owner of Shares that does not specify how the
beneficial owner's Shares are to be voted on a Proposal will be deemed to be an
instruction to vote such Shares in favor of such Proposal. If any other business
is brought before the Meeting, your Shares will be voted at your proxy holder's
discretion.
Therefore, if you beneficially own Shares that are held in "street
name" through a broker-dealer or that are held of record by a service
organization, and if you have not given or do not give voting instructions for
your Shares, your Shares may not be voted at all or may be voted in a manner
that you may not intend. You are strongly encouraged to be sure your
broker-dealer or service organization has instructions as to how your Shares are
to be voted.
Preferred Shares held in "street name" as to which voting instructions
have not been received from the beneficial owners or persons entitled to vote as
of one business day before the Meeting, or, if adjourned, one business day
before the day to which the Meeting is adjourned, and that would otherwise be
treated as "broker non-votes" may, pursuant to Rule 452 of the New York Stock
Exchange, be voted by the broker on a Proposal in the same proportion as the
votes cast by all preferred Shareholders of such Fund who have voted on that
item. Rule 452 permits proportionate voting of preferred Shares with respect to
a particular Proposal if, among other things, (i) a minimum of 30% of the
preferred Shares outstanding has been voted by the holders of such preferred
Shares with respect to such Proposal and (ii) less than 10% of the preferred
Shares outstanding has been voted by the holders of such preferred Shares
against such item. For the purpose of meeting the 30% test, abstentions will be
treated as Shares voted and for the purpose of meeting the 10% test, abstentions
will not be treated as Shares voted against the item.
Shareholders who execute proxies or record their voting instructions
via telephone or the Internet may revoke them at any time before they are voted
by filing with the Secretary of the appropriate Fund a written notice of
revocation, by delivering (including via telephone or the Internet) a duly
executed proxy bearing a later date or by attending the Meeting and voting in
person. Merely attending the Meeting, however, will not revoke any previously
submitted proxy.
20
If you hold Shares in more than one account, you will receive a proxy
card for each account. To ensure that all of your Shares are voted, please sign,
date and return the proxy card for each account. To ensure Shareholders have the
Funds' latest proxy information and material to vote, the Board may conduct
additional mailings prior to the date of the Meeting, each of which will include
a proxy card regardless of whether you have previously voted. Only your latest
dated proxy card will be counted.
The Board has fixed the close of business on November 13, 2009, as the
Record Date for the determination of Shareholders of each Fund entitled to
notice of, and to vote at, the Meeting. Shareholders of each Fund as of the
close of business on the Record Date will be entitled to one vote on each matter
to be voted on by such Fund for each Share of the Fund held and a fractional
vote with respect to fractional Shares, with no cumulative voting rights.
ADVISER AND SUB-ADVISERS
Adviser. Claymore Advisors, LLC, a wholly-owned subsidiary of Claymore
Group and indirect subsidiary of Guggenheim, acts as each Fund's investment
adviser. As of September 30, 2009, Claymore entities have provided supervision,
management and/or servicing on approximately $13.3 billion in assets through
closed-end funds, unit investment trusts and exchange-traded funds. The Adviser
and Claymore Group are located at 2455 Corporate West Drive, Lisle, Illinois
60532.
Sub-Advisers. The Sub-Advisers serve as investment sub-adviser to
certain Funds. Additional information regarding each Sub-Adviser is set forth on
Appendix F.
ADMINISTRATOR
Claymore Advisors, LLC. Claymore Advisors, LLC, located at 2455
Corporate West Drive, Lisle, Illinois 60532, serves as administrator to each
Fund, except WIW. It is expected that Claymore Advisors, LLC will continue to
provide administrative services to such Funds following consummation of the
Transaction. The administrative fees paid by each Fund to Claymore Advisors, LLC
during the Fund's last fiscal year are set forth on Appendix E.
Legg Mason Fund Adviser, Inc. Legg Mason Fund Adviser, Inc., 100
International Drive, 7th Fl., Baltimore, MD 21202, served as administrator to
WIW until September 30, 2009. Since September 30, 2009, Legg Mason Partners Fund
Advisor, LLC, 100 International Drive, 7th Fl., Baltimore, MD 21202, has served
as administrator to WIW. Each entity is an affiliate of Western. It is expected
that Legg Mason Partners Fund Advisor, LLC will continue to provide
administrative services to WIW. The administrative fees paid by WIW during WIW's
last fiscal year are set forth on Appendix E.
AFFILIATED BROKERS
Commissions, if any, paid to affiliated brokers of each Fund during the
Fund's last fiscal year are set forth on Appendix E.
OUTSTANDING SHARES
The number of outstanding Shares of each Fund, as of the Record Date,
are set forth in Appendix A.
PRINCIPAL SHAREHOLDERS
As of the Record Date, to the knowledge of the Funds, no person
beneficially owned more than 5% of the voting securities of any class of
securities of any Fund, except as set forth in Appendix B.
SECURITY OWNERSHIP OF MANAGEMENT
As of the Record Date, the Trustees and officers of each Fund owned, in
the aggregate, less than 1% of such Fund's outstanding Shares.
21
DEADLINE FOR SHAREHOLDER PROPOSALS
ETFs. The ETFs do not hold regular annual meetings of Shareholders. Any
Shareholder who wishes to submit a proposal for consideration at a meeting of
the ETFs should send such proposal to the relevant ETF at 2455 Corporate West
Drive, Lisle, Illinois 60532. To be considered for presentation at a Shareholder
meeting, rules promulgated by the Securities and Exchange Commission require
that, among other things, a Shareholder's proposal must be received at the
offices of the Fund a reasonable time before a solicitation is made. Timely
submission of a proposal does not necessarily mean that such proposal will be
included.
Closed-End Funds. Information regarding the deadline for timely
submission of proposals intended to be presented at a Closed-End Fund's next
scheduled annual meeting of Shareholders was provided in the proxy statement
relating to each Closed-End Fund's previous annual meeting of Shareholders. The
applicable deadlines are set forth in Appendix H.
EXPENSES OF PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Adviser. Certain
officers of the Fund and certain officers and employees of the Adviser or its
affiliates (none of whom will receive additional compensation therefore) may
solicit proxies by telephone, mail, e-mail and personal interviews. Brokerage
houses, banks and other fiduciaries may be requested to forward proxy
solicitation material to their principals to obtain authorization for the
execution of proxies, and will be reimbursed by the Adviser for such
out-of-pocket expenses. The Funds have retained The Altman Group, Inc. ("The
Altman Group") as proxy solicitor. The Altman Group will receive a project
management fee as well as fees charged on a per call basis and certain other
expenses. The Altman Group has advised management of the Funds that
approximately 110 of its employees will be involved in the solicitation of
proxies by The Altman Group on behalf of the Funds. The Adviser estimates that
the total fees payable to The Altman Group with respect to solicitation on
behalf of all funds in the fund complex, including the Funds and certain funds
not part of this Proxy Statement, will be approximately $700,000.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE MEETING
TO BE HELD ON JANUARY 12, 2010
This Proxy Statement is available on the Internet at [o].
OTHER MATTERS
The management of the Funds knows of no other matters which are to be
brought before the Meeting. However, if any other matters not now known properly
come before the Meeting, it is the intention of the persons named in the
enclosed form of proxy to vote such proxy in accordance with their judgment on
such matters.
Failure of a quorum to be present at the Meeting with respect to a Fund
will necessitate adjournment of the Meeting for such Fund. In the event that a
quorum is present at the Meeting with respect to a Fund but sufficient votes to
approve the Proposal by such Fund are not received, proxies may vote Shares
(including abstentions and broker non-votes) in favor of one or more
adjournments of the Meeting with respect to such Fund with respect to the
Proposal to permit further solicitation of proxies, provided they determine that
such an adjournment and additional solicitation is reasonable and in the
interest of Shareholders based on a consideration of all relevant factors,
including the nature of the relevant proposal, the percentage of votes then
cast, the percentage of negative votes then cast, the nature of the proposed
solicitation activities and the nature of the reasons for such further
solicitation.
One Proxy Statement may be delivered to two or more Shareholders of a
Fund who Share an address, unless the Fund has received instructions to the
contrary. To request a separate copy of the Proxy Statement, which will be
delivered promptly upon written or oral request, or for instructions as to how
to request a single copy if multiple copies are received, Shareholders should
contact the applicable Fund at the address or telephone number set forth above.
WE URGE YOU TO VOTE PROMPTLY BY COMPLETING, SIGNING, DATING AND MAILING
THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE PROVIDED OR RECORDING YOUR
VOTING INSTRUCTIONS VIA TELEPHONE OR THE INTERNET SO YOU WILL BE REPRESENTED AT
THE MEETING.
22
Very truly yours,
/s/ [o]
[o]
on behalf of the Board of Trustees
of each Fund
November [o], 2009
23
APPENDIX A
OUTSTANDING SHARES
The table below sets forth the number of Shares outstanding of each Fund, as of
the close of business on the Record Date.
------------------------------------------------------------------------------------ ------------------------------------
Fund
------------------------------------------------------------------------------------ ------------------------------------
Exchange-Traded Funds Shares
------------------------------------------------------------------------------------ ------------------------------------
Claymore Exchange-Traded Fund Trust
------------------------------------------------------------------------------------ ------------------------------------
CSD ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
CVY ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
CZA ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
DEF ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
EEB ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
IRO ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
LVL ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
MZG ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
MZN ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
MZO ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
NFO ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
OTP ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
OTR ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
RYJ ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
STH ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
UBD ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
ULQ ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
UEM ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
XGC ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
XRO ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
Claymore Exchange-Traded Fund Trust 2
------------------------------------------------------------------------------------ ------------------------------------
CGW ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
CRO ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
CUT ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
EEN ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
ENY ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
EXB ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
FAA ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
FRN ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
HAO ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
HGI ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
ROB ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
SEA ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
TAN ........................................................................ [o]
------------------------------------------------------------------------------------ ------------------------------------
TAO ........................................................................ [o]
------------------------------------------------------------------------------------ ----------------- ------------------
Closed-End Funds Common Shares Preferred Shares
------------------------------------------------------------------------------------ ----------------- ------------------
FMO ............................................................................ [o] N/A
------------------------------------------------------------------------------------ ----------------- ------------------
MCN ............................................................................ [o] N/A
------------------------------------------------------------------------------------ ----------------- ------------------
OLA ............................................................................ [o] N/A
------------------------------------------------------------------------------------ ----------------- ------------------
TYW ............................................................................ [o] [o]
------------------------------------------------------------------------------------ ----------------- ------------------
WIW ............................................................................ [o] N/A
------------------------------------------------------------------------------------ ----------------- ------------------
A-1
B-1
APPENDIX B
PRINCIPAL SHAREHOLDERS
As of the Record Date, to the knowledge of the Funds, no person beneficially
owned more than 5% of the voting securities of any class of securities of any
Fund, except as set forth below.
------------------------- ------------------------------------- -------------------- ------------------ ----------------
FUND SHAREHOLDER NAME AND ADDRESS CLASS OF SHARES SHARE HOLDINGS PERCENTAGE
OWNED
------------------------------------------------------------------------------------------------------------------------
Exchange-Traded Funds
------------------------------------------------------------------------------------------------------------------------
Claymore Exchange-Traded Fund Trust
------------------------- ------------------------------------- -------------------- ------------------ ----------------
CSD ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
CVY ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
CZA ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
DEF ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
EEB ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
IRO ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
LVL ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
MZG.............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
MZN ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
MZO ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
NFO ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
OTP ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
OTR ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
RYJ ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
STH ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
UBD ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
ULQ ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
UEM ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
XGC ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
XRO ............. [o] [o] [o] [o]
------------------------------------------------------------------------------------------------------------------------
Claymore Exchange-Traded Fund Trust 2
------------------------- ------------------------------------- -------------------- ------------------ ----------------
CGW ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
CRO ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
CUT ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
EEN ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
ENY ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
EXB ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
FAA ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
FRN ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
HAO ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
HGI ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
ROB ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
SEA ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
TAN ............. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
TAO ............. [o] [o] [o] [o]
------------------------------------------------------------------------------------------------------------------------
Closed-End Funds
------------------------- ------------------------------------- -------------------- ------------------ ----------------
FMO ................. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
MCN ................. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
OLA ................. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
TYW ................. [o] [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
WIW ................. [o] [o] [o]
------------------------- ------------------------------------- -------------------- ------------------ ----------------
B-1
APPENDIX C
ADVISORY AGREEMENTS
Dates, Approvals and Fee Rates
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
DATE PRIOR
ADVISORY
DATE PRIOR AGREEMENT DATE INTERIM DATE NEW
DATE OF ADVISORY LAST ADVISORY ADVISORY
PRIOR AGREEMENT SUBMITTED FOR AGREEMENT AGREEMENT
ADVISORY LAST APPROVED SHAREHOLDER APPROVED BY APPROVED BY ADVISORY EXPENSE
FUND AGREEMENT BY THE BOARD APPROVAL THE BOARD THE BOARD FEE RATE(1) CAP(2)
----------------------------------------------------------------------------------------------------------------------------------
EXCHANGE-TRADED FUNDS
----------------------------------------------------------------------------------------------------------------------------------
Claymore Exchange-Traded Fund Trust
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
CSD ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50% .60%
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
CVY ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .60
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
CZA ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .60
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
DEF ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .60
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
EEB ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .60
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
IRO ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .60
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
LVL ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .60
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
MZG ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .40 .40
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
MZN ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .40 .40
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
MZO ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .40 .40
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
NFO ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .60
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
OTP ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .60
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
OTR ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .60
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
RYJ ............. 5/27/08 8/3/09(3) [o] 9/28/09 9/28/09 .75(4) .75
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
STH ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .60
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
UBD ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .20 .27
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
ULQ ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .20 .27
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
UEM ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .25 .37
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
XGC ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .45(4) .45
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
XRO ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .60
----------------------------------------------------------------------------------------------------------------------------------
Claymore Exchange-Traded Fund Trust 2
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
CGW ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50% .65%
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
CRO ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .65
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
CUT ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .65
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
EEN ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .35(4) .35
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
ENY ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .65
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
EXB ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .65
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
FAA ............. 8/16/06 12/1/08 [o] 9/28/09 9/28/09 .50 .65
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
FRN ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .65
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
HAO ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .55 .70
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
HGI ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .65
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
ROB ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .70
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
SEA ............. 8/16/06 8/4/08 [o] 9/28/09 9/28/09 .50 .65
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
TAN ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .65
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
TAO ............. 8/16/06 8/3/09(3) [o] 9/28/09 9/28/09 .50 .65
----------------------------------------------------------------------------------------------------------------------------------
Closed-End Funds
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
FMO .................. 12/22/04 11/11/08 12/17/04 9/23/09 9/23/09 1.00% N/A
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
MCN .................. 7/27/04 4/14/09 7/20/04 9/23/09 9/23/09 0.50% N/A
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
OLA .................. 7/18/05 1/20/09 7/18/05 9/28/09 9/28/09 1.00% N/A
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
C-1
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
TYW .................. 4/27/04 1/20/09 4/20/04 9/28/09 9/28/09 0.70% N/A
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
WIW .................. 2/24/04 11/17/08 [o] 9/28/09 9/28/09 .60% N/A
------------------------- -------------- --------------- --------------- --------------- -------------- ------------- ------------
(1) The Advisory Fee Rate set forth in the table above is the advisory fee
rate paid by each Fund pursuant to such Fund's Prior Advisory
Agreement, Interim Advisory Agreement and New Advisory Agreement. For
each Fund, the advisory fee rate is applied to the same asset base
pursuant to such Fund's Prior Advisory Agreement, Interim Advisory
Agreement and New Advisory Agreement, as set forth below:
With respect to each ETF, the advisory fee is 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 above.
With respect to WIW, the advisory fee is calculated as a percentage of
the WIW's "Average Weekly Assets," which means the average weekly value
of the total assets of the WIW (including any assets attributable to
leverage) minus accrued liabilities (other than liabilities
representing leverage). For purposes of calculating Average Weekly
Assets, neither the liquidation preference of any preferred shares of
beneficial interest outstanding nor any liabilities associated with any
instruments or transactions used to leverage the WIW's portfolio
(whether or not such instruments or transactions are "covered" within
the meaning of the 1940 Act and the rules and regulations thereunder,
giving effect to any interpretations of the Securities and Exchange
Commission and its staff) is considered a liability. In addition, with
respect to reverse repurchase or dollar roll transactions ("Repurchase
Transactions") entered into by the WIW, Average Weekly Assets includes
(a) any proceeds from the sale of an asset (the "Underlying Asset") of
the WIW to a counterparty in a Repurchase Transaction and (b) the value
of such Underlying Asset as of the relevant measuring date.
With respect to FMO, MCN, OLA and TYW, the advisory fee is calculated
as a a monthly fee in arrears at an annual rate equal to a percentage
of the average daily value of the Fund's Managed Assets. "Managed
Assets" is defined as the total assets of the Trust (including the
assets attributable to the proceeds from any financial leverage) minus
the sum of the accrued liabilities (other than the aggregate
indebtedness constituting financial leverage). Managed Assets shall
include assets attributable to financial leverage of any kind,
including, without limitation, borrowing (including through a credit
facility, the issuance of debt securities or the purchase of residual
interest bonds), the issuance of preferred securities, the reinvestment
of collateral received for securities loaned in accordance with the
Fund's investment objectives and policies, and/or any other means.
(2) Each ETF and the Adviser have entered into an Expense Reimbursement
Agreement (each an "Expense Agreement") in which the Adviser has agreed
to waive its management fees and/or pay certain operating expenses of
the ETF in order to maintain the expense ratio of the ETF at or below
the percentage of average net assets set forth above (excluding
interest expenses, licensing fees, offering costs, brokerage
commissions and other trading expenses, taxes and extraordinary
expenses such as litigation and other expenses not incurred in the
ordinary course of the ETF's business), at least until December 31,
2012 (the "Expense Cap"). For a period of five years subsequent to each
ETF's commencement of operations, the Adviser may recover from such ETF
fees and expenses waived or reimbursed during the prior three years if
the ETF's expense ratio, including the recovered expenses, falls below
the Expense Cap.
(3) At meetings of the Boards of the Trusts held on August 3, 2009, the
Boards approved the continuance of the Prior Advisory Agreement for
each ETF for a period of ninety (90) days, in anticipation of
subsequent meetings to consider the approval of the Interim Advisory
Agreements and New Advisory Agreements.
(4) RYJ, XGC and EEN pay to the Adviser a unitary management fee for the
services and facilities provided by the Adviser payable on a monthly
basis at the annual rate equal to the specified percentage of each such
ETF's average daily net assets set forth above. Out of the unitary
management fee, the Adviser pays substantially all expenses of the ETF,
including the cost of transfer agency, custody, fund administration,
legal, audit and other services, except for the fee payments under the
advisory agreement, distribution fees, if any, brokerage expenses,
taxes, interest, litigation expenses and other extraordinary expenses.
C-2
APPENDIX D
SUB-ADVISORY AGREEMENTS
Dates, Approvals and Fee Rates
------------------- ---------------- -------------- -------------- --------------- ------------- -------------- -----------
DATE PRIOR
DATE PRIOR SUB-ADVISORY DATE
SUB-ADVISORY AGREEMENT INTERIM DATE NEW
DATE OF AGREEMENT LAST SUB-ADVISORY SUB-ADVISORY
PRIOR LAST SUBMITTED FOR AGREEMENT AGREEMENT SUB-ADVISORY
SUB-ADVISORY APPROVED BY SHAREHOLDER APPROVED BY APPROVED BY FEE
FUND SUB-ADVISER AGREEMENT THE BOARD APPROVAL THE BOARD THE BOARD RATE(1)
------------------- ---------------- -------------- -------------- --------------- ------------- -------------- -----------
Exchange-Traded Funds
---------------------------------------------------------------------------------------------------------------------------
UBD ......... Mellon 2/6/08 8/3/09(2) [o] 9/28/09 9/28/09 0.08%(3)
------------------- ---------------- -------------- -------------- --------------- ------------- -------------- -----------
ULQ ......... Mellon 2/6/08 8/3/09(2) [o] 9/28/09 9/28/09 0.08%(3)
------------------- ---------------- -------------- -------------- --------------- ------------- -------------- -----------
UEM ......... Mellon 2/6/08 8/3/09(2) [o] 9/28/09 9/28/09 0.08%(3)
---------------------------------------------------------------------------------------------------------------------------
Closed-End Funds
------------------- ---------------- -------------- -------------- --------------- ------------- -------------- -----------
FMO ......... FAMCO 9/14/07 11/11/08 7/18/07 9/23/09 9/23/09 0.50%
------------------- ---------------- -------------- -------------- --------------- ------------- -------------- -----------
MCN ......... Madison 7/27/04 4/14/09 7/20/04 9/23/09 9/23/09 0.50%
------------------- ---------------- -------------- -------------- --------------- ------------- -------------- -----------
OLA ......... Analytic [7/18/05] 1/20/09 [7/18/05] 9/28/09 9/28/09 0.50%
------------------- ---------------- -------------- -------------- --------------- ------------- -------------- -----------
TYW ......... TS&W 4/27/04 1/20/09 4/20/04 9/28/09 9/28/09 0.42%(5)
---------------- -------------- -------------- --------------- ------------- -------------- -----------
SMC [o] 1/20/09 6/27/06 9/28/09 9/28/09 0.30%(5)
------------------- ---------------- -------------- -------------- --------------- ------------- -------------- -----------
WIW ......... Western 2/24/04 11/17/08 [o] 9/28/09 9/28/09 0.27%
---------------- -------------- -------------- --------------- ------------- -------------- -----------
Western 10/30/08 9/8/08 N/A(4) 9/28/09 9/28/09 0.27%(6)
Singapore
---------------- -------------- -------------- --------------- ------------- -------------- -----------
Western London 10/30/08 9/8/08 N/A(4) 9/28/09 9/28/09 0.27%(6)
---------------- -------------- -------------- --------------- ------------- -------------- -----------
Western Japan 10/30/08 9/8/08 N/A(4) 9/28/09 9/28/09 0.27%(6)
------------------- ---------------- -------------- -------------- --------------- ------------- -------------- -----------
(1) The Sub-Advisory Fee Rate set forth in the table above is the
sub-advisory fee rate paid by pursuant to the Prior Sub-Advisory
Agreement, Interim Sub-Advisory Agreement and New Sub-Advisory
Agreement. For each Fund, the sub-advisory fee rate is applied to the
same asset base pursuant to such Fund's Prior Sub-Advisory Agreement,
Interim Sub-Advisory Agreement and New Sub-Advisory Agreement, as set
forth below:
With respect to WIW, the sub-advisory fee is calculated as a percentage
of the WIW's "Average Weekly Assets" and, with respect to the Western
Affiliates, the amount of Average Weekly Assets allocated to such
Sub-Adviser. Average Weekly Assets which means the average weekly value
of the total assets of the WIW (including any assets attributable to
leverage) minus accrued liabilities (other than liabilities
representing leverage). For purposes of calculating Average Weekly
Assets, neither the liquidation preference of any preferred shares of
beneficial interest outstanding nor any liabilities associated with any
instruments or transactions used to leverage the WIW's portfolio
(whether or not such instruments or transactions are "covered" within
the meaning of the 1940 Act and the rules and regulations thereunder,
giving effect to any interpretations of the Securities and Exchange
Commission and its staff) is considered a liability. In addition, with
respect to reverse repurchase or dollar roll transactions ("Repurchase
Transactions") entered into by the WIW, Average Weekly Assets includes
(a) any proceeds from the sale of an asset (the "Underlying Asset") of
the WIW to a counterparty in a Repurchase Transaction and (b) the value
of such Underlying Asset as of the relevant measuring date.
With respect to FMO, MCN, OLA and TYW, the sub-advisory fee is
calculated as a monthly fee in arrears at an annual rate equal to a
percentage of the average daily value of the Fund's Managed Assets or
the amount
D-1
of such Managed Assets allocated to the applicable Sub-Adviser.
"Managed Assets" is defined as the total assets of the Trust (including
the assets attributable to the proceeds from any financial leverage)
minus the sum of the accrued liabilities (other than the aggregate
indebtedness constituting financial leverage). Managed Assets shall
include assets attributable to financial leverage of any kind,
including, without limitation, borrowing (including through a credit
facility, the issuance of debt securities or the purchase of residual
interest bonds), the issuance of preferred securities, the reinvestment
of collateral received for securities loaned in accordance with the
Fund's investment objectives and policies, and/or any other means.
(2) At meetings of the Boards of the Trusts held on August 3, 2009, the
Boards approved the continuance of the Prior Sub-Advisory Agreement for
each Sub-Advised ETF for a period of ninety (90) days, in anticipation
of subsequent meetings to consider the approval of the Interim
Sub-Advisory Agreements and New Sub-Advisory Agreements.
(3) The Sub-Advisory fee rate for UBD, ULQ and UEM is 0.08% for the first
$200 million of assets and 0.05% for assets over $200 million, with a
minimum sub-advisory fee of $50,000 per Fund.
(4) Each Prior Sub-Advisory Agreement between Western and a Western
Affiliate was entered into without Shareholder approval based on an
opinion of counsel.
(5) With respect to TYW, TS&W acts as investment sub-adviser and is
responsible for the day-to-day management of TYW's portfolio of equity
and income securities. For this service, TS&W receives a monthly fee in
arrears at an annual rate equal to a 0.42% of the average daily value
of the Managed Assets allocated to TYW's portfolio of equity and income
securities. SMC Fixed Income Management, LP also acts as investment
sub-adviser to TYW and is responsible for the day-to-day management of
TYW's portfolio of municipal securities. For this service, SMC receives
a monthly fee in arrears at an annual rate equal to a 0.30% of the
average daily value of the Managed Assets allocated to TYW's portfolio
of municipal securities.
(6) With respect to WIW, Western pays to each Western Affiliate an annual
fee, payable on a monthly basis, at the annual rate of .27% of WIW
average weekly assets that managed by such Western Affiliate.
D-2
APPENDIX E
FEES PAID TO THE ADVISER, SUB-ADVISER AND AFFILIATES
The following table indicates amounts paid by each Fund to its Adviser
or an affiliate of the Adviser, a Sub-Adviser or an affiliate of the Sub-Adviser
and commission paid to Affiliated Brokers during the Fund's last fiscal year.
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
AGGREGATE PERCENTAGE OF FUND'S
ADVISORY FEE SUB-ADVISORY FEE ADMINISTRATION BROKERAGE AGGREGATE BROKERAGE
(AFTER WAIVERS (AFTER WAIVERS FEE (AFTER COMMISSIONS COMMISSION PAID TO
AND AND WAIVERS AND PAID TO AFFILIATED BROKERS
REIMBURSEMENTS, REIMBURSEMENTS, REIMBURSEMENTS, AFFILIATED (IDENTIFY BROKER AND
FUND IF ANY) ($)(1) IF ANY) ($)(2) IF ANY) ($)(3) BROKERS ($) RELATIONSHIP)
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
Exchange-Traded Funds
------------------------------------------------------------------------------------------------------------------------------
Claymore Exchange-Traded Fund Trust
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
CSD ........... $ 0 N/A $ 0 $ 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
CVY ........... 115,095 N/A 14,603 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
CZA ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
DEF ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
EEB ........... 2,165,996 N/A 108,143 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
IRO ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
LVL ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
MZG ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
MZN ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
MZO ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
NFO ........... 3,307 N/A 6,284 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
OTP ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
OTR ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
RYJ ........... 337,315(7) N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
STH ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
UBD ........... 0 $ 0 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
ULQ ........... 0 0 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
UEM ........... 0 0 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
XGC ........... 1,844(7) N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
XRO ........... 68,639 N/A 9,911 0 N/A
------------------------------------------------------------------------------------------------------------------------------
Claymore Exchange-Traded Fund Trust 2
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
CGW ........... $ 481,926 N/A $ 41,693 $ 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
CRO ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
CUT ........... 47,448 N/A 9,714 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
EEN ........... 4,366(7) N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
ENY ........... 0 N/A 961 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
EXB ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
FAA ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
FRN ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
HAO ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
HGI ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
ROB ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
SEA ........... 0 N/A 0 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
TAN ........... 319,724 N/A 34,858 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
TAO ........... 0 N/A 0 0 N/A
------------------------------------------------------------------------------------------------------------------------------
Closed-End Funds
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
FMO ................ $ 5,179,724 $ 2,589,862 $ 116,293 $ 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
MCN ................ 1,108,341 1,108,341 57,524(4) 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
OLA ................ 2,729,252 1,364,626 69,482 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
TYW ................ 2,171,216 ***(5) 77,035 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
WIW ................ 5,683,485 ***(6) [o](6) 0 N/A
------------------------- ----------------- ------------------ ------------------ ----------------- --------------------------
(1) With respect to each Sub-Advised Fund (except MCN), the Adviser pays a
portion of the Advisory Fees
E-1
received to the Sub-Adviser as a sub-advisory fee.
(2) With respect to each Sub-Advised Fund (except MCN), the Sub-Advisory
Fee is paid to the Sub-Adviser by the Adviser. With respect to MCN, the
Sub-Advisory Fee is paid to the Sub-Adviser by the Fund.
(3) Paid to Claymore Advisors, LLC, unless otherwise noted.
4 In addition to the administrator fees paid to Claymore Advisors, LLC,
the Fund also paid $55,974 to Madison, the Fund's Sub-Adviser, pursuant
to a Fund Accounting Agreement.
(5) With respect to TYW, during TYW's last fiscal year, TS&W received
sub-advisory fees in an amount of $604,065 and SMC received
sub-advisory fees in an amount of $499,046.
(6) With respect to WIW, during WIW's last fiscal year, Western received a
sub-advisory fee in an amount of $[o]. Western pays a portion of the
sub-advisory fee received by it to the Western Affiliates. During WIW's
last fiscal year, the amount paid by Western to each Western Affiliate
was as follows: $[o] to Western Singapore; $[o] to Western London and
$[o] to Western Japan.
(6) Paid to Legg Mason Fund Adviser, Inc., an affiliate of Western, which
served as administrator to WIW until September 30, 2009. Since
September 30, 2009, Legg Mason Partners Fund Advisor, LLC, an affiliate
of Western, has served as administrator to WIW.
(7) RYJ, XGC and EEN pay to the Adviser a unitary management fee for the
services and facilities provided by the Adviser. Out of the unitary
management fee, the Adviser pays substantially all expenses of the ETF,
including the cost of transfer agency, custody, fund administration,
legal, audit and other services, except for the fee payments under the
advisory agreement, distribution fees, if any, brokerage expenses,
taxes, interest, litigation expenses and other extraordinary expenses.
E-2
APPENDIX F
ADDITIONAL INFORMATION ABOUT THE SUB-ADVISERS
ANALYTIC INVESTORS LLC
Analytic Investors LLC ("Analytic") acts as OLA's investment
sub-adviser and is responsible for the day-to-day management of OLA's portfolio.
As of June 30, 2009, Analytic managed approximately $8.5 billion in total
assets. Analytic is a subsidiary of Old Mutual (US) Holdings Inc., a
wholly-owned subsidiary of Old Mutual plc, a London-based, multi-national
financial services firm. As of December 31, 2008, Old Mutual plc and its
affiliates had approximately (pound)265 billion of assets under management. Old
Mutual plc is among the top 50 glOBal financial services firms, based on assets
under management. Analytic is located at 555 West Fifth Street, 50th Floor, Los
Angeles, California 90013, and Old Mutual plc is located at Old Mutual Place,
5th Floor, 2 Lambeth Hill, London EC4V 4GG.
Principal Executive Officer and Board of Directors. Harindra de Silva,
Ph.D., CFA, Director/President; Roger Clark, Ph.D., Director/President; Marie
Nastasi Arlt, Director/VP; all located at 555 West 5th St., 50th Floor, Los
Angeles, CA 90013; Thomas Turpin, Director/Interim CEO, 200 Clarendon St., 52nd
Floor, Boston, MA 02116.
Other Funds Advised by Analytic. Analytic acts as investment adviser
with respect to one other registered investment companies having similar
investment objectives as OLA.
FUND MANAGED ASSETS ADVISORY FEE
---- ------------------ ------------
Old Mutual Analytic Fund $139,000,000 0.95%(1)
(1) Fee waivers and/or expense reimbursement totaled 0.10% for the
Institutional class shares, 0.07% for A class shares, 0.04% for C class
chares and 0.05% for Z class shares.
Relationships with the Fund. Matthew J. Appelstein serves as a trustee
of TYW and OLA and is an employee and officer of Old Mutual Asset Management,
the parent company of Analytic. No other Trustee of the Funds is an officer,
employee, director, general partner or Shareholder of Analytic or has any
material direct or indirect interest in Analytic any other person controlling,
controlled by or under common control with Analytic. No officers of the Funds
are employees or officers of Analytic.
FIDUCIARY ASSET MANAGEMENT, LLC
Fiduciary Asset Management, LLC ("FAMCO"), a wholly-owned subsidiary of
Piper Jaffray Companies, acts as FMO's investment sub-adviser and is responsible
for making investment decisions with respect to the investment of FMO's assets.
As of September 30, 2009, FAMCO supervised and managed approximately $14 billion
in assets for endowments & foundations, public pension plans, corporate trusts,
union plans, Taft-Hartley plans, closed-end funds and private investment funds.
FAMCO is located at 8235 Forsyth Blvd., Suite 700, St. Louis, Missouri 63105 and
Piper Jaffray Companies is located at 800 Nicollet Mall, Minneapolis, MN, 55402.
Principal Executive Officer and Board of Directors. Mr. Wiley D.
Angell, 8235 Forsyth Blvd. Suite 700, St. Louis, MO, 63105, is the Chief
Executive Officer.
Other Funds Advised by FAMCO. FAMCO acts as investment adviser with
respect to one other registered investment companies having similar investment
objectives as FMO.
FUND MANAGED ASSETS ADVISORY FEE
---- ------------------ ------------
MLP & Strategic Equity Fund Inc. $194,000,000 .50%
Relationships with the Fund. Joseph E. Gallagher, Jr. serves as a
trustee of FMO and is an employee and officer of FAMCO. No other Trustee of the
Funds is an officer, employee, director, general partner or Shareholder of FAMCO
or has any material direct or indirect interest in FAMCO any other person
controlling, controlled by or under
F-1
common control with FAMCO. Certain officers of FMO, as identified on Appendix G,
are employees or officers of FAMCO.
MADISON ASSET MANAGEMENT, LLC
Madison Asset Management, LLC ("Madison"), a subsidiary of Madison
Investment Advisors, Inc., acts as MCN's investment manager and is responsible
for the day-to-day management of the MCN's portfolio. Madison and its affiliated
entities act as investment adviser for individuals, corporations, pension funds,
endowments, insurance companies, mutual funds and closed-end investment
companies, with assets under management of approximately $15 billion as of
September 30, 2009. Madison and Madison Investment Advisors, Inc. are located at
550 Science Drive, Madison, Wisconsin 53711.
Principal Executive Officer and Board of Directors. Mr. Frank E.
Burgess, 550 Science Drive, Madison, WI 53711, is the Chief Executive Officer of
Madison Investment Advisors, Inc. The Board of Directors of Madison Investment
Advisors, Inc. is Frank E. Burgess, Michael J. Schlageter, Katherine L. Frank
and Jay R. Sekelsky, each of 550 Science Drive, Madison, WI 53711.
Other Funds Advised by Madison. As of the Record Date, Madison acts as
investment adviser with respect to two other registered investment companies
having similar investment objectives as MCN.
FUND MANAGED ASSETS ADVISORY FEE
---- ------------------ ------------
MSP $79,707,765 .80%
MADOX 5,956,276 .75%
Relationships with the Fund. Frank E. Burgess serves as a trustee of
MCN and is an employee and officer of Madison. No other Trustee of the Funds is
an officer, employee, director, general partner or Shareholder of Madison or has
any material direct or indirect interest in Madison any other person
controlling, controlled by or under common control with Madison. Certain
officers of MCN, as identified on Appendix G, are employees or officers of
Madison.
Madison provides fund accounting services to MCN pursuant to a separate
Fund Accounting Agreement. It is expected that Madison will continue to provide
such services to MCN. The fund accounting fee is based on the combined managed
assets of MCN and another closed-end investment company sponsored by Madison.
The fund accounting fee is allocated on a prorated basis of the managed assets
of each fund. The amount of the fund accounting fees paid by MCN to Madison
during MCN's last fiscal year are set forth in Appendix E.
MELLON
Mellon Capital Management Corporation ("Mellon") acts as investment
sub-adviser to UBD, ULQ and UEM. Mellon is a leading innovator in the investment
industry and manages global quantitative-based investment strategies for
institutional and private investors. As of September 30, 2009, Mellon had assets
under management totaling approximately $169.7 billion. Mellon is a wholly-owned
indirect subsidiary of The Bank of New York Mellon Corporation, a publicly
traded financial holding company. Mellon is located at 50 Fremont Street, Suite
3900, San Francisco, California 94105 and The Bank of New York Mellon
Corporation is located at One Wall Street, New York, New York 10286.
Principal Executive Officer and Board of Directors. Charles Jacklin,
President & Chief Executive Officer. Board of Directors: William L. Fouse, CFA,
Chairman, Mellon Capital Management; Thomas F. Loeb, Chairman, Mellon Capital
Management; Charles J. Jacklin, President and CEO , Mellon Capital Management;
Ronald P. O'Hanley, President and CEO, BNY Mellon Asset Management; Thomas B.
Hazuka, Vice Chairman, Mellon Capital Management; Phillip N. Maisano, Chairman,
EACM Advisors LLC; William P. Rydell, CFA, Vice Chairman, Mellon Capital
Management; Scott E. Wennerholm, Chief Operating Officer, BNY Mellon Asset
Management; John S. Cone, CFA.
Other Funds Advised by Mellon. Mellon does not act as investment
adviser with respect to any other registered investment companies having similar
investment objectives as UBD, ULQ or UEM.
F-2
Relationships with the Fund. No Trustee of the Funds is an officer,
employee, director, general partner or Shareholder of Mellon or has any material
direct or indirect interest in Mellon or any other person controlling,
controlled by or under common control with Mellon. No officers of the Funds are
employees or officers of Mellon.
SMC FIXED INCOME MANAGEMENT, LP
SMC Fixed Income Management, LP ("SMCFIM") acts as investment
sub-adviser to TYW and is responsible for the day-to-day management of TYW's
portfolio of municipal securities. SMCFIM is an affiliate of Spring Mountain
Capital, LP ("Spring Mountain"). Spring Mountain is an investment management
firm founded in July 2001 specializing in alternative investments and advisory
services for both broad asset allocation and/or focused portfolios. As of
September 30, 2009, SMCFIM has under management and advisement the following
municipal assets: 1.) TYW - $152 million; 2.) Separately managed accounts - $45
million; and 3.) unit investment trusts - $800 million. The general partner of
SMCFIM is SMC Fixed Income Management, LLC. SMCFIM is located at 3 Independence
Way, Suite 205, Princeton, New Jersey 08540 and Spring Mountain is located at 65
East 55th Street, 33rd Floor, New York, NY 10022.
Principal Executive Officer and Board of Directors. Limited Partners:
Spring Mountain Capital, LP and Vincent Giordano.
Other Funds Advised by SMCFIM. SMCFIM does not act as investment
adviser with respect to any other registered investment companies having similar
investment objectives as TYW.
Relationships with the Fund. No Trustee of the Funds is an officer,
employee, director, general partner or Shareholder of SMC or has any material
direct or indirect interest in SMC or any other person controlling, controlled
by or under common control with SMC. Certain officers of TYW, as identified on
Appendix G, are employees or officers of SMC.
THOMPSON, SIEGEL & WALMSLEY LLC
Thompson, Siegel & Walmsley LLC ("TS&W") acts as investment sub-adviser
to TYW and is responsible for the day-to-day management of TYW's portfolio of
equity and income securities. As of September 30, 2009, TS&W managed
approximately $6.4 billion in total assets. TS&W is a subsidiary of Old Mutual
(US) Holdings Inc., a wholly-owned subsidiary of Old Mutual plc, a London-based,
multi-national financial services firm. As of December 31, 2008, Old Mutual plc
and its affiliates had approximately (pound)265 billion of assets under
management. Old MUtual plc is among the top 50 global financial services firms,
based on assets under management. TS&W is located at 6806 Paragon Place, Suite
300, Richmond, Virginia 23230, and Old Mutual plc is located at Old Mutual
Place, 2 Lambeth Hill, London, EC4VGG.
Principal Executive Officer and Board of Directors. Matthew G.
Thompson, Chairman; Lawrence E. Gibson, Co- CEO; Horace P. Whitworth, Co-CEO;
H.B. Thomson; Thomas Turpin, CEO Old Mutual Asset Management.
Other Funds Advised by TS&W. TS&W does not act as investment adviser
with respect to any other registered investment companies having similar
investment objectives as TYW.
Relationships with the Fund. Matthew J. Appelstein serves as a trustee
of TYW and OLA and is an employee and officer of Old Mutual Asset Management,
the parent company of TS&W. No other Trustee of the Funds is an officer,
employee, director, general partner or Shareholder of TS&W or has any material
direct or indirect interest in TS&W any other person controlling, controlled by
or under common control with TS&W. No officers of the Funds are employees or
officers of TS&W.
WESTERN ASSET MANAGEMENT COMPANY
Western serves as WIW's investment manager. Western is a
wholly-owned subsidiary of Legg Mason, Inc. ("Legg Mason"), a holding company
which, through its subsidiaries, is engaged in providing investment advisory
services to individuals and institutions. Western's address is 385 East Colorado
Boulevard, Pasadena, California 91101. The address of Legg Mason is 100
International Drive, Baltimore, Maryland 21202. As of June 30, 2009, Western
managed approximately $485.2 billion in total assets. The following non-U.S.
affiliates of Western also serve as investment managers of WIW:
F-3
Western Singapore, Reg. No. 200007692R, 1 George Street #23-01,
Singapore 049145;
Western London, 10 Exchange Square, Primrose Street, London, England
EC2A 2EC; and
Western Japan, 36F Shin-Marunouchi Building, 5-1 Marunouchi 1-Chome
Chiyoda-Ku, Tokyo 100-6536, Japan.
Western Singapore and Western Japan are each wholly owned by Legg
Mason.
Western Asset Management (UK) Holdings Limited 10 Exchange Square,
Primrose Street, London, United Kingdom EC2A 2EN is the sole shareholder of each
of Western London and Western Singapore. LM International Holding LP 155
Bishopsgate London, United Kingdom EC2M 3TY is the sole shareholder of Western
Asset Management (UK) Holdings Limited. Legg Mason International Holdings, LLC
100 International Drive, Baltimore, MD 21202 and Legg Mason International
Holdings II, LLC 100 International Drive, Baltimore, MD 21202 are the sole
general partners of LM International Holding LP. Legg Mason is the sole
shareholder of Legg Mason International Holdings II, LLC.
Principal Executive Officer and Boards of Directors.
---------------------------------------- --------------------------------------- --------------------------------------
FIRM NAME, ADDRESS AND PRINCIPAL NAME, ADDRESS AND PRINCIPAL
OCCUPATION OF PRINCIPAL EXECUTIVE OCCUPATION OF DIRECTORS WHO ARE NOT
OFFICER PRINCIPAL EXECUTIVE OFFICERS
---------------------------------------- --------------------------------------- --------------------------------------
WESTERN James W. Hirschmann III; 385 E. Jeffrey A. Nattans; 100
Colorado Blvd., Pasadena, CA 91101; International Drive, Baltimore, MD
Director and Chief Executive Officer 21202; Executive Vice President of
of Western Legg Mason
---------------------------------------- --------------------------------------- --------------------------------------
David R. Odenath; 100 International
Drive, Baltimore, MD 21202; Senior
Executive Vice President of Legg
Mason
---------------------------------------- --------------------------------------- --------------------------------------
WESTERN LONDON Michael B. Zelouf; 10 Exchange Ronald R. Dewhurst; 100
Square, Primrose Street, London, International Drive, Baltimore, MD
United Kingdom EC2A 2EN; Director and 21202; Senior Executive Vice
Senior Executive Officer of Western President of Legg Mason
London
---------------------------------------- --------------------------------------- --------------------------------------
James W. Hirschmann III
---------------------------------------- --------------------------------------- --------------------------------------
David R. Odenath
---------------------------------------- --------------------------------------- --------------------------------------
Charles A. Ruys de Perez; 385 E.
Colorado Blvd., Pasadena, CA 91101;
General Counsel and Secretary of
Western
---------------------------------------- --------------------------------------- --------------------------------------
WESTERN JAPAN Naoya Orime; 5-1 Marunouchi 1-Chome, Ronald R. Dewhurst
Chiyoda-Ku, Tokyo, Japan, 100-6536,
Director and Head of Operations
---------------------------------------- --------------------------------------- --------------------------------------
Takashi Komatsu, 5-1 Marunouchi
1-Chome, Chiyoda-Ku, Tokyo, Japan,
100-6536; Director and Chief
Compliance Officer of Western Japan
---------------------------------------- --------------------------------------- --------------------------------------
David R. Odenath
---------------------------------------- --------------------------------------- --------------------------------------
Michael B. Zelouf
---------------------------------------- --------------------------------------- --------------------------------------
WESTERN SINGAPORE Rajeev De Mello; 1 George Street Ronald R. Dewhurst
#23-01, Singapore, Singapore 049145,
Chief Executive Officer and Executive
Director of Western Singapore
---------------------------------------- --------------------------------------- --------------------------------------
David R. Odenath
----------------------------------------- --------------------------------------- --------------------------------------
Michael B. Zelouf
---------------------------------------- --------------------------------------- --------------------------------------
F4
Other Funds Advised by Western or one or more Western Affiliates. Under
normal market conditions, WIW's portfolio is invested as follows (all
limitations apply at the time of purchase and are measured by total managed
assets): (i) at least 80% in inflation-linked securities, (ii) no more than 40%
in below investment grade securities and (iii) up to 100% in non-U.S. dollar
investments (up to 100% of its non-U.S. dollar exposure may be unhedged). The
following are the registered investment companies that predominantly invest in
inflation-linked securities that are advised by Western and/or one or more of
the Western Affiliates.
----------------------------------------------------------------------------------------------------------------------
FUND ADVISER MANAGED ASSETS ADVISORY FEE
----------------------------------------------------------------------------------------------------------------------
Western Asset Inflation Indexed Plus Bond Portfolio Western (Sub-Adviser) $ 472,197,593 0
----------------------------------------------------------------------------------------------------------------------
Western Asset Inflation Linked Opportunity Fund Western $ 16,600,775 0
----------------------------------------------------------------------------------------------------------------------
Western Asset Inflation Management Fund Inc. Western (Sub-Adviser) $ 165,456,881 0
----------------------------------------------------------------------------------------------------------------------
Western Asset/Claymore Inflation-Linked Western $ 356,520,528 0.30%
Securities & Income Fund
----------------------------------------------------------------------------------------------------------------------
Relationships with the Fund. R. Jay Gerken serves as a trustee of WIW
and is an employee and officer of Legal Mason. No other Trustee of the Funds is
an officer, employee, director, general partner or shareholder of Western or has
any material direct or indirect interest in Western any other person
controlling, controlled by or under common control with Western. Certain
officers of WIW, as identified on Appendix G, are employees or officers of
Western.
Legg Mason Fund Adviser, Inc., 100 International Drive, Baltimore, MD
21202, served as administrator to WIW until September 30, 2009. Since September
30, 2009, Legg Mason Partners Fund Advisor, LLC, 100 International Drive,
Baltimore, MD 21202, has served as administrator to WIW. Each entity is an
affiliate of Western. It is expected that Legg Mason Partners Fund Advisor, LLC
will continue to provide administrative services to WIW. In consideration for
these services, WIW pays the administrator a monthly fee at an annual rate of
$125,000. The amount of the administrative fees paid by WIW during the WIW's
last fiscal year are set forth in Appendix E.
F-5
APPENDIX G
AFFILIATED OFFICERS
The following table identifies each person who serves as an officer of
the Funds who is a officer, employee or equity owner of the Adviser or a
Sub-Adviser, and lists the Funds for which such person serves as an officer.
------------------------------------ ----------------------------- ----------------------------------------
AFFILIATED ENTITY NAME FUND(S)
------------------------------------ ----------------------------- ----------------------------------------
------------------------------------ ----------------------------- ----------------------------------------
Adviser ....................... J. Thomas Futrell All Funds (except WIW)
------------------------------------ ----------------------------- ----------------------------------------
Kevin M. Robinson All Funds (except WIW)
------------------------------------ ----------------------------- ----------------------------------------
Steven M. Hill All Funds
------------------------------------ ----------------------------- ----------------------------------------
Bruce Saxon All Funds (except WIW)
------------------------------------ ----------------------------- ----------------------------------------
Mark E. Mathiasen All Funds
------------------------------------ ----------------------------- ----------------------------------------
James Howley All Funds (except WIW)
------------------------------------ ----------------------------- ----------------------------------------
Mark J. Furjanic All Funds (except WIW)
------------------------------------ ----------------------------- ----------------------------------------
Donald P. Swade All Funds (except WIW)
------------------------------------ ----------------------------- ----------------------------------------
Melissa J. Nguyen All Funds
------------------------------------ ----------------------------- ----------------------------------------
Elizabeth H. Hudson MCN, OLA, TYW
------------------------------------ ----------------------------- ----------------------------------------
------------------------------------ ----------------------------- ----------------------------------------
Analytic ...................... None N/A
------------------------------------ ----------------------------- ----------------------------------------
------------------------------------ ----------------------------- ----------------------------------------
FAMCO ......................... James Cunnane Jr. FMO
------------------------------------ ----------------------------- ----------------------------------------
Charles Walbrandt FMO
------------------------------------ ----------------------------- ----------------------------------------
------------------------------------ ----------------------------- ----------------------------------------
Madison ....................... Frank E. Burgess MCN
------------------------------------ ----------------------------- ----------------------------------------
Jay Sekelsky MCN
------------------------------------ ----------------------------- ----------------------------------------
Kay Frank MCN
------------------------------------ ----------------------------- ----------------------------------------
Ray DiBernardo MCN
------------------------------------ ----------------------------- ----------------------------------------
Greg Hoppe MCN
------------------------------------ ----------------------------- ----------------------------------------
------------------------------------ ----------------------------- ----------------------------------------
Mellon......................... None N/A
------------------------------------ ----------------------------- ----------------------------------------
------------------------------------ ----------------------------- ----------------------------------------
SMC ........................... Vincent R. Giordano TYW
------------------------------------ ----------------------------- ----------------------------------------
George Gregorio TYW
------------------------------------ ----------------------------- ----------------------------------------
Roberto W. Roffo TYW
------------------------------------ ----------------------------- ----------------------------------------
------------------------------------ ----------------------------- ----------------------------------------
TS&W .......................... None N/A
------------------------------------ ----------------------------- ----------------------------------------
------------------------------------ ----------------------------- ----------------------------------------
Western ....................... R. Jay Gerken WIW
------------------------------------ ----------------------------- ----------------------------------------
Charles A. Ruys de Perez WIW
------------------------------------ ----------------------------- ----------------------------------------
Todd F. Kuehl WIW
------------------------------------ ----------------------------- ----------------------------------------
Frances M. Guggino WIW
------------------------------------ ----------------------------- ----------------------------------------
Erin K. Morris WIW
------------------------------------ ----------------------------- ----------------------------------------
Susan C. Curry WIW
------------------------------------ ----------------------------- ----------------------------------------
G-1
APPENDIX H
CLOSED-END FUND DEADLINES FOR SHAREHOLDER PROPOSALS
The following table shows the dates by which (i) Shareholder proposals
intended for inclusion in a Closed-End Fund's proxy statement in connection with
such Fund's next scheduled annual meeting of Shareholders pursuant to Rule 14a-8
under the Exchange Act must be received by such Fund at such Fund's principal
executive offices and (ii) Shareholder proposals made outside of Rule 14a-8
under the Exchange Act must be received by such Fund at such Fund's principal
executive offices, including the deadline to be considered "timely" within the
meaning of Rule 14a-4(c).
--------------------------------------- --------------------------- ----------------------------------------------------
DEADLINE FOR PROPOSALS OUTSIDE 14A-8
FUND RULE 14A-8 PROPOSALS
--------------------------------------- --------------------------- ---------------------------- -----------------------
NOT EARLIER THAN NOR LATER THAN(1)
--------------------------------------- --------------------------- ---------------------------- -----------------------
FMO ............................. February 15, 2010 March 23, 2010 April 22, 2010
--------------------------------------- --------------------------- ---------------------------- -----------------------
MCN ............................. February 22, 2010 March 23, 2010 April 22, 2010
--------------------------------------- --------------------------- ---------------------------- -----------------------
OLA ............................. February 10, 2010 March 22, 2010 April 21, 2010
--------------------------------------- --------------------------- ---------------------------- -----------------------
TYW ............................. February 10, 2010 March 22, 2010 April 21, 2010
--------------------------------------- --------------------------- ---------------------------- -----------------------
WIW ............................. December 10, 2009 February 8, 2010 February 23, 2010
--------------------------------------- --------------------------- ---------------------------- -----------------------
(1) Deadline by which Shareholder proposals made outside of Rule 14a-8 under
the Exchange Act must be received by such Fund at such Fund's principal
executive offices in order to be considered "timely" within the meaning of
Rule 14a-4(c).
The proper submission of a Shareholder proposal does not guarantee that
it will be included in the Fund's proxy materials or presented at a Shareholder
meeting. Shareholder proposals are subject to the requirements of applicable law
and the applicable Fund's Declaration of Trust and Bylaws.
H-1
APPENDIX I
FORMS OF NEW ADVISORY AGREEMENTS
INDEX
PAGE
Closed-End Fund (Except WIW) Form of New Advisory Agreement ............... I-2
WIW Form of New Advisory Agreement ........................................ I-
ETF Form of New Advisory Agreement ........................................ I-
I-1
CLOSED-END FUND (EXCEPT WIW) FORM OF NEW ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement"), dated as of
___________, 2010, between _______________, a 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;
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
Adviser 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; 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 of Trustees;
(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 of Trustees) 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;
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(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, 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 of Trustees
concerning the performance of the independent accountants as the Board of
Trustees may reasonably request or deems appropriate;
(j) Make such reports and recommendations to the Board of Trustees
concerning the performance and fees of the Trust's Custodian, Transfer Agent,
Administrator and Dividend Disbursing Agent as the Board of Trustees 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 of Trustees;
(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.
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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; 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 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;
and
(c) 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
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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 1940 Act) 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 an annual rate equal
to % of the average daily value of the Trust's Managed Assets. "Managed Assets"
means the total assets of the Trust (including the assets attributable to the
proceeds from any financial leverage) minus the sum of the accrued liabilities
(other than the aggregate indebtedness constituting financial leverage). 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 1940 Act) 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 one year. Thereafter,
if not terminated, this Agreement shall continue in effect with respect to the
Trust for successive
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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 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 State of Delaware 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.
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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.
----------------------------------------
By:
----------------------------------------
Name:
Title:
CLAYMORE ADVISORS, LLC
By:
----------------------------------------
Name:
Title:
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WIW FORM OF NEW ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT
This INVESTMENT ADVISORY AGREEMENT, made this day of , 2010, by and
between Western Asset/Claymore Inflation-Linked Opportunities & Income Fund, a
Massachusetts business trust (the "Trust"), and Claymore Advisors, LLC, a
Delaware limited liability company (the "Advisor").
WHEREAS, the Trust is registered as a closed-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust wishes to retain the Advisor to provide certain
investment advisory, management, administrative and shareholder services; and
WHEREAS, the Advisor is willing to furnish such services on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. The Trust hereby appoints Claymore Advisors, LLC as Advisor of the
Trust for the period and on the terms set forth in this Agreement. The Advisor
accepts such appointment and agrees to render the services herein set forth, for
the compensation herein provided.
2. The Trust shall at all times keep the Advisor fully informed with
regard to the securities and other property owned by it, its funds available, or
to become available, for investment, and generally as to the condition of its
affairs. It shall furnish the Advisor with such other documents and information
with regard to its affairs as the Advisor may from time to time reasonably
request.
3. (a) Subject to the supervision of the Trust's Board of Trustees (the
"Trustees"), the Advisor shall regularly provide the Trust with investment
research, advice, management and supervision and shall furnish a continuous
investment program for the Trust consistent with the Trust's investment
objectives, policies and restrictions. The Advisor shall determine from time to
time what securities or other property will be purchased, retained or sold by
the Trust, and shall implement those decisions, all subject to the provisions of
the Trust's Agreement and Declaration of Trust and By-Laws, the 1940 Act, the
applicable rules and regulations of the Securities and Exchange Commission, and
other applicable federal and state law, as well as the investment objectives,
policies and restrictions of the Trust, as each of the foregoing may be amended
from time to time. The Advisor will place orders pursuant to its investment
determinations for the Trust either directly with the issuer or with any broker,
dealer or futures commission merchant (collectively, a "broker"). In the
selection of brokers and the placing of orders for the purchase and sale of
portfolio investments for the Trust, the Advisor shall seek to obtain the most
favorable price and execution available, except to the extent it may be
permitted to pay higher brokerage commissions for brokerage and research
services as described below. In using its best efforts to obtain for the Trust
the most favorable price and execution available, the Advisor, bearing in mind
the Trust's best interests at all times, shall consider all factors it deems
relevant, including, by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission, the
timing of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker involved and the
quality of service rendered by the broker in other transactions. Subject to such
policies as the Trustees may determine, the Advisor shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Trust to pay, on behalf of
the Trust, a broker that provides brokerage and research services to the Advisor
or any affiliated person of the Advisor an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker would have charged for effecting that transaction, if the Advisor
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker, viewed in terms of either that particular transaction or the Advisor's
overall responsibilities with respect to the Trust and to other clients of the
Advisor and any affiliated person of the Advisor as to which the Advisor or any
affiliated person of the Advisor exercises investment discretion. The Advisor
shall also provide advice and
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recommendations with respect to other aspects of the business and affairs of the
Trust, and shall perform such other functions of management and supervision, as
may be directed by the Trustees.
(b) In addition to the services to be provided by the Advisor pursuant
to Paragraph 3(a) of this Agreement, the Advisor shall, subject to the
supervision of the Trustees, provide the services set forth in Exhibit A
attached hereto. In all matters pertaining to the performance of the services
set forth in Exhibit A, the Advisor will act in conformity with the Trust's
Agreement and Declaration of Trust, By-Laws and registration statements, each as
amended from time to time, and with the directions of the Trustees and the
Trust's executive officers; and will conform to and comply with the requirements
of the 1940 Act and the rules and regulations thereunder and all other
applicable federal or state laws and regulations. Notwithstanding any other
provision of this Agreement, the Advisor shall be responsible for any expense it
incurs in connection with its duties under this Paragraph 3(b).
(c) The Trust hereby agrees with the Advisor and with any investment
manager appointed pursuant to Paragraph 4 below (an "Investment Manager") that
any entity or person associated with the Advisor or Investment Manager (or with
any affiliated person of the Advisor or Investment Manager) that is a member of
a national securities exchange is authorized to effect any transaction on such
exchange for the account of the Trust which is permitted by Section 11(a) of the
Securities Exchange Act of 1934, as amended, and Rule 11a2-2(T) thereunder, and
the Trust hereby consents to the retention of compensation for such transactions
in accordance with Rule 11a2-2(T)(a)(2)(iv) or otherwise.
4. The Advisor may enter into a contract ("Investment Management
Agreement") with one or more investment managers in which the Advisor delegates
to such investment manager or investment managers any or all of its duties
specified in Paragraph 3 hereunder. Such Investment Management Agreement must
meet all requirements of the 1940 Act and the rules and regulations thereunder.
5. (a) The Advisor, at its expense, shall supply the Board of Trustees
and officers of the Trust with statistical information and reports reasonably
requested by them and reasonably available to the Advisor and shall furnish the
Trust with office facilities, including space, furniture and equipment and all
personnel reasonably necessary for the operation of the Trust. The Advisor shall
oversee the maintenance of all books and records with respect to the Trust's
portfolio transactions and the keeping of the Trust's books of account in
accordance with all applicable federal and state laws and regulations and shall
perform such other administrative, bookkeeping or clerical duties as may be
agreed upon by the parties. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Advisor hereby agrees that any records which it
maintains for the Trust are the property of the Trust, and further agrees to
surrender promptly to the Trust or its agents any of such records upon the
Trust's request. The Advisor further agrees to arrange for the preservation of
the records required to be maintained by Rule 31a-1 under the 1940 Act for the
periods prescribed by Rule 31a-2 under the 1940 Act. The Advisor shall authorize
and permit any of its directors, officers and employees, who may be elected as
Trustees or officers of the Trust, to serve in the capacities in which they are
elected. The Advisor may enter into a contract with one or more other parties in
which the Advisor delegates to such party or parties any or all of the duties
specified in this Paragraph 5(a).
(b) Other than as herein specifically indicated, the Advisor shall not
be responsible for the expenses of the Trust. Specifically (but without
limitation), the Advisor will not be responsible for any of the following
expenses of the Trust, which expenses shall be borne by the Trust: advisory
fees; distribution fees; interest; taxes; governmental fees; fees, voluntary
assessments and other expenses incurred in connection with membership in
investment company organizations; the cost (including brokerage commissions or
charges, if any) of securities or other property purchased or sold by the Trust
and any losses in connection therewith; fees of custodians, transfer agents,
registrars, administrators or other agents; legal expenses; expenses of
preparing share certificates; expenses relating to the redemption or repurchase
of the Trust's shares; expenses of registering and qualifying shares of the
Trust for sale under applicable federal and state law; expenses of preparing,
setting in print, printing and distributing prospectuses, reports, notices and
dividends to Trust shareholders; costs of stationery; costs of shareholders' and
other meetings of the Trust; Trustees' fees; audit fees; travel expenses of
officers, Trustees and employees of the Trust, if any; and the Trust's pro rata
portion of premiums on any fidelity bond and other insurance covering the Trust
and/or its officers and Trustees.
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6. No Trustee, officer or employee of the Trust shall receive from the
Trust any salary or other compensation as such Trustee, officer or employee
while he or she is at the same time a director, officer, or employee of the
Advisor or any affiliated company of the Advisor. This Paragraph 6 shall not
apply to Trustees, executive committee members, consultants and other persons
who are not regular members of the Advisor's or any affiliated company's staff.
7. As compensation for the services performed and expenses assumed by
the Advisor, including the services of any consultants, investment managers or
other parties retained by the Advisor, the Trust shall pay the Advisor an annual
fee, payable on a monthly basis, at the annual rate of 0.60% of the Trust's
average weekly assets. "Average Weekly Assets" means the average weekly value of
the total assets of the Trust (including any assets attributable to leverage)
minus accrued liabilities (other than liabilities representing leverage). For
purposes of calculating Average Weekly Assets, neither the liquidation
preference of any preferred shares of beneficial interest outstanding nor any
liabilities associated with any instruments or transactions used to leverage the
Trust's portfolio (whether or not such instruments or transactions are "covered"
within the meaning of the 1940 Act and the rules and regulations thereunder,
giving effect to any interpretations of the Securities and Exchange Commission
and its staff) is considered a liability. In addition, with respect to reverse
repurchase or dollar roll transactions ("Repurchase Transactions") entered into
by the Trust, Average Weekly Assets includes (a) any proceeds from the sale of
an asset (the "Underlying Asset") of the Trust to a counterparty in a Repurchase
Transaction and (b) the value of such Underlying Asset as of the relevant
measuring date. The first payment of the fee shall be made as promptly as
possible at the end of the month succeeding the effective date of this
Agreement. 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. For purposes
of this Agreement and except as otherwise provided herein, the Average Weekly
Assets of the Trust shall be calculated pursuant to procedures adopted by the
Trustees of the Trust for calculating the value of the Trust's assets or
delegating such calculations to third parties. In the event that the expenses of
the Trust exceed any expense limitation which the Advisor may, by written notice
to the Trust, voluntarily declare to be effective with respect to the Trust,
subject to such terms and conditions as the Advisor may prescribe in such
notice, the compensation due the Advisor shall be reduced, and, if necessary,
the Advisor shall bear the Trust's expenses to the extent required by such
expense limitation.
8. In the absence of willful misfeasance, bad faith or gross negligence
on the part of the Advisor, or reckless disregard of its obligations and duties
hereunder, the Advisor shall not be subject to any liability to the Trust or to
any shareholder of the Trust, for any act or omission in the course of, or
connected with, rendering services hereunder.
9. Nothing in this Agreement shall limit or restrict the right of any
director, officer, or employee of the Advisor who may also be a Trustee,
officer, or employee of the Trust to engage in any other business or to devote
his or her time and attention to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature, or limit or
restrict the right of the Advisor to engage in any other business or to render
services of any kind, including investment advisory and management services, to
any other trust, firm, individual or association.
10. As used in this Agreement, the terms "assignment," "interested
person," "affiliated person," and "majority of the outstanding voting
securities" shall have the meanings given to them by Section 2(a) of the 1940
Act, subject to such exemptions as may be granted, issued or adopted by the
Securities and Exchange Commission or its staff by any rule, regulation, or
order; the term "specifically approve at least annually" shall be construed in a
manner consistent with the 1940 Act and the rules and regulations thereunder;
and the term "brokerage and research services" shall have the meaning given in
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
11. This Agreement shall become effective upon its execution, and shall
remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Paragraph 12 below) until terminated as follows:
(a) Either party hereto may at any time terminate this
Agreement by sixty days' written notice delivered or mailed by
registered mail, postage prepaid, to the other party, or
(b) If (i) the Trustees or the shareholders of the Trust by
the vote of a majority of the outstanding voting securities of the
Trust, and (ii) a majority of the Trustees who are not interested
persons of
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the Trust or of the Advisor, by vote cast in person at a meeting called
for the purpose of voting on such approval, do not specifically approve
at least annually the continuance of this Agreement, then this
Agreement shall automatically terminate at the close of business on the
first anniversary of its execution, or upon the expiration of one year
from the effective date of the last such continuance, whichever is
later; provided, however, that if the continuance of this Agreement is
submitted to the shareholders of the Trust for their approval and such
shareholders fail to approve such continuance of this Agreement as
provided herein, the Advisor may continue to serve hereunder in a
manner consistent with the 1940 Act and the rules and regulations
thereunder.
Action by the Trust under paragraph (a) of this Paragraph 11 may be
taken either (i) by vote of a majority of the Trustees, or (ii) by the vote of a
majority of the outstanding voting securities of the Trust.
12. Except as otherwise provided herein, this Agreement shall terminate
automatically in the event of its assignment by the Advisor and shall not be
assignable by the Trust without the consent of the Advisor. Any termination of
this Agreement pursuant to Paragraph 11 shall be without the payment of any
penalty. This Agreement shall not be amended unless such amendment is approved
by the vote of a majority of the outstanding voting securities of the Trust
(provided that such shareholder approval is required by the 1940 Act and the
rules and regulations thereunder, giving effect to any interpretations of the
Securities and Exchange Commission and its staff), and by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of a
majority of the Trustees who are not interested persons of the Trust or of the
Advisor.
13. The Advisor hereby grants to the Trust the nonexclusive right and
license to use the mark "Claymore" (the "Licensed Mark") in the Trust's name and
in connection with the formation, issuance, marketing, promotion and operations
of, or disclosure related to, the Trust. The Advisor agrees that it shall
receive no compensation for any such use by the Trust. The Advisor hereby
warrants and represents that it has filed applications and/or owns rights in the
Licensed Mark sufficient to grant this license. No right, title or interest in
the Licensed Mark, except the right to use the Licensed Mark as provided in this
Agreement, is or will be transferred to the Trust by this Agreement. Should this
Agreement be terminated, the Trust agrees that it will take reasonably necessary
steps to change its name to a name not including the word "Claymore."
14. The Advisor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records and other
information relative to the Trust, any Investment Manager appointed pursuant to
Paragraph 4 hereof, and all prior, current or potential shareholders of the
Trust and not to use such records and information for any purpose other than the
performance of its duties hereunder. The Advisor also agrees that, without the
prior written consent of the Trust, it will not disclose personal information of
any shareholders of the Trust ("Personal Shareholder Information") or any other
confidential information, including to its affiliates, unless it is required by
law to disclose the information to the recipient of such information. The
Advisor further agrees, represents and warrants that (a) only those employees of
the Advisor who need to do so in carrying out their job responsibilities may
access Personal Shareholder Information; (b) it maintains physical, electronic
and procedural safeguards that comply with federal standards to protect
confidentiality; and (c) it may use Personal Shareholder Information only for
the purposes set forth in this Agreement. Upon termination of this Agreement,
all confidential information shall be promptly returned unless otherwise agreed
to by the parties, although copies may be retained.
15. This Agreement embodies the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter hereof. Should any part of this
Agreement 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 and shall inure to the benefit of the parties hereto
and their respective successors.
16. A copy of the Trust's Agreement and Declaration of Trust is on file
with the Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this Agreement has been executed on behalf of the Trust by an officer
of the Trust as an officer and not individually and the obligations of or
arising out of this Agreement are not binding upon any of the Trustees, officers
or shareholders of the Trust individually but are binding only upon the assets
and property of the Trust.
I-11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
Attest: WESTERN ASSET/CLAYMORE INFLATION-LINKED OPPORTUNITIES &
INCOME FUND
By: _______________ By: ______________________________________
Attest: CLAYMORE ADVISORS, LLC
By: _______________ By: ______________________________________
I-12
EXHIBIT A
o Reply to requests for information concerning the Trust from
shareholders or prospective shareholders, brokers or the public;
o Aid in the secondary market support of the Trust through regular
written and oral communications with the Trust's New York Stock
Exchange specialist, the closed-end fund analyst community and various
information providers specializing in the dissemination of closed end
fund information;
o Prepare (or oversee the preparation) for review and approval by
officers of the Trust financial information for the Trust's reports to
be sent to the Trust's shareholders, and arrange for the printing and
dissemination of such reports to shareholders;
o Prepare (or oversee the preparation) for review by an officer of the
Trust all reports required to be filed with the Securities and Exchange
Commission, including reports on Forms N-SAR and N-CSR, and in the
filing of such completed forms with the Securities and Exchange
Commission;
o Assist in the dissemination to shareholders of the Trust's proxy
materials and assist in the filing of such materials with the Trust's
regulators, and oversee the tabulation of proxies by the Trust's
transfer agent;
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
assist in the preparation of materials relevant to the Trust's Dividend
Reinvestment Plan;
o Establish and maintain a toll-free number for sales support and
marketing requests on an ongoing basis;
o Develop and maintain, as agreed by the Trust, a website for the Trust
which will provide daily and weekly updates, daily net asset value and
price information, monthly distribution notifications and such other
information reasonably requested by the Trust, as well as hyperlinks to
the websites of the Advisor and any Investment Manager appointed
pursuant to Paragraph 4 above, for added information;
o Make the Trust and any Investment Manager aware of trading strategies
that might be used for the Trust and communicate to the investment
community any changes made to the Trust's trading strategies;
o Assist, as agreed by the Trust, in the provision of materials regarding
the Trust to the investment community and current and prospective
investors;
o Assist in the review of materials made available to shareholders and
prospective investors to assure compliance with applicable laws, rules
and regulations;
o Oversee, as agreed by the Trust, the dissemination of the Trust's net
asset value, market price and discount;
o Host analyst meetings as appropriate;
o Provide persons to serve as officers and trustees of the Trust, as the
Trust may request;
o Maintain ongoing contact with brokers in branch offices whose clients
hold Trust shares or whose clients may have an interest in acquiring
Trust shares, including providing, among other things, progress reports
on the Trust, dividend announcements and performance updates;
o Assist in the drafting of press releases to the public;
I-13
o Make such reports and recommendations to the Trustees as the Trustees
reasonably request or deem appropriate;
o Oversee, in consultation with, and as agreed by, any Investment
Manager, matters relating to the conduct and administration of meetings
of the Trustees, including, without limitation, the preparation and
distribution of all appropriate materials to the Trustees in advance of
any such meetings, the scheduling of such meetings, communication with
respect to such meetings and, if requested, the hosting of such
meetings (including arranging any off-site meetings);
o 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 Trustees) such other books and records required by
law or for the proper operation of the Trust;
o Oversee the preparation and filing of the Trust's federal, state and
local income tax returns and any other required tax returns;
o Review the appropriateness of and arrange for payment of the Trust's
expenses;
o 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;
o Oversee and review calculations of fees paid to the Trust's service
providers;
o Oversee the Trust's portfolio and perform necessary calculations as
required under Section 18 of the 1940 Act;
o 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;
o Review implementation of any share purchase programs authorized by the
Trustees;
o Prepare such information and reports as may be required by any banks
from which the Trust borrows funds;
o 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; and
o Provide such other services as the parties may mutually agree from time
to time.
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ETF FORM OF NEW ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT
.........
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement"), dated as of ,
2010, between , 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 hereunder with respect to each Fund pursuant to an
Investment Advisory Agreement between the Trust and the Adviser dated as of
....... (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 dated as of October 14, 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
I-15
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
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
I-16
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 1940 Act) of the Adviser.
During the term of this Agreement for each Fund listed on Exhibit A
hereto, the Adviser shall pay all of the expenses of each such 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 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 1940 Act) 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
I-17
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 one year 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.
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.
I-18
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.
I-19
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.
--------------------------------
By: ---------------------------
Name:
Title:
CLAYMORE ADVISORS, LLC
By: ---------------------------
Name:
Title:
I-20
APPENDIX J
FORMS OF NEW SUB-ADVISORY AGREEMENTS
INDEX
PAGE
FMO Form of New Sub-Advisory Agreement .................................. J-2
MCN Form of New Investment Management Agreement ......................... J-
OLA Form of New Sub-Advisory Agreement .................................. J-
TYW Form of TS&W New Sub-Advisory Agreement ............................. J-
TYW Form of SMC New Sub-Advisory Agreement .............................. J-
WIW Form of New Investment Management Agreement ......................... J-
WIW Form of New Investment Management between Western affiliates ........ J-
Sub-Advised ETF Form of New Sub-Advisory Agreement ...................... J-
J-1
FMO FORM OF NEW SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT (the "Agreement") dated as of ,
2010, among Fiduciary/Claymore MLP Opportunity Fund, a Delaware statutory trust
(the "Trust"), Claymore Advisors, LLC, a Delaware limited liability company (the
"Investment Adviser"), and Fiduciary Asset Management, LLC, a Missouri limited
liability company (the "Investment Sub-Adviser").
WHEREAS, the Investment 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 (defined below);
WHEREAS, the investment advisory agreement between the Investment
Adviser and the Trust (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 Trust 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
Trust 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
Trust Assets in accordance with the investment policies of the Trust; (ii)
arranging, subject to the provisions of paragraph 3 hereof, for the purchase and
sale of securities and other assets for the Trust; (iii) providing investment
research and credit analysis concerning the Trust Assets; (v) placing orders for
purchases and sales of Trust Assets, (vi) maintaining the books and records as
are required to support Trust investment operations, (vii) monitoring on a daily
basis the investment activities and portfolio holdings relating to the Trust,
and (viii) voting proxies relating to the Trust's portfolio securities in
accordance with the proxy voting policies and procedures of the Investment
Sub-Adviser. 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 Trust Assets and the investment policies and practices of the Trust,
including (but not limited to) the use by the Trust of financial leverage and
elements (e.g., form, amount and costs) relating to such financial leverage and
the utilization by the Trust 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 Trust and the Investment Adviser informed
of developments materially affecting the Trust and shall, upon request, furnish
to the Trust all information relevant to such developments. The Investment
Sub-Adviser will periodically
J-2
communicate to the Investment Adviser, at such times as the Investment Adviser
may direct, information concerning the purchase and sale of securities for the
Trust, 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 Trust under the Investment
Advisory Agreement. The Investment Sub-Adviser will provide the services
rendered by it under this Agreement in accordance with the Trust'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 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. The Trust shall maintain its
books and records, and the Investment Sub-Adviser shall have no responsibility
with respect thereto, other than its obligations under the 1940 Act, the
Advisers Act or other applicable law. In addition, the Investment Sub-Adviser
may, to the extent permitted by the 1940 Act, the Advisers Act and other
applicable law, aggregate purchase and sale orders being made simultaneously for
other accounts managed by the Investment Sub-Adviser or its affiliates and
allocate the securities so purchased or sold, as well as expenses incurred in
the transaction, among the Trust and other accounts in an equitable manner.
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") thereunder;
(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 Trust as set forth in the Trust's Prospectus filed with the
SEC as part of the Trust's Registration Statement on Form N-2; 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 Trust 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 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 Trust 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
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 Trust's securities
transactions and render to the Investment Adviser and the Trust's Board of
Trustees such periodic and special reports as they may reasonably request; and
(d) treat confidentially and as proprietary information of the Trust
all non-public 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.
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
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their own accounts or for the accounts of others for whom it or they may be
acting; provided, however, that any of the foregoing activities are consistent
with applicable law and the Investment Sub-Adviser's fiduciary obligations to
the Trust.
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 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 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 a 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 a Investment Sub-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 Investment Sub-Adviser or its affiliates to
participate in agency cross transactions involving an Account, consistent with
any policies and procedures that may be adopted by the Board of Trustees of the
Trust, and this Agreement shall constitute executed, written consent of the
Trust for the Investment Sub-Adviser engaging in agency cross transactions. 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 1940 Act) of
the Investment Sub-Adviser. The Investment Sub-Adviser shall not be responsible
for any expenses of the Investment Adviser or the Trust not specifically set
forth in this Section 8 or otherwise in any written agreement between the
Investment Sub-Adviser and the Trust or the Investment Adviser, as the case may
be.
8. COMPENSATION.
(a) The Investment-Advisor 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 monthly fee (the
"Investment Management Fee") payable in arrears at an annual rate equal to 0.50%
of the average daily value of the Trust's Managed Assets. "Managed Assets" means
the total assets of the Trust (including the assets attributable to the proceeds
from any financial leverage) minus the sum of the accrued liabilities (other
than the aggregate indebtedness constituting financial leverage). 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.
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 failing to be registered as an
investment adviser under the Advisers Act, (b) the Investment Sub-Adviser having
been served
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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) the occurrence of any 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) the occurrence of any
material 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 Adviser or
by the Trust (or their respective agents) 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 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 Trust by the Investment Sub-Adviser
as provided below) if the Trust 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 Trust whether or not the Investment
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
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 1940 Act) 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 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 a
reasonable belief 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 one year. 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 1940 Act) 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 Trust 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 Trust 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.
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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 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.
15. USE OF THE NAME FIDUCIARY. The Investment Sub-Adviser has consented
to the use by the Trust of the name or identifying word "Fiduciary" in the name
of the Trust. Such consent is conditioned upon the employment of the Investment
Sub-Adviser as the investment sub-adviser to the Trust. 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 Trust to cease using "Fiduciary" in the
name of the Trust if the Trust 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 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 other wise, 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 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:
---------------------------------------
FIDUCIARY ASSET MANAGEMENT, LLC
By:
----------------------------------------
FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND
By:
----------------------------------------
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MCN FORM OF NEW INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT (the "Agreement") dated as of ,
2010, among Madison/Claymore Covered Call & Equity Strategy Fund, a Delaware
statutory trust (the "Trust"), Claymore Advisors, LLC, a Delaware limited
liability company (the "Investment Adviser"), and Madison Asset Management, LLC,
a Wisconsin limited liability company (the "Investment Manager").
WHEREAS, the Investment 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 (defined below);
WHEREAS, the investment advisory agreement between the Investment
Adviser and the Trust (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 Manager
to provide certain sub-advisory services;
WHEREAS, the Investment Manager is registered as 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 Manager 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
Manager to act as a sub-adviser with respect to the Trust as set forth in this
Agreement and the Investment Manager accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. SERVICES OF THE INVESTMENT MANAGER. 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 Manager will perform certain of the day-to-day operations of the
Trust 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
Trust Assets in accordance with the investment policies of the Trust; (ii)
arranging, subject to the provisions of paragraph 3 hereof, for the purchase and
sale of securities and other assets for the Trust; (iii) providing investment
research and credit analysis concerning the Trust Assets; (v) placing orders for
purchases and sales of Trust Assets, (vi) maintaining the books and records as
are required to support Trust investment operations, and (vii) monitoring on a
daily basis the investment activities and portfolio holdings relating of the
Trust. At the request of the Investment Adviser, the Investment Manager 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 Trust Assets and the
investment policies and practices of the Trust, including (but not limited to)
the use by the Trust of financial leverage and elements (e.g., form, amount and
costs) relating to such financial leverage and the utilization by the Trust 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 Manager will keep the Trust and
the Investment Adviser informed of developments materially affecting the Trust
and shall, on its own initiative, furnish to the Trust all information relevant
to such developments. The Investment Manager 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 Trust,
including: (i) the name of
J-8
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 Trust under the Investment Advisory
Agreement. The Investment Manager will provide the services rendered by it under
this Agreement in accordance with the Trust'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 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.
3. COVENANTS. In the performance of its duties under this Agreement,
the Investment Manager:
(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 Trust as set forth in the Trust's Prospectus filed with the SEC as part of
the Trust's Registration Statement on Form N-2; 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 Manager will obtain the best
price and the most favorable execution of its orders. In placing orders, the
Investment Manager 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
Manager may select brokers on the basis of the research, statistical and pricing
services they provide to the Trust and other clients of the Investment Adviser
or the Investment Manager, 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 Manager 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 Investment
Manager 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 Manager to the Trust 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 Investment Adviser, the
Investment Manager 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 Trust'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 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.
4. SERVICES NOT EXCLUSIVE. Nothing in this Agreement shall prevent the
Investment Manager 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 Manager 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 Manager 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 Manager 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
Investment Manager 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.
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6. AGENCY CROSS TRANSACTIONS. From time to time, the Investment Manager
or brokers or dealers affiliated with the Investment Manager may find themselves
in a position to buy for certain of their brokerage clients (each an "Account")
securities which the Investment Manager'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 Manager 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 a Investment
Manager is making the investment decision (as opposed to a brokerage client who
makes his own investment decisions), and the Investment Manager 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 Manager's part regarding the Advisory client. The SEC has adopted a
rule under the Advisers Act which permits a Investment Manager 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 Investment Manager 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 Manager.
7. EXPENSES. During the term of this Agreement, the Investment Manager
will bear all costs and expenses of its employees and any overhead incurred by
the Investment Manager 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 1940 Act) of the Investment
Manager.
8. COMPENSATION.
(a) The Trust agrees to pay to the Investment Manager and the
Investment Manager agrees to accept as full compensation for all services
rendered by the Investment Manager as such, a monthly fee (the "Investment
Management Fee") in arrears at an annual rate equal to 0.50% of the average
daily value of the Trust's Managed Assets. "Managed Assets" means the total
assets of the Trust (including the assets attributable to the proceeds from any
financial leverage) minus the sum of the accrued liabilities (other than the
aggregate indebtedness constituting financial leverage). 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.
9. CERTAIN INFORMATION. The Investment Manager shall promptly notify
the Investment Adviser in writing of the occurrence of any of the following
events: (a) the Investment Manager shall fail to be registered as an investment
adviser under the Advisers Act, (b) the Investment Manager 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 Manager or any parent of the Investment Manager within the
meaning of the 1940 Act, or (d) there is an adverse change in the business or
financial position of the Investment Manager.
10. LIMITATION ON LIABILITY.
(a) The Investment Manager will not be liable for any error of judgment
or mistake of law or for any loss suffered by the Investment Manager, 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.
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(b) The Trust may, but shall not be required to, make advance payments
to the Investment Manager in connection with the expenses of the Investment
Manager in defending any action with respect to which damages or equitable
relief might be sought against the Investment Manager under this Section (which
payments shall be reimbursed to the Trust by the Investment Manager as provided
below) if the Trust receives (i) a written affirmation of the Investment
Manager'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 Investment Manager 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 Investment Manager is liable
under this Section or (2) in the absence of such a decision, upon the request of
the Investment Manager 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 1940 Act) nor parties to the
proceeding ("Disinterested Non-Party Trustees"). In addition, at least one of
the following conditions must be met: (A) the Investment Manager shall provide a
security for such Investment Manager 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 Investment Manager 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 one year. 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 1940 Act) 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 Manager 60 days'
notice (which notice may be waived by the Investment Manager), 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 Investment Manager 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 Trust 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. 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 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.
15. USE OF THE NAME MADISON. The Investment Manager has consented to
the use by the Trust of the name or identifying word "Madison" in the name of
the Trust. Such consent is conditioned upon the employment of the Investment
Manager as the investment sub-adviser to the Trust. The names or identifying
words "Madison" may be used from time to time in other connections and for other
purposes by the Investment Manager and any of its affiliates. The Investment
Manager may require the Trust to cease using "Madison" in the name of the Trust
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if the Trust or the Investment Adviser ceases to employ, for any reason, the
Investment Manager, any successor thereto or any affiliate thereof as investment
sub-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 other wise, 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 counter parts 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:
----------------------------------------
MADISON ASSET MANAGEMENT, LLC
By:
----------------------------------------
MADISON/CLAYMORE COVERED CALL & EQUITY STRATEGY FUND
By:
----------------------------------------
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OLA FORM OF NEW SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT (the "Agreement") dated as of ,
2010, 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 LLC, a Delaware limited liability company
("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 (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");
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(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 or
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, (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
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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
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 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 1940 Act) of the Sub-Adviser (and who are
not also such affiliated persons of the Adviser).
8. COMPENSATION.
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(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.
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 1940 Act) 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.
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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 one year. 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 1940 Act) 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 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.
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.
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(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.
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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:
----------------------------------------
Name:
Title:
ANALYTIC INVESTORS, INC.
By:
----------------------------------------
Name:
Title:
OLD MUTUAL/CLAYMORE LONG-SHORT FUND
By:
----------------------------------------
Name:
Title:
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TYW FORM OF TS&W NEW SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT (the "Agreement") dated as of ,
2010, among TS&W / Claymore Tax-Advantaged Balanced Fund, a Delaware statutory
trust (the "Trust"), Claymore Advisors, LLC, a Delaware limited liability
company (the "Adviser"), and Thompson, Siegel & Walmsley LLC, a Delaware limited
liability company ("TS&W" 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 (defined below);
WHEREAS, the investment advisory agreement between the Adviser and the
Trust (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 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 Adviser wishes to retain the Sub-Adviser to provide
certain sub-advisory services with respect to that portion of the Trust's assets
(the "Trust Assets") allocated at any time and from time to time to the Equity
and Income Securities Portfolio (as described in the Trust's Prospectus for
common shares dated April 27, 2004) and including the proportionate share of
such Trust Assets attributable to the proceeds from any preferred shares or
other form of financial leverage of the Trust that may be outstanding, but minus
the sum of the proportionate share of the Trust's accrued liabilities (other
than the proportionate share of the Trust's aggregate indebtedness constituting
financial leverage) (such portion of the Trust Assets so allocated, the "Equity
and Income Assets"). 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 purposes of this Agreement, the total assets of the
Trust shall be calculated in the same manner as set forth 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 a
sub-adviser with respect to 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 furnished (or shall, as such documents become
available or are amended, promptly furnish) the Sub-Adviser with 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");
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(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"); and
(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 Sub-Adviser will perform
investment advisory services on behalf of the Trust and certain of the
day-to-day operations of the Trust associated with such investment advisory
services, which may include one or more of the following services at the request
of the Adviser: (i) managing the investment and reinvestment of the Equity and
Income Assets in accordance with the investment policies of the Trust; (ii)
arranging, subject to the provisions of paragraph 3 hereof, for the purchase and
sale of securities and other assets for the Equity and Income Securities
Portfolio; (iii) providing investment research and credit analysis concerning
the Equity and Income Securities Portfolio; (v) placing orders for purchases and
sales of Equity and Income Assets, (vi) maintaining the books and records as are
required to support Trust investment operations as they relate to the Equity and
Income Securities Portfolio, and (vii) monitoring on a daily basis the
investment activities and portfolio holdings relating to the Equity and Income
Securities Portfolio. 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 Assets and the investment
policies and practices of the Trust, including (but not limited to) asset
allocation decisions and the use by the Trust of financial leverage and elements
(e.g., form, amount and costs) relating to such financial leverage and the
utilization by the Trust of any interest rate or other hedging or risk
management transactions in connection therewith; provided that the Adviser shall
be responsible for and make all determinations regarding such matters under and
in accordance with the Investment Advisory Agreement. In addition, the
Sub-Adviser will keep the Trust and the Adviser informed of developments
materially adversely affecting the Equity and Income Securities 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 Equity and Income Securities 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, and (v) such other information
as the Adviser may reasonably require for purposes of fulfilling its obligations
to the Trust under the Investment Advisory Agreement. The Sub-Adviser will
provide the services rendered by it under this Agreement in accordance with the
Trust's investment objective, policies and restrictions (as currently in effect
and as they may be amended or supplemented from time to time) applicable to the
Equity and Income Securities Portfolio 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.
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 objective, policies and restrictions of
the Trust applicable to the Equity and Income Securities Portfolio as set forth
in the Prospectus, as such investment objective, policies and
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restrictions are amended from time to time (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 of Trustees of the Trust 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 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
securities transactions with respect to the Equity and Income Securities
Portfolio 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 Sub-Adviser or
brokers or dealers affiliated with 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 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 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 a Sub-Adviser is making the
investment decision (as opposed to a brokerage client who makes his own
investment decisions), and 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 part
regarding the Advisory client. The SEC has adopted a rule under the Advisers Act
which permits a Sub-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
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authorizes the 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 Sub-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 1940 Act) of the Sub-Adviser (and who are
not also such affiliated persons of the Adviser).
8. COMPENSATION. 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 fee, computed and paid monthly in
arrears at the annual rate equal to 0.42% of the average daily Equity and Income
Assets, determined by taking an average of all of the determinations of such
amounts during such month while this Agreement is in effect (the "Sub-Advisory
Fee"). For any period less than a month during which this Agreement is in
effect, the 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.
9. CERTAIN INFORMATION. The Sub-Adviser 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.
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 Equity and Income Asset) 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 1940 Act) 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.
12. 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 one year. Thereafter, if not terminated,
this Agreement shall continue in effect with respect to the Trust for successive
periods of
J-24
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 1940 Act) 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 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.)
13. 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.
14. 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.
15. 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.
16. USE OF THE NAME TS&W. The Sub-Adviser has consented to the use by
the Trust of the name or identifying word "TS&W" in the name of the Trust. Such
consent is conditioned upon the employment of the Sub-Adviser as the investment
sub-adviser to the Trust. The parties acknowledge that "TS&W" and "Thompson,
Siegel & Walmsley" and "Thompson, Siegel & Walmsley, Inc." are and remain the
property of the Sub-Adviser and that the Sub-Adviser is not hereby granting to
any party hereto a license or franchise with respect to the use of such name.
The Trust and the Advisor each agrees not to use the name "TS&W" or "Thompson,
Siegel & Walmsley" in any sales material without first presenting such document
to the Sub-Adviser and obtaining its express consent prior to use. The names or
identifying words "TS&W" may be used from time to time in other connections and
for other purposes by the Sub-Adviser and any of its affiliates. The Sub-Adviser
may require the Trust to cease using "TS&W" 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 investment sub-adviser of the
Trust. No press release shall be issued with respect to the Trust without the
prior consent of Old Mutual Asset Management 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. No right to
the use of the name Old Mutual is granted hereby.
17. 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
other wise, 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.
J-25
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.
18. 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.
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:
----------------------------------------
----------------------------------------
Name:
Title:
THOMPSON, SIEGEL & WALMSLEY, INC.
By:
----------------------------------------
----------------------------------------
Name:
Title:
TS&W / CLAYMORE TAX-ADVANTAGED
BALANCED FUND
By:
----------------------------------------
----------------------------------------
Name:
Title:
J-27
TYW FORM OF SMC NEW SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT (the "Agreement") dated as of ,,
among TS&W / Claymore Tax-Advantaged Balanced Fund, a Delaware statutory trust
(the "Trust"), Claymore Advisors, LLC, a Delaware limited liability company (the
"Adviser"), and SMC Fixed Income Management, LP, a Delaware limited partnership
(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 (defined below);
WHEREAS, the investment advisory agreement between the Adviser and the
Trust (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 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 Adviser wishes to retain the Sub-Adviser to provide
certain sub-advisory services with respect to that portion of the Trust's assets
(the "Trust Assets") allocated at any time and from time to time to the
Municipal Securities Portfolio (as described in the Trust's Prospectus for
common shares dated April 27, 2004) and including the proportionate share of
such Trust Assets attributable to the proceeds from any preferred shares or
other form of financial leverage of the Trust that may be outstanding, but minus
the sum of the proportionate share of the Trust's accrued liabilities (other
than the proportionate share of the Trust's aggregate indebtedness constituting
financial leverage) (such portion of the Trust Assets so allocated, the
"Municipal Securities Assets"). 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 purposes of this Agreement, the total
assets of the Trust shall be calculated in the same manner as set forth 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 a
sub-adviser with respect to 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.
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 Sub-Adviser will perform certain
of the day-to-day operations of the Trust which may include one or more of the
following services at the request of the Adviser: (i) managing the investment
and reinvestment of the Municipal Securities Assets in accordance with the
investment policies of the Trust; (ii) arranging, subject to the provisions of
paragraph 3 hereof, for the purchase and sale of securities and other assets for
the Municipal Securities Portfolio; (iii) providing investment research and
credit analysis concerning the Municipal Securities Assets; (v) placing orders
for purchases and sales of Municipal Securities Assets, (vi) maintaining the
books and records as are required to support Trust investment operations, as
they relate to the Municipal Securities Portfolio, (vii) monitoring on a daily
basis the investment activities and portfolio holdings relating to the Municipal
Securities Portfolio and (vii) voting proxies relating to the Municipal
Securities Portfolio's portfolio securities in accordance with the proxy voting
policies and procedures of the
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Sub-Adviser. At the request of the Adviser, the Sub-Adviser will also, subject
to the oversight and supervision of the Adviser and the direction and control of
the Trust's Board of Trustees, consult with the Adviser as to the overall
management of the Trust Assets and the investment policies and practices of the
Trust, including (but not limited to) asset allocation decisions, the use by the
Trust of financial leverage and elements (e.g., form, amount and costs) relating
to such financial leverage and the utilization by the Trust of any interest rate
or other hedging or risk management transactions in connection therewith;
provided that the Adviser shall be responsible for and make all determinations
regarding such matters under and in accordance with the Investment Advisory
Agreement. In addition, the Sub-Adviser will keep the Trust and the Adviser
informed of developments materially affecting the Municipal Securities Portfolio
and shall, on its own initiative, 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 direct, information concerning the
purchase and sale of securities for the Municipal Securities 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, and (v) such
other information as the Adviser may reasonably require for purposes of
fulfilling its obligations to the Trust under the Investment Advisory Agreement.
The Sub-Adviser will provide the services rendered by it under this Agreement in
accordance with the Trust's investment objective, policies and restrictions, as
currently in effect and as they may be amended or supplemented from time to time
(to the extent such amendments are not available to Sub-Advisor at Board
meetings or other meetings where Sub-Advisor is, or should reasonably be
expected to be, in attendance, written notice of such amendments shall be
provided to Sub-Advisor), applicable to the Municipal Securities Portfolio 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.
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; (iv) the investment objectives, policies and restrictions of
the Trust applicable to the Municipal Securities Portfolio as set forth in the
Trust's Prospectus filed with the SEC as part of the Trust's Registration
Statement on Form N-2; and (v) any policies, determinations and/or resolutions
of the Board of Trustees of the Trust or the Adviser (to the extent such
policies, determinations and/or resolutions are not available to Sub-Advisor at
Board meetings or other meetings where Sub-Advisor is, or should reasonably be
expected to be, in attendance, written notice of such policies, determinations
and/or resolutions shall be provided to Sub-Advisor);
(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 adhere to the standard of
best execution in placing its orders. In placing orders, the 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 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 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 provided
that the Advisor shall provide the Sub-Advisor with a schedule of its affiliates
and the Trust's affiliates;
(c) will maintain books and records with respect to the Trust's
securities transactions with respect to the Municipal Securities Portfolio and
render to the Adviser and the Trust's Board of Trustees such periodic and
special reports as they may reasonably request; and
J-29
(d) will treat confidentially and as proprietary information of the
Trust all records and other non-public 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; provided that the Sub-Advisor may divulge
such records to regulators, auditors, its attorneys or as may be required in
accordance with 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 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 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 Sub-Adviser or
brokers or dealers affiliated with 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 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 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 a Sub-Adviser is making the
investment decision (as opposed to a brokerage client who makes his own
investment decisions), and 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 part
regarding the advisory client. The SEC has adopted a rule under the Advisers Act
which permits a Sub-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 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.
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 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 1940 Act) of the Sub-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 by the
Sub-Adviser as such, a monthly fee (the "Investment Management Fee") payable in
arrears at an annual rate equal to 0.30% of the average daily value of the
Municipal Securities 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.
(b) For purposes of this Agreement, the total assets of the Trust shall
be calculated by the Advisor 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-Adviser shall promptly notify the
Adviser in writing of the occurrence of any of the following events: (a) the
Sub-Adviser failing to be registered as an investment adviser under the Advisers
Act, (b) the Sub-Adviser having 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
J-30
affairs of the Trust, (c) the occurrence of any change in control of the
Sub-Adviser or any parent of the Sub-Adviser within the meaning of the 1940 Act,
or (d) the occurrence of any material adverse change in the business or
financial position of the Sub-Adviser.
10. LIMITATION ON LIABILITY.
(a) The Sub-Adviser will not be liable for any loss arising from any
error of judgment or mistake of law or for any loss suffered by the Sub-Adviser,
the 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 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 1940 Act) 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 [one year]. 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 1940 Act) 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 Sub-Adviser 60 days' notice
(which notice may be waived by the 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 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 will terminate automatically upon any
termination of the Investment Advisory Agreement between 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 or on the first day after the
electronic confirmation of receipt by the recipient of the notice if sent via
email.
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
J-31
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 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.
15. USE OF THE NAME SMC. The Sub-Adviser has consented to the use by
the Trust of the name or identifying word "SMC" 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 names or identifying words "SMC" may be used from time to time
in other connections and for other purposes by the Sub-Adviser and any of its
affiliates. The Sub-Adviser may require the Trust to cease using "SMC" 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.
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 other wise, 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 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:
----------------------------------------
----------------------------------------
TS&W / CLAYMORE TAX-ADVANTAGED
BALANCED FUND
By:
----------------------------------------
----------------------------------------
SMC FIXED INCOME MANAGEMENT, LP
By:
----------------------------------------
----------------------------------------
J-33
WIW FORM OF NEW MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT
This INVESTMENT MANAGEMENT AGREEMENT made this day of 2010, by and
between Claymore Advisors, LLC (the "Advisor"), a Delaware limited liability
company, and Western Asset Management Company ("WAM"), a California corporation,
each of which is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended.
WHEREAS, the Advisor is the adviser of Western Asset/Claymore
Inflation-Linked Opportunities & Income Fund (the "Trust"), a closed-end,
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Advisor wishes to retain WAM to provide certain investment
advisory services in connection with the Advisor's management of the Trust; and
WHEREAS, WAM is willing to furnish such services on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1 Appointment. The Advisor hereby appoints WAM as investment manager
for the Trust for the period and on the terms set forth in this Agreement. WAM
accepts such appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
2 Delivery of Documents. The Advisor has furnished WAM with copies of
each of the following:
(a) The Trust's Agreement and Declaration of Trust and all amendments
thereto (such Declaration of Trust, as presently in effect and as it shall from
time to time be amended, is herein called the "Declaration");
(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 Advisor as the adviser and WAM as investment
manager and approving the Investment Advisory Agreement between the Advisor and
the Trust with respect to the Trust (the "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, no par value;
(e) The Trust's most recent prospectus (such prospectus, as presently
in effect, and all amendments and supplements thereto are herein called the
"Prospectus"); and
(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").
The Advisor will furnish WAM from time to time with copies of all amendments of
or supplements to the foregoing.
3 Investment Advisory Services. (a) Subject to the supervision of the
Trustees and the Advisor, WAM shall as requested by the Advisor regularly
provide the Trust with investment research, advice, 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
Trust's current Prospectus and Statement of Additional Information. WAM shall as
requested by the Advisor determine from time to time what securities or other
property
J-34
will be purchased, retained or sold by the Trust, and shall implement those
decisions, all subject to the provisions of the Trust's Declaration and By-Laws,
the 1940 Act, the applicable rules and regulations of the Securities and
Exchange Commission, and other applicable federal and state law, as well as the
investment objectives, policies, and restrictions of the Trust, as each of the
foregoing may be amended from time to time. WAM will as requested by the Advisor
place orders pursuant to its investment determinations for the Trust either
directly with the issuer or with any broker, dealer or futures commission
merchant (collectively, a "broker"). In the selection of brokers and the placing
of orders for the purchase and sale of portfolio investments for the Trust, WAM
shall seek to obtain for the Trust the most favorable price and execution
available, except to the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described below. In using its
best efforts to obtain for the Trust the most favorable price and execution
available, WAM, bearing in mind the Trust's best interests at all times, shall
consider all factors it deems relevant, including, by way of illustration,
price, the size of the transaction, the nature of the market for the security,
the amount of the commission, the timing of the transaction taking into
consideration market prices and trends, the reputation, experience and financial
stability of the broker involved and the quality of service rendered by the
broker in other transactions. Subject to such policies as the Trustees may
determine and communicate to WAM in writing, WAM shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Trust to pay a broker that
provides brokerage and research services to WAM or any affiliated person of WAM
an amount of commission for effecting a portfolio investment transaction in
excess of the amount of commission another broker would have charged for
effecting that transaction, if WAM determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker, viewed in terms of either that particular
transaction or WAM's overall responsibilities with respect to the Trust and to
other clients of WAM and any affiliated person of WAM as to which WAM or any
affiliated person of WAM exercises investment discretion. WAM shall also perform
such other functions of management and supervision as may be requested by the
Advisor and agreed to by WAM.
(b) WAM will as requested by the Advisor oversee the maintenance of all
books and records with respect to the investment transactions of the Trust that
it implements in accordance with all applicable federal and state laws and
regulations, and will furnish the Trustees with such periodic and special
reports as the Trustees or the Advisor reasonably may request.
(c) The Trust hereby agrees with WAM and any investment manager
appointed pursuant to paragraph 3(d) below (a "Subadviser") that any entity or
person associated with WAM or the Subadviser (or with any affiliated person of
WAM or the Subadviser) which is a member of a national securities exchange is
authorized to effect any transaction on such exchange for the account of the
Trust which is permitted by Section 11(a) of the Securities Exchange Act of
1934, as amended, and Rule 11a2-2(T) thereunder, and the Trust hereby consents
to the retention of compensation for such transactions in accordance with Rule
11a2-2(T)(a)(2)(iv) or otherwise.
(d) WAM may enter into a contract (the "Subadvisory Contract") with one
or more investment managers in which WAM delegates to such investment manager or
investment managers any or all duties specified in this Section 3. Such
Subadvisory Contract must meet all requirements of the 1940 Act and the rules
and regulations thereunder.
4 Services Not Exclusive. WAM's services hereunder are not deemed to be
exclusive, and WAM shall be free to render similar services to others. It is
understood that persons employed by WAM to assist in the performance of its
duties hereunder might not devote their full time to such service. Nothing
herein contained shall be deemed to limit or restrict the right of WAM or any
affiliate of WAM to engage in and devote time and attention to other businesses
or to render services of whatever kind or nature.
5 Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, WAM hereby agrees that all books and records which it
maintains for the Trust are property of the Trust and further agrees to
surrender promptly to the Trust or its agents any of such records upon the
Trust's request. WAM further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any such records required to be maintained by Rule
31a-1 under the 1940 Act.
J-35
6 Expenses. During the term of this Agreement, WAM will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities and other property (including brokerage
commissions, if any) purchased for the Trust.
7 Compensation. For the services which WAM will render to the Advisor
and the Trust under this Agreement, the Advisor shall pay WAM an annual fee,
payable on a monthly basis, at the annual rate of 0.27% of the Trust's average
weekly assets. "Average Weekly Assets" means the average weekly value of the
total assets of the Trust (including any assets attributable to leverage) minus
accrued liabilities (other than liabilities representing leverage). For purposes
of calculating Average Weekly Assets, neither the liquidation preference of any
preferred shares of beneficial interest outstanding nor any liabilities
associated with any instruments or transactions to leverage the Trust's
portfolio (whether or not such instruments or transactions are "covered" within
the meaning of the 1940 Act and the rules and regulations thereunder, giving
effect to any interpretations of the Securities and Exchange Commission and its
staff) is considered a liability. In addition, with respect to reverse
repurchase or dollar roll transactions ("Repurchase Transactions") entered into
by the Trust, Average Weekly Assets includes (a) any proceeds from the sale of
an asset (the "Underlying Asset") of the Trust to a counterparty in a Repurchase
Transaction and (b) the value of such Underlying Asset as of the relevant
measuring date. Fees due to WAM hereunder shall be paid promptly to WAM by the
Advisor following its receipt of fees from 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. For purposes of this Agreement and except as
otherwise provided herein, the Average Weekly Assets of the Trust shall be
calculated pursuant to procedures adopted by the Trustees of the Trust for
calculating the value of the Trust's assets or delegating such calculations to
third parties.
8 Limitation of Liability. In the absence of willful misfeasance, bad
faith or gross negligence on the part of WAM, or reckless disregard of its
obligations and duties hereunder, WAM shall not be subject to any liability to
the Advisor, the Trust or any shareholder of the Trust, for any act or omission
in the course of, or connected with, rendering services hereunder.
9 Definitions. As used in this Agreement, the terms "assignment,"
"interested person," "affiliated person," and "majority of the outstanding
voting securities" shall have the meanings given to them by Section 2(a) of the
1940 Act, subject to such exemptions as may be granted, issued or adopted by the
Securities and Exchange Commission or its staff by any rule, regulation, or
order; the term "specifically approve at least annually" shall be construed in a
manner consistent with the 1940 Act and the rules and regulations thereunder;
and the term "brokerage and research services" shall have the meaning given in
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
10 Term. This Agreement shall become effective upon its execution, and
shall remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 12) until terminated as follows:
(a) The Trust may at any time terminate this Agreement by 60
days' written notice delivered or mailed by registered mail, postage
prepaid, to the Advisor and WAM, or
(b) If (i) the Trustees or the shareholders of the Trust by
vote of a majority of the outstanding voting securities of the Trust,
and (ii) a majority of the Trustees who are not interested persons of
the Trust, the Advisor or WAM, by vote cast in person at a meeting
called for the purpose of voting on such approval, do not specifically
approve at least annually the continuance of this Agreement, then this
Agreement shall automatically terminate at the close of business on the
first anniversary of its execution, or upon the expiration of one year
from the effective date of the last such continuance, whichever is
later; provided, however, that if the continuance of this Agreement is
submitted to the shareholders of the Trust for their approval and such
shareholders fail to approve such continuance of this Agreement as
provided herein, WAM may continue to serve hereunder in a manner
consistent with the 1940 Act and the rules and regulations thereunder,
or
(c) WAM may at any time terminate this Agreement by 60 days'
written notice delivered or mailed by registered mail, postage prepaid,
to the Advisor.
J-36
Action by the Trust under paragraph (a) of this Section 10 may be taken
either (i) by vote of a majority of the Trustees, or (ii) by the vote of a
majority of the outstanding voting securities of the Trust.
11 Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
12 No Assignment; Amendments. This Agreement shall terminate
automatically in the event of its assignment or in the event that the Advisory
Agreement shall have terminated for any reason. Any termination of this
Agreement pursuant to Section 10 shall be without the payment of any penalty.
This Agreement shall not be amended unless such amendment is approved by the
vote of a majority of the outstanding voting securities of the Trust (provided
that such shareholder approval is required by the 1940 Act and the rules and
regulations thereunder, giving effect to any interpretations of the Securities
and Exchange Commission and its staff) and by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Trustees who are not interested persons of the Trust, the Advisor or WAM.
13 Non-Exclusive Right. WAM hereby grants to the Trust the nonexclusive
right and license to use the mark "Western" (the "Licensed Mark") in the Trust's
name and in connection with the formation, issuance, marketing, promotion and
operations of, or disclosure related to, the Trust. WAM agrees that it shall
receive no compensation for any such use by the Trust. WAM hereby warrants and
represents that it has filed applications and/or owns rights in the Licensed
Mark sufficient to grant this license. No right, title, or interest in the
Licensed Mark, except the right to use the Licensed Mark as provided in this
Agreement, is or will be transferred to the Trust by this Agreement. Should this
Agreement be terminated, the Trust agrees that it will take reasonably necessary
steps to change its name to a name not including the word "Western."
14 Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. 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. Should any part of this Agreement 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 and shall inure to the
benefit of the parties hereto and their respective successors.
15. Limitation of Liability. A copy of the Trust's Agreement and
Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this Agreement has been executed
on behalf of the Trust by an officer of the Trust as an officer and not
individually and the obligations of or arising out of this Agreement are not
binding upon any of the Trustees, officers or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
J-37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
Attest: CLAYMORE ADVISORS, LLC
By: _______________ By: ______________________________________
Attest: WESTERN ASSET MANAGEMENT COMPANY
By: _______________ By: ______________________________________
The foregoing is accepted by:
Attest: WESTERN ASSET/CLAYMORE INFLATION-LINKED
OPPORTUNITIES & INCOME FUND
By: _______________ By: ______________________________________
J-38
WIW FORM OF NEW MANAGEMENT AGREEMENT BETWEEN WESTERN AFFILIATES
INVESTMENT MANAGEMENT AGREEMENT
This INVESTMENT MANAGEMENT AGREEMENT made this ______ day of _________
2010, by and among Western Asset Management Company (the "Advisor"), a
California corporation, _________________________ ("Subadviser"), a
________________ organized under _________, and Claymore Advisors, LLC
("Claymore"), a Delaware limited liability company, each of which is registered
as an investment adviser under the Investment Advisers Act of 1940, as amended.
WHEREAS, the Advisor and Claymore are each advisers of Western
Asset/Claymore Inflation-Linked Opportunities & Income Fund (the "Trust"), a
closed-end, management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Advisor wishes to retain Subadviser to provide certain
investment advisory services in connection with the Advisor's management of the
Trust; and
WHEREAS, Subadviser is willing to furnish such services on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1 Appointment. The Advisor hereby appoints Subadviser as investment
manager for the Trust with respect to those assets of the Trust as may be
designated by the Advisor from time to time for the period and on the terms set
forth in this Agreement. Subadviser accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2 Delivery of Documents. Claymore has furnished Subadviser with copies
of each of the following:
(a) The Trust's Agreement and Declaration of Trust and all amendments
thereto (such Declaration of Trust, as presently in effect and as it shall from
time to time be amended, is herein called the "Declaration");
(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 Claymore and the Advisor as advisers and
Subadviser as investment manager and approving an Investment Advisory Agreement
between Claymore and the Trust, an Investment Management Agreement between the
Adviser and Claymore with respect to the Trust (the "Western Management
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, no par value;
(e) The Trust's most recent prospectus (such prospectus, as presently
in effect, and all amendments and supplements thereto are herein called the
"Prospectus"); and
(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").
Claymore will furnish Subadviser from time to time with copies of all amendments
of or supplements to the foregoing.
3 Investment Advisory Services. (a) Subject to the supervision of the
Trustees and the Advisor, Subadviser shall as requested by the Advisor regularly
provide the Trust with investment research, advice, management and
J-39
supervision and shall furnish a continuous investment program for the Trust with
respect to those assets of the Trust as may be designated by the Advisor from
time to time consistent with the Trust's investment objectives, policies, and
restrictions as stated in the Trust's current Prospectus and Statement of
Additional Information. Subadviser shall as requested by the Advisor determine
from time to time what securities or other property will be purchased, retained
or sold by the Trust, and shall implement those decisions, all subject to the
provisions of the Trust's Declaration and By-Laws, the 1940 Act, the applicable
rules and regulations of the Securities and Exchange Commission, and other
applicable federal and state law, as well as the investment objectives,
policies, and restrictions of the Trust, as each of the foregoing may be amended
from time to time. Subadviser will as requested by the Advisor place orders
pursuant to its investment determinations for the Trust either directly with the
issuer or with any broker, dealer or futures commission merchant (collectively,
a "broker"). In the selection of brokers and the placing of orders for the
purchase and sale of portfolio investments for the Trust, Subadviser shall seek
to obtain for the Trust the most favorable price and execution available, except
to the extent it may be permitted to pay higher brokerage commissions for
brokerage and research services as described below. In using its best efforts to
obtain for the Trust the most favorable price and execution available,
Subadviser, bearing in mind the Trust's best interests at all times, shall
consider all factors it deems relevant, including, by way of illustration,
price, the size of the transaction, the nature of the market for the security,
the amount of the commission, the timing of the transaction taking into
consideration market prices and trends, the reputation, experience and financial
stability of the broker involved and the quality of service rendered by the
broker in other transactions. Subject to such policies as the Trustees may
determine and communicate to Subadviser in writing, Subadviser shall not be
deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused the Trust to pay a
broker that provides brokerage and research services to Subadviser or any
affiliated person of Subadviser an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker would have charged for effecting that transaction, if Subadviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker, viewed in terms of either that particular transaction or Subadviser's
overall responsibilities with respect to the Trust and to other clients of
Subadviser and any affiliated person of Subadviser as to which Subadviser or any
affiliated person of Subadviser exercises investment discretion. Subadviser
shall also perform such other functions of management and supervision as may be
requested by the Advisor and agreed to by Subadviser.
(b) Subadviser will as requested by the Advisor oversee the maintenance
of all books and records with respect to the investment transactions of the
Trust that it implements in accordance with all applicable federal and state
laws and regulations, and will furnish the Trustees with such periodic and
special reports as the Trustees or the Advisor reasonably may request.
(c) The Trust hereby agrees with the Subadviser and with any investment
manager appointed pursuant to paragraph 3(d) below (a "Sub-Subadviser") that any
entity or person associated with Subadviser or Sub-Subadviser (or with any
affiliated person of Subadviser or Sub-Subadviser) which is a member of a
national securities exchange is authorized to effect any transaction on such
exchange for the account of the Trust which is permitted by Section 11(a) of the
Securities Exchange Act of 1934, as amended, and Rule 11a2-2(T) thereunder, and
the Trust hereby consents to the retention of compensation for such transactions
in accordance with Rule 11a2-2(T)(a)(2)(iv) or otherwise.
(d) Subadviser may enter into a contract (a "Sub-Subadvisory Contract")
with one or more investment managers in which Subadviser delegates to such
investment managers any or all duties specified in this Section 3. Such
Sub-Subadvisory Contract must meet all requirements of the 1940 Act and the
rules and regulations thereunder.
4 Services Not Exclusive. Subadviser's services hereunder are not
deemed to be exclusive, and Subadviser shall be free to render similar services
to others. It is understood that persons employed by Subadviser to assist in the
performance of its duties hereunder might not devote their full time to such
service. Nothing herein contained shall be deemed to limit or restrict the right
of Subadviser or any affiliate of Subadviser to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
5 Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Subadviser hereby agrees that all books and records which it
maintains for the Trust are property of the Trust and further agrees to
surrender promptly to the Trust or its agents any of such records upon the
Trust's request. Subadviser further agrees to
J-40
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such
records required to be maintained by Rule 31a-1 under the 1940 Act.
6 Expenses. During the term of this Agreement, Subadviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities and other property (including brokerage
commissions, if any) purchased for the Trust.
7 Compensation. For the services which Subadviser will render to the
Advisor and the Trust under this Agreement, the Advisor shall pay Subadviser an
annual fee, payable on a monthly basis, at the annual rate of .27% of the
Trust's average weekly assets that Subadviser manages. "Average Weekly Assets"
means the average weekly value of the total assets of the Trust (including any
assets attributable to leverage) minus accrued liabilities (other than
liabilities representing leverage). For purposes of calculating Average Weekly
Assets, neither the liquidation preference of any preferred shares of beneficial
interest outstanding nor any liabilities associated with any instruments or
transactions to leverage the Trust's portfolio (whether or not such instruments
or transactions are "covered" within the meaning of the 1940 Act and the rules
and regulations thereunder, giving effect to any interpretations of the
Securities and Exchange Commission and its staff) is considered a liability.
In addition, with respect to reverse repurchase or dollar roll transactions
("Repurchase Transactions") entered into by the Trust, Average Weekly Assets
includes (a) any proceeds from the sale of an asset (the "Underlying Asset") of
the Trust to a counterparty in a Repurchase Transaction and (b) the value of
such Underlying Asset as of the relevant measuring date. Fees due to Subadviser
hereunder shall be paid promptly to Subadviser by the Advisor following its
receipt of fees from Claymore. 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. For purposes of this Agreement and except as otherwise provided
herein, the Average Weekly Assets of the Trust shall be calculated pursuant to
procedures adopted by the Trustees of the Trust for calculating the value of the
Trust's assets or delegating such calculations to third parties.
8 Limitation of Liability. In the absence of willful misfeasance, bad
faith or gross negligence on the part of Subadviser, or reckless disregard of
its obligations and duties hereunder, Subadviser shall not be subject to any
liability to the Advisor, the Trust or any shareholder of the Trust, for any act
or omission in the course of, or connected with, rendering services hereunder.
9 Definitions. As used in this Agreement, the terms "assignment,"
"interested person," "affiliated person," and "majority of the outstanding
voting securities" shall have the meanings given to them by Section 2(a) of the
1940 Act, subject to such exemptions as may be granted, issued or adopted by the
Securities and Exchange Commission or its staff by any rule, regulation, or
order; the term "specifically approve at least annually" shall be construed in a
manner consistent with the 1940 Act and the rules and regulations thereunder;
and the term "brokerage and research services" shall have the meaning given in
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
10 Term. This Agreement shall become effective upon its execution, and
shall remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 12) until terminated as follows:
(a) The Trust may at any time terminate this Agreement by 60
days' written notice delivered or mailed by registered mail, postage
prepaid, to the Advisor and Subadviser, or
(b) If (i) the Trustees or the shareholders of the Trust by
vote of a majority of the outstanding voting securities of the Trust,
and (ii) a majority of the Trustees who are not interested persons of
the Trust, the Advisor or Subadviser, by vote cast in person at a
meeting called for the purpose of voting on such approval, do not
specifically approve at least annually the continuance of this
Agreement, then this Agreement shall automatically terminate at the
close of business on the first anniversary of its execution, or upon
the expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that if the
continuance of this Agreement is submitted to the shareholders of the
Trust for their approval and such shareholders fail to approve such
continuance of this Agreement as provided herein, Subadviser may
continue to serve hereunder in a manner consistent with the 1940 Act
and the rules and regulations thereunder, or
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(c) Subadviser may at any time terminate this Agreement by 60
days' written notice delivered or mailed by registered mail, postage
prepaid, to the Advisor.
Action by the Trust under paragraph (a) of this Section 10 may be taken
either (i) by vote of a majority of the Trustees, or (ii) by the vote of a
majority of the outstanding voting securities of the Trust.
11 Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
12 No Assignment; Amendments. This Agreement shall terminate
automatically in the event of its assignment or in the event that the Western
Management Agreement shall have terminated for any reason. Any termination of
this Agreement pursuant to Section 10 shall be without the payment of any
penalty. This Agreement shall not be amended unless such amendment is approved
by the vote of a majority of the outstanding voting securities of the Trust
(provided that such shareholder approval is required by the 1940 Act and the
rules and regulations thereunder, giving effect to any interpretations of the
Securities and Exchange Commission and its staff) and by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of a
majority of the Trustees who are not interested persons of the Trust, the
Advisor or Subadviser.
13 Non-Exclusive Right. Subadviser hereby grants to the Trust the
nonexclusive right and license to use the mark "Western Asset Management Company
Limited" (the "Licensed Mark") in the Trust's name and in connection with the
formation, issuance, marketing, promotion and operations of, or disclosure
related to, the Trust. Subadviser agrees that it shall receive no compensation
for any such use by the Trust. Subadviser hereby warrants and represents that it
has filed applications and/or owns rights in the Licensed Mark sufficient to
grant this license. No right, title, or interest in the Licensed Mark, except
the right to use the Licensed Mark as provided in this Agreement, is or will be
transferred to the Trust by this Agreement. Should this Agreement be terminated,
the Trust agrees that it will take reasonably necessary steps to change its name
to a name not including the word "Western Asset."
14 Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. 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. Should any part of this Agreement 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 and shall inure to the
benefit of the parties hereto and their respective successors.
15 Limitation of Liability. A copy of the Trust's Agreement and
Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this Agreement has been executed
on behalf of the Trust by an officer of the Trust as an officer and not
individually and the obligations of or arising out of this Agreement are not
binding upon any of the Trustees, officers or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
Attest: WESTERN ASSET MANAGEMENT COMPANY
By: _______________ By: ______________________________________
Attest: WESTERN ASSET MANAGEMENT
COMPANY LIMITED
By: _______________ By: ______________________________________
Attest: CLAYMORE ADVISORS, LLC
By: _______________ By: ______________________________________
The foregoing is accepted by:
Attest: WESTERN ASSET/CLAYMORE INFLATION-LINKED
OPPORTUNITIES & INCOME FUND
By: _______________ By: ______________________________________
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SUB-ADVISED ETF FORM OF NEW SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT
AGREEMENT, dated as __________, 2010 by and between Claymore Advisors,
LLC (the "Investment Adviser"), a Delaware limited liability company having its
principal office and place of business at 2455 Corporate West Drive, Lisle,
Illinois 60532, and Mellon Capital Management Corporation (the "Sub-Adviser"), a
Delaware corporation having its principal office and place of business at 50
Fremont Street, Suite 3900, San Francisco, California 94105.
WHEREAS, the Investment Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended ("Advisers Act");
WHEREAS, the Investment Adviser had entered into an Investment Advisory
Agreement dated as of August 16, 2006, as amended as of May 4, 2009 (the "Prior
Advisory Agreement"), with Claymore Exchange-Traded Fund Trust (the "Trust") an
investment company registered under the Investment Company Act of 1940, as
amended ("Investment Company Act");
WHEREAS, the Sub-Adviser is registered as an investment adviser under
the Advisers Act;
WHEREAS, the Investment Adviser had previously retained the Sub-Adviser
to provide certain investment sub-advisory services to the funds specified in
Appendix A hereto, as amended from time to time, each a series of the Trust
(each a "Fund" and collectively, the "Funds"), pursuant to a Sub-Advisory
Agreement between the Adviser and the Sub-Adviser dated as of February 6, 2008,
(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, and the Adviser and the Sub-Adviser
entered into an Interim Sub-Advisory Agreement, each dated as of October 14,
2009;
WHEREAS, the Trust and the Adviser entered into a new Investment
Advisory Agreement (the "Advisory Agreement");
WHEREAS, the Adviser wishes to continue to have the Sub-Adviser furnish
certain investment sub-advisory services to each Fund on an ongoing basis; and
WHEREAS, this Agreement has been approved by the Trust's Board of
Trustees in accordance with the provisions of the Investment Company Act, and
the Sub-Adviser is willing to furnish such services to the Investment Adviser
and each Fund;
NOW, THEREFORE, the Investment Adviser and the Sub-Adviser agree as
follows:
1. APPOINTMENT OF THE SUB-ADVISER
The Investment Adviser hereby appoints the Sub-Adviser to act as a
sub-adviser for each Fund, subject to the supervision and oversight of the
Investment Adviser and the Trustees of the Trust, and in accordance with the
terms and conditions of this Agreement. The Sub-Adviser will be an independent
contractor and will have no authority to act for or represent the Trust or the
Investment Adviser in any way or otherwise be deemed an agent of the Trust or
Investment Adviser except as expressly authorized in this Agreement or another
writing by the Trust, the Investment Adviser and the Sub-Adviser.
2. ACCEPTANCE OF APPOINTMENT
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The Sub-Adviser accepts that appointment and agrees to render the
services herein set forth, for the compensation herein provided.
The assets of each Fund will be maintained in the custody of a
custodian (who shall be identified by the Investment Adviser in writing). The
Sub-Adviser will not have custody of any securities, cash or other assets of the
Fund and will not be liable for any loss resulting from any act or omission of
the custodian other than acts or omissions arising in reasonable reliance on
instructions of the Sub-Adviser.
3. SERVICES TO BE RENDERED BY THE SUB-ADVISER TO THE TRUST
A. 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 Sub-Adviser will perform certain of the
day-to-day operations of the Funds which may include one or more of the
following services at the request of the Investment Adviser. As sub-adviser to
each Fund, the Sub-Adviser will manage the investment and reinvestment of the
assets of the Fund and determine the composition of the assets of the Fund, in
accordance with the terms of this Agreement, the Fund's Prospectus and Statement
of Additional Information.
B. As part of the services it will provide hereunder, the Sub-Adviser
will:
i. formulate and implement a continuous investment program and
portfolio management compliance and reporting program for each Fund;
ii. take whatever steps it deems necessary or advisable to implement
the investment program for each Fund by arranging for the purchase and
sale of securities as appropriate;
iii. keep the Investment Adviser informed on an ongoing basis of all
material facts concerning the investment and reinvestment of the assets
of each Fund and the operations of the Sub-Adviser that would affect
the management of the Fund, make regular and periodic special written
reports of such additional information concerning the same as may
reasonably be requested from time to time by the Investment Adviser or
the Trustees of the Trust, and attend meetings with the Investment
Adviser and/or the Trustees, as reasonably requested, to discuss the
foregoing;
iv. Sub-Adviser shall promptly notify Investment Adviser of securities
in a Fund for which fair valuation may be required or of significant
events that Sub-Adviser feels may require fair value pricing of all or
a portion of a Fund's portfolio, and if requested by Investment Adviser
shall provide advice about the fair value of the securities and other
investments/assets in the Fund, as necessary provided, however, that
the parties acknowledge that the Trust is responsible for any fair
value pricing; and
v. cooperate with and provide reasonable assistance to the Investment
Adviser, the Trust's administrator, the Trust's custodian and foreign
custodians, the Trust's transfer agent and pricing agents and all other
agents and representatives of the Trust and the Investment Adviser,
keep all such persons fully informed as to such matters as the
Sub-Adviser considers in good faith to be necessary to the performance
of their obligations to the Trust and the Investment Adviser, provide
prompt responses to reasonable requests made by such persons and
maintain any appropriate interfaces with each so as to promote the
efficient exchange of information.
C. In furnishing services hereunder, the Sub-Adviser shall be subject to,
and shall perform in accordance with the following: (i) the then effective
Prospectus and Statement of Additional Information of the Trust filed with the
Securities and Exchange Commission ("SEC") and delivered to the Sub-Adviser, as
the same may be thereafter modified, amended and/or supplemented ("Prospectus
and SAI"); (ii) the Investment Company Act and the Advisers Act and the rules
under each, and all other federal and state laws or regulations applicable to
the Trust and the Fund(s); and (iii) any order or no-action letter of the SEC
governing the operation of the Trust. Prior to the commencement of the
Sub-Adviser's services hereunder, the Investment Adviser shall provide the
Sub-Adviser with current copies of the Prospectus and SAI, any order or
no-action letter of the SEC governing the operation of the Trust, and any
relevant compliance and other policies and procedures that are adopted by the
Board of Trustees and agreed upon with the Sub-
J-45
Adviser. The Investment Adviser undertakes to provide the Sub-Adviser with
copies or other written notice of any amendments, modifications or supplements
to any such above-mentioned documents and, except as may be required by the
Advisers Act or other applicable law or regulation, Sub-Adviser will not need to
comply until a copy has been provided to the Sub-Adviser.
D. The Sub-Adviser, at its expense, will furnish: (i) all necessary
facilities and personnel, including salaries, expenses and fees of any personnel
required for them to faithfully perform their duties under this Agreement; and
(ii) administrative facilities, including maintaining records, and all equipment
necessary for the efficient conduct of the Sub-Adviser's duties under this
Agreement.
E. The Sub-Adviser will select brokers and dealers to effect all Fund
transactions subject to the conditions set forth herein. The Sub-Adviser will
place all necessary orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions, if applicable. The Sub-Adviser is directed at all times
to seek to execute transactions for each Fund in accordance with applicable
federal and state laws and regulations. In placing any orders for the purchase
or sale of investments for each Fund, in the name of the Fund or its nominees,
the Sub-Adviser shall use its best efforts to seek to obtain for the Fund "best
execution," considering all of the relevant circumstances, and shall maintain
records adequate to demonstrate compliance with this requirement. In no instance
will Fund securities be purchased from or sold to the Sub-Adviser, or any
affiliated person thereof, except in accordance with the Investment Company Act,
the Advisers Act and the rules under each, and all other federal and state laws
and regulations applicable to the Trust and the Fund.
F. The Sub-Adviser is not authorized to engage in "soft-dollar"
transactions permitted by Section 28(e) of the Securities Exchange Act of 1934,
as amended ("Exchange Act"), without the express written approval of the Adviser
or the Trust's Board of Trustees.
G. On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund(s) as well as other clients of
the Sub-Adviser, the Sub-Adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be purchased or sold to attempt to obtain a fair and reasonable result and
efficient execution. Allocation of the securities so purchased or sold, as well
as the expenses incurred in the transaction, will be made by the Sub-Adviser in
the manner which the Sub-Adviser considers to be the most equitable and
consistent with its fiduciary obligations to each Fund and to its other clients
over time. The Investment Adviser agrees that the Sub-Adviser and its affiliates
may give advice and take action in the performance of their duties with respect
to any of their other clients that may differ from advice given, or the timing
or nature of actions taken, with respect to the Fund. The Investment Adviser
also acknowledges that the Sub-Adviser and its affiliates are fiduciaries to
other entities, some of which have the same or similar investment objectives
(and will hold the same or similar investments) as the Fund, and that the
Sub-Adviser will carry out its duties hereunder together with its duties under
such relationships.
H. The Sub-Adviser will provide the Investment Adviser with copies of the
Sub-Adviser's current policies and procedures adopted in accordance with Rule
206(4)-7 under the Advisers Act. To the extent the Funds are required by the
Investment Company Act to adopt any such policy or procedure, the Investment
Adviser will submit such policy or procedure to the Trust's Board of Trustees
for adoption by each of the Funds, with such modifications or additions thereto
as the Board of Trustees or Investment Adviser may recommend with the
concurrence of the Sub-Adviser. The Sub-Adviser shall furnish the services
hereunder to the Fund in accordance with this Section 3 and such policies and
procedures.
I. The Sub-Adviser will maintain and preserve all accounts, books and
records with respect to each Fund as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act and
Advisers Act and the rules thereunder and shall file with the SEC all forms
pursuant to Section 13F and 13G of the Exchange Act, with respect to its duties
as are set forth herein. In compliance with the requirements of Rule 31a-3 under
the Investment Company Act, the Sub-Adviser agrees that all records which it
maintains for the Trust are the property of the Trust, agrees to preserve for
the periods prescribed by Rule 31a-2 under the Investment Company Act any
records which it maintains for the Trust and which are required to be maintained
by Rule 31a-1 under the Investment Company Act and further agrees to surrender
promptly to the Trust any records which it so maintains, upon request by the
Trust subject to the Sub-Advisers document retention policy.
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J. The Sub-Adviser will, unless and until otherwise directed by the
Investment Adviser or the Board of Trustees, exercise all rights of security
holders with respect to securities held by each Fund, including, but not limited
to: voting proxies in accordance with the Sub-Adviser's then-current proxy
voting policies, converting, tendering, exchanging or redeeming securities.
4. COMPENSATION OF SUB-ADVISER
The Investment Adviser will pay the Sub-Adviser as compensation for
providing services in accordance with this Agreement those fees as set forth in
Appendix B. In addition, the Investment Adviser shall be responsible for
extraordinary expenses incurred by the Sub-Adviser in connection with the
performance of its duties hereunder.
In the event of termination of this Agreement, the fee provided in
Appendix B shall be computed on the basis of the period ending on the last
business day on which this Agreement is in effect, subject to a pro rata
adjustment based on the number of days elapsed in the month as a percentage of
the total number of days in such month.
5. LIABILITY AND INDEMNIFICATION
A. Except as may otherwise be provided by the Investment Company Act or any
other federal securities law, neither the Sub-Adviser nor any of its officers,
affiliates or employees (its "Affiliates") shall be liable for any losses,
claims, damages, liabilities or litigation (including legal and other expenses)
incurred or suffered by the Investment Adviser or the Trust as a result of any
error of judgment by the Sub-Adviser or its Affiliates with respect to each
Fund, except that nothing in this Agreement shall operate or purport to operate
in any way to exculpate, waive or limit the liability of the Sub-Adviser or its
Affiliates for, and the Sub-Adviser shall indemnify and hold harmless the Trust,
the Investment Adviser, all affiliated persons thereof (within the meaning of
Section 2(a)(3) of the Investment Company Act) and all controlling persons (as
described in Section 15 of the Securities Act of 1933, as amended ("1933 Act"))
(collectively, "Manager Indemnitees") against any and all losses, claims,
damages, liabilities or litigation (including reasonable legal and other
expenses) to which any of the Manager Indemnitees may become subject under the
1933 Act, the Investment Company Act, the Advisers Act, or under any other
statute, or common law or otherwise arising out of or based on (i) any breach by
the Sub-Adviser of a Sub-Adviser representation or warranty made herein, (ii)
any willful misconduct, bad faith, reckless disregard or negligence of the
Sub-Adviser in the performance of any of its duties or obligations hereunder or
(iii) any untrue statement of a material fact contained in the Prospectus or
SAI, proxy materials, reports, advertisements, sales literature, or other
materials pertaining to the Fund(s) or the omission to state therein a material
fact known to the Sub-Adviser which was required to be stated therein or
necessary to make the statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the Investment
Adviser or the Trust in writing, or the omission of such information, by the
Sub-Adviser for use therein.
B. Except as may otherwise be provided by the Investment Company Act or any
other federal securities law, the Investment Adviser shall indemnify and hold
harmless the Sub-Adviser, its officers and employees and all affiliated persons
thereof (within the meaning of Section 2(a)(3) of the Investment Company Act)
and all controlling persons (as described in Section 15 of the 1933 Act)
(collectively, "Sub-Adviser Indemnitees") against any and all losses, claims,
damages, liabilities or litigation (including reasonable legal and other
expenses) to which any of the Sub-Adviser Indemnitees may become subject under
the 1933 Act, the Investment Company Act, the Advisers Act, or under any other
statute, at common law or otherwise, arising out of or based on this Agreement;
provided however, the Investment Adviser shall not indemnify or hold harmless
the Sub-Adviser Indemnitees for any losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses) arising out of or
based on (i) any breach by the Sub-Adviser of a Sub-Adviser representation or
warranty made herein, (ii) any willful misconduct, bad faith, reckless disregard
or negligence of the Sub-Adviser in the performance of any of its duties or
obligations hereunder or (iii) any untrue statement of a material fact contained
in the Prospectus or SAI, proxy materials, reports, advertisements, sales
literature, or other materials pertaining to the Fund(s) or the omission to
state therein a material fact known to the Sub-Adviser which was required to be
stated therein or necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon information furnished to
the Investment Adviser or the Trust, or the omission of such information by the
Sub-Adviser for use therein.
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C. A party seeking indemnification hereunder (the "Indemnified Party") shall (i)
provide prompt notice to the other of any claim ("Claim") for which it intends
to seek indemnification, (ii) grant control of the defense and /or settlement of
the Claim to the other party, and (iii) cooperate with the other party in the
defense thereof. The Indemnified Party shall have the right at its own expense
to participate in the defense of any Claim, but shall not have the right to
control the defense, consent to judgment or agree to the settlement of any Claim
without the written consent of the other party. The party providing the
indemnification shall not consent to the entry of any judgment or enter any
settlement which (i) does not include, as an unconditional term, the release by
the claimant of all liabilities for Claims against the Indemnified Party or (ii)
which otherwise adversely affects the rights of the Indemnified Party.
D. Notwithstanding anything in this Agreement to the contrary contained herein,
neither party shall not be responsible or liable for its failure to perform
under this Agreement or for any losses to the other party or the Trust resulting
from any event beyond the reasonable control of such party or its agents,
including but not limited to nationalization, expropriation, devaluation,
seizure, or similar action by any governmental authority, de facto or de jure;
or enactment, promulgation, imposition or enforcement by any such governmental
authority of currency restrictions, exchange controls, levies or other charges
affecting the Trust's property; or the breakdown, failure or malfunction of any
utilities or telecommunications systems; or any order or regulation of any
banking or securities industry including changes in market rules and market
conditions affecting the execution or settlement of transactions; or acts of
war, terrorism, insurrection or revolution; or acts of God, or any other similar
event.
6. REPRESENTATIONS OF THE INVESTMENT ADVISER
The Investment Adviser represents, warrants and agrees that:
A. The 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 Investment Company Act and
Investment Adviser represents that it has the authority to appoint Sub-Adviser.
B. The Trust has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the Investment Company Act and will provide the
Sub-Adviser with a copy of such code of ethics.
C. The Investment Adviser is currently in compliance and shall at all times
continue to be in material compliance with the requirements imposed upon the
Investment Adviser by applicable material law and regulations.
D. The Investment Adviser (i) will be registered as an investment adviser under
the Advisers Act prior to the commencement of operation of the Funds and
thereafter will continue to be so registered for so long as this Agreement
remains in effect; (ii) is not prohibited by the Investment Company Act, the
Advisers Act or other law, regulation or order from performing the services
contemplated by this Agreement; (iii) has met and will seek to continue to meet
for so long as this Agreement is in effect, any other applicable federal or
state requirements, or the applicable requirements of any regulatory or industry
self-regulatory agency necessary to be met in order to perform the services
contemplated by this Agreement; (iv) has the authority to enter into and perform
the services contemplated by this Agreement, and (v) will promptly notify the
Sub-Adviser of the occurrence of any event that would disqualify the Investment
Adviser from serving as investment manager of an investment company pursuant to
Section 9(a) of the Investment Company Act or otherwise. The Investment Adviser
will also promptly notify the Sub-Adviser if it is served or otherwise receives
notice of any material action, suit, proceeding, inquiry or investigation, at
law or in equity, before or by any court, government agency, self-regulatory
organization, public board or body, involving the affairs of the Fund(s) or the
Investment Adviser, provided, however, that routine regulatory examinations of
the Investment Adviser shall not be required to be reported by this provision
and the Investment Adviser shall not be required to notify the Sub-Adviser of
events subject to this provision until such time that it notifies its clients.
E. The Investment Adviser acknowledges receipt of Part II of Sub-Adviser's Form
ADV at least 48 hours prior to entering into this Agreement, as required by Rule
204-3 under the Advisers Act.
F. The Investment Adviser shall provide (or cause the Trust's custodian to
provide) timely information to the Sub-Adviser regarding such matters as the
composition of assets in the portion of each Fund managed by the Sub-
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Adviser, cash requirements and cash available for investment in such portion of
each such Fund, and all other information as may be reasonably necessary for the
Sub-Adviser to perform its duties hereunder.
7. REPRESENTATIONS OF THE SUB-ADVISER
The Sub-Adviser represents, warrants and agrees as follows:
A. The Sub-Adviser (i) is registered as an investment adviser under the Advisers
Act and will continue to be so registered for so long as this Agreement remains
in effect; (ii) is not prohibited by the Investment Company Act, the Advisers
Act or other law, regulation or order from performing the services contemplated
by this Agreement; (iii) has met and will seek to continue to meet for so long
as this Agreement remains in effect, any other applicable federal or state
requirements, or the applicable requirements of any regulatory or industry
self-regulatory agency necessary to be met in order to perform the services
contemplated by this Agreement; (iv) has the authority to enter into and perform
the services contemplated by this Agreement; and (v) will promptly notify the
Investment Adviser of the occurrence of any event that would disqualify the
Sub-Adviser from serving as an investment adviser of an investment company
pursuant to Section 9(a) of the Investment Company Act or otherwise. The
Sub-Adviser will also promptly notify each Fund and the Investment Adviser if it
is served or otherwise receives notice of any material action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court,
government agency, self-regulatory organization, public board or body, involving
the affairs of the Fund(s) or the Sub-Adviser, provided, however, that routine
regulatory examinations of the Sub-Adviser shall not be required to be reported
by this provision and the Sub-Adviser shall not be required to notify the Fund
of events subject to this provision until such time that it notifies its other
clients.
B. The Sub-Adviser is currently in compliance and shall at all times continue to
be in material compliance with the requirements imposed upon the Sub-Adviser by
applicable material law and regulations.
C. The Sub-Adviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the Investment Company Act and Rule 204A-1
under the Advisers Act and will provide the Investment Adviser and the Board
with a copy of such code of ethics, together with evidence of its adoption.
Within forty-five days of the end of the last calendar quarter of each year that
this Agreement is in effect, and as otherwise requested, the Sub-Adviser shall
certify to the Investment Adviser that the Sub-Adviser has complied with the
requirements of Rule 17j-1 and Rule 204A-1 during the previous year and that
there has been no material violation of the Sub-Adviser's code of ethics or, if
such a material violation has occurred, that appropriate action was taken in
response to such violation. Upon the written request of the Investment Adviser,
the Sub-Adviser shall permit the Investment Adviser, its employees or its agents
to examine the reports required to be made to the Sub-Adviser by Rule
17j-1(c)(1) and Rule 204A-1(b) and all other records relevant to the
Sub-Adviser's code of ethics.
D. The Form ADV provided to the Investment Adviser is, as of the date of this
Agreement, Sub-Adviser's Form ADV as most recently filed with the SEC and
Sub-Adviser will promptly furnish a copy of all amendments to Sub-Adviser's Form
ADV to the Investment Adviser on an annual basis. Such amendments shall reflect
all material changes in the Sub-Adviser's organizational structure, senior
management or other significant developments affecting the Sub-Adviser, as
required by the Advisers Act.
E. The Sub-Adviser agrees to maintain an appropriate level of errors and
omissions or professional liability insurance coverage.
F. The Sub-Adviser agrees that it will not knowingly refer directly or
indirectly to its relationship with the Trust, the Fund(s), the Investment
Adviser or any of their respective affiliates in offering, marketing or other
promotional materials without the express written consent of the Investment
Adviser, except as required by rule, regulation or upon the request of a
governmental authority.
G. The Sub-Adviser acknowledges that the Investment Adviser and the Trust intend
to rely on Rule 17a-10, Rule 10f-3, Rule 12d3-1 and Rule 17e-1 under the
Investment Company Act, and the Sub-Adviser hereby agrees that it shall not
consult with any other sub-adviser to the Trust with respect to transactions in
Trust assets.
J-49
8. NON-EXCLUSIVITY
The services of the Sub-Adviser to the Investment Adviser, the Fund(s)
and the Trust are not to be deemed to be exclusive, and the Sub-Adviser shall be
free to render investment advisory or other services to others and to engage in
other activities. It is understood and agreed that the directors, officers, and
employees of the Sub-Adviser are not prohibited from engaging in any other
business activity or from rendering services to any other person, or from
serving as partners, officers, directors, trustees, or employees of any other
firm or corporation.
9. SUPPLEMENTAL ARRANGEMENTS
The Sub-Adviser may from time to time employ or associate itself with
any person it believes to be particularly suited to assist it in providing the
services to be performed by such Sub-Adviser hereunder, provided that no such
person shall perform any services with respect to the Fund(s) that would
constitute an assignment or require a written advisory agreement pursuant to the
Investment Company Act. Any compensation payable to such persons shall be the
sole responsibility of the Sub-Adviser, and neither the Investment Adviser nor
the Trust shall have any obligations with respect thereto or otherwise arising
under the Agreement.
10. REGULATION
The Sub-Adviser shall submit to all regulatory and administrative
bodies having jurisdiction over the services provided pursuant to this Agreement
any information, reports, or other material which any such body by reason of
this Agreement may request or require pursuant to applicable laws and
regulations and shall promptly provide the Advisor and Trust with copies of such
information, reports and materials.
11. RECORDS
The records relating to the services provided under this Agreement
shall be the property of the Trust and shall be under its control; however, the
Trust shall furnish to the Sub-Adviser such records and permit it to retain such
records (either in original or in duplicate form) as it shall reasonably require
in order to carry out its business. In the event of the termination of this
Agreement, upon the written request of Investment Adviser, such other records
shall promptly be returned to the Trust by the Sub-Adviser free from any claim
or retention of rights therein, provided that the Sub-Adviser may retain any
such records that are required by law or regulation. The parties shall keep
confidential any information obtained in connection with its duties hereunder
and disclose such information only if the relevant party has authorized such
disclosure or if such disclosure is expressly required or requested by
applicable federal or state regulatory authorities, or otherwise required by
law.
12. DURATION OF AGREEMENT
This Agreement shall become effective with respect to each Fund as of
the date (the "Effective Date") (a) this Agreement has been approved by (i) 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 (ii) the vote of a
majority of the outstanding voting securities of each Fund at the time
outstanding and entitled to vote and (b) the Advisory Agreement has become
effective pursuant to its terms. This Agreement shall continue in effect for a
period more than one year from the Effective Date only so long as such
continuance is specifically approved at least annually by the Board of Trustees
provided that in such event such continuance shall also be approved by the vote
of a majority of the Independent Trustees cast in person at a meeting called for
the purpose of voting on such approval. Additional Funds may be added to
Appendix A by agreement of the Investment Adviser and the Sub-Adviser and only
after the approval by the Board of Trustees of the Trust, including a majority
of the Independent Trustees, cast in person at a meeting called for the purpose
of voting such approval and, if required under the Investment Company Act, a
majority of the outstanding voting securities (as defined in the Investment
Company Act) of the Fund.
13. TERMINATION OF AGREEMENT
J-50
This Agreement may be terminated with respect to any Fund at any time,
without the payment of any penalty, by the Board of Trustees, including a
majority of the Independent Trustees or by the vote of a majority of the
outstanding voting securities of such Fund on not more than sixty (60) days
written notice to the Investment Adviser and the Sub-Adviser. In addition, this
Agreement may be terminated with respect to any Fund by the Sub-Adviser upon
sixty (60) days' written notice to the Investment Adviser. This Agreement will
automatically terminate, without the payment of any penalty in the event the
Investment Advisory Agreement between the Investment Adviser and the Trust is
assigned (as defined in the Investment Company Act) or terminates for any other
reason. This Agreement will also terminate upon written notice to the other
party that the other party is in material breach of this Agreement, unless the
other party in material breach of this Agreement cures such breach to the
reasonable satisfaction of the party alleging the breach within thirty (30) days
after written notice. Any "assignment" (as that term is defined in the
Investment Company Act) of this Agreement will result in automatic termination
of this Agreement. The Sub-Adviser will notify the Trust and the Investment
Adviser of any such assignment and of any changes in key personnel who are
either the portfolio manager(s) of the Funds named in the Prospectus and/or SAI,
or senior management of the Sub-Adviser, in each case prior to or promptly
after, such change.
14. AMENDMENTS TO THE AGREEMENT
Except to the extent permitted by the Investment Company Act or the
rules or regulations thereunder or pursuant to exemptive relief granted by the
SEC, this Agreement may be amended by the parties with respect to any Fund only
if such amendment, if material, is specifically approved by the vote of a
majority of the outstanding voting securities of such Fund (unless such approval
is not required by Section 15 of the Investment Company Act as interpreted by
the SEC or its staff or unless the SEC has granted an exemption from such
approval requirement) and by the vote of a majority of the Independent Trustees
cast in person at a meeting called for the purpose of voting on such approval.
The required shareholder approval shall be effective with respect to the Fund if
a majority of the outstanding voting securities of the Fund vote to approve the
amendment, notwithstanding that the amendment may not have been approved by a
majority of the outstanding voting securities of any other Fund affected by the
amendment or all of the Funds of the Trust.
15. ASSIGNMENT
The Sub-Adviser shall not assign or transfer its rights and obligations
under this Agreement. Any assignment (as that term is defined in the Investment
Company Act) of the Agreement shall result in the automatic termination of this
Agreement, as provided in Section 13 hereof. The Sub-Adviser agrees to bear all
reasonable legal, printing, mailing, proxy and related expenses of the Trust and
the Investment Adviser, if any, arising out of any assignment of this Agreement
by Sub-Adviser. Notwithstanding the foregoing, no assignment shall be deemed to
result from any changes in the directors, officers or employees of such
Sub-Adviser except as may be provided to the contrary in the Investment Company
Act or the rules or regulations thereunder.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties with respect to each Fund.
17. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
18. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the address listed below of each applicable party in
person or by registered or certified mail or a private mail or delivery service
providing the sender with notice of receipt or such other address as specified
in a notice duly given to the other parties. Notice shall be deemed given on the
date delivered or mailed in accordance with this paragraph.
J-51
For: MELLON CAPITAL MANAGEMENT
CORPORATION
Attention: Manager of Client Service
50 Fremont Street, Suite 3900
San Francisco, California 94105
For: CLAYMORE ADVISORS, LLC
Attention: General Counsel
2455 Corporate West Drive
Lisle, Illinois 60532
For: CLAYMORE EXCHANGE-TRADED
FUND TRUST AND CLAYMORE
EXCHANGE-TRADED FUND TRUST 2
Attention: Chief Executive Officer
2455 Corporate West Drive
Lisle, Illinois 60532
With a copy to:
[Investment Adviser]
19. SEVERABILITY AND SURVIVAL
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein. Sections 5, 11 and 20 shall
survive the termination of this Agreement.
20. TRUST AND SHAREHOLDER LIABILITY
The Sub-Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Certificate of Incorporation and
agrees that obligations, if any, assumed by the Trust pursuant to this Agreement
shall be limited in all cases to the Trust and its assets, and if the liability
relates to one or more series, the obligations hereunder shall be limited to the
respective assets of the Fund. The Sub-Adviser further agrees that it shall not
seek satisfaction of any such obligation from the shareholders or any individual
shareholder of the Fund(s), nor from the Trustees or any individual Trustee of
the Trust.
21. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York, or any of the applicable
provisions of the Investment Company Act. To the extent that the laws of the
State of New York, or any of the provisions in this Agreement, conflict with
applicable provisions of the Investment Company Act, the latter shall control.
22. INTERPRETATION
Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Investment Company Act shall be resolved by reference to such term or
provision of the Investment Company Act and to interpretations thereof, if any,
by the United States courts or, in the absence of any controlling decision of
any such court, by rules, regulations or orders of the SEC validly issued
pursuant to the Investment Company Act. Specifically, the terms "vote of a
majority of the outstanding voting
J-52
securities," "interested persons," "assignment," and "affiliated persons," as
used herein shall have the meanings assigned to them by Section 2(a) of the
Investment Company Act. In addition, where the effect of a requirement of the
Investment Company Act reflected in any provision of this Agreement is relaxed
by a rule, regulation or order of the SEC, whether of special or of general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
23. COUNTERPARTS
This Agreement may be executed in counterparts each of which shall be
deemed to be an original and all of which, taken together, shall be deemed to
constitute one and the same instrument.
J-53
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first mentioned above.
CLAYMORE ADVISORS, LLC MELLON CAPITAL MANAGEMENT
CORPORATION
By: By:
------------------ ------------------
Name: Name:
------------------ ------------------
Title: Title:
------------------ ------------------
J-54
Logo
CLAYMORE(SM)
PROXY CARD FOR
FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS - JANUARY 12, 2010
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
A special meeting of shareholders of Fiduciary/Claymore MLP Opportunity Fund
(the "Fund") will be held at the offices of the Fund, 2455 Corporate West Drive,
Lisle, Illinois, 60532, on Tuesday, January 12, 2010 at [o], Central Time (the
"Meeting"). The undersigned hereby appoints each of Mark E. Mathiasen and Kevin
M. Robinson, or their respective designees, with full power of substitution and
revocation, as proxies to represent and to vote all shares of the undersigned at
the Meeting and all adjournments thereof, with all powers the undersigned would
possess if personally present, upon the matters specified on the reverse side.
---------------- QUESTIONS ABOUT THIS PROXY? Should you have any questions
| | about the proxy materials or regarding how to vote your
| | shares, please contact our proxy information line
| | TOLL-FREE AT 1-866-796-1290. Representatives are available
| | Monday through Friday 9:00 a.m. to 10:00 p.m. Eastern
---------------- Time.
--------------------------------------------------------------------------------
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND SHAREHOLDER MEETING TO BE HELD ON
JANUARY 12, 2010
THE PROXY STATEMENT FOR THIS MEETING IS AVAILABLE AT:
WWW.PROXYONLINE.COM/DOCS/____________.PDF
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND
Proxy for Special Meeting of Shareholders -- January 12, 2010
PLEASE SEE THE INSTRUCTIONS BELOW IF YOU WISH TO VOTE BY PHONE, MAIL OR VIA THE
INTERNET.
CALL: To vote your proxy by phone, call toll-free 1-866-796-1290 and
provide the representative with the control number found on the
reverse side of this proxy card. Representatives are available
to take your voting instructions Monday through Friday 9:00 a.m.
to 10:00 p.m. Eastern Time.
LOG-ON: To vote via the Internet, go to WWW.PROXYONLINE.COM and enter
the control number found on the reverse side of this proxy card.
MAIL: To vote your proxy by mail, check the appropriate voting box on
the reverse side of this proxy card, sign and date the card and
return it in the enclosed postage-paid envelope. IF CONVENIENT,
PLEASE UTILIZE ONE OF THE TWO VOTING OPTIONS ABOVE SO THAT YOUR
VOTE WILL BE RECEIVED BEFORE JANUARY 12TH.
NOTE: Please sign here exactly as your name appears in the records of the
Fund and date. If the shares are held jointly, each holder should sign.
When signing as an attorney, executor, administrator, trustee, guardian,
officer of a corporation or other entity or in any other representative
capacity, please give the full title under signature(s).
------------------------------------------
Shareholder sign here Date
------------------------------------------
Joint owner sign here Date
IT IS IMPORTANT THAT PROXIES BE VOTED PROMPTLY. EVERY SHAREHOLDER'S VOTE IS
IMPORTANT.
FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND
CONTROL NUMBER
123456789123
WE NEED YOUR PROXY VOTE AS SOON AS POSSIBLE. YOUR PROMPT ATTENTION WILL
HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
Remember to SIGN AND DATE THE REVERSE SIDE before mailing in your vote. This
proxy card is valid only when signed and dated.
--------------------------------------------------------------------------------
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
INDICATED AS TO THE PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH PROPOSAL. THE
PROXIES MAY VOTE AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: [X]
FOR AGAINST ABSTAIN
1. To approve a new investment advisory agreement between the Fund and [ ] [ ] [ ]
Claymore Advisors, LLC.
2. To approve a new investment sub-advisory agreement among the Fund, [ ] [ ] [ ]
Claymore Advisors, LLC and Fiduciary Asset Management, LLC.
THANK YOU FOR VOTING
Logo
CLAYMORE(SM) PROXY CARD FOR
MADISON/CLAYMORE COVERED CALL & EQUITY STRATEGY FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS - JANUARY 12, 2010
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
A special meeting of shareholders of Madison/Claymore Covered Call & Equity
Strategy Fund (the "Fund") will be held at the offices of the Fund, 2455
Corporate West Drive, Lisle, Illinois, 60532, on Tuesday, January 12, 2010 at
[o], Central Time (the "Meeting"). The undersigned hereby appoints each of Mark
E. Mathiasen and Kevin M. Robinson, or their respective designees, with full
power of substitution and revocation, as proxies to represent and to vote all
shares of the undersigned at the Meeting and all adjournments thereof, with all
powers the undersigned would possess if personally present, upon the matters
specified on the reverse side.
---------------- QUESTIONS ABOUT THIS PROXY? Should you have any questions
| | about the proxy materials or regarding how to vote your
| | shares, please contact our proxy information line TOLL-FREE
| | AT 1-866-796-1290. Representatives are available Monday
| | through Friday 9:00 a.m. to 10:00 p.m. Eastern Time.
----------------
--------------------------------------------------------------------------------
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
MADISON/CLAYMORE COVERED CALL & EQUITY STRATEGY FUND SHAREHOLDER MEETING TO BE
HELD ON JANUARY 12, 2010
THE PROXY STATEMENT FOR THIS MEETING IS AVAILABLE AT:
WWW.PROXYONLINE.COM/DOCS/__________.PDF
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
MADISON/CLAYMORE COVERED CALL & EQUITY STRATEGY FUND
Proxy for Special Meeting of Shareholders -- January 12, 2010
PLEASE SEE THE INSTRUCTIONS BELOW IF YOU WISH TO VOTE BY PHONE, MAIL OR VIA THE
INTERNET.
CALL: To vote your proxy by phone, call toll-free 1-866-796-1290 and
provide the representative with the control number found on the
reverse side of this proxy card. Representatives are available
to take your voting instructions Monday through Friday 9:00 a.m.
to 10:00 p.m. Eastern Time.
LOG-ON: To vote via the Internet, go to WWW.PROXYONLINE.COM and enter
the control number found on the reverse side of this proxy card.
MAIL: To vote your proxy by mail, check the appropriate voting box on
the reverse side of this proxy card, sign and date the card and
return it in the enclosed postage-paid envelope. IF CONVENIENT,
PLEASE UTILIZE ONE OF THE TWO VOTING OPTIONS ABOVE SO THAT YOUR
VOTE WILL BE RECEIVED BEFORE JANUARY 12TH.
NOTE: Please sign here exactly as your name appears in the records of the
Fund and date. If the shares are held jointly, each holder should sign.
When signing as an attorney, executor, administrator, trustee, guardian,
officer of a corporation or other entity or in any other representative
capacity, please give the full title under signature(s).
--------------------------------------------
Shareholder sign here Date
--------------------------------------------
Joint owner sign here Date
IT IS IMPORTANT THAT PROXIES BE VOTED PROMPTLY. EVERY SHAREHOLDER'S VOTE IS
IMPORTANT.
MADISON/CLAYMORE COVERED CALL & EQUITY STRATEGY FUND
CONTROL NUMBER
123456789123
WE NEED YOUR PROXY VOTE AS SOON AS POSSIBLE. YOUR PROMPT ATTENTION WILL HELP TO
AVOID THE EXPENSE OF FURTHER SOLICITATION.
--------------------------------------------------------------------------------
Remember to SIGN AND DATE THE REVERSE SIDE before mailing in your vote. This
proxy card is valid only when signed and dated.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
INDICATED AS TO THE PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH PROPOSAL. THE
PROXIES MAY VOTE AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: [X]
FOR AGAINST ABSTAIN
1. To approve a new investment advisory agreement between the Fund and [ ] [ ] [ ]
Claymore Advisors, LLC.
2. To approve a new investment management agreement among the Fund, Claymore [ ] [ ] [ ]
Advisors, LLC and Madison Asset Management, LLC.
THANK YOU FOR VOTING
Logo
CLAYMORE(SM) PROXY CARD FOR
OLD MUTUAL/CLAYMORE LONG-SHORT FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS - JANUARY 12, 2010
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
A special meeting of shareholders of Old Mutual/Claymore Long-Short Fund (the
"Fund") will be held at the offices of the Fund, 2455 Corporate West Drive,
Lisle, Illinois, 60532, on Tuesday, January 12, 2010 at [o], Central Time (the
"Meeting"). The undersigned hereby appoints each of Mark E. Mathiasen and Kevin
M. Robinson, or their respective designees, with full power of substitution and
revocation, as proxies to represent and to vote all shares of the undersigned at
the Meeting and all adjournments thereof, with all powers the undersigned would
possess if personally present, upon the matters specified on the reverse side.
---------------- QUESTIONS ABOUT THIS PROXY? Should you have any questions
| | about the proxy materials or regarding how to vote your
| | shares, please contact our proxy information line TOLL-FREE
| | AT 1-866-796-1290. Representatives are available Monday
| | through Friday 9:00 a.m. to 10:00 p.m. Eastern Time.
----------------
--------------------------------------------------------------------------------
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE OLD
MUTUAL/CLAYMORE LONG-SHORT FUND SHAREHOLDER MEETING TO BE HELD ON JANUARY 12,
2010
THE PROXY STATEMENT FOR THIS MEETING IS AVAILABLE AT:
WWW.PROXYONLINE.COM/DOCS/____________.PDF
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
OLD MUTUAL/CLAYMORE LONG-SHORT FUND
Proxy for Special Meeting of Shareholders -- January 12, 2010
PLEASE SEE THE INSTRUCTIONS BELOW IF YOU WISH TO VOTE BY PHONE, MAIL OR VIA THE
INTERNET.
CALL: To vote your proxy by phone, call toll-free 1-866-796-1290 and
provide the representative with the control number found on the
reverse side of this proxy card. Representatives are available
to take your voting instructions Monday through Friday 9:00 a.m.
to 10:00 p.m. Eastern Time.
LOG-ON: To vote via the Internet, go to WWW.PROXYONLINE.COM and enter
the control number found on the reverse side of this proxy card.
MAIL: To vote your proxy by mail, check the appropriate voting box on
the reverse side of this proxy card, sign and date the card and
return it in the enclosed postage-paid envelope. IF CONVENIENT,
PLEASE UTILIZE ONE OF THE TWO VOTING OPTIONS ABOVE SO THAT YOUR
VOTE WILL BE RECEIVED BEFORE JANUARY 12TH.
NOTE: Please sign here exactly as your name appears in the records of the
Fund and date. If the shares are held jointly, each holder should sign.
When signing as an attorney, executor, administrator, trustee, guardian,
officer of a corporation or other entity or in any other representative
capacity, please give the full title under signature(s).
------------------------------------------
Shareholder sign here Date
------------------------------------------
Joint owner sign here Date
IT IS IMPORTANT THAT PROXIES BE VOTED PROMPTLY. EVERY SHAREHOLDER'S VOTE IS
IMPORTANT.
OLD MUTUAL/CLAYMORE LONG-SHORT FUND
CONTROL NUMBER
123456789123
WE NEED YOUR PROXY VOTE AS SOON AS POSSIBLE. YOUR PROMPT ATTENTION WILL
HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
Remember to SIGN AND DATE THE REVERSE SIDE before mailing in your vote. This
proxy card is valid only when signed and dated.
--------------------------------------------------------------------------------
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
INDICATED AS TO THE PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH PROPOSAL. THE
PROXIES MAY VOTE AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: [X]
FOR AGAINST ABSTAIN
1. To approve a new investment advisory agreement between the Fund and [ ] [ ] [ ]
Claymore Advisors, LLC.
2. To approve a new investment sub-advisory agreement among the Fund, [ ] [ ] [ ]
Claymore Advisors, LLC and Analytic Investors LLC.
THANK YOU FOR VOTING
Logo
CLAYMORE(SM)
PROXY CARD FOR
TS&W / CLAYMORE TAX-ADVANTAGED BALANCED FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS - JANUARY 12, 2010
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
A special meeting of shareholders of TS&W / Claymore Tax-Advantaged Balanced
Fund (the "Fund") will be held at the offices of the Fund, 2455 Corporate West
Drive, Lisle, Illinois, 60532, on Tuesday, January 12, 2010 at [o], Central Time
(the "Meeting"). The undersigned hereby appoints each of Mark E. Mathiasen and
Kevin M. Robinson, or their respective designees, with full power of
substitution and revocation, as proxies to represent and to vote all shares of
the undersigned at the Meeting and all adjournments thereof, with all powers the
undersigned would possess if personally present, upon the matters specified on
the reverse side.
---------------- QUESTIONS ABOUT THIS PROXY? Should you have any questions
| | about the proxy materials or regarding how to vote your
| | shares, please contact our proxy information line TOLL-FREE
| | AT 1-866-796-1290. Representatives are available Monday
| | through Friday 9:00 a.m. to 10:00 p.m. Eastern Time.
----------------
--------------------------------------------------------------------------------
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE TS&W /
CLAYMORE TAX-ADVANTAGED BALANCED FUND SHAREHOLDER MEETING TO BE HELD ON
JANUARY 12, 2010
THE PROXY STATEMENT FOR THIS MEETING IS AVAILABLE AT:
WWW.PROXYONLINE.COM/DOCS/___________.PDF
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
TS&W / CLAYMORE TAX-ADVANTAGED BALANCED FUND
Proxy for Special Meeting of Shareholders -- January 12, 2010
PLEASE SEE THE INSTRUCTIONS BELOW IF YOU WISH TO VOTE BY PHONE, MAIL OR VIA THE
INTERNET.
CALL: To vote your proxy by phone, call toll-free 1-866-796-1290 and
provide the representative with the control number found on the
reverse side of this proxy card. Representatives are available
to take your voting instructions Monday through Friday 9:00 a.m.
to 10:00 p.m. Eastern Time.
LOG-ON: To vote via the Internet, go to WWW.PROXYONLINE.COM and enter
the control number found on the reverse side of this proxy card.
MAIL: To vote your proxy by mail, check the appropriate voting box on
the reverse side of this proxy card, sign and date the card and
return it in the enclosed postage-paid envelope. IF CONVENIENT,
PLEASE UTILIZE ONE OF THE TWO VOTING OPTIONS ABOVE SO THAT YOUR
VOTE WILL BE RECEIVED BEFORE JANUARY 12TH.
NOTE: Please sign here exactly as your name appears in the records of the Fund
and date. If the shares are held jointly, each holder should sign. When signing
as an attorney, executor, administrator, trustee, guardian, officer of a
corporation or other entity or in any other representative capacity, please give
the full title under signature(s).
-------------------------------------------
Shareholder sign here Date
-------------------------------------------
Joint owner sign here Date
IT IS IMPORTANT THAT PROXIES BE VOTED PROMPTLY. EVERY SHAREHOLDER'S VOTE IS
IMPORTANT.
TS&W / CLAYMORE TAX-ADVANTAGED BALANCED FUND
CONTROL NUMBER
123456789123
WE NEED YOUR PROXY VOTE AS SOON AS POSSIBLE. YOUR PROMPT ATTENTION WILL HELP TO
AVOID THE EXPENSE OF FURTHER SOLICITATION.
Remember to SIGN AND DATE THE REVERSE SIDE before mailing in your vote. This
proxy card is valid only when signed and dated.
--------------------------------------------------------------------------------
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
INDICATED AS TO THE PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH PROPOSAL. THE
PROXIES MAY VOTE AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: [X]
FOR AGAINST ABSTAIN
1. To approve a new investment advisory agreement between the Fund and [ ] [ ] [ ]
Claymore Advisors, LLC.
2. (i) To approve a new investment sub-advisory agreement among the Fund, [ ] [ ] [ ]
Claymore Advisors, LLC and Thompson, Siegel & Walmsley LLC.
2. (ii) To approve a new investment sub-advisory agreement among the Fund, [ ] [ ] [ ]
Claymore Advisors, LLC and SMC Fixed Income Management, LP.
THANK YOU FOR VOTING
Logo
CLAYMORE(SM)
PROXY CARD FOR
WESTERN ASSET/CLAYMORE INFLATION-LINKED OPPORTUNITIES & INCOME FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS - JANUARY 12, 2010
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
A special meeting of shareholders of Western Asset/Claymore Inflation-Linked
Opportunities & Income Fund (the "Fund") will be held at the offices of the
Fund, 2455 Corporate West Drive, Lisle, Illinois, 60532, on Tuesday, January 12,
2010 at [o], Central Time (the "Meeting"). The undersigned hereby appoints each
of Mark E. Mathiasen and Kevin M. Robinson, or their respective designees, with
full power of substitution and revocation, as proxies to represent and to vote
all shares of the undersigned at the Meeting and all adjournments thereof, with
all powers the undersigned would possess if personally present, upon the matters
specified on the reverse side.
---------------- QUESTIONS ABOUT THIS PROXY? Should you have any questions
| | about the proxy materials or regarding how to vote your
| | shares, please contact our proxy information line TOLL-FREE
| | AT 1-866-796-1290. Representatives are available Monday
| | through Friday 9:00 a.m. to 10:00 p.m. Eastern Time.
----------------
--------------------------------------------------------------------------------
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE WESTERN
ASSET/CLAYMORE INFLATION-LINKED OPPORTUNITIES & INCOME FUND SHAREHOLDER MEETING
TO BE HELD ON JANUARY 12, 2010
THE PROXY STATEMENT FOR THIS MEETING IS AVAILABLE AT:
WWW.PROXYONLINE.COM/DOCS/____________.PDF
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
WESTERN ASSET/CLAYMORE INFLATION-LINKED OPPORTUNITIES & INCOME FUND
Proxy for Special Meeting of Shareholders -- January 12, 2010
PLEASE SEE THE INSTRUCTIONS BELOW IF YOU WISH TO VOTE BY PHONE, MAIL OR VIA THE
INTERNET.
CALL: To vote your proxy by phone, call toll-free 1-866-796-1290 and
provide the representative with the control number found on the
reverse side of this proxy card. Representatives are available
to take your voting instructions Monday through Friday 9:00 a.m.
to 10:00 p.m. Eastern Time.
LOG-ON: To vote via the Internet, go to WWW.PROXYONLINE.COM and enter
the control number found on the reverse side of this proxy card.
MAIL: To vote your proxy by mail, check the appropriate voting box on
the reverse side of this proxy card, sign and date the card and
return it in the enclosed postage-paid envelope. IF CONVENIENT,
PLEASE UTILIZE ONE OF THE TWO VOTING OPTIONS ABOVE SO THAT YOUR
VOTE WILL BE RECEIVED BEFORE JANUARY 12TH.
NOTE: Please sign here exactly as your name appears in the records of the
Fund and date. If the shares are held jointly, each holder should sign.
When signing as an attorney, executor, administrator, trustee, guardian,
officer of a corporation or other entity or in any other representative
capacity, please give the full title under signature(s).
-----------------------------------------
Shareholder sign here Date
-----------------------------------------
Joint owner sign here Date
IT IS IMPORTANT THAT PROXIES BE VOTED PROMPTLY. EVERY SHAREHOLDER'S VOTE IS
IMPORTANT.
WESTERN ASSET/CLAYMORE INFLATION-LINKED OPPORTUNITIES & INCOME FUND
CONTROL NUMBER
123456789123
WE NEED YOUR PROXY VOTE AS SOON AS POSSIBLE. YOUR PROMPT ATTENTION WILL
HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
--------------------------------------------------------------------------------
Remember to SIGN AND DATE THE REVERSE SIDE before mailing in your vote. This
proxy card is valid only when signed and dated.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
INDICATED AS TO THE PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH PROPOSAL. THE
PROXIES MAY VOTE AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: [X]
FOR AGAINST ABSTAIN
1. To approve a new investment advisory agreement between the Fund and [ ] [ ] [ ]
Claymore Advisors, LLC.
2. (i) To approve a new investment management agreement among the Fund, [ ] [ ] [ ]
Claymore Advisors, LLC and Western Asset Management Company
2. (ii) To approve a new investment management agreement among Claymore
Advisors, LLC, Western Asset Management Company and Western Asset Management
Company Pte. Ltd. (Singapore) [ ] [ ] [ ]
2. (iii) To approve a new investment management agreement among Claymore
Advisors, LLC, Western Asset Management Company and Western Asset Management
Company Limited (London) [ ] [ ] [ ]
2. (iv) To approve a new investment management agreement among Claymore
Advisors, LLC, Western Asset Management Company and Western Asset Management
Company Ltd. (Japan) [ ] [ ] [ ]
THANK YOU FOR VOTING
Logo
CLAYMORE(SM)
PROXY CARD FOR
[SUB-ADVISED ETF]
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS - JANUARY 12, 2010
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
A special meeting of shareholders of Claymore__________ETF (the "Fund") will be
held at the offices of the Fund, 2455 Corporate West Drive, Lisle, Illinois,
60532, on Tuesday, January 12, 2010 at [o], Central Time (the "Meeting"). The
undersigned hereby appoints each of Mark E. Mathiasen and Kevin M. Robinson, or
their respective designees, with full power of substitution and revocation, as
proxies to represent and to vote all shares of the undersigned at the Meeting
and all adjournments thereof, with all powers the undersigned would possess if
personally present, upon the matters specified on the reverse side.
---------------- QUESTIONS ABOUT THIS PROXY? Should you have any questions
| | about the proxy materials or regarding how to vote your
| | shares, please contact our proxy information line TOLL-FREE
| | AT 1-866-796-1290. Representatives are available Monday
| | through Friday 9:00 a.m. to 10:00 p.m. Eastern Time.
----------------
--------------------------------------------------------------------------------
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
CLAYMORE__________ETF SHAREHOLDER MEETING TO BE HELD ON JANUARY 12, 2010
THE PROXY STATEMENT FOR THIS MEETING IS AVAILABLE AT:
WWW.PROXYONLINE.COM/DOCS/____________.PDF
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
CLAYMORE__________ETF
Proxy for Special Meeting of Shareholders -- January 12, 2010
PLEASE SEE THE INSTRUCTIONS BELOW IF YOU WISH TO VOTE BY PHONE, MAIL OR VIA THE
INTERNET.
CALL: To vote your proxy by phone, call toll-free 1-866-796-1290 and
provide the representative with the control number found on the
reverse side of this proxy card. Representatives are available
to take your voting instructions Monday through Friday 9:00 a.m.
to 10:00 p.m. Eastern Time.
LOG-ON: To vote via the Internet, go to WWW.PROXYONLINE.COM and enter
the control number found on the reverse side of this proxy card.
MAIL: To vote your proxy by mail, check the appropriate voting box on
the reverse side of this proxy card, sign and date the card and
return it in the enclosed postage-paid envelope. IF CONVENIENT,
PLEASE UTILIZE ONE OF THE TWO VOTING OPTIONS ABOVE SO THAT YOUR
VOTE WILL BE RECEIVED BEFORE JANUARY 12TH.
NOTE: Please sign here exactly as your name appears in the records of the Fund
and date. If the shares are held jointly, each holder should sign. When signing
as an attorney, executor, administrator, trustee, guardian, officer of a
corporation or other entity or in any other representative capacity, please give
the full title under signature(s).
------------------------------------------
Shareholder sign here Date
------------------------------------------
Joint owner sign here Date
IT IS IMPORTANT THAT PROXIES BE VOTED PROMPTLY. EVERY SHAREHOLDER'S VOTE IS
IMPORTANT.
CLAYMORE__________ETF
CONTROL NUMBER
123456789123
WE NEED YOUR PROXY VOTE AS SOON AS POSSIBLE. YOUR PROMPT ATTENTION WILL
HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
--------------------------------------------------------------------------------
Remember to SIGN AND DATE THE REVERSE SIDE before mailing in your vote. This
proxy card is valid only when signed and dated.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
INDICATED AS TO THE PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH PROPOSAL. THE
PROXIES MAY VOTE AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: [X]
FOR AGAINST ABSTAIN
1. To approve a new investment advisory agreement between the Fund and [ ] [ ] [ ]
Claymore Advisors, LLC.
2. To approve a new investment sub-advisory agreement among the Fund, [ ] [ ] [ ]
Claymore Advisors, LLC and Mellon Capital Management Corporation.
THANK YOU FOR VOTING
Logo
CLAYMORE(SM)
PROXY CARD FOR
[NON SUB-ADVISED ETF]
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS - JANUARY 12, 2010
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
A special meeting of shareholders of Claymore__________ETF (the "Fund") will be
held at the offices of the Fund, 2455 Corporate West Drive, Lisle, Illinois,
60532, on Tuesday, January 12, 2010 at [o], Central Time (the "Meeting"). The
undersigned hereby appoints each of Mark E. Mathiasen and Kevin M. Robinson, or
their respective designees, with full power of substitution and revocation, as
proxies to represent and to vote all shares of the undersigned at the Meeting
and all adjournments thereof, with all powers the undersigned would possess if
personally present, upon the matters specified on the reverse side.
---------------- QUESTIONS ABOUT THIS PROXY? Should you have any questions
| | about the proxy materials or regarding how to vote your
| | shares, please contact our proxy information line TOLL-FREE
| | AT 1-866-796-1290. Representatives are available Monday
| | through Friday 9:00 a.m. to 10:00 p.m. Eastern Time.
----------------
--------------------------------------------------------------------------------
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
CLAYMORE__________ETF SHAREHOLDER MEETING TO BE HELD ON JANUARY 12, 2010
THE PROXY STATEMENT FOR THIS MEETING IS AVAILABLE AT:
WWW.PROXYONLINE.COM/DOCS/____________.PDF
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
CLAYMORE__________ETF
Proxy for Special Meeting of Shareholders -- January 12, 2010
PLEASE SEE THE INSTRUCTIONS BELOW IF YOU WISH TO VOTE BY PHONE, MAIL OR VIA THE
INTERNET.
CALL: To vote your proxy by phone, call toll-free 1-866-796-1290 and
provide the representative with the control number found on the
reverse side of this proxy card. Representatives are available
to take your voting instructions Monday through Friday 9:00 a.m.
to 10:00 p.m. Eastern Time.
LOG-ON: To vote via the Internet, go to WWW.PROXYONLINE.COM and enter
the control number found on the reverse side of this proxy card.
MAIL: To vote your proxy by mail, check the appropriate voting box on
the reverse side of this proxy card, sign and date the card and
return it in the enclosed postage-paid envelope. IF CONVENIENT,
PLEASE UTILIZE ONE OF THE TWO VOTING OPTIONS ABOVE SO THAT YOUR
VOTE WILL BE RECEIVED BEFORE JANUARY 12TH.
NOTE: Please sign here exactly as your name appears in the records of the
Fund and date. If the shares are held jointly, each holder should sign.
When signing as an attorney, executor, administrator, trustee, guardian,
officer of a corporation or other entity or in any other representative
capacity, please give the full title under signature(s).
------------------------------------------
Shareholder sign here Date
------------------------------------------
Joint owner sign here Date
IT IS IMPORTANT THAT PROXIES BE VOTED PROMPTLY. EVERY SHAREHOLDER'S VOTE IS
IMPORTANT.
CLAYMORE__________ETF
CONTROL NUMBER
123456789123
WE NEED YOUR PROXY VOTE AS SOON AS POSSIBLE. YOUR PROMPT ATTENTION
WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
Remember to SIGN AND DATE THE REVERSE SIDE before mailing in your vote. This
proxy card is valid only when signed and dated.
--------------------------------------------------------------------------------
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
INDICATED AS TO THE PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH PROPOSAL. THE
PROXIES MAY VOTE AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT - DO NOT DETACH
TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: [X]
FOR AGAINST ABSTAIN
1. To approve a new investment advisory agreement between the Fund and [ ] [ ] [ ]
Claymore Advisors, LLC.
THANK YOU FOR VOTING