Exhibit 99(g)(ii)
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT (the "Agreement") dated as of
___________, 2006, among Claymore/Xxxxxxx James SB-1 Equity Fund, a Delaware
statutory trust (the "Trust"), Claymore Advisors, LLC, a Delaware limited
liability company (the "Investment Adviser"), and Xxxxxxx Xxxxx & Associates,
Inc., a Florida corporation (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 dated as of _________, 2006 (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 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
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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 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.
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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 0000 Xxx) 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
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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 [ ]%
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 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
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be due upon (1) a final decision on the merits by a court or other body before
whom the proceeding was brought as to whether or not the Investment Sub-Adviser
is liable under this Section or (2) in the absence of such a decision, upon the
request of the Investment Sub-Adviser for reimbursement by a majority vote of a
quorum consisting of trustees of the Trust who are neither "interested persons"
of the Trust (as defined in Section 2(a)(19) of the 0000 Xxx) nor parties to the
proceeding ("Disinterested Non-Party Trustees"). In addition, at least one of
the following conditions must be met: (A) the Investment Sub-Adviser shall
provide a security for such Investment Sub-Adviser undertaking, (B) the 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 two years. Thereafter, if not terminated,
this Agreement shall continue in effect with respect to the Trust for successive
periods of 12 months, provided such continuance is specifically approved at
least annually by both (a) the vote of a majority of the 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 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the Trust,
without the payment of any penalty, upon giving the Investment Sub-Adviser 60
days' notice (which notice may be waived by the Investment Sub-Adviser),
provided that such termination by the Trust shall be directed or approved by the
vote of a majority of the Trustees of the Trust in office at the time or by the
vote of the holders of a majority of the voting securities of the 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.
13. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an
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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 XXXXXXX XXXXX. The Investment Sub-Adviser has
consented to the use by the Trust of the name or identifying word "Xxxxxxx
Xxxxx" 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 "Xxxxxxx Xxxxx" 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 "Xxxxxxx Xxxxx" 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:
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Xxxxxxxx Xxxxxxx
Senior Managing Director and
General Counsel
XXXXXXX XXXXX & ASSOCIATES, INC.
By:
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[name]
[title]
CLAYMORE/XXXXXXX JAMES
SB-1 EQUITY FUND
By:
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Xxxxxxx Xxxxxx
Secretary
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