PARTICIPANT AGREEMENT
FIXED INCOME FUNDS
Claymore Exchange-Traded Fund Trust
Claymore Exchange-Traded Fund Trust 2
This Participant Agreement (this Agreement) is entered into between Claymore
Securities, Inc. (the Distributor) and, _____________________ (the Participant),
and is subject to acceptance by the Claymore Exchange-Traded Fund Trust and the
Claymore Exchange-Traded Fund Trust 2 (each a Trust), and The Bank of New York
Mellon (the Transfer Agent). The Transfer Agent serves as the Transfer Agent of
the Trust and is an Index Receipt Agent as that term is defined in the rules of
the National Securities Clearing Corporation (NSCC). The Distributor, and the
Participant acknowledge and agree that the Trust shall be a third-party
beneficiary of the Agreement and shall receive the benefits contemplated by the
Agreement to the extent specified herein. The Distributor has been retained to
provide certain services with respect to acting as principal underwriter of the
Trust in connection with the creation and distribution of shares of beneficial
interest (Shares or Trust Shares) of the Series of the Trust (each a Fund). As
specified in the Trusts Prospectus and Statement of Additional Information
incorporated therein (together, the Prospectus) included as part of its
Registration Statement as amended on Form N-1A, Trust Shares may be created or
redeemed only in aggregations of the number of shares as identified in the
Prospectus for each Fund, referred to therein and herein as a Creation Unit.
Capitalized terms not otherwise defined herein are used herein as defined in the
Trusts Prospectus.
This Agreement is intended to set forth certain premises and the procedures by
which the Participant may create and/or redeem Creation Units through the
Federal Reserve/Treasury Automated Debt Entry System maintained at the Federal
Reserve Bank of New York (the Fed Book-Entry System) and the Depository Trust
Company (DTC). The parties hereto in consideration of the premises and of the
mutual agreements contained herein agree as follows:
1. STATUS OF PARTICIPANT. The Participant hereby represents, covenants and
warrants that with respect to orders for the creation or redemption of Creation
Units by means of the Fed Book-Entry System and DTC, it is eligible to utilize
the Fed Book-Entry System and is a Participant in DTC (as defined in the Trusts
Prospectus, a DTC Participant). The Participant may place orders for the
creation or redemption of Creation Units through the Fed Book-Entry System
and/or DTC or Euroclear, subject to the procedures for creation and redemption
referred to in Section 2 of this Agreement (Execution of Orders) and the
procedures described in Attachment A hereto. Any change in the foregoing status
of the Participant shall terminate this Agreement, and the Participant shall
give prompt notice to the Distributor and the Transfer Agent of such change.
Transfers of securities settling through Euroclear or other foreign depositories
may require Participant access to such facilities.
The Participant further represents that it is a broker-dealer registered with
the Securities and Exchange Commission and a member of the Financial Industry
Regulatory Authority (FINRA) or is exempt from or otherwise not required to be
licensed as a broker-dealer or a member of FINRA. The Participant is registered
and/or licensed to act as a broker or dealer, or is otherwise exempt, according
to all applicable state laws in which the Participant conducts its activities as
defined hereunder. The Participant agrees to conform to the NASD Conduct Rules
(or comparable FINRA Conduct Rules, if such NASD Conduct Rules are subsequently
renamed, repealed, rescinded, or are otherwise replaced by FINRA Conduct Rules)
if it is a member of FINRA and the securities laws of any jurisdiction to the
extent such laws, rules and regulations relate to the Participants transactions
in, and activities with respect to the Trust Shares.
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2. EXECUTION OF ORDERS. All orders for the creation or redemption of Creation
Units shall be handled in accordance with the terms of the Trusts Prospectus,
and, where applicable, the procedures described in Attachment A to this
Agreement. In addition, to the extent Creation Units of a Fund subject to this
Agreement will be sold to the Participant and redeemed by the Participant in
cash only, the provisions of this Agreement as they relate to in-kind creations
and redemptions (e.g., relating to Deposit Securities) will not apply, and, in
such circumstances, the procedures for placing and processing an order to
purchase Shares and a request to redeem Shares shall be made in accordance with
the terms and procedures set forth in the relevant Funds prospectus. In the
event the procedures include the use of recorded telephone lines, the
Participant hereby consents to such use. In the event that the Distributor, the
Transfer Agent, or the Trust becomes legally compelled to disclose to any third
party any recording involving communications with the Participant, the
Distributor agrees to provide the Participant with reasonable advance written
notice identifying the recordings to be so disclosed, together with copies of
such recordings, so that the Participant may seek a protective order or other
appropriate remedy with respect to the recordings or waive its right to do so.
In the event that such protective order or other remedy is not obtained, or the
Participant waives its right to seek such protective order or remedy, the
Distributor, the Transfer Agent, or the Trust, as the case may be, agrees to
furnish only that portion of the recorded conversation that, according to legal
counsel, is legally required to be furnished and will exercise its best efforts
to obtain a protective order or other reliable assurance that confidential
treatment will be accorded the recorded conversation; provided that the
Distributor shall not be required to incur any expenses in obtaining such
treatment without reimbursement for reasonable expenses by the Participant. The
Distributor, the Transfer Agent, and the Trust shall not otherwise disclose to
any third party any recording involving communications with the Participant
without the Participants express written consent, except the Distributor, the
Transfer Agent, and the Trust may disclose to a regulatory or self-regulatory
organization, to the extent required by applicable rule or law, recordings
involving communications with the Participant. The Trust reserves the right to
issue additional or other procedures relating to the manner of creating or
redeeming Creation Units, and the Participant, the Distributor and the Transfer
Agent agree to comply with such procedures as may be issued from time to time,
upon reasonable notice thereof.
With respect to any Redemption Order, the Participant acknowledges and agrees on
behalf of itself and any party for which it is acting (regardless of its
capacity) to use commercially reasonable efforts to return to the Trust any
dividend, distribution or other corporate action paid to it or to the party for
which it is acting in respect of any Deposit Security that is transferred to the
Participant or any party for which it is acting that, based on the valuation of
such Deposit Security at the time of transfer, should have been paid to the
Trust. With respect to any Redemption Order, the Participant also acknowledges
and agrees on behalf of itself and any party for which it is acting (regardless
of its capacity) that the Trust is entitled to reduce the amount of money or
other proceeds due to the Participant or any party for which it is acting by an
amount equal to any dividend, distribution or other corporate action that
erroneously is scheduled to be paid or credited or has been paid or credited to
the Participant or to the party for which it is acting that, based on the
valuation of such Deposit Security at the time of transfer, should be paid to
the Fund. If, however, the Trust so reduces the amount of money or other
proceeds due to the Participant, the Participant shall not be required to return
to the Trust dividends, distributions or other corporate actions paid to it or
to the party for which it is acting as is contemplated in the first sentence of
this paragraph equal to the amount so reduced by the Trust. With respect to any
Purchase Order, the Trust acknowledges and agrees to promptly return to the
Participant or any party for which it is acting any dividend, distribution or
other corporate action paid or credited to the Trust in respect of any Deposit
Security that is transferred to the Trust that, based on the valuation of such
Deposit Security at the time of transfer, should have been paid to the
Participant or any party for which it is acting.
3. CREATION AND REDEMPTION PROCESS. If creations and redemptions pursuant to
this Agreement are on an in-kind basis, Participant understands and acknowledges
that the Transfer Agent
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will not effect a creation or redemption (issuing a Creation Unit Aggregation of
Shares in the case of a creation, transferring Deposit Securities in the case of
a redemption) until it has received confirmation of receipt of the Participants
incoming security transfer through the Fed Book-Entry System, Euroclear, or DTC
in the case of a creation, and through Euroclear or DTC in the case of a
redemption.
4. DEPOSIT SECURITIES AND/OR RELEVANT CASH AMOUNTS. The Participant
understands that the number and names of the designated portfolio of Deposit
Securities (when applicable) and relevant cash amounts to be included in the
current Portfolio Deposit for each Fund will be made available each day that the
New York Stock Exchange (the NYSE) or the American Stock Exchange, whichever is
so identified in the applicable Fund Prospectus for making such information
available, is open for trading through the facilities of NSCC. The Participant
will not be responsible for errors in the information relating to the Deposit
Securities and/or relevant cash amounts to be included in the current Portfolio
Deposit to be transmitted through the facilities of NSCC in connection with
Redemption Orders and Purchase Orders that are caused by the Trust or the
Transfer Agent, or otherwise.
5. ROLE OF PARTICIPANT. The Participant acknowledges and agrees that for all
purposes of this Agreement, the Participant shall have no authority in any
matter or in any respect to act as agent of the Distributor, the Transfer Agent
or the Trust.
(a) The Participant, as a DTC Participant, agrees that it shall be bound
by all of the obligations of a DTC Participant in addition to any
obligations that it undertakes hereunder or in accordance with the
Prospectus.
(b) The Participant agrees (i) subject to any privacy obligations or
other obligations arising under the federal or state securities laws it may
have to its customers, to assist the Distributor in ascertaining certain
information regarding sales of Trust Shares made by or through Participant
upon the request of the Trust or the Distributor necessary for the Funds to
comply with their obligations to distribute information to its shareholders
as may be required from time to time under applicable state or federal
securities laws, or (ii) in lieu thereof, and at the option of the
Participant, the Participant may undertake to deliver prospectuses, as may
be amended or supplemented from time to time, proxy material, annual and
other reports of the Funds or other similar information that the Funds are
obligated to deliver to their shareholders to the Participants customers
that custody Fund Shares with the Participant, after receipt from the Funds
or the Distributor of sufficient quantities to allow mailing thereof to
such customers. It is Participants responsibility to notify Distributor of
the quantity of material and location for shipping. The Distributor agrees
that the names and addresses and other information concerning Participants
customers are and shall remain the sole property of the Participant and
none of the Distributor, the Trust or any of their respective affiliates
shall use the names and addresses and other information concerning
Participants customers for any purpose except in connection with the
performance of their duties and responsibilities hereunder and except for
servicing and informational mailings described in this clause (b) of
Section 5, or as may otherwise be required by applicable law.
(c) The Participant affirms that it has procedures in place reasonably
designed to protect the privacy of non-public personal consumer/customer
financial information to the extent required by applicable law, rule and
regulation.
(d) The Participant represents that it has policies, procedures and
internal controls in place that are reasonably designed to comply with
applicable anti-money laundering laws and regulations, including applicable
provisions of the USA Patriot Act of 2001 and the regulations administered
by the U.S. Department of the Treasurys Office of Foreign Assets Control as
the
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same may be in effect from time to time. To the extent required and
permissible by applicable law, rule or regulation, agreements or policies
the Participant will cooperate with and provide assistance to the Trust and
the Distributor, which may include providing the Trust and Distributor with
additional information regarding transactions in Shares when required to do
so under applicable law, rule, court order or by an administrative or
regulatory entity. Notwithstanding anything in the foregoing to the
contrary, Participants obligations under this clause (d) shall be subject
to any privacy or other duties Participant may have to its customers
arising under federal or state securities laws, agreements or policies.
6. PARTICIPANT REPRESENTATIONS.
(a) The Participant represents, warrants and agrees that it will not
make, in connection with any sale or solicitation of a sale of Shares, any
representations concerning the Funds, the Creation Units or the Shares
other than those not inconsistent with the Trusts then current Prospectus
or any promotional or sales literature furnished to the Participant by the
Distributor or the Trust, or any such materials permitted by clause (b) of
this Section 6.
(b) The Participant agrees not to furnish or cause to be furnished by
Participant or its employees to any person or display or publish any
information or materials relating to the Funds (including, without
limitation, promotional materials and sales literature, advertisements,
press releases, announcements, statements, posters, signs or other similar
materials, but not including any materials prepared and used for
Participants internal use only or brokerage communications prepared by
Participant in the normal course of its business and consistent with the
Trusts then current prospectus and in accordance with applicable laws and
regulations) (Marketing Materials), except such Marketing Materials as may
be furnished to the Participant by the Distributor or the Trust and such
other Marketing Materials as are not inconsistent with the Trusts then
current Prospectus and have been approved by the Distributor in writing
prior to use; provided that such Marketing Materials clearly indicate that
such Marketing Materials are prepared and distributed by Participant. All
Marketing Materials prepared by the Participant shall be filed, if required
by applicable laws, rules or regulations, with FINRA by the Participant.
(c) The Participant understands that the Trust will not be advertised or
marketed as an open-end investment company, i.e., as a mutual fund, which
offers redeemable securities, and that any advertising materials will
prominently disclose that Shares are redeemable only in Creation Unit size
by or through an Authorized Participant and, when applicable, on an in-kind
basis as described in the relevant Funds Prospectus. In addition, the
Participant understands that any advertising material that addresses
redemptions of Shares, including the Prospectus, will disclose that the
owners of Shares may acquire Shares and tender Shares for redemption to the
Fund in Creation Unit aggregations only.
(d) Notwithstanding anything to the contrary in this Agreement,
Participant and its affiliates may, without the written approval of the
Distributor or the Trust, prepare and circulate in the regular course of
their businesses research reports and other similar materials that include
information, opinions or recommendations relating to Trust Shares; provided
that such reports and information comply with applicable FINRA rules.
7. TITLE TO SECURITIES: RESTRICTED SECURITIES. The Participant represents on
behalf of itself and any party for which it acts that upon delivery of a
portfolio of Deposit Securities to the Trusts Custodian, when applicable, the
Trust will acquire good and unencumbered title to such securities, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claims, including, without limitation, any restriction upon the sale
or transfer of such securities imposed by (i)
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any agreement or arrangement entered into by the Participant or any party for
which it is acting in connection with a transaction to purchase Shares or (ii)
any provision of the U.S. Securities Act of 1933 (1933 Act), and any regulations
thereunder (except that portfolio securities of issuers other than U.S. issuers
shall not be required to have been registered under the 1933 Act if exempt from
such registration), or of the applicable laws or regulations of any other
applicable jurisdiction and (iii) no such securities are restricted securities
as such term is used in Rule 144(a)(3)(i) promulgated under the 1933 Act.
8. SUB-CUSTODIAN ACCOUNT. The Participant understands and agrees that in the
case of Claymore Exchange-Traded Fund Trust 2 only, to the extent necessary or
applicable, the Trust has caused the Trusts Custodian to maintain with a
sub-custodian for such Fund an account in each relevant foreign jurisdiction to
which the Participant shall, when applicable, deliver or cause to be delivered
in connection with the creation of a Creation Unit aggregation the Deposit
Securities not subject to settlement in the U.S. and any other applicable cash
amounts (or the cash value of all or a part of such securities, in the case of a
permitted or required cash purchase or cash in lieu amount) on behalf of itself
or any other party for which it is acting (regardless of its capacity), with any
appropriate adjustments as advised by the Trust, in accordance with the terms
and conditions applicable to such account in such foreign jurisdiction.
9. FEES. In connection with the creation or redemption of Creation Units, the
Transfer Agent shall charge, and the Participant agrees to pay to the Transfer
Agent, the Transaction Fee prescribed in the Trusts Prospectus applicable to
creations or redemptions, or, when applicable, the Transaction Fee and such
additional amounts as may be prescribed pursuant to the Trusts Prospectus
applicable to creations where the cash equivalent value of one or more Deposit
Securities is being deposited in lieu of the inclusion of such Deposit Security
in the securities portion of the Portfolio Deposit because the Participant is
restricted by regulation or otherwise from investing or engaging in a
transaction in such security. The Transaction Fee and such additional amounts
may be waived or otherwise adjusted from time to time subject to the provisions
relating thereto and any limitations as prescribed in the Prospectus. The
Transfer Agent acknowledges and agrees to provide Participant with adequate
notice in advance of any such adjustment in the Transaction Fee and such
additional amounts.
10. AUTHORIZED PERSONS. Concurrently with the execution of this Agreement and
as requested in writing from time to time thereafter, the Participant shall
deliver to the Distributor and the Transfer Agent, duly certified as appropriate
by its secretary or other duly authorized officer, a certificate setting forth
the names and signatures of all persons authorized to give instructions relating
to activity contemplated hereby or any other notice, request or instruction on
behalf of the Participant (each, an Authorized Person). Such certificate may be
accepted and relied upon by the Distributor and the Transfer Agent as conclusive
evidence of the facts set forth therein and shall be considered to be in full
force and effect until receipt by the Distributor and the Transfer Agent of a
superseding certificate bearing a subsequent date. The Transfer Agent shall
issue to each Authorized Person a unique personal identification number (PIN
Number) by which such Authorized Person and the Participant shall be identified
and instructions issued by the Participant hereunder shall be authenticated.
Upon the termination or revocation of authority of such Authorized Person by the
Participant, the Participant shall give prompt written notice of such fact to
the Distributor and the Transfer Agent and such notice shall be effective upon
receipt by both the Distributor and the Transfer Agent.
11. REDEMPTION. The Participant represents and warrants that it will not
obtain a Submission Number (as defined in Attachment A) from the Transfer Agent
for the purpose of redeeming a Creation Unit unless (a) it or its customer, as
the case may be, owns outright or has the right or authority to tender for
redemption the requisite number of Trust Shares of any Fund to be redeemed, and
the entire proceeds of the Redemption and (b) such Trust Shares have not been
loaned or pledged to another party nor are the subject of a repurchase
agreement, securities lending agreement or such other arrangement,
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which, under the circumstances, would preclude the delivery of such Trust
Shares to the Transfer Agent in accordance with the Prospectus or as otherwise
required by the Trust. The Participant will not be responsible for costs
incurred by the Transfer Agent or the Distributor related to trade breaks where
the failure to transfer Shares or collateral is due to negligence or bad faith
of the Transfer Agent or the Distributor, an act of God or is unrelated to any
act or omission of the Participant.
12. BENEFICIAL OWNERSHIP. The Participant represents and warrants to the
Distributor and the Trust that either (i) it does not hold for its own account
80 percent (80%) or more of outstanding Trust Shares of the relevant Fund or
(ii) if it does hold 80 percent (80%) or more of outstanding Trust Shares of the
relevant Fund in its own account that such a circumstance would not cause the
Trust to have a basis in any Fund Security (i.e., any security in which the Fund
invests, including, as the circumstance may arise, any security contributed by
the Participant) different from the fair market value of such security.
13. INDEMNIFICATION. This Section 13 shall survive the termination of this
Agreement.
a. The Participant hereby agrees to indemnify and hold harmless the
Distributor in its capacity as principal underwriter, the Trust, the
Transfer Agent, their respective affiliates, directors, officers, employees
and agents, and each person, if any, who controls such persons within the
meaning of Section 15 of the 1933 Act (each an AP Indemnified Party) from
and against any loss, liability, cost and expense (including reasonable
attorneys fees) incurred by such AP Indemnified Party as a direct result of
(i) any breach by the Participant of any provision of this Agreement that
relates to the Participant; (ii) any failure on the part of the Participant
to perform any of its obligations set forth in the Agreement; (iii) any
failure by the Participant to comply with applicable laws, including rules
and regulations of self-regulatory organizations, to the extent the
foregoing relates to the Participants transactions in, and activities with
respect to, Shares under this Agreement, except that the Participant shall
not be required to indemnify an AP Indemnified Party to the extent that
such failure was caused by Participants adherence to instructions given or
representations made by the Distributor, the Transfer Agent or any AP
Indemnified Party, as applicable; or (iv) actions of such AP Indemnified
Party in reasonable reliance upon any instructions issued by the
Participant or representations made by the Participant in accordance with
Attachment A (as it may be amended from time to time) and reasonably
believed by the Distributor or the Transfer Agent, as applicable, to be
genuine and to have been given by the Participant except to the extent that
the Participant had previously revoked a PIN Number used in giving such
instructions or representations (where applicable) and such revocation was
given by the Participant and received by the Distributor and the Transfer
Agent in accordance with the terms of Section 10 hereto. The foregoing
shall not apply to any loss, damage, charge, liability, cost, expense,
cause of action, obligation, judgment or fee incurred by such AP
Indemnified Party arising out of the AP Indemnified Partys gross negligence
or reckless or willful acts or omissions or the AP Indemnified Partys
failure to perform its responsibilities under this Agreement. The
Participant and the Distributor understand and agree that the Trust is
entitled and intends to proceed directly against the Participant in the
event that the Participant fails to honor any of its obligations pursuant
to this Agreement that benefit the Trust. The Participant shall not be
liable under its indemnity agreement contained in this paragraph with
respect to any claim made against any AP Indemnified Party unless the AP
Indemnified Party shall have notified the Participant in writing of the
claim within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall have been
served upon the AP Indemnified Party (or after the AP Indemnified Party
shall have received notice of service on any designated agent). However,
failure to notify the Participant of any claim shall not relieve the
Participant from any liability which it may have to any AP Indemnified
Party against whom such action is brought otherwise than on account of its
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indemnity agreement contained in this paragraph and shall only release it
from such liability under this paragraph to the extent it has been
materially prejudiced by such failure to give notice. The Participant shall
be entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any claims,
but if the Participant elects to assume the defense, the defense shall be
conducted by counsel chosen by it and satisfactory to the AP Indemnified
Party in the suit, and who shall not, except with the consent of the AP
Indemnified Parties, be counsel to the Participant. If the Participant does
not elect to assume the defense of any suit, it will reimburse the AP
Indemnified Party in the suit for the reasonable fees and expenses of any
counsel retained by it.
b. The Distributor hereby agrees to indemnify and hold harmless the
Participant, its respective subsidiaries, affiliates, directors, officers,
employees and agents, and each person, if any, who controls such persons
within the meaning of Section 15 of the 1933 Act (each a Distributor
Indemnified Party) from and against any loss, liability, cost and expense
(including reasonable attorneys fees) incurred by such Distributor
Indemnified Party as a result of (i) any breach by the Distributor of any
provision of this Agreement that relates to the Distributor; (ii) any
failure on the part of the Distributor to perform any of its obligations
set forth in this Agreement; (iii) any failure by the Distributor to comply
with applicable laws, including rules and regulations of self-regulatory
organizations in relation to its role as Distributor of the Funds, (iv) any
untrue statements or omissions made in any promotional material or sales
literature furnished to the Participant or otherwise approved in writing by
the Trust or the Fund, (v) actions of such Distributor Indemnified Party in
reasonable reliance upon any instructions issued or representations made by
the Distributor, the Trust or the Fund in accordance with Attachment A (as
it may be amended from time to time) reasonably believed by the Participant
to be genuine and to have been given by the Distributor, the Trust or the
Fund; or (vi) any untrue statement or alleged untrue statement of a
material fact contained in the registration statement of the Trust as
originally filed with the Securities and Exchange Commission or in any
amendment thereof, or in any prospectus or any statement of additional
information, or any amendment thereof or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in connection with the Participants
acting in its capacity as a Participant. The foregoing shall not apply to
any loss, damage, charge, liability, cost, expense, cause of action,
obligation, judgment or fee incurred by such Distributor Indemnified Party
arising out of the Distributor Indemnified Partys gross negligence or
reckless or willful acts or omissions or the Distributor Indemnified Partys
failure to perform its responsibilities under this Agreement. The
Distributor shall not be liable under its indemnity agreement contained in
this paragraph with respect to any claim made against any Distributor
Indemnified Party unless the Distributor Indemnified Party shall have
notified the Distributor in writing of the claim within a reasonable time
after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Distributor
Indemnified Party (or after the Distributor Indemnified Party shall have
received notice of service on any designated agent). However, failure to
notify the Distributor of any claim shall not relieve the Distributor from
any liability which it may have to any Distributor Indemnified Party
against whom such action is brought otherwise than on account of its
indemnity agreement contained in this paragraph and shall only release it
from such liability under this paragraph to the extent it has been
materially prejudiced by such failure to give notice. The Distributor shall
be entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any claims,
but if the Distributor elects to assume the defense, the defense shall be
conducted by counsel chosen by it and satisfactory to the Distributor
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Indemnified Party in the suit and who shall not, except with the consent of
the Distributor Indemnified Parties, be counsel to the Distributor. If the
Distributor does not elect to assume the defense of any suit, it will
reimburse the Distributor Indemnified Party in the suit for the reasonable
fees and expenses of any counsel retained by it. The Distributor agrees to
notify the Participant promptly of the commencement of any litigation or
proceedings against it or any of its officers or trustees in connection
with the issuance or sale of any of the Creation Units or the Shares.
c. The Transfer Agent agrees to indemnify and hold the Distributor and
the Trust harmless from any loss, liability, cost and expense (including
reasonable attorneys fees) (Losses) arising out of or in connection with
the negligence, bad faith or willful misconduct of the Transfer Agent in
performing or failing to perform the duties contemplated hereunder;
provided, however, as related solely to the Distributor, to the extent the
electronic order entry system provided by the Transfer Agent is available
for a particular type of order and to the Participant placing such order,
such indemnity shall only apply to Losses arising out of or in connection
with an order placed through such electronic order entry system.
d. No indemnifying party, as described in paragraphs (a) and (b) above,
shall, without the written consent of the AP Indemnified Party or the
Distributor Indemnified Party, as the case may be, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless such
settlement, compromise or judgment (i) includes an unconditional release of
the AP Indemnified Party or Distributor Indemnified Party, as the case may
be, from all liability arising out of such action or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a
failure to act, by or on behalf of any AP Indemnified Party or Distributor
Indemnified Party, as the case may be.
e. No party to this Agreement shall be liable to the other party or to
any other person for any damages arising out of mistakes or errors in data
provided to such AP Indemnified Party or Distributor Indemnified Party, as
the case may be, by a third party, or out of interruptions or delays of
electronic means of communications with the AP Indemnified Party or the
Distributor Indemnified Party.
14. ACKNOWLEDGMENT. The Participant acknowledges receipt of the Trusts
Prospectus and represents it has reviewed such document and understands the
terms thereof. The Distributor agrees to process orders, or cause its agents to
process orders, for creation in accordance with the provisions of the Prospectus
and this Agreement. The Transfer Agent acknowledges that pursuant to the
Transfer Agency Agreement between itself and the Funds it is required to process
orders for redemptions in accordance with the provisions of the Prospectus and
this Agreement.
15. NOTICES. Except as otherwise specifically provided in this Agreement, all
notices required or permitted to be given pursuant to this Agreement shall be
given in writing and delivered by personal delivery or by postage prepaid
registered or certified United States first class mail, return receipt
requested, or by telex, telegram or facsimile or similar means of same day
delivery (with a confirming copy by mail as provided herein). Unless otherwise
notified in writing, all notices to the Transfer Agent shall be given or sent as
follows: The Bank of New York Mellon, 0 Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxxx, XX
00000, Attn: ETF Services Group. All notices to the Trust shall be given or sent
as follows: Claymore Exchange-Traded Fund Trust, in care of The Bank of New York
Mellon, 0 Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxxx, XX 00000, Attn: ETF Services
Group. All notices to the Participant, the Transfer Agent, and the Distributor
shall be directed to the address or telephone, facsimile or telex numbers
indicated below the signature line of such party, except in the case of
communications by the Distributor or Transfer Agent to the Participant during
the order creation or redemption process as detailed in Attachment A to this
Agreement, especially the Distributors or Transfer Agents attempt to contact an
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Authorized Person of the Participant with respect to, among other things,
ambiguous instructions, the suspension or cancellation of an order as discussed
in Attachment A, Distributor and Transfer Agent agree to contact a
representative of the ETF Trading Desk of the Participant.
16. TERMINATION; INTERPRETATION; ENTIRE AGREEMENT; AMENDMENT. This Agreement
shall become effective in this form as of the date accepted by the Transfer
Agent and may be terminated at any time by any party upon thirty (30) days prior
notice to the other parties (i) unless earlier terminated by the Transfer Agent
in the event of a material breach of this Agreement or the procedures described
herein by the Participant or (ii) in the event that the Trust is terminated
pursuant to the Trust Agreement. This Agreement supersedes any prior agreement
between the parties with respect to the subject matter contained herein. Titles
and section headings are included solely for convenient reference and are not a
part of this Agreement. This Agreement and Attachment A hereto, which is hereby
incorporated herein by reference, constitute the entire agreement between the
parties regarding the matters contained herein and may be amended or modified
only by a written document signed by an authorized representative of each party.
17. PROSPECTUS AND REPRESENTATIONS.
The Distributor will provide to the Participant copies of the then current
Prospectus and any printed supplemental information in reasonable quantities
upon request. The Participant shall, upon reasonable request of the Trust,
provide the Trust with sufficient documentation and other evidence that the
Participant is providing prospectuses and, where applicable, product
descriptions, to the purchasers of any Shares. The Distributor represents,
warrants and agrees that it will promptly notify the Participant when a revised,
supplemented or amended prospectus for any Shares is available and deliver or
otherwise make available to the Participant copies of such revised, supplemented
or amended prospectus at such time and in such numbers as to enable the
Participant to comply with any obligation it may have to deliver such prospectus
to customers. As a general matter, the Distributor will make such revised,
supplemented or amended prospectus available to the Participant promptly after
its effective date. The Distributor shall be deemed to have complied with this
Section 17 when the Participant has received such revised, supplemented or
amended prospectus by email at [enter email addres@enter email address],
printable form, with such number of hard copies as may be agreed from time to
time by the parties promptly thereafter.
18. NO PROMOTION. Each of the Trust, the Distributor and the Transfer Agent
agrees that it will not, without the prior written consent of Participant in
each instance, (i) use in advertising, publicity, or otherwise the name of
Participant or any affiliate of Participant, or any partner or employee of
Participant, nor any trade name, trademark, trade device, service xxxx, symbol
or any abbreviation, contraction or simulation thereof owned by Participant or
its affiliates, or (ii) represent, directly or indirectly, that any product or
any service provided by the Trust, Distributor or Transfer Agent has been
approved or endorsed by Participant. This provision shall survive termination or
expiration of the Agreement.
19. COUNTERPARTS. This Agreement may be simultaneously executed in several
counterparts, each of which shall be an original and all shall constitute but
one and the same instrument.
20. GOVERNING LAW. This Agreement and all of the transactions hereunder shall
be governed by and interpreted in accordance with the laws of the State of New
York without regard to the conflicts of laws provisions thereof. The parties
irrevocably submit to the personal jurisdiction and service and venue of any
federal or state court within the State of New York having subject matter
jurisdiction, for the purpose of any action, suit or proceeding arising out of
or relating to this Agreement.
9
21. ASSIGNMENT. No party may assign its rights or obligations under this
Agreement (in whole or in part) without the prior written consent of the other
parties, which shall not be unreasonably withheld; provided, that any party may
assign its rights and obligations hereunder (in whole, but not in part) without
such consent to an entity acquiring all, or substantially all of its assets or
business or to an affiliate. Notwithstanding Section 16 hereof, in the event
that an entity acquires all or substantially all of Participants assets or
business, the Distributor or Transfer Agent may elect within a limited period of
time not to exceed thirty (30) days from the date upon which such acquisition
was publicly announced to immediately terminate this Agreement, provided
Participant is given 10 business days notice prior to the effective date of such
termination.
22. SUCCESSORS AND ASSIGNS. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
23. SEVERANCE. If any provision of this Agreement is held by any court or any
act, regulation, rule or decision of any other governmental or supra national
body or authority or regulatory or self-regulatory organization to be invalid,
illegal or unenforceable for any reason, it shall be invalid, illegal or
unenforceable only to the extent so held and shall not affect the validity,
legality or enforceability of the other provisions of this Agreement so long as
this Agreement as so modified continues to express, without material change, the
original intentions of the parties as to the subject matter of this Agreement
and the deletion of such portion of this Agreement will not substantially impair
the respective benefits, obligations, or expectations of the parties to this
Agreement.
24. NO STRICT CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party.
IN WITNESS WHEREOF, the duly authorized representatives of the below parties
hereto have executed this Agreement the effective date of which shall be date of
the last dated signature below (the Effective Date).
10
CLAYMORE SECURITIES, INC.
BY: _____________________________
NAME: Xxxxxxx X. Xxxxxx III________
TITLE: Managing Director__________
Address: 0000 Xxxxxxxxx Xxxx Xxxxx_
Xxxxx, XX 60532________
Telephone: (000) 000-0000__________
Facsimile: (000) 000-0000__________
DATE: ________________________
[__AP FIRMS NAME__]
BY: _______________________________
NAME: ____________________________
TITLE: ____________________________
Address: ________________________
________________________
Telephone: ________________________
Facsimile: ________________________
Telex: _________________________
DATE: _________________________
11
ACCEPTED BY:
THE BANK OF NEW YORK MELLON,
AS TRANSFER AGENT
BY: _______________________________
NAME: Xxxxx Holland__________________
TITLE: Managing Director_____________
Address: Xxx Xxxx Xxxxxx, 00xx Xxxxx______
Xxx Xxxx, XX 10286__________
Telephone: 000-000-0000_____________
Facsimile: 000-000-0000______________
DATE: ___________________________
CLAYMORE EXCHANGE-TRADED FUND TRUST
CLAYMORE EXCHANGE-TRADED FUND TRUST 2
BY: ____________________________
NAME: Xxxxx X. Botset___________
TITLE: Vice President____________
Address: Claymore Securities, Inc._____
0000 Xxxxxxxxx Xxxx Xxxxx__
Xxxxx, XX 60532____________
Telephone: (000) 000-0000_____________
Facsimile: (000) 000-0000_____________
DATE: _____________________________
12
ATTACHMENT A
-------------
PROCEDURES FOR PROCESSING
-------------------------
PURCHASE ORDERS AND REDEMPTION ORDERS
-------------------------------------
This Attachment A to the Participant Agreement supplements the Prospectus
with respect to the procedures to be used in processing (1) a Purchase Order for
the purchase of Shares of Claymore Exchange-Traded Fund Trust and Claymore
Exchange-Traded Fund Trust 2 in Creation Units of each Fund and a (2) Redemption
Order for the redemption of Shares of Claymore Exchange-Traded Fund Trust and
Claymore Exchange-Traded Fund Trust 2 in Creation Units of each Fund.
Capitalized terms, unless otherwise defined in this Attachment A, have the
meanings attributed to them in the Participant Agreement or the Prospectus.
An Authorized Participant is required to have signed the Participant
Agreement. Upon acceptance of the Agreement and execution thereof by the Trust
and in connection with the initial Purchase Order submitted by the Authorized
Participant, the Transfer Agent will assign a PIN Number to each Authorized
Person authorized to act for an Authorized Participant. This will allow an
Authorized Participant through its Authorized Person(s) to place a Purchase
Order or Redemption Order with respect to the purchase or redemption of Creation
Units of Shares of Claymore Exchange-Traded Fund Trust and Claymore
Exchange-Traded Fund Trust 2.
13
ATTACHMENT A PART A
TO
PARTICIPANT AGREEMENT
FOR CLAYMORE EXCHANGE-TRADED FUND TRUST AND
CLAYMORE EXCHANGE-TRADED FUND TRUST 2
TO PLACE A PURCHASE ORDER FOR
-----------------------------
CREATION UNIT(S) OF SHARES OF ONE OR MORE FUNDS OF
--------------------------------------------------
CLAYMORE EXCHANGE-TRADED FUND TRUST AND CLAYMORE EXCHANGE-TRADED
----------------------------------------------------------------
FUND TRUST 2
------------
1. PLACING A PURCHASE ORDER.
The Authorized Participant (AP) submitting an order to create shall submit
such orders containing the information required by to the Transfer Agent in the
following manner: (a) in writing transmitted by facsimile (b) through Transfer
Agents electronic order entry system, as such may be made available and
constituted from time to time, the use of which shall be subject to the terms
and conditions of the Electronic Services Agreement, incorporated herein by
reference; or (c) by telephone to the Transfer Agent Representative and the
Distributor, as applicable, according to the procedures set forth below. The
order so transmitted (either in writing or electronic form) is hereinafter
referred to as the Submission or the Purchase Order as applicable, and the
Business Day on which a Submission is made is hereinafter referred to as the
Transmittal Date. NOTE THAT IF THE TELEPHONIC METHOD OF SUBMITTING ORDERS IS
USED, THE TELEPHONE CALL IN WHICH THE SUBMISSION NUMBER IS ISSUED INITIATES THE
ORDER PROCESS BUT DOES NOT ALONE CONSTITUTE THE ORDER. AN ORDER OR REQUEST IS
ONLY COMPLETED AND PROCESSED UPON RECEIPT OF THE SUBMISSION.
To begin a Purchase Order, the Authorized Participant (AP) must telephone the
BNYM ETF Administrator at (000) 000-0000 or such other number as the Distributor
designates in writing to the AP. This telephone call must be made by an
Authorized Person of the AP and answered by BNYM before the closing time of the
regular trading session on the Listing Exchange which is ordinarily 4:00 p.m.
Eastern Standard Time (Listing Exchange Closing Time or Order Cutoff Time). Upon
verifying the authenticity of the AP (as determined by the use of the
appropriate PIN Number), the BNYM ETF Administrator will request that the AP
place the Purchase Order. To do so, the AP must provide the appropriate ticker
symbols when referring to each Fund. After the AP has placed the Purchase Order,
the BNYM ETF Administrator will read the Purchase Order back to the AP. The AP
then must affirm that the Purchase Order has been taken correctly by the BNYM
ETF Administrator. If the AP affirms that Purchase Order has been taken
correctly, the BNYM ETF Administrator will issue a confirmation number to the
AP. All orders may also be placed by the AP via the web by the times described
above.
Purchase Orders for select funds may be placed after the Listing Exchange
Closing Time and before 5:30 PM Eastern Standard Time on any Business Day. For
such Funds the Order Cutoff Time will be 5:30 PM Eastern Standard Time. Such
Purchase Orders, if accepted, will receive the next Business Days NAV per
Creation Unit.
PLEASE NOTE: A PURCHASE ORDER REQUEST IS NOT COMPLETE UNTIL THE CONFIRMATION
NUMBER IS ISSUED BY THE BNYM ETF ADMINISTRATOR. WITH RESPECT TO EACH FUND, AN
ORDER FOR FUND SHARES CAN NOT BE CANCELED BY THE AP AFTER
14
THE CONFIRMATION NUMBER HAS BEEN ISSUED. INCOMING TELEPHONE CALLS ARE QUEUED AND
WILL BE HANDLED IN THE SEQUENCE RECEIVED. ACCORDINGLY, THE AP SHOULD NOT HANG UP
AND REDIAL. CALLS THAT ARE IN PROGRESS AT THE CUTOFF TIME ARE VALID AND THE
ORDER WILL BE TAKEN. PLEASE NOTE THAT "IN PROGRESS" IS DEFINED AS AN AP ACTUALLY
SPEAKING WITH A BNYM ETF ADMINISTRATOR . FOR CALLS THAT ARE PLACED BEFORE THE
CUTOFF TIME THAT ARE IN THE HOLDING QUEUE UNANSWERED AT OR AFTER THE CUTOFF
TIME, WILL BE VERBALLY DENIED. INCOMING CALLS THAT ARE RECEIVED AFTER THE CUTOFF
TIME WILL NOT BE ANSWERED BY THE BNYM ETF ADMINISTRATOR. ALL TELEPHONE CALLS
WILL BE RECORDED.
2. RECEIPT OF TRADE CONFIRMATION.
Subject to the conditions that a properly completed telephone Purchase Order
has been placed by the AP (either on its own or its customers behalf) not later
than the Listing Exchange Closing Time, the Distributor will accept the Purchase
Order on behalf of the Trust and will confirm in writing to the AP that its
Purchase Order has been accepted within 45 minutes after the designated Order
Cutoff time on the Business Day that the Purchase Order is received (e.g. 4:45
PM EST or 6:15 EST). Once the purchase order has been approved by the
Distributor, the Distributor will sign or time-stamp the order and send that
purchase order to the BNYM ETF Administrator.
3. QUALITY ASSURANCE.
After a confirmation number is issued by the BNYM ETF Administrator to the
AP, the AP will fax a written version of the Purchase Order to the BNYM ETF
Administrator. Upon receipt, the BNYM ETF Administrator should immediately
telephone the AP if the BNYM ETF Administrator believes that the Purchase Order
has not been completed correctly by the AP. In addition, the BNYM ETF
Administrator will telephone the AP if the BNYM ETF Administrator is in
non-receipt of the Purchase Order Form within 15 minutes after the Purchase
Order has been called into the BNYM ETF Administrator.
4. REJECTING OR SUSPENDING PURCHASE ORDERS.
The Trust or the Distributor reserve the absolute right to reject acceptance
of a Purchase Order if (i) the order is not in proper form as determined by the
Trust, the BNYM ETF Administrator or the Distributor; (ii) subject to Section
5.1 of this Attachment A, Part A, the portfolio of Deposit Securities (and/or
cash in lieu of names that the AP is not able to deliver in physical form)
delivered is not as specified by the Distributor; (iii) acceptance of the
Deposit Securities would have certain adverse tax consequences to the Trust or
any Fund; (iv) the acceptance of the Portfolio Deposit would, in the opinion of
counsel, be unlawful; or (v) circumstances outside the control of Trust, the
Distributor or the Transfer Agent make it for all practical purposes impossible
to process a Purchase Order. The Distributor shall notify the AP of a rejection
or revocation of any Purchase Order. The Distributor is under no duty, however,
to give notification of any defects or irregularities in the delivery of
Portfolio Deposits nor shall either of them incur any liability for the failure
to give any such notification. The Trust and Distributor may not revoke a
previously accepted Purchase Order, as defined in Section 2 of this Attachment.
The Trust acknowledges its agreement to return to the AP or any party for
which it is acting any dividend, distribution or other corporate action paid to
the Trust in respect of any Deposit Security that is transferred to Trust that,
based on the valuation of such Deposit Security at the time of transfer, should
have been paid to the AP or any party for which it is acting.
15
5. CONTRACTUAL SETTLEMENT.
(a) Through the CNS Clearing Process:
(1) Except as provided below, Deposit Securities of any Domestic Fund must be
delivered through the NSCC to a DTC account maintained at the Custodian on or
before the Domestic Contractual Settlement Date (defined below). The AP must
also make available on or before the Contractual Settlement Date, by means
satisfactory to the Trust, immediately available or same day funds estimated by
the Trust to be sufficient to pay the Cash Component next determined after
acceptance of the Purchase Order, together with the applicable purchase
Transaction Fee. Any excess funds will be returned following settlement of the
issue of the Creation Unit of Shares of the Trust. The Domestic Contractual
Settlement Date is the earlier of (i) the date upon which all of the required
Deposit Securities, the Cash Component and any other cash amounts which may be
due are delivered to Trust and (ii) the trade date plus three (t +3) Business
Days. Except as provided in the next two paragraphs, a Creation Unit of Shares
of any Fund will be issued through the CNS system and the payment of the Cash
Component and the purchase Transaction Fee through CNS in accordance with the
terms, conditions and guarantees as set forth in CNS agreements to which the
Custodian and AP have entered into.
(2) The Trust reserves the right to permit or require the substitution of an
amount of cash (i.e., a cash in lieu amount ) to be added to the Cash Component
to replace any Deposit Security with respect to any Domestic Fund which may not
be available in sufficient quantity for delivery or which may not be eligible
for transfer through the CNS Clearing Process, or which may not be eligible for
transfer through the systems of DTC and hence not eligible for transfer through
the CNS Clearing Process (discussed below), additional cost, if any, to acquire
the omitted securities will be at the expense of the Participant.
(3) Any settlement outside the CNS Clearing Process is subject to additional
requirements and fees as discussed in the Prospectus.
(b) Outside the CNS Clearing Process:
(1) Except as provided below, Deposit Securities must be delivered to an
account maintained at the applicable local Subcustodian on or before the
International Contractual Settlement Date (defined below). The AP must also make
available on or before the International Contractual Settlement Date, by means
satisfactory to the Trust, immediately available or same day funds estimated by
the Trust to be sufficient to pay the Cash Component next determined after
acceptance of the Purchase Order, together with the applicable purchase
Transaction Fee (as described in the Prospectus). Any excess funds will be
returned following settlement of the issue of the Creation Unit of Shares. The
International Contractual Settlement Date with respect to each International
Fund is the earlier of (i) the date upon which all of the required Deposit
Securities, the Cash Component and any other cash amounts which may be due are
delivered to Trust and (ii) the latest day for settlement on the customary
settlement cycle in the jurisdiction(s) where the any of the securities of such
International Fund are customarily traded.
(2) Except as provided in the next two paragraphs, a Creation Unit of Shares
will not be issued until the transfer of good title to the Trust of the
portfolio of Deposit Securities and the payment of the Cash Component and the
purchase Transaction Fee have been completed. When the Subcustodian confirms to
the Custodian that the required securities included in the Portfolio Deposit
(or, when permitted in the sole discretion of the Trust, the cash value thereof)
have been delivered to the account of the relevant Subcustodian, the Custodian
shall will cause the delivery of the Creation Unit of Shares.
16
(3) The Trust may in its sole discretion permit or require the substitution
of an amount of cash (i.e., a cash in lieu amount) to be added to the Cash
Component to replace any Deposit Security which may not be available in
sufficient quantity for delivery or for other similar reasons. If the Trust
notifies the Distributor that a cash in lieu amount will be accepted, the
Distributor or Transfer Agent will notify the AP and the AP shall deliver, on
behalf of itself or the party on whose behalf it is acting, the cash in lieu
amount, with any appropriate adjustments as advised by the Trust which may
include any difference between the actual cost to the Trust to acquire an
omitted security and the value of the security had the security been delivered
in kind. Additional amounts, if any, shall be included in the calculation of the
Cash Component to be received, any excess amounts will be returned to the AP
following settlement of the issue of the Creation Unit of Shares.
(4) In the event that a Portfolio Deposit is incomplete on the settlement
date for a Creation Unit of Shares because certain or all of the Deposit
Securities are missing, the Trust may issue a Creation Unit of Shares
notwithstanding such deficiency in reliance on the undertaking of the AP to
deliver the missing Deposit Securities as soon as possible, which undertaking
shall be secured by such the APs delivery and maintenance of collateral
consisting of cash having a value at least equal to 105% of the value of the
missing Deposit Securities. The parties hereto agree that the delivery of such
collateral shall be made in accordance with the Cash Collateral Settlement
Procedures, which such procedures shall be provided to the AP by the Transfer
Agent upon request. The parties hereto further agree that Trust, acting in good
faith, may purchase the missing Deposit Securities at any time and the AP agrees
to accept liability for any shortfall between the cost to the Trust of
purchasing such securities and the value of the collateral, which may be sold by
the Trust at such time, and in such manner, as the Trust may determine in its
sole discretion.
6. CASH PURCHASES.
When, in the sole discretion of the Trust, cash purchases of Creation Units
of Shares are available or specified for a Fund, such purchases shall be
effected in essentially the same manner as in-kind purchases thereof. In the
case of a cash purchase or where the cash equivalent value of one or more
Deposit Securities is being deposited in lieu of such Deposit Security, the AP
must pay the cash equivalent of the Deposit Securities it would otherwise be
required to provide through an in-kind purchase, plus the same Cash Component
required to be paid by an in-kind purchaser. In addition, to offset the Trusts
brokerage, transaction, and other costs associated with using the cash to
purchase the requisite Deposit Securities, the AP may be required to pay and
additional Transaction Fee or adjustment as advised by the Trust which may
include any difference between the actual cost to the Trust to acquire the
Deposit Securities and the value of the Deposit Securities had the Deposit
Securities been delivered in. Such Transaction Fees and additional amounts, if
any, shall be included in the calculation of the Cash Component to be received.
Any excess amounts will be returned to the AP following settlement of the issue
of the Creation Unit of Shares
7. CUSTOM BASKETS.
The Trust has developed procedures for Creations and Redemptions using
baskets of Deposit Securities that differ from that published by NSCC as the
then-existing portfolio basket for the Fund (a Custom Basket). In order for an
AP to deliver or receive a Custom Basket to the Distributor or Transfer Agent
and the Trust in connection with a purchase or redemption order rather than the
basket of Deposit Securities published by NSCC together with the Cash Amount,
any cash in lieu amounts and any other cash fees, the Distributor, Investment
Manager, or Trust must notify the AP that the Fund would like to effect the
purchase or redemption through a Custom Basket and identify the contents of the
Custom Basket on or prior to the time the AP calls with its purchase order and
the AP must agree to deliver the
17
Custom Basket in connection with the purchase. Prior to trade date, the Transfer
Agent must notify NSCC of the Deposit Securities in the custom creation basket.
18
ATTACHMENT A -- PART B
TO
PARTICIPANT AGREEMENT
FOR CLAYMORE EXCHANGE-TRADED FUND TRUST AND
CLAYMORE EXCHANGE-TRADED FUND TRUST 2
PROCEDURES TO PLACE A REDEMPTION ORDER FOR
------------------------------------------
CREATION UNIT(S) OF SHARES OF ONE OR MORE FUNDS OF
--------------------------------------------------
CLAYMORE EXCHANGE-TRADED FUND TRUST AND CLAYMORE EXCHANGE-TRADED
----------------------------------------------------------------
FUND TRUST 2
------------
1. PLACING A REDEMPTION ORDER.
The AP submitting a request to redeem shall submit such requests containing
the information required by to the Transfer Agent in the following manner: (a)
in writing transmitted by facsimile; (b) through Transfer Agents electronic
order entry system, as such may be made available and constituted from time to
time, the use of which shall be subject to the terms and conditions of the
Electronic Services Agreement, incorporated herein by reference; or (c) by
telephone to the Transfer Agent Representative and the Distributor, as
applicable, according to the procedures set forth below. The request so
transmitted (either in writing or electronic form) is hereinafter referred to as
the Submission or the Redemption Order as applicable, and the Business Day on
which a Submission is made is hereinafter referred to as the Transmittal Date.
NOTE THAT IF THE TELEPHONIC METHOD OF REQUESTING A REDEMPTION IS USED, THE
TELEPHONE CALL IN WHICH THE REQUEST NUMBER IS ISSUED INITIATES THE REQUEST
PROCESS BUT DOES NOT ALONE CONSTITUTE THE REQUEST. A REQUEST IS ONLY COMPLETED
AND PROCESSED UPON RECEIPT OF THE SUBMISSION.
Redemption Orders for Creation Units of Shares may be initiated only on days
that the Listing Exchange is open for trading. Redemption Orders may only be
made in whole Creation Units of shares of each Fund. To begin a Redemption
Order, the AP must telephone the BNYM ETF Administrator at (000) 000-0000. This
telephone call must be made by an Authorized Person of the AP and answered by
BNYM before the closing time of the regular trading session on the Listing
Exchange which is ordinarily 4:00 p.m. Eastern Standard Time (Listing Exchange
Closing Time Or Order Cutoff Time). Upon verifying the authenticity of the AP
(as determined by the use of the appropriate PIN Number), the BNYM ETF
Administrator will request that the AP place the Redemption Order. To do so, the
AP must provide the appropriate ticker symbols when referring to a Fund. After
the AP has placed the Redemption Order, the BNYM ETF Administrator will read the
Redemption Order back to the AP. The AP then must affirm that the Redemption
Order has been taken correctly by the BNYM ETF Administrator. If the AP affirms
that Redemption Order has been taken correctly, the BNYM ETF Administrator will
issue a confirmation number to the AP.
Redemption Orders for select funds may be placed after the Listing Exchange
Closing Time and before 5:30 PM Eastern Standard Time on any Business Day. For
such Funds the Order Cutoff Time will be 5:30 PM Eastern Standard Time. Such
Redemption Orders, if accepted, will receive the next Business Days NAV per
Creation Unit.
PLEASE NOTE: A REDEMPTION ORDER REQUEST IS NOT COMPLETE UNTIL THE
CONFIRMATION NUMBER IS ISSUED BY THE BNYM ETF ADMINISTRATOR. WITH RESPECT TO
EACH FUND, AN ORDER FOR FUND SHARES CANNOT BE CANCELED BY THE AP AFTER THE
CONFIRMATION NUMBER HAS BEEN ISSUED. INCOMING TELEPHONE CALLS ARE QUEUED
19
AND WILL BE HANDLED IN THE SEQUENCE RECEIVED. ACCORDINGLY, THE AP SHOULD NOT
HANG UP AND REDIAL. CALLS THAT ARE IN PROGRESS AT THE CUTOFF TIME ARE VALID AND
THE ORDER WILL BE TAKEN. PLEASE NOTE THAT "IN PROGRESS" IS DEFINED AS AN AP
ACTUALLY SPEAKING WITH A BNYM ETF ADMINISTRATOR. FOR CALLS THAT ARE PLACED
BEFORE THE CUTOFF TIME THAT ARE IN THE HOLDING QUEUE UNANSWERED BY STAFF AT OR
AFTER THE CUTOFF TIME, WILL BE VERBALLY DENIED. INCOMING CALLS THAT ARE RECEIVED
AFTER THE CUTOFF TIME WILL NOT BE ANSWERED BY THE BNYM ETF ADMINISTRATOR. ALL
TELEPHONE CALLS WILL BE RECORDED.
2. RECEIPT OF CONFIRMATION.
Subject to the conditions that a duly completed Redemption Order is received
by the Distributor from the AP on behalf of itself or another redeeming investor
by the Listing Exchange Closing Time, the Distributor will accept the Redemption
Order on behalf of the Trust and Distributor and will confirm in writing to the
AP that its Redemption Order has been accepted within 45 minutes after the
designated cutoff time on the Business Day the Redemption Order is received
(e.g. 4:45 PM EST or 6:15 PM EST). Once the Redemption Order has been approved
by the Distributor, the Distributor will sign or time-stamp the order and send
the Redemption Order to the BNYM ETF Administrator.
3. QUALITY ASSURANCE.
(a) After a confirmation number is issued by the BNYM ETF Administrator to
the AP, the AP will fax a copy of the Redemption Order to the BNYM ETF
Administrator. Upon receipt, the BNYM ETF Administrator should immediately
telephone the AP, if the BNYM ETF Administrator believes that the Redemption
Order has not been completed correctly by the AP. In addition, the BNYM ETF
Administrator will telephone the AP if the BNYM ETF Administrator is in
non-receipt of the Redemption Order Form within 15 minutes after the Redemption
Order has been called into the BNYM ETF Administrator.
4. TAKING DELIVERY OF DEPOSIT SECURITIES.
The Deposit Securities constituting in-kind redemption proceeds will be
delivered to the appropriate account which must be indicated in the APs Standing
Redemption Instructions. An Authorized Person of the AP may amend the APs
Standing Redemption Instructions from time to time in writing to the BNYM ETF
Administrator and the Trust in a form approved by the Trust. A redeeming
Beneficial Owner or the AP acting on behalf of such Beneficial Owner must
maintain appropriate securities broker-dealer, bank or other custody
arrangements to which account such Deposit Securities will be delivered.
Redemptions of Shares for Deposit Securities will be subject to compliance with
applicable U.S. federal and state securities laws.
5. CONTRACTUAL SETTLEMENT.
(a) Through the CNS Clearing Process:
(1) Except as provided below, the Shares of any Domestic Fund must be
delivered through the NSCC to a DTC account maintained at the applicable
custodian of any Domestic Fund on or before the Domestic Contractual
Settlement Date (defined below). The Trust will make available on the
Domestic Contractual Settlement Date, the Cash Component next determined
after acceptance of the Redemption Order, less the applicable Transaction
Fee. The "Domestic Contractual Settlement Date" is the date upon which all
of the required Shares must be
20
delivered to the Trust and, the Deposit Securities, any cash in lieu
amounts and Cash Component less any fees are delivered by the Trust to the
AP (ordinarily trade date plus three (t + 3) Business Days). Except as
provided in the next two paragraphs, the Deposit Securities representing
Creation Units of Shares and any cash component will be delivered
concurrently with the transfer of good title to the Trust of the required
number of Shares through the NSCCs Continuous Net Settlement (CNS) system
and the delivery of the Cash Component less the
Transaction Fee through CNS;
(2) The Trust reserves the right to permit or require the substitution
of an amount of cash (i.e., a cash in lieu amount ) to be added to the Cash
Component to replace any Deposit Security with respect to a Fund which may
not be available in sufficient quantity for delivery or which may not be
eligible for transfer through the CNS Clearing Process, or which may not be
eligible for transfer through the systems of DTC and hence not eligible for
transfer through the CNS Clearing Process (discussed below) and will be at
the expense of the Fund and will affect the value of all Shares of such
Fund; but the Trust, subject to the approval of the Board, may adjust the
Transaction Fee within the parameters described below to protect ongoing
shareholders. Any settlement outside the CNS Clearing Process is subject to
additional requirements and fees as discussed in the Prospectus.
(3) In the event that the number of Shares is insufficient on the
settlement date for Creation Unit(s) of Shares, the Trust may deliver the
Deposit Securities notwithstanding such deficiency in reliance on the
undertaking of the AP to deliver the missing Shares as soon as possible,
which undertaking shall be secured by such the APs delivery and maintenance
of collateral consisting of cash having a value at least equal to 115% of
the value of the missing Shares. The parties hereto agree that the delivery
of such collateral shall be made in accordance with the Cash Collateral
Settlement Procedures, which such procedures shall be provided to the AP by
the Transfer Agent upon request. The parties hereto further agree that the
Trust, acting in good faith, may purchase the missing Shares at any time
and the AP agrees to accept liability for any shortfall between the cost to
the Trust of purchasing such shares and the value of the collateral, which
may be sold by Trust at such time, and in such manner, as the Trust may
determine in its sole discretion.
(b) Outside the CNS Clearing Process:
(1) Except as provided below, the Shares must be delivered to an account
maintained at the Custodian on or before the Business Day immediately
following the date on which the NAV of the redemption was calculated. The
Trust will also make available on the International Contractual Settlement
Date, immediately available or same day funds sufficient to pay the Cash
Component next determined after acceptance of the Redemption Order, less
the applicable Transaction Fee (as described in the Prospectus). The
International Contractual Settlement Date of an International Fund is the
earlier of (i) the date upon which all of the Deposit Securities are
delivered to the AP and (ii) the latest day for settlement on the customary
settlement cycle in the jurisdiction(s) where the any of the securities of
such International Fund are customarily traded.
(2) Deliveries of redemption proceeds by the Funds generally will be
made within three (3) Business Days. Due to the schedule of holidays in
certain countries, however, the delivery of in-kind Deposit Securities of
International Funds may take longer than three Business Days after the day
on which the Redemption Order is placed.
21
(3) Except as provided in the next two paragraphs, the Deposit
Securities will not be delivered until the transfer of good title to the
Trust of the required Creation Unit(s) of Shares has been completed. When
the Custodian confirms that the required Shares (or, when permitted in the
sole discretion of the Trust, the cash collateral has been received by the
account, the Custodian will cause the delivery of the Deposit Securities.
(4) The Trust may in its sole discretion permit or require the
substitution of an amount of cash (i.e., a cash in lieu amount) to be added
to the Cash Component to replace any Deposit Security which may not be
available in sufficient quantity for delivery or for other similar reasons.
If the Trust notifies Distributor that a cash in lieu amount will be
delivered, the Distributor will notify the AP and the AP shall receive, on
behalf of itself or the party on whose behalf it is acting, the cash in
lieu amount, with any appropriate adjustments as advised by the Trust. The
AP may also elect to replace any Deposit Securities with a cash in lieu
amount to the extent that the AP is not authorized to purchase the
particular Deposit Securities from the Fund or is not able to sell the
particular Deposit Securities in the secondary market, consistent with
restrictions in applicable law or the APs internal policies and procedures.
(5) In the event that the number of Shares is insufficient on the
settlement date for Creation Unit(s) of Shares (Order Date +1), the Trust
may deliver the Deposit Securities notwithstanding such deficiency in
reliance on the undertaking of the AP to deliver the missing Shares as soon
as possible, which undertaking shall be secured by such the APs delivery on
Order Date +1 and subsequent maintenance of collateral consisting of cash
having a value at least equal to 105% of the value of the missing Shares.
The parties hereto agree that the delivery of such collateral shall be made
in accordance with the Cash Collateral Settlement Procedures, which such
procedures shall be provided to the AP by the Transfer Agent upon request.
The parties hereto further agree that the Trust, acting in good faith, may
purchase the missing Shares at any time and the AP agrees to accept
liability for any shortfall between the cost to the Trust of purchasing
such shares and the value of the collateral, which may be sold by the Trust
at such time, and in such manner, as the Trust may determine in its sole
discretion.
6. CASH REDEMPTIONS.
In the event that, in the sole discretion of the Trust, cash redemptions are
permitted or required by the Trust, proceeds will be paid to the AP redeeming
Shares on behalf of the redeeming investor as soon as practicable after the date
of redemption.
7. STANDING REDEMPTION INSTRUCTIONS.
Attachment D hereto contains the APs Standing Redemption Instructions, which
include information identifying the account(s) into which Deposit Securities of
each Fund and any other redemption proceeds should be delivered by the Trust
pursuant to a Redemption Order.
22
IN WITNESS WHEREOF, the Participant acknowledges that he or she has read the
procedures relating to Custom Baskets and agrees to comply with all such
procedures. Failure to comply with the Custom Basket procedures will require the
transaction to be effected in the Standard Basket.
Participant:
By: _________________
Title: _________________
Address: _________________
Telephone: _________________
Facsimile: _________________
Telex: _________________
Date: _________________
23
ATTACHMENT B
TO
PARTICIPANT AGREEMENT
FOR CLAYMORE EXCHANGE-TRADED FUND TRUST AND
CLAYMORE EXCHANGE-TRADED FUND TRUST 2
FORM OF CERTIFIED AUTHORIZED PERSONS
------------------------------------
OF THE AUTHORIZED PARTICIPANT
-----------------------------
The following are the names, titles and signatures of all persons (each an
Authorized Person) authorized to give instructions relating to any activity
contemplated by this Agreement or any other notice, request or instruction on
behalf of the AP pursuant to this Agreement.
Name: __________________
Title: __________________
Signature: __________________
Name: __________________
Title: __________________
Signature: __________________
Name: __________________
Title: __________________
Signature: __________________
The undersigned, [name], [title], [company], does hereby certify that the
persons listed above have been duly elected to the offices set forth beneath
their names, that they presently hold such offices, that they have been duly
authorized to act as Authorized Persons of this institution in its capacity as
an AP pursuant to the Agreement by and between, Claymore Securities, Inc. as
Distributor, Claymore Exchange-Traded Fund Trust and Claymore Exchange-Traded
Fund Trust 2 and, and _______________________ as AP dated [date] and that their
signatures set forth above are their own true and genuine signatures.
In witness whereof, the undersigned has hereby set his/her hand and the seal of
[company].
Date: _________________ ___________________
[name, title]
24
ATTACHMENT C
TO
PARTICIPANT AGREEMENT
FOR CLAYMORE EXCHANGE-TRADED FUND TRUST AND
CLAYMORE EXCHANGE-TRADED FUND TRUST 2
INTERNATIONAL FUND SUBCUSTODIAN ACCOUNTS FOR
--------------------------------------------
DELIVERY OF DEPOSIT SECURITIES
------------------------------
The Subcustodian accounts into which an AP should deposit the securities
constituting the Deposit Securities of each International Fund of Claymore
Exchange-Traded Fund Trust and Claymore-Exchange-Traded Fund Trust 2are set
forth below:
__________________
[name of Fund]
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
__________________
[name of Fund]
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
__________________
[name of Fund]
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
__________________
[name of Fund]
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
__________________
[name of Fund]
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
25
ATTACHMENT D
TO
PARTICIPANT AGREEMENT
FOR CLAYMORE EXCHANGE-TRADED FUND TRUST AND
CLAYMORE EXCHANGE-TRADED FUND TRUST 2
THE AP ACCOUNTS
---------------
FOR DELIVERY OF DEPOSIT SECURITIES
----------------------------------
The accounts into which Claymore Exchange-Traded Fund Trust and Claymore-
Exchange-Traded Fund Trust 2 should deposit the securities constituting the
Deposit Securities of each Fund upon redemption by the AP are set forth below:
Name of AP: __________________
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
CLAYMORE SECURITIES, INC., DISTRIBUTOR
THE BANK OF NEW YORK MELLON, TRANSFER AGENT
CREATION/REDEMPTION ORDER FORM
CLAYMORE ETFs
--------------------------------------------------------------------------------
CONTACT INFORMATION FOR ORDER EXECUTION:
Telephone order number: (000) 000-0000/4968/4967/4969
Facsimile number: (000) 000-0000
--------------------------------------------------------------------------------
Participant must complete all items in Part 1. The Distributor and/or Transfer
Agent, in their discretion may reject any order not submitted in complete form.
I. TO BE COMPLETED BY PARTICIPANT:
-------------------------------
Date:_____________________________ Time:______________________
Broker Name: ________________________ Firm Name:___________________
NSCC Participant Number:______________ DTC Participant Number:_________
Telephone Number:____________________ Fax Number:___________________
Type of order (Check One)
Creation of _________ Redemption of _________
Claymore Exchange-Traded Fund Trust:
Claymore US Capital Markets Micro-Term Fixed Income ETF (ULQ) ____
Claymore Capital Markets Bond ETF (UBD) ____
Claymore BulletShares 2011 Corporate Bond ETF (BSCB) ___
Claymore BulletShares 2012 Corporate Bond ETF (BSCC) ___
Claymore BulletShares 2013 Corporate Bond ETF (BSCD) ___
Claymore BulletShares 2014 Corporate Bond ETF (BSCE) ___
Claymore BulletShares 2015 Corporate Bond ETF (BSCF) ___
Claymore BulletShares 2016 Corporate Bond ETF (BSCG) ___
Claymore BulletShares 2017 Corporate Bond ETF (BSCH) ___
26
Claymore Exchange-Traded Fund Trust 2:
N/A at this time
If creation/redemption is a custom basket order, indicate the restricted
security name, ticker and number of shares to be settled in cash as part of the
Cash Component.
--------------------------------------------------------------------------------
Name ____________________________ Symbol _________ Number of Shares_____________
Name ____________________________ Symbol _________ Number of Shares_____________
--------------------------------------------------------------------------------
PARTICIPANT INTENDS TO SELL OR OTHERWISE DISPOSE OF THE UNITS BEING CREATED AS
SOON AS IS REASONABLY PRACTICABLE.
# Of Creation Units (CU) Transacted: Number:_______________
Number written out: ______________
Order #: ______________________________ ______________________________
Authorized Persons Signature
II. TO BE COMPLETED BY DISTRIBUTOR OR TRANSFER AGENT:
-------------------------------------------------
This certifies that the above order has been:
___________Accepted by the Distributor (in the case of creations)
___________Declined-Reason: ___________________________________
___________ ________ ____________________________
Date Time Authorized Signature
III. TO BE COMPLETED ONLY IF CREATION ORDER IS DECLINED DUE TO 80 PERCENT TESTS:
---------------------------------------------------------------------------
The participant represents and warrants to the Distributor and the Transfer
Agent that either ( i ) it does not hold for the account of any single
Beneficial Owner of Claymore ETFs, 80 percent (80%) or more of outstanding ETFs
or (ii) if it does hold for the account of any single Beneficial Owner of
Claymore ETFs, 80 percent (80%) or more of outstanding Claymore ETFs, that such
a circumstance would not cause the Fund to have a basis in the Index Securities
deposited with the Fund different from the market value of such Index Securities
on the date of such deposit, pursuant to Section 351 of the Internal Revenue
Code of 1986, as amended.
____________________________
Authorized Signature
27
