Exhibit 99.(g)(i)
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement"), dated as of January
[ ], 2004, between Dreman/Claymore Dividend & Income Fund, a Delaware statutory
trust (the "Trust"), and Claymore Advisors, LLC, a Delaware limited liability
company (the "Adviser").
WHEREAS, the Adviser has agreed to furnish investment advisory services to
the Trust, a closed-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, this Agreement has been approved in accordance with the provisions
of the 1940 Act, and the Adviser is willing to furnish such services upon the
terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed by and between the parties hereto as
follows:
1. IN GENERAL. The Adviser agrees, all as more fully set forth herein, to
act as investment adviser to the Trust with respect to the investment of the
Trust's assets and to supervise and arrange for the day-to-day operations of the
Trust and the purchase of securities for and the sale of securities held in the
investment portfolio of the Trust.
2. DUTIES AND OBLIGATIONS OF THE ADVISER WITH RESPECT TO INVESTMENT OF
ASSETS OF THE TRUST. Subject to the succeeding provisions of this section and
subject to the direction and control of the Trust's Board of Trustees, the
Adviser shall (i) act as investment adviser for and supervise and manage the
investment and reinvestment of the Trust's assets and, in connection therewith,
have complete discretion in purchasing and selling securities and other assets
for the Trust and in voting, exercising consents and exercising all other rights
appertaining to such securities and other assets on behalf of the Trust; (ii)
supervise the investment program of the Trust and the composition of its
investment portfolio; and (iii) arrange, subject to the provisions of paragraph
4 hereof, for the purchase and sale of securities and other assets held in the
investment portfolio of the Trust. In performing its duties under this Section
2, the Adviser may delegate some or all of its duties and obligations under this
Agreement to one or more sub-investment advisers; provided, however, that any
such delegation shall be pursuant to an agreement with terms agreed upon by the
Trust and approved in a manner consistent with the 1940 Act and provided,
further, that no such delegation shall relieve the Adviser from its duties and
obligations of management and supervision of the management of the Trust's
assets pursuant to this Agreement and to applicable law.
3. DUTIES AND OBLIGATIONS OF ADVISER WITH RESPECT TO THE ADMINISTRATION OF
THE TRUST. The Adviser also agrees to furnish office
1
facilities and equipment and clerical, bookkeeping and administrative services
(other than such services, if any, provided by the Trust's Custodian, Transfer
Agent, Administrator and Dividend Disbursing Agent and other service providers)
for the Trust. To the extent requested by the Trust, the Adviser agrees to
provide the following administrative services:
(a) Oversee the determination and publication of the Trust's net asset
value in accordance with the Trust's policy as adopted from time to time by
the Board of Trustees;
(b) Oversee the maintenance by the Trust's Custodian and Transfer Agent and
Dividend Disbursing Agent of certain books and records of the Trust as
required under Rule 31a-1(b)(4) of the 1940 Act and maintain (or oversee
maintenance by the Trust's Administrator or such other persons as approved
by the Board of Trustees) such other books and records required by law or
for the proper operation of the Trust;
(c) Oversee the preparation and filing of the Trust's federal, state and
local income tax returns and any other required tax returns;
(d) Review the appropriateness of and arrange for payment of the Trust's
expenses;
(e) Prepare (or oversee the preparation) for review and approval by
officers of the Trust financial information for the Trust's semi-annual and
annual reports, proxy statements and other communications with shareholders
required or otherwise to be sent to Trust shareholders, and arrange for the
printing and dissemination of such reports and communications to
shareholders;
(f) Prepare (or oversee the preparation) for review by an officer of the
Trust the Trust's periodic financial reports required to be filed with the
Securities and Exchange Commission ("SEC") on Form N-SAR, N-CSR and such
other reports, forms and filings, as may be mutually agreed upon;
(g) Prepare reports relating to the business and affairs of the Trust as
may be mutually agreed upon and not otherwise appropriately prepared by the
Trust's Custodian, counsel or auditors;
(h) Prepare (or oversee the preparation of) such information and reports as
may be required by any stock exchange or exchanges on which the Trust's
shares are listed;
(i) Make such reports and recommendations to the Board of Trustees
concerning the performance of the independent accountants as the Board of
Trustees may reasonably request or deems appropriate;
2
(j) Make such reports and recommendations to the Board of Trustees
concerning the performance and fees of the Trust's Custodian, Transfer
Agent, Administrator and Dividend Disbursing Agent as the Board of Trustees
may reasonably request or deems appropriate;
(k) Oversee and review calculations of fees paid to the Trust's service
providers;
(l) Oversee the Trust's portfolio and perform necessary calculations as
required under Section 18 of the 1940 Act;
(m) Consult with the Trust's officers, independent accountants, legal
counsel, Custodian, Administrator or other accounting agent, Transfer Agent
and Dividend Disbursing Agent in establishing the accounting policies of
the Trust and monitor financial and shareholder accounting services;
(n) Review implementation of any share purchase programs authorized by the
Board of Trustees;
(o) Determine the amounts available for distribution as dividends and
distributions to be paid by the Trust to its shareholders; prepare and
arrange for the printing of dividend notices to shareholders; and provide
the Trust's Dividend Disbursing Agent and Custodian with such information
as is required for such parties to effect the payment of dividends and
distributions and to implement the Trust's dividend reinvestment plan;
(p) Prepare such information and reports as may be required by any banks
from which the Trust borrows funds;
(q) Provide such assistance to the Custodian and the Trust's counsel and
auditors as generally may be required to properly carry on the business and
operations of the Trust;
(r) Assist in the preparation and filing of Forms 3, 4, and 5 pursuant to
Section 16 of the Securities Exchange Act of 1934, as amended, and Section
30(f) of the 1940 Act for the officers and trustees of the Trust, such
filings to be based on information provided by those persons;
(s) Respond to or refer to the Trust's officers or Transfer Agent,
shareholder (including any potential shareholder) inquiries relating to the
Trust; and
(t) Supervise any other aspects of the Trust's administration as may be
agreed to by the Trust and the Adviser.
All services are to be furnished through the medium of any directors, officers
or employees of the Adviser or its affiliates as the Adviser deems appropriate
in order to fulfill its obligations hereunder. The Trust will reimburse the
Adviser or its affiliates for
3
all out-of- pocket expenses incurred by them in connection with the performance
of the administrative services described in this paragraph 3.
4. COVENANTS. In the performance of its duties under this Agreement, the
Adviser:
(a) shall at all times conform to, and act in accordance with, any
requirements imposed by: (i) the provisions of the 1940 Act and the
Investment Advisers Act of 1940, as amended, and all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC"); (ii) any
other applicable provision of law; (iii) the provisions of the Agreement
and Declaration of Trust, as amended and restated, and By-Laws of the
Trust, as such documents are amended from time to time; (iv) the investment
objectives and policies of the Trust as set forth in its Registration
Statement on Form N-2; and (v) any policies and determinations of the Board
of Trustees of the Trust;
(b) will place orders either directly with the issuer or with any broker or
dealer. Subject to the other provisions of this paragraph, in placing
orders with brokers and dealers, the Adviser will attempt to obtain the
best price and the most favorable execution of its orders. In placing
orders, the Adviser will consider the experience and skill of the firm's
securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, the Adviser may
select brokers on the basis of the research, statistical and pricing
services they provide to the Trust and other clients of the Adviser.
Information and research received from such brokers will be in addition to,
and not in lieu of, the services required to be performed by the Adviser
hereunder. A commission paid to such brokers may be higher than that which
another qualified broker would have charged for effecting the same
transaction, provided that the Adviser determines in good faith that such
commission is reasonable in terms either of the transaction or the overall
responsibility of the Adviser to the Trust and its other clients and that
the total commissions paid by the Trust will be reasonable in relation to
the benefits to the Trust over the long-term. In no instance, however, will
the Trust's securities be purchased from or sold to the Adviser, or any
affiliated person thereof, except to the extent permitted by the SEC or by
applicable law; and
(c) will treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust, and the Trust's
prior, current or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities
and duties hereunder, except after prior notification to and approval in
writing by the Trust, which approval shall not be unreasonably withheld and
may not be withheld where the Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Trust.
4
5. SERVICES NOT EXCLUSIVE. Nothing in this Agreement shall prevent the
Adviser or any officer, employee or other affiliate thereof from acting as
investment adviser for any other person, firm or corporation, or from engaging
in any other lawful activity, and shall not in any way limit or restrict the
Adviser or any of its officers, employees or agents from buying, selling or
trading any securities for its or their own accounts or for the accounts of
others for whom it or they may be acting; provided, however, that the Adviser
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations under this Agreement.
6. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Adviser hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust's request. The
Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
7. AGENCY CROSS TRANSACTIONS. From time to time, the Adviser or brokers or
dealers affiliated with it may find themselves in a position to buy for certain
of their brokerage clients (each an "Account") securities which the Adviser's
investment advisory clients wish to sell, and to sell for certain of their
brokerage clients securities which advisory clients wish to buy. Where one of
the parties is an advisory client, the Adviser or the affiliated broker or
dealer cannot participate in this type of transaction (known as a cross
transaction) on behalf of an advisory client and retain commissions from one or
both parties to the transaction without the advisory client's consent. This is
because in a situation where the Adviser is making the investment decision (as
opposed to a brokerage client who makes his own investment decisions), and the
Adviser or an affiliate is receiving commissions from both sides of the
transaction, there is a potential conflicting division of loyalties and
responsibilities on the Adviser's part regarding the advisory client. The
Securities and Exchange Commission has adopted a rule under the Investment
Advisers Act of 1940, as amended, which permits the Adviser or its affiliates to
participate on behalf of an Account in agency cross transactions if the advisory
client has given written consent in advance. By execution of this Agreement, the
Trust authorizes the Adviser or its affiliates to participate in agency cross
transactions involving an Account. The Trust may revoke its consent at any time
by written notice to the Adviser.
8. EXPENSES. During the term of this Agreement, the Adviser will bear all
costs and expenses of its employees and any overhead incurred in connection with
its duties hereunder and shall bear the costs of any salaries or trustees fees
of any officers or trustees of the Trust who are affiliated persons (as defined
in the 0000 Xxx) of the Adviser.
9. COMPENSATION OF THE ADVISER. (a) The Trust agrees to pay to the Adviser
and the Adviser agrees to accept as full compensation for all services rendered
by the Adviser as such, a monthly fee (the "Investment Advisory Fee") in arrears
at an annual rate equal to 0.85 % of the average daily value of the Trust's
Managed Assets.
5
"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, consituting financial leverage shall not be considered a
liability of the Trust. For any period less than a month during which this
Agreement is in effect, the fee shall be prorated according to the proportion
which such period bears to a full month of 28, 29, 30 or 31 days, as the case
may be.
(b) For purposes of this Agreement, the total assets of the Trust shall be
calculated pursuant to the procedures adopted by resolutions of the Trustees of
the Trust for calculating the value of the Trust's assets or delegating such
calculations to third parties.
10. LIMITATION ON LIABILITY. (a) The Adviser will not be liable for any
error of judgment or mistake of law or for any loss suffered by Adviser or by
the Trust in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its duties under this Agreement.
(b) The Trust may, but shall not be required to, make advance payments to
the Adviser in connection with the expenses of the Adviser in defending any
action with respect to which damages or equitable relief might be sought against
the Adviser under this Section (which payments shall be reimbursed to the Trust
by the Adviser as provided below) if the Trust receives (i) a written
affirmation of the Adviser's good faith belief that the standard of conduct
necessary for the limitation of liability in this Section has been met and (ii)
a written undertaking to reimburse the Trust whether or not the Adviser shall be
deemed to have liability under this Section, such reimbursement to be due upon
(1) a final decision on the merits by a court or other body before whom the
proceeding was brought as to whether or not the Adviser is liable under this
Section or (2) in the absence of such a decision, upon the request of the
Adviser for reimbursement by a majority vote of a quorum consisting of trustees
of the Trust who are neither "interested persons" of the Trust (as defined in
Section 2(a)(19) of the 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 Adviser shall provide a security for such Adviser undertaking,
(B) the Trust shall be insured against losses arising by reason of any lawful
advance, or (C) a majority of a quorum of the Disinterested Non-Party Trustees
of the Trust or an independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the Adviser ultimately
will be found not to be liable under this Section.
11. DURATION AND TERMINATION. This Agreement shall become effective as of
the date hereof and, unless sooner terminated with respect to the Trust as
provided herein, shall continue in effect for a period of 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
6
(a) the vote of a majority of the Trust's Board of Trustees or the vote of a
majority of the outstanding voting securities of the Trust at the time
outstanding and entitled to vote, and (b) by the vote of a majority of the
Trustees who are not parties to this Agreement or interested persons of any
party to this Agreement, cast in person at a meeting called for the purpose of
voting on such approval. Notwithstanding the foregoing, this Agreement may be
terminated by the Trust at any time, without the payment of any penalty, upon
giving the Adviser 60 days' notice (which notice may be waived by the Adviser),
provided that such termination by the Trust shall be directed or approved by the
vote of a majority of the Trustees of the Trust in office at the time or by the
vote of the holders of a majority of the voting securities of the Trust at the
time outstanding and entitled to vote, or by the Adviser on 60 days' written
notice (which notice may be waived by the Trust). This Agreement will also
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meanings of such terms
in the 1940 Act.)
13. NOTICES. Any notice under this Agreement shall be in writing to the
other party at such address as the other party may designate from time to time
for the receipt of such notice and shall be deemed to be received on the earlier
of the date actually received or on the fourth day after the postmark if such
notice is mailed first class postage prepaid.
14. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. Any amendment of this Agreement shall be
subject to the 1940 Act.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware for contracts to be per formed
entirely therein without reference to choice of law principles thereof and in
accordance with the applicable provisions of the 1940 Act.
16. USE OF THE NAME CLAYMORE. The Adviser has consented to the use by the
Trust of the name or identifying word "Claymore" in the name of the Trust. Such
consent is conditioned upon the employment of the Adviser as the investment
adviser to the Trust. The name or identifying word "Claymore" may be used from
time to time in other connections and for other purposes by the Adviser and any
of its affiliates. The Adviser may require the Trust to cease using "Claymore"
in the name of the Trust if the Trust ceases to employ, for any reason, the
Adviser, any successor thereto or any affiliate thereof as investment adviser of
the Trust.
17. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding on, and shall inure to the
benefit of the parties hereto and their respective successors.
7
18. COUNTERPARTS. This Agreement may be executed in counterparts by the
parties hereto, each of which shall constitute an original counterpart, and all
of which, together, shall constitute one Agreement.
8
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument
to be executed by their duly authorized officers, all as of the day and the year
first above written.
DREMAN/CLAYMORE DIVIDEND & INCOME FUND
By:
----------------------
Name: Xxxxxxxx Xxxxxxx
Title: Secretary
CLAYMORE ADVISORS, LLC
By:
----------------------
Name:
Title: President
9
