Exhibit 99.(g)(ii)
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT (the "Agreement") dated as of
January [ ], 2004, among Dreman/Claymore Dividend & Income Fund, a Delaware
statutory trust (the "Trust"), Claymore Advisors, LLC, a Delaware limited
liability company (the "Adviser"), and Dreman Value Management LLC, a Delaware
limtied liability company ("Dreman" or the "Sub-Adviser").
WHEREAS, the Adviser has agreed to furnish investment management and
advisory services to the Trust, a closed-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940 Act")
with respect to the Trust Assets (defined below);
WHEREAS, the investment advisory agreement between the Adviser and the
Trust dated as of January [ ], 2004 (such agreement or the most recent successor
agreement between such parties relating to advisory services to the Trust is
referred to herein as the "Investment Advisory Agreement") contemplates that the
Adviser may sub-contract investment advisory services with respect to the Trust
to a sub-adviser(s) pursuant to a sub-advisory agreement(s) agreeable to the
Trust and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Adviser wishes to retain the Sub-Adviser to provide
certain sub-advisory services;
WHEREAS, the Sub-Adviser is registered as a registered investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"); and
WHEREAS, this Agreement has been approved in accordance with the
provisions of the 1940 Act, and the Sub-Adviser is willing to furnish such
services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed by and between the parties hereto as
follows:
1. APPOINTMENT. The Adviser hereby appoints the Sub-Adviser to
act as a sub-adviser with respect to the Trust as set forth in this Agreement
and the Sub-Adviser accepts such appointment and agrees to render the services
herein set forth for the compensation herein provided.
2. SERVICES OF THE SUB-ADVISER. Subject to the succeeding
provisions of this section, the oversight and supervision of the Adviser and the
direction and control of the Trust's Board of Trustees, the Sub-Adviser will
perform certain of the day-to-day operations of the Trust which may include one
or more of the following services at the request of the Adviser: (i) managing
the investment and reinvestment of
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the Trust Assets in accordance with the investment policies of the Trust; (ii)
arranging, subject to the provisions of paragraph 3 hereof, for the purchase and
sale of securities and other assets for the Trust; (iii) providing investment
research and credit analysis concerning the Trust Assets; (v) placing orders for
purchases and sales of Trust Assets, (vi) maintaining the books and records as
are required to support Trust investment operations, and (vii) monitoring on a
daily basis the investment activities and portfolio holdings relating of the
Trust. At the request of the Adviser, the Sub-Adviser will also, subject to the
oversight and supervision of the Adviser and the direction and control of the
Trust's Board of Trustees, consult with the Adviser as to the overall management
of the Trust Assets and the investment policies and practices of the Trust,
including (but not limited to) the use by the Trust of financial leverage and
elements (e.g., form, amount and costs) relating to such financial leverage and
the utilization by the Trust of any interest rate or other hedging or risk
management transactions in connection therewith, and will perform any of the
services described in the Investment Advisory Agreement. In addition, the
Sub-Adviser will keep the Trust and the Adviser informed of developments
materially affecting the Trust and shall, on its own initiative, furnish to the
Trust all information relevant to such developments. The Sub-Adviser will
periodically communicate to the Adviser, at such times as the Adviser may
direct, information concerning the purchase and sale of securities for the
Trust, including: (i) the name of the issuer, (ii) the amount of the purchase or
sale, (iii) the name of the broker or dealer, if any, through which the purchase
or sale is effected, (iv) the CUSIP number of the instrument, if any, and (v)
such other information as the Adviser may reasonably require for purposes of
fulfilling its obligations to the Trust under the Investment Advisory Agreement.
The Sub-Adviser will provide the services rendered by it under this Agreement in
accordance with the Trust's investment objective, policies and restrictions (as
currently in effect and as they may be amended or supplemented from time to
time) as stated in the Trust's Prospectus filed with the SEC as part of the
Trust's Registration Statement on Form N-2 and the resolutions of the Trust's
Board of Trustees.
3. COVENANTS. In the performance of its duties under this
Agreement, the Sub-Adviser:
(a) shall at all times comply and act in accordance with: (i) the
provisions of the 1940 Act and the Advisers Act and all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC"); (ii) any
other applicable provision of law; (iii) the provisions of the Agreement and
Declaration of Trust and By-Laws of the Trust, as such documents are amended
from time to time; (iv) the investment objectives, policies and restrictions of
the Trust as set forth in the Trust's Prospectus filed with the SEC as part of
the Trust's Registration Statement on Form N-2; and (v) any policies,
determinations and/or resolutions of the Board of Trustees of the Trust or the
Adviser;
(b) will place orders either directly with the issuer or with any
broker or dealer. Subject to the other provisions of this paragraph, in placing
orders with brokers and dealers, the Sub-Adviser will obtain the best price and
the most favorable execution of its orders. In placing orders, the Sub-Adviser
will consider the experience and skill of the firm's securities traders as well
as the firm's financial responsibility and
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administrative efficiency. Consistent with this obligation, the Sub-Adviser may
select brokers on the basis of the research, statistical and pricing services
they provide to the Trust and other clients of the Adviser or the Sub-Adviser,
as the case may be. Information and research received from such brokers will be
in addition to, and not in lieu of, the services required to be performed by the
Sub-Adviser hereunder. A commission paid to such brokers may be higher than that
which another qualified broker would have charged for effecting the same
transaction, provided that the Sub-Adviser determines in good faith that such
commission is reasonable in terms either of the transaction or the overall
responsibility of the Adviser and the Sub-Adviser to the Trust and their other
clients and that the total commissions paid by the Trust will be reasonable in
relation to the benefits to the Trust over the long-term. In no instance,
however, will the Trust's securities be purchased from or sold to the Adviser,
the Sub-Adviser or any affiliated person thereof, except to the extent permitted
by the SEC or by applicable law;
(c) maintain books and records with respect to the Trust's
securities transactions and render to the Adviser and the Trust's Board of
Trustees such periodic and special reports as they may request; and
(d) treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust, and the Trust's
prior, current or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder.
4. SERVICES NOT EXCLUSIVE. Nothing in this Agreement shall
prevent the Sub-Adviser or any officer, employee or other affiliate thereof from
acting as investment adviser for any other person, firm or corporation, or from
engaging in any other lawful activity, and shall not in any way limit or
restrict the Sub-Adviser or any of its officers, employees or agents from
buying, selling or trading any securities for their own accounts or for the
accounts of others for whom it or they may be acting; provided, however, that
the Sub-Adviser will not undertake any activities which will adversely affect
the performance of its obligations under this Agreement.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust's request. The
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
6. AGENCY CROSS TRANSACTIONS. From time to time, the Sub-Adviser
or brokers or dealers affiliated with the Sub-Adviser may find themselves in a
position to buy for certain of their brokerage clients (each an "Account")
securities which the Sub-Adviser's investment advisory clients wish to sell, and
to sell for certain of their brokerage clients securities which advisory clients
wish to buy. Where one of the parties is an advisory client, the Sub-Adviser or
the affiliated broker or dealer cannot participate in this type of transaction
(known as a cross transaction) on behalf of an advisory client and retain
commissions from both parties to the transaction without the
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advisory client's consent. This is because in a situation where a Sub-Adviser is
making the investment decision (as opposed to a brokerage client who makes his
own investment decisions), and the Sub-Adviser or an affiliate is receiving
commissions from one or both sides of the transaction, there is a potential
conflicting division of loyalties and responsibilities on the Sub-Adviser's part
regarding the Advisory client. The SEC has adopted a rule under the Advisers Act
which permits a Sub-Adviser or its affiliates to participate on behalf of an
Account in agency cross transactions if the Advisory client has given written
consent in advance. By execution of this Agreement, the Trust authorizes the
Sub-Adviser or its affiliates to participate in agency cross transactions
involving an Account. The Trust may revoke its consent at any time by written
notice to the Sub-Adviser.
7. EXPENSES. During the term of this Agreement, the Sub-Adviser
will bear all costs and expenses of its employees and any overhead incurred by
the Sub-Adviser in connection with their duties hereunder and shall bear the
costs of any salaries or trustees fees of any officers or trustees of the Trust
who are affiliated persons (as defined in the 0000 Xxx) of the Sub-Adviser.
8. COMPENSATION.
(a) The Adviser agrees to pay, in the aggregate, to the
Sub-Adviser and the Sub-Adviser agrees to accept as full compensation for all
services rendered by the Sub-Adviser as such, a monthly fee in arrears at a rate
equal to [60]% of the monthly advisory fees received by the Adviser from the
Trust (net of any waivers or reimbursements by the Trust and after payment by
the Adviser of any asset-based or other compensation payable to members of the
underwriting syndicate or other selling group members by the Adviser) (the
"Sub-Advisory Fee"). For any period less than a month during which this
Agreement is in effect, the Sub-Advisory Fee shall be prorated according to the
proportion which such period bears to a full month of 28, 29, 30 or 31 days, as
the case may be.
(b) For purposes of this Agreement, the "Trust 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
purposes of this Agreement, the total assets of the Trust shall be calculated in
the same manner as set forth in the Investment Advisory Agreement.
9. CERTAIN INFORMATION. The Sub-Advisers shall promptly notify
the Adviser in writing of the occurrence of any of the following events: (a) the
Sub-Adviser shall fail to be registered as an investment adviser under the
Advisers Act, (b) the Sub-Adviser shall have been served or otherwise have
notice of any action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, public board or body, involving the affairs of
the Trust, (c) there is a change in control of the Sub-Adviser or any parent of
the Sub-Adviser within the meaning of the 1940 Act, or (d) there is an adverse
change in the business or financial position of the Sub-Adviser.
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10. LIMITATION ON LIABILITY.
(a) The Sub-Adviser will not be liable for any error of judgment or
mistake of law or for any loss suffered by the Sub-Adviser, the Adviser or by
the Trust in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its duties under this Agreement.
(b) The Trust may, but shall not be required to, make advance payments
to the Sub-Adviser in connection with the expenses of the Sub-Adviser in
defending any action with respect to which damages or equitable relief might be
sought against the Sub-Adviser under this Section (which payments shall be
reimbursed to the Trust by the Sub-Adviser as provided below) if the Trust
receives (i) a written affirmation of the Sub-Adviser's good faith belief that
the standard of conduct necessary for the limitation of liability in this
Section has been met and (ii) a written undertaking to reimburse the Trust
whether or not the Sub-Adviser shall be deemed to have liability under this
Section, such reimbursement to be due upon (1) a final decision on the merits by
a court or other body before whom the proceeding was brought as to whether or
not the Sub-Adviser is liable under this Section or (2) in the absence of such a
decision, upon the request of the Sub-Adviser for reimbursement by a majority
vote of a quorum consisting of trustees of the Trust who are neither "interested
persons" of the Trust (as defined in Section 2(a)(19) of the 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 Sub-Adviser shall
provide a security for such Sub-Adviser undertaking, (B) the Trust shall be
insured against losses arising by reason of any lawful advance, or (C) a
majority of a quorum of the Disinterested Non-Party Trustees of the Trust or an
independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Sub-Adviser ultimately will be found
not to be liable under this Section.
12. DURATION AND TERMINATION. This Agreement shall become
effective as of the date hereof and shall continue (unless terminated
automatically as set forth below) in effect for a period of two years.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Trust for successive periods of 12 months, provided such
continuance is specifically approved at least annually by both (a) the vote of a
majority of the Trust's Board of Trustees or a vote of a majority of the
outstanding voting securities of the Trust at the time outstanding and entitled
to vote and (b) by the vote of a majority of the Trustees, who are not parties
to this Agreement or interested persons (as such term is defined in the 0000
Xxx) of any such party, cast in person at a meeting called for the purpose of
voting on such approval. Notwithstanding the foregoing, this Agreement may be
terminated by the Trust or the Adviser at any time, without the payment of any
penalty, upon giving the Sub-Adviser 60 days' notice (which notice may be waived
by the Sub-Adviser), provided that such
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termination by the Trust or the Adviser shall be directed or approved by the
vote of a majority of the Trustees of the Trust in office at the time or by the
vote of the holders of a majority of the voting securities of the Trust at the
time outstanding and entitled to vote, or by the Sub-Adviser on 60 days' written
notice (which notice may be waived by the Trust and the Adviser), and will
terminate automatically upon any termination of the Investment Advisory
Agreement betweenhe Trust and the Adviser. This Agreement will also immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meanings of such terms in the 1940 Act.)
13. NOTICES. Any notice under this Agreement shall be in writing
to the other party at such address as the other party may designate from time to
time for the receipt of such notice and shall be deemed to be received on the
earlier of the date actually received or on the fourth day after the postmark if
such notice is mailed first class postage prepaid.
14. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware for contracts to
be performed entirely therein without reference to choice of law principles
thereof and in accordance with the applicable provisions of the 1940 Act.
16. USE OF THE NAME DREMAN. The Sub-Adviser has consented to the
use by the Trust of the name or identifying word "Dreman" in the name of the
Trust. Such consent is conditioned upon the employment of the Sub-Adviser as the
investment sub-adviser to the Trust. The names or identifying words "Dreman" may
be used from time to time in other connections and for other purposes by the
Sub-Adviser and any of its affiliates. The Sub-Adviser may require the Trust to
cease using "Dreman" in the name of the Trust if the Trust or the Adviser ceases
to employ, for any reason, the Sub-Adviser, any successor thereto or any
affiliate thereof as investment sub-adviser of the Trust.
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 other wise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding on, and shall inure to the
benefit of the parties hereto and their respective successors.
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18. COUNTERPARTS. This Agreement may be executed in counter parts
by the parties hereto, each of which shall constitute an original counterpart,
and all of which, together, shall constitute one Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers designated below as of the day and
year first above written.
CLAYMORE ADVISORS, LLC
By:
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Xxxxxxxx Xxxxxxx
Senior Managing Director and
General Counsel
DREMAN VALUE MANAGEMENT LLC
By:
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DREMAN/CLAYMORE DIVIDEND & INCOME
FUND
By:
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