Exhibit(h)(2)
DISTRIBUTION AGREEMENT
Among
CLAYMORE SECURITIES, INC., GABELLI FUNDS, LLC and
GABELLI DIVIDEND AND INCOME FUND
DISTRIBUTION AGREEMENT (this "Agreement"), dated as of October ,
2003, between Claymore Securities, Inc., a Kansas corporation ("Claymore"),
Gabelli Funds, LLC, a New York limited liability company ("Gabelli") and,
solely with respect to Section 6, Gabelli Dividend and Income Fund, a Delaware
statutory trust (the "Fund").
WHEREAS, Gabelli wishes to sponsor the Fund, a syndicated, leveraged
closed-end investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), that will invest primarily in equity
securities;
WHEREAS, Gabelli has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form N-2 covering
the registration of shares of the Fund's common stock under the Securities Act
of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and a notification on Form N-8A of registration of
the Fund as an investment company under the 1940 Act (such registration
statement and any other registration statement filed with the Commission under
the 1933 Act and the 1940 Act with respect to an initial public offering
("IPO") by the Fund, as the same may from time to time be amended or
supplemented, and including any information incorporated by reference therein,
being referred to herein as the "Registration Statement"; said Registration
Statement will include the final prospectus in the form first furnished to the
underwriters for use in connection with an IPO by the Fund, as the same may
from time to time be amended or supplemented, and including any information
incorporated by reference therein, being referred to herein as the
"Prospectus");
WHEREAS, Gabelli wishes to retain Claymore to provide certain
marketing and investor servicing with respect to the offering and operation of
the Fund as set forth herein; and
WHEREAS, Gabelli, or its affiliate shall be the Fund's investment
adviser pursuant to an agreement between it and the Fund in accordance with
the requirements of the 1940 Act.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Claymore shall perform the following services with respect
to the Fund and as compensation therefore shall receive the
fees indicated below:
Claymore shall provide distribution assistance and other
duties to Gabelli with respect to the Fund including (i)
assist in the review of sales and marketing materials to be
made available to the Fund's shareholders to assure
compliance with applicable laws, rules and regulations and
(ii) conduct roadshow presentations and teleconference calls
with branch offices of the various underwriting participants
during the IPO.
As compensation for Claymore's services, Gabelli shall pay
to Claymore a fee computed and paid monthly equal to % of
the gross investment advisory fees collected by
Gabelli/"net revenue" received by Gabelli from the Fund
with respect to the IPO Assets (as defined herein) for a
period of five (5) years. "Net revenue" for this purpose
equals 80% of the amount of investment advisory fees
collected by Gabelli with respect to the IPO assets. "IPO
Assets" for this purpose means the net assets attributable
to the Fund's common shares sold in the IPO, excluding (i)
shares sold through Gabelli & Company, Inc. and the
Citigroup/Xxxxx Xxxxxx system and (ii) any assets
attributable to leverage.
2. The parties agree to use their best efforts to take all
commercially reasonable actions necessary to effectuate the
intent of this Agreement. Notwithstanding such, the parties
agree that the withdrawal, abandonment or termination of the
offering is in the sole discretion of Gabelli.
3. The parties acknowledge that each will receive from the
other certain information and written material. The parties
agree that all such information provided to the other party,
whether oral or written, shall be considered confidential
and proprietary, unless (i) otherwise stated at the time of
disclosure or (ii) such information is or becomes generally
available to the public other than as a result of a
disclosure by such party or its representatives. The parties
agree that confidential information shall not be used for
the benefit of the other party, or for the benefit of any
other person or entity, and shall not be disclosed to any
other person, except (i) as expressly provided in this
Agreement, (ii) as may be required under applicable law or
(iii) as requested by a court, government agency or
regulatory body. Upon termination of the obligations
hereunder, all confidential information shall be promptly
returned unless otherwise agreed to by the parties, although
copies may be retained. The parties agree that upon written
receipt of confidential information they will undertake all
reasonable and appropriate steps to ensure that the secrecy
and confidentiality of the confidential information is
maintained.
4. Claymore represents and warrants to Gabelli as follows:
(a) Claymore is a corporation duly incorporated, validly
existing and in good standing under the laws of the
state of Kansas. Claymore has the corporate power and
authority to execute this Agreement.
(b) Each of the execution and delivery by Claymore of this
Agreement and the performance by Claymore of its
obligations hereunder has been duly authorized by all
requisite corporate action and will not violate any
provision of law, any order of any court or other
agency of government, the Certificate of Incorporation
or By-laws of Claymore, or any provision of any
indenture, agreement or other instrument to which
Claymore is a party or by which any of its properties
or assets is bound or affected, or conflict with,
result in a breach of or constitute (with due notice
or lapse of time or both) a default under any such
indenture, agreement or other instrument.
(c) This Agreement has been duly executed and delivered by
Claymore and constitutes the legal, valid and binding
obligations of Claymore, enforceable in accordance
with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting
creditor's rights generally; and (ii) as limited by
laws relating to the availability of specific
performance, injunctive relief, or other equitable
remedies.
(d) Claymore holds all governmental and other licenses,
permits, franchises and other authorizations necessary
for the conduct of its business as proposed to be
conducted herein, including all necessary
registrations with respect to broker-dealer
activities.
(e) Claymore is not authorized to make representations
concerning the Fund or the shares of the Fund except
those contained in the Prospectus and in such printed
information subsequently issued by Gabelli or the Fund
as information supplemental to such Prospectus.
5. Gabelli represents and warrants to Claymore as follows:
(a) Gabelli is a New York limited liability company,
validly existing and in good standing under the laws
of the State of New York. Gabelli has the power and
authority to execute this Agreement.
(b) Each of the execution and delivery by Gabelli of this
Agreement and the performance by Gabelli of its
obligations hereunder has been duly authorized by all
requisite action and will not violate any provision of
law, any order of any court or other agency of
government, the Certificate of Formation and Operating
Agreement of Gabelli, or any provision of any
indenture, agreement or other instrument to which
Gabelli is a party or by which any of its properties
or assets is bound or affected, or conflict with,
result in a breach of or constitute (with due notice
or lapse of time or both) a default under any such
indenture, agreement or other instrument.
(c) This Agreement has been duly executed and delivered by
Gabelli and constitutes the legal, valid and binding
obligations of Gabelli, enforceable in accordance with
its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting
creditor's rights generally; and (ii) as limited by
laws relating to the availability of specific
performance, injunctive relief, or other equitable
remedies.
(d) Gabelli holds all governmental and other licenses,
permits, franchises and other authorizations necessary
for the conduct of its business as proposed to be
conducted herein.
6. The parties agree that their respective costs and expenses
in connection with this Agreement shall be addressed as
provided in this Section 6. In order for any cost or expense
of a party to be properly shared or reimbursed in accordance
with this Section 6, such cost or expense must have been
reasonably and actually incurred (not merely accrued), must
not be ineligible for reimbursement by the Fund under its
declaration of trust and bylaws, the 1940 Act and any other
applicable law or regulation, must be accurately accounted
for and must be subject to review by the other party. For
purposes of this Agreement, organizational and offering
costs and expenses shall include those expenses of the Fund
identified as such in any underwriting agreement relating to
an IPO by the Fund, including out-of-pocket expenses of the
underwriters (including reasonable fees and disbursements of
counsel to the underwriters) required to be reimbursed in
the event such underwriting agreement is terminated under
certain circumstances specified therein. Claymore will be
involved in assisting in the initial sale of the Common
Shares of the Fund.
a. In the event that Gabelli determines to withdraw,
abandon or terminate the IPO, the parties agree that
each will be solely responsible for its own costs and
expenses in connection with this Agreement and the
Fund's offering. However, if the determination to
withdraw, abandon or terminate the IPO is Gabelli's,
and not based upon the determination of the Fund's
principal underwriter, Gabelli will reimburse Claymore
for its out of pocket expenses up to $50,000.
b. In the event that the Fund is created and successfully
completes an IPO, the costs and expenses of each party
shall be reimbursed as follows:
A reimbursement account will be created equal to $0.04
multiplied by the number of shares sold in the IPO
(including all shares sold pursuant to the exercise of any
over-allotment option granted to the underwriters, assuming
a $20.00 share price) (the "Reimbursement Account"). The
Reimbursement Account will be used to satisfy:
First, the proper organizational and offering costs of the
Fund;
Next, the proper out of pocket offering costs incurred by
Claymore (shall not include any payments Claymore makes or
is obligated to make to its sales personnel);
Next, the proper out of pocket offering costs incurred by
Gabelli (shall not include payments Gabelli makes or is
obligated to make to its sales personnel);
To the extent there remains a balance in the Reimbursement
Account after these payments, such amount will be shared
equally between Gabelli and Claymore to the extent of other
out of pocket offering costs incurred in connection with the
offering and this Agreement (including payments either makes
or is obligated to make to its sales personnel), until one
of such parties has no additional such costs and then any
remaining amount shall be paid to either Gabelli or
Claymore, as the case may be, to the extent such party has
additional such costs.
7. The obligations of the parties hereunder shall terminate
upon the earlier to occur of (i) the successful completion
of an initial public offering of the Fund's common stock,
(ii) the decision by Gabelli to abandon, withdraw or
terminate the initial public offering or (iii) June 30,
2004. The obligation of Gabelli to pay Claymore pursuant to
Section 1 hereof shall survive termination of this
Agreement, except if (i) the IPO is abandoned, withdrawn or
terminated by Gabelli (subject to the expense reimbursement
described in Section 6(a) herein) or (ii) in the opinion of
Gabelli, such payments are determined to be prohibited under
applicable law or regulatory authority.
8. This Agreement shall inure to the benefit of and be binding
upon each of the parties hereto. This Agreement can not be
assigned without the written consent of each party.
9. This Agreement constitutes the full and entire understanding
and agreement between the parties with regard to the
subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth
herein.
10. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of
which together shall constitute one instrument.
11. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York,
applicable to agreements made and to be performed in said
state.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
CLAYMORE SECURITIES, INC. GABELLI FUNDS LLC
By__________________________________ By________________________
Solely with respect to Section 6,
THE GABELLI DIVIDEND AND INCOME FUND
By___________________________________
