EXHIBIT (k)(7)
ADDITIONAL COMPENSATION AGREEMENT
December [ ], 2004
Pioneer Investment Management, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Highland Capital Management, L.P.
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
Ladies and Gentlemen:
Reference is made to the Purchase Agreement dated December [ ], 2004 (the
"Purchase Agreement"), by and among Pioneer Floating Rate Trust (the "Fund"), a
closed-end management investment company (the "Fund"), Pioneer Investment
Management Inc. ("Pioneer" or the "Adviser"), Highland Capital Management, L.P.
("Highland" or the "Subadviser" and, together with Pioneer, the "Advisers") and
each of the respective Underwriters named therein, with respect to the issue and
sale of the Fund's common shares of beneficial interest, no par value (the
"Common Shares"), as described therein. Reference is also made to (i) the
Advisory Agreement, dated [ ], 2004 (the "Advisory Agreement") between Pioneer
and the Fund and (ii) the registration statement on Form N-2 regarding the
Common Shares of the Fund (the "Registration Statement"). Capitalized terms used
herein and not otherwise defined shall have the meanings given to them in the
Purchase Agreement.
The Advisers hereby confirm their agreement with UBS Securities LLC ("UBS
Securities") with respect to the additional compensation referred to in the
"Underwriting" section of the Registration Statement, payable jointly by the
Advisers to UBS Securities. The Advisers agree to pay to UBS Securities
additional compensation (collectively, the "Additional Compensation") as
provided for in Section 3 hereof; provided, however, that such Additional
Compensation shall not exceed an amount equal to 0.15% of the Fund's average
weekly assets attributable to the Common Shares sold by UBS Securities in the
offering; and provided, further, that such payments shall not exceed the
"Maximum Additional Compensation Amount" (as defined in Section 4 hereof). The
Additional Compensation shall be payable as set forth in Section 3 hereof.
SECTION 1. Additional Compensation.
(a) Within 60 days following the Closing Date, UBS Securities shall
prepare or cause to be prepared and provide to the Advisers a chart indicating
the aggregate purchase price to the public of the Common Shares sold by UBS
Securities and the Pro Rata Percentage (as defined in Section 2 hereof) of UBS
Securities that shall be appended as Schedule A to this Additional Compensation
Agreement. Such Schedule A shall be prepared in good faith by UBS Securities and
subject to verification by the Advisers.
(b) The Advisers hereby employ UBS Securities, for the period and on the
terms and conditions set forth herein, to provide the following services at the
reasonable request of the Advisers:
(i) after-market support services designed to maintain the
visibility of the Fund on an ongoing basis;
(ii) relevant information, studies or reports regarding general
trends in the closed-end investment companies and asset management industries,
if reasonably obtainable, and consult with representatives of the Advisers in
connection therewith; and
(iii) information to and consult with the Advisers with respect to
applicable strategies designed to address market value discounts, if any, with
respect to the Fund.
SECTION 2. Pro Rata Percentage. UBS Securities shall be assigned a "Pro
Rata Percentage," the numerator of which shall equal the aggregate purchase
price to the public of the Common Shares sold by UBS Securities as set forth on
Schedule A hereto and the denominator of which shall equal the aggregate
purchase price to the public of all of the Common Shares purchased by the
Underwriters pursuant to the Purchase Agreement.
SECTION 3. Payment of Additional Compensation.
(a) The Advisers shall pay the Additional Compensation, quarterly in
arrears, to UBS Securities in an amount equal to the product of UBS Securities'
Pro Rata Percentage multiplied by 0.0375% of the average weekly assets of the
Fund for such quarter.
(b) All fees payable hereunder shall be paid to UBS Securities by wire
transfer of immediately available funds within 15 days following the end of each
calendar quarter to a bank account designated by UBS Securities. At the time of
each payment of Additional Compensation hereunder, the Advisers shall deliver to
UBS Securities a statement indicating the amount of the aggregate average weekly
total assets of the Fund for such quarter (including assets attributable to any
preferred shares of the Fund that may be outstanding) on which such payment was
based.
(c) The initial payments of Additional Compensation hereunder shall be
paid with respect to the calendar quarter ending March 31, 2005. In the event
that this Additional Compensation Agreement terminates prior to the end of a
calendar quarter, the Additional Compensation required to be paid hereunder
shall be due and payable within 15 days following the termination hereof and
shall be pro-rated in respect of the period prior to such termination.
Notwithstanding the foregoing, if any payment hereunder would otherwise fall on
a day which is not a business day, it shall be due on the next day which is a
business day. All fees payable hereunder shall be in addition to any fees paid
by the Advisers pursuant to the Purchase Agreement.
SECTION 4. Maximum Additional Compensation Amount. The "Maximum Additional
Compensation Amount" payable by the Advisers hereunder shall be [ ]% of the
aggregate offering price of the Common Shares. Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated will receive additional compensation which will not exceed [
]% of the aggregate initial offering price of the Common Shares.
SECTION 5. Term. This Additional Compensation Agreement shall continue
coterminously with and so long as the Advisory Agreement remains in effect
between the Fund and Pioneer, or any similar investment management agreement
with a successor in interest or affiliate of Pioneer remains in effect, as and
to the extent that such investment management agreement is renewed periodically
in accordance with the Investment Company Act of 1940, as amended. This
Additional Compensation Agreement shall terminate on the earliest to occur of
(a) with respect to UBS Securities, the payment by the Advisers to UBS
Securities of the Maximum Additional Compensation Amount, (b) with respect to
the Fund, the dissolution and winding up of the Fund and (c) with respect to
Pioneer, the date on which the Advisory Agreement or other investment management
agreement between the Fund and Pioneer or any successor in interest to Pioneer,
including but not limited to an affiliate of Pioneer, shall terminate.
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SECTION 6. The amount of the fee payable hereunder to UBS Securities by
each Adviser shall be determined by agreement of the Advisers; provided,
however, that if the full amount of the fee for a quarter is not paid to UBS
Securities within 15 days of the end of such quarter, Pioneer shall be solely
responsible for paying any deficiency to UBS Securities.
SECTION 7. Except to the extent legally required (after consultation with,
and approval as to form and substance by, UBS Securities and its counsel), none
of (i) the name of UBS Securities, (ii) any advice rendered by UBS Securities to
the Advisers or (iii) or any communication from UBS Securities in connection
with the services performed by UBS Securities pursuant to this Agreement will be
quoted or referred to orally or in writing, or in the case of (ii) and (iii),
reproduced or disseminated, by the Advisers or any of their affiliates or any of
their affiliates' agents, without UBS Securities' prior written consent
SECTION 8. The Advisers will furnish UBS Securities with such information
as UBS Securities believes appropriate to its assignment (all such information
so furnished being the "Information"). The Advisers recognize and confirm that
UBS Securities (a) will use and rely primarily on the Information and on
information available from generally recognized public sources in performing the
services contemplated by this Agreement without having assumed responsibility
for independently verifying the same, (b) does not assume responsibility for the
accuracy, completeness or reasonableness of the Information and such other
information and (c) will not make an appraisal of any assets or liabilities
(contingent or otherwise) of the Fund. The Advisers represent that at any time
UBS Securities is undertaking after market support services, the publicly
available information with respect to the Fund will not contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained therein not misleading.
SECTION 9. Not an Investment Adviser. The Advisers acknowledge that UBS
Securities are not providing any advice hereunder as to the value of securities
or regarding the advisability of purchasing or selling any securities for the
Fund. No provision of this Additional Compensation Agreement shall be considered
as creating, nor shall any provision create, any obligation on the part of UBS
Securities, and UBS Securities is not hereby agreeing, to: (i) furnish any
advice or make any recommendations regarding the purchase or sale of portfolio
securities or (ii) render any opinions, valuations or recommendations of any
kind or to perform any such similar services. The Advisers acknowledge and agree
that UBS Securities has been retained solely to provide the services specified
herein to the Advisers, and not to act as an adviser to any other person, and
the Adviser's engagement of UBS Securities is not intended to confer rights upon
any person (including the Fund or shareholders, employees or creditors of the
Adviser or the Fund) not a party hereto as against UBS Securities or its
affiliates, or their respective directors, officers, employees or agents,
successors, or assigns. UBS Securities shall act as an independent contractor
under this Agreement, and not in any other capacity including as a fiduciary,
and any duties arising out of its engagement shall be owed solely to the
Advisers.
SECTION 10. Not Exclusive. Nothing herein shall be construed as
prohibiting UBS Securities or its respective affiliates from acting as such for
any other clients (including other registered investment companies or other
investment advisers).
SECTION 11. No Liability. The Advisers agree that UBS Securities shall not
have liability to either Adviser or the Fund for any act or omission to act by
UBS Securities in the course of its performance under this Additional
Compensation Agreement, in the absence of gross negligence or willful misconduct
on the part of UBS Securities. The Advisers jointly and severally agree to
indemnify and hold harmless UBS Securities and its respective officers,
directors, agents and employees against any loss or expense arising out of or in
connection with UBS Securities' performance under this Additional Compensation
Agreement. This provision shall survive the termination, expiration or
supersession of this Additional Compensation Agreement.
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SECTION 12. Assignment. This Additional Compensation Agreement may not be
assigned by any party without the prior written consent of each other party.
SECTION 13. Amendment; Waiver. No provision of this Additional
Compensation Agreement may be amended or waived except by an instrument in
writing signed by the parties hereto.
SECTION 14. Governing Law. This Additional Compensation Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York. No claim, counterclaim or dispute of any kind or nature whatsoever arising
out of or in any way relating to this Agreement ("Claim") may be commenced,
prosecuted or continued in any court other than the courts of the State of New
York located in the City and County of New York or in the United States District
Court for the Southern District of New York, which courts shall have exclusive
jurisdiction over the adjudication of such matters, and the Advisers and UBS
Securities consent to the jurisdiction of such courts and personal service with
respect thereto. The Advisers and UBS Securities waive all right to trial by
jury in any proceeding (whether based upon contract, tort or otherwise) in any
way arising out of or relating to this Agreement.
SECTION 15. Counterparts. This Additional Compensation Agreement may be
executed in any number of counterparts, each of which shall be an original, and
all of which, when taken together, shall constitute one agreement. Delivery of
an executed signature page of this Additional Compensation Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
Pioneer, Highland and UBS Securities in accordance with its terms.
Very truly yours,
UBS SECURITIES LLC
By: ___________________________________
Name:
Title:
By: ___________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
PIONEER INVESTMENT MANAGEMENT, INC.
By: __________________________________
Name:
Title:
HIGHLAND CAPITAL MANAGEMENT, L.P.
By: __________________________________
Name:
Title:
SCHEDULE A
AGGREGATE
NAME OF QUALIFYING PURCHASE PRICE TO PUBLIC PRO RATA
UNDERWRITER OF COMMON SHARES SOLD PERCENTAGE
------------------ ------------------------ ----------
UBS Securities LLC $[ ]
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UBS SECURITIES LLC INDEMNIFICATION AGREEMENT
December [ ], 2004
UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
In connection with the engagement of UBS Securities LLC ("UBS Securities")
to provide the Services to the undersigned (the "Companies") with the matters
set forth in the Additional Compensation Agreement dated December [ ], 2004
between the Companies and UBS Securities (the "Agreement"), in the event that
UBS Securities becomes involved in any capacity in any claim, suit, action,
proceeding, investigation or inquiry (including, without limitation, any
shareholder or derivative action or arbitration proceeding) (collectively, a
"Proceeding") (i) in connection with or arising out of any untrue statement or
alleged untrue statement of a material fact contained in information with
respect to the Fund or any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or (ii) otherwise in
connection with or arising out of the Agreement or the Services to be provided
thereunder, the Companies agree to indemnify, defend and hold UBS Securities
harmless to the fullest extent permitted by law, from and against any losses,
claims, damages, liabilities and expenses in connection with or arising out of
the Agreement or the Services to be provided thereunder (a "Covered Claim"),
except, in the case of clause (ii) above only, to the extent that it shall be
determined by a court of competent jurisdiction in a judgment that has become
final in that it is no longer subject to appeal or other review, that such
losses, claims, damages, liabilities and expenses resulted solely from the gross
negligence, bad faith or willful misconduct of UBS Securities. In addition, in
the event that UBS Securities becomes involved in any capacity in any Proceeding
which relates to a Covered Claim, the Companies will reimburse UBS Securities
for its legal and other expenses (including the reasonable cost of any
investigation and preparation) as such expenses are incurred by UBS Securities
in connection therewith. If such indemnification were not to be available for
any reason, the Companies agree to contribute to the losses, claims, damages,
liabilities and expenses involved (i) in the proportion appropriate to reflect
the relative benefits received or sought to be received by the Companies and its
stockholders, on the one hand, and UBS Securities, on the other hand, in the
matters contemplated by the Agreement or (ii) if (but only if and to the extent)
the allocation provided for in clause (i) is for any reason held unenforceable,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Companies and their
stockholders, on the one hand, and the party entitled to contribution, on the
other hand, as well as any other relevant equitable considerations; provided,
that in no event shall the Companies contribute less than the amount necessary
to assure that UBS Securities is not liable for losses, claims, damages,
liabilities and expenses in excess of the amount of fees actually received by
UBS Securities pursuant to the Agreement. Relative fault shall be determined by
reference to, among other things, whether any alleged untrue statement or
omission or any other alleged conduct relates to information provided by the
Companies or other conduct by the Companies (or its employees or other agents),
on the one hand, or by UBS Securities, on the other hand. The Companies will not
settle any Proceeding in respect of which indemnity may be sought hereunder,
whether or not UBS Securities is an actual or potential party to such
Proceeding, without UBS Securities' prior written consent. For purposes of this
Indemnification Agreement, UBS Securities shall include UBS Securities LLC, any
of its affiliates, each other person, if any, controlling UBS Securities or any
of its affiliates, their respective officers, current and former directors,
employees and agents, and the successors and assigns of all of the foregoing
persons. The foregoing indemnity and contribution agreement shall be in addition
to any rights that any indemnified party may have at common law or otherwise.
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If any Proceeding is brought against UBS Securities in respect of which
indemnity may be sought against the Companies pursuant to the foregoing
paragraph, UBS Securities shall promptly notify the Companies in writing upon
receipt of actual notice of the institution of such Proceeding and the Companies
shall assume the defense of such Proceeding, including the employment of counsel
reasonably satisfactory to UBS Securities and payment of all fees and expenses;
provided, however, that the omission to so notify the Companies shall not
relieve the Companies from any liability which the Companies may have to UBS
Securities or otherwise, unless and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the Companies.
UBS Securities shall have the right to employ its own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of UBS
Securities unless the employment of such counsel shall have been authorized in
writing by the Companies in connection with the defense of such Proceeding or
the Companies shall not have, within a reasonable period of time in light of the
circumstances, employed counsel reasonably satisfactory to UBS to have charge of
the defense of such Proceeding or UBS Securities shall have reasonably concluded
that there may be defenses available to it which are different from, additional
to or in conflict with those available to the Companies (in which case the
Companies shall not have the right to direct the defense of such Proceeding on
behalf of UBS Securities), in any of which events such fees and expenses shall
be borne by the Companies and paid as incurred (it being understood, however,
that the Companies shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding or
series of related Proceedings in the same jurisdiction). The Companies shall not
be liable for any settlement of any Proceeding effected without its written
consent but if settled with the written consent of the Companies, the Companies
agree to indemnify and hold harmless UBS Securities from and against any loss or
liability by reason of such settlement. Notwithstanding the foregoing sentence,
if at any time UBS Securities shall have requested the Companies to reimburse
UBS Securities for fees and expenses of counsel as contemplated by the second
sentence of this paragraph, then the Companies agree that they shall be liable
for any settlement of any Proceeding effected without their written consent if
(i) such settlement is entered into more than 60 business days after receipt by
the Companies of the aforesaid request, (ii) the Companies shall not have
reimbursed UBS Securities in accordance with such request prior to the date of
such settlement and (iii) UBS Securities shall have given the Companies at least
30 days' prior notice of its intention to settle.
The Companies agree that neither UBS Securities nor any of its affiliates,
directors, agents, employees or controlling persons shall have any liability to
the Companies or any person asserting claims on behalf of or in right of the
Companies in connection with or as a result of a Covered Claim, except to the
extent that it shall be determined by a court of competent jurisdiction in a
judgment that has become final in that it is no longer subject to appeal or
other review that any losses, claims, damages, liabilities or expenses incurred
by the Companies resulted solely from the gross negligence, bad faith or willful
misconduct of UBS Securities in performing the Services.
THIS INDEMNIFICATION AGREEMENT AND ANY CLAIM, COUNTERCLAIM OR DISPUTE OF
ANY KIND OR NATURE WHATSOEVER ARISING OUT OF OR IN ANY WAY RELATING TO THIS
AGREEMENT ("CLAIM"), DIRECTLY OR INDIRECTLY, SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS SET FORTH BELOW,
NO CLAIM MAY BE COMMENCED, PROSECUTED OR CONTINUED IN ANY COURT OTHER THAN THE
COURTS OF THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WHICH
COURTS SHALL HAVE EXCLUSIVE JURISDICTION OVER THE ADJUDICATION OF SUCH MATTERS,
AND THE COMPANIES AND UBS SECURITIES CONSENT TO THE JURISDICTION OF SUCH COURTS
AND PERSONAL SERVICE WITH RESPECT THERETO. THE COMPANIES HEREBY CONSENT TO
PERSONAL JURISDICTION, SERVICE AND VENUE IN ANY COURT IN WHICH ANY CLAIM ARISING
OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT IS
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BROUGHT BY AND THIRD PARTY AGAINST UBS SECURITIES OR ANY INDEMNIFIED PARTY. EACH
OF UBS SECURITIES AND EACH OF THE COMPANIES WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY PROCEEDING OR CLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING
OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT. THE COMPANIES AGREES THAT A
FINAL JUDGMENT IN ANY PROCEEDING OR CLAIM ARISING OUT OF OR IN ANY WAY RELATING
TO THIS AGREEMENT BROUGHT IN ANY SUCH COURT SHALL BE CONCLUSIVE AND BINDING UPON
THE COMPANIES AND MAY BE ENFORCED IN ANY OTHER COURTS TO THE JURISDICTION OF
WHICH THE COMPANIES IS OR MAY BE SUBJECT, BY SUIT UPON SUCH JUDGMENT.
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The foregoing Indemnification Agreement shall remain in full force and
effect notwithstanding any termination of UBS Securities' engagement. This
Indemnification Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same agreement.
Very truly yours,
PIONEER INVESTMENT MANAGEMENT, INC.
By: ___________________________________
Name:
Title:
HIGHLAND CAPITAL MANAGEMENT, L.P.
By: ___________________________________
Name:
Title:
Accepted and agreed to as of
the date first above written:
UBS SECURITIES LLC
By: __________________________________
Name:
Title:
By: __________________________________
By:
Title:
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