QUALIFYING UNDERWRITER
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ADDITIONAL COMPENSATION AGREEMENT
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[ ], 2004
Xxxx Xxxxxxx Advisers, LLC
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated the date
hereof (the "Underwriting Agreement"), by and among Xxxx Xxxxxxx Tax-Advantaged
Dividend Income Fund, a closed-end management investment company (the "Fund"),
Xxxx Xxxxxxx Advisers, LLC ("Xxxx Xxxxxxx Advisers" or the "Investment Adviser")
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
Investment Advisory Agreement (the "Investment Advisory Agreement") to be
entered into between the Investment Adviser 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 Underwriting Agreement.
The Investment Adviser hereby confirms its agreement with each
Qualifying Underwriter (as defined in Section 1 hereof) with respect to the
additional compensation referred to in the "Underwriting" section of the
Registration Statement, payable by the Investment Adviser to each of the
Qualifying Underwriters. The Investment Adviser agrees to pay to each Qualifying
Underwriter 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 0.10% per annum of
the aggregate average daily net asset value of the Fund (including assets
attributable to any preferred shares or other financial leverage of the Fund
that may be outstanding); and provided, further, that such payments shall not,
in the aggregate, 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. Qualifying Underwriters. For the purposes of this Qualifying
Underwriter Additional Compensation Agreement (the "Additional Compensation
Agreement"), each Underwriter which sells Common Shares of the Fund in the
initial public offering of the Fund's Common Shares with an aggregate purchase
price to the public of at least $50,000,000 (the "Qualifying Amount") (which
amount shall equal the aggregate purchase price to the public of any Firm Shares
and Additional Shares sold by such Underwriter, as determined by UBS Securities
LLC ("UBS Securities") in good faith and as set forth in Schedule A hereto)
shall be a "Qualifying Underwriter"; provided, however, that the Qualifying
Amount may be reduced with respect to any Underwriter in the sole discretion of
the Investment Adviser. Within 60 days following the Closing Date, UBS
Securities shall prepare and provide to the Investment Adviser a chart listing
each of the Qualifying Underwriters, which chart shall indicate the number of
Common Shares sold by each Qualifying Underwriter and the Pro Rata Percentage
(as defined in Section 2 hereof) of each Qualifying Underwriter and shall be
appended as Schedule A to this Additional Compensation Agreement.
SECTION 2. Pro Rata Percentage. Each Qualifying Underwriter 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 such
Underwriter 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 Underwriting Agreement.
SECTION 3. Payment of Additional Compensation.
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(a) The Investment Adviser shall pay the Additional Compensation,
quarterly in arrears, to each Qualifying Underwriter in an amount equal to the
product of such Qualifying Underwriter's Pro Rata Percentage multiplied by
0.025% of the aggregate average daily net asset value of the Fund for such
quarter (including assets attributable to any preferred shares of the Fund that
may be outstanding); provided, however, that in the event that the contractual
advisory fee rate payable by the Fund to Xxxx Xxxxxxx Advisers or such successor
or affiliate under the Investment Advisory Agreement is reduced below 0.55%, the
fee payable by Xxxx Xxxxxxx Advisers to such Qualifying Underwriter shall be
reduced in proportion to, and for the period of, such reduction of the advisory
fee, and this Additional Compensation Agreement shall be deemed to be amended
automatically to reflect the same.
(b) All fees payable hereunder shall be paid to each Qualifying
Underwriter by wire transfer of immediately available funds within 15 days
following the end of each calendar quarter to a bank account designated by such
Qualifying Underwriter. At the time of each payment of Additional Compensation
hereunder, the Investment Adviser shall deliver to each Qualifying Underwriter
receiving an installment of Additional Compensation a statement indicating the
amount of the of the aggregate average daily net asset value 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, 2004. 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 Investment Adviser pursuant to the Underwriting Agreement.
SECTION 4. Maximum Additional Compensation Amount. The "Maximum Additional
Compensation Amount" payable by the Investment Adviser hereunder shall be, with
respect to each Qualifying Underwriter, [ ]% of the aggregate offering price of
the Common Shares.
SECTION 5. Term. This Additional Compensation Agreement shall continue
coterminously with and so long as the Investment Advisory Agreement, dated [ ],
2004, remains in effect between the Fund and Xxxx Xxxxxxx Advisers, or any
similar investment advisory agreement with a successor in interest or affiliate
of Xxxx Xxxxxxx Advisers remains in effect, as, and to the extent, that such
investment advisory 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 any
Qualifying Underwriter, the payment by the Investment Adviser to such Qualifying
Underwriter 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 the
Fund, the date on which the Investment Advisory Agreement or other investment
advisory agreement between the Fund and the Investment Adviser or any successor
in interest to the Investment Adviser, including but not limited to an affiliate
of the Investment Adviser, shall terminate.
SECTION 6. Not an Investment Adviser. The Investment Adviser acknowledges
that the Underwriters 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 any Underwriter, and the Underwriters are 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.
SECTION 7. Not Exclusive. Nothing herein shall be construed as prohibiting
any Underwriter or its respective affiliates from acting as such for any other
clients (including other registered investment companies or other investment
advisers).
SECTION 8. No Liability. The Investment Adviser agrees that no Underwriter
shall have liability to the Investment Adviser or the Fund for any act or
omission to act by such Underwriter in the course of its performance under this
Additional Compensation Agreement, in the absence of gross negligence or willful
misconduct on the part of such Underwriter. The Investment Adviser agrees to
indemnify and hold harmless each Underwriter and its respective officers,
directors, agents and employees against any loss or expense arising out of or in
connection with such Underwriter's performance under this Additional
Compensation Agreement. This provision shall survive the termination, expiration
or supersession of this Additional Compensation Agreement.
SECTION 9. Assignment. This Additional Compensation Agreement may not be
assigned by any party without the prior written consent of each other party.
SECTION 10. 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 11. Governing Law. This Additional Compensation Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 12. 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.
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
Xxxx Xxxxxxx Advisers and the Qualifying Underwriters in accordance with its
terms.
Very truly yours,
By:
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Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXX XXXXXXX ADVISERS, LLC
By:
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Name: Xxxxxxx X. Xxxx
Title: Chairman, President and
Chief Executive Officer
SCHEDULE A
Aggregate
Purchase Price to Public Pro Rata
Name of Qualifying Underwriter of Common Shares Sold Percentage
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