ADDITIONAL COMPENSATION AGREEMENT
ADDITIONAL COMPENSATION AGREEMENT (the "Agreement"), dated as of March
[30], 2004, between Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx") and Xxxxxxxxx Xxxxxx Management Inc. ("NB
Management").
WHEREAS, Xxxxxxxxx Xxxxxx Dividend Advantage Fund Inc. (including any
successor by merger or otherwise, the "Fund") is a non-diversified, closed-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), and its shares of common stock ("common
shares") are registered under the Securities Act of 1933, as amended;
WHEREAS, NB Management is the investment manager of the Fund;
WHEREAS, Xxxxxxx Xxxxx is acting as lead underwriter in an offering of the
Fund's common shares;
WHEREAS, NB Management desires to provide additional compensation to
Xxxxxxx Xxxxx for acting as lead underwriter in an offering of the Fund's common
shares; and
WHEREAS, NB Management desires to retain Xxxxxxx Xxxxx to provide
after-market support services designed to maintain the visibility of the Fund on
an ongoing basis, and Xxxxxxx Xxxxx is willing to render such services;
NOW, THEREFORE, in consideration of the mutual terms and conditions set
forth below, the parties hereto agree as follows:
1. (a) NB Management hereby employs Xxxxxxx Xxxxx, for the period and on the
terms and conditions set forth herein, to provide the following services
at the reasonable request of NB Management:
(1) after-market support services designed to maintain the visibility of
the Fund on an ongoing basis;
(2) relevant information, studies or reports regarding general trends in
the closed-end investment management company and asset management
industries, if reasonably obtainable, and consult with
representatives of NB Management in connection therewith; and
(3) information to and consultation with NB Management with respect to
applicable strategies designed to address market value discounts, if
any.
(b) At the request of NB Management, Xxxxxxx Xxxxx shall limit or cease
any action or service provided hereunder to the extent and for the time
period requested by NB Management; provided, however, that pending
termination of this Agreement as provided for in Section 6 hereof, any
such limitation or cessation shall not relieve NB Management of its
payment obligations pursuant to Section 2 hereof.
(c) Xxxxxxx Xxxxx will promptly notify NB Management if it learns of any
material inaccuracy or misstatement in, or material omission from, any
written information, as of the date such information was published,
provided by Xxxxxxx Xxxxx to NB Management in connection with the
performance of services by Xxxxxxx Xxxxx under this Agreement.
2. NB Management shall pay Xxxxxxx Xxxxx a fee computed weekly and payable
quarterly in arrears commencing June 30, 2004 at an annualized rate of
0.15% of the Fund's Managed Assets (as defined below) for a term as
described in Section 6 hereof; provided that the sum total amount of the
fee hereunder, shall not exceed 3.4974% of the total price to the public
of the Fund's common shares sold pursuant to the prospectus dated March [
], 2004 (the "Prospectus") (including all Initial Securities and Option
Securities as such terms are described in the Purchase Agreement, dated
March [__], 2004, by and among the Fund, NB Management, Xxxxxxxxx Xxxxxx,
LLC and each of the Underwriters named therein (the "Purchase Agreement"))
(the "Maximum Additional Xxxxxxx Xxxxx Compensation Amount"). The sum
total of this fee, fees payable to X.X. Xxxxxxx & Sons, Inc. pursuant to
the Corporate Finance Services and Consulting Agreement, and fees payable
to Xxxxxx Brothers Inc. pursuant to the Corporate Finance Services and
Consulting Agreement, plus the amount of the expense reimbursement of
$.00667 per common share payable by the Fund to the Underwriters pursuant
to the Purchase Agreement (which amount, pursuant to the Purchase
Agreement, shall not exceed .03335% of the total price to the public of
the Fund's common shares sold pursuant to the Prospectus), shall not
exceed 4.5% of the total price to the public of the Fund's common shares
sold pursuant to the Prospectus. "Managed Assets" is defined as the total
assets of the Fund (including any assets attributable to any preferred
shares of the Fund that may be outstanding or otherwise attributable to
the use of leverage) minus liabilities (other than the aggregate
indebtedness entered into for purposes of leverage). All quarterly fees
payable hereunder shall be paid to Xxxxxxx Xxxxx within 15 days following
the end of each calendar quarter. The sum total of all compensation to
underwriters in connection with the Offering, including sales load and
other additional underwriting compensation to and reimbursement of
underwriters in connection with the Offering, shall not exceed 9.0% of the
total price to the public of the Fund's common shares sold pursuant to the
Prospectus (the "Maximum Additional Compensation Amount"). Xxxxxxx Xxxxx
hereby undertakes to notify NB Management when the Maximum Additional
Xxxxxxx Xxxxx Compensation Amount has been paid by NB Management.
3. NB Management shall be permitted to discharge all or a portion of its
payment obligations hereunder upon prepayment in full or in part of the
remaining balance due of the maximum additional commission amount
described in Section 2 above.
4. NB Management acknowledges that the services of Xxxxxxx Xxxxx provided for
hereunder do not include any advice as to the value of securities or
regarding the advisability of purchasing or selling any securities for the
Fund's portfolio. No provision of this Agreement shall be considered as
creating, nor shall any provision create, any obligation on the part of
Xxxxxxx Xxxxx, and Xxxxxxx Xxxxx 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 in
connection with providing the services described in Section 1 hereof.
5. Nothing herein shall be construed as prohibiting Xxxxxxx Xxxxx or its
affiliates from providing similar or other services to any other clients
(including other registered investment companies or other investment
advisors), so long as Xxxxxxx Xxxxx'x services to NB Management are not
impaired thereby.
6. This Agreement shall commence on the date referred to above and shall be
in effect only so long as NB Management acts as the investment manager to
the Fund pursuant to the Management Agreement (as such term is defined in
the Purchase Agreement); PROVIDED, HOWEVER, that this Agreement shall
terminate on the earliest to occur of (a) the payment by NB Management to
Xxxxxxx Xxxxx of the Maximum Additional Xxxxxxx Xxxxx Compensation Amount,
(b) the payment by NB Management of the Maximum Additional Compensation
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Amount, (c) the dissolution and winding up of the Fund and (d) the date on
which the Management Agreement or other investment management agreement
between the Fund and NB Management or any successor in interest to NB
Management shall terminate, provided that this Agreement shall not
terminate pursuant to this clause (d) unless any successor to NB
Management as investment manager to the Fund (whether pursuant to the
Management Agreement or otherwise) expressly assumes the obligations of NB
Management under this Agreement.
7. NB Management will xxxxxxx Xxxxxxx Xxxxx with such information as Xxxxxxx
Xxxxx reasonably believes appropriate to its assignment hereunder (all
such information so furnished being the "Information"). NB Management
recognizes and confirms that Xxxxxxx Xxxxx (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 independently verified the same and (b) does not assume
responsibility for the accuracy or completeness of the Information and
such other information. To the best of NB Management's knowledge, the
Information to be furnished by NB Management, when delivered, will be true
and correct in all material respects and will not contain any material
misstatement of fact or omit to state any material fact necessary to make
the statements contained therein not misleading. NB Management will
promptly notify Xxxxxxx Xxxxx if it learns of any material inaccuracy or
misstatement in, or material omission from, any Information delivered to
Xxxxxxx Xxxxx.
8. It is understood that Xxxxxxx Xxxxx is being engaged hereunder solely to
provide the services described above to NB Management and that Xxxxxxx
Xxxxx is not acting as an agent or fiduciary of, and shall have no duties
or liability to the current or future stockholders of the Fund or any
other third party in connection with its engagement hereunder, all of
which are hereby expressly waived.
9. NB Management agrees that Xxxxxxx Xxxxx shall have no liability to NB
Management or the Fund for any act or omission to act by Xxxxxxx Xxxxx in
the course of its performance under this Agreement, in the absence of
gross negligence or willful misconduct on the part of Xxxxxxx Xxxxx. NB
Management agrees to the indemnification and other agreements set forth in
the Indemnification Agreement attached hereto, the provisions of which are
incorporated herein by reference and shall survive the termination,
expiration or supersession of this Agreement.
10. This 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") shall be governed by and construed in accordance with the laws
of the State of New York.
11. 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 NB Management and Xxxxxxx Xxxxx consent
to the jurisdiction of such courts and personal service with respect
thereto. Each of Xxxxxxx Xxxxx and NB Management waives 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. NB Management
agrees that a final judgment in any proceeding or counterclaim brought in
any such court shall be conclusive and binding upon NB Management and may
be enforced in any other courts to the jurisdiction of which NB Management
is or may be subject, by suit upon such judgment.
12. This Agreement may not be assigned by either party without the prior
written consent of the other party.
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13. This Agreement (including the attached Indemnification Agreement) embodies
the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements
and understandings relating to the subject matter hereof. If any provision
of this Agreement is determined to be invalid or unenforceable in any
respect, such determination will not affect such provision in any other
respect or any other provision of this Agreement, which will remain in
full force and effect. This Agreement may not be amended or otherwise
modified or waived except by an instrument in writing signed by both
Xxxxxxx Xxxxx and NB Management.
14. All notices required or permitted to be sent under this Agreement shall be
sent, if to NB Management:
Xxxxxxxxx Xxxxxx Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000.
Attention: Xxxxx X. Xxxxxxx
cc: Xxxxx Xxxxxxx
or if to Xxxxxxx Xxxxx:
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
4 World Financial Center
New York, New York 10080
Attention: Xxxx Xxxx
or such other name or address as may be given in writing to the other
parties. Any notice shall be deemed to be given or received on the third
day after deposit in the US mail with certified postage prepaid or when
actually received, whether by hand, express delivery service or facsimile
transmission, whichever is earlier.
15. This Agreement may be executed in separate counterparts, each of which is
deemed to be an original and all of which taken together constitute one
and the same agreement.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Additional
Compensation Agreement as of the date first above written.
XXXXXXXXX XXXXXX MANAGEMENT INC. XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX &
XXXXX INCORPORATED
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
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XXXXXXX XXXXX & CO. INDEMNIFICATION AGREEMENT
---------------------------------------------
March [ ], 2004
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In connection with the engagement of Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") to advise and assist the
undersigned (together with its affiliates under the control of Xxxxxxxxx Xxxxxx
Management Inc, and subsidiaries, referred to as the "Company") with the matters
set forth in the Additional Compensation Agreement dated March [ ], 2004 between
the Company and Xxxxxxx Xxxxx (the "Agreement"), in the event that Xxxxxxx Xxxxx
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") in
connection with any matter in any way relating to or referred to in the
Agreement or arising out of the matters contemplated by the Agreement,
including, without limitation, related services and activities prior to the date
of the Agreement, the Company agrees to indemnify, defend and hold Xxxxxxx Xxxxx
harmless to the fullest extent permitted by law, from and against any losses,
claims, damages, liabilities and expenses in connection with any matter in any
way relating to or referred to in the Agreement or arising out of the matters
contemplated by the Agreement, including, without limitation, related services
and activities prior to the date of the Agreement, 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
such losses, claims, damages, liabilities and expenses resulted from the gross
negligence or willful misconduct of Xxxxxxx Xxxxx. In addition, in the event
that Xxxxxxx Xxxxx becomes involved in any capacity in any Proceeding in
connection with any matter in any way relating to or referred to in the
Agreement or arising out of the matters contemplated by the Agreement,
including, without limitation, related services and activities prior to the date
of the Agreement, the Company will reimburse Xxxxxxx Xxxxx for its legal and
other expenses (including the cost of any investigation and preparation) as such
expenses are reasonably incurred by Xxxxxxx Xxxxx in connection therewith. If
such indemnification were not to be available for any reason, the Company agrees
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 Company and its stockholders and affiliates and
other constituencies, on the one hand, and Xxxxxxx Xxxxx, 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
Company and its stockholders and affiliates and other constituencies, on the one
hand, and the party entitled to contribution, on the other hand, as well as any
other relevant equitable considerations. The Company agrees that for the
purposes of this paragraph the relative benefits received, or sought to be
received, by the Company and its stockholders and affiliates, on the one hand,
and the party entitled to contribution, on the other hand, of a transaction as
contemplated shall be deemed to be in the same proportion that the total value
received or paid or contemplated to be received or paid by the Company or its
stockholders or affiliates and other constituencies, as the case may be, as a
result of or in connection with the transaction (whether or not consummated) for
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which Xxxxxxx Xxxxx has been retained to perform financial services bears to the
fees paid to Xxxxxxx Xxxxx under the Agreement; provided, that in no event shall
the Company contribute less than the amount necessary to assure that Xxxxxxx
Xxxxx is not liable for losses, claims, damages, liabilities and expenses in
excess of the amount of fees actually received by Xxxxxxx Xxxxx 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 Company or other conduct by the
Company (or its employees or other agents), on the one hand, or by Xxxxxxx
Xxxxx, on the other hand. The Company shall not be liable under this
Indemnification Agreement to Xxxxxxx Xxxxx regarding any settlement or
compromise or consent to the entry of any judgment with respect to any
Proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the Company is an actual or potential party to such
Proceeding) unless such settlement, compromise or judgment is consented to by
the Company. The Company shall not, without the prior written consent of Xxxxxxx
Xxxxx, settle or compromise or consent to the entry of any judgment with respect
to any Proceeding in respect of which indemnification or contribution could be
sought under this Indemnification Agreement (whether or not Xxxxxxx Xxxxx is an
actual or potential party thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of Xxxxxxx Xxxxx from all
liability arising out of such Proceeding and (ii) does not include a statement
as to or an admission of fault, culpability or a failure to act by or on behalf
of Xxxxxxx Xxxxx. For purposes of this Indemnification Agreement, Xxxxxxx Xxxxx
shall include Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, any of its affiliates, each other person, if any, controlling
Xxxxxxx Xxxxx 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.
The Company agrees that neither Xxxxxxx Xxxxx nor any of its affiliates,
directors, agents, employees or controlling persons shall have any liability to
the Company or any person asserting claims on behalf of or in right of the
Company in connection with or as a result of either Xxxxxxx Xxxxx'x engagement
under the Agreement or any matter referred to in the Agreement, including,
without limitation, related services and activities prior to the date of the
Agreement, 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 Company resulted from the gross
negligence or willful misconduct of Xxxxxxx Xxxxx in performing the services
that are the subject of the Agreement.
Notwithstanding any provision contained herein, in no event shall Xxxxxxx
Xxxxx be entitled to indemnification by the Company hereunder from and against
any losses, claims, damages, liabilities or expenses in respect of which
indemnity may be sought under Section 6 of the Purchase Agreement (as defined in
the Agreement).
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 COMPANY AND XXXXXXX XXXXX CONSENT TO THE JURISDICTION OF SUCH COURTS AND
PERSONAL SERVICE WITH RESPECT THERETO. THE COMPANY HEREBY CONSENTS 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 BROUGHT BY ANY THIRD PARTY AGAINST
XXXXXXX XXXXX OR ANY INDEMNIFIED PARTY. EACH OF XXXXXXX XXXXX AND THE COMPANY
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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 COMPANY 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 COMPANY AND MAY BE ENFORCED IN
ANY OTHER COURTS TO THE JURISDICTION OF WHICH THE COMPANY 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 Xxxxxxx Xxxxx'x 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,
XXXXXXXXX XXXXXX MANAGEMENT INC.
By:
----------------------
Name:
Title:
Accepted and agreed to as of
the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
----------------------
Name:
Title:
