Ex (k)(3)
ADDITIONAL COMPENSATION AGREEMENT
ADDITIONAL COMPENSATION AGREEMENT (the "Agreement"), dated as of March
, 2003, between Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx") and Fund Asset Management, L.P. (the "Adviser").
WHEREAS, Preferred Income Strategies Fund, Inc. (including any successor
by merger or otherwise, the "Fund") is a newly organized, 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, par
value $.10 per share ("Common Stock") are registered under the Securities Act of
1933, as amended; and
WHEREAS, the Adviser is the investment adviser of the Fund;
WHEREAS, Xxxxxxx Xxxxx is acting as lead underwriter in an offering of the
Common Stock;
WHEREAS, the Adviser desires to provide additional compensation to Xxxxxxx
Xxxxx for acting as lead underwriter in an offering of the Common Stock; and
WHEREAS, the Adviser 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) The Adviser 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 the Adviser:
(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 company and asset
management industries, if reasonably obtainable, and consult
with representatives of the Adviser in connection therewith;
and
(3) information to and consult with the Adviser with respect to
applicable strategies designed to address market value
discounts, if any.
(b) At the request of the Adviser, Xxxxxxx Xxxxx shall limit or cease
any action or service provided hereunder to the extent and for the
time period requested by the Adviser; provided, however, that
pending termination of this Agreement as provided for in Section 5
hereof, any such limitation or cessation shall not relieve the
Adviser of its payment obligations pursuant to Section 2 hereof.
(c) Xxxxxxx Xxxxx will promptly notify the Adviser 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 the Adviser in connection
with the performance of services by Xxxxxxx Xxxxx under this
Agreement.
2. The Adviser shall pay Xxxxxxx Xxxxx a fee computed weekly and payable
quarterly in arrears commencing , 2003 at an annualized rate of 0.10%
of the Fund's average weekly net assets (including any assets attributable
to any preferred stock that may be outstanding), as defined in the Fund's
prospectus dated March , 2003 (the "Prospectus"), plus the proceeds of
any outstanding borrowings used for leverage for a term as described in
Section 5 hereof; provided that the total amount of the fee hereunder
shall not exceed 4.5% of the total price (including all Initial Securities
and Option Securities as such terms are described in the Purchase
Agreement, dated March , 2003, by and among the Fund, the Adviser and
each of the Underwriters named therein, the "Purchase Agreement") to the
public of the Common Stock offered by the Prospectus; and provided
further, that in determining when this maximum fee amount has been paid,
the value of each of the quarterly payments made hereunder shall be
discounted at the annual rate of 10% back to the closing date of the
Fund's Common Stock offering. All quarterly fees payable hereunder shall
be paid to Xxxxxxx Xxxxx within 15 days following the end of each calendar
quarter.
3. The Adviser 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.
4. 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
managers), so long as Xxxxxxx Xxxxx'x services to the Adviser are not
impaired thereby.
5. The term of this Agreement shall commence upon the date referred to above
and shall be in effect so long as the Adviser acts as the investment
manager to the Fund pursuant to the Advisory Agreement (as such term is
defined in the Purchase Agreement) or other subsequent advisory agreement.
6. The Adviser will xxxxxxx Xxxxxxx Xxxxx with such information as Xxxxxxx
Xxxxx believes appropriate to its assignment hereunder (all such
information so furnished being the "Information"). The Adviser 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 the Adviser's knowledge, the
Information to be furnished by the Adviser 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. The Adviser 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.
7. It is understood that Xxxxxxx Xxxxx is being engaged hereunder solely to
provide the services described above to the Adviser 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 shareholders of the Fund or any other
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third party in connection with its engagement hereunder, all of which are
hereby expressly waived.
8. The Adviser agrees that Xxxxxxx Xxxxx shall have no liability to the
Adviser 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.
9. 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.
10. 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 Adviser and Xxxxxxx Xxxxx consent to
the jurisdiction of such courts and personal service with respect thereto.
Each of Xxxxxxx Xxxxx and the Adviser 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. The Adviser agrees that a
final judgment in any proceeding or counterclaim brought in any such court
shall be conclusive and binding upon the Adviser and may be enforced in
any other courts to the jurisdiction of which the Adviser is or may be
subject, by suit upon such judgment.
11. This Agreement may not be assigned by either party without the prior
written consent of the other party.
12. This Agreement embodies the entire agreement and understanding between the
parties hereto 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 the
Adviser.
13. All notices required or permitted to be sent under this Agreement shall be
sent, if to the Adviser:
Fund Asset Management, L.P.
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxx X. Xxxx, Xx., President
or if to Xxxxxxx Xxxxx:
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
4 World Financial Center
New York, New York 10080
Attention:
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
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prepaid or when actually received, whether by hand, express delivery
service or facsimile transmission, whichever is earlier.
14. 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.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Additional
Compensation Agreement as of the date first above written.
FUND ASSET MANAGEMENT, X.X. XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
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