ADDITIONAL COMPENSATION AGREEMENT
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October [ ], 2003
Xxxxxxxxx Xxxxxx Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated October [ ], 2003
(the "Underwriting Agreement"), by and among Xxxxxxxxx Xxxxxx Real Estate
Securities Income Fund Inc., a closed-end management investment company (the
"Fund"), Xxxxxxxxx Xxxxxx Management Inc. ("Xxxxxxxxx Xxxxxx") and each of the
respective Underwriters named therein, with respect to the issuance and sale of
the Fund's shares of common stock, par value $0.0001 per share (the "Common
Stock"), as described therein. Reference is also made to (i) the Investment
Management Agreement (the "Management Agreement") to be entered into between
Xxxxxxxxx Xxxxxx and the Fund and (ii) the registration statement on Form N-2
regarding the Common Stock 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 Manger agrees to pay to each of Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") and Xxxxxx Brothers Inc. ("Xxxxxx
Brothers") (each a "Co-Lead Manager" and together, the "Co-Lead Managers"), in
their capacities as co-lead managers of the offering of the Fund's Common Stock
described in the Registration Statement (the "Offering"), additional
compensation (collectively, the "Additional Compensation") as provided for in
Section 3 hereof; provided, however, that such payments shall not, in the
aggregate, exceed the "Maximum Additional Compensation Amount" (as defined in
Section 3 hereof). The Additional Compensation shall be payable as set forth in
Section 2 hereof.
SECTION 1. PRO RATA PERCENTAGE. Each Co-Lead Manager shall be assigned
a "Pro Rata Percentage," the numerator of which shall equal the aggregate
purchase price to the public of the Common Stock sold by such Co-Lead Manager
and the denominator of which shall equal the aggregate purchase price to the
public of all shares sold by the Underwriters in the Offering, each as set forth
on Schedule A hereto.
SECTION 2. PAYMENT OF ADDITIONAL COMPENSATION.
(a) Subject to Section 3, in consideration of the services rendered by
each of Xxxxxxx Xxxxx and Xxxxxx Brothers in its capacity as a Co-Lead
Manager, Xxxxxxxxx Xxxxxx shall pay the Additional Compensation, quarterly in
arrears, to each Co-Lead Manager in an amount equal to such Co-Lead Manager's
Pro Rata Percentage multiplied by 0.0375% of the aggregate average daily
managed assets of the Fund for such quarter (including assets attributable to
any preferred shares or other financial leverage of the Fund that may be
outstanding).
(b) All fees payable hereunder shall be paid to each respective Co-Lead
Manager by wire transfer of immediately available funds within 15 days following
the end of each calendar quarter to a bank account designated by such Co-Lead
Manager. At the time of each payment of Additional Compensation hereunder,
Xxxxxxxxx Xxxxxx shall deliver to the applicable Co-Lead Manager a statement
indicating the amount of the average daily managed assets of the Fund for such
quarter (including assets attributable to any preferred shares or other
financial leverage of the Fund that may be outstanding) on which such payment
was based.
(c) The initial payment of Additional Compensation hereunder shall be paid
with respect to the calendar quarter ending December 31, 2003, prorated in
respect to the period from the closing date of the firm shares offered pursuant
to the Underwriting Agreement to December 31, 2003. 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 Xxxxxxxxx Xxxxxx
pursuant to the Underwriting Agreement.
(d) Xxxxxxxxx Xxxxxx 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 that portion of the Maximum Additional Compensation
Amount (as defined in Section 3) due to the Co-Lead Managers under this
Additional Compensation Agreement as described in this Section 2.
SECTION 3. MAXIMUM ADDITIONAL COMPENSATION AMOUNT. The "Maximum
Additional Compensation Amount" payable by Xxxxxxxxx Xxxxxx hereunder shall be %
of the aggregate offering price of the shares of Common Stock in the offering.
SECTION 4. TERM. This Additional Compensation Agreement shall terminate
on the earliest to occur of (a) notice by the Co-Lead Managers to Xxxxxxxxx
Xxxxxx that further payments hereunder would exceed the Maximum Additional
Compensation Amount, (b) the dissolution and winding up of the Fund, (c) the
date on which the Management Agreement or other investment management agreement
between the Fund and Xxxxxxxxx Xxxxxx or any successor in interest to Xxxxxxxxx
Xxxxxx, including but not limited to an affiliate of Xxxxxxxxx Xxxxxx, shall
terminate and (d) the prepayment by Xxxxxxxxx Xxxxxx of an agreed upon amount in
accordance Section 2(d) hereof.
SECTION 5. NOT AN INVESTMENT ADVISER. Xxxxxxxxx Xxxxxx acknowledges
that neither Co-Lead Manager is 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 either Co-Lead Manager, and neither Co-Lead Manager is 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.
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SECTION 6. NOT EXCLUSIVE. Nothing herein shall be construed as
prohibiting either Co-Lead Manager or their respective affiliates from acting as
underwriter for any other clients (including other registered investment
companies or other investment advisers). This Additional Compensation agreement
shall not be considered to constitute a partnership, association or joint
venture between Xxxxxxxxx Xxxxxx and either Co-Lead Manager. In addition,
nothing in this Additional Compensation Agreement shall be construed to
constitute either Co-Lead Manager as the agent or employee of Xxxxxxxxx Xxxxxx
or Xxxxxxxxx Xxxxxx as the agent or employee of either Co-Lead Manager and
neither of the parties hereto shall make any representation to the contrary.
SECTION 7. NO LIABILITY. With respect to each Co-Lead Manager,
Xxxxxxxxx Xxxxxx agrees that such Co-Lead Manager shall not have liability to
Xxxxxxxxx Xxxxxx or the Fund for any act or omission to act by such Co-Lead
Manager 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 Co-Lead Manager. The Investment Adviser agrees to indemnify and hold
harmless each Co-Lead Manager and its respective officers, directors, agents and
employees against any loss or expense arising out of or in connection with such
Co-Lead Manager's performance under this Additional Compensation Agreement. This
provision shall survive the termination, expiration or supersession of this
Additional Compensation Agreement.
SECTION 8. ASSIGNMENT. This Additional Compensation Agreement may not
be assigned by any party without the prior written consent of each other party.
SECTION 9. 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 10. 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 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 Xxxxxxxxx Xxxxxx and each Co-Lead Manager each consents to the
jurisdiction of such courts and personal service with respect thereto. Each of
Xxxxxxxxx Xxxxxx and each Co-Lead Manager 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 Additional Compensation Agreement. Each of
Xxxxxxxxx Xxxxxx and each Co-Lead Manager agrees that a final judgment in any
proceeding or counterclaim brought in any such court shall be conclusive and
binding upon Xxxxxxxxx Xxxxxx and such Co-Lead Manager and may be enforced in
any other courts the jurisdiction of which Xxxxxxxxx Xxxxxx and such Co-Lead
Manager is or may be subject, by suit upon such judgment.
SECTION 11. This Additional Compensation 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 Additional Compensation Agreement is determined to be invalid
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or unenforceable in any respect, such determination will not affect such
provision in any other respect or any other provision of this Additional
Compensation Agreement, which will remain in full force and effect. This
Additional Compensation Agreement may not be amended or otherwise modified or
waived except by an instrument in writing signed by Xxxxxxxxx Xxxxxx and each
Co-Lead Manager.
SECTION 12. All notices required or permitted to be sent under this
Agreement shall be sent, if to Xxxxxxxxx Xxxxxx:
Xxxxxxxxx Xxxxxx Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx (cc: General Counsel)
or if to Xxxxxxx Xxxxx:
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxx
or if to Xxxxxx Brothers:
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxx.
Xxx Xxxx, XX 00000
Attn:
Any notice shall be deemed to be given or received on the third day
after deposit in the U.S. mail with certified postage prepaid or when
actually received, whether by hand, express delivery service or
facsimile transmission, whichever is earlier.
SECTION 13. 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
Xxxxxxxxx Xxxxxx, Xxxxxxx Xxxxx and Xxxxxx Brothers Inc. in accordance with its
terms.
Very truly yours,
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
-----------------------------------------
Name:
Title:
XXXXXX BROTHERS INC.
By:
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Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXXXX XXXXXX MANAGEMENT INC.
By:
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Name:
Title:
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SCHEDULE A
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AGGREGATE
CO-LEAD MANAGER PURCHASE PRICE TO AGGREGATE PURCHASE
PUBLIC OF COMMON PRICE TO PUBLIC OF
SHARES SOLD BY CO COMMON SHARES PRO RATA
-LEAD MANAGER SOLD BY UNDERWRITERS PERCENTAGE
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Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated
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Xxxxxx Brothers Inc.
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