EXECUTION COPY
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 management investment company and
asset management industries, if reasonably obtainable, and
consultation 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 monthly and payable
quarterly in arrears commencing June 30, 2004 at an annualized rate of
0.15% of the Fund's Managed Assets (as such term is defined in the
prospectus, dated March 25, 2004 (the "Prospectus") relating to the
Offering) for a term as described in Section 6 hereof; provided that the
sum total amount of the fee hereunder shall not exceed 3.27227% of the
total price to the public of the Fund's common shares sold pursuant to the
Prospectus (including all Initial Securities and Option Securities as such
terms are described in the Purchase Agreement, dated March 25, 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. ("X.X. Xxxxxxx") pursuant to the
Corporate Finance Services and Consulting Agreement, dated as of March 30,
2004, between NB Management and X.X. Xxxxxxx, and fees payable to Xxxxxx
Brothers Inc. ("Xxxxxx") pursuant to the Corporate Finance Services and
Consulting Agreement, dated as of March 30, 2004, between NB Management and
Xxxxxx, 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.
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, including
fees payable pursuant to this Section 2, 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 Xxxxxxx Xxxxx Compensation
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
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payment by NB Management of the Maximum Additional Compensation 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 affiliate or successor in interest to NB
Management shall terminate.
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.
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
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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.
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: /s/ Xxxxxx Xxxxx By: /s/ Xxxxxxx X. Xxxx
----------------------------- -------------------------------------
Name: Xxxxxx Xxxxx Name: Xxxxxxx X. Xxxx
Title: SVP Title: First Vice-President
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XXXXXXX XXXXX & CO. INDEMNIFICATION AGREEMENT
---------------------------------------------
March 30, 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 30, 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
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
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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: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: SVP
Accepted and agreed to as of
the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By /s/ Xxxxxxx X. Xxxx
--------------------------------
Name: Xxxxxxx X. Xxxx
Title: First Vice President
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