Exhibit (h)(3)
ADDITIONAL COMPENSATION AGREEMENT
November [ ], 2002
Qualifying Underwriters
Listed on Schedule B hereto
Ladies and Gentlemen:
Reference is made to each Underwriting Agreement dated the date
hereof (each, an "Underwriting Agreement"), by and among each respective
closed-end management investment company listed on Schedule A hereto (each a
"Fund" and collectively, the "Funds"), Xxxxx Xxxxx Management (the "Adviser")
and each of the respective Underwriters named therein, with respect to the issue
and sale of each Fund's common shares of beneficial interest, par value $0.01
per share (the "Common Shares"), as described therein. Reference is also made to
(i) the Investment Advisory Agreements (the "Investment Advisory Agreements") to
be entered into between the Adviser and each Fund and (ii) the registration
statements on Form N-2 regarding the Common Shares of each Fund (the
"Registration Statements"). Capitalized terms used herein and not otherwise
defined shall have the meanings given to them in the respective Underwriting
Agreements.
UBS Warburg LLC ("UBS Warburg") 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 Statements, payable by UBS Warburg to each of the Qualifying
Underwriters. UBS Warburg 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 weekly gross asset values of the Funds (including assets
attributable to any preferred shares of the Funds that may be outstanding)
multiplied by the aggregate Pro Rata Percentages (as defined in Section 2
hereof) applicable to the Qualifying Underwriters (as defined in Section 1); 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
Additional Compensation Agreement, each Underwriter which sells Common Shares of
the Funds with an aggregate purchase price to the public of at least $50,000,000
(which amount shall equal the aggregate purchase price to the public of any Firm
Shares and Additional Shares sold by such Underwriter, as determined in the sole
discretion of UBS Warburg and set forth in Schedule B hereto) shall be a
"Qualifying Underwriter"; provided, however, that UBS Warburg shall not be
included in the term "Qualifying Underwriter." UBS Warburg may, in its sole and
absolute discretion, waive such $50,000,000 sales requirement with respect to
any Underwriter and determine such Underwriter to be a Qualifying Underwriter
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SECTION 2. Pro Rata Percentage. Each Qualifying Underwriter shall be
assigned a "Pro Rata Percentage," the numerator of which shall be the aggregate
purchase price to the public of the Common Shares sold by such Underwriter as
set forth on Schedule B 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 Agreements.
SECTION 3. Payment of Additional Compensation.
(a) UBS Warburg shall pay the Additional Compensation, quarterly in
arrears, to each Qualifying Underwriter in an amount equal to the product of
such Underwriter's Pro Rata Percentage multiplied by 0.025% of the Funds'
aggregate average weekly gross asset values (including assets attributable to
any preferred shares of the Funds that may be outstanding) for such quarter. For
the purposes of determining amounts due to each Qualifying Underwriter, the
average weekly gross asset value for each Fund shall be the average weekly gross
asset value as calculated by the Adviser for the applicable quarter. Nothing
herein shall in any way obligate UBS Warburg to calculate the average weekly
gross asset values of the Funds for any quarter and UBS Warburg shall be
entitled to rely exclusively on the Adviser's calculations. No Qualifying
Underwriter shall have the right to challenge the calculation of the average
weekly gross asset values of the Funds nor shall any Qualifying Underwriter have
the right to obligate UBS Warburg to calculate the average weekly gross asset
values for the Funds.
(b) All fees payable hereunder shall be paid by wire transfer of
immediately available funds within 15 days following the end of each calendar
quarter to a bank account designated by the payee.
(c) The initial payments of Additional Compensation hereunder shall
be with respect to the calendar quarter ending December 31, 2002. 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.
SECTION 4. Maximum Additional Compensation Amount. The "Maximum
Additional Compensation Amount" payable by UBS Warburg hereunder shall be, with
respect to each Qualifying Underwriter, such amount as, when taken together with
the amount of all underwriting compensation other than the Additional
Compensation received by such Underwriter in connection with the offerings of
the Common Shares of the Funds, equals the maximum compensation allowed under
the conduct rules of the National Association of Securities Dealers, Inc., as
such rules are then in effect.
SECTION 5. Term. This Additional Compensation Agreement shall
continue coterminously with and so long as the Investment Advisory Agreements,
each dated November [ ], 2002, remain in effect between the Funds and Xxxxx
Xxxxx Management or any successor in interest or affiliate of Xxxxx Xxxxx
Management, as, and to the extent, that each such Investment Advisory Agreement
is renewed periodically in accordance with the 1940 Act.
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This Additional Compensation Agreement shall terminate on the earliest to occur
of (a) with respect to any Qualifying Underwriter, the payment by UBS Warburg to
such Qualifying Underwriter of the Maximum Additional Compensation Amount, (b)
with respect to any Fund, the dissolution and winding up of that Fund and (c)
with respect to any Fund, the date on which the Investment Advisory Agreement or
other advisory agreement between that Fund and the Adviser or any successor in
interest to the Adviser, including but not limited to an affiliate of the
Adviser.
SECTION 6. 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 7. Assignment. This Additional Compensation Agreement may
not be assigned by any party without the prior written consent of each other
party.
SECTION 8. 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 9. Governing Law. This Additional Compensation Agreement
shall be governed by, and construed in accordance with, the laws of the State of
New York.
SECTION 10. 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
UBS Warburg and the Qualifying Underwriters in accordance with its terms.
Very truly yours,
UBS WARBURG LLC
By: ________________________________
Name: Xxxxx Xxxxxxxx
Title: Managing Director
By: ________________________________
Name: Xxxx X. Reit
Title: Executive Director
CONFIRMED AND ACCEPTED,
as of the date first above written:
[Insert Qualifying Underwriters]
By: ________________________________
Name:
Title:
SCHEDULE A
Name of Fund
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Xxxxx Xxxxx Insured Municipal Bond Fund II
Xxxxx Xxxxx Insured Arizona Municipal Bond Fund
Xxxxx Xxxxx Insured California Municipal Bond Fund II
Xxxxx Xxxxx Insured Florida Municipal Bond Fund
Xxxxx Xxxxx Insured Massachusetts Municipal Bond Fund
Xxxxx Xxxxx Insured Michigan Municipal Bond Fund
Xxxxx Xxxxx Insured New Jersey Municipal Bond Fund
Xxxxx Xxxxx Insured New York Municipal Bond Fund II
Xxxxx Xxxxx Insured Ohio Municipal Bond Fund
Xxxxx Xxxxx Insured Pennsylvania Municipal Bond Fund
Xxxxx Xxxxx Municipal Income Trust II
SCHEDULE B
Aggregate
Purchase Price to Public Pro Rata
Name of Qualifying Underwriter of Common Shares Sold Percentage
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