Exhibit (k)(7)
ADDITIONAL COMPENSATION AGREEMENT
ADDITIONAL COMPENSATION AGREEMENT (the "Agreement"), dated as of August 29,
2003, between Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx") and Xxxxxxxx & Xxxxxxxx Incorporated ("Xxxxxxxx &
Xxxxxxxx").
WHEREAS, Xxxxxxxx & Xxxxxxxx/Claymore Total Return Fund Incorporated
(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
common shares are registered under the Securities Act of 1933, as amended; and
WHEREAS, Xxxxxxxx & Xxxxxxxx is the investment advisor of the Fund;
WHEREAS, Xxxxxxx Xxxxx is acting as lead underwriter in an offering of the
Fund's common shares;
WHEREAS, Xxxxxxxx & Xxxxxxxx desires to provide additional compensation to
Xxxxxxx Xxxxx for acting as lead underwriter in an offering of the Fund's common
shares; and
WHEREAS, Xxxxxxxx & Xxxxxxxx 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) Xxxxxxxx & Xxxxxxxx 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 Xxxxxxxx & Xxxxxxxx Incorporated:
(1) to provide after-market support services designed to maintain the
visibility of the Fund on an ongoing basis;
(2) to provide 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 Xxxxxxxx & Xxxxxxxx in connection therewith;
and
(3) to provide information to and consult with Xxxxxxxx & Xxxxxxxx
with respect to applicable strategies designed to address market
value discounts, if any.
(b) At the request of Xxxxxxxx & Xxxxxxxx, Xxxxxxx Xxxxx shall limit or
cease any action or service provided hereunder to the extent and for
the time period requested by Xxxxxxxx & Xxxxxxxx; provided, however,
that pending termination of this Agreement as provided for in Section
5 hereof, any such limitation or cessation shall not relieve Xxxxxxxx
& Xxxxxxxx of its payment obligations pursuant to Section 2 hereof.
(c) Xxxxxxx Xxxxx will promptly notify Xxxxxxxx & Xxxxxxxx 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 Xxxxxxxx & Xxxxxxxx in
connection with the performance of services by Xxxxxxx Xxxxx under
this Agreement.
2. Xxxxxxxx & Xxxxxxxx shall pay Xxxxxxx Xxxxx a fee computed weekly and
payable quarterly in arrears commencing September 30, 2003 at an annualized
rate of 0.15% of the Fund's managed assets for a term as described in
Section 5 hereof; provided that the total amount of the fee hereunder, plus
the aggregate of (i) the amount of the expense reimbursement of $.0083 per
common share payable by the Fund to the Underwriters pursuant to the
Purchase Agreement dated August 26, 2003, by and among the Fund, Xxxxxxxx &
Xxxxxxxx and each of the Underwriters named therein, the "Purchase
Agreement", (ii) the amount of the fee, if any, payable to Claymore
Securities, Inc. pursuant to the Underwriters Participation Agreement dated
August 29, 2003, between the Fund and Claymore Securities, Inc., (iii) the
amount of the fee payable to Claymore Securities, Inc. pursuant to the
Servicing Agreement dated August 29, 2003, between the Fund and Claymore
Securities, Inc. (iv) and the amount payable by the Fund to the
underwriters' counsel pursuant to the Purchase Agreement, 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) to the
public of the Fund's common shares offered by the prospectus dated August
26, 2003. All quarterly fees payable hereunder shall be paid to Xxxxxxx
Xxxxx within 15 days following the end of each calendar quarter.
3. Xxxxxxxx & Xxxxxxxx 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 Xxxxxxxx & Xxxxxxxx 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 Xxxxxxxx & Xxxxxxxx acts as the
investment manager to the Fund pursuant to the Investment Management
Agreement (as such term is defined in the Purchase Agreement) or other
subsequent advisory agreement.
6. Xxxxxxxx & Xxxxxxxx will xxxxxxx Xxxxxxx Xxxxx with such information as
Xxxxxxx Xxxxx believes appropriate to its assignment hereunder (all such
information so furnished being the "Information"). Xxxxxxxx & Xxxxxxxx
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 Xxxxxxxx & Xxxxxxxx'x knowledge, the
Information to be furnished by Xxxxxxxx & Xxxxxxxx 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. Xxxxxxxx & Xxxxxxxx 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.
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7. It is understood that Xxxxxxx Xxxxx is being engaged hereunder solely to
provide the services described above to Xxxxxxxx & Xxxxxxxx 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 third party in connection with its engagement hereunder, all of
which are hereby expressly waived.
8. Xxxxxxxx & Xxxxxxxx agrees that Xxxxxxx Xxxxx shall have no liability to
Xxxxxxxx & Xxxxxxxx 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.
Xxxxxxxx & Xxxxxxxx agrees to the indemnification and other agreement 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.
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 Xxxxxxxx & Xxxxxxxx and Xxxxxxx Xxxxx
consent to the jurisdiction of such courts and personal service with
respect thereto. Each of Xxxxxxx Xxxxx and Xxxxxxxx & Xxxxxxxx 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.
Xxxxxxxx & Xxxxxxxx agrees that a final judgment in any proceeding or
counterclaim brought in any such court shall be conclusive and binding upon
Xxxxxxxx & Xxxxxxxx and may be enforced in any other courts to the
jurisdiction of which Xxxxxxxx & Xxxxxxxx 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 (including the attached Indemnification 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 Xxxxxxxx & Xxxxxxxx.
13. All notices required or permitted to be sent under this Agreement shall be
sent, if to Xxxxxxxx & Xxxxxxxx:
Xxxxxxxx & Xxxxxxxx Incorporated
000 Xxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
or if to Xxxxxxx Xxxxx:
Xxxxxxx Xxxxx & Co.
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Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
4 World Financial Center
New York, New York 10080
Attention: Xxxxxxx Xxxxx
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.
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 WITHESS WHEREOF, the parties hereto have duly executed this Additional
Compensation Agreement as of the date first above written.
XXXXXXXX & XXXXXXXX INCORPORATED XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx Xxxx
_____________________________ _____________________________
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxxx Xxxx
Title: President Title: First Vice President
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XXXXXXX XXXXX & CO. INDEMNIFICATION AGREEMENT
August 29, 2003
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 and subsidiaries, referred to as the
"Company") with the matters set forth in the Agreement dated August 29, 2003
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 solely 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
the
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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 will not settle any Proceeding in respect
of which indemnity may be sought hereunder, whether or not Xxxxxxx Xxxxx is an
actual or potential party to such Proceeding, without Xxxxxxx Xxxxx'x prior
written consent. 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 solely from the gross
negligence or willful misconduct of Xxxxxxx Xxxxx in performing the services
that are the subject of 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
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,
XXXXXXXX & XXXXXXXX INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Accepted and agreed to as of
the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By /s/ Xxxxxxx Xxxx
----------------------------
Name: Xxxxxxx Xxxx
Title: First Vice President
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