CORPORATE FINANCE SERVICES AND CONSULTING AGREEMENT
This CORPORATE FINANCE SERVICES AND CONSULTING AGREEMENT (the "Agreement"),
dated as of April , 2003, between X.X. Xxxxxxx & Sons, Inc. ("X.X. Xxxxxxx") and
Xxxxxxxxx Xxxxxx Management Inc. ("Xxxxxxxxx Xxxxxx").
WHEREAS, Xxxxxxxxx Xxxxxx Realty Income Fund Inc. (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, par value $.0001 per share (the "Common Stock"), are registered
under the Securities Act of 1933, as amended;
WHEREAS, X.X. Xxxxxxx has acted as lead underwriter in the public offering
of the Fund's Common Stock (the "Offering");
WHEREAS, Xxxxxxxxx Xxxxxx is the investment manager and the administrator
of the Fund;
WHEREAS, Xxxxxxxxx Xxxxxx desires to retain X.X. Xxxxxxx to provide,
directly or (in part) through a Delegation Party (as defined below), certain
corporate finance and consulting services to Xxxxxxxxx Xxxxxx and to the Fund on
an ongoing basis, and X.X. Xxxxxxx is willing to render such services; and
WHEREAS, Xxxxxxxxx Xxxxxx desires to provide compensation to X.X. Xxxxxxx
and, as applicable, any Delegation Party for providing such services;
NOW, THEREFORE, in consideration of the mutual terms and conditions set
forth below, the parties hereto agree as follows:
1. (a) Xxxxxxxxx Xxxxxx hereby employs X.X. Xxxxxxx, for the period and on
the terms and conditions set forth herein, to provide the following
services: (i) 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 Xxxxxxxxx Xxxxxx in connection therewith;
(ii) At the request of Xxxxxxxxx Xxxxxx, provide certain economic
research and statistical information and reports, if reasonably
obtainable, on behalf of Xxxxxxxxx Xxxxxx or the Fund and consult
with representatives of Xxxxxxxxx Xxxxxx or the Fund, and/or
Directors of the Fund in connection therewith, which information and
reports shall include: (a) statistical and financial market
information with respect to the Fund's market performance; and (b)
comparative information regarding the Fund and other closed-end
management investment companies with respect to (x) the net asset
value of their respective shares (as made publicly available by the
Fund and such investment companies), (y) the respective market
performance of the Fund and such other companies, and (z) other
relevant performance indicators; and (iii) Provide Xxxxxxxxx Xxxxxx
with such other services in connection with the Common Stock
relating to the trading price and market price thereof upon which
Xxxxxxxxx Xxxxxx and X.X. Xxxxxxx shall, from time to time, agree,
including after-market services designed to maintain the visibility
of the Fund in the market.
(b) At the request of Xxxxxxxxx Xxxxxx, X.X. Xxxxxxx and, as applicable,
any Delegation Party, shall limit or cease any action or service
provided hereunder to the extent and for the time period requested
by Xxxxxxxxx Xxxxxx; provided, however, that pending termination of
this Agreement as provided for in Section 8 hereof, any such
limitation or cessation shall not relieve Xxxxxxxxx Xxxxxx of its
payment obligations pursuant to Section 3 hereof.
(c) X.X. Xxxxxxx and, as applicable, any Delegation Party, will promptly
notify Xxxxxxxxx Xxxxxx in writing if it learns of any material
inaccuracy or misstatement in, or material omission from, any
written information provided by X.X. Xxxxxxx or any Delegation Party
to Xxxxxxxxx Xxxxxx in connection with the performance of services
by X.X. Xxxxxxx or any Delegation Party under this Agreement. X.X.
Xxxxxxx and, as applicable, each Delegation Party, agrees that in
performing its service under this Agreement, it shall comply with
all applicable laws, rules and regulations.
2. X.X. Xxxxxxx may delegate a portion of its rights and obligations under
this Agreement to other persons (each, a "Delegation Party"), certain of
whom may be Underwriters (as defined in the Underwriting Agreement dated
__________, 2003 between X.X. Xxxxxxx, the Fund, Xxxxxxxxx Xxxxxx and
Xxxxxxxxx Xxxxxx, LLC) or other participants, or affiliates of such
participants, in the offering and distribution of the Common Stock;
provided that X.X. Xxxxxxx shall have obtained the prior written consent of
Xxxxxxxxx Xxxxxx if such person is not an Underwriter of the offering and
distribution of the Common Stock. X.X. Xxxxxxx shall give notice to
Xxxxxxxxx Xxxxxx of each such delegation and of each such Delegation Party
prior to delegation in the form attached as Annex A hereto. Such notice
shall state the portion of the fees otherwise payable to X.X. Xxxxxxx
hereunder which shall instead be payable by Xxxxxxxxx Xxxxxx directly to
such Delegation Party and shall be appended to and become a part of this
Agreement. Each Delegation Party shall be a registered broker-dealer under
the Securities Exchange Act of 1934, as amended, and shall not be otherwise
prohibited by law from providing services to Xxxxxxxxx Xxxxxx hereunder.
3. Xxxxxxxxx Xxxxxx shall pay to X.X. Xxxxxxx (or, as applicable with respect
to a portion of such fee payable instead to a Delegation Party pursuant to
Section 2 above, the appropriate Delegation Party) a fee payable quarterly
in arrears commencing __________, 2003 at an annualized rate of 0.15% of
the Fund's average daily Managed Assets (as such term is defined in the
Prospectus relating to the Offering) for a term as described in Section 8
hereof; provided that the total amount of the fee hereunder (when taken
together with the sales load of $0.675 per share and the expense
reimbursement equal to the greater of (1) $50,000 and (2) $0.005 per share
received by the Underwriters in connection with the Offering of the Common
Stock) shall not exceed any sales charge limits (which the parties hereto
currently understand to be 9.0% of the aggregate offering price of the
shares of Common Stock in the Offering) under the rules of the NASD, Inc.,
as then in effect; 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% to
the closing date of the Offering. All quarterly fees payable hereunder
shall be paid to X.X. Xxxxxxx or, as applicable, the appropriate Delegation
Party within 30 days following the end of each calendar quarter.
4. 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 the maximum additional compensation amount
described in paragraph 3 above.
5. Xxxxxxxxx Xxxxxx acknowledges that the services of X.X. Xxxxxxx (and, as
applicable, any Delegation Party) provided for hereunder do not include any
advice as to the value of securities or regarding the advisability of
purchasing or selling any securities, in each case 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 X.X. Xxxxxxx
or any Delegation Party, and neither X.X. Xxxxxxx nor any Delegation Party
is agreeing, to: (i) furnish any advice or make any recommendations
regarding the purchase or sale of portfolio securities or (ii) render any
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opinions, valuations of portfolio securities or recommendations of any kind
in connection with providing the services described in Section 1 hereof, to
the extent that any such services would constitute investment advisory or
investment banking services, it being understood between the parties hereto
that any such investment advisory or investment banking services if, and to
the extent, agreed to be performed by X.X. Xxxxxxx or any Delegation Party,
shall be the subject of a separate agreement with Xxxxxxxxx Xxxxxx.
6. Nothing herein shall be construed as prohibiting X.X. Xxxxxxx, any
Delegation Party or any of their respective affiliates from providing
similar or other services to any other clients (including other registered
investment companies or other investment managers), so long as X.X.
Xxxxxxx'x or the applicable Delegation Party's services to Xxxxxxxxx Xxxxxx
are not impaired thereby. Neither this Agreement nor the performance of the
services contemplated hereunder shall be considered to constitute a
partnership, association or joint venture between X.X. Xxxxxxx or any
Delegation Party and Xxxxxxxxx Xxxxxx. In addition, nothing in this
Agreement shall be construed to constitute X.X. Xxxxxxx or any Delegation
Party as the agent or employee of Xxxxxxxxx Xxxxxx or Xxxxxxxxx Xxxxxx as
the agent or employee of X.X. Xxxxxxx or any Delegation Party, and neither
party shall make any representation to the contrary. It is understood that
X.X. Xxxxxxx and, as applicable, each Delegation Party are being engaged
hereunder solely to provide the services described above to Xxxxxxxxx
Xxxxxx and that neither X.X. Xxxxxxx nor any Delegation Party is acting as
an agent or fiduciary of, and neither X.X. Xxxxxxx nor any Delegation Party
shall have any 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 to the extent that
Xxxxxxxxx Xxxxxx has the authority to waive such duties and liabilities.
7. Xxxxxxxxx Xxxxxx will furnish X.X. Xxxxxxx and, as applicable, any
Delegation Party with such information as such party reasonably believes
appropriate to the performance of its obligations hereunder (all such
information so furnished being the "Information"). Xxxxxxxxx Xxxxxx
recognizes and confirms that X.X. Xxxxxxx and, as applicable, any
Delegation Party (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 Xxxxxxxxx Berman's knowledge, the Information to be
furnished by Xxxxxxxxx Xxxxxx 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. Xxxxxxxxx Xxxxxx will promptly
notify X.X. Xxxxxxx or any Delegation Party if it learns of any material
inaccuracy or misstatement in, or material omission from, any Information
delivered to such party.
8. The term of this Agreement shall commence upon the date referred to above
and shall be in effect only so long as Xxxxxxxxx Xxxxxx (or any affiliate
or successor in interest) acts as the investment manager to the Fund
pursuant to the Management Agreement (as such term is defined in the
Underwriting Agreement, dated April , 2003, by and among the Fund,
Xxxxxxxxx Xxxxxx and each of the Underwriters named therein), as such
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Agreement (or other subsequent advisory agreement) may be renewed from time
to time pursuant to the 0000 Xxx.
9. Xxxxxxxxx Xxxxxx agrees that neither X.X. Xxxxxxx nor any Delegation Party
shall have any liability to Xxxxxxxxx Xxxxxx or the Fund for any act or
omission to act by X.X. Xxxxxxx or any Delegation Party in the course of
its performance under this Agreement, in the absence of gross negligence or
willful misconduct on the part of X.X. Xxxxxxx or such Delegation Party.
X.X. Xxxxxxx shall have no liability for any acts or omissions of any
Delegation Party. Xxxxxxxxx Xxxxxx agrees that it shall provide
indemnification to X.X. Xxxxxxx and each Delegation Party as set forth in
the Indemnification Agreement appended hereto.
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 Xxxxxxxxx Xxxxxx, X.X. Xxxxxxx and, as
applicable, each Delegation Party consent to the jurisdiction of such
courts and personal service with respect thereto. Each of Xxxxxxxxx Xxxxxx,
X.X. Xxxxxxx and, as applicable, each Delegation Party 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. Each of
Xxxxxxxxx Xxxxxx, X.X. Xxxxxxx and, as applicable, each Delegation Party
agrees that a final judgment in any proceeding or counterclaim brought in
any such court shall be conclusive and binding upon such party and may be
enforced in any other courts to the jurisdiction of which such party is or
may be subject, by suit upon such judgment.
12. Except as provided in Section 2 hereof, this Agreement may not be assigned
by either party without the prior written consent of the other party.
13. 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 Xxxxxxxxx Xxxxxx, X.X. Xxxxxxx
and, as applicable, each Delegation Party.
14. 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
0
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx (cc: General Counsel)
or if to X.X. Xxxxxxx:
X.X. Xxxxxxx & Sons, Inc.
Xxx Xxxxx Xxxxxxxxx
Xx. Xxxxx, XX 00000
Attention: Investment Banking--Corporate Finance
or if to any Delegation Party, to the name and address specified in the
relevant Notice of Delegation 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 U.S. 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.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Corporate
Finance Services and Consulting Agreement as of the date first above written.
XXXXXXXXX XXXXXX MANAGEMENT INC. X.X. XXXXXXX & SONS, INC.
By: _____________________________ By: _____________________________
Name: Name:
Title: Title:
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ANNEX A
Notice of Delegation
--------------------
X.X. Xxxxxxx & Sons, Inc. ("X.X. Xxxxxxx") hereby delegates a portion of
its obligations under that certain Corporate Finance Services and Consulting
Agreement (the "Agreement"), dated April , 2003, between X.X. Xxxxxxx and
Xxxxxxxxx Xxxxxx Management, Inc. ("Xxxxxxxxx Xxxxxx"), to [ ] (the "Delegation
Party"). The Delegation Party hereby agrees to provide such services to
Xxxxxxxxx Xxxxxx and Xxxxxxxxx Xxxxxx Realty Income Fund Inc. (the "Fund") as
Xxxxxxxxx Xxxxxx and the Delegation Party shall from time to time agree.
X.X. Xxxxxxx hereby agrees to instruct Xxxxxxxxx Xxxxxx to pay to the
Delegation Party [ ]% of the total fees payable under the Agreement to the
Delegation Party. The Delegation Party agrees that by executing this Notice of
Delegation, it shall become a party to the Agreement and shall abide by the
terms and conditions thereof.
All notices required or permitted to be sent under this Notice of
Delegation or the Agreement shall be sent to the Delegation Party at the
following address:
[ ]
Agreed to and accepted by:
X.X. Xxxxxxx & Sons, Inc. [Delegation Party]
_______________________________ _______________________________
By: By:
Title: Title:
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INDEMNIFICATION AGREEMENT
X.X. Xxxxxxx & Sons, Inc.
on behalf of itself and each
Delegation Party
c/o X.X. Xxxxxxx & Sons, Inc.
Xxx Xxxxx Xxxxxxxxx
Xx. Xxxxx, XX 00000
Ladies and Gentlemen:
In connection with the engagement of X.X. Xxxxxxx and, as applicable, each
Delegation Party (as defined in the Agreement referred to below) to provide
services to the undersigned (together with its affiliates and subsidiaries,
referred to as the "Company") in connection with the matters set forth in the
Corporate Finance Services and Consulting Agreement dated April , 2003 (the
"Agreement"), between the Company, X.X. Xxxxxxx & Sons, Inc. and, as applicable,
each Delegation Party (any Delegation Parties, together with X.X. Xxxxxxx &
Sons, Inc., are referred to herein as the "Service Providers"), in the event
that any Service Provider 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 each Service
Provider 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 such Service Provider. In addition, in
the event that any Service Provider 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 such Service Provider for its legal
and other expenses (including the cost of any investigation and preparation) as
such expenses are reasonably incurred by such Service Provider 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 the Service
Providers, 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
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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 the Service Providers have been retained to perform
services bears to the fees paid to the Service Providers under the Agreement;
provided, that in no event shall the Company contribute less than the amount
necessary to assure that no Service Provider is liable for losses, claims,
damages, liabilities and expenses in excess of the amount of fees actually
received by such Service Provider 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 the relevant Service Provider, on the
other hand. The Company shall not be liable under this Indemnification Agreement
to any Service Provider 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 each Service Provider, 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 any Service Provider is an
actual or potential party thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each Service Provider 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 any Service Provider. For purposes of this Indemnification Agreement, each
Service Provider shall include any of its affiliates, each other person, if any,
controlling such Service Provider 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 any Service Provider 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 such Service
Provider's 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 such Service Provider in performing the
services that are the subject of the Agreement.
Notwithstanding any provision contained herein, in no event shall any
Service Provider 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 9 of the Underwriting Agreement.
For clarification, the parties to this Indemnification Agreement agree that
the term "affiliate" as used in the definition of "Company" herein does not
include any registered investment company for which Xxxxxxxxx Xxxxxx Management
Inc. serves as investment adviser.
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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 EACH SERVICE PROVIDER 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 ANY SERVICE PROVIDER OR ANY INDEMNIFIED PARTY. EACH SERVICE PROVIDER 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 any Service Provider's 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: _______________________
Name:
Title:
Accepted and agreed to as of
the date first above written:
X.X. XXXXXXX & SONS, INC.
By: _______________________
Name:
Title:
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