SHAREHOLDER SERVICING AGREEMENT
SHAREHOLDER SERVICING AGREEMENT (the "Agreement"), dated as of June [16],
2003, between Xxxx Xxxxxxx Advisers, LLC ("Xxxx Xxxxxxx Advisers") and UBS
Securities LLC ("UBS Securities").
WHEREAS, Xxxx Xxxxxxx Preferred Income Fund III (the "Fund") is a
closed-end, diversified management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and its shares of
beneficial interest are registered under the Securities Act of 1933, as amended;
and
WHEREAS, Xxxx Xxxxxxx Advisers is the investment adviser of the Fund; and
WHEREAS, Xxxx Xxxxxxx Advisers desires to retain UBS Securities to provide
shareholder servicing and market information with respect to the Fund, and UBS
Securities 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. Xxxx Xxxxxxx Advisers hereby employs UBS Securities, for the period and on
the terms and conditions set forth herein, to provide the following services:
(a) Undertake to make available public information pertaining to the Fund
on an ongoing basis and to communicate to investors and prospective investors
the Fund's features and benefits (including periodic seminars or conference
calls, responses to questions from current or prospective shareholders and
specific shareholder contact where appropriate);
(b) Make available to investors and prospective investors market price, net
asset value, yield and other information regarding the Fund, if reasonably
obtainable, for the purpose of maintaining the visibility of the Fund in the
investor community;
(c) At the request of Xxxx Xxxxxxx Advisers or the Fund, provide certain
economic research and statistical information and reports, if reasonably
obtainable, on behalf of Xxxx Xxxxxxx Advisers or the Fund and consult with
representatives of Xxxx Xxxxxxx Advisers and/or Trustees of the Fund in
connection therewith, which information and reports shall include: (i)
statistical and financial market information with respect to the Fund's market
performance; and (ii) comparative information regarding the Fund and other
closed-end management investment companies with respect to (x) the net asset
value of their respective shares, (y) the respective market performance of the
Fund and such other companies, and (z) other relevant performance indicators;
and
(d) At the request of Xxxx Xxxxxxx Advisers or the Fund, provide
information to and consult with Xxxx Xxxxxxx Advisers and/or the Board of
Trustees of the Fund with respect to applicable strategies designed to address
market value discounts, which may include share repurchases, tender offers,
modifications to dividend policies or capital structure, repositioning or
restructuring of the Fund, conversion of the Fund to an open-end investment
company, liquidation or merger; including providing information concerning the
use and impact of the above strategic alternatives by other market participants.
(e) At the request of Xxxx Xxxxxxx Advisers or the Fund, UBS Securities
shall limit or cease any action or service provided hereunder to the extent and
for the time period requested by Xxxx Xxxxxxx Advisers or the Fund; provided,
however, that pending termination of this Agreement as provided for in Section 5
hereof, any such limitation or cessation shall not relieve Xxxx Xxxxxxx Advisers
of its payment obligations pursuant to Section 2 hereof.
(f) UBS Securities will promptly notify Xxxx Xxxxxxx Advisers or the Fund,
as the case may be, if it learns of any material inaccuracy or misstatement in,
or material omission from, any written information provided by UBS Securities to
Xxxx Xxxxxxx Advisers or the Fund in connection with the performance of services
by UBS Securities under this Agreement.
2. Xxxx Xxxxxxx Advisers will pay UBS Securities a fee computed weekly and
payable quarterly at an annualized rate of 0.10% of the average weekly gross
assets of the Fund. The aggregate fee payable by Xxxx Xxxxxxx Advisers to UBS
Securities pursuant to this Agreement will not exceed 4.5% of the aggregate
initial offering price of the common shares of the Fund; provided, that in
determining when the maximum amount has been paid the value of each of the
quarterly payments shall be discounted at the annual rate of 10% to the closing
date of the initial offering of the Fund's common shares.
3. Xxxx Xxxxxxx Advisers acknowledges that the shareholder services of UBS
Securities 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 UBS
Securities, and UBS Securities 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 UBS Securities 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 UBS Securities' services to Xxxx Xxxxxxx Advisers and the Fund are
not impaired thereby.
5. The term of this Agreement shall commence upon the date referred to
above, shall be in effect for a period of two years and shall thereafter
continue for successive one year periods provided that the agreement may be
terminated by either party upon 60 days' written notice of the intention to
terminate; provided, however, that in the event that the contractual advisory
fee rate payable by the Fund to Xxxx Xxxxxxx Advisers or such successor or
affiliate under the Investment Management Agreement is reduced below 0.55%, the
fee payable by Xxxx Xxxxxxx Advisers to UBS Securities pursuant to Section 2 of
this agreement shall reduced in proportion to, and for the period of, such
reduction of the advisory fee, and this agreement shall be deemed to be amended
automatically to reflect the same.
6. Xxxx Xxxxxxx Advisers will furnish UBS Securities with such information
as UBS Securities believes appropriate to its assignment hereunder (all such
information so furnished being the "Information"). Xxxx Xxxxxxx Advisers
recognizes and confirms that UBS Securities (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 Xxxx Xxxxxxx Adviser's knowledge, the Information to be furnished by
Xxxx Xxxxxxx Advisers 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. Xxxx Xxxxxxx Advisers will promptly notify UBS Securities if it
learns of any material inaccuracy or misstatement in, or material omission from,
any Information delivered to UBS Securities.
7. It is understood that UBS Securities is being engaged hereunder solely
to provide the services described above to Xxxx Xxxxxxx Advisers and to the Fund
and that UBS Securities 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,
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. Xxxx Xxxxxxx Advisers agrees that UBS Securities shall have no liability
to Xxxx Xxxxxxx Advisers or the Fund for any act or omission to act by UBS
Securities in the course of its performance under this Agreement, in the absence
of gross negligence or willful misconduct on the part of UBS Securities. Xxxx
Xxxxxxx Advisers 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.
9. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK FOR CONTRACTS TO BE PERFORMED ENTIRELY THEREIN AND WITHOUT
REGARD TO THE CHOICE OF LAW PRINCIPLES THEREOF.
10. EACH OF THE XXXX XXXXXXX ADVISERS AND UBS SECURITIES AGREE THAT ANY
ACTION OR PROCEEDING BASED HEREON, OR ARISING OUT OF UBS SECURITIES' ENGAGEMENT
HEREUNDER, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN XXX XXXXXX XX XXX
XXXXX XX XXX XXXX LOCATED IN THE CITY AND COUNTY OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. XXXX XXXXXXX
ADVISERS AND UBS SECURITIES EACH HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW
YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK FOR THE PURPOSE OF ANY SUCH ACTION OR PROCEEDING AS SET FORTH ABOVE AND
IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH SUCH ACTION OR PROCEEDING. EACH OF XXXX XXXXXXX ADVISERS AND UBS SECURITIES
HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
ACTION OR PROCEEDING BROUGHT IN ANY SUCH REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
11. Xxxx Xxxxxxx Advisers and UBS Securities each hereby irrevocably waive
any right they may have to a trial by jury in respect of any claim based upon or
arising out of this Agreement or the transactions contemplated hereby. 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 UBS
Securities and Xxxx Xxxxxxx Advisers.
13. All notices required or permitted to be sent under this Agreement shall
be sent, if to Xxxx Xxxxxxx Advisers:
Xxxx Xxxxxxx Advisers, LLC
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Chief Legal Officer
or if to UBS Securities:
UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Legal Officer
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.
14. This Agreement may be exercised on separate counterparts, each of which
is deemed to be an original and all of which taken together constitute one and
the same agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Shareholder Servicing Agreement as of the date first above written.
XXXX XXXXXXX ADVISERS, LLC
By: _____________________________
Name: Xxxxxxx X. Xxxx
Title: Chairman, President and Chief Executive Officer
UBS SECURITIES LLC
By: _____________________________
Name: Xxxxx Xxxxxxxx
Title: Managing Director
By: _____________________________
Name: Xxxx X. Reit
Title: Executive Director
UBS Securities LLC Indemnification Agreement
--------------------------------------------
June [16], 2003
UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
In connection with the engagement of UBS Securities LLC ("UBS
Securities") 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 [ ], 2003 between the Company and UBS Securities (the
"Agreement"), in the event that UBS Securities 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 UBS Securities 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 UBS Securities. In addition, in the event that UBS Securities
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
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reimburse UBS Securities for its legal and other expenses (including the cost of
any investigation and preparation) as such expenses are incurred by UBS
Securities 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 UBS Securities, 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 UBS
Securities has been retained to perform financial services bears to the fees
paid to UBS Securities under the Agreement; provided, that in no event shall the
Company contribute less than the amount necessary to assure that UBS Securities
is not liable for losses, claims, damages, liabilities and expenses in excess of
the amount of fees actually received by UBS Securities 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 UBS
Securities, on the other hand. The Company will not settle any Proceeding in
respect of which indemnity may be sought hereunder, whether or not UBS
Securities is an actual or potential party to such Proceeding, without UBS
Securities' prior written consent. For purposes of this Indemnification
Agreement, UBS Securities shall include UBS Securities LLC, any of its
affiliates, each other person, if any, controlling UBS Securities 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 UBS Securities 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 UBS Securities'
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 UBS Securities 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 UBS SECURITIES CONSENT TO THE JURISDICTION OF SUCH COURTS
AND PERSONAL SERVICE WITH RESPECT THERETO. THE COMPANY HEREBY CONSENTS TO
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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 AND THIRD PARTY
AGAINST UBS SECURITIES OR ANY INDEMNIFIED PARTY. EACH OF UBS SECURITIES 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 UBS Securities' 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,
XXXX XXXXXXX ADVISERS, LLC
By:
-----------------------
Name:
Title
Accepted and agreed to as of
the date first above written:
UBS SECURITIES LLC
By
-------------------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Director
By
-------------------------------
Name: Xxxx X. Reit
Title: Executive Director
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