COMPROMISE AND STANDSTILL AGREEMENT
Exhibit 99.1
This
Compromise and Standstill Agreement (the “Agreement”) is made and entered into
effective as of the 30th day of April 2009 by and among Xxxxxxxxx Xxxxxx
Management LLC (“Xxxxxxxxx Xxxxxx”) and Xxxxxx X. Xxxxxx, Western Investment
LLC, Western Investment Hedged Partners L.P., Western Investment Activism
Partners LLC, Western Investment Institutional Partners, LLC, Western Investment
Total Return Partners L.P., Western Investment Total Return Fund Ltd., Benchmark
Plus Institutional Partners, L.L.C., Benchmark Plus Partners, L.L.C. and
Benchmark Plus Management, L.L.C. Xx. Xxxxxx, Western Investment LLC,
Western Investment Hedged Partners L.P., Western Investment Activism Partners
LLC, Western Investment Institutional Partners, LLC, Western Investment Total
Return partners L.P., Western Investment Total Return Fund Ltd., Benchmark Plus
Institutional Partners, L.L.C., Benchmark Plus Partners, L.L.C., and Benchmark
Plus Management, L.L.C., and each of their officers, directors and present or
future affiliates (as defined in the
Securities Exchange Act of 1934, as amended, “Affiliates”) (collectively,
referred to herein as “Western”).
WHEREAS,
Xxxxxxxxx Xxxxxx is an investment adviser registered with the Securities and
Exchange Commission (“SEC”) under the Investment Advisors Act of 1940, as
amended, and is the investment manager to Xxxxxxxxx Xxxxxx California
Intermediate Municipal Fund Inc. (“NBW”), Xxxxxxxxx Xxxxxx Dividend Advantage
Fund Inc. (“NDD”), Xxxxxxxxx Xxxxxx High Yield Strategies Fund (“NHS”),
Xxxxxxxxx Xxxxxx Intermediate Municipal Fund Inc. (“NBH”), Xxxxxxxxx Xxxxxx
Income Opportunity Fund Inc. (“NOX”), Xxxxxxxxx Xxxxxx New York Intermediate
Municipal Fund Inc. (“NBO”) and Xxxxxxxxx Xxxxxx Real Estate Securities Income
Fund Inc. (“NRO”), each a closed-end management investment company (each a
“Fund” and collectively, the “Funds”) registered with the SEC, the common shares
of which are publicly traded;
WHEREAS,
on or about December 12, 2008, Western communicated to the Secretary of the
Funds its intent to submit nominations for Class I directors/trustees, as the
case may be, of each of NBW, NDD, NHS, NBH, NOX and NBO for election at the
Funds’ 2009 annual meeting of stockholders (the “Annual Meetings”);
WHEREAS,
the Funds have called their Annual Meetings to consider the election of Class I
Directors/Trustees and to consider approval of new investment management and
sub-advisory agreements in connection with the proposed acquisition of certain
businesses of Xxxxxxxxx Xxxxxx Holdings LLC, including Xxxxxxxxx Xxxxxx and
Xxxxxxxxx Xxxxxx, LLC and certain fixed income businesses of the Investment
Management Division of Xxxxxx Brothers Holdings Inc. (“LBHI”), run by Xxxxxx
Brothers Asset Management LLC and together with Xxxxxxxxx Xxxxxx LLC the
Sub-Advisers to the Funds, by the management team, portfolio managers and
certain key members and senior professionals of the former Investment Management
Division of LBHI (“Change of Control Approvals”);
WHEREAS,
the Board of Directors/Trustees of each Fund (collectively, the “Board”) have
approved, and each Fund announced via press releases on February 6, 2009 and
April 16, 2009, a tender offer for up to 10% of each Fund’s common shares at a
price equal to 98% of such Fund’s net asset value (“NAV”) as determined on the
day the tender offer expires, such Tender Offers to commence on May 1, 2009 and
end on May 29, 2009 (each a “May Tender Offer”); and
WHEREAS, the Boards
have approved, and each Fund announced via press release on February 6, 2009, a
semi-annual tender offer program consisting of up to four tender offers over a
two-year period (the “Tender Offer Program”) pursuant to which each Fund will
conduct a tender offer for between 5% and 20% of its outstanding common shares
at a price equal to 98% of its NAV determined on the day the tender offer
expires if any such Fund’s common shares trade at an average daily discount to
its NAV of greater than 10% for a twelve-week measurement period;
NOW,
THEREFORE, in consideration of the mutual promises and covenants contained in
this Agreement, and for other good and valuable consideration, the parties agree
as follows:
1. In
connection with the Annual Meetings and any adjournments thereof, or any other
meeting of stockholders called for the purpose of considering the Change of
Control Approvals, Western shall cause all of its shares of each Fund to be
voted on each matter in accordance with the recommendations of the Board of
Directors/Trustees of each Fund (collectively, the “Boards”), as set forth in
each Fund’s definitive proxy statement relating to the Annual Meetings, and will
not, directly or indirectly, solicit, recommend, advise or urge, formally or
informally, anyone to vote otherwise. Prior to the commencement of
the Annual Meetings, upon the request of Xxxxxxxxx Xxxxxx, Western will notify
each Fund in accordance with the notice provisions below, of the total number of
shares for which its members, or a record holder acting at the instruction of
one or more of Western’s members, have submitted proxy cards. In the
event that the stockholders fail to approve any matter recommended by Board, and
the Funds believe in good faith that there is a question as to how Western’s
shares were voted, upon the request of an officer of Xxxxxxxxx Xxxxxx, Western
will notify the person identified in Section 10 and the President of Xxxxxxxxx
Xxxxxx as to the number of shares voted with respect to such matter and the name
of the holder(s) as shown on the relevant proxy card(s). If shares
are held in street name, the notification shall so specify, indicating the name
of the record holder and providing a copy of all voting instructions issued to
such record holder.
2. Western
will abandon the definitive proxy statement with respect to NDD filed with the
SEC on April 23, 2009, and shall not deliver or mail any proxy materials to
stockholders of NDD. Such abandonment shall be deemed accomplished without any
further action beyond the signing of this agreement and informing the SEC in
writing.
3. Western
will abandon the preliminary proxy statements filed with the SEC with respect
to: NOX as filed on April 10, 2009; NHS as filed on April 15, 2009; NBW as filed
on April 17, 2009; NBO as filed on April 20, 2009 and NBH as filed on April 21,
2009, such abandonment shall be deemed accomplished without any further action
beyond the signing of this agreement and informing the SEC in
writing.
4.(a)
Xxxxxxxxx Xxxxxx represents that each of NDD, NOX, NHS, NBW and
NBO shall conduct the May Tender Offer as so announced.
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(b)
Xxxxxxxxx Xxxxxx represents that the Boards of NDD, NOX, NHS, NBW and NBO have
approved the twelve-week measurement period which shall commence on June 5, 2009
and end on August 28, 2009 (the “Measurement Period”) with respect to the
potential initial tender offer under the Tender Offer Program, and any Fund the
average daily discount of which is calculated to exceed 10% during such
Measurement Period shall make a tender offer for 10% of such Fund’s outstanding
common shares at a price equal to 98% of such Fund’s NAV calculated at the close
of business on the day the tender offer expires. Xxxxxxxxx Xxxxxx
agrees that any such initial tender offers shall commence as soon as reasonably
practicable after the end of the Measurement Period, but in no event later than
ten (10) business days following the end of the Measurement Period.
Nothing
in this Section 4 shall obligate Xxxxxxxxx Xxxxxx to recommend or amend any
other term of the Tender Offer Program including the amount of shares to be
tendered, if required, following any subsequent measurement period.
5. Xxxxxxxxx
Xxxxxx hereby undertakes to make promptly a commercially reasonable effort to
identify a course of action, which Xxxxxxxxx Xxxxxx believes is in the best
interest of NDD and its stockholders, and that will provide each NDD stockholder
with liquidity options including the ability of each NDD stockholder to realize
no less than 95% of net asset value on their NDD shares, as soon as reasonably
practicable following NDD board approval (the “Liquidity
Event”). Options to be considered include, but are not limited to,
liquidation, reorganization into one or more open-end registered investment
companies advised and administered by Xxxxxxxxx Xxxxxx or conversion to an
open-end fund. Upon identifying a possible course of action,
Xxxxxxxxx Xxxxxx shall present and recommend approval of such action to NDD’s
Board no later than June 30, 2009.
6. (a)
For a period of three years from the date of this Agreement (the
“Restricted Period”), Western shall not: (i) submit any stockholder proposals
for the vote or consent (collectively, “vote”) of stockholders (whether or not
pursuant to SEC Rule 14a-8 or otherwise); (ii) nominate any candidate for
election as a director or trustee; or (iii) solicit proxies for any stockholder
proposals or nominations of candidates for election as directors or trustees, in
any registered investment company, including the Funds, managed or sponsored by
Xxxxxxxxx Xxxxxx, its affiliates, successors or assigns, whether such funds now
exist or are organized hereafter (collectively, the “NB Funds,” and each an “NB
Fund”). During the Restricted Period, Western shall not, either
directly or indirectly, explicitly or implicitly: (i) encourage, recommend,
advise or urge others to put forward stockholder proposals, including any
proposal to replace the investment manager or sub-adviser of any NB Fund, or
nominations with respect to director/trustees of any NB Fund; (ii) indicate
support or approval for any stockholder proposals or nominations relating to any
NB Fund (except pursuant to voting pursuant to the clause (iii) hereof); (iii)
cause or permit
their shares of any NB Fund to be voted on any matter in any way other than in
accordance with the recommendations of that NB Fund’s Board; or (iv) solicit or
encourage others to vote against any matter recommended by a NB Fund’s
Board. During the Restricted Period, Western shall not, either directly or
indirectly, purchase or otherwise acquire, or obtain voting rights for, any
securities issued by any NB Fund, except: (i) through reinvestment of
distributions or an exchange or merger offer made to all stockholders; or (ii)
in connection with the sale, transfer or other reallotment from one Western
entity to another or to an Affiliate, so long as the aggregate number of shares
held by Western or any Affiliate does not increase. During the
Restricted Period, Western shall not, either directly or indirectly, cause or
encourage any party unrelated to Western to acquire in excess of 1% of the
outstanding shares of any NB Fund.
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(b)
In the event that (i) the Liquidity Event is not approved by the NDD Board on or
prior to June 30, 2009, or (ii) the NDD Board fails to recommend stockholder
approval of the Liquidity Event (to the extent stockholder approval is
required), and Xxxxxxxxx Xxxxxx and/or NDD do not use commercially reasonable
efforts to have the Liquidity Event approved as soon as reasonably practicable,
Section 6(a) shall not apply with respect to NDD.
8. Immediately
following the execution of this Agreement, prior to which the Boards of NDD,
NOX, NHS, NBW and NBO approved the initial measurement period with respect to
the Tender Offer Program and the amount to be tendered should the average daily
discount exceed 10%, as described in paragraph 4(b), Xxxxxxxxx Xxxxxx will issue
a press release announcing the foregoing in a form substantially similar to the
form attached hereto as Exhibit
A.
9. Other
than as announced by Xxxxxxxxx Xxxxxx or the Funds or otherwise made public by
Xxxxxxxxx Xxxxxx, the Funds or Western as permitted by the next sentence, or as
may be required by law or regulatory process or agency, all forms and provisions
of this Agreement shall remain confidential. Xxxxxxxxx Xxxxxx
acknowledges and agrees that this Agreement will be filed as an exhibit to
Western’s Amended Schedule 13D for each of the Funds for which Western has filed
a Schedule 13D.
10. Any
notices hereunder shall be delivered by email or facsimile, with a copy by
ordinary mail, directed as follows:
To the
Funds and Xxxxxxxxx Xxxxxx Management LLC, by delivery to:
Xxxxxx X. Xxxxxx, Esq.
General
Counsel
Xxxxxxxxx
Xxxxxx Management LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
xxxxxxx@xx.xxx
Fax: 000-000-0000
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To Western, by delivery
to:
Xxxxxx X. Xxxxxx
0000 X.
Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
Xxxx 00000
Fax: (000) 000-0000
With a copy to:
Xxxxxx
Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Park
Avenue Tower
00 Xxxx
00xx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention:
Xxxx X. Xxxxxxxx, Esq.
xxxxxxxxx@xxxxxxxxx.xxx
Facsimile:
(000) 000-0000
11. In
the event that Xxxxxxxxx Xxxxxx or a Fund breaches any material provision of
this Agreement, then Sections 1, 2, 3, 6 and 7 shall terminate and be of no
further force and effect.
12. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective agents, executors, heirs, successors and assigns.
13. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
14. This Agreement shall
be governed by, and construed in accordance with, the laws of the State
of New York, without regard to conflict of laws provisions. The parties agree
that the state and federal courts of the State of New York shall be the proper
forums for any legal controversy arising in connection with this Agreement, and
the parties hereby irrevocably and unconditionally consent to the exclusive
jurisdiction of such courts for such purposes.
15. This
Agreement constitutes the entire agreement among the parties with respect to the
subject matter hereof, and may be modified or amended only by a writing signed
by an authorized representative of the parties hereto. No
representations, warranties, or inducements have been made by any party hereto
concerning this Agreement other than those contained and memorialized
herein. This Agreement is the product of mutual bargaining between
and among the parties and, therefore, will not be construed against one party or
another.
[The
remainder of this page left blank intentionally.]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first written above.
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WESTERN
INVESTMENT HEDGED PARTNERS L.P.
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By:
Western Investment LLC, Its General
Partner
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By:
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/s/
Xxxxxx X. Xxxxxx
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Name:
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Xxxxxx
X. Xxxxxx
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By: |
/s/ Xxxxxx
X. Xxxxxx
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| Title: | Managing Member |
Name:
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Xxxxxx
X. Xxxxxx
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Title:
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Managing
Member
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WESTERN
INVESTMENT ACTIVISM PARTNERS LLC
By: Western
Investment, LLC, Its Managing
Member
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WESTERN
INVESTMENT INSTITUTIONAL PARTNERS LLC
By: Western
Investment LLC, Its Managing Member
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By:
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/s/
Xxxxxx X. Xxxxxx
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By:
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/s/
Xxxxxx X. Xxxxxx
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Name:
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Xxxxxx
X. Xxxxxx
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Name:
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Xxxxxx
X. Xxxxxx
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Title:
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Managing
Member
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Title:
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Managing
Member
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WESTERN
INVESTMENT TOTAL RETURN PARTNERS L.P.
By: Western
Investment, LLC, Its General
Partner
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WESTERN
INVESTMENT TOTAL RETURN FUND LTD.
By: Western
Investment LLC, Its Investment Manager
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By:
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/s/
Xxxxxx X. Xxxxxx
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By:
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/s/
Xxxxxx X. Xxxxxx
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Name:
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Xxxxxx
X. Xxxxxx
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Name:
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Xxxxxx
X. Xxxxxx
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Title:
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Managing
Member
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Title:
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Managing
Member
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/s/
Xxxxxx X. Xxxxxx
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BENCHMARK PLUS INSTITUTIONAL
PLUS, L.L.C.
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Xxxxxx
X. Xxxxxx
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By:
Benchmark Plus Management, L.L.C., Managing
Member
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By:
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/s/ Xxxxxx
Xxxxxxxx
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Name:
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Xxxxxx Xxxxxxxx | ||
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Title:
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BENCHMARK
PLUS PARTNERS L.L.C.
By:
Benchmark Plus Management, L.L.C., Managing
Member
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BENCHMARK
PLUS MANAGEMENT L.L.C.
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By:
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/s/
Xxxxxx Xxxxxxxx
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By:
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/s/
Xxxxxx Xxxxxxxx
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Name:
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Xxxxxx
Xxxxxxxx
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Name:
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Xxxxxx
Xxxxxxxx
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Title:
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Title:
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XXXXXXXXX
XXXXXX MANAGEMENT LLC
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By:
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/s/
Xxxxxx Xxxxx
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Name:
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Xxxxxx
Xxxxx
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Title:
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President
and Chief Executive Officer
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EXHIBIT
A
NEW YORK,
NY, April [ ], 2009, Xxxxxxxxx Xxxxxx Management LLC (“NB
Management”) announced today the first measurement period for each of Xxxxxxxxx
Xxxxxx California Intermediate Municipal Fund Inc. (AMEX: NBW), Xxxxxxxxx Xxxxxx
Dividend Advantage Fund Inc. (AMEX: NDD), Xxxxxxxxx Xxxxxx Income Opportunity
Fund Inc. (AMEX: NOX), Xxxxxxxxx Xxxxxx New York Intermediate Municipal Fund
Inc. (AMEX:NBO) and Xxxxxxxxx Xxxxxx High Yield Strategies Fund Inc. (NYSE: NHS)
(each a “Fund” and collectively, the “Funds”) under the previously announced
semi-annual tender offer programs (each, a “tender offer program”). Under each
tender offer program, if a Fund’s common shares trade at an average daily
discount to net asset value (“NAV”) of greater than 10% during a 12-week
measurement period, the Fund would conduct a tender offer for between 5% and 20%
of its outstanding common shares at a price equal to 98% of its NAV determined
on the day the tender offer expires. Each Fund has determined that
the initial measurement period shall commence on June 5, 2009 and end on August
28, 2009 (the “Measurement Period”). Furthermore, the Funds’ Boards
of Directors/Trustees have decided that should any Fund’s average daily discount
exceed 10% during the Measurement Period such Fund shall make a tender offer for
up to 10% of its outstanding shares.
Additionally,
NB Management today announced that it is exploring certain courses of action
with respect to NDD that would result in increased liquidity options for NDD’s
shareholders. Xxxxxxxxx Xxxxxx currently anticipates that it will
present, and recommend for approval, a course of action to NDD’s Board of
Directors at its next regularly scheduled meeting.
This
announcement is not a recommendation, an offer to purchase or a solicitation of
an offer to sell shares of any Fund. The Funds have not yet commenced
the tender offers described in this release. Any tender offer will be
made only by an offer to purchase, a related letter of transmittal and other
documents, which will be filed with the Securities and Exchange Commission as
exhibits to a tender offer statement on Schedule TO. Shareholders of
each Fund should read the relevant offer to purchase and tender offer statement
on Schedule TO and related exhibits when those documents are filed and become
available, as they will contain important information about the tender
offers.
Xxxxxxxxx Xxxxxx Management LLC, the
Funds’ investment manager, is a subsidiary of Xxxxxxxxx Xxxxxx Holdings LLC, an
investment advisory company serving individuals, families, and taxable and
non-taxable institutions with a broad range of investment products, services and
strategies. Xxxxxxxxx Xxxxxx engages in wealth management services
including private asset management, mutual funds, institutional management and
alternative investments. For further information about Xxxxxxxxx Xxxxxx please
visit xxx.xx.xxx.
# #
#
Statements
made in this release that look forward in time involve risks and uncertainties
and are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such risks and uncertainties include, without
limitation, the adverse effect from a decline in the securities markets or a
decline in a Fund’s performance, a general downturn in the economy, competition
from other closed-end investment companies, changes in government policy or
regulation, inability of a Fund’s investment adviser to attract or retain key
employees, inability of a Fund to implement its investment strategy, inability
of a Fund to manage rapid expansion and unforeseen costs and other effects
related to legal proceedings or investigations of governmental and
self-regulatory organizations.
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