ADDITIONAL COMPENSATION AGREEMENT
June 24, 2003
CITIGROUP GLOBAL MARKETS INC.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated the date hereof (the
"Underwriting Agreement"), by and among Xxxxxxxxx Xxxxxx Income Opportunity Fund
Inc., a Maryland corporation (the "Fund"), Xxxxxxxxx Xxxxxx Management Inc., a
New York corporation (the "Adviser"), Xxxxxxxxx Xxxxxx, LLC, a Delaware limited
liability company, and each of the Underwriters named therein, with respect to
the issue and sale of the Fund's Common Shares, as described therein. Reference
is also made to (i) the Investment Management Agreement dated as of June 24,
2003 (the "Investment Management Agreement"), between the Adviser and the Fund
and (ii) the registration statement on Form N-2 registering the Common Shares of
the Fund (the "Registration Statement"). Capitalized terms used herein and not
otherwise defined shall have the meanings given to them in the Underwriting
Agreement.
1. AGREEMENT. The Adviser hereby confirms its agreement with each of
Citigroup Global Markets Inc. and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated (collectively, the "Primary Underwriters") with respect to the
additional compensation referred to in the "Underwriting" section of the
Registration Statement, payable by the Adviser to the Primary Underwriters. The
Adviser agrees to pay (i) to the Primary Underwriters a fee at an aggregate rate
of 0.15% per annum of the Fund's Managed Assets (as defined in Section 3(b)
hereof) and (ii) to Citigroup Global Markets Inc., a fee of $100,000 per annum
(collectively, the "Additional Compensation"); provided, however, that such
payments shall not, in the aggregate, exceed the "Maximum Additional
Compensation Amount" (as defined in Section 4 hereof). In exchange for the
Additional Compensation, each Primary Underwriter will provide to the Adviser
certain after-market shareholder support services on an ongoing basis designed
to maintain the visibility of the Fund in the investor community and will
provide relevant information, studies or reports regarding the Fund and the
closed-end investment company industry.
2. PRO RATA PERCENTAGE. Each Primary Underwriter shall be assigned a "Pro
Rata Percentage" based on the number of Common Shares sold by such Primary
Underwriter in the Fund's initial public offering and listed on Schedule I
hereto.
3. PAYMENT OF ADDITIONAL COMPENSATION. (a) The Adviser shall pay the
Additional Compensation, payable in arrears at the end of each calendar quarter,
as follows: (i) to each Primary Underwriter, Additional Compensation in an
amount equal to such Primary Underwriter's Pro Rata Percentage multiplied by
0.0375% of the Fund's Managed Assets for such quarter and (ii) to Citigroup
Global Markets Inc., Additional Compensation in an amount equal to $25,000 for
such quarter.
(b) For the purposes of this Additional Compensation Agreement, "Managed
Assets" means the average daily total assets of the Fund minus liabilities
(other than the aggregate indebtedness, if any, entered into for purposes of
leverage).
(c) All Additional Compensation payable hereunder shall be paid to each
Primary Underwriter by wire transfer of immediately available funds within 30
days following the end of each calendar quarter to a bank account designated by
such Primary Underwriter. At the time of each payment of Additional Compensation
hereunder, the Adviser shall deliver to each Primary Underwriter receiving an
installment of Additional Compensation a statement indicating the amount of
Managed Assets on which such payment was based.
(d) The initial payments of Additional Compensation hereunder shall be
with respect to the calendar quarter ending September 30, 2003, pro-rated in
respect of the period from the Closing Date to September 30, 2003. 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 30 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 that is a
business day. All Additional Compensation payable hereunder shall be in addition
to any fees paid by the Adviser pursuant to the Underwriting Agreement.
(e) The Adviser shall be permitted to terminate this agreement at any time
upon making a prepayment to the Primary Underwriters of amounts otherwise
payable hereunder. The amount of any such prepayment will be determined by
mutual agreement of the Adviser and the Primary Underwriters.
(f) Each Primary Underwriter agrees that it shall promptly notify the
Adviser in writing if it learns of any material inaccuracy or misstatement in,
or material omission from, any written information provided by such Primary
Underwriter to the Adviser in connection with the performance of services by
such Primary Underwriter under this Agreement. Each Primary Underwriter agrees
that in performing its services under this Agreement, it shall comply with all
applicable laws, rules and regulations.
4. MAXIMUM ADDITIONAL COMPENSATION AMOUNT. The "Maximum Additional
Compensation Amount" payable by the Adviser hereunder shall be the excess of (i)
four and one-half percent (4.5%) of the aggregate initial public offering price
for the Common Shares purchased pursuant to the Underwriting Agreement
(including all Firm Shares and Additional Shares) over (ii) the amount payable
by the Fund to the Underwriters pursuant to Section 12 of the Underwriting
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Agreement for partial reimbursement of certain Underwriter expenses; PROVIDED,
that the total amount of the Additional Compensation payable hereunder (when
taken together with the sales load paid by the Fund to the Underwriters pursuant
to the Underwriting Agreement and any expense reimbursement paid to the
Underwriters pursuant to the Underwriting Agreement) shall not exceed any sales
charge limits (which the parties hereto currently understand to be 9.0% of the
aggregate offering price of the Common Shares to be offered pursuant to the
Underwriting Agreement) under the rules of the NASD, Inc., as then in effect;
and provided, further, that in determining when this Maximum Additional
Compensation 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.
5. TERM. This Additional Compensation Agreement shall terminate on the
earliest to occur of (a) the payment by the Adviser hereunder of the Maximum
Additional Compensation Amount, (b) the prepayment by the Adviser of an agreed
upon amount in accordance with Section 3(e) hereof, (c) the dissolution and
winding up of the Fund, (d) the date on which the Investment Management
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, shall no longer be in full force and effect and (e)
notwithstanding the foregoing or any other provision of this Additional
Compensation Agreement, this Additional Compensation Agreement shall terminate
if the Common Shares are not sold to the Underwriters in accordance with the
terms of the Underwriting Agreement on the Closing Date and, in the event of
such termination, there shall be no obligation on the part of any party hereto
with respect to this Additional Compensation Agreement.
6. NOT AN INVESTMENT ADVISER. The Adviser acknowledges that the Primary
Underwriters are not providing any advice hereunder 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 any
Primary Underwriter, and the Primary Underwriters are 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 to perform any such similar services.
7. NOT EXCLUSIVE. Nothing herein shall be construed as prohibiting any
Primary Underwriter or its respective affiliates from acting as an underwriter
for any other persons (including other registered investment companies or other
investment managers). Neither this Agreement nor the performance of the services
contemplated hereunder shall be considered to constitute a partnership,
association or joint venture between the Adviser and the Primary Underwriters.
In addition, nothing in this Agreement shall be construed to constitute any
Primary Underwriter as the agent or employee of the Adviser or the Adviser as
the agent or employee of any Primary Underwriter and none of the parties hereto
shall make any representation to the contrary.
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8. ASSIGNMENT. This Additional Compensation Agreement may not be assigned
by any party without prior written consent of each other party.
9. 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.
10. NOTICE. Notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (a) if to the Adviser, c/o Neuberger
Xxxxxx, LLC, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; Attention: Xxxxx
Xxxxxxx, Esq., with a copy to Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000; Attention Xxxx Xxxxx; or (b) if to Citigroup Global Markets
Inc., as representative of the Primary Underwriters, at the office of Citigroup
Global Markets Inc. at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Manager, Investment Banking Division.
11. GOVERNING LAW. This Additional Compensation Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
12. 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 the Additional Compensation Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof.
13. CONSENT TO JURISDICTION. 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 Adviser and each Primary
Underwriter consents to the jurisdiction of such courts and personal service
with respect thereto. Each Primary Underwriter and the Adviser 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. The Adviser
and each Primary Underwriter agree that a final judgment in any proceeding or
counterclaim brought in any such court shall be conclusive and binding upon the
Adviser and each such Primary Underwriter and may be enforced in any other
courts to the jurisdiction of which the Adviser and each Primary Underwriter is
or may be subject, by suit upon such judgment.
This Agreement shall be effective as of the date first written above.
[END OF TEXT]
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XXXXXXXXX XXXXXX
Management INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------
Name: Xxxxxx Xxxxx
Title: Senior Vice President
Agreed and Accepted:
CITIGROUP GLOBAL MARKETS INC.
By: /s/ Xxxxxx X. Xxxx, Xx.
-----------------------------------
Name: Xxxxxx X. Xxxx, Xx.
Title: Director
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
By: /s/ Xxxx Xxxxxxxx
--------------------------------------------
Authorized Signatory
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Schedule I
Pro Rata
Percentage
Name of Primary Underwriter -----------
Citigroup Global Markets Inc. 79.38%
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated 20.62%
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