EXECUTION COPY
CORPORATE FINANCE SERVICES AND CONSULTING AGREEMENT
This CORPORATE FINANCE SERVICES AND CONSULTING AGREEMENT (the "Agreement"),
dated as of March 30, 2004, between Xxxxxx Brothers Inc. ("Xxxxxx") and
Xxxxxxxxx Xxxxxx Management Inc. ("NB Management").
WHEREAS, Xxxxxxxxx Xxxxxx Dividend Advantage Fund Inc. (including any
successor by merger or otherwise, 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 Shares"), are registered under the Securities Act
of 1933, as amended;
WHEREAS, Xxxxxx is acting as a managing underwriter in the public offering
of the Fund's Common Shares (the "Offering");
WHEREAS, NB Management is the investment manager of the Fund;
WHEREAS, NB Management desires to retain Xxxxxx to provide certain
corporate finance and consulting services to NB Management and to the Fund on an
ongoing basis, and Xxxxxx is willing to render such services; and
WHEREAS, NB Management desires to provide compensation to Xxxxxx 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) NB Management hereby employs Xxxxxx, for the period and on the terms
and conditions set forth herein, to provide the following services:
(i) relevant information, studies or reports regarding the Fund and
regarding general trends in the closed-end management investment
company and asset management industries, if reasonably obtainable, and
consult with representatives of NB Management in connection therewith;
(ii) certain economic research and statistical information and
reports, if reasonably obtainable, on behalf of NB Management or the
Fund and consult with representatives of NB Management or the Fund,
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) such other
services in connection with the Common Shares relating to the trading
price and market price thereof upon which NB Management and Xxxxxx
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 NB Management, Xxxxxx shall limit or cease any
action or service provided hereunder to the extent and for the time
period requested by NB Management; provided, however, that pending
termination of this Agreement as provided for in Section 7 hereof, any
such limitation or cessation shall not relieve NB Management of its
payment obligations pursuant to Section 2 hereof.
(c) Xxxxxx will promptly notify NB Management in writing if it learns of
any material inaccuracy or misstatement in, or material omission from,
any written information provided by Xxxxxx to NB Management in
connection with the performance of services by Xxxxxx under this
Agreement. Xxxxxx agrees that in performing its services under this
Agreement, it shall comply in all material respects with all
applicable laws, rules and regulations.
2. NB Management shall pay to Xxxxxx a fee computed monthly and payable
quarterly in arrears commencing June 30, 2004 at an annualized rate of
0.15% of the Fund's Managed Assets (as such term is defined in the
prospectus, dated March 25, 2004 (the "Prospectus"), relating to the
Offering) attributable to the Common Shares sold by Xxxxxx in the Offering
for a term as described in Section 7 hereof. The total amount of the fee
hereunder shall not exceed 0.65392% of the total price to the public of the
Common Shares sold in the Offering (the "Maximum Additional Xxxxxx
Compensation Amount"); the total amount of additional payments to X.X.
Xxxxxxx & Sons, Inc. ("X.X. Xxxxxxx") pursuant to the Corporate Finance
Services and Consulting Agreement, dated March 30, 2004, by and between NB
Management and X.X. Xxxxxxx shall not exceed 0.54046% of the total price to
the public of the Fund's Common Shares sold by the Prospectus; and the
total amount of additional payments to Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated ("Xxxxxxx Xxxxx") pursuant to the Additional
Compensation Agreement, dated March 30, 2004, by and between NB Management
and Xxxxxxx Xxxxx shall not exceed 3.27227% of the total price to the
public of the Fund's Common Shares sold by the Prospectus; and in no event
shall the sum of the total aggregate amount of these additional payments to
Xxxxxx, X.X. Xxxxxxx and Xxxxxxx Xxxxx, plus the amount of the expense
reimbursement of $.00667 per share of Common Share payable by the Fund
pursuant to the Purchase Agreement dated March 25, 2004 by and among the
Fund, NB Management, Xxxxxxxxx Xxxxxx, LLC, and each of the underwriters
named therein (which amount, pursuant to the Purchase Agreement, shall not
exceed .03335% of the total price to the public of the Fund's Common Shares
sold pursuant to the Prospectus), exceed 4.5% of the total price to the
public of the Common Shares sold in the Offering. All quarterly fees
payable hereunder shall be paid to Xxxxxx within 15 days following the end
of each calendar quarter. The sum total of all compensation to the
underwriters in connection with the Offering, including fees payable
pursuant to this Section 2, as well as sales load and other underwriting
compensation in connection with the Offering, shall not exceed 9.0% of the
total price to the public of the Fund's Common Shares sold pursuant to the
Prospectus (the "Maximum Additional Compensation Amount"). Xxxxxx hereby
undertakes to use its reasonable best efforts to notify NB Management when
the Maximum Additional Xxxxxx Compensation Amount has been paid by NB
Management.
3. NB Management 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 Xxxxxx Compensation Amount
described in paragraph 2 above.
4. NB Management acknowledges that the services of Xxxxxx 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
Xxxxxx, and Xxxxxx 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, 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 Xxxxxx, shall be the subject of a
separate agreement with NB Management.
5. Nothing herein shall be construed as prohibiting Xxxxxx or its affiliates
from providing similar or other services to any other clients (including
other registered investment companies or other investment advisors), so
long as Xxxxxx'x services to NB Management 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 Xxxxxx and NB Management. In addition, nothing in
this Agreement shall be construed to constitute Xxxxxx as the agent or
employee of NB Management or NB Management as the agent or employee of
Xxxxxx, and neither party shall make any representation to the contrary. It
is understood that Xxxxxx is being engaged hereunder solely to provide the
services described above to NB Management and that Xxxxxx is not acting as
an agent or fiduciary of, and Xxxxxx shall not have any duties or liability
to, the current or future stockholders of the Fund or any other third party
in connection with its engagement hereunder, all of which are hereby
expressly waived to the extent NB Management has the authority to waive
such duties and liabilities.
6. NB Management will furnish Xxxxxx with such information as such party
reasonably believes appropriate to the performance of its obligations
hereunder (all such information so furnished being the "Information"). NB
Management recognizes and confirms that Xxxxxx (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 NB Management's knowledge, the
Information to be furnished by NB Management 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. NB Management will
promptly notify Xxxxxx if it learns of any material inaccuracy or
misstatement in, or material omission from, any Information delivered to
such party.
7. This Corporate Finance Services and Consulting Agreement shall commence on
the date referred to above and shall be in effect only so long as NB
Management (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 Purchase Agreement); PROVIDED, HOWEVER, that
this Agreement shall terminate on the earliest to occur of (a) the payment
by NB Management to Xxxxxx of the Maximum Additional Xxxxxx Compensation
Amount, (b) the payment by NB Management of the Maximum Additional
Compensation Amount, (c) the dissolution and winding up of the Fund and (d)
the date on which the Management Agreement or other investment management
agreement between the Fund and NB Management or any affiliate or successor
in interest to NB Management shall terminate; and PROVIDED FURTHER,
HOWEVER, that in the event Xxxxxx is in material breach of any of the terms
of this Corporate Finance Services and Consulting Agreement and shall not
have remedied such breach within thirty days after written notice from NB
Management requiring the same to be remedied, or in the event of gross
negligence or willful misconduct by Xxxxxx in the performance of its duties
under this Corporate Finance Service and Consulting Agreement, NB
Management may terminate this Corporate Finance Services and Consulting
Agreement immediately effective upon notice to Xxxxxx and no further
payments shall be due Xxxxxx under this Corporate Finance Services and
Consulting Agreement (except for any balance due prior to such notice of
termination).
8. NB Management agrees that Xxxxxx shall have no liability to NB Management
or the Fund for any act or omission to act by Xxxxxx in the course of its
performance under this Agreement, in the absence of gross negligence or
willful misconduct on the part of Xxxxxx. NB Management 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 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 NB Management and Xxxxxx consent to the
jurisdiction of such courts and personal service with respect thereto. Each
of NB Management and Xxxxxx 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 NB Management and
Xxxxxx 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.
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 with
respect to the subject matter hereof 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 NB Management and
Xxxxxx.
13. All notices required or permitted to be sent under this Agreement shall be
sent, if to NB Management:
Xxxxxxxxx Xxxxxx Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000.
Attention: Xxxxx X. Xxxxxxx (cc: General Counsel)
or if to Xxxxxx:
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Managing Director
or such other name and address as may be given in writing to the other
party hereto.
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 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.
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. XXXXXX BROTHERS INC.
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxx X. Xxxxxx
---------------------------------- -----------------------------------
Name: Xxxxxx Xxxxx Name: Xxxx X. Xxxxxx
Title: SVP Title: Managing Director
INDEMNIFICATION AGREEMENT
-------------------------
March 30, 2004
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In connection with the engagement of Xxxxxx to provide services to the
undersigned (together with its affiliates under the control of Xxxxxxxxx Xxxxxx
Management Inc. and subsidiaries, referred to as the "Company") in connection
with the matters set forth in the Corporate Finance Services and Consulting
Agreement dated March 30, 2004 (the "Agreement"), between the Company and Xxxxxx
Brothers Inc. (Xxxxxx Brothers Inc., is referred to herein as the "Service
Provider"), in the event that the 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 (other than
services and activities performed pursuant to the Purchase Agreement, dated
March 25, 2004, by and among the Fund, NB Management, Xxxxxxxxx Xxxxxx, LLC and
each of the Underwriters named therein (the "Purchase Agreement")), the Company
agrees to indemnify, defend and hold the 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, 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 the Service Provider. In addition, in the event that the Service
Provider becomes involved in any capacity in any Proceeding in connection with
any matter in any way arising out of the matters contemplated by the Agreement,
the Company will reimburse the Service Provider for its legal and other expenses
(including the cost of any investigation and preparation) as such expenses are
reasonably incurred by the 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 Provider, 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 the Service Provider has been retained to perform services bears to the
fees paid to the Service Provider under the Agreement; provided, that in no
event shall the Company contribute less than the amount necessary to assure that
the Service Provider is not liable for losses, claims, damages, liabilities and
expenses in excess of the amount of fees actually received by the 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 Service Provider, on the other hand. The Company shall
not be liable under this Indemnification Agreement to the 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. Each party shall not, without the prior
written consent of the other party, 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 the other party is an actual or potential party
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of the other party 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 the other party. For purposes
of this Indemnification Agreement, the Service Provider shall include any of its
affiliates, each other person, if any, controlling the 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 the 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 the 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 the Service Provider in performing the
services that are the subject of the Agreement.
Notwithstanding any provision contained herein, in no event shall the
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 Purchase Agreement (as
defined in the 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. or any of its affiliates serves as investment adviser.
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 THE 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 THE SERVICE PROVIDER OR ANY INDEMNIFIED PARTY. THE 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.
The foregoing Indemnification Agreement shall remain in full force and
effect notwithstanding any termination of the 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: /s/ Xxxxxx Xxxxx
----------------------------------------
Name: Xxxxxx Xxxxx
Title: SVP
Accepted and agreed to as of
the date first above written:
XXXXXX BROTHERS INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: Managing Director
