Exhibit (k)(9)
July [ ], 2007
Xxxxx Xxxxx Management
000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
FORM OF ADDITIONAL COMPENSATION AGREEMENT
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated July [ ], 2007 (the
"Underwriting Agreement"), by and among Xxxxx Xxxxx Risk-Managed Diversified
Equity Income Fund, a closed-end management investment company (the "Fund"),
Xxxxx Xxxxx Management ("Xxxxx Xxxxx" or the "Adviser"), Rampart Investment
Management Company, Inc. (the Sub-Advisor) and each of the respective
Underwriters named therein, with respect to the issue and sale of the Fund's
common shares of beneficial interest, par value $0.01 per share (the "Common
Shares"), as described therein. Reference is also made to (i) the Investment
Advisory Agreement, dated [ ] [ ], 2007 (the "Investment Advisory Agreement")
between Xxxxx Xxxxx and the Fund and (ii) the registration statement on Form N-2
regarding 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.
The Adviser hereby confirms its agreement with each Qualifying Underwriter (as
defined in Section 1 hereof) with respect to the additional compensation
referred to in the "Underwriting" section of the Registration Statement, payable
by Xxxxx Xxxxx to each of the Qualifying Underwriters. Xxxxx Xxxxx agrees to pay
to each Qualifying Underwriter additional compensation (collectively, the
"Additional Compensation") as provided for in Section 3 hereof; provided,
however, that such Additional Compensation shall not exceed an amount equal to [
]% per annum of the aggregate average daily gross assets of the Fund (including
assets attributable to any preferred shares of the Fund that may be
outstanding); and provided, further, that such payments shall not exceed the
"Maximum Additional Compensation Amount" (as defined in Section 4 hereof). The
Additional Compensation shall be payable as set forth in Section 3 hereof.
SECTION 1. Qualifying Underwriters. For the purposes of this Additional
Compensation Agreement, each Underwriter (other than [ ]), which sells Common
Shares of the Fund with an aggregate purchase price to the public of at least
$50,000,000 shall be a "Class I Qualifying Underwriter" and each Underwriter
(other than [ ]) which sells Common Shares of the Fund with an aggregate
purchase price to the public of at least $100,000,000, shall be a "Class II
Qualifying Underwriter"; provided, however, that the amounts required to qualify
as a Class I Qualifying Underwriter or a Class II Qualifying Underwriter may be
reduced with respect to any Underwriter in the sole discretion of Xxxxx Xxxxx.
Class I Qualifying Underwriters and Class II Qualifying Underwriters are
referred to collectively herein as "Qualifying Underwriters." A Qualifying
Underwriter which qualifies as a Class II Qualifying Underwriter shall not also
be a Class I Qualifying Underwriter. Within 60 days following the Closing Date,
the Qualifying Underwriters shall prepare or cause to be prepared and provide to
the Adviser a chart listing each of the Qualifying Underwriters, which chart
shall indicate the aggregate purchase price to the public of the Common Shares
sold by each Qualifying Underwriter and the Pro Rata Percentage (as defined in
Section 2 hereof) of each Qualifying Underwriter and shall be appended as
Schedule A to this Additional Compensation Agreement. Such Schedule A shall be
prepared in good faith by the Qualifying Underwriters and subject to
verification by the Adviser.
SECTION 2. Pro Rata Percentage. Each Qualifying Underwriter shall be assigned a
"Pro Rata Percentage," the numerator of which shall equal the aggregate purchase
price to the public of the
Common Shares sold by such Underwriter as set forth on Schedule A hereto and the
denominator of which shall equal the aggregate purchase price to the public of
all of the Common Shares purchased by the Underwriters pursuant to the
Underwriting Agreement.
SECTION 3. Payment of Additional Compensation.
(a) The Adviser shall pay the Additional Compensation, quarterly in
arrears, to each Class I Qualifying Underwriter in an amount equal to the
product of such Qualifying Underwriter's Pro Rata Percentage multiplied by [ ]%
of the aggregate average daily gross assets of the Fund for such quarter.
(b) The Adviser shall pay the Additional Compensation, quarterly in
arrears, to each Class II Qualifying Underwriter in an amount equal to the
product of such Qualifying Underwriter's Pro Rata Percentage multiplied by [ ]%
of the aggregate average daily gross assets of the Fund for such quarter.
(c) All fees payable hereunder shall be paid to each Qualifying
Underwriter by wire transfer of immediately available funds within 15 days
following the end of each calendar quarter to the bank account designated by
such Qualifying Underwriter. At the time of each payment of Additional
Compensation hereunder, the Adviser shall deliver to each Qualifying Underwriter
receiving an installment of Additional Compensation a statement indicating the
amount of the of the aggregate average daily gross asset value of the Fund for
such quarter (including assets attributable to any preferred shares of the Fund
that may be outstanding) on which such payment was based.
(d) The initial payments of Additional Compensation hereunder shall be
paid with respect to the calendar quarter ending September 30, 2007. 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 15 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 which is a
business day. All fees payable hereunder shall be in addition to any fees paid
by the Investment Adviser pursuant to the Underwriting Agreement.
SECTION 4. Maximum Additional Compensation Amount. The "Maximum Additional
Compensation Amount" payable by the Investment Adviser hereunder shall be [ ]%
of the aggregate offering price of the Common Shares. [ ] will receive
additional compensation which will not exceed [ ]% of the aggregate initial
offering price of the Common Shares. [ ] will receive additional compensation
which will not exceed [ ]% of the aggregate initial offering price of the Common
Shares. [ ] will receive additional compensation which will not exceed [ ]% of
the aggregate initial offering price of the Common Shares.
SECTION 5. Term. This Additional Compensation Agreement shall continue
coterminously with and so long as the Investment Advisory Agreement, dated [ ]
[ ], 2007, remains in effect between the Fund and the Adviser, or any similar
investment advisory agreement with a successor in interest or affiliate of the
Adviser remains in effect, as, and to the extent, that such investment advisory
agreement is renewed periodically in accordance with the Investment Company Act
of 1940, as amended. This Additional Compensation Agreement shall terminate on
the earliest to occur of (a) with respect to any Qualifying Underwriter, the
payment by Xxxxx Xxxxx to such Qualifying Underwriter of the Maximum Additional
Compensation Amount, (b) with respect to the Fund, the dissolution and winding
up of the Fund and (c) with respect to the Fund, the date on which the
Investment Advisory Agreement or other investment advisory agreement between the
Fund and the Adviser or any successor in interest to the Adviser, including but
not limited to an affiliate of the Adviser, shall terminate.
SECTION 6. Not an Investment Adviser. The Adviser acknowledges that the
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. No provision of this Additional Compensation Agreement shall be
considered as creating, nor shall any provision create, any obligation on the
part of any Underwriter, and the 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 or to perform any such similar services.
SECTION 7. Not Exclusive. Nothing herein shall be construed as prohibiting any
Underwriter or its respective affiliates from acting as such for any other
clients (including other registered investment companies or other investment
advisers).
SECTION 8. No Liability. Xxxxx Xxxxx agrees that no Underwriter shall have
liability to Xxxxx Xxxxx or the Fund for any act or omission to act by such
Underwriter in the course of its performance under this Additional Compensation
Agreement, in the absence of gross negligence or willful misconduct on the part
of such Underwriter. Xxxxx Xxxxx agrees to indemnify and hold harmless each
Underwriter and its respective officers, directors, agents and employees against
any loss or expense arising out of or in connection with such Underwriter's
performance under this Additional Compensation Agreement. This provision shall
survive the termination, expiration or supersession of this Additional
Compensation Agreement.
SECTION 9. Assignment. This Additional Compensation Agreement may not be
assigned by any party without the prior written consent of each other party.
SECTION 10. 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.
SECTION 11. Governing Law. This Additional Compensation Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 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 this Additional Compensation Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Adviser and the Qualifying Underwriters in accordance with its terms.
Very truly yours,
[ ]
By:___________________________
Name:
Title:
[ ]
By:___________________________
Name:
Title:
[ ]
By:___________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXX XXXXX MANAGEMENT
By:_____________________________________
Name:
Title:
SCHEDULE A
AGGREGATE
PURCHASE PRICE TO PUBLIC PRO RATA
NAME OF QUALIFYING UNDERWRITER CLASS OF COMMON SHARES SOLD PERCENTAGE
------------------------------ ----- --------------------- ----------
$[ ] [ ]
Indemnification Agreement
[ ] [ ], 2007
[ ]
[ADDRESS]
In connection with the additional compensation payments made to [ ], [ ], and
[ ] (each a "Bank" and together the "Banks") by the undersigned (the "Company")
as set forth in the Additional Compensation Agreement dated [ ] [ ], 2007,
between the Company and the Banks (the "Agreement"), in the event that a Bank
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 or arising out of the Agreement, the Company agrees to
indemnify, defend and hold each Bank harmless to the fullest extent permitted
by law, from and against any losses, claims, damages, liabilities and expenses
in connection with or arising out of the Agreement (a "Covered Claim"), 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, bad faith or willful misconduct of a
Bank. In addition, in the event that a Bank becomes involved in any capacity in
any Proceeding which relates to a Covered Claim, the Company will reimburse the
Bank for its legal and other expenses (including the reasonable cost of any
investigation and preparation) as such expenses are incurred by the Bank 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, on the one hand, and a Bank, 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 is for any reason held unenforceable, in such proportion
as is appropriate to reflect not only the relative benefits referred to in the
Agreement but also the relative fault of the Company and its stockholders, on
the one hand, and the party entitled to contribution, on the other hand, as well
as any other relevant equitable considerations; provided, that in no event shall
the Company contribute less than the amount necessary to assure that the Banks
are not liable for losses, claims, damages, liabilities and expenses in excess
of the amount of fees actually received by a Bank 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 each Bank, on the other hand.
The Company will not settle any Proceeding in respect of which indemnity may be
sought hereunder, whether or not a Bank is an actual or potential party to such
Proceeding, without that Bank's prior written consent. For purposes of this
Indemnification Agreement, a Bank shall include each Bank, any of its
affiliates, each other person, if any, controlling the Bank 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.
If any Proceeding is brought against a Bank in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, the Bank shall
promptly notify the Company in writing of the institution of such Proceeding and
the Company shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to the Bank and payment of all
fees and expenses; provided, however, that the omission to so notify the Company
shall not relieve the Company from any liability which the Company may have to a
Bank or otherwise, unless and only to the extent that, such omission results in
the forfeiture of substantive rights or defenses by the Company. Each Bank
shall have the right to employ its own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of the Bank unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such Proceeding or the Company shall not have,
within a reasonable period of time in light of the circumstances, employed
counsel to have charge of the defense of such Proceeding or the Bank shall have
reasonably concluded that there may be defenses available to it which are
different from, additional to or in conflict with those available to the Company
(in which case the Company shall not have the right to direct the defense of
such Proceeding on behalf of a Bank), in any of which events such fees and
expenses shall be borne by the Company and paid as incurred (it being
understood, however, that the Company shall not be liable for the expenses of
more than one separate counsel (in addition to any local counsel) in any one
Proceeding or series of related Proceedings in the same jurisdiction). The
Company shall not be liable for any settlement of any Proceeding effected
without its written consent but if settled with the written consent of the
Company, the Company agrees to indemnify and hold harmless a Bank from and
against any loss or liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time a Bank shall have requested the Company to
reimburse the Bank for fees and expenses of counsel as contemplated by the
second sentence of this paragraph, then the Company agrees that it shall be
liable for any settlement of any Proceeding effected without its written consent
if (i) such settlement is entered into more than 60 business days after receipt
by the Company of the aforesaid request, (ii) the Company shall not have
reimbursed a Bank in accordance with such request prior to the date of such
settlement and (iii) the Bank shall have given the Company at least 30 days'
prior notice of its intention to settle.
The Company agrees that neither the Banks nor any of their 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 a Covered Claim, 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, bad faith or willful
misconduct of a Bank in performing the Services.
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 A BANK'S 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 AND THIRD PARTY AGAINST
UBS SECURITIES OR ANY INDEMNIFIED PARTY. EACH OF THE BANKS 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 Bank'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,
XXXXX XXXXX MANAGEMENT
By:
----------------------
Name:
Title:
Accepted and agreed to as of the date first above written:
[ ]
By: ___________________________________
Name:
Title:
[ ]
By:_____________________________________________
Name:
Title:
[ ]
By: ___________________________________
Name:
Title:
