COLLATERAL MANAGEMENT AGREEMENT dated as of July 16, 2010 by and between GOLUB CAPITAL BDC 2010-1 LLC as Issuer and GC ADVISORS LLC
EXECUTION
COPY
dated as
of July 16, 2010
by and
between
▇▇▇▇▇
CAPITAL BDC 2010-1 LLC
as
Issuer
and
GC
ADVISORS LLC
as
Collateral Manager
TABLE
OF CONTENTS
|
Page
|
||||
|
Section
1.
|
Definitions;
Rules of Construction
|
1
|
||
|
Section
2.
|
General
Duties and Authority of the Collateral Manager
|
4
|
||
|
Section
3.
|
Purchase
and Sale Transactions; Brokerage
|
9
|
||
|
Section
4.
|
Additional
Activities of the Collateral Manager
|
11
|
||
|
Section
5.
|
Certain
Conflicts of Interest
|
13
|
||
|
Section
6.
|
Records;
Confidentiality
|
14
|
||
|
Section
7.
|
Obligations
of Collateral Manager
|
15
|
||
|
Section
8.
|
Compensation
|
15
|
||
|
Section
9.
|
Benefit
of the Agreement
|
17
|
||
|
Section
10.
|
Limits
of Collateral Manager Responsibility
|
18
|
||
|
Section
11.
|
No
Joint Venture
|
20
|
||
|
Section
12.
|
Term;
Termination
|
21
|
||
|
Section
13.
|
Assignments
|
23
|
||
|
Section
14.
|
Removal
for Cause
|
24
|
||
|
Section
15.
|
Obligations
of Resigning or Removed Collateral Manager
|
26
|
||
|
Section
16.
|
Representations
and Warranties
|
26
|
||
|
Section
17.
|
Limited
Recourse; No Petition
|
30
|
||
|
Section
18.
|
Notices
|
30
|
||
|
Section
19.
|
Binding
Nature of Agreement; Successors and Assigns
|
31
|
||
|
Section
20.
|
Entire
Agreement; Amendment
|
31
|
||
|
Section
21.
|
Governing
Law
|
32
|
||
|
Section
22.
|
Submission
to Jurisdiction
|
32
|
||
|
Section
23.
|
Waiver
of Jury Trial
|
32
|
||
|
Section
24.
|
Conflict
with the Indenture
|
32
|
||
|
Section
25.
|
Subordination;
Assignment of Agreement
|
33
|
||
|
Section
26.
|
Indulgences
Not Waivers
|
33
|
||
|
Section
27.
|
Costs
and Expenses
|
33
|
||
|
Section
28.
|
Third
Party Beneficiary
|
34
|
||
|
Section
29.
|
Titles
Not to Affect Interpretation
|
34
|
||
|
Section
30.
|
Execution
in Counterparts
|
34
|
-i-
TABLE
OF CONTENTS
(continued)
|
Page
|
||||
|
Section
31.
|
Provisions
Separable
|
34
|
||
|
Section
32.
|
Gender
|
34
|
||
|
Section
33.
|
|
Written
Disclosure Statement
|
|
34
|
-ii-
This
Collateral Management Agreement (as amended, supplemented or otherwise modified
from time to time, this “Agreement”), dated as
of July 16, 2010, is entered into by and between ▇▇▇▇▇ CAPITAL BDC 2010-1 LLC, a
Delaware limited liability company, with its office located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the “Issuer”), and GC
ADVISORS LLC, a Delaware limited liability company, located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as collateral manager (together with
its successors and permitted assigns, “▇▇▇▇▇” and the “Collateral
Manager”).
WITNESSETH:
WHEREAS,
the Notes (as defined in the Indenture) will be issued pursuant to an Indenture
dated as of the date hereof (the “Indenture”), between
the Issuer and U.S. Bank National Association, as trustee (together with any
successor trustee permitted under the Indenture, the “Trustee”);
WHEREAS,
the Issuer intends to pledge all Collateral Obligations and the other Assets, as
set forth in the Indenture, to the Trustee as security for the Secured Parties
under the Indenture;
WHEREAS,
the Issuer desires to appoint ▇▇▇▇▇ as the Collateral Manager to provide the
services described herein and ▇▇▇▇▇ desires to accept such
appointment;
WHEREAS,
the Indenture authorizes the Issuer to enter into this Agreement, pursuant to
which the Collateral Manager agrees to perform, on behalf of the Issuer, certain
investment management duties with respect to the acquisition, administration and
disposition of Assets in the manner and on the terms set forth herein and to
perform such additional duties as are consistent with the terms of this
Agreement and the Indenture as the Issuer may from time to time reasonably
request; and
WHEREAS,
the Collateral Manager has the capacity to provide the services required hereby
and is prepared to perform such services upon the terms and subject to the
conditions set forth herein;
NOW,
THEREFORE, in consideration of the agreements herein set forth, the parties
hereto agree as follows:
Section
1. Definitions; Rules of
Construction
(a) As
used in this Agreement:
“Advisers Act” shall
mean the U.S. Investment Advisers Act of 1940, as amended.
“Affiliate
Transaction” shall have the meaning set forth in Section
5(a).
“Aggregate Collateral
Management Fee” shall have the meaning set forth in Section
8(b).
1
“Agreement” shall have
the meaning set forth in the preamble.
“Cause” shall have the
meaning set forth in Section
14(a).
“Client” means with
respect to any specified Person, any Person or account for which the specified
Person provides investment management services or investment
advice.
“Collateral Management
Fee” shall have the meaning set forth in Section
8(a).
“Collateral Management Fee
Shortfall Amount” shall have the meaning set forth in Section
8(a).
“Collateral Manager”
shall have the meaning set forth in the preamble.
“Collateral Manager
Breaches” shall have the meaning set forth in Section
10(a).
“Collateral Manager
Information” shall have the meaning set forth in Section
16(b)(v).
“Collateral Manager
Notes” shall mean any Notes owned by the Collateral Manager, an Affiliate
thereof, or any account, fund, client or portfolio established and controlled by
the Collateral Manager or an Affiliate thereof or for which the Collateral
Manager or an Affiliate thereof acts as the investment adviser or with respect
to which the Collateral Manager or an Affiliate thereof exercises discretionary
control.
“Cumulative Deferred
Management Fee” shall have the meaning set forth in Section
8(b).
“Current Deferred Management
Fee” shall have the meaning set forth in Section
8(b).
“Expenses” shall have
the meaning set forth in Section
10(b).
“Fee Basis Amount”
means, as of any date of determination, the sum of (i) the Collateral Principal
Amount, (ii) the aggregate principal amount of all Defaulted Obligations and
(iii) the aggregate amount of all Principal Financed Accrued
Interest.
“Final Offering
Circular” shall mean the Offering Circular, dated July 13, 2010 with
respect to the Secured Notes, as supplemented by the Supplement dated July 14,
2010 and as further amended or supplemented.
“▇▇▇▇▇” shall have the
meaning set forth in the preamble.
“Indemnified Party”
shall have the meaning set forth in Section 10(b).
“Indemnifying Party”
shall have the meaning set forth in Section
10(b).
“Indenture” shall have
the meaning set forth in the recitals hereto.
“Independent Review
Party” shall have the meaning set forth in Section
5(b).
2
“Instrument of
Acceptance” shall have the meaning set forth in Section
12(c).
“Internal Policies”
shall have the meaning set forth in Section
3(b).
“Issuer” shall have
the meaning set forth in the preamble.
“Losses” shall have
the meaning set forth in Section
10(b).
“Material Adverse
Effect” means, with respect to any event or circumstance, a material
adverse effect on (a) the business, financial condition (other than the
performance of the Assets) or operations of the Issuer, taken as a whole, (b)
the validity or enforceability of the Indenture, this Agreement or the Issuer’s
Organizational Instruments or (c) the existence, perfection, priority or
enforceability of the Trustee’s lien on the Assets.
“Offering Circulars”
shall mean, collectively, the Final Offering Circular, as the same may be
amended or supplemented, and the Preliminary Offering Circular.
“Organizational
Instruments” shall mean the memorandum and articles of association or
certificate of incorporation and bylaws (or the comparable documents for the
applicable jurisdiction), in the case of a corporation, or the partnership
agreement, in the case of a partnership, or the certificate of formation and
limited liability company agreement (or the comparable documents for the
applicable jurisdiction), in the case of a limited liability
company.
“Preliminary Offering
Circular” shall mean the Preliminary Offering Circular, dated June 24,
2010, with respect to the Secured Notes.
“Prime Rate” shall
mean the rate announced by U.S. Bank National Association from time to time as
its prime rate in the United States, such rate to change as and when such
designated rate changes. The Prime Rate is not intended to be the
lowest rate of interest charged by U.S. Bank National Association or any other
specified financial institution in connection with extensions of credit to
debtors.
“Proceedings” shall
have the meaning set forth in Section
22.
“Related Person”
means, with respect to any Person, the direct or indirect owners of the equity
interests therein, directors, officers, employees, managers, agents and
professional advisors thereof, including, with respect to the Collateral
Manager, any investment adviser in which the Collateral Manager or any of its
Affiliates has an economic or ownership interest.
“Staffing Agreement”
shall have the meaning set forth in Section
13(b).
“Standard of Care”
shall have the meaning set forth in Section
2(a).
“Statement of Cause”
shall have the meaning set forth in Section
14(a).
“Termination Notice”
shall have the meaning set forth in Section
14(a).
3
“Transaction” shall
mean any action taken by the Collateral Manager on behalf of the Issuer with
respect to the Assets, including, without limitation, (i) selecting the
Collateral Obligations and Eligible Investments to be acquired by the Issuer,
(ii) investing and reinvesting the Assets, (iii) instructing the Trustee with
respect to any acquisition, disposition or tender of, or Offer with respect to,
a Collateral Obligation, Equity Security or Eligible Investment by the Issuer
and (iv) any of the services set forth in Section
2.
“Trustee” shall have
the meaning set forth in the recitals hereto.
(b)
Capitalized terms used but not otherwise defined
herein shall have the respective meanings assigned thereto in the Indenture and
the rules of construction set forth in Section 1.2 of the
Indenture are hereby incorporated by reference herein.
Section
2. General Duties and Authority
of the Collateral Manager.
(a)
▇▇▇▇▇ is hereby appointed as Collateral Manager of the
Issuer for the purpose of performing certain investment management functions
including, without limitation, directing and supervising the investment and
reinvestment of the Collateral Obligations and Eligible Investments and
performing certain administrative functions on behalf of the Issuer in
accordance with the applicable provisions of the Indenture and of this
Agreement, and ▇▇▇▇▇ hereby accepts such appointment. The Collateral
Manager shall have the power to execute and deliver all necessary and
appropriate documents and instruments on behalf of the Issuer in connection with
performing its obligations set forth herein. Except as may otherwise
be expressly provided in this Agreement or the Indenture, the Collateral Manager
will perform its obligations hereunder and under the Indenture with reasonable
care and in good faith, (i) using a degree of skill and attention no less than
that which the Collateral Manager exercises with respect to comparable assets
that it may manage for itself and its other clients, and (ii) in accordance with
the Collateral Manager’s customary practices and procedures involving assets of
the nature and character of the Assets (the “Standard of
Care”).
(b)
Subject to Section
2(a), Section
2(d), Section
5 and Section
10 and to the applicable provisions of the Indenture and of this
Agreement, the Collateral Manager agrees, and is hereby authorized, to provide
the following services to the Issuer:
(i) select
the Collateral Obligations and Eligible Investments to be acquired and select
the Collateral Obligations, Equity Securities and Eligible Investments to be
sold or otherwise disposed of by the Issuer;
(ii) invest
and reinvest the Assets;
(iii) instruct
the Trustee with respect to any acquisition, disposition, or tender of, or Offer
with respect to, a Collateral Obligation, Equity Security, Eligible Investment
or other assets received in respect thereof in the open market or otherwise by
the Issuer; and
(iv) perform
all other tasks and take all other actions that are specified, or not
inconsistent with, the duties of the Collateral Manager set forth in the
Indenture, the Collateral Administration Agreement or this
Agreement.
4
The
Collateral Manager shall, and is hereby authorized to, perform its obligations
hereunder and under the Indenture in a manner which is consistent with the terms
hereof and of the Indenture.
Notwithstanding
anything to the contrary in this Section 2(b), none of
the services performed by the Collateral Manager shall result in or be construed
as resulting in an obligation to perform any of the following: (i) the
Collateral Manager acting repeatedly or continuously as an intermediary in
securities for the Issuer; (ii) the Collateral Manager providing investment
banking services to the Issuer; or (iii) the Collateral Manager having direct
contact with, or actively soliciting or finding outside investors to invest in
the Issuer.
(c)
Subject to the provisions concerning its general duties and
obligations as set forth in paragraphs (a) and (b) above and the terms of the
Indenture, the Collateral Manager shall provide, and is hereby authorized to
provide, the following services to the Issuer:
(i) The
Collateral Manager shall perform the investment-related duties and functions
(including, without limitation, the furnishing of Issuer Orders, Issuer Requests
and Authorized Officer’s certificates) as are expressly required hereunder or
under the Indenture with regard to acquisitions, sales or other dispositions of
Collateral Obligations, Equity Securities, Eligible Investments and other
securities and assets permitted to be acquired or sold under, and subject to,
the Indenture (including any proceeds received by way of Offers, workouts and
restructurings on assets owned by the Issuer) and shall comply with the
Investment Criteria and other requirements in the Indenture. The
Collateral Manager shall have no obligation to perform any other duties other
than as expressly specified herein or in the Indenture and the Collateral
Manager shall be subject to no implicit obligations of any kind. The Issuer
hereby irrevocably (except as provided below) appoints the Collateral Manager as
its true and lawful agent and attorney-in-fact (with full power of substitution)
in its name, place and stead and at its expense, in connection with the
performance of its duties provided for in this Agreement or in the Indenture,
including, without limitation, the following powers: (A) to give or cause to be
given any necessary receipts or acquittance for amounts collected or received
hereunder, (B) to make or cause to be made all necessary transfers of the
Collateral Obligations, Equity Securities and Eligible Investments in connection
with any acquisition, sale or other disposition made pursuant hereto and the
Indenture, (C) to execute (under hand, under seal or as a deed) and deliver or
cause to be executed and delivered on behalf of the Issuer all necessary or
appropriate bills of sale, assignments, agreements and other instruments in
connection with any such acquisition, sale or other disposition and (D) to
execute (under hand, under seal or as a deed) and deliver or cause to be
executed and delivered on behalf of the Issuer any consents, votes, proxies,
waivers, notices, amendments, modifications, agreements, instruments, orders or
other documents in connection with or pursuant to this Agreement or the
Indenture and relating to any Collateral Obligation, Equity Security or Eligible
Investment. The Issuer hereby ratifies and confirms all that such
attorney-in-fact (or any substitute) shall lawfully do hereunder and pursuant
hereto and authorizes such attorney-in-fact to exercise full discretion and act
for the Issuer in the same manner and with the same force and effect as the
managers or officers of the Issuer might or could do in respect of the
performance of such services, as well as in respect of all other things the
Collateral Manager deems necessary or incidental to the furtherance or conduct
of the Collateral Manager’s services under this Agreement or under the
Indenture, subject in each case to the applicable terms of this Agreement and of
the Indenture. The Issuer hereby authorizes such attorney-in-fact, in
its sole discretion (but subject to applicable law and the provisions of this
Agreement and the Indenture), to take all actions that it considers reasonably
necessary and appropriate in respect of the Assets, this Agreement and the other
Transaction Documents. Nevertheless, if so requested by the Collateral Manager
or by a purchaser of any Collateral Obligation or Eligible Investment, the
Issuer shall ratify and confirm any such sale or other disposition by executing
and delivering to the Collateral Manager or such purchaser all proper bills of
sale, assignments, releases, powers of attorney, proxies, dividends, other
orders and other instruments as may reasonably be designated in any such
request. Except as otherwise set forth and provided for herein, this
grant of power of attorney is coupled with an interest, and it shall survive and
not be affected by the subsequent dissolution or bankruptcy of the
Issuer. Notwithstanding anything herein to the contrary, the
appointment herein of the Collateral Manager as the Issuer’s agent and
attorney-in-fact shall automatically cease and terminate upon the effective date
of any termination of this Agreement, the resignation of the Collateral Manager
pursuant to Section
12 or any removal of the Collateral Manager pursuant to Section
14. Each of the Collateral Manager and the Issuer shall take
such other actions, and furnish such certificates, opinions and other documents,
as may be reasonably requested by the other party hereto in order to effectuate
the purposes of this Agreement and to facilitate compliance with applicable laws
and regulations and the terms of this Agreement and of the
Indenture.
5
(ii) The
Collateral Manager shall negotiate on behalf of the Issuer with prospective
originators, sellers or purchasers of Collateral Obligations as to the terms
relating to the acquisition, sale or other dispositions thereof.
(iii) Subject
to any applicable terms of the Collateral Administration Agreement, the
Collateral Manager shall monitor the Assets on behalf of the Issuer on an
ongoing basis and shall provide or cause to be provided to the Issuer all
reports, schedules and other data reasonably available to the Collateral Manager
that the Issuer is required to prepare and deliver or cause to be prepared and
delivered under the Indenture, in such forms and containing such information
required thereby, in reasonably sufficient time for such required reports,
schedules and data to be reviewed and delivered by or on behalf of the Issuer to
the parties entitled thereto under the Indenture. The obligation of
the Collateral Manager to furnish such information is subject to the Collateral
Manager’s timely receipt of necessary reports and the appropriate information
from the Person responsible for the delivery of or preparation of such
information or such reports (including without limitation, the Obligors of the
Collateral Obligations, the Rating Agencies, the Trustee and the Collateral
Administrator) and to any confidentiality restrictions with respect thereto. The
Collateral Manager shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing reasonably believed by it to be
genuine and to have been signed or sent by a Person that the Collateral Manager
has no reason to believe is not duly authorized. The Collateral
Manager also may rely upon any statement made to it orally or by telephone and
made by a Person the Collateral Manager has no reason to believe is not duly
authorized, and shall not incur any liability for relying
thereon. The Collateral Manager is entitled to rely on any other
information furnished to it by third parties that it reasonably believes in good
faith to be genuine.
6
(iv) The
Collateral Manager, on behalf of the Issuer, shall be responsible for obtaining,
to the extent reasonably practicable and to the extent such information is
available to it, any information concerning whether a Collateral Obligation has
become a Defaulted Obligation, a Current Pay Obligation, a Credit Risk
Obligation or a Credit Improved Obligation.
(v) The
Collateral Manager may, subject to and in accordance with the Indenture, as
agent of the Issuer and on behalf of the Issuer, direct the Trustee to take, or
take on behalf of the Issuer, as applicable, any of the following actions with
respect to a Collateral Obligation, Equity Security or Eligible
Investment:
(A) purchase
or otherwise acquire such Collateral Obligation or Eligible
Investment;
(B) retain
such Collateral Obligation, Equity Security or Eligible Investment;
(C) sell
or otherwise dispose of such Collateral Obligation, Equity Security or Eligible
Investment (including any assets received by way of Offers, workouts and
restructurings on assets owned by the Issuer) in the open market or
otherwise;
(D) if
applicable, tender such Collateral Obligation, Equity Security or Eligible
Investment;
(E) if
applicable, consent to or refuse to consent to any proposed amendment,
modification, restructuring, exchange, waiver or Offer and give or refuse to
give any notice or direction;
(F) retain
or dispose of any securities or other property (if other than cash) received by
the Issuer;
(G) call
or waive any default with respect to any Defaulted Obligation;
(H) vote
to accelerate the maturity of any Defaulted Obligation;
(I) participate
in a committee or group formed by creditors of an obligor or an issuer under a
Collateral Obligation or Eligible Investment;
(J) after
or in connection with the payment in full of all amounts owed under the Secured
Notes and the termination without replacement of the Indenture or in connection
with any Redemption or Refinancing of the Notes, advise the Issuer as to when,
in the view of the Collateral Manager, it would be in the best interest of the
Issuer to liquidate all or any portion of the Issuer's investment portfolio
(and, if applicable, after discharge of the Indenture) and render such
assistance as may be necessary or required by the Issuer in connection with such
liquidation or any actions necessary to effectuate a Redemption or Refinancing
of the Notes;
(K) advise
and assist the Issuer with respect to the valuation of the Assets, to the extent
required or permitted by the Indenture;
7
(L) provide
strategic and financial planning (including advice on utilization of assets),
financial statements and other similar reports;
(M) negotiate
any Refinancing for the Issuer as authorized by the Indenture; and
(N) exercise
any other rights or remedies with respect to such Collateral Obligation, Equity
Security or Eligible Investment as provided in the Underlying Documents of the
obligor or issuer under such Assets or the other documents governing the terms
of such Assets or take any other action consistent with the terms of this
Agreement or of the Indenture which the Collateral Manager reasonably determines
to be in the best interests of the Issuer.
(vi) The
Collateral Manager may:
(A) retain
accounting, tax, counsel and other professional services on behalf of the Issuer
as may be needed by the Issuer; and
(B) consult
on behalf of the Issuer with each Rating Agency at such times as may be
reasonably requested by such Rating Agency and provide the Rating Agencies with
any information reasonably requested in connection with each Rating Agency’s
monitoring of the acquisition and disposition of Collateral Obligations and each
Rating Agency’s maintenance of their ratings of the Secured Notes.
(vii) In
connection with the purchase of any Collateral Obligation by the Issuer, the
Collateral Manager shall prepare, on behalf of the Issuer, the information
required to be delivered to the Trustee pursuant to the Indenture.
(d)
In performing its duties hereunder and when exercising its
discretion and judgment in connection with any transactions involving the
Assets, the Collateral Manager shall carry out any reasonable written directions
of the Issuer for the purpose of the Issuer’s compliance with its Organizational
Instruments and the Indenture; provided that such directions
are not inconsistent with any provision of this Agreement or the Indenture by
which the Collateral Manager is bound.
(e)
In providing services hereunder, the Collateral Manager may, without the
consent of any party, employ third parties, including, without limitation, its
affiliates, to render advice (including investment advice), to provide services
to arrange for trade execution and otherwise provide assistance to the Issuer
and to perform any of its duties hereunder; provided that the Collateral
Manager shall not be relieved of any of its duties hereunder regardless of the
performance of any services by third parties, including affiliates.
(f)
The Collateral Manager shall not be bound to comply with any supplemental
indenture until it has received a copy of such supplemental indenture from the
Issuer or the Trustee and unless the Collateral Manager has consented thereto in
writing, as provided in the Indenture.
8
Section
3. Purchase and Sale
Transactions; Brokerage.
(a)
The Collateral Manager, subject to and in accordance with the
Indenture, hereby agrees that it shall cause any Transaction to be conducted on
terms and conditions negotiated on an arm’s-length basis and in accordance with
applicable law. Except as expressly permitted under the Indenture, no
Assets (other then any Delayed Drawdown Collateral Obligations or Revolving
Collateral Obligations) shall be purchased if such Assets may give rise to any
obligation or liability on the Issuer’s part to take any action or make any
payment other than at the Issuer’s option.
(b)
The Collateral Manager will seek to obtain the best execution (but shall have no
obligation to obtain the lowest prices available) for all orders placed with
respect to any Transaction, in a manner permitted by law and in a manner it
believes to be in the best interests of the Issuer. Subject to the
preceding sentence, the Collateral Manager may, in the allocation of business,
select brokers and/or dealers with whom to effect trades on behalf of the Issuer
and may open cash trading accounts with such brokers and dealers (provided that none of the
Assets may be credited to, held in or subject to the lien of the broker or
dealer with respect to any such account). In addition, subject to the first
sentence of this paragraph, the Collateral Manager may, in the allocation of
business, take into consideration research and other brokerage services
furnished to the Collateral Manager or its Affiliates by brokers and dealers
which are not Affiliates of the Collateral Manager; provided that the Collateral
Manager in good faith believes that the compensation for such services rendered
by such brokers and dealers complies with the requirements of Section 28(e) of
the Securities Exchange Act of 1934, as amended (“Section 28(e)”), or
in the case of principal or fixed income transactions for which the “safe
harbor” of Section 28(e) is not available, the amount of the spread charged is
reasonable in relation to the value of the research and other brokerage services
provided. Such services may be used by the Collateral Manager in connection with
its other advisory activities or investment operations. The Collateral Manager
may aggregate sales and purchase orders placed with respect to the Assets with
similar orders being made simultaneously for other Clients of the Collateral
Manager or of Affiliates of the Collateral Manager, if in the Collateral
Manager’s reasonable judgment such aggregation shall result in an overall
economic benefit to the Issuer, taking into consideration the advantageous
selling or purchase price, brokerage commission or other expenses, as well as
the availability of such Assets on any other basis. In accounting for
such aggregated order price, commissions and other expenses may be apportioned
on a weighted average basis. When a Transaction occurs as part of any
aggregate sales or purchase orders, the objective of the Collateral Manager will
be to allocate the executions among the Clients in an equitable manner and in
accordance with the internal policies and procedures of the Collateral Manager
(as such may be amended from time to time, the “Internal Policies”)
and applicable law.
(c)
The Issuer acknowledges and agrees that (i) the determination by the
Collateral Manager of any benefit to the Issuer will be subjective and will
represent the Collateral Manager’s evaluation at the time that the Issuer will
be benefited by relatively better purchase or sales prices, lower brokerage
commissions, lower transaction costs and expenses and beneficial timing of
transactions or any combination of any of these and/or other factors and (ii)
the Collateral Manager shall be fully protected with respect to any such
determination to the extent the Collateral Manager acts in accordance with Section 2(a). The
Issuer acknowledges that the Collateral Manager is the investment advisor to the
Originator and is the designated manager of the Depositor, which is the Holder
of the Class B Notes and the Subordinated Notes on and, potentially, after the
Closing Date which may give rise to conflicts of interest between the Collateral
Manager's duties to the Issuer under this Agreement and its duty to such
Client.
9
(d)
Subject to the Collateral Manager’s execution
obligations described herein, compliance with applicable law and compliance with
the applicable provisions of the Indenture, the Collateral Manager may effect
transactions with the Issuer or its Affiliates (i) on an agency basis or (ii) on
a principal basis where the Collateral Manager or any of its Affiliates sells
assets to or purchases assets from the Issuer.
(e)
The Collateral Manager or any of its Affiliates may acquire or sell
assets, for its own account or for the accounts of its Clients, without either
requiring or precluding the acquisition or sale of such assets for the account
of the Issuer. Such investments may be the same as or different from those made
on behalf of the Issuer. In the event that, in light of market conditions and
investment objectives, the Collateral Manager determines that it would be
advisable to acquire the same Collateral Obligation both for the Issuer and
either the proprietary account of the Collateral Manager or any Affiliate of the
Collateral Manager or another Client of the Collateral Manager, the Collateral
Manager will allocate investment opportunities across such entities for which
such opportunities are appropriate, consistent with (1) its internal conflict of
interest and allocation policies, (2) any applicable requirements of the
Advisers Act and (3) if and to the extent applicable, certain restrictions of
the 1940 Act regarding co-investments with affiliates.
(f)
The Issuer acknowledges and agrees that the Collateral Manager and its
Affiliates may invest for their own accounts or for the accounts of others in
assets that would be appropriate investments for the Issuer. The
Issuer acknowledges that the Collateral Manager and its Affiliates may enter
into, for their own accounts or for the accounts of others, credit default swaps
relating to obligors and issuers with respect to the Collateral Obligations
included in the Assets. The Issuer understands that the Collateral Manager and
its Affiliates may have economic interests in (including, without limitation,
controlling equity interests or other equity or debt interests), be lenders to,
receive payments from, render services to, engage in transactions with or have
other relationships with obligors and issuers with respect to the Collateral
Obligations included in the Assets. In particular, the Collateral
Manager and its Affiliates may make and/or hold investments in an obligor’s or
issuer’s obligations or securities that may be pari passu, senior or junior
in ranking to an investment in such obligor’s or issuer’s obligations or
securities made and/or held by the Issuer, or otherwise have interests different
from or adverse to those of the Issuer. The Issuer agrees that, in
the course of managing the Collateral Obligations held by the Issuer, the
Collateral Manager may consider its relationships with other Clients (including
obligors and issuers) and its Affiliates. The Collateral Manager may
decline to make a particular investment for the Issuer in view of such
relationships. In addition, individuals who are partners, managers,
members, shareholders, directors, officers, employees or agents of the
Collateral Manager or of one or more of its Affiliates may serve on boards of
directors of, or otherwise have ongoing relationships with, such obligors and
issuers. As a result, such individuals may possess information
relating to obligors and issuers of Collateral Obligations that is (a) not known
to or (b) known but restricted as to its use by the individuals at the
Collateral Manager responsible for monitoring the Collateral Obligations and
performing the other obligations of the Collateral Manager under this
Agreement. Each of such ownership and other relationships may result
in securities laws restrictions on transactions in such securities by the Issuer
and otherwise create conflicts of interest for the Issuer. The Issuer
acknowledges and agrees that, in all such instances, the Collateral Manager and
its Affiliates may in their discretion make investment recommendations and
decisions that may be the same as or different from those made with respect to
the Issuer’s investments and they have no duty, in making or managing such
investments, to act in a way that is favorable to the Issuer.
10
(g)
The Issuer agrees that neither the Collateral Manager
nor any of its Affiliates is under any obligation to offer all investment
opportunities of which they become aware to the Issuer or to account to the
Issuer for (or share with the Issuer or inform the Issuer of) any such
transaction or any benefit received by them from any such
transaction. The Issuer understands that the Collateral Manager
and/or its Affiliates may have, for their own accounts or for the accounts of
others, portfolios with substantially the same portfolio criteria as are
applicable to the Issuer. Furthermore, the Collateral Manager and/or
its Affiliates may make an investment on behalf of any Client or on their own
behalf without offering the investment opportunity or making any investment on
behalf of the Issuer and, accordingly, investment opportunities may not be
allocated among all such Clients. The Issuer acknowledges that
affirmative obligations may arise in the future, whereby the Collateral Manager
and/or its Affiliates are obligated to offer certain investments to Clients
before or without the Collateral Manager’s offering those investments to the
Issuer. The Issuer agrees that the Collateral Manager may make
investments on behalf of the Issuer in securities or obligations that it has
declined to invest in or enter into for its own account, the account of any of
the Collateral Manager or its Affiliates or the account of any other
Client.
Section
4. Additional Activities of the
Collateral Manager.
Nothing
herein shall prevent the Collateral Manager or any of its Affiliates from
engaging in other businesses, or from rendering services of any kind to the
Issuer, the Trustee, the Initial Purchaser, any Holder or their respective
Affiliates or any other Person regardless of whether such business is in
competition with the Issuer or otherwise. Without prejudice to the generality of
the foregoing, partners, members, managers, shareholders, directors, officers,
employees and agents of the Collateral Manager, Affiliates of the Collateral
Manager, and the Collateral Manager may:
(a)
serve as managers or directors (whether supervisory or
managing), officers, employees, partners, agents, nominees or signatories for
the Issuer or any Affiliate thereof, or for any obligor or issuer in respect of
any of the Collateral Obligations, Equity Securities or Eligible Investments or
any affiliate thereof, to the extent permitted by their respective
Organizational Instruments and Underlying Documents, as from time to time
amended, or by any resolutions duly adopted by the Issuer, its Affiliates or any
obligor or issuer in respect of any of the Collateral Obligations, Eligible
Investments or Equity Securities (or any Affiliate thereof) pursuant to their
respective Organizational Instruments;
11
(b)
receive fees for services of whatever nature
rendered to the obligor or issuer in respect of any of the Collateral
Obligations, Eligible Investments or Equity Securities or any Affiliate
thereof;
(c)
be retained to provide services unrelated to this
Agreement to the Issuer or its Affiliates and be paid therefor, on an
arm’s-length basis;
(d)
be a secured or unsecured creditor of, or hold a debt obligation of
or equity interest in, the Issuer or any Affiliate thereof or any obligor or
issuer of any Collateral Obligation, Eligible Investment or Equity Security or
any Affiliate thereof;
(e)
subject to Section 3(b) and
Section 5,
applicable law and the applicable provisions of the Indenture sell any
Collateral Obligation or Eligible Investment to, or purchase any Collateral
Obligation or Equity Security from, the Issuer while acting in the capacity of
principal or agent;
(f)
underwrite, arrange, structure, originate, syndicate, act as a
distributor of or make a market in any Collateral Obligation, Equity Security or
Eligible Investment;
(g)
serve as a member of any “creditors’ board”, “creditors’ committee”
or similar creditor group with respect to any Collateral Obligation, Defaulted
Obligation, Eligible Investment or Equity Security; or
(h)
act as collateral manager, portfolio manager, investment manager
and/or investment adviser or sub-adviser in collateralized bond obligation
vehicles, collateralized loan obligation vehicles and other similar warehousing,
financing or investment vehicles.
The
Issuer acknowledges that there are generally no ethical screens or information
barriers among the Collateral Manager and certain of its Affiliates of the type
that many firms implement to separate individuals who make investment decisions
from others who might possess applicable material, non-public
information. The Issuer acknowledges that the Collateral Manager may
be prevented from causing the Issuer to transact in certain assets due, among
other things, to internal restrictions imposed on the Collateral Manager
regarding the possession and use of material and/or non-public information and
certain restrictions of the 1940 Act regarding co-investments with
affiliates.
12
(i)
It is understood that the Collateral Manager and any of its
Affiliates may engage in any other business and furnish investment management
and advisory services to others, including Persons which may have investment
policies similar to those followed by the Collateral Manager with respect to the
Assets and which may own securities or obligations of the same class, or which
are of the same type, as the Collateral Obligations or the Eligible Investments
or other securities or obligations of the obligor or issuer of the Collateral
Obligations or the Eligible Investments. The Collateral Manager will be free, in
its sole discretion, to make recommendations to others, or effect transactions
on behalf of itself or for others, which may be the same as or different from
those effected with respect to the Assets. Nothing in the Indenture and this
Agreement shall prevent the Collateral Manager or any of its Affiliates, acting
either as principal or agent on behalf of others, from buying or selling, or
from recommending to or directing any other account to buy or sell, at any time,
securities or obligations of the same kind or class, or securities or
obligations of a different kind or class of the same issuer, as those directed
by the Collateral Manager to be purchased or sold on behalf of the Issuer. It is
understood that, to the extent permitted by applicable law, the Collateral
Manager, its Affiliates or their respective Related Persons or any member of
their families or a person or entity advised by the Collateral Manager may have
an interest in a particular transaction or in securities or obligations of the
same kind or class, or securities or obligations of a different kind or class of
the same issuer, as those whose purchase or sale the Collateral Manager may
direct hereunder. In the event that, in light of market conditions
and investment objectives, the Collateral Manager determines that it would be
advisable to purchase the same Collateral Obligation both for the Issuer, and
either the proprietary account of the Collateral Manager or any Affiliate of the
Collateral Manager or another client of the Collateral Manager, the Collateral
Manager will allocate investment opportunities across such entities for which
such opportunities are appropriate, consistent with (1) its internal conflict of
interest and allocation policies, (2) any applicable requirements of the
Advisers Act and (3) if and to the extent applicable, certain restrictions of
the 1940 Act regarding co-investments with affiliates.
Section
5. Certain Conflicts of
Interest.
(a)
Subject to compliance with applicable
laws and regulations and subject to this Agreement and the Indenture, the
Collateral Manager may direct the Trustee to acquire an Asset from, or sell an
Asset to, the Collateral Manager, any of its Affiliates or any Client for which
the Collateral Manager or any of its Affiliates serves as investment adviser for
fair market value; provided that the Collateral
Manager shall obtain the Issuer's written consent through the Independent Review
Party as provided herein if any such transaction requires the consent of the
Issuer under Section 206(3) of the Advisers Act (an “Affiliate
Transaction”).
(b)
With respect to the approval of Affiliate
Transactions, the Issuer shall appoint the independent directors of ▇▇▇▇▇
Capital BDC, Inc., the Issuer’s designated manager, to act on behalf of the
Issuer by majority vote (a majority of such directors, the “Independent Review
Party”).
The
Issuer acknowledges that Affiliates of the Collateral Manager may purchase all
of the outstanding Class B Notes and acquire all of the Subordinated Notes and
Membership Interests and that Clients advised by the Collateral Manager or its
Affiliates may acquire the Notes. In certain circumstances, the interests of the
Issuer and/or the Holders with respect to matters as to which the Collateral
Manager is advising the Issuer may conflict with the interests of the Collateral
Manager. The Issuer hereby acknowledges that various potential and actual
conflicts of interest do or may exist with respect to the Collateral Manager as
described in this Agreement and in the Final Offering Circular; provided that nothing in this
Section 5 shall
be construed as altering the duties of the Collateral Manager as set forth
herein, in the Indenture or under applicable law.
13
Section
6. Records;
Confidentiality.
The
Collateral Manager shall maintain or cause to be maintained appropriate books of
account and records relating to its services performed hereunder, and such books
of account and records shall be accessible for inspection by representatives of
the Issuer, the Trustee, the Holders, and the Independent accountants appointed
by the Collateral Manager on behalf of the Issuer pursuant to Article X of the
Indenture at any time during normal business hours and upon not less than three
Business Days’ prior notice. The Collateral Manager shall keep confidential any
and all information obtained in connection with the services rendered hereunder
and shall not disclose any such information to non-affiliated third parties
except (a) with the prior written consent of the Issuer, (b) such information as
a Rating Agency shall reasonably request in connection with its rating of the
Secured Notes or in supplying credit estimates on any Collateral Obligation
included in the Assets, (c) in connection with establishing trading or
investment accounts or otherwise in connection with effecting Transactions on
behalf of the Issuer, (d) as required by (i) applicable law, regulation, court
order, or a request by a governmental regulatory agency with jurisdiction over
the Collateral Manager or any of its Affiliates, (ii) the rules or regulations
of any self-regulating organization, body or official having jurisdiction over
the Collateral Manager or any of its Affiliates or (iii) the rules and
regulations of any stock exchange on which the Secured Notes may be listed, (e)
to its professional advisors (including, without limitation, legal, tax and
accounting advisors), (f) such information as shall have been publicly disclosed
other than in known violation of this Agreement or the provisions of the
Indenture or shall have been obtained by the Collateral Manager on a
non-confidential basis, (g) as expressly permitted in the Final Offering
Circular, in the Indenture or in any other Transaction Document, (h) such
information as is necessary or appropriate to disclose so that the Collateral
Manager may perform its duties hereunder, under the Indenture or any other
Transaction Document or (i) general performance information which may be used by
the Collateral Manager, its Affiliates or their Related Persons in connection
with their marketing activities. For purposes of this Section 6, the
Holders, the Trustee, the Calculation Agent and the Collateral Administrator
shall not be considered “non-affiliated third
parties.” Notwithstanding the foregoing, it is agreed that the
Collateral Manager may disclose (a) that it is serving as collateral manager of
the Issuer, (b) the nature, aggregate principal amount and overall performance
of the Issuer’s assets, (c) the amount of earnings on the Assets, (d) such other
information about the Issuer, the Assets and the Notes as is customarily
disclosed by managers of collateralized loan obligations and (e) each of its
respective employees, representatives or other agents may disclose to any and
all Persons, without limitation of any kind, the United States federal income
tax treatment and United States federal income tax structure of the transactions
contemplated by the Indenture, this Agreement and the related documents and all
materials of any kind (including opinions and other tax analyses) that are
provided to them relating to such United States federal income tax treatment and
United States income tax structure.
14
Section
7. Obligations of Collateral
Manager.
In
accordance with the Standard of Care set forth in Section 2(a), the
Collateral Manager shall take care to avoid taking any action that would (a)
materially adversely affect the status of the Issuer for purposes of the United
States federal or state law or other law applicable to it, (b) not be permitted
by the Issuer’s Organizational Instruments, copies of which the Collateral
Manager acknowledges the Issuer has provided to the Collateral Manager, (c)
violate any law, rule or regulation of any governmental body or agency having
jurisdiction over the Issuer, including, without limitation, actions which would
violate any law of the United States federal, state or other applicable
securities law that is known by the Collateral Manager to be applicable to it
and, in each case, the violation of which would have a Material Adverse Effect
on the Issuer or have a material adverse effect on the ability of the Collateral
Manager to perform its obligations hereunder, (d) require registration of either
of the Issuer or the pool of Assets as an “investment company” under Section 8
of the 1940 Act, or (e) knowingly and willfully adversely affect the
interests of the Issuer in the Assets in any material respect (other than (i) as
expressly permitted hereunder or under the Indenture or (ii) in connection with
any action taken in the ordinary course of business of the Collateral Manager in
accordance with its Standard of Care). If the Collateral Manager is ordered by
the designated manager of the Issuer or the requisite Holders to take any action
which would, or could reasonably be expected to, in each case in its reasonable
business judgment, have any such consequences, the Collateral Manager shall
promptly notify the Issuer and the Trustee that such action would, or could
reasonably be expected to, in each case in its reasonable business judgment,
have one or more of the consequences set forth above and shall not take such
action unless the designated manager of the Issuer then requests the Collateral
Manager to do so and both a Majority of the Controlling Class and a Majority of
the Subordinated Notes have consented thereto in writing. Notwithstanding any
such request, the Collateral Manager shall not take such action unless (i)
arrangements satisfactory to it are made to insure or indemnify the Collateral
Manager, Affiliates of the Collateral Manager and shareholders, partners,
members, managers, directors, officers or employees of the Collateral Manager or
such Affiliates from any liability and expense it may incur as a result of such
action and (ii) if the Collateral Manager so requests in respect of a question
of law, the Issuer delivers to the Collateral Manager an Opinion of Counsel
(from outside counsel satisfactory to the Collateral Manager) that the action so
requested does not violate any law, rule or regulation of any governmental body
or agency having jurisdiction over the Issuer or over the Collateral
Manager. Neither the Collateral Manager nor its Affiliates,
shareholders, partners, members, managers, directors, officers or employees
shall be liable to the Issuer or any other Person, except as provided in Section 10.
Notwithstanding anything contained in this Agreement to the contrary, any
indemnification or insurance by the Issuer provided for in this Section 7 or Section 10 shall be
payable out of the Assets in accordance with the Priority of Payments, and the
Collateral Manager may take into account such Priority of Payments in
determining whether any proposed indemnity arrangements contemplated by this
Section 7 are
satisfactory.
Section
8. Compensation.
(a)
As compensation for its performance of its obligations
as Collateral Manager under this Agreement, the Collateral Manager will be
entitled to receive on each Payment Date (in accordance with the Priority of
Payments) the Collateral Management Fee (the “Collateral Management
Fee”).
15
The Collateral Management
Fee will be payable on each Payment Date to the extent of the funds
available for such purpose in accordance with the Priority of Payments. The
Collateral Management Fee is payable to the Collateral Manager in arrears, on
each Payment Date in an amount (as certified by the Collateral Manager to the
Trustee) equal to 0.35% per annum (calculated on the basis of a 360-day year
consisting of twelve 30-day months) of the Fee Basis Amount at the beginning of
the Collection Period relating to such Payment Date; provided that the Collateral
Management Fee due on any Payment Date shall not include any such fee (or any
portion thereof) that has been waived by the Collateral Manager
hereunder.
The
Collateral Management Fee is payable on each Payment Date only to the extent
that sufficient Interest Proceeds or Principal Proceeds are available. To the
extent the Collateral Management Fee is not paid on a Payment Date due to
insufficient Interest Proceeds or Principal Proceeds (and such fee was not
voluntarily deferred or waived by the Collateral Manager), the Collateral
Management Fee due on such Payment Date (or the unpaid portion thereof, as
applicable, the “Collateral Management Fee
Shortfall Amount”) will be automatically deferred for payment on the
succeeding Payment Date, with interest, in accordance with the Priority of
Payments. Interest on Collateral Management Fee Shortfall Amounts shall accrue
at the Prime Rate for the period beginning on the first Payment Date on which
the related Collateral Management Fee was due (and not paid) through the Payment
Date on which such Collateral Management Fee Shortfall Amount (including accrued
interest) is paid. To the extent that funds are available on a Payment Date for
the payment of all or a portion of the outstanding Collateral Management Fee
Shortfall Amounts and the Collateral Manager elects to defer such Collateral
Management Fee Shortfall Amounts, interest shall not accrue on such Collateral
Management Fee Shortfall Amounts beyond such Payment Date.
(b)
At the option of the Collateral Manager by written
notice to the Trustee no later than the Determination Date immediately prior to
such Payment Date, on each Payment Date, (i) all or a portion of the Collateral
Management Fees or the Collateral Management Fee Shortfall Amount (including
accrued interest) due and owing on such Payment Date may be deferred for payment
on a subsequent Payment Date, without interest (the “Current Deferred Management
Fee”) and (ii) all or a portion of the previously deferred Collateral
Management Fees or Collateral Management Fee Shortfall Amounts (collectively,
the “Cumulative
Deferred Management Fee”) may be declared due and payable (to the extent
there are sufficient Interest Proceeds and Principal Proceeds
therefor). At such time as the Secured Notes are redeemed in
connection with an Optional Redemption or a Tax Redemption, without duplication,
all accrued and unpaid Collateral Management Fees, Current Deferred Management
Fees, Collateral Management Fee Shortfall Amounts (including accrued interest)
and Cumulative Deferred Management Fees (the “Aggregate Collateral
Management Fee”) shall be due and payable to the Collateral
Manager.
(c)
The Collateral Manager may, in its sole discretion (but
shall not be obligated to), elect to waive all or any portion of the Collateral
Management Fee payable to the Collateral Manager on any Payment
Date. Any such election shall be made by the Collateral Manager
delivering written notice thereof to the Trustee no later than the Determination
Date immediately prior to such Payment Date. Any election to waive
the Collateral Management Fee may also be made by written standing instructions
to the Trustee; provided that such standing
instructions may be rescinded by the Collateral Manager at any
time.
16
(d)
Except as otherwise set forth herein and in the Indenture, the
Collateral Manager will continue to serve as Collateral Manager under this
Agreement notwithstanding that the Collateral Manager will not have received
amounts due it under this Agreement because sufficient funds were not then
available hereunder to pay such amounts in accordance with the Priority of
Payments.
(e)
If the Collateral Manager is terminated for any reason or resigns or is
removed, (i) Collateral Management Fees calculated as provided in this Section 8 shall be
prorated for any partial period elapsing from the last Payment Date on which
such Collateral Manager received the Collateral Management Fee to the effective
date of such termination, resignation or removal and (ii) any unpaid Cumulative
Deferred Management Fees and Collateral Management Fee Shortfall Amounts
(including related interest) shall be determined as of the effective date of
such termination, resignation or removal and, in each case, shall be due and
payable on each Payment Date following the effective date of such termination,
resignation or removal in accordance with the Priority of Payments until paid in
full. Otherwise, such Collateral Manager shall not be entitled to any further
compensation for further services but shall be entitled to receive any expense
reimbursement accrued to the effective date of termination, resignation or
removal and any indemnity amounts owing (or that may become owing) under Section 7, Section 10, or Section
15(a)(iii). Any Aggregate Collateral Management Fee, expense
reimbursement and indemnities owed to such Collateral Manager in accordance with
this Section
8(e) and any Aggregate Collateral Management Fee, expense reimbursement
and indemnities owed to any successor Collateral Manager on any Payment Date
shall be paid pro rata based on the amount thereof then due and owing to each
subject to the Priority of Payments.
Section
9. Benefit of the
Agreement.
The
Collateral Manager shall perform its obligations hereunder in accordance with
the terms of this Agreement and the terms of the Indenture applicable to it. The
Collateral Manager agrees and consents to the provisions contained in Section
15.1(f) of the Indenture. In addition, the Collateral Manager acknowledges the
pledge of this Agreement under the granting clause of the
Indenture.
17
Section
10. Limits of Collateral Manager
Responsibility.
(a)
None of the Collateral Manager, its affiliates or their
respective Related Persons assumes any responsibility under this Agreement,
other than the Collateral Manager’s assumption of its responsibility to render
the services required to be performed by it hereunder and under the terms of the
Indenture applicable to it in good faith, subject to the Standard of Care
described in Section
2(a). The Collateral Manager shall not be responsible for any
action or inaction of the Issuer or the Trustee in following or declining to
follow any advice, recommendation or direction of the Collateral Manager,
including as set forth in Section
7. The Indemnified Parties (as defined below) shall not be
liable to the Issuer, the Trustee, any Holder, the Initial Purchaser, any of
their respective affiliates, or Related Persons or any other Persons for any
act, omission, error of judgment, mistake of law, or for any claim, loss,
liability, damage, judgments, assessments, settlement, cost, or other expense
(including attorneys’ fees and expenses and court costs) arising out of or with
respect to any investment or for any other act or omission in the performance of
the Collateral Manager’s obligations under or in connection with this Agreement
or the terms of any other Transaction Document applicable to the Collateral
Manager, incurred as a result of actions taken or recommended or for any
omissions of the Collateral Manager, or for any decrease in the value of the
Assets, except for liability to which the Collateral Manager would be subject
(i) by reason of acts constituting bad faith, willful misconduct or gross
negligence in the performance of its duties hereunder and under the terms of the
Indenture or (ii) with respect to the Collateral Manager Information, as of the
date made, such information containing any untrue statement of a material fact
or omitting to state a material fact necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading (the
preceding clauses (i) and (ii) collectively referred to for purposes of this
Section 10 as
“Collateral Manager
Breaches”). The Collateral Manager shall not be liable for any
consequential, punitive, exemplary or treble damages or lost profits hereunder
or under the Indenture. Nothing contained herein shall be deemed to waive any
liability which cannot be waived under applicable state or federal law or any
rules or regulations adopted thereunder.
(b)
(i) The Issuer shall indemnify and hold harmless (the
Issuer in such case, the “Indemnifying Party”)
the Collateral Manager, its affiliates and their respective Related Persons
(each, an “Indemnified
Party”) from and against any and all losses, claims, damages, judgments,
assessments, costs or other liabilities (collectively, “Losses”) and will
promptly reimburse each such Indemnified Party for all reasonable fees and
expenses incurred by an Indemnified Party with respect thereto (including
reasonable fees and expenses of counsel) (collectively, “Expenses”) arising
out of or in connection with the issuance of the Notes (including, without
limitation, any untrue statement of material fact contained in the Offering
Circulars, or omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading other than the
Collateral Manager Information), the transactions contemplated by the Offering
Circulars, the Indenture or this Agreement and any acts or omissions of any such
Indemnified Party; provided, that such
Indemnified Party shall not be indemnified for any Losses or Expenses incurred
as a result of any acts or omissions by such Indemnified Party that constitute a
Collateral Manager Breach. Notwithstanding anything contained herein to the
contrary, the obligations of the Issuer under this Section 10 to
indemnify any Indemnified Party for any Losses or Expenses are non-recourse
obligations of the Issuer payable solely out of the Assets in accordance with
the Priority of Payments set forth in the Indenture.
(ii) The
Collateral Manager shall indemnify and hold harmless (the Collateral Manager in
such case, the “Indemnifying Party”)
the Issuer, its affiliates and their respective Related Persons (each such party
being, in such case, an “Indemnified Party”)
from and against any and all Losses and shall promptly reimburse each such
Indemnified Party for all reasonable Expenses as such Expenses are incurred in
investigating, preparing, pursuing or defending any Actions in respect of or
arising out of any Collateral Manager Breaches; provided, however, that the
Collateral Manager shall not be liable for any consequential, punitive,
exemplary or treble damages or lost profits.
18
(c)
An Indemnified Party shall (or, with respect to the Related
Persons of the Collateral Manager or of the Issuer, as applicable, the
Collateral Manager or the Issuer, as applicable, shall cause such Indemnified
Party to) promptly notify the Indemnifying Party if the Indemnified Party
receives a complaint, claim, compulsory process or other notice of any Loss
giving rise to a claim for indemnification under this Section 10, but
failure so to notify the Indemnifying Party or to comply with paragraph (d)
below shall not relieve such Indemnifying Party from its obligations under this
Section 10
unless and to the extent that such Indemnifying Party did not otherwise learn of
such action or proceeding and to the extent such failure results in the
forfeiture by the Indemnifying Party of material rights and
defenses.
(d)
With respect to any claim made or threatened against an
Indemnified Party, or compulsory process or request served upon such Indemnified
Party for which such Indemnified Party is or may be entitled to indemnification
under this Section
10, such Indemnified Party shall (or with respect to the Related Persons
of the Collateral Manager or of the Issuer, as applicable, the Collateral
Manager or the Issuer, as applicable, shall cause such Indemnified Party
to):
(i) at
the Indemnifying Party’s expense, provide the Indemnifying Party such
information and cooperation with respect to such claim as the Indemnifying Party
may reasonably require, including, but not limited to, making appropriate
personnel available to the Indemnifying Party at such reasonable times as the
Indemnifying Party may request;
(ii) at
the Indemnifying Party’s expense, cooperate and take all such steps as the
Indemnifying Party may reasonably request to preserve and protect any defense to
such claim;
(iii) in
the event suit is brought with respect to such claim, upon reasonable prior
notice, afford to the Indemnifying Party the right, which the Indemnifying Party
may exercise in its sole discretion and at its expense, (A) to participate in
the investigation, defense and settlement of such claim, and, (B) to the extent
that it shall wish, to assume the defense thereof, with counsel satisfactory to
such Indemnified Party (who shall not, except with the consent of the
Indemnified Party, be counsel to the Indemnifying Party), and, after notice from
the Indemnifying Party to such Indemnified Party of its election so to assume
the defense thereof, the Indemnifying Party shall not be liable to such
Indemnified Party under such subsection for any legal fees and expenses of other
counsel or any other expenses, in each case subsequently incurred by such
Indemnified Party, in connection with the defense thereof other than reasonable
costs of investigation, except that, if such Indemnified Party reasonably
determines that counsel selected by the Indemnifying Party has a conflict of
interest, such Indemnifying Party shall pay the reasonable fees and
disbursements of one additional counsel selected by the Indemnified Party (in
addition to any local counsel) separate from its own counsel for all Indemnified
Parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances; and
(iv) neither
incur any material expense to defend against nor make any admission with respect
thereto (other than routine or incontestable admission or factual admissions the
failure to make which could expose such Indemnified Party to (A) unindemnified
liability, or (B) only if the Indemnified Party is the Collateral Manager or an
affiliate or Related Person of the Collateral Manager or of an affiliate
thereof, any liability in respect of which, in the good faith determination of
such Indemnified Party, the Indemnifying Party is unlikely to have sufficient
funds available to indemnify the Indemnified Party in full, taking into account
the Priority of Payments), nor permit a default or consent to the entry of any
judgment in respect thereof, in each case without the prior written consent of
the Indemnifying Party; provided that the
Indemnifying Party shall have advised such Indemnified Party that such
Indemnified Party is entitled to be indemnified hereunder with respect to such
claim.
19
(e)
No Indemnified Party shall, without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, settle or compromise any claim giving rise to a claim for
indemnity hereunder, or permit a default or consent to the entry of any judgment
in respect thereof; provided that if the
Indemnified Party is the Collateral Manager or an affiliate or a Related Person
of the Collateral Manager or of an affiliate thereof, such Indemnified Party
shall not be required to seek or obtain such consent if it determines in good
faith that the Indemnifying Party is unlikely to have sufficient funds available
to indemnify it in full, taking into account the Priority of
Payments.
(f)
No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, which consent shall not be
unreasonably withheld, settle or compromise or consent to the entry of any
judgment with respect to any claim giving rise to a claim for indemnity
hereunder if such settlement includes a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any Indemnified
Party.
(g)
The compliance of the Collateral Manager’s actions with
the provisions of the Indenture and this Agreement shall be determined on the
date of action only, based upon the prices and characteristics of the Assets on
the date of such action (or on the most recent date practicable, in the case of
Collateral Obligations not purchased or sold on such date); provided that the provisions
of the Indenture and this Agreement shall not be deemed breached as a result of
changes in value, status or any other conditions of an investment following the
date of such action and the Collateral Manager shall not be responsible under
this Agreement for the performance of or any losses on the Assets acquired in
accordance with this Agreement.
(h)
The Assets shall be held by the Custodian
appointed by the Issuer pursuant to the Indenture. The Collateral
Manager and its Affiliates shall at no time have custody or physical control of
the Assets. The Collateral Manager shall not be liable for any act or
omission of the Collateral Administrator, the Trustee or any sub-custodian or
other agent appointed by the Calculation Agent or the Issuer. Any compensation
owed to the Collateral Administrator, the Trustee or the Calculation Agent for
their services to the Issuer shall be the obligation of the Issuer and not the
Collateral Manager.
Section
11. No Joint
Venture.
The
Issuer and the Collateral Manager are not partners or joint venturers with each
other and nothing herein shall be construed to make them such partners or joint
venturers or impose any liability as such on either of them. The Collateral
Manager shall be deemed, for all purposes herein, an independent contractor and
shall, except as otherwise expressly provided herein or in the Indenture or
authorized by the Issuer from time to time, have no authority to act for or
represent the Issuer in any way or otherwise be deemed an agent of the Issuer.
It is acknowledged that neither the Collateral Manager nor any of its Affiliates
has provided or shall provide any tax, accounting or legal advice or assistance
to the Issuer or any other Person in connection with the transactions
contemplated hereby.
20
Section
12. Term;
Termination.
(a)
This Agreement shall commence as of the date first set forth above
and shall continue in force until the first of the following occurs: (i) the
final liquidation of the Assets and the final distribution of the proceeds of
such liquidation to the Noteholders, (ii) the payment in full of the Notes, and
the satisfaction and discharge of the Indenture in accordance with its terms or
(iii) the early termination of this Agreement in accordance with Section 12(b), (c), (d), (e) or (f) or Section
14.
(b)
Subject only to clause (c) below, the Collateral Manager may
resign, upon 90 days’ prior written notice to the Issuer (or such shorter notice
as is acceptable to the Issuer) and the Trustee (and the Issuer shall direct the
Trustee to distribute a copy of such notice to the Holders within five (5)
Business Days of receipt); provided that the Collateral
Manager shall have the right to resign immediately upon the effectiveness of any
material change in applicable law or regulations which renders the performance
by the Collateral Manager of its duties hereunder or under the Indenture to be a
violation of such law or regulation.
(c)
No resignation or removal of the Collateral Manager pursuant to this
Agreement shall be effective until the date as of which a successor Collateral
Manager shall have been appointed and approved and has accepted and assumed all
of the Collateral Manager’s duties and obligations pursuant to this Agreement in
writing (an “Instrument of
Acceptance”).
(d)
Promptly after notice of any removal under Section 14 or any
resignation of the Collateral Manager that is to take place while any of the
Notes are Outstanding, the Issuer shall transmit or cause the Trustee to
transmit copies of such notice to the Holders and each Rating Agency and shall
appoint a successor Collateral Manager in accordance with the procedures set
forth in clause (e) below; provided that such successor
Collateral Manager (i) has demonstrated an ability to professionally and
competently perform duties similar to those imposed upon the Collateral Manager
hereunder, (ii) is legally qualified and has the capacity to assume all of the
responsibilities, duties and obligations of the Collateral Manager hereunder and
under the applicable terms of the Indenture, (iii) does not cause or result in
the Issuer becoming, or require the pool of Assets to be registered as, an
investment company under the 1940 Act and (iv) with respect to which the Global
Rating Agency Condition has been satisfied.
21
(e)
A Majority of the Subordinated Notes will nominate a
successor Collateral Manager that meets the criteria set forth in clause (d)
above (other than subclause (iv) thereof) within 30 days of initial notice of
the resignation or removal of the Collateral Manager and if the Majority of the
Controlling Class consents thereto, such proposed successor will be appointed
the successor Collateral Manager by the Issuer; provided that the Global
Rating Agency Condition has been satisfied with respect thereto. If a
Majority of the Subordinated Notes fails to nominate such a successor within 30
days of initial notice of the resignation or removal of the Collateral Manager
or if a Majority of the Controlling Class does not consent thereto, then a
Majority of the Controlling Class shall, within 60 days of initial notice of the
resignation or removal of the Collateral Manager, nominate a successor
Collateral Manager that meets the criteria set forth in clause (d) above (other
than subclause (iv) thereof). If a Majority of the Subordinated Notes
consents to such Controlling Class nominee, such nominee shall be appointed the
successor Collateral Manager by the Issuer; provided the Global Rating
Agency Condition has been satisfied with respect thereto. If no
successor Collateral Manager is appointed within 90 days with the consent
thereto of a Majority of the Controlling Class (if nominated by a Majority of
the Subordinated Notes) or the consent thereto of a Majority of the Subordinated
Notes (if nominated by a Majority of the Controlling Class) (or, in the event of
a change in applicable law or regulation which renders the performance by the
Collateral Manager of its duties under this Agreement or the Indenture to be a
violation of such law or regulation, within 30 days) following the termination
or resignation of the Collateral Manager, any of the Issuer, the Collateral
Manager, a Majority of the Subordinated Notes and the Majority of the
Controlling Class shall have the right to petition a court of competent
jurisdiction to appoint a successor Collateral Manager, in any such case whose
appointment shall become effective after such successor has accepted its
appointment and assumed all of the Collateral Manager’s duties and obligations
pursuant to this Agreement in an Instrument of Acceptance and without the
consent of any Holder.
(f)
The successor Collateral Manager shall be entitled
to the Collateral Management Fee set forth in Sections 8(a) (and,
to the extent it defers such fees, the related Aggregate Collateral Management
Fee due and owing to such successor Collateral Manager under Section 8(b)) and no
compensation payable to such successor Collateral Manager shall be greater than
as set forth in Section 8 without the
prior written consent of 100% of each Class of Notes voting separately by Class,
including Collateral Manager Notes. Upon the later of the expiration of the
applicable notice periods with respect to termination specified in this Section 12 or in
Section 14 and
the acceptance of its appointment hereunder by the successor Collateral Manager,
all authority and power of the Collateral Manager hereunder, whether with
respect to the Assets or otherwise, shall automatically and without action by
any person or entity pass to and be vested in the successor Collateral Manager.
The Issuer, the Trustee and the successor Collateral Manager shall take such
action (or cause the outgoing Collateral Manager to take such action) consistent
with this Agreement and as shall be necessary to effect any such
succession.
(g)
If this Agreement is terminated pursuant to this
Section 12,
such termination shall be without any further liability or obligation of either
party to the other, except as provided in clause (h) below.
(h)
Sections 6, 7 (with respect to
any indemnity or insurance provided thereunder), 8 (with respect to
any accrued and unpaid Aggregate Collateral Management Fees) 10, 12(g), 15, 17, 21, 22, 23 and 25 shall survive any
termination of this Agreement pursuant to this Section 12 or Section
14.
22
Section
13. Assignments.
(a)
Except as otherwise provided in this Section 13, the
Collateral Manager may not assign or delegate (except as provided in Section
2(e)) its rights or responsibilities under this Agreement without (i)
satisfaction of the Global Rating Agency Condition with respect thereto and (ii)
obtaining the consent of the Issuer and the consent of a Majority of the
Controlling Class and a Majority of the Subordinated Notes (voting
separately). The Collateral Manager shall not be required to obtain
such consents or satisfy such condition with respect to a change of control
transaction that is deemed to be an assignment within the meaning of Section
202(a)(1) of the Advisers Act; provided that, for so long as
the Collateral Manager is a registered investment adviser under the Advisers
Act, the Collateral Manager shall obtain the consent of the Issuer, in a manner
consistent with SEC Staff interpretations of Section 205(a)(2) of the Advisers
Act, to any such transaction.
(b)
The Collateral Manager may without satisfaction of the Global Rating
Agency Condition, without obtaining the consent of the Majority of the
Controlling Class or of the Majority of the Subordinated Notes and, so long as
such assignment or delegation does not constitute an “assignment” for purposes
of Section 205(a)(2) of the Advisers Act during such time as the Collateral
Manager is a registered investment adviser under the Advisers Act, without
obtaining the prior consent of the Issuer, (1) assign any of its rights or
obligations under this Agreement to an Affiliate; provided that such Affiliate
(i) has demonstrated ability, whether as an entity or by its principals and
employees, to professionally and competently perform duties similar to those
imposed upon the Collateral Manager pursuant to this Agreement, (ii) has the
legal right and capacity to act as Collateral Manager under this Agreement, and
(iii) shall not cause the Issuer or the pool of Assets to become required to
register under the provisions of the 1940 Act or (2) enter into (or have its
parent enter into) any consolidation or amalgamation with, or merger with or
into, or transfer of all or substantially all of its asset management business
to, another entity and, at the time of such consolidation, merger, amalgamation
or transfer the resulting, surviving or transferee entity assumes all the
obligations of the Collateral Manager under this Agreement generally (whether by
operation of law or by contract) and the other entity has substantially the same
investment staff providing investment management services to the Issuer; provided that the Collateral
Manager shall deliver prior notice to the Rating Agencies of any assignment,
delegation or combination made pursuant to this sentence. Upon the
execution and delivery of any such assignment by the assignee, the Collateral
Manager will be released from further obligations pursuant to this Agreement
except with respect to its obligations and agreements arising under Section 10, 12(g), 17, 21 through 23, and 25 in respect of its
acts or omissions occurring prior to such assignment and except with respect to
its obligations under Section 15 after such
assignment. For the avoidance of doubt, the staffing agreement
between the Collateral Manager and two of its Affiliates, ▇▇▇▇▇ Capital
Incorporated and ▇▇▇▇▇ Capital Management LLC (the “Staffing Agreement”),
shall not be deemed an assignment or delegation of duties by the Collateral
Manager or require the consent of any party hereto.
(c)
This Agreement shall not be assigned by the Issuer without (i) the
prior written consent of the Collateral Manager, the Trustee and a Majority of
the each Class of Notes (voting separately) and (ii) satisfaction of the Global
Rating Agency Condition, except in the case of assignment by the Issuer (1) to
an entity which is a successor to the Issuer permitted under the Indenture, in
which case such successor organization shall be bound hereunder and by the terms
of said assignment in the same manner as the Issuer is bound thereunder or (2)
to the Trustee as contemplated by the granting clause of the Indenture. The
Issuer may assign its rights, title and interest in (but not its obligations
under) this Agreement to the Trustee pursuant to the Indenture; and the
Collateral Manager by its signature below agrees to, and acknowledges, such
assignment. Upon assignment by the Issuer, the Issuer shall use reasonable
efforts to cause such assignee to execute and deliver to the Collateral Manager
such documents as the Collateral Manager shall consider reasonably necessary to
effect fully such assignment.
23
(d)
The Issuer shall provide (or cause the Trustee to provide) the
Rating Agencies and the Holders with notice of any assignment pursuant to this
Section
13.
Section
14. Removal for
Cause.
(a)
The Collateral Manager may be removed for Cause upon 10
Business Days’ prior written notice by the Issuer (“Termination Notice”)
at the direction of a Majority of the Controlling Class or a Majority of the
Subordinated Notes. Simultaneous with its direction to the Issuer to
remove the Collateral Manager for Cause, such Majority of the Controlling Class
or the Subordinated Notes, as applicable, shall give to the Issuer a written
statement setting forth the reason for such removal (“Statement of
Cause”). The Trustee (at the direction of the Issuer) shall
distribute a copy of the Termination Notice and the Statement of Cause to the
Holders within five (5) Business Days of receipt. No such removal
shall be effective (A) until the date as of which a successor Collateral Manager
shall have been appointed in accordance with Sections 12(d) and (e)
and delivered an Instrument of Acceptance to the Issuer and the successor
Collateral Manager has effectively assumed all of the Collateral Manager’s
duties and obligations and (B) unless the Statement of Cause has been delivered
to the Issuer as set forth in this Section
14(a). “Cause” means any of
the following:
(i)
the Collateral Manager shall willfully
and intentionally violate or breach any material provision of this Agreement or
the Indenture applicable to it in bad faith (not including a willful and
intentional breach that results from a good faith dispute regarding reasonable
alternative courses of action or interpretation of instructions or provisions of
the relevant Transaction Documents);
(ii)
the Collateral Manager shall breach any provision of
this Agreement or any terms of the Indenture applicable to it (other than as
covered by clause (i) and it being understood that failure to meet any
Concentration Limitation, Collateral Quality Test or Coverage Test is not a
breach for purposes of this clause (ii)), which breach would reasonably be
expected to have a Material Adverse Effect on the Issuer and shall not cure such
breach (if capable of being cured) within 30 days after the earlier to occur of
a Responsible Officer of the Collateral Manager receiving notice or having
actual knowledge of such breach, unless, if such breach is remediable, the
Collateral Manager has taken action commencing the cure thereof within such 30
day period that the Collateral Manager believes in good faith will remedy such
failure within 60 days after the earlier to occur of a Responsible Officer
receiving notice or having actual knowledge thereof;
(iii)
the failure of any representation, warranty,
certification or statement made or delivered by the Collateral Manager in or
pursuant to this Agreement or the Indenture to be correct in any material
respect when made which failure (A) would reasonably be expected to have a
Material Adverse Effect on the Issuer and (B) is not corrected by the Collateral
Manager within 30 days of a Responsible Officer of the Collateral Manager
receiving notice of such failure, unless such failure is remediable, the
Collateral Manager has taken action commencing the cure thereof within such 30
day period that the Collateral Manager believes in good faith will remedy such
failure within 60 days after the earlier to occur of a Responsible Officer
receiving notice thereof or having actual knowledge
thereof;
24
(iv)
the Collateral Manager is wound up or dissolved or there
is appointed over it or a substantial part of its assets a receiver,
administrator, administrative receiver, trustee or similar officer; or the
Collateral Manager (A) ceases to be able to, or admits in writing its inability
to, pay its debts as they become due and payable, or makes a general assignment
for the benefit of, or enters into any composition or arrangement with, its
creditors generally; (B) applies for or consents (by admission of material
allegations of a petition or otherwise) to the appointment of a receiver,
trustee, assignee, custodian, liquidator or sequestrator (or other similar
official) of the Collateral Manager or of any substantial part of its properties
or assets in connection with any winding up, liquidation, reorganization or
other relief under any bankruptcy, insolvency, receivership or similar law, or
authorizes such an application or consent, or proceedings seeking such
appointment are commenced without such authorization, consent or application
against the Collateral Manager and continue undismissed for 60 days; (C)
authorizes or files a voluntary petition in bankruptcy, or applies for or
consents (by admission of material allegations of a petition or otherwise) to
the application of any bankruptcy, reorganization, arrangement, readjustment of
debt, insolvency, dissolution, or similar law, or authorizes such application or
consent, or proceedings to such end are instituted against the Collateral
Manager without such authorization, application or consent and are approved as
properly instituted and remain undismissed for 60 days or result in adjudication
of bankruptcy or insolvency or the issuance of an order for relief; or (D)
permits or suffers all or any substantial part of its properties or assets to be
sequestered or attached by court order and the order (if contested in good
faith) remains undismissed for 60 days;
(v)
the occurrence and continuation of an Event of Default
pursuant to Sections 5.1(a), (b) or (c) under the Indenture that primarily
results from any material breach by the Collateral Manager of its duties under
this Agreement or under the Indenture which breach or default is not cured
within any applicable cure period; or
(vi)
(A) the occurrence of an act by the Collateral Manager
that constitutes fraud or criminal activity in the performance of its
obligations under this Agreement (as determined pursuant to a final adjudication
by a court of competent jurisdiction) or the Collateral Manager being indicted
for a criminal offence materially related to its business of providing asset
management services, or (B) any officer of the Collateral Manager primarily
responsible for the performance by the Collateral Manager of its obligations
under this Agreement (in the performance of his or her investment management
duties) is indicted for a criminal offense materially related to the business of
the Collateral Manager providing asset management services and continues to have
responsibility for the performance by the Collateral Manager under this
Agreement for a period of ten (10) days after such
indictment.
25
(b)
If any of the events specified in clauses
(a)(i) through (vi) of this Section 14 shall
occur, the Collateral Manager shall give prompt written notice thereof to the
Issuer, the Holders of the Controlling Class, the Holders of the Subordinated
Notes, the Trustee, and the Rating Agencies; provided that if any of the
events specified in Section 14(a)(iv)
shall occur, the Collateral Manager shall give written notice thereof to the
Issuer, the Trustee, and the Rating Agencies immediately upon the Collateral
Manager’s becoming aware of the occurrence of such event. A Majority
of the Controlling Class and a Majority of the Subordinated Notes, voting
separately by Class, may waive any event described in Section 14(a)(i),
(ii), (iii), (v) or (vi) as a basis for
termination of this Agreement and removal of the Collateral Manager under this
Section
14.
(c)
If the Collateral Manager is removed pursuant to this Section 14, the
Issuer shall have, in addition to the rights and remedies set forth in this
Agreement, all of the rights and remedies available with respect thereto at law
or equity.
Section
15. Obligations of Resigning or
Removed Collateral Manager.
(a)
On, or as soon as practicable after, the date any resignation
or removal is effective, the Collateral Manager shall (at the Issuer’s
expense):
(i) deliver
to the Issuer or to such other Person as the Issuer shall instruct all property
and documents of the Issuer or otherwise relating to the Assets then in the
custody of the Collateral Manager;
(ii) deliver
to the Trustee an accounting with respect to the books and records delivered to
the Trustee or the successor Collateral Manager appointed pursuant to Section 12;
and
(iii) agree
to cooperate with all reasonable requests related to any proceedings, even after
its resignation or removal, which arise in connection with this Agreement or the
Indenture, assuming the Collateral Manager has received an indemnity in form
reasonably satisfactory to the Collateral Manager from an entity reasonably
satisfactory to the Collateral Manager, and expense reimbursement reasonably
satisfactory to the Collateral Manager.
(b)
Notwithstanding such resignation or removal, the
Collateral Manager shall remain liable for its obligations under Section 10 and its
acts or omissions giving rise thereto and for any expenses, losses, damages,
liabilities, demands, charges and claims of any nature whatsoever (including
reasonable attorneys’ fees) in respect of or arising out of a Collateral Manager
Breach, subject to the limitations of liability set forth in Section
10.
Section
16. Representations and
Warranties.
(a)
The Issuer hereby represents and warrants to the
Collateral Manager as follows:
(i) The
Issuer has been duly organized and is validly existing and in good standing
under the laws of the State of Delaware, has the full power and authority to own
its assets and the obligations and securities proposed to be owned by it and
included in the Assets and to transact the business in which it is presently
engaged and is duly qualified under the laws of each jurisdiction where its
ownership or lease of property, the conduct of its business or the performance
of this Agreement, the Indenture, the Notes or any other Transaction Document
require such qualification, except for those jurisdictions in which the failure
to be so qualified, authorized or licensed would not have a Material Adverse
Effect on the Issuer.
26
(ii) The
Issuer has full power and authority to execute, deliver and perform all of its
obligations under this Agreement, the Indenture, the Notes and any other
Transaction Document to which it is a party and to perform all of its
obligations under this Agreement, the Indenture, the Notes, and any other
Transaction Document to which it is a party and has taken all necessary action
to authorize this Agreement and the execution and delivery of this Agreement and
the performance of all obligations imposed upon it hereunder, and, as of the
Closing Date, will have taken all necessary action to authorize the Indenture,
the Notes and any other Transaction Document to which it is a party and the
execution, delivery and performance of this Agreement, the Indenture, the Notes
and any other Transaction Document to which it is a party and the performance of
all obligations imposed upon it hereunder or thereunder. No consent of any other
Person including, without limitation, members and creditors of the Issuer, and
no license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing (other than any filings pursuant to the UCC required
under the Indenture and necessary to perfect any security interest granted
thereunder) or declaration with, any governmental authority is required by the
Issuer in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, the Indenture, the Notes or any other
Transaction Document to which the Issuer is a party or the obligations imposed
upon the Issuer hereunder and thereunder. This Agreement and all other
Transaction Documents to which the Issuer is a party have been, and each
instrument and document to which the Issuer is a party required hereunder or
under the Indenture, the Notes or any other Transaction Document to which the
Issuer is a party will be, executed and delivered by an Authorized Officer of
the Issuer, and this Agreement or any other Transaction Document to which the
Issuer is a party constitute, and each instrument or document required hereunder
to which the Issuer is a party, when executed and delivered hereunder or
thereunder, will constitute, the legally valid and binding obligation of the
Issuer enforceable against the Issuer in accordance with its terms, subject, as
to enforcement, (A) to the effect of bankruptcy, receivership, insolvency,
winding-up or similar laws affecting generally the enforcement of creditors’
rights as such laws would apply in the event of any bankruptcy, receivership,
insolvency, winding-up or similar event applicable to the Issuer and (B) to
general equitable principles (whether enforceability of such principles is
considered in a proceeding at law or in equity).
(iii) The
execution, delivery and performance of this Agreement, any other Transaction
Document to which the Issuer is a party and the documents and instruments
required hereunder and thereunder will not violate any provision of any existing
law or regulation binding on the Issuer, or any order, judgment, award or decree
of any court, arbitrator or governmental authority binding on the Issuer, or the
Organizational Instruments of, or any securities issued by, the Issuer or of any
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking to which the Issuer is a party or by which the Issuer or any of its
assets may be bound, the violation of which would have a Material Adverse Effect
on the Issuer, and will not result in or require the creation or imposition of
any lien on any of its property, assets or revenues pursuant to the provisions
of any such mortgage, indenture, lease, contract or other agreement, instrument
or undertaking (other than the lien of the Indenture).
27
(iv) The
Issuer is not in violation of its Organizational Instruments or in breach or
violation of or in default under any contract or agreement to which it is a
party or by which it or any of its property may be bound, or any applicable
statute or any rule, regulation or order of any court, government agency or body
having jurisdiction over the Issuer or its properties, the breach or violation
of which or default under which would have a material adverse effect on the
validity or enforceability of this Agreement, the provisions of the Indenture or
any other Transaction Document applicable to the Issuer, or the performance by
the Issuer of its duties hereunder or thereunder.
(b)
The Collateral Manager hereby represents and warrants to the Issuer,
as of the date hereof, as follows:
(i) The
Collateral Manager is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, has full
power and authority to own its assets and to transact the business in which it
is currently engaged, and is duly qualified to do business and is in good
standing under the laws of each jurisdiction where the performance of this
Agreement and any other Transaction Document to which it is a party would
require such qualification, except for those jurisdictions in which the failure
to be so qualified, authorized or licensed would not have a material adverse
effect on the ability of the Collateral Manager to perform its obligations under
this Agreement, the provisions of the Indenture and any other Transaction
Document applicable to the Collateral Manager, or on the validity or
enforceability of this Agreement, the provisions of the Indenture and any other
Transaction Document applicable to the Collateral Manager.
(ii) The
Collateral Manager has full power and authority to execute and deliver this
Agreement and any other Transaction Document to which it is a party and to
perform all of its required obligations hereunder and under the provisions of
the Indenture and any other Transaction Document applicable to the Collateral
Manager, and has taken all necessary action to authorize this Agreement and any
other Transaction Document to which it is a party on the terms and conditions
hereof and thereof and the execution and delivery of this Agreement and any
other Transaction Document to which it is a party and the performance of all
obligations required hereunder and thereunder applicable to the Collateral
Manager. No consent of any other Person, including, without limitation, members
and creditors of the Collateral Manager, and no license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required by the Collateral
Manager in connection with this Agreement or any other Transaction Document
applicable to it or the execution, delivery, performance, validity or
enforceability of this Agreement or any Transaction Document applicable to it or
the obligations imposed on the Collateral Manager hereunder or under the terms
of the Indenture or any other Transaction Document applicable to the Collateral
Manager other than those which have been obtained or made. No representation is
made herein with respect to the requirements of state securities laws or
regulations. This Agreement has been executed and delivered by an Authorized
Officer of the Collateral Manager, and this Agreement and any other Transaction
Document to which it is a party constitutes the valid and legally binding
obligation of the Collateral Manager enforceable against the Collateral Manager
in accordance with its terms, subject, as to enforcement, (A) to the effect of
bankruptcy, insolvency, winding-up or similar laws affecting generally the
enforcement of creditors’ rights as such laws would apply in the event of any
bankruptcy, receivership, insolvency, winding-up or similar event applicable to
the Collateral Manager and (B) to general equitable principles (whether
enforceability of such principles is considered in a proceeding at law or in
equity).
28
(iii) The
execution, delivery and performance of this Agreement and the terms of the
Indenture and any other Transaction Document applicable to the Collateral
Manager will not violate any provision of any existing law or regulation binding
on the Collateral Manager (except that no representation is made herein with
respect to the requirements of state securities laws or regulations), or any
order, judgment, award or decree of any court, arbitrator or governmental
authority binding on the Collateral Manager, or the Organizational Instruments
of, or any securities issued by, the Collateral Manager or of any mortgage,
indenture, lease, contract or other agreement, instrument or undertaking to
which the Collateral Manager is a party or by which the Collateral Manager or
any of its assets may be bound, the violation of which would have a material
adverse effect on the business, operations, assets or financial condition of the
Collateral Manager or which would reasonably be expected to adversely affect in
a material manner its ability to perform its obligations hereunder or under the
Indenture or any other Transaction Document.
(iv)
There is no charge, investigation, action, suit or proceeding before or by any
court pending or, to the actual knowledge of the Collateral Manager, threatened,
that, if determined adversely to the Collateral Manager, would have a material
adverse effect upon the performance by the Collateral Manager of its duties
under this Agreement or the provisions of the Indenture and any other
Transaction Document applicable to the Collateral Manager.
(v) Any
information in the sections entitled “Summary of Terms—Collateral Manager,”
“Risk Factors—Risks Relating to the Collateral Manager,” “Risk Factors—Relating
to Certain Conflicts of Interest—Certain Conflicts of Interest Relating to the
Collateral Manager and its Affiliates,” “Risk Factors—Relating to Certain
Conflicts of Interest—Conflicts related to obligations of the Collateral
Manager’s investment committee, the Collateral Manager or its affiliates have to
other clients,” and “The Collateral Manager” contained in the Final Offering
Circular, as thereafter amended or supplemented, as of the date of the Final
Offering Circular or as the date of any such amendment or supplement, as
applicable (provided that the Collateral Manager has consented to such amendment
or supplement) (collectively, the “Collateral Manager
Information”) does not and, as of the Closing Date, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(c)
The Collateral Manager makes no representation, express or implied,
with respect to the Issuer or any disclosure with respect to the
Issuer.
29
Section
17. Limited Recourse; No
Petition.
The
Collateral Manager hereby agrees that it shall not institute against, or join
any other Person in instituting against the Issuer any bankruptcy,
reorganization, arrangement, insolvency, moratorium or liquidation proceedings
or other proceedings under U.S. federal or state or other bankruptcy or similar
laws until at least one year (or, if longer, the applicable preference period
then in effect) plus one day after payment in full of all Notes issued under the
Indenture; provided
that nothing in this Section 17 shall
preclude the Collateral Manager from (A) taking any action prior to the
expiration of such applicable preference period in (x) any case or proceeding
voluntarily filed or commenced by the Issuer or (y) any insolvency proceeding
filed or commenced against the Issuer by any Person other than the Collateral
Manager or (B) commencing against the Issuer or any properties of the Issuer any
legal action that is not a bankruptcy, reorganization, arrangement, insolvency,
moratorium or liquidation proceeding. The Collateral Manager hereby acknowledges
and agrees that the Issuer’s obligations hereunder will be solely the limited
liability company obligations of the Issuer, and that the Collateral Manager
will not have any recourse to any of the shareholders, partners, members,
managers, directors, officers, employees, or Affiliates of the Issuer with
respect to any claims, losses, damages, liabilities, indemnities or other
obligations in connection with any Transactions contemplated hereby.
Notwithstanding any other provisions hereof or of any other Transaction
Document, recourse in respect of any obligations of the Issuer to the Collateral
Manager hereunder or thereunder will be limited to the Assets as applied in
accordance with the Priority of Payments pursuant to the Indenture and, on the
exhaustion of the Assets, all claims against the Issuer arising from this
Agreement or any Transaction Document or any Transactions contemplated hereby or
thereby shall be extinguished and shall not revive. This Section 17 shall
survive the termination of this Agreement for any reason
whatsoever.
Section
18. Notices.
Unless
expressly provided otherwise herein, all notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received when delivered
against receipt or upon actual receipt of registered or certified mail, postage
prepaid, return receipt requested, or, in the case of telecopier notice, when
received in legible form, addressed as set forth below:
(a) If
to the Issuer:
▇▇▇▇▇
Capital BDC 2010-1 LLC
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇
with a
copy to the Collateral Manager and a copy to:
Dechert
LLP
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telephone
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
30
If to the
Collateral Manager:
GC
Advisors LLC
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇
(b) If
to the Trustee:
U.S. Bank
National Association
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇
(c) If
to the Holders:
At their
respective addresses maintained in the Register or otherwise maintained by the
Trustee pursuant to the Indenture.
Any party
may change the address or telecopy number to which communications or copies
directed to such party are to be sent by giving notice to the other parties of
such change of address or telecopy number in conformity with the provisions of
this Section 18
for the giving of notice.
Section
19. Binding Nature of Agreement;
Successors and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns as provided
herein.
Section
20. Entire Agreement;
Amendment.
This
Agreement, the Indenture and the Collateral Administration Agreement contain the
entire agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersede all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter
hereof. The express terms hereof and thereof control and supersede
any course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other
than by an agreement in writing executed by each of the parties
hereto. Neither the Issuer nor the Collateral Manager will enter into
any agreement amending, modifying or terminating this Agreement without
satisfaction of the Global Rating Agency Condition and obtaining the consent of
a Majority of the Controlling Class and a Majority of the Subordinated Notes
(voting separately by Class); provided that no such Global
Rating Agency Condition or consent will be required in connection with any
amendment hereto the sole purpose of which is to (i) correct inconsistencies,
typographical or other errors, defects or ambiguities or (ii) conform this
Agreement to the Final Offering Circular, the Collateral Administration
Agreement or the Indenture (as it may be amended from time to time). The Issuer
shall provide the Holders with notice of any amendment of this
Agreement.
31
Section
21. Governing
Law.
THIS
AGREEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK INCLUDING NEW
YORK GENERAL OBLIGATIONS LAW §§ 5-1401 AND 5-1402 BUT OTHERWISE WITHOUT
REGARD TO THE PRINCIPLES THEREOF GOVERNING CONFLICTS OF LAW.
Section
22. Submission to
Jurisdiction.
With
respect to any suit, action or proceedings relating to this Agreement or any
matter between the parties arising under or in connection with this Agreement
(“Proceedings”), each
party irrevocably: (i) submits to the non-exclusive jurisdiction
of the Supreme Court of the State of New York sitting in the Borough of
Manhattan and the United States District Court for the Southern District of New
York, and any appellate court from any thereof; and (ii) waives any
objection which it may have at any time to the laying of venue of any
Proceedings brought in any such court, waives any claim that such Proceedings
have been brought in an inconvenient forum and further waives the right to
object, with respect to such Proceedings, that such court does not have any
jurisdiction over such party. Nothing in this Agreement precludes any
of the parties from bringing Proceedings in any other jurisdiction, nor will the
bringing of Proceedings in any one or more jurisdictions preclude the bringing
of Proceedings in any other jurisdiction.
Each of
the Collateral Manager and the Issuer irrevocably consents to the service of any
and all process in any action or proceeding by the mailing or delivery of copies
of such process to it at the office to which notices are sent to
it.
Section
23. Waiver of Jury
Trial.
EACH
PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
PROCEEDING.
Section
24. Conflict with the
Indenture.
Except as
set forth in Section
2(f), in the event that this Agreement requires any action to be taken
with respect to any matter and the Indenture requires that a different action be
taken with respect to such matter, and such actions are mutually exclusive, the
provisions of the Indenture in respect thereof shall control. In respect of any
other conflict between the terms of this Agreement and the Indenture or actions
required under the terms of the Indenture and the terms of this Agreement, the
terms of the Indenture shall control.
32
Section
25. Subordination; Assignment of
Agreement.
The
Collateral Manager agrees that the payment of all amounts to which it is
entitled pursuant to this Agreement shall be subordinated to the extent set
forth in, and the Collateral Manager agrees to be bound by the provisions of,
Article XI of the Indenture as if the Collateral Manager were a party to the
Indenture and hereby consents to the assignment of this Agreement as provided in
Section 15.1 of the Indenture.
Section
26. Indulgences Not
Waivers.
Neither
the failure nor any delay on the part of any party hereto to exercise any right,
remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the same or of any other
right, remedy, power or privilege, nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other occurrence. No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.
Section
27. Costs and
Expenses.
Except as
otherwise agreed to by the parties hereto, the costs and expenses (including the
fees and disbursements of counsel and accountants) of the Collateral Manager and
of the Issuer incurred in connection with the negotiation and preparation of and
the execution of this Agreement and any amendment hereto, and all matters
incidental thereto, shall be borne by the Issuer. The Issuer will reimburse the
Collateral Manager for expenses including fees and out-of-pocket expenses
reasonably incurred by the Collateral Manager in connection with services
provided under this Agreement with respect to (a) legal advisers, consultants,
rating agencies, accountants, brokers and other professionals retained by the
Issuer or the Collateral Manager (on behalf of the Issuer), (b) asset pricing
and asset rating services, compliance services and software, and accounting,
programming and data entry services directly related to the management of the
Assets, (c) all taxes, regulatory and governmental charges (not based on the
income of the Collateral Manager), insurance premiums or expenses (d) any and
all costs and expenses incurred in connection with the acquisition, disposition
of investments on behalf of the Issuer (whether or not actually consummated) and
management thereof, including attorneys' fees and disbursements, (e) any fees,
expenses or other amounts payable to the Rating Agencies, (f) any extraordinary
costs and expenses incurred by the Collateral Manager in the performance of its
obligations under this Agreement and the Indenture and (g) as otherwise agreed
upon by parties. The Collateral Manager shall be obligated to pay all reasonable
costs and disbursements in connection with the perfection and the maintenance of
perfection, as against all third parties, of the Depositor’s, Issuer’s and
Trustee’s respective right, title and interest in and to the Assets (including,
without limitation, the security interests provided for in the
Indenture).
33
Section
28. Third Party
Beneficiary.
The
parties hereto agree that the Trustee on behalf of the Secured Parties shall be
a third party beneficiary of this Agreement, and shall be entitled to rely upon
and enforce such provisions of this Agreement to the same extent as if each of
them were a party hereto.
Section
29. Titles Not to Affect
Interpretation.
The
titles of paragraphs and subparagraphs contained in this Agreement are for
convenience only, and they neither form a part of this Agreement nor are they to
be used in the construction or interpretation hereof.
Section
30. Execution in
Counterparts.
This
Agreement may be executed in any number of counterparts by telegraphic or other
written form of communication, each of which shall be deemed to be an original
as against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
Section
31. Provisions
Separable.
The
provisions of this Agreement are independent of and separable from each other,
and no provision shall be affected or rendered invalid or unenforceable by
virtue of the fact that for any reason any other or others of them may be
invalid or unenforceable in whole or in part.
Section
32. Gender.
Words
used herein, regardless of the number and gender specifically used, shall be
deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine or neuter, as the context
requires.
Section
33. Written Disclosure
Statement
The
Issuer acknowledges that it has received Part II of the Collateral Manager’s
Form ADV filed with the Securities and Exchange Commission, as required by Rule
204-(3) under the Adviser’s Act, more than 48 hours prior to the date of
execution of this Agreement.
34
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.
|
▇▇▇▇▇
CAPITAL BDC 2010-1 LLC
|
|
|
By: ▇▇▇▇▇
Capital BDC, Inc., its designated
|
|
|
manager
|
|
|
By:
|
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ |
|
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇
|
|
|
Title:
Chief Executive Officer
|
|
|
GC
ADVISORS LLC
|
|
|
By:
|
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ |
|
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇
|
|
|
Title:
Manager
|
|
35