Exhibit K-8
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EXECUTION COPY
SPECIAL VALUE OPPORTUNITIES FUND, LLC
9,520 Shares
Money Market Cumulative Preferred(TM) Shares (MMP(R))
Liquidation Preference U.S. $25,000 per Share
PLACEMENT AGENCY AGREEMENT
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July 13, 2004
▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Special Value Opportunities Fund, LLC, a Delaware limited liability
company (the "Fund"), proposes to offer for sale in a private offering solely
to certain "accredited investors" (as that term is defined in Regulation D
("Regulation D") under the Securities Act of 1933, as amended (the "Securities
Act")), up to 9,520 shares of its Money Market Cumulative Preferred Shares in
multiple series, each with a liquidation preference of U.S. $25,000 per share
(each a "series of Preferred Shares" and, collectively, the "Preferred
Shares"). The date on which the Fund issues each series of Preferred Shares is
herein referred to as a "Date of Original Issue".
The Preferred Shares will be issued by the Fund pursuant to the
Second Amended and Restated Operating Agreement, dated as of July 12, 2004 (the
"Operating Agreement"), among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as the initial member, SVOF MM,
LLC, as the special member, and the common shareholders, and the Statement of
Preferences relating to the Preferred Shares (the "Statement of Preferences")
dated July 12, 2004. The payment of the liquidation preference of the Preferred
Shares upon mandatory redemption of the Preferred Shares on or before July 13,
2014, and the timely payment of dividends on the Preferred Shares (whether or
not declared) will be guaranteed by Ambac Assurance Corporation (the "Insurer")
under a guaranty insurance policy (the "Insurance Policy").
On July 13, 2004 (the "Initial Date of Original Issue"), the Fund
will enter into (i) an Investment Management Agreement, dated as of July 13,
2004 (the "Investment Management Agreement"), with ▇▇▇▇▇▇▇▇▇▇ Capital Partners,
LLC, a Delaware limited liability company ("▇▇▇▇▇▇▇▇▇▇"), as investment manager
(the "Investment Manager"), (ii) a Co-Management Agreement, dated as of July
13, 2004 (the "Co-Management Agreement"), with Babson Capital Management LLC
("Babson"), a Delaware limited liability company, as co-manager (the
"Co-Manager"), and the Investment Manager, (iii) a Credit Agreement, dated as
of July 13, 2004 (the "Credit Agreement"), with various financial institutions
(the "Lenders"), the Insurer, CDC Financial Products Inc., as administrative
agent (the "Administrative Agent"), and CDC Financial Products Inc., as
arranger, (iv) a Pledge and Intercreditor Agreement, dated as of July 13, 2004
(the "Pledge Agreement"), with the Insurer, the Administrative Agent and CDC
Financial Products Inc., as secured parties representative (the "Secured
Parties Representative"), (v) the Insurance Agreement, dated as of July 13,
2004 relating to the Insurance Policy (the "Insurance Agreement"), with the
Insurer, (vi) a Custodial Agreement, dated as of July 6, 2004 (the "Custodial
Agreement"), with ▇▇▇▇▇ Fargo Bank, National Association (the "Custodian"), the
Administrative Agent and the Secured Parties Representative, and (vii) an
Auction Agency Agreement (including the form of Broker-Dealer Agreement) with
Deutsche Bank Trust Company Americas (the "Auction Agent"), dated July 13, 2004
(the "Auction Agency Agreement"). Collectively, the Operating Agreement, the
Investment Management Agreement, the Co-Management Agreement, the Credit
Agreement, the Pledge Agreement, the Insurance Agreement, the Custodial
Agreement and the Auction Agency Agreement are referred to herein as the "Fund
Agreements." This Placement Agency Agreement is herein referred to as this
"Agreement."
The Fund has prepared and has delivered to the Placement Agent
copies of a preliminary offering circular dated July 8, 2004 setting forth
information concerning the Fund, the Managers, the Fund Agreements, the series
of Preferred Shares to be issued on the Initial Date of Original Issue, the
Preferred Shares, the Insurance Policy and the terms of the sale of the
Preferred Shares (including any appendices or exhibits thereto and any
information incorporated therein by reference, as the same may be amended or
supplemented from time to time, the "Preliminary Offering Circular"). On the
day the initial dividend rate on the initial series of Preferred Shares is
determined, the Fund will prepare a final offering circular, dated the date of
such determination, consisting of the Preliminary Offering Circular as of such
date and including such initial dividend rate with such additional changes as
shall be consented to by you (the "Initial Offering Circular"). In connection
with the sale of each series of Preferred Shares after the Initial Date of
Original Issue, the Fund will prepare and deliver to you copies of a
preliminary offering circular in accordance with Section 3(c) hereof and copies
of a final offering circular with respect to such series of Preferred Shares
setting forth the initial dividend rate on such series of Preferred Shares in
accordance with Section 3(d) hereof (each such final offering circular,
including the Initial Offering Circular, including any appendices or exhibits
thereto and any information incorporated therein by reference, as the same may
be amended or supplemented from time to time in accordance with the terms
hereof, is herein referred to as the "Offering Circular").
The Fund and the Investment Manager each wishes to confirm its
agreement concerning your acting as the exclusive placement agent (the
"Placement Agent") in connection with the sale of the Preferred Shares.
1. Appointment of Placement Agent. On the basis of the
representations and warranties contained herein, and subject to the terms and
satisfaction of the conditions set forth herein, the Fund hereby appoints you
as its agent and grants you the exclusive right to offer, as its agent, the
Preferred Shares to certain "accredited investors" within the meaning of
Regulation D under the Securities Act pursuant to the terms of this Agreement
and you hereby accept such appointment and agree to use your best efforts to
secure subscriptions to buy shares of each series of the Preferred Shares, at a
purchase price of $25,000 per share, from such accredited investors during any
Marketing Period (as hereinafter defined) during the period commencing on the
date hereof to but excluding the earlier of July 14, 2006 and the date on which
all of the Preferred Shares have been sold pursuant to the terms of this
Agreement (the "Commitment Period").
2. Restrictions. The Placement Agent agrees:
(a) Not to solicit any offer to buy from or offer to sell to any
person any Preferred Shares unless (i) (A) the Placement Agent or one of its
affiliates has a substantive, pre-existing relationship with such person and
(B) the Placement Agent shall reasonably believe that at such time such person
and each other person for whom such person is acting are institutional
"accredited investors" within the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D with respect to the Preferred Shares, have sufficient knowledge
and experience in financial and business matters to be capable of evaluating
the merits and risks of the purchase of the Preferred Shares and are able and
prepared to bear the economic risk of investing in and holding the Preferred
Shares and (ii) the Placement Agent shall reasonably believe that any purchase
of Preferred Shares by such person will be for its own account, and not with a
view to any public resale or distribution thereof (any person meeting the
requirements of this Section 2(a) is referred to herein as a "Prospective
Investor");
(b) Not to offer or sell Preferred Shares by means of any form of
general solicitation or advertising, including, but not limited to, (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising;
(c) Not to solicit any offer to buy or to offer to sell Preferred
Shares to any Prospective Investor unless the Placement Agent has sent to such
Prospective Investor a copy of a preliminary Offering Circular or the Offering
Circular and not to confirm a sale of any series of Preferred Shares with a
purchaser of the Preferred Shares of such series without first or
simultaneously delivering an Offering Circular relating to such series of
Preferred Shares (and any amendment or supplement thereto that the Fund shall
have furnished to the Placement Agent prior to the date of such confirmation of
sale); and
(d) Not to sell Preferred Shares to any Prospective Investor,
unless the Placement Agent has received a Purchaser's Letter, substantially in
the form of Exhibit A attached hereto, signed by such Prospective Investor.
3. Procedures. (a) After the Initial Date of Original Issue, the
Fund shall give the Placement Agent and the Insurer written notice,
substantially in the form of Exhibit B hereto (a "Notice of Issuance"), of its
intention to sell one or more series of Preferred Shares (the "Offered
Preferred Shares") no less than thirty days prior to the proposed Marketing
Commencement Date (as hereinafter defined). Each Notice of Issuance shall state
(i) the proposed Date of Original Issue for such Offered Preferred Shares and
(ii) the number of Offered Preferred Shares to be issued, which in any event
shall not be less than 1,200 shares nor more than 6,000 shares.
(b) (i) Subject to the satisfaction of the conditions set forth in
Section 3(c) hereof, the Placement Agent shall be obligated to use its best
efforts to secure subscriptions to purchase Offered Preferred Shares pursuant
to Section 1 hereof during the period (the "Marketing Period") commencing on
the seventh business day (each a "Marketing Commencement Date") prior to the
Date of Original Issue for such Offered Preferred Shares and ending on the
second business day prior to such Date of Original Issue. The Fund reserves the
right, in its sole discretion, to suspend the solicitation of subscriptions for
Offered Preferred Shares during any Marketing Period. Upon the receipt of
written notice from the Fund, the Placement Agent will suspend solicitation of
subscriptions for Offered Preferred Shares during such Marketing Period until
such time as the Fund has advised the Placement Agent that such solicitation
may be resumed.
(ii) If (A) the Fund suspends the solicitation of
subscriptions for Offered Preferred Shares during any Marketing Period
and then advises the Placement Agent that it may resume soliciting
subscriptions for such Offered Preferred Shares or (B) the Placement
Agent is not obligated to solicit subscriptions to buy Offered
Preferred Shares pursuant to Section 1 hereof during any Marketing
Period or to purchase Offered Preferred Shares pursuant to Section
5(a) hereof on the proposed Date of Original Issue therefor as a
result of the occurrence of an event described in Section 7(o) hereof,
(1) any further obligation of the Placement Agent to solicit
subscriptions for such Offered Preferred Shares shall be subject to
the satisfaction of the conditions set forth in Section 3(c) hereof on
the date the Fund requests the Placement Agent to resume soliciting
such subscriptions or on the date of the cessation of the event
described in Section 7(o) hereof, as the case may be, (2) the Date of
Original Issue for such Offered Preferred Shares shall be postponed to
a date agreed upon by the Fund and the Placement Agent that is at
least seven full business days after the resumption of solicitation or
the cessation of the event described in Section 7(o) hereof, as the
case may be, (3) the Marketing Period for such Offered Preferred
Shares shall recommence on the date described in clause (1) above and
shall end on the second business day prior to such Date of Original
Issue and (4) the Fund shall make any changes that in the opinion of
counsel for the Fund or counsel for the Placement Agent may be
necessary in the preliminary Offering Circular with respect to such
Offered Preferred Shares to reflect such changes.
(c) The obligation of the Placement Agent to solicit subscriptions
for Offered Preferred Shares during any Marketing Period therefor will be
subject to the accuracy on and as of the related Marketing Commencement Date of
the representations and warranties of the Fund and Investment Manager contained
herein, to the performance by the Fund and the Investment Manager of all of
their respective obligations required to be performed hereunder on or prior to
such Marketing Commencement Date and to each of the following additional terms
and conditions:
(i) No stop order suspending the sale of such Offered
Preferred Shares in any jurisdiction shall have been issued and no
proceeding for that purpose shall have been commenced or shall be
pending or threatened;
(ii) The Fund shall have prepared and delivered to the
Placement Agent copies of a preliminary Offering Circular with respect
to such Offered Preferred Shares, consisting of the Initial Offering
Circular, amended or supplemented in a manner satisfactory to the
Placement Agent to include the following information:
(A) the number of such Offered Preferred Shares being
offered, the initial Auction Date for such Offered Preferred Shares
and the number of Rate Period Days in the initial Rate Period
therefor which in no event shall exceed 28 Rate Period Days without
the consent of the Placement Agent;
(B) all information with respect to the Insurer contained
in any documents filed by Ambac Financial Group with the Securities
and Exchange Commission (the "Commission") pursuant to Section 13,
14 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act") since the date of the Initial Offering Circular;
(C) all financial and statistical information with
respect to the Insurer contained in such preliminary Offering
Circular under the heading "Capitalization of the Company--Ambac"
as of the end of a fiscal year of the Insurer ending less than one
year and ninety days before the last day of such Marketing Period
and, if the last day of such Marketing Period will be more than 160
days after the end of such fiscal year (155 days, in the case of
the fiscal year ending December 31, 2005), all financial and
statistical information with respect to the Insurer contained in
such preliminary Offering Circular under the heading
"Capitalization of the Company--Ambac and the Money Markets
Preferred Shares Policy" presented as of the end of a fiscal
quarter of the Insurer ending less than 160 days (or 155 days, in
the case of the fiscal year ending December 31, 2005) before the
last day of such Marketing Period; and
(D) all information contained in the most recent annual
and semi-annual reports filed by the Fund with the Commission
pursuant to the 1940 Act since the date of the Initial Offering
Circular, and all financial statements (excluding, in each case,
any summary or schedule of the assets of the Fund included
therewith) provided to the Lenders pursuant to Section 6.1.2 of the
Credit Agreement, including, without limitation, the following:
(1) if such Marketing Commencement Date is during the
period commencing on November 30, 2004 to but excluding March
31, 2005, an unaudited consolidated balance sheet of the Fund as
of September 30, 2004 and the related unaudited consolidated
statements of operations, members' equity and cash flows for the
quarter ending September 30, 2004 and the period from the
Initial Date of Original Issue to September 30, 2004 furnished
by the Fund to the Lenders pursuant to Section 6.1.2 of the
Credit Agreement;
(2) if such Marketing Commencement Date is during the
period commencing on March 31, 2005 to but excluding May 31,
2005, (x) an audited consolidated balance sheet of the Fund as
of December 31, 2004 and the related audited consolidated
statements of operations, members' equity and cash flows for the
period from the Initial Date of Original Issue to December 31,
2004 furnished by the Fund to the Lenders pursuant to Section
6.1.2 of the Credit Agreement and (y) the information contained
in the Fund's annual report for the period from the Initial Date
of Original Issue to December 31, 2004 filed by the Fund with
the Commission;
(3) if such Marketing Commencement Date is during the
period commencing on May 31, 2005 to but excluding August 31,
2005, (x) the audited financial statements and information from
the Fund's annual report described in paragraph (2) above and
(y) an unaudited consolidated balance sheet of the Fund as of
March 31, 2005 and the related unaudited consolidated statements
of operations, members' equity and cash flows for the quarter
ending March 31, 2005 furnished by the Fund to the Lenders
pursuant to Section 6.1.2 of the Credit Agreement;
(4) if such Marketing Commencement Date is during the
period commencing on August 31, 2005 to but excluding November
30, 2005, (x) the audited financial statements described in
paragraph (2) above, (y) an unaudited consolidated balance sheet
of the Fund as of June 30, 2005 and the related unaudited
consolidated statements of operations, members' equity and cash
flows for the quarter and the portion of the year ending June
30, 2005 furnished by the Fund to the Lenders pursuant to
Section 6.1.2 of the Credit Agreement and (z) the information
contained in the Fund's semi-annual report for the six months
ending June 30, 2005 filed by the Fund with the Commission;
(5) if such Marketing Commencement Date is during the
period commencing on November 30, 2005 to but excluding March
31, 2006, (x) the audited financial statements described in
paragraph (2) above, (y) the information from the Fund's semi-
annual report described in paragraph (4) above and (z) an
unaudited consolidated balance sheet of the Fund as of September
30, 2005 and the related unaudited consolidated statements of
operations, members' equity and cash flows for the quarter and
the portion of the year ending September 30, 2005 furnished by
the Fund to the Lenders pursuant to Section 6.1.2 of the Credit
Agreement;
(6) if such Marketing Commencement Date is during the
period commencing on March 31, 2006 to but excluding May 31,
2006, (x) an audited consolidated balance sheet of the Fund as
of December 31, 2005 and the related audited consolidated
statements of operations, members' equity and cash flows for the
year ending December 31, 2005 furnished by the Fund to the
Lenders pursuant to Section 6.1.2 of the Credit Agreement and
(y) the information contained in the Fund's annual report for
the year ending December 31, 2005 filed by the Fund with the
Commission; and
(7) if such Marketing Commencement Date is during the
period commencing on May 31, 2006 to but excluding July 1, 2006,
(x) the audited financial statements and information from the
Fund's annual report described in paragraph (6) above and (y) an
unaudited consolidated balance sheet of the Fund as of March 31,
2006 and the related unaudited consolidated statements of
operations, members' equity and cash flows for the quarter
ending March 31, 2006 furnished by the Fund to the Lenders
pursuant to Section 6.1.2 of the Credit Agreement;
(iii) The Placement Agent shall not have discovered and
disclosed to the Fund during or prior to the commencement of such
Marketing Period that such preliminary Offering Circular or any
amendment or supplement thereto contains an untrue statement of a fact
which, in the reasonable opinion of the Placement Agent, is material
or omits to state any fact which, in the reasonable opinion of the
Placement Agent, is material and is required to be stated therein or
is necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(iv) The Placement Agent shall have received a certificate on
such Marketing Commencement Date signed by any Vice President,
Treasurer or Assistant Treasurer of the Insurer, dated such Marketing
Commencement Date, in which such officer consents to the inclusion of
the information under the heading "Capitalization of the
Company--Ambac" in such preliminary Offering Circular (the "Insurer's
Information") and certifies that the Insurer's Information as of such
Marketing Commencement Date is true and correct in all material
respects and does not include any untrue statement of a material fact;
and
(v) If such preliminary Offering Circular contains financial
data with respect to the Fund, the Placement Agent shall have received
a letter from the certified independent accountants of the Fund,
addressed to the Placement Agent, dated the Marketing Commencement
Date, in form and substance acceptable to the Placement Agent (A)
confirming that they are independent public accountants with respect
to the Fund within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings thereunder
and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission and (B) stating, as of the Marketing Commencement Date (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in such preliminary Offering Circular, as of a date not more than five
days prior to the Marketing Commencement Date), the conclusions and
findings of such firm with respect to the financial information and
other matters ordinarily covered by accountants' "comfort letters" to
underwriters in connection with registered public offerings.
(d) The Placement Agent will set the initial dividend rate on each
series of Offered Preferred Shares on the second business day prior to the Date
of Original Issue for such series or on such other business day as shall be
agreed upon by the Placement Agent and the Fund (the "Pricing Date"). If, on
the Pricing Date for any series of Offered Preferred Shares, the Placement
Agent shall have not solicited Prospective Purchasers to purchase all of the
shares of such series on the Date of Original Issue for such series, the
dividend rate for the initial Rate Period for such series will equal the
Maximum Rate for such Rate Period. On the Pricing Date for each series of
Offered Preferred Shares, the Fund will prepare and provide copies to the
Placement Agent of an Offering Circular, dated such Pricing Date, consisting of
the preliminary Offering Circular with respect to such series of Offered
Preferred Shares as of such Pricing Date and including the initial dividend
rate on such series of Offered Preferred Shares with such additional changes as
shall be consented to by the Placement Agent.
4. Representations, Warranties and Agreements of the Fund and the
Investment Manager. (a) The Fund and the Investment Manager jointly and
severally represent and warrant to, and agree with, the Placement Agent on and
as of the date hereof, as of each Marketing Commencement Date, as of each Date
of Original Issue and as of each date on which the Offering Circular shall be
amended or supplemented (each of such times referenced above being referred to
herein as a "Representation Date") that:
(i) The Offering Circular, as of its date, did not, and as of
such Representation Date, will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that no representation or warranty is made as to (i) the
information contained in the Offering Circular in reliance upon and in
conformity with written information relating to the Placement Agent
furnished to the Fund by or on behalf of the Placement Agent
specifically for use therein (the "Placement Agent's Information") or
(ii) the Insurer's Information;
(ii) Each Offering Document (as defined in Section 6(g)
hereof) provided by the Fund or any Manager to Prospective Investors,
as of the date thereof, will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that no representation or warranty is made as to the
Placement Agent's Information or the Insurer's Information;
(iii) Assuming compliance by the Placement Agent with the
agreements set forth in Section 2 hereof, it is not necessary, in
connection with the issuance and sale of each series of Preferred
Shares by the Fund in the manner contemplated by this Agreement, to
register such series of Preferred Shares under the Securities Act;
(iv) A notification of registration of the Fund as an
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), on Form N-8A (the "1940 Act Notification")
has been prepared by the Fund in conformity with the 1940 Act and has
been or will be filed with the Commission on or prior to the Initial
Date of Original Issue;
(v) When filed with the Commission, the 1940 Act
Notification, and any amendment or supplement thereto, conformed or
will conform in all material respects to the requirements of the 1940
Act and the rules and regulations of the Commission under the 1940 Act
(the "1940 Act Rules and Regulations") and did not or will not, as of
its filing date, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided that
no representation or warranty is made as to the Placement Agent's
Information or the Insurer's Information;
(vi) After the 1940 Act Notification has been filed with the
Commission, the Fund will be duly registered under the 1940 Act as a
closed-end non-diversified management investment company;
(vii) The Fund has not received any notice from the
Commission pursuant to Section 8(e) of the 1940 Act with respect to
the 1940 Act Notification (or any amendment or supplement thereto);
(viii) The registration statement on Form N-2 to be filed by
the Fund in accordance with Section 6(a) hereof (the "Registration
Statement"), when filed with the Commission, will conform in all
material respects to the requirements of the 1940 Act and the 1940 Act
Rules and Regulations and will not, as of its effective date, contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were
made, not misleading; provided that no representation or warranty is
made as to the Placement Agent's Information or the Insurer's
Information;
(ix) The Fund (A) is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of
Delaware, (B) has the limited liability company power and authority to
own or hold its properties and to conduct the business in which it
will engage as described in the Offering Circular and (C) is qualified
to do business and is in good standing in each jurisdiction where the
nature of its business requires such qualification, except where the
failure to so qualify or to be in good standing would not reasonably
be expected to have a material adverse effect on the business,
management, financial condition, stockholders' equity or results of
operations of the Fund (a "Material Adverse Effect");
(x) The Fund has an authorized capitalization as set forth in
the Offering Circular. All of the issued common shares of the Fund
issued on or before such Representation Date have been duly and
validly authorized and issued, are fully paid and non-assessable and
conform to the description thereof contained in the related Offering
Circular;
(xi) The shares of each series of Offered Preferred Shares
when sold by the Fund pursuant to this Agreement will have been duly
and validly authorized and, when issued and delivered against payment
therefor in accordance with this Agreement, will be duly and validly
issued, fully paid and non-assessable; and the Offered Preferred
Shares will conform to the description thereof contained in the
related Offering Circular;
(xii) The Fund has the requisite power and authority to
execute and deliver this Agreement and the Fund Agreements and perform
its obligations hereunder and thereunder;
(xiii) Each of the Fund Agreements has been duly authorized,
executed and delivered by the Fund and, assuming due execution and
delivery thereof by the other parties thereto, constitutes the legal,
valid and binding obligation of the Fund enforceable in accordance
with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws relating to or affecting
generally the enforcement of creditors' rights or by general equitable
principles;
(xiv) This Agreement has been duly authorized, executed and
delivered by the Fund;
(xv) The execution, delivery and performance of this
Agreement and the Fund Agreements by the Fund and the consummation of
the transactions contemplated hereby and thereby will not (A) conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to
which the Fund is a party or by which the Fund is bound or to which
any of the property or assets of the Fund is subject, (B) result in
any violation of the provisions of the Operating Agreement or (C)
result in the violation of any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Fund or any of its properties or assets, except
in the case of clauses (A) and (C), such conflicts, breaches or
violations that in the aggregate would not reasonably be expected to
have a Material Adverse Effect;
(xvi) No consent, approval, authorization or order of, or
filing or registration with, any court or governmental agency or body
having jurisdiction over the Fund or any of its properties or assets
is required for the execution, delivery and performance of this
Agreement and the Fund Agreements by the Fund and the consummation of
the transactions contemplated hereby and thereby, except for those
which have been obtained or made;
(xvii) The Fund is not (A) in violation of the Operating
Agreement, (B) in default, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets is subject or (C) in
violation of any law, ordinance, governmental rule, regulation or
court decree to which it or its property or assets may be subject or
has failed to obtain any material license, permit, certificate,
franchise or other governmental authorization or permit necessary to
the ownership of its property or to the conduct of its business,
except, in the case of clauses (B) and (C), such defaults, events,
violations or failures that in the aggregate would not reasonably be
expected to have a Material Adverse Effect;
(xviii) There are no legal or governmental proceedings
pending to which the Fund is a party or of which any property or
assets of the Fund is the subject which is reasonably likely to have a
Material Adverse Effect, and to the best of its knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(xix) The financial statements (including the related notes
and supporting schedules), if any, of the Fund included in the
Offering Circular present fairly the financial condition and results
of operations of the Fund, at the dates and for the periods indicated,
and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis in all material
respects throughout the periods involved;
(xx) The independent public accountants certifying any
audited financial statements of the Fund included in the Offering
Circular are independent public accountants as required by the 1940
Act and the 1940 Act Rules and Regulations;
(xxi) This Agreement and each of the Fund Agreements complies
in all material respects with all applicable provisions of the 1940
Act, the 1940 Act Rules and Regulations, the Investment Advisers Act
of 1940 (the "Advisers Act"), and the rules and regulations adopted by
the Commission under the Advisers Act (the "Advisers Act Rules and
Regulations");
(xxii) The Fund is, and at all times through the completion
of the transactions contemplated hereby, will be, in compliance in all
material respects with the terms and conditions of the 1940 Act,
except for such failures to comply that in the aggregate would not
reasonably be expected to have a Material Adverse Effect or a material
adverse effect on the shareholders of the Fund;
(xxiii) No person is serving or acting as an officer, trustee
or investment adviser of the Fund except in accordance with the
provisions of the 1940 Act and the 1940 Act Rules and Regulations and
the Advisers Act and the Advisers Act Rules and Regulations; and
(xxiv) Neither the Fund nor any of its affiliates (as defined
in Rule 501(b) of Regulation D) has, directly or through any agent
(other than the Placement Agent), (A) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as such term is defined in the Securities Act) which is or
will be integrated with the offering and sale of the Preferred Shares
in a manner that would require the registration of the Preferred
Shares under the Securities Act; (B) engaged in any form of general
solicitation or general advertising (within the meaning of Regulation
D) in connection with the offering of the Preferred Shares or (C)
otherwise taken or will take any action that would require the
registration of the Preferred Shares under the Securities Act.
(b) The Investment Manager represents and warrants to, and
agrees with, the Placement Agent on and as of each Representation Date that:
(i) The Investment Manager has been duly formed and is
validly existing as a limited liability company, in good standing
under the laws of its jurisdiction of organization, is duly registered
and qualified to do business and is in good standing in each
jurisdiction in which its ownership or lease of property or the
conduct of its business as described in the Offering Circular requires
such qualification, and has all limited liability company power and
authority necessary to own or hold its properties and to conduct its
business as described in the Offering Circular, except where the
failure to so qualify or to be in good standing would not reasonably
be expected to have a material adverse effect on the condition
(financial or other), business, properties or results of operations of
the Investment Manager or on the ability of the Investment Manager to
perform its obligations under this Agreement and the Fund Agreements
to which it is a party ("Investment Manager Material Adverse Effect");
(ii) The Investment Manager is duly registered as an
investment adviser under the Advisers Act and is not prohibited by the
Advisers Act, the 1940 Act, the Advisers Act Rules and Regulations or
the 1940 Act Rules and Regulations from acting under the Fund
Agreements to which it is a party;
(iii) Each of the Fund Agreements to which the Investment
Manager is a party has been duly authorized, executed and delivered by
the Investment Manager, and, assuming due execution and delivery
thereof by the other parties thereto, constitutes the legal, valid and
binding obligation of the Investment Manager enforceable in accordance
with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws relating to or affecting
generally the enforcement of creditors' rights or by general equitable
principles;
(iv) This Agreement has been duly authorized, executed and
delivered by the Investment Manager;
(v) The execution, delivery and performance of this Agreement
and the Fund Agreements to which the Investment Manager is a party and
the consummation of the transactions contemplated hereby and thereby
will not (A) conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Investment Manager is a party or by which
the Investment Manager is bound or to which any of the property or
assets of the Investment Manager is subject, (B) result in any
violation of the provisions of the operating agreement of the
Investment Manager or (C) result in the violation of any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Investment Manager or any of its
properties or assets, except in the case of clauses (A) and (C), such
conflicts, breaches or violations that in the aggregate would not
reasonably be expected to have an Investment Manager Material Adverse
Effect;
(vi) No consent, approval, authorization or order of, or
filing or registration with, any court or governmental agency or body
having jurisdiction over the Investment Manager or any of its
properties or assets is required for the execution, delivery and
performance of this Agreement and the Fund Agreements to which it is a
party and the consummation of the transactions contemplated hereby and
thereby, except for those which have been obtained or made;
(vii) The Investment Manager has the financial resources
available to it necessary for the performance of its services and
obligations as contemplated in the Offering Circular and under this
Agreement and the Fund Agreements to which it is a party;
(viii) There are no legal or governmental proceedings pending
to which the Investment Manager is a party or of which any property or
assets of the Investment Manager is the subject which is reasonably
likely to have an Investment Manager Material Adverse Effect, and to
the best of the Investment Manager's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others; and
(ix) The Investment Manager is not (A) in violation of its
operating agreement, (B) in default, and no event has occurred which,
with notice or lapse of time or both, would constitute such a default,
in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of its properties or assets is
subject or (C) in violation of any law, ordinance, governmental rule,
regulation or court decree to which it or its property or assets may
be subject or has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or permit
necessary to the ownership of its property or to the conduct of its
business, except, in the case of clauses (B) and (C), such defaults,
events, violations or failures that in the aggregate would not
reasonably be expected to have an Investment Manager Material Adverse
Effect.
(c) Reliance. The Fund, the Investment Manager and the Placement
Agent agree that (i) any subscriptions to purchase Offered Preferred Shares
solicited by the Placement Agent shall be solicited, and any Offered Preferred
Shares purchased by the Placement Agent hereunder shall be purchased by the
Placement Agent, in reliance on the representations and warranties of, and the
performance of the covenants and agreements by, the Fund and the Investment
Manager contained herein and on the terms and conditions and in the manner
provided herein and (ii) any Offered Preferred Shares sold by the Fund
hereunder shall be sold by the Fund in reliance on the performance of the
covenants and agreements by the Placement Agent contained herein.
5. Sale and Delivery. (a) Sale. Subject to the terms and conditions
and in reliance upon the representations and warranties contained herein,
including, without limitation the conditions set forth in Section 7 hereof, on
each Date of Original Issue during the Commitment Period, other than the
Initial Date of Original Issue, the Fund agrees to sell to the Placement Agent,
and the Placement Agent agrees to purchase from the Fund, for a purchase price
equal to $25,000 per share, any Offered Preferred Shares being issued by the
Fund on such Date of Original Issue not being purchased by Prospective
Investors solicited by the Placement Agent pursuant to the terms hereof;
provided, however, that on any Date of Original Issue during each period set
forth on Exhibit C hereto, the Placement Agent shall not be obligated to
purchase more Offered Preferred Shares than the lesser of (x) the number of
shares set forth on Exhibit C hereto for such period and (y) 8,020 minus the
aggregate number of Offered Preferred Shares sold hereunder on each Date of
Original Issue (other than the Initial Date of Original Issue) preceding such
Date of Original Issue.
(b) Delivery. Delivery of and payment for each series of Offered
Preferred Shares shall be made at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇
& ▇▇▇▇ LLP, Los Angeles, California, or at such other place as shall be agreed
upon by the Placement Agent and the Fund, at 9:00 A.M., California time, on the
Date of Original Issue thereof.
(c) Global Certificates. On the Date of Original Issue for each
series of Offered Preferred Shares, the Fund shall deliver the global
certificates representing the shares of such series to the Auction Agent as
custodian for The Depository Trust Company ("DTC") against payment by the
Placement Agent to or upon order of the Fund of the purchase price for the
shares of such series by wire transfer in U.S. dollars in same-day funds. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement or such other place as may be agreed upon by the Placement
Agent is a further condition of the obligations of the Placement Agent
hereunder. Upon delivery, the shares of each series of Offered Preferred Shares
shall be in global form, registered in the name of DTC or its nominee. The Fund
agrees to make one or more global certificates evidencing the shares of each
series of Offered Preferred Shares available for inspection by the Placement
Agent in New York, New York at least 24 hours prior to the Date of Original
Issue thereof.
(d) Placement Agent Fee. The Fund hereby agrees to pay or cause to
be paid a fee per share of each series of Offered Preferred Shares sold to a
Prospective Investor solicited by the Placement Agent or purchased by the
Placement Agent hereunder upon and subject to completion of the delivery of and
payment for such share on the Date of Original Issue thereof, which amount
shall be withheld by the Placement Agent from the gross proceeds of the
offering of the shares of such series. The fee payable on the Date of Original
Issue of each series of Offered Preferred Shares will equal the product of (i)
$25,000, (ii) the number of shares of such series of Offered Preferred Shares,
(iii) 0.25% and (iv) the number of Rate Period Days in the initial Rate Period
for such series divided by 360.
(e) Commitment Fee. The Fund hereby agrees to pay or cause to be
paid to the Placement Agent on the Initial Date of Original Issue a structuring
and underwriting fee in an amount equal to $3,570,000, payable in immediately
available funds.
6. Further Agreements of the Fund and the Investment Manager. Each
of the Fund and the Investment Manager jointly and severally agrees with the
Placement Agent:
(a) to file or cause to be filed (i) the 1940 Act Notification with
the Commission on or before the Initial Date of Original Issue, (ii) a
registration statement with respect to the Fund with the Commission pursuant to
Section 8(b) of the 1940 Act (the "Registration Statement") within three months
of the Initial Date of Original Issue and any amendment to the Registration
Statement with the Commission requested by the Commission and (iii) any other
filings required to be made by the Commission pursuant to the 1940 Act, in each
case, in conformity with the requirements of the 1940 Act and the 1940 Act
Rules and Regulations; and to furnish promptly to the Placement Agent and to
counsel for the Placement Agent a copy of the 1940 Act Notification and the
Registration Statement each as originally filed with the Commission and, during
the Commitment Period, each amendment thereto, including all financial
statements, consents and exhibits thereto;
(b) to advise the Placement Agent promptly of receipt by the Fund
of any notice from the Commission pursuant to Section 8(e) of the 1940 Act with
respect to the 1940 Act Notification or the Registration Statement (or any
amendment or supplement to either of them);
(c) during any Marketing Period (i) to advise the Placement Agent
promptly and, if requested, confirm such advice in writing, of the happening of
any event which makes any statement of a material fact made in the Offering
Circular untrue or which requires the making of any additions to or changes in
the Offering Circular in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, (ii) to advise
the Placement Agent promptly of any order preventing or suspending the use of
the Offering Circular, of any suspension of the qualification of the shares of
any series of Offered Preferred Shares for offering or sale in any jurisdiction
and of the initiation or threatening of any proceeding for any such purpose,
and (iii) to use its best efforts to prevent the issuance of any such order
preventing or suspending the use of the Offering Circular or suspending any
such qualification and, if any such suspension is issued, to obtain the lifting
thereof at the earliest possible time;
(d) prior to making any amendment or supplement to the Offering
Circular, including, without limitation, any such amendment or supplement
effected by incorporating by reference in the Offering Circular any information
with respect to the Fund contained in any annual or semi-annual report filed by
the Fund with the Commission pursuant to the 1940 Act but excluding any such
amendment or supplement effected by incorporating by reference any information
with respect to the Insurer contained in any filing made by Ambac Financial
Group with the Commission pursuant to Section 13, 14 or 15(d) of the Exchange
Act, to furnish a copy thereof to the Placement Agent and counsel for the
Placement Agent and not to effect any such amendment or supplement or
incorporate any such report by reference without the consent of the Placement
Agent, which consent shall not be unreasonably withheld (for the avoidance of
doubt, this paragraph shall not prohibit the Fund from making any filing or
amending or supplementing any filing with the Commission without the Placement
Agent's consent, but such filing will not be incorporated by reference into the
Offering Circular without the Placement Agent's consent);
(e) prior to making any amendment or supplement to the Insurer's
Information in any Offering Circular, other than by incorporating by reference
any information with respect to the Insurer contained in any filing made by
Ambac Financial Group with the Commission pursuant to Section 13, 14 or 15(d)
of the Exchange Act, to furnish a copy thereof to the Insurer and not to effect
any such amendment or supplement without the consent of the Insurer;
(f) if any event shall occur or condition exist as a result of
which it is necessary, in the opinion of counsel for the Placement Agent, after
discussions with the Fund, the Investment Manager and their counsel, to amend
or supplement the Offering Circular during any Marketing Period in order that
the Offering Circular will not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to a Prospective Investor, not misleading,
or if at any time it is necessary during any Marketing Period to amend or
supplement the Offering Circular to comply with applicable law, to immediately
notify the Placement Agent to suspend solicitations to purchase Offered
Preferred Shares pursuant to Section 3(b) hereof and, prior to any resumption
of such solicitation, prepare such amendment or supplement as may be necessary
to correct such untrue statement or omission or so that the Offering Circular,
as so amended or supplemented, will comply with applicable law;
(g) to extend to all Prospective Investors during a Marketing
Period the opportunity to ask questions of, and receive answers from, the Fund
and the Investment Manager concerning the Fund and the Offered Preferred Shares
and the terms and conditions of the offering thereof and to obtain any
information such Prospective Investors may consider necessary in making an
informed investment decision or in order to verify the accuracy of the
information set forth in the Offering Circular, to the extent the Fund or the
Investment Manager possess the same or can acquire it without unreasonable
effort or expense (any such additional information, including, without
limitation, any valuation statements or other reports provided to Prospective
Investors, together with the Offering Circular are referred to herein as the
"Offering Documents");
(h) to supply to the Placement Agent, on a continuing basis so long
as the Placement Agent is party to a Broker-Dealer Agreement, (i) copies of all
valuation statements, all auditor's agreed-upon procedures reports, all
auditor's statements with respect to defaults under the Credit Agreement and
all officer's certificates furnished by the Fund to the Lenders pursuant to the
Credit Agreement, (ii) copies of all reports showing compliance or
noncompliance with the Investment Company Act Preferred Shares Asset Coverage
test and the rating agency guidelines furnished to the Insurer pursuant to the
Insurance Agreement, (iii) copies of all reports filed by the Fund with the
Commission, (iv) copies of all audited and unaudited financial statements of
the Fund delivered by the Fund to the Lenders pursuant to the Credit Agreement,
(iv) copies of all correspondence with, and information that the Fund makes
available to any Rating Agency, in connection with the Preferred Shares and the
Fund Agreements and the transactions contemplated hereby and thereby and (vi)
copies of any amendments to the Fund Agreements, provided that the Placement
Agent agrees that all non-public information obtained by it pursuant to this
Section 6(h) shall be subject to that certain confidentiality agreement, dated
November 20, 2003, between the Placement Agent and the Investment Manager;
(i) to promptly take from time to time such actions as the
Placement Agent may reasonably request to qualify Offered Preferred Shares for
offering and sale under the securities or Blue Sky laws of such jurisdictions
as the Placement Agent may designate and to continue such qualifications in
effect for the term of this Agreement; and to arrange for the determination of
the eligibility for investment of Offered Preferred Shares under the laws of
such jurisdictions as the Placement Agent may reasonably request; provided that
the Fund shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to file a general consent to
service of process in any jurisdiction;
(j) to assist the Placement Agent in arranging for the shares of
each series of Offered Preferred Shares to be eligible for clearance and
settlement through DTC;
(k) not to, and to cause its affiliates not to, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated with
the sale of the Preferred Shares in a manner which would require registration
of any of the Preferred Shares under the Securities Act;
(l) not to, and to cause its affiliates not to, authorize or
knowingly permit any person acting on their behalf to, solicit any offer to buy
or offer to sell Preferred Shares by means of any form of general solicitation
or general advertising within the meaning of Regulation D or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act; and not to offer, sell, contract to sell or otherwise dispose
of, directly or indirectly, any securities under circumstances where such
offer, sale, contract or disposition would cause the exemption afforded by
Section 4(2) of the Securities Act to cease to be applicable to the offering
and sale of the Preferred Shares as contemplated by this Agreement;
(m) during the Commitment Period, to make its officers, employees,
independent accountants and legal counsel reasonably available upon request by
the Placement Agent and to provide the Placement Agent with such information
concerning the business and financial affairs of the Fund, the Investment
Manager, the Preferred Shares and the Fund Agreements as the Placement Agent
may reasonably request;
(n) to advise the Placement Agent if either Standard & Poor's
Ratings Service ("S&P") or ▇▇▇▇▇'▇ Investors Service ("Moody's") downgrades the
ratings of the Preferred Shares, proposes to downgrade the Preferred Shares or
puts any rating of the Preferred Shares under surveillance or review;
(o) during the Commitment Period, without the prior written consent
of the Placement Agent, to amend, supplement or otherwise modify any of the
terms or provisions of the Statement of Preferences or any of the terms or
provisions of the Operating Agreement which define the preferences, voting
powers, rights, terms or conditions of the Preferred Shares or otherwise relate
to the Preferred Shares (the "Preferred Share Provisions");
(p) during the Commitment Period, without the prior written consent
of the Placement Agent, which consent shall not be unreasonably withheld, (i)
to amend, supplement or otherwise modify, or consent to the amendment,
supplement or modification of, (A) any of the terms or provisions of the
Operating Agreement, other than the Preferred Share Provisions, or (B) any of
the other Fund Agreements, in each case, other than any such amendment,
supplement or modification that does not adversely affect in any material
respect the interests of the Placement Agent or the holders of the Preferred
Shares; and
(q) during the Commitment Period, promptly provide to the Placement
Agent a copy of any notice given to the Lenders pursuant to Section 6.1.7 of
the Credit Agreement.
7. Conditions of Placement Agent's Obligations. The obligations of
the Placement Agent hereunder in respect of the shares of each series of
Offered Preferred Shares are subject to the accuracy, on and as of each
Representation Date, of the representations and warranties of the Fund and the
Investment Manager contained herein, to the accuracy of the statements of the
Fund and the Investment Manager and their respective officers made in any
certificates delivered pursuant hereto, to the performance by the Fund and the
Investment Manager of their obligations required to be performed hereunder on
or prior to the Date of Original Issue of such series, and to the satisfaction
of each of the following additional terms and conditions:
(a) Copies of the final Offering Circular (and any amendments or
supplements thereto) with respect to such series of Offered Preferred Shares
shall have been distributed to the Placement Agent in accordance with Section
3(d) hereof, and no stop order suspending the sale of the shares of such series
of Offered Preferred Shares in any jurisdiction shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending or
threatened.
(b) The Placement Agent shall not have discovered and disclosed to
the Fund that the Offering Circular or any amendment or supplement thereto
contains an untrue statement of a fact which, in the reasonable opinion of the
Placement Agent, is material or omits to state any fact which, in the
reasonable opinion of the Placement Agent, is material and is required to be
stated therein or is necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading.
(c) Each of the Auction Agency Agreement and the Broker-Dealer
Agreement with ▇▇▇▇▇▇ Brothers Inc. shall have been duly executed and delivered
by the parties thereto and shall be in full force and effect or, in the case of
the Auction Agency Agreement, a similar agreement with a replacement auction
agent shall be in full force and effect.
(d) The Insurance Policy shall have been duly executed and
delivered by the Insurer to the Secured Parties Representative, shall be in
full force and effect and shall have been amended, if necessary, to include
such series of Offered Preferred Shares as a "Insured Obligation" thereunder.
(e) An indemnification agreement between the Insurer and the
Placement Agent, in form and substance satisfactory to the Placement Agent,
shall have been executed and delivered by the parties thereto and shall be in
full force and effect.
(f) The Placement Agent shall have received an opinion of ▇▇▇▇▇▇▇,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special counsel to the Fund, dated such Date
of Original Issue and addressed to the Placement Agent, regarding negative
assurances concerning the Offering Circular and the accuracy of the
descriptions of the Preferred Shares and the Fund Agreements in the Offering
Circular, in the form attached hereto as Exhibit D.
(g) The Placement Agent shall have received an opinion of ▇▇▇▇▇▇▇,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special counsel to the Fund, dated such Date
of Original Issue and addressed to the Placement Agent, regarding general
corporate matters, due formation of the Fund, issuance of the shares of such
series of Preferred Shares, New York enforceability of the Fund Agreements,
compliance with securities laws, the 1940 Act and the Advisers Act, and other
New York and federal law matters, in the form attached hereto as Exhibit E.
(h) The Placement Agent shall have received an opinion of ▇▇▇▇▇▇▇,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special counsel to the Fund, dated such Date
of Original Issue and addressed to the Placement Agent, that the statements set
forth in the Offering Circular under the heading "Certain U.S. Federal Income
Tax Aspects of an Investment in the Company" accurately describe the material
federal income tax consequences to holders of the Preferred Shares, in the form
attached hereto as Exhibit F.
(i) The Placement Agent shall have received an opinion of ▇▇▇▇▇▇▇,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special counsel to the Investment Manager,
dated such Date of Original Issue and addressed to the Placement Agent,
regarding general corporate matters, due formation of the Investment Manager,
New York enforceability of the Fund Agreements to which the Investment Manager
is a party, compliance with securities laws, the 1940 Act and the Advisers Act,
and other New York and federal law matters, in the form attached hereto as
Exhibit G.
(j) The Placement Agent shall have received an opinion of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, counsel to the Co-Manager, dated such Date of Original Issue and
addressed to the Placement Agent, regarding general corporate matters, due
incorporation of the Co-Manager, New York enforceability of the Fund Agreements
to which the Co-Manager is a party, compliance with securities laws, the 1940
Act and the Advisers Act, and other New York and federal law matters, in the
form attached hereto as Exhibit H.
(k) The Placement Agent shall have received an opinion of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, special counsel to the Custodian, dated such
Date of Original Issue and addressed to the Placement Agent, regarding general
corporate matters, due organization of the Custodian, New York enforceability
of the Fund Agreements to which the Custodian is a party, and New York and
federal law matters, in the form attached hereto as Exhibit I.
(l) The Placement Agent shall have received an opinion of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, dated such Date of Original Issue and addressed to the
Placement Agent, with respect to the validity of the shares of such series of
Preferred Shares and such other matters as the Placement Agent may reasonably
request.
(m) The Placement Agent shall have received an opinion from ▇▇▇▇
▇▇▇, Assistant General Counsel of the Insurer, dated such Date of Original Issue
and addressed to the Placement Agent, pertaining to the enforceability of the
Insurance Policy and other matters, in the form attached hereto as Exhibit J.
(n) The Placement Agent shall have received a letter from S&P
stating that the shares of such series of Offered Preferred Shares have
received a rating of "AAA" from S&P and a letter from Moody's stating that the
shares of such series of Offered Preferred Shares have received a rating of
"Aaa" from Moody's.
(o) (i) Trading in the auction rate securities market shall not
have been suspended, generally disrupted or limited during the Marketing Period
immediately preceding such Date of Original Issue, (ii) a material disruption
in the securities settlement system maintained by DTC shall have not occurred
and be continuing on such Date of Original Issue or (iii) any moratorium on
commercial banking activities shall not have been declared by federal or state
authorities and be continuing on such Date of Original Issue.
(p) The Placement Agent shall have received on such Date of
Original Issue a certificate or certificates signed by a senior executive
officer and senior financial officer of the Fund, dated such Date of Original
Issue, in which such officers shall state that, to the best of their knowledge
(A) the representations and warranties of the Fund in this Agreement and the
Fund Agreements are true and correct on and as of such Date of Original Issue;
(B) that the Fund has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder or under the Fund Documents
at or prior to such Date of Original Issue; (C) no event or occurrence which
with the passage of time or the giving of notice thereof or both would become
an "Event of Default" (as defined in the Credit Agreement) has occurred and is
continuing; (D) subsequent to the date as of which information is given in the
Offering Circular, there has not been any material change in the capital stock
or debt of the Fund or any material adverse change, or any development which is
reasonably likely to cause a material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity, results
of operations, business or prospects of the Fund, other than as set forth or
contemplated in the Offering Circular; and (E) nothing has come to such
officers' attention that would lead such officers to believe that the Offering
Circular as of such Date of Original Issue includes any untrue statement of a
material fact or omits 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; provided that such officers shall make no such statement
with respect to the Placement Agent's Information or the Insurer's Information.
(q) The Placement Agent shall have received on such Date of
Original Issue a certificate or certificates signed by the person serving as
the chief executive officer of the Investment Manager or the person serving as
the chief financial officer of the Investment Manager and any other officer of
the Investment Manager, dated such Date of Original Issue, in which such
officers shall state that, to the best of their knowledge (A) the
representations and warranties of the Investment Manager in this Agreement and
any other Fund Agreements to which the Investment Manager is a party are true
and correct on and as of such Date of Original Issue; (B) that the Investment
Manager has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder or under the Fund Agreements at or
prior to such Date of Original Issue; (C) no event or occurrence which with the
passage of time or the giving of notice thereof or both would become an "Event
of Default" (as defined in the Credit Agreement) has occurred and is
continuing; and (D) nothing has come to such officers' attention that would
lead such officers to believe that the Offering Circular as of such Date of
Original Issue includes any untrue statement of a material fact or omits 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;
provided that such officers shall make no such statement with respect to the
Placement Agent's Information or the Insurer's Information.
(r) If the Offering Circular with respect to such series of
Preferred Shares contains financial data with respect to the Fund, the
Placement Agent shall have received a letter from the certified independent
accountants of the Fund, addressed to the Placement Agent, dated such Date of
Original Issue, in form and substance acceptable to the Placement Agent (A)
confirming that they are independent public accountants with respect to the
Fund within the meaning of Rule 101 of the Code of Professional Conduct of the
AICPA and its interpretations and rulings thereunder and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission and (B) stating, as of such Date
of Original Issue (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Offering Circular, as of a date not more than five
days prior to the Date of Original Issue), the conclusions and findings of such
firm with respect to the financial information and other matters covered in the
letter with respect to the Offering Circular delivered pursuant to Section 3(c)
hereof and (C) confirming in all material respects the conclusions and findings
set forth in the initial letter.
(s) On such Date of Original Issue, (i) ▇▇▇▇▇▇▇▇▇▇ is acting as the
investment manager of the Fund pursuant to the Investment Management Agreement,
(ii) the Board of Directors has not approved the termination of the Investment
Management Agreement or the termination of ▇▇▇▇▇▇▇▇▇▇ as the investment manager
of the Fund, (iii) neither the Fund nor ▇▇▇▇▇▇▇▇▇▇ has provided the other party
with notice of the termination of the Investment Management Agreement and (iv)
no event has occurred as of such Date of Original Issue which gives the Insurer
or any other party the right to terminate the Investment Management Agreement.
(t) As of such Date of Original Issue, the Board of Directors shall
not have failed to declare dividends payable in respect of any outstanding
series of Preferred Shares.
(u) The Placement Agent shall have received all other documents,
opinions and certificates in respect of the issuance of such series of Offered
Preferred Shares that it shall have received hereunder on the Initial Date of
Original Issue in respect of the issuance of the initial series of Preferred
Shares.
8. Termination. The Fund may terminate this Agreement for any
reason, at any time, upon the giving of 10 days' written notice of such
termination to the Placement Agent. This Agreement will automatically
terminate, without the giving of any notice, on the first date on which ▇▇▇▇▇▇
Brothers Inc. is no longer the exclusive Broker-Dealer with respect to the
Preferred Shares.
9. Indemnification. (a) The Fund and the Investment Manager shall,
jointly and severally, indemnify and hold harmless the Placement Agent, its
affiliates, their respective officers, directors, shareholders, partners,
trustees, employees, representatives and agents, and each person, if any, who
controls the Placement Agent within the meaning of the Securities Act
(collectively referred to for purposes of this Section 9(a) and Section 10 as a
"Placement Agent Indemnified Party"), from and against any loss, claim, damage
or liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of the Preferred Shares), to which that Placement Agent
Indemnified Party may become subject, whether commenced or threatened, under
the Securities Act, any other federal or state statutory law or regulation, at
common law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Circular, any other preliminary Offering Circular, any final Offering Circular
or in any other Offering Document or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and shall reimburse each Placement Agent
Indemnified Party promptly upon demand for any legal or other expenses
reasonably incurred by that Placement Agent Indemnified Party in connection
with investigating or defending or preparing to defend against or appearing as
a third party witness in connection with any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
neither the Fund nor the Investment Manager shall be liable in any such case to
the extent that any such loss, claim, damage, liability or action arises out
of, or is based upon, an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with the Placement Agent's Information or the Insurer's Information;
provided, further, that the foregoing indemnity agreement with respect to the
Preliminary Offering Circular or any other preliminary Offering Circular shall
not inure to the benefit of the Placement Agent if any such loss, claim,
damage, liability or action results from the fact that both (i) the person
asserting any such loss, claim, damage or liability was not sent a copy of the
final Offering Circular with respect to the Offered Preferred Shares purchased
by such person at or prior to the time written confirmation of the sale of such
Offered Preferred Shares was sent to such person and (ii) the untrue statement
in or omission from the Preliminary Offering Circular or such other preliminary
Offering Circular was corrected in such final Offering Circular unless, in
either case, such failure to deliver such final Offering Circular was a result
of non-compliance by the Fund with the provisions of Section 3(d)hereof.
(b) The Placement Agent shall indemnify and hold harmless the Fund,
the Investment Manager and their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Fund or
the Investment Manager within the meaning of the Securities Act (collectively
referred to for purposes of this Section 9(b) and Section 10 as a "Fund
Indemnified Party"), from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases
and sales of the Preferred Shares), to which that Fund Indemnified Party may
become subject, whether commenced or threatened, under the Securities Act, any
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Circular, any other preliminary
Offering Circular, any final Offering Circular or in any other Offering
Document or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with the Placement Agent's Information, and shall
reimburse each Fund Indemnified Party promptly upon demand for any legal or
other expenses reasonably incurred by that Fund Indemnified Party in connection
with investigating or defending or preparing to defend against or appearing as
a third party witness in connection with any such loss, claim, damage,
▇▇▇▇▇▇▇▇▇ or action as such expenses are incurred.
(c) As soon as reasonably practicable after receipt by a Placement
Agent Indemnified Party or a Fund Indemnified Party (each an "Indemnified
Party") under this Section 9 of notice of any claim or the commencement of any
action, the Indemnified Party shall, if a claim in respect thereof is to be
made against the indemnifying party pursuant to Section 9(a) or 9(b), notify
the indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have under this Section 9
except to the extent that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; and, provided,
further, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an Indemnified Party otherwise than
under this Section 9. If any such claim or action shall be brought against an
Indemnified Party and it notifies the indemnifying party of its intention to
seek indemnification hereunder, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice from the
indemnifying party to the Indemnified Party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the Indemnified Party under this Section 9 for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation or providing evidence;
provided, however, that an Indemnified Party shall have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of
such counsel for the Indemnified Party will be at the expense of such
Indemnified Party unless (i) the indemnifying party has failed to provide
counsel satisfactory to such Indemnified Party in a timely manner, (ii) such
Indemnified Party determines that such counsel's representation of such
Indemnified Party would present such counsel with a conflict of interest or
(iii) the Indemnified Party determines that there may be legal defenses
available to it or other Indemnified Parties which are different from or in
addition to those available to the indemnifying party. It is understood that
the indemnifying party or parties shall not, in connection with any proceeding
or related proceedings in the same jurisdiction, be liable for the reasonable
fees, disbursements and other charges of more than one separate firm of
attorneys (in addition to any local counsel) at any one time for all such
Indemnified Party or Parties. Each Indemnified Party, as a condition of the
indemnity agreements contained in Sections 9(a) and 9(b) hereof, shall use all
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim. No indemnifying party shall (i) without the prior
written consent of the respective Indemnified Parties (which consent shall not
be unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the Indemnified Parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an explicit unconditional release of each Indemnified Party from all
liability arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
the consent of the indemnifying party or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any Indemnified Party from and against any loss or liability by
reason of such settlement or judgment.
(d) Notwithstanding the provisions of Section 9(a), Section 9(b)
and Section 10 hereof, (i) the Placement Agent shall not be required to
indemnify the Fund Indemnified Parties pursuant to Section 9(b) hereof and/or
contribute amounts pursuant to Section 10 hereof by reason of any untrue or
alleged untrue statement or omission or alleged omission in an aggregate amount
that exceeds the amount of the total fees received by the Placement Agent under
this Agreement, (ii) the Investment Manager shall not be required to indemnify
the Placement Agent Indemnified Parties pursuant to Section 9(a) hereof and/or
contribute amounts pursuant to Section 10 hereof by reason of any untrue or
alleged untrue statement or omission or alleged omission in an aggregate amount
that exceeds the amount of the total fees received by the Investment Manager
from the Fund pursuant to the Investment Management Agreement and through the
direct or indirect ownership by the Investment Manager and its affiliates of
the Carried Interest (as defined in the Offering Circular) and (iii) if, as of
the end of the fiscal quarter of the Fund immediately preceding the date of any
demand by a Placement Agent Indemnified Party for indemnification or
contribution from the Fund and the Investment Manager pursuant to Section 9 or
10 hereof, the Company Equity (as defined in the Credit Agreement, or if the
Credit Agreement has been terminated, as defined in the Credit Agreement
immediately before termination) equals or exceeds 60% of Contributed Company
Capital (as defined in the Credit Agreement, or if the Credit Agreement has
been terminated, as defined in the Credit Agreement immediately before
termination), any such demand for indemnification and/or contribution by a
Placement Agent Indemnified Party from the Investment Manager will be in an
amount up to the Investment Manager Percentage (as hereinafter defined) of the
amount being demanded from the Fund and the Investment Manager pursuant to
Section 9 hereof and/or Section 10 hereof; provided, however that, if the Fund
fails to pay any amount demanded of it by a Placement Agent Indemnified Party
pursuant to Section 9 and/or 10 hereof within 14 days of such demand, such
Placement Agent Indemnified Party may, subject to the limitations set forth in
clause (ii) of this Section 9(d), demand payment by the Investment Manager of
the full amount being demanded from the Fund and the Investment Manager
pursuant to Section 9 hereof and/or Section 10 hereof. If the Investment
Manager pays any amount of the Fund Percentage (as hereinafter defined) of any
demand made by a Placement Agent Indemnified Party pursuant to the proviso in
the immediately preceding sentence, the Investment Manager shall have the right
to recover such amount from the Fund and such payment shall in no way limit any
claim the Investment Manager may have against the Fund for such amount, whether
in law or at equity. The "Investment Manager Percentage" on the date of any
demand for indemnification or contribution from the Fund and the Investment
Manager pursuant to Section 9 hereof and/or Section 10 hereof will equal the
percentage equivalent of a fraction, the numerator of which is the total fees
received by the Investment Manager from the Fund pursuant to the Investment
Management Agreement and through the direct or indirect ownership by the
Investment Manager and its affiliates of the Carried Interest on or prior to
such date, and the denominator of which is the sum of the total gross proceeds
from the sale of the Preferred Shares under this Agreement received by the Fund
on or prior to such date and the total fees received by the Investment Manager
from the Fund pursuant to the Investment Management Agreement and through the
direct or indirect ownership by the Investment Manager and its affiliates of
the Carried Interest on or prior to such date; and the "Fund Percentage" on any
such date will equal 100% minus the Investment Manager Percentage on such date.
For the purposes of this Section 9(d), the "direct or indirect ownership by the
Investment Manager and its affiliates of the Carried Interest" shall not
include any direct or indirect ownership of the Carried Interest by the
Co-Manager, members of the Fund's advisory board or employees of the Investment
Manager other than ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇.
(e) The obligations of the Fund, the Investment Manager and the
Placement Agent in this Section 9 and in Section 10 are in addition to any
other liability that the Fund, the Investment Manager or the Placement Agent,
as the case may be, may otherwise have, including in respect of any breaches of
representations, warranties and agreements made herein by any such party.
10. Contribution. If the indemnification provided for in Section 9
is unavailable or insufficient to hold harmless an Indemnified Party under
Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such Indemnified Party, contribute to the amount paid or payable
by such Indemnified Party as a result of such loss, claim, damage or liability,
or action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Fund and the Investment Manager
on the one hand and the Placement Agent on the other from the offering of the
Preferred Shares hereunder or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Fund and the Investment Manager on the one hand
and the Placement Agent on the other with respect to the statements or
omissions that resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Fund and the Investment Manager on the one
hand and the Placement Agent on the other with respect to such offering shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Preferred Shares offered under this Agreement (before deducting
expenses) received by the Fund on the one hand, and the total fees received by
the Placement Agent under this Agreement, on the other, bear to the total gross
proceeds from the sale of the Preferred Shares under this Agreement. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to the Fund or the Investment
Manager or information supplied by the Fund or the Investment Manager on the
one hand or to the Placement Agent's Information on the other, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The Fund, the
Investment Manager and the Placement Agent agree that it would not be just and
equitable if contributions pursuant to this Section 10 were to be determined by
pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to herein. The amount paid
or payable by an Indemnified Party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 10
shall be deemed to include, for purposes of this Section 10, any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending or preparing to defend any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
11. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Placement Agent, the Fund, the
Investment Manager and their respective successors and permitted assigns,
provided, however, that neither this Agreement nor any of the rights, interest
or obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties. This Agreement and the terms
and provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 9 and 10 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Fund, the
Investment Manager and the Placement Agent. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 11, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
12. Additional Broker/Dealer Agreement. The Fund hereby agrees that
▇▇▇▇▇▇ Brothers Inc. shall be the sole Broker-Dealer for the Preferred Shares;
provided, however that the Fund may enter into Broker-Dealer Agreements with
one or more additional Broker-Dealers selected by the Fund ("Additional
Broker-Dealer Agreements") if (1)(a) the amount by which the Applicable Rate
for a series of the Preferred Shares for a Rate Period exceeds the Reference
Rate for such Rate Period (the "Preferred Shares' Spread") is more than 15
basis points more than the amount by which the dividend rate for comparable
structured finance auction rate preferred securities with the same ratings, the
same financial guarantor and the same auction rate period ("Comparable
Securities") exceeds the LIBOR rate for the related auction rate period for the
Comparable Securities (the "Comparable Securities' Spread") for three out of
five consecutive Rate Periods for such series of Preferred Shares (such three
periods, the "Applicable Periods" and such an event, an "Additional Dealer
Event"), (b) there has not been a material adverse change in the credit quality
of the Preferred Shares (either as a result of a material adverse change in the
assets of the Fund or the financial condition of the Insurer) during the
Applicable Periods, (c) the Fund provides ▇▇▇▇▇▇ Brothers Inc. with prior
written notice of its intention to enter into Additional Broker-Dealer
Agreements because of the auction results for the Preferred Shares during the
Applicable Periods, (d) the Preferred Shares' Spread for the two consecutive
Rate Periods immediately following Placement Agent's receipt of such notice is
more than 15 basis points more than the Comparable Securities' Spread and (e)
prior to entering into any Additional Broker-Dealer Agreement, the Fund
terminates any further commitment of the Placement Agent to purchase Offered
Preferred Shares hereunder or (2)(a) three Additional Dealer Events occur over
the course of any 12 consecutive months, (b) there has not been a material
adverse change in the credit quality of the Preferred Shares (either as a
result of a material adverse change in the assets of the Fund or the financial
condition of the Insurer) during the Applicable Periods relating to any of the
Additional Dealer Events, (c) the Fund provides the Placement Agent with prior
written notice of its intention to enter into Additional Broker-Dealer
Agreements because of the occurrence of three Additional Dealer Events over the
course of such 12 consecutive months and (d) prior to entering into any
Additional Broker-Dealer Agreement, the Fund terminates any further commitment
of the Placement Agent to purchase Offered Preferred Shares hereunder.
13. Expenses. The Fund agrees with the Placement Agent to pay (i)
the costs incident to the authorization, issuance, sale, preparation and
delivery of the Preferred Shares and any taxes payable in that connection; (ii)
the costs incident to the preparation, printing and distribution of the
Offering Circular and any amendments or supplements thereto; (iii) the costs of
preparing and distributing each of the Fund Agreements; (iv) the costs incident
to the preparation, printing and delivery of the global certificates evidencing
the Preferred Shares, including stamp duties and transfer taxes, if any,
payable upon issuance of the Preferred Shares; (v) the fees and expenses of
counsel to the Fund; (vi) the reasonable fees and expenses of counsel to the
Placement Agent; (vii) the fees and expenses of qualifying the Preferred Shares
under the securities laws of the several jurisdictions and of preparing and
distributing Blue Sky Memoranda (including related reasonable fees and expenses
of counsel for the Placement Agent); (viii) any fees charged by rating agencies
for rating the Preferred Shares; (ix) the fees and expenses of the Insurer, the
Custodian and the Auction Agent (including related fees and expenses of any
counsel to such parties), to the extent obligated to pay such amounts in
accordance with the Fund Agreements; (x) all expenses and application fees
incurred in connection with the approval of the Preferred Shares for book-entry
transfer by DTC; and (xi) all other costs and expenses incident to the
performance of the obligations of the Fund under this Agreement which are not
otherwise specifically provided for in this Section 13.
14. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Fund (including Section 12
hereof), the Investment Manager and the Placement Agent contained in this
Agreement or made by or on behalf of the Fund, the Investment Manager or the
Placement Agent pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for any of the
Offered Preferred Shares and shall remain in full force and effect, regardless
of any termination or cancellation of this Agreement or any investigation made
by or on behalf of any of them or any of their respective affiliates, officers,
directors, employees, representatives, agents or controlling persons.
15. Notices, etc.. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Placement Agent, shall be delivered or sent by
nationally recognized overnight courier or telecopy transmission to:
▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇
Telecopier no.: (▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇)
(▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇▇▇ ▇▇▇▇▇);
(b) if to the Fund, shall be delivered or sent by nationally
recognized overnight courier or telecopy transmission to:
Through August 1, 2004:
Special Value Opportunities Fund, LLC
C/o Tennenbaum Capital Partners, LLC
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier no.: (▇▇▇) ▇▇▇-▇▇▇▇
After August 1, 2004:
Special Value Opportunities Fund, LLC
C/o Tennenbaum Capital Partners, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier no.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to Investment Manager, shall be delivered or sent by
nationally recognized overnight courier or telecopy transmission to:
Through August 1, 2004:
▇▇▇▇▇▇▇▇▇▇ Capital Partners, LLC
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
After August 1, 2004:
▇▇▇▇▇▇▇▇▇▇ Capital Partners, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or at such other address as may be specified by prior written notice to the
other parties hereto.
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
16. Definition of Terms. For purposes of this Agreement, (a)
capitalized terms used but not defined herein shall have the meanings given to
such terms in the Statement of Preferences, (b) the term "business day" means
any day on which the New York Stock Exchange, Inc. is open for trading, and (c)
except where otherwise expressly provided, the term "affiliate" has the meaning
set forth in Rule 405 under the Securities Act.
17. Placement Agent's Information. The parties hereto acknowledge
and agree that, for all purposes of this Agreement, the "Placement Agent's
Information" consists solely of the following information in the Offering
Circular: the fourth full paragraph on the third page of the Offering Circular
and the information in the Offering Circular under the caption "Certain Terms
of the Offering - Other Information."
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
19. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
20. Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
parties hereto.
21. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
22. Entirety. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior understandings and agreements of such parties.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Fund, the Investment
Manager and the Placement Agent in accordance with its terms.
Very truly yours,
SPECIAL VALUE OPPORTUNITIES FUND, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Secretary
▇▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Managing Partner
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
EXHIBIT A
FORM OF PURCHASER'S LETTER
FOR
SPECIAL VALUE OPPORTUNITIES FUND, LLC
MONEY MARKET CUMULATIVE PREFERRED SHARES
To: Special Value Opportunities Fund, LLC
Ambac Assurance Corporation
▇▇▇▇▇▇ Brothers Inc.
A Broker-Dealer
An Agent Member
1. We may from time to time offer to purchase, purchase, offer to sell
and/or sell shares of one or more series of the Money Market
Cumulative Preferred(TM) Shares captioned above or beneficial
interests therein ("Money Market Shares") issued by Special Value
Opportunities Fund, LLC (the "Fund") and having the benefit of a
financial guaranty insurance policy issued by Ambac Assurance
Corporation, as described in the private placement memorandum and
applicable supplements thereto relating thereto (the "Memorandum").
Capitalized terms used and not defined herein have the meanings
assigned to them in the Memorandum. We agree that this letter shall
apply to all such purchases, sales and offers and to Money Market
Shares owned by us. We understand that the rate on each series of
Money Market Shares may be based from time to time on the results of
Auctions as set forth in the Memorandum.
2. We represent and agree as follows:
A. We understand and expressly acknowledge that the Money Market
Shares have not been and will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, that the Money Market Shares may not be
reoffered, resold or otherwise pledged, hypothecated or
transferred except pursuant to a registration statement under
the Securities Act or pursuant to an applicable exemption
from the registration requirements of the Securities Act
(which may include an exemption pursuant to Rule 144A
thereunder).
B. We will be an institutional "accredited investor" within the
meaning of Rule 501(a) (1), (2), (3) or (7) under the
Securities Act with respect to the Money Market Shares to be
purchased by us, will have previously invested in similar
types of instruments and will be able and prepared to bear
the economic risk of investing in and holding the Money
Market Shares.
C. We have received and read the Memorandum and will have had
access to such financial and other information, and have been
afforded the opportunity to ask such questions and receive
answers thereto, as we deem necessary in connection with our
decision to purchase Money Market Shares.
3. We hereby confirm that any purchase of Money Market Shares made by us
will be for our own account.
4. We recognize that the addressees will rely upon the truth and accuracy
of the foregoing investment representations and agreements, and we
agree that each of our purchases of Money Market Shares now or in the
future shall be deemed to constitute our concurrence in and
reaffirmation of all of the foregoing which shall be binding on us. We
further agree that we will not place any order or bid to purchase
Money Market Shares at any time during which we are not able to make
the concurrence and reaffirmation referenced in the preceding
sentence.
5. We agree that any bid or sell order placed by us shall constitute an
irrevocable offer by us to purchase or sell the Money Market Shares
subject to such bid or sell order, or such lesser number of Money
Market Shares as we shall be required to sell or purchase as a result
of such Auction, at the applicable price, all as set forth in the
Memorandum, and that if we fail to place a bid or sell order with
respect to any series of Money Market Shares owned by us with a
Broker-Dealer on any Auction Date, or a Broker-Dealer to which we
communicate a bid or sell order fails to submit such bid or sell order
to the Auction Agent, we shall be deemed to have placed a hold order
with respect to such Money Market Shares as described in the
Memorandum. We authorize any Broker-Dealer that submits a bid or sell
order as our agent in Auctions to execute contracts for the sale of
Money Market Shares covered by such bid or sell order. We recognize
that the payment by such Broker-Dealer for Money Market Shares
purchased on our behalf shall not relieve us of any liability to such
Broker-Dealer for payment for such Money Market Shares.
6. We agree that transfers of Money Market Shares may be made only in the
authorized denominations set forth in the Memorandum and only to a
person that has delivered a signed ▇▇▇▇▇▇▇▇▇'s Letter to a
Broker-Dealer. So long as the ownership of the shares of any series of
Money Market Shares is maintained in book-entry form by the Depository
Trust Company ("DTC"), we will sell, transfer or otherwise dispose of
shares of such series of Money Market Shares held by us from time to
time only pursuant to a bid or sell order placed in a Auction or to or
through a Broker-Dealer, provided that in the case of all transfers
other than pursuant to Auctions our Broker-Dealer shall advise the
Auction Agent of such transfer. We understand that a restrictive
legend will be placed on certificates representing the shares of each
series of Money Market Shares and stop-transfer instructions will be
issued to the transfer agent and/or registrar. We agree to comply with
any other transfer restrictions or other related procedures as
described in the Memorandum.
7. We agree that, during the applicable period as described in the
Memorandum, ownership of the Money Market Shares shall be represented
by a global certificate registered in the name of DTC or its nominee,
that we will not be entitled to receive any certificate representing
the Money Market Shares and that our ownership of any Money Market
Shares will be maintained in book-entry form by DTC for the account of
our Agent Member, which in turn will maintain records of our
beneficial ownership. We authorize and instruct our Agent Member to
disclose to the Auction Agent such information concerning our
beneficial ownership of Money Market Shares as the Auction Agent shall
request.
8. We acknowledge that partial deliveries of Money Market Shares
purchased in Auctions may be made to us and such deliveries shall
constitute good delivery as set forth in the Memorandum.
9. We agree that the Money Market Shares will be treated as equity for
U.S. federal income tax purposes.
10. This letter is not a commitment by us to purchase any Money Market
Shares.
11. The descriptions of Auction Procedures set forth in the Memorandum are
incorporated by reference herein and, in case of any conflict between
this letter and any such description, such description shall control.
12. Any photocopy or other reproduction of this letter shall be deemed of
equal effect as a signed original.
13. Our Agent Member at DTC currently is __________________________.
14. Our personnel authorized to place orders with Broker-Dealers for the
purposes set forth in the Memorandum in Auctions currently is/are
________________________, telephone number (___) ___________. Our
facsimile number is (___)
_______________.
15. Our taxpayer identification number is _________________________________.
This letter supersedes any prior-dated version of this letter; any recipient of
this letter may rely upon it until such recipient has received a signed writing
amending or revoking this letter.
Dated:________________
Name of
Purchaser:___________________________
By: _________________________________
Printed Name:________________________
Title:_______________________________
Mailing Address of Purchaser:
_____________________________________
_____________________________________
_____________________________________
EXHIBIT B
NOTICE OF ISSUANCE
------------------
SPECIAL VALUE OPPORTUNITIES FUND, LLC
SERIES [_] MONEY MARKET CUMULATIVE PREFERRED(TM) SHARES (MMP(R))
NOTICE IS HEREBY GIVEN that Special Value Opportunities Fund, LLC is
proposing to issue _______________ shares of Series [__] Money Market
Cumulative Preferred Shares (the "Preferred Shares") on _________.
Terms used herein have the meanings set forth in the Statement of
Preferences relating to the Preferred Shares.
SPECIAL VALUE OPPORTUNITIES FUND, LLC
By:__________________________________
Name:________________________________
Title:_______________________________
Date:________________________________
EXHIBIT C
PURCHASE COMMITMENT SCHEDULE
----------------------------
------------------------------------------------------------ -------------------
Period Number of Shares
------------------------------------------------------------ -------------------
From and excluding the Initial Date of Original
Issue to but excluding December 13, 2004 8,020
------------------------------------------------------------ -------------------
From and including December 13, 2004 to but
excluding May 13, 2005 6,664
------------------------------------------------------------- ------------------
From and including May 13, 2005 to but
excluding October 13, 2005 5,236
------------------------------------------------------------ -------------------
From and including October 13, 2005 to but
excluding March 13, 2006 3,332
------------------------------------------------------------ -------------------
From and including March 13, 2006 to but
excluding July 13, 2006 1,904
------------------------------------------------------------ -------------------
EXHIBIT D
FORM OF NEGATIVE ASSURANCES
OF sKADDEN ,aRPS, SLATE, ▇▇▇▇▇▇▇ & ▇▇▇▇ llp
AS SPECIAL COUNSEL TO THE FUND
------------------------------
EXHIBIT E
FORM OF OPINION OF ▇▇▇▇▇▇▇ ,ARPS, SLATE, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
AS SPECIAL COUNSEL TO THE FUND
------------------------------
EXHIBIT F
FORM OF OPINION OF ▇▇▇▇▇▇▇ ,ARPS, SLATE, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
AS SPECIAL TAX COUNSEL TO THE FUND
----------------------------------
EXHIBIT G
FORM OF OPINION OF ▇▇▇▇▇▇▇ ,ARPS, SLATE, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
AS SPECIAL COUNSEL TO THE INVESTMENT MANAGER
--------------------------------------------
EXHIBIT H
FORM OF OPINION OF ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
AS COUNSEL TO THE CO-MANAGER
----------------------------
EXHIBIT I
FORM OF OPINION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
AS SPECIAL COUNSEL TO THE CUSTODIAN
-----------------------------------
EXHIBIT J
FORM OF OPINION OF ▇▇▇▇ ▇▇▇,
ASSISTANT GENERAL COUNSEL TO AMBAC
----------------------------------