Exhibit K-2
-----------
_____________________________________________________________________________
PLEDGE AND INTERCREDITOR AGREEMENT
dated as of July 13, 2004
among
SPECIAL VALUE OPPORTUNITIES FUND, LLC,
as Borrower,
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Custodian,
AMBAC ASSURANCE CORPORATION,
as Insurer
CDC FINANCIAL PRODUCTS INC.,
as Administrative Agent,
and
CDC FINANCIAL PRODUCTS INC.,
as Secured Parties Representative
______________________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; CONSTRUCTION
SECTION 1.1 Definitions..............................................................................1
SECTION 1.2 Rules of Construction....................................................................2
SECTION 1.3 Accounting and UCC Terms.................................................................2
SECTION 1.4 Computation of Time Periods..............................................................2
SECTION 1.5 Cross References.........................................................................2
SECTION 1.6 Reference to Secured Parties.............................................................2
SECTION 1.7 Automatic Amendment......................................................................2
SECTION 1.8 Other Agreements.........................................................................2
SECTION 1.9 Legal Representation of the Parties......................................................2
ARTICLE II SECURITY INTEREST
SECTION 2.1 Grant of Security Interest; No Obligation................................................3
SECTION 2.2 Acknowledgments..........................................................................3
SECTION 2.3 Perfection of Security Interest..........................................................3
SECTION 2.4 No Recourse..............................................................................3
ARTICLE III THE CUSTODIAL ACCOUNT;
THE ESCROW ACCOUNT;CREDITING OF COLLATERAL
SECTION 3.1 Establishment and Maintenance of the Custodial Account and the Escrow Account............4
SECTION 3.2 Procedures for Crediting of Collateral to Custodial Account or Escrow Account............5
SECTION 3.3 Investments of Funds in Custodial Account and Escrow Account; Release of Funds...........5
SECTION 3.4 Release of Collateral....................................................................6
SECTION 3.5 Restrictions on Release or Transfer of Collateral........................................7
SECTION 3.6 Disposition of and Release of Security Interest.........................................12
SECTION 3.7 Limitation by Law.......................................................................12
ARTICLE IV RIGHTS OF CONTROLLING CLASS AND SECURED PARTIES
SECTION 4.1 Rights of Controlling Class.............................................................12
SECTION 4.2 Certain Rights of Secured Parties.......................................................12
ARTICLE V REMEDIES
SECTION 5.1 Remedies................................................................................13
SECTION 5.2 Right to Initiate Judicial Proceedings, etc.............................................14
SECTION 5.3 Appointment of a Receiver...............................................................15
SECTION 5.4 Directions Originated by the Controlling Class..........................................15
SECTION 5.5 Remedies Not Exclusive..................................................................15
SECTION 5.6 Waiver of Certain Rights................................................................16
SECTION 5.7 Notice of Secured Parties Representative Actions........................................16
SECTION 5.8 Limitation by Law.......................................................................17
ARTICLE VI LIQUIDATION ACCOUNT; APPLICATION OF PROCEEDS
SECTION 6.1 The Liquidation Account.................................................................17
SECTION 6.2 Control of the Liquidation Account......................................................17
SECTION 6.3 Investment of Funds Deposited in the Liquidation Account................................17
SECTION 6.4 Limitation on Disbursements from Liquidation Account; Reliance on
Liquidation Direction...................................................................17
SECTION 6.5 Distributions...........................................................................18
SECTION 6.6 Administration of the Liquidation Account...............................................19
SECTION 6.7 Receipt by Representative...............................................................20
ARTICLE VII TERMINATION OF SECURITY INTEREST
SECTION 7.1 Termination of Security Interest; Release of Collateral.................................20
SECTION 7.2 Termination Statements..................................................................20
ARTICLE VIII REPRESENTATIONS AND WARRANTIES
SECTION 8.1 The Borrower............................................................................21
ARTICLE IX COVENANTS
SECTION 9.1 Title Covenants.........................................................................23
SECTION 9.2 Further Assurances......................................................................23
SECTION 9.3 Notices.................................................................................24
SECTION 9.4 Costs of Transfer; Taxes; and Expenses..................................................24
SECTION 9.5 Secured Parties Representative May Perform..............................................24
SECTION 9.6 Pledged Investments.....................................................................24
SECTION 9.7 Delivery of Instruments.................................................................25
ARTICLE X SECURED PARTIES REPRESENTATIVE'S ROLE
SECTION 10.1 Appointment and Duties of the Secured Parties Representative............................25
SECTION 10.2 Delivery of Agreements and Information as to Holders....................................26
SECTION 10.3 Compensation and Expenses...............................................................27
SECTION 10.4 Stamp and Other Similar Taxes...........................................................27
SECTION 10.5 Filing Fees, Excise Taxes, etc..........................................................27
SECTION 10.6 Indemnification.........................................................................28
SECTION 10.7 Direction of the Secured Parties Representative.........................................28
SECTION 10.8 Acceptance of Appointment...............................................................29
SECTION 10.9 Exculpatory Provisions..................................................................29
SECTION 10.10 Reliance by Secured Parties Representative..............................................30
SECTION 10.11 Limitations on Duties of the Secured Parties Representative...(a).......................31
SECTION 10.12 Resignation and Removal of the Secured Parties Representative...........................32
SECTION 10.13 Merger of the Secured Parties Representative............................................33
SECTION 10.14 Reasonable Care.........................................................................34
SECTION 10.15 Delegation of Duties....................................................................34
SECTION 10.16 Certain Voting Matters..................................................................34
SECTION 10.17 Confidentiality; Investment Company Act.................................................35
ARTICLE XI MISCELLANEOUS
SECTION 11.1 Amendments, Supplements and Waivers.....................................................35
SECTION 11.2 Notices.................................................................................36
SECTION 11.3 Notices to the Borrower.................................................................37
SECTION 11.4 Headings................................................................................37
SECTION 11.5 Severability............................................................................37
SECTION 11.6 Separate Liability......................................................................37
SECTION 11.7 Sharing of Payments.....................................................................37
SECTION 11.8 Secured Parties Representative Actions, Rights and Remedies.............................37
SECTION 11.9 Binding Effect..........................................................................38
SECTION 11.10 Governing Law...........................................................................38
SECTION 11.11 Counterparts............................................................................38
SECTION 11.12 Other Transactions......................................................................38
SECTION 11.13 Limitation on Actions, Inconsistency....................................................38
SECTION 11.14 Forum Selection and Consent to Jurisdiction.............................................39
SECTION 11.15 Waiver of Jury Trial....................................................................39
SECTION 11.16 Non-Recourse to Investment Manager, Co-Manager or Holders of Preferred
Shares or Common Shares ................................................................40
SECTION 11.17 No Petition.............................................................................40
ANNEXES
Annex I Definitions.................................................................................I-1
Annex II Locations..................................................................................II-1
Annex III Addresses for Notices.....................................................................III-1
Annex IV Transfers and Perfection of Pledged Loans, Pledged Trade Payables and
Pledged Trade Claims, and Pledged Structured Product Transactions and
Defensive Hedge Transactions...............................................................IV-1
PLEDGE AND INTERCREDITOR AGREEMENT
THIS PLEDGE AND INTERCREDITOR AGREEMENT, dated as of July 13,
2004 (as amended, supplemented or otherwise modified from time to time, this
"Agreement"), is entered into by and among SPECIAL VALUE OPPORTUNITIES FUND,
LLC, a Delaware limited liability company (the "Borrower"), AMBAC ASSURANCE
CORPORATION, as insurer (the "Insurer"), CDC FINANCIAL PRODUCTS INC., as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, as custodian (in such capacity, the "Custodian"), and CDC
Financial Products Inc., as representative of the Secured Parties (in such
capacity, the "Secured Parties Representative").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
extended Loan Commitments to the Borrower;
WHEREAS, pursuant to the Senior Facility Insurance Agreement,
the Insurer has issued its Senior Facility Insurance Policy with respect to the
Loans under the Credit Agreement;
WHEREAS, concurrently with the closing of the Credit
Agreement, the Borrower shall have obtained commitments for the purchase of its
Preferred Shares and the issuance of the Preferred Shares Insurance Policy
pursuant to the Preferred Shares Insurance Agreement;
WHEREAS, it is the intent of the parties that (a) the
obligations of the Borrower to the Secured Parties under the Credit Agreement,
the Insurance Agreements and the Secured Hedging Agreements be secured by a
first priority lien and security interest in the Collateral and (b) this
Agreement create such lien and security interest in such assets to secure the
obligations of the Borrower referred to above and other such obligations
described herein and make certain provisions relating to the various
relationships among the Secured Parties and the administration of the
Collateral; and
WHEREAS, as a condition precedent to the making of the
initial Loans under the Credit Agreement and the issuance of the Insurance
Policies, the Borrower is required to execute and deliver this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
SECTION 1.1. Definitions. As used in this Agreement, and unless the
context requires a different meaning, capitalized terms used but not defined
herein shall have the respective meanings set forth in Annex I hereto. In the
event of any inconsistency between the definition of any term as set forth
herein and the definition of such term as set forth in Annex I, the definition
of such term as set forth in Annex I shall control. Terms not otherwise defined
in this Agreement (including Annex I) are used as defined in the Credit
Agreement.
SECTION 1.2. Rules of Construction. Unless the context otherwise
requires, (a) a term has the meaning assigned to it herein or in Annex I
hereto, subject to the provisions of Section 1.1 (Definitions); (b) words in
the singular include the plural, and words in the plural include the singular;
(c) "paid in full" and any phrase of similar import means "paid in full in
cash"; and (d) "including" means, where not already so indicated, "including
without limitation."
SECTION 1.3. Accounting and UCC Terms. As used herein, unless
otherwise specifically defined in this Agreement, and unless the context
requires a different meaning: (a) all accounting terms shall be construed in
accordance with GAAP; and (b) all terms defined in Articles 8 and 9 of the UCC
are used herein as so defined.
SECTION 1.4. Computation of Time Periods. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."
SECTION 1.5. Cross References. "Herein," "hereof" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision. Unless otherwise specified, references
in this Agreement to any Article, Section, Schedule, Annex or Exhibit are
references to such Article or Section of, or Schedule, Annex or Exhibit to,
this Agreement, and references in any Article, Section, Schedule, Annex,
Exhibit or definition to any subsection or clause are references to such
subsection or clause of such Article, Section, Schedule, Annex, Exhibit or
definition.
SECTION 1.6. Reference to Secured Parties. In each case herein where
any payment or distribution is to be made or notice is to be given to "Secured
Parties," such payments, distributions and notices in respect of the Lenders
shall be made to the Administrative Agent and to the extent that notice is to
be given to the Administrative Agent or the Lenders, a copy shall be given to
the Insurer.
SECTION 1.7. Automatic Amendment. In the event a new Credit Agreement
shall be designated by the Borrower consistent with the provisions hereof, the
parties hereto agree that, subject to Section 11.1(a)(v), this Agreement may be
modified to effect any technical amendments hereto which may be advisable to
afford to the lenders and their representatives under such new Credit Agreement
the same rights, remedies and protections afforded to the Insurer, the Lenders
and their Representatives as of the Closing Date.
SECTION 1.8. Other Agreements. All references in this Agreement to an
agreement, instrument or other document shall be construed as a reference to
that agreement, instrument or document as the same may be amended, modified,
varied, supplemented or novated from time to time.
SECTION 1.9. Legal Representation of the Parties. This Agreement was
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement or any
other Transaction Document to be construed or interpreted against any party
shall not apply to any construction or interpretation hereof or thereof.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security Interest; No Obligation. (a) To secure
the due and punctual payment of all Secured Obligations, howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, now
or hereafter existing or due or to become due, in accordance with the terms
thereof, and to secure the due and punctual performance of all of the
obligations of the Borrower contained in this Agreement, the Credit Agreement,
the Insurance Agreements, the other Transaction Documents and any Secured
Hedging Agreement, the Borrower hereby Grants to the Secured Parties
Representative (and each successor Secured Parties Representative) for its
benefit and the benefit of the Secured Parties, a security interest (the
"Global Lien") in all of the Borrower's right, title and interest in and to the
Collateral; provided, however, that the Global Lien on any Collateral released
or distributed by the Custodian from the Custodial Account (including, but not
limited to, any transfers from the Custodial Account to the Borrower Custodial
Account) or the Escrow Account pursuant to, and in accordance with the terms
of, the Custodial Agreement and Article III of this Agreement shall
automatically be released and discharged, without any action by the Secured
Parties Representative or any other Secured Party, except to the extent that
such Collateral is released or distributed to the Liquidation Account. The
Secured Parties Representative's remedial rights in respect of the Collateral
shall be subject in all respects to the terms of Article V hereof.
(b) The Security Interest is Granted as security only and shall not
subject the Secured Parties to, or transfer or in any way affect or modify, any
obligation or liability of the Borrower with respect to any of the Collateral
or any transaction in connection therewith.
SECTION 2.2. Acknowledgments. (a) The Borrower hereby acknowledges
that all securities that are identified from time to time in the Custodian's
records as being subject to a security interest in favor of the Secured Parties
Representative for the benefit of any of the Secured Parties (so long as any
Secured Obligations are outstanding) are subject to such a security interest.
Notwithstanding anything else to the contrary, each of the Administrative
Agent, the Insurer, the Secured Parties Representative and the Hedging
Representative acknowledges and understands that its rights (and the other
Secured Parties' rights) under this Agreement may only be exercised in
accordance with the terms of this Agreement.
(b) The parties hereto (excluding the Borrower) acknowledge and
understand that in respect of the obligations hereunder of the Borrower
(including indemnification obligations) they shall have recourse only to the
Collateral and the other assets of the Borrower, and that recourse shall be
limited as provided in Section 9.19 of the Credit Agreement and Section 7.13 of
each of the Insurance Agreements.
SECTION 2.3. Perfection of Security Interest. The parties hereto agree
that the Custodian shall (a) hold the Collateral for the benefit of the
Borrower and the Secured Parties, as required by the Custodial Agreement and
(b) be authorized to take any and all actions set forth therein with respect to
the Collateral to preserve the Security Interest.
SECTION 2.4. No Recourse. Except as otherwise provided in this
Agreement or any other Transaction Document, any release granted by any
Representative pursuant to Article III or any other Transaction Document shall
be without recourse to the Secured Parties Representative or any other
Representative or any Secured Party.
ARTICLE III
THE CUSTODIAL ACCOUNT; THE ESCROW ACCOUNT; CREDITING OF COLLATERAL
SECTION 3.1. Establishment and Maintenance of the Custodial Account
and the Escrow Account. (a) On (or prior to) the date hereof the Borrower and
the Custodian shall have established the Custodial Account and the Escrow
Account and at all times thereafter the Borrower and the Custodian shall
maintain the Custodial Account and the Escrow Account pursuant to the terms and
conditions of the Custodial Agreement until payment in full of all Secured
Obligations then due and payable and the termination of all Commitments.
(b) Custodian's Instructions. The Custodial Agreement shall provide
that the Custodial Account and the Escrow Account shall be maintained at the
Custodian, except as otherwise instructed by the Secured Parties
Representative, and the Secured Parties Representative hereby agrees not to so
instruct the Custodian without the prior written consent of the Borrower and
the Representatives. The parties hereto acknowledge and understand that the
Custodial Agreement provides that the Custodian is authorized to take
instructions from the Borrower or the Investment Manager with respect to
transfers and withdrawals from or deposits to the Custodial Account and the
Escrow Account (and otherwise pay expenses from or direct the investment of
funds held therein), subject to limitations on such authority set forth in the
Custodial Agreement and Section 3.5 of this Agreement. The parties hereto
acknowledge and understand that, under the Custodial Agreement, only the
Borrower, the Investment Manager and the Secured Parties Representative, on
behalf of the respective Secured Parties, may originate instructions and orders
given to the Custodian, and that the Secured Parties Representative shall only
direct the Custodian (including any suspension of the authority of the Borrower
and the Investment Manager to instruct the Custodian) pursuant to the terms and
conditions of this Agreement. By its acceptance of the benefits hereof, each
Secured Party hereby agrees that it will not originate instructions or orders
to the Custodian independently through the exercise of any rights such Secured
Party may have in the Transaction Documents.
(c) Sole Dominion and Control. The parties hereto hereby agree that
the dominion and control over the Custodial Account and the Escrow Account
shall be determined in accordance with the provisions of the Custodial
Agreement, and the Custodian shall be the agent, bailee, securities
intermediary and custodian of Account Property.
(d) Control Agreement. The parties hereto hereby acknowledge that it
is their intention that (i) the Secured Parties Representative has "control"
under Article 8 of the UCC of the security entitlement in the financial assets
comprising the Account Property by virtue of the power of the Secured Parties
Representative, in its capacity as a secured party for the benefit of the
Secured Parties under the Global Lien, to deliver an "entitlement order"
(within the meaning of Section 8-102(a)(8) of the UCC) to the Custodian under
the Custodial Agreement and (ii) the Custodian shall be the Securities
Intermediary against which the Secured Parties as entitlement holders have a
security entitlement and shall act in such capacity for purposes of the
Custodial Agreement.
(e) Delegation. All actions that the Borrower is permitted or required
to take in accordance with the terms hereof (including, without limitations,
providing any notices to any Person or giving instructions to the Custodian in
accordance with the terms hereof) may be taken by the Investment Manager on the
behalf of the Borrower.
SECTION 3.2. Procedures for Crediting of Collateral to Custodial
Account or Escrow Account.
(a) In General. The Borrower may, on any Business Day, at such times
as may be agreed to with the Custodian, transfer any Cash or Company Investment
to the Custodian for deposit in the Custodial Account or the Escrow Account or
otherwise include the same within the Collateral in accordance with the
applicable procedures set forth in the Custodial Agreement and, in the case of
Bank Loans, Structured Product Transactions, Defensive Hedge Transactions,
Trade Payables and Trade Claims, in Annex IV hereto.
(b) Acquisition of Company Investments. Each time that the Borrower
shall acquire any Cash or Company Investment, the Borrower shall, if such Cash
or Company Investment is to be included in the Collateral and has not already
been transferred to the Custodial Account, transfer or cause the transfer of
such Cash or Company Investment to the Custodian for deposit into the Custodial
Account to be held for the benefit of the Borrower, the Secured Parties
Representative and the Representatives, on behalf of the respective Secured
Parties they represent, in accordance with the terms hereof and of the
Custodial Agreement. The Security Interest in the funds or other property used
to acquire such Cash or Company Investment shall, immediately upon such
acquisition and transfer and without further action on the part of the Secured
Parties Representative, the Controlling Class, any Representative or any other
Secured Party, be released; provided that such acquisition is made in
accordance with the terms hereof and of the Custodial Agreement. It is
understood and agreed that Secured Hedging Agreements shall be delivered to the
Secured Parties Representative but need not be delivered to the Custodian.
(c) Form of Transfer. The Borrower shall transfer each item of
Collateral to the Custodian pursuant to this Agreement in a form and manner
sufficient to create perfected security interests therein for the benefit of
the Secured Parties, subject only to Permitted Liens and in a form and manner
reasonably acceptable to the Custodian and in accordance with the requirements
of this Agreement and the Custodial Agreement and, in the case of Pledged
Loans, Pledged Structured Product Transactions, Defensive Hedge Transactions,
Pledged Trade Payables and Pledged Trade Claims, with the requirements of Annex
IV hereto.
(d) Escrow Account. On any Business Day on which RIC Distributions are
made in accordance with Section 6.2.5 of the Credit Agreement, the Borrower
shall direct the Custodian to deposit such RIC Distributions into the Escrow
Account on such Business Day.
SECTION 3.3. Investments of Funds in Custodial Account and Escrow
Account; Release of Funds.
(a) Investment of Funds. Except to the extent that the Borrower's
rights may be limited when a Notice of Suspension (including any Acceleration
Notice and any Final Maturity Payment Default Notice) or Liquidation Notice has
been delivered and is in effect, the Borrower may, without the consent of the
Secured Parties Representative, any Representative or any other Secured Party,
direct the investment and reinvestment by the Custodian of (i) all cash credit
balances on deposit in the Custodial Account or the Escrow Account and (ii) all
interest and income on and proceeds from such credit balances and Pledged
Investments, in accordance with the Custodial Agreement and the following terms
and conditions:
(i) the Borrower may maintain credit balances in the
Custodial Account or the Escrow Account;
(ii) all such credit balances and proceeds will be maintained
as interest-bearing credit balances in accordance with the customary
practice of the Custodian or be invested solely in Cash, Cash
Equivalents and other Company Investments; and
(iii) prior to or contemporaneously with the making of any
investment or reinvestment in a Company Investment which is intended
to be included in the Collateral, the Borrower shall, subject to the
Borrower's right to release or remove Collateral pursuant to this
Agreement and the Custodial Agreement, take or cause to be taken such
steps as may be necessary to insure that the Secured Parties
Representative will have a valid and perfected security interest in
such investment, subject only to Permitted Liens.
(b) Distribution of Funds. Except to the extent that the Borrower's
rights may be limited when a Notice of Suspension (including any Acceleration
Notice and any Final Maturity Payment Default Notice) or Liquidation Notice has
been delivered and is in effect, the Borrower may direct that Cash or Cash
Equivalents in the Custodial Account or the Escrow Account be withdrawn and
distributed as and when required to enable the Borrower to pay expenses
incurred in the ordinary course of business, to make distributions to the
holders of its equity interests subject to the limitations of the Credit
Agreement (including, in the case of the Escrow Account, subject to the
limitations set forth in Section 6.2.5 of the Credit Agreement) and the
Insurance Agreements, to pay premiums and other expenses under the Insurance
Agreements, to capitalize the Hedging SPEs and to meet its other obligations or
for any other purpose other than any incurred in contravention of the
Transaction Documents.
(c) Representation and Warranty. Each request by the Borrower for
investment, reinvestment or release of Cash or Cash Equivalents in or from the
Custodial Account or the Escrow Account shall be deemed a representation and
warranty by the Borrower that (i) such investment, reinvestment or release is
in accordance with the terms and conditions specified in subsection (a) of this
Section 3.3 or for the purposes specified in subsection (b) of this Section
3.3, as applicable, and (ii) except in the case of an investment or
reinvestment in Cash or Cash Equivalents or as otherwise permitted by Section
3.4 or 3.5, no Event of Default has occurred and is continuing on the date of
such request or will occur as a result of such investment or release.
SECTION 3.4. Release of Collateral. On any Business Day, except to the
extent that the Borrower's rights may be limited when a Notice of Suspension
(including any Acceleration Notice and any Final Maturity Payment Default
Notice) or Liquidation Notice has been delivered and is in effect, and subject
to the provisions of Section 3.5 (a) hereof and Section 6.2.8 of the Credit
Agreement, the Borrower may direct the release, transfer, sale, exchange or
other disposition of Pledged Investments and other Collateral (including any
Related Contracts) (including, but not limited to, any transfer to the Borrower
Custodial Account or the Escrow Account and any transfer in connection with the
capitalization of the Hedging SPEs) by delivering to the Custodian such
information and other materials as are reasonably required by the Custodian to
properly identify and process such Collateral and its release or transfer in
accordance with the provisions of the Custodial Agreement.
SECTION 3.5 Restrictions on Release or Transfer of Collateral.
(a) Event of Default or Over-Collateralization Test Deficiency.
Notwithstanding anything contained herein to the contrary,
the Borrower shall not, without the consent of the Secured
Parties Representative, request, direct or permit any release
or transfer of Collateral on any date if, after giving effect
to all transactions (including such release or transfer)
occurring prior to or as of such date, any Event of Default
or Over-Collateralization Test Deficiency shall have occurred
and be continuing on such date or will occur as a result of
such release or transfer; provided, however, that such
release or transfer shall be permitted without the consent of
the Secured Parties Representative prior to the earlier to
occur of (i) an Insolvency Event or (ii) exercise of remedies
by any Representative or the Secured Parties Representative
pursuant to Section 5.1 if:
(i) such release or transfer of cash credit balances or
Pledged Investments is for the investment or reinvestment thereof in
cash credit balances or a Cash Equivalent pursuant to Section 3.3 and
such cash credit balances or such Cash Equivalent, as the case may be,
is added to the Collateral or otherwise used to cure or assist in
curing such Over-Collateralization Test Deficiency or Event of
Default, to pay Secured Obligations due and payable or to make
distributions in respect of Preferred Shares that are due and payable
and then permitted to be paid in accordance with the terms of the
Credit Agreement, to satisfy any pre-existing funding obligations of
the Borrower under any Company Investment (upon prompt written notice
to the Controlling Class) or to pay other reasonable fees and expenses
of the Borrower (including investment management fees and expenses,
due and payable);
(ii) such release or transfer is in connection with a sale of
such Collateral for cash credit balances that will be added to the
Collateral in an amount, as reasonably determined by the Borrower, at
least equal to the fair market value of such Collateral as of such
date or as of the date of the commitment by the Borrower to such sale;
(iii) so long as no Payment Default shall have occurred and
be continuing, (A) such release or transfer is of Cash in connection
with a purchase of a Company Investment that will be added to the
Collateral, (B) such purchase is for an amount, as reasonably
determined by the Borrower, which is not more than the fair market
value of such Company Investment as of such date or as of the date of
the commitment by the Borrower to such purchase and (C) either (1) the
commitment for such purchase existed prior to the Borrower's obtaining
knowledge of an occurrence of an Event of Default or an
Over-Collateralization Test Deficiency that is then continuing in
effect or (2) in the case of an Over-Collateralization Test
Deficiency, the Borrower has delivered to the Administrative Agent the
statement contemplated by Section 6.1.18 of the Credit Agreement in
respect of such Over-Collateralization Test Deficiency prior to
requesting such release of Collateral; or
(iv) such release or transfer is of Cash in connection with a
RIC Distribution or a payment of RIC Withholding Taxes in accordance
with Section 6.2.5 of the Credit Agreement.
In the foregoing cases, the Borrower shall be deemed to
represent and warrant that each release or transfer of Collateral is in
compliance with this Section 3.5.
(b) Effect of Notice of Suspension; Acceleration Notice;
Final Maturity Payment Default Notice; Liquidation Direction.
(i) Except as otherwise provided in this Article III, so long
as a Notice of Suspension (including any Acceleration Notice and any
Final Maturity Payment Default Notice) or a Liquidation Notice has not
been delivered and is not in effect, the Borrower may direct the
Custodian to make transfers and withdrawals from or deposits to the
Custodial Account or the Escrow Account (and otherwise pay expenses
from or direct the investment of funds therein) without the consent of
the Secured Parties Representative, any Representative or any other
Secured Party.
(ii) When a Notice of Suspension is in effect but no
Liquidation Notice is in effect (whether or not an Acceleration Notice
is in effect), the Borrower may instruct the Custodian in respect of
the Custodial Account or the Escrow Account without the consent of the
Secured Parties Representative, any Representative or any other
Secured Party except that:
(x) sales or dispositions of Company
Investments may not be made by the Borrower or the Investment
Manager without the prior written consent of the Controlling
Class, unless (A) the Borrower gives the Secured Parties
Representative and the Representatives simultaneously written
notice of a proposed sale or disposition with respect to a
Company Investment having a Market Value of $24,000,000 or
less and the Secured Parties Representative does not object
in writing to such sale or disposition within two Business
Days from the date of the Secured Parties Representative's
receipt of such notice or (B) the Borrower or the Investment
Manager gives the Secured Parties Representative and the
Representatives simultaneously written notice of a proposed
sale or disposition with respect to a Company Investment
having a Market Value of more than $24,000,000 and the
Secured Parties Representative does not object in writing to
such sale or disposition within three Business Days from the
date of the Secured Parties Representative's receipt of such
notice; provided that the requirements of this Section
3.5(b)(ii)(x) shall not apply to sales or dispositions of
Company Investments to the extent that such sales and
dispositions do not exceed $8,000,000 in the aggregate during
the existence of the applicable Notice of Suspension; and
(y) purchases or acquisitions of Company
Investments (except for the acquisition or purchase of Cash
Equivalents) may not be made without the prior written
consent of the Controlling Class; provided, however, that the
Borrower may provide a written request for such consent to
the Controlling Class and if such consent is not given within
five Business Days after such request, the Controlling Class
shall be deemed to have rejected such request and denied
consent; provided, further, that the Borrower may, upon
prompt written notice to the Controlling Class, (1) purchase
a Company Investment if (A) such Company Investment will be
added to the Collateral, (B) such purchase is for an amount,
as reasonably determined by the Borrower, which is not more
than the fair market value of such Company Investment as of
such date or as of the date of the commitment by the Borrower
to make such purchase and (C) the commitment for such
purchase existed prior to the receipt of such Notice of
Suspension and (2) direct the Custodian to transfer amounts
from the Custodial Account to satisfy any pre-existing
funding obligation of the Borrower under any Company
Investment.
(iii) When a Notice of Suspension and an Acceleration Notice
are in effect but no Liquidation Notice is in effect, (x) neither the
Borrower nor the Investment Manager shall have the authority to direct
the Custodian except for sales, dispositions, purchases or
acquisitions of Company Investments permitted by Section 3.5(b)(ii)
and (y) the Secured Parties Representative shall, on behalf of the
Secured Parties, direct the Custodian to make payments or forward
amounts from the Custodial Account or the Escrow Account in respect of
(V) distributions in respect of Preferred Shares that are due and
payable and then permitted to be paid in accordance with the terms of
the Credit Agreement, (W) RIC Distributions or RIC Withholding Taxes,
(X) Administrative Expenses, (Y) expenses of collection then due and
payable of the Secured Parties Representative, the Custodian, the
Administrative Agent, the Insurer and the Lenders and (Z) as permitted
by the Controlling Class, Management Fees as they become due and
payable, in each case, until such amounts have been paid in full. To
the extent amounts remain after the amounts provided for in the
preceding sentence have been paid, the Secured Parties Representative
shall direct the Custodian to make payments or forward amounts from
the Custodial Account or the Escrow Account from time to time (but in
any event not less than monthly) with respect to the amounts described
in clauses Second through Seventh of Section 6.5(a) in the priorities
set forth in Section 6.5(a).
(iv) After the occurrence of a Liquidation Acceleration or a
Final Maturity Payment Default and for so long as a Liquidation Notice
shall be in effect, (x) neither the Borrower nor the Investment
Manager may direct the Custodian in any way with respect to property
deposited in the Custodial Account or the Escrow Account, (y) the
Secured Parties Representative shall, on behalf of the Secured
Parties, direct the Custodian to make payments or forward amounts from
the Custodial Account in respect of distributions in respect of
Preferred Shares that are due and payable and then permitted to be
paid in accordance with the terms of the Credit Agreement and (z) the
provisions of Section 3.5(c)(iv) shall apply to funds and proceeds
related to property deposited in the Custodial Account.
(v) The Borrower shall make the calculations necessary to
determine what transfers and payments should be made pursuant to
clauses (ii) and (iii) of Section 3.5(b) and Section 3.5(c)(iv) and,
when such Sections are applicable, shall provide a written report with
respect thereto to the Secured Parties Representative and the
Representatives within five Business Days after the end of each month
during the term of this Agreement.
(vi) If an Acceleration Notice, a Final Maturity Payment
Default Notice or a Liquidation Notice is in effect, the Secured
Parties Representative, at the direction of the Controlling Class,
shall have the right to remove the Custodian pursuant to the terms of
the Custodial Agreement or terminate the Custodial Agreement without
the consent of the Borrower. If the Custodian is removed pursuant to
the preceding sentence, the Secured Parties Representative, at the
direction of the Controlling Class, shall appoint a successor
Custodian or otherwise take possession (or have its designee take
possession) of the assets in the Custodial Account and the Escrow
Account.
(c) Conditions to Notice of Suspension; Acceleration Notice; Final
Maturity Payment Default Notice; Liquidation Direction.
(i) If an Event of Default shall occur and be continuing for
a period of at least 45 consecutive days, the Secured Parties
Representative shall (if directed to do so by the Controlling Class)
promptly notify the Borrower, the Investment Manager, the Co-Manager,
the Custodian, ▇▇▇▇▇'▇, S&P and the Representatives in writing (which
notice may be made by facsimile transmission) (such notice being a
"Notice of Suspension") that the authority of the Borrower and the
Investment Manager is limited as provided in Section 3.5(b)(ii). If
(x) the authority of the Borrower and the Investment Manager with
respect to the Collateral has been limited by a Notice of Suspension
pursuant to this Section 3.5(c)(i), (y) the Event of Default that was
the basis for a Notice of Suspension has been cured or waived and any
Acceleration with respect thereto has been rescinded and (z) no other
Event of Default has occurred prior to the date of such cure and
waiver and is continuing, then (I) the Secured Parties Representative
shall promptly provide to the Borrower, the Investment Manager, the
Custodian and the Representatives written notice that the limitations
of Section 3.5(b)(ii) no longer apply and (II) such limitations shall
no longer apply.
(ii) Upon an Acceleration, the Administrative Agent shall
provide written notice (or telephone notice promptly confirmed in
writing) of such Acceleration to the Secured Parties Representative,
which shall promptly provide written notice thereof to the Borrower,
the Investment Manager, the Co-Manager, the Custodian, ▇▇▇▇▇'▇,S&P and
each other Representative.
(iii) Upon a Final Maturity Payment Default, the
Administrative Agent shall provide written notice (or telephone notice
promptly confirmed in writing) of such Final Maturity Payment Default
to the Scured Parties Representative, which shall promptly provide
written notice thereof to the Borrower, the Investment Manager, the
Co-Manager, the Custodian, ▇▇▇▇▇'▇, S&P and each other Representative.
(iv) Upon the occurrence of a Liquidation Acceleration or a
Final Maturity Payment Default, the Controlling Class Representative,
acting in accordance with the Liquidation Conditions, shall provide
prompt written notice (which notice may be made by facsimile
transmission) (a "Liquidation Direction") to the Secured Parties
Representative directing the Secured Parties Representative to take
the following actions: (x) provide a Liquidation Notice to the
Custodian and (y) proceed to foreclose and enforce the Security
Interest and to sell or otherwise dispose of the Collateral in the
manner instructed by the Controlling Class Representative in such
notice. Such Liquidation Direction shall contain a certification to
the effect that the Liquidation Direction has been given by the
Controlling Class Representative on behalf of the Controlling Class
and shall bind all other Secured Parties thereunder and hereunder. The
Secured Parties Representative shall promptly take such actions upon
receipt of a Liquidation Direction. Upon such foreclosure and
enforcement, the Secured Parties Representative shall thereupon in the
manner set forth in Section 6.5 effect disbursements of the funds and
proceeds and products of the Collateral received from the Custodian
from time to time. A Liquidation Direction may be revoked by the
Controlling Class Representative as evidenced by a written notice
(which notice may be made by facsimile transmission) thereof to the
Secured Parties Representative. Any such revocation shall be in the
sole discretion of the Controlling Class. All Liquidation Directions
and revocations thereof shall be simultaneously provided by the
Controlling Class Representative to the Representatives, the Secured
Parties Representative, the Borrower and the Custodian. The Custodial
Agreement shall provide that, upon the Custodian's receipt of a
Liquidation Notice and for so long as such Liquidation Notice is in
effect, the Custodian shall (x) not follow any directions regarding
the funds or other property on deposit in the Custodial Account or the
Escrow Account from the Borrower or the Investment Manager and (y)
take all reasonable actions to assist the Secured Parties
Representative in a foreclosure and enforcement required under this
Section 3.5(c), including (A) actions set forth in the Custodial
Agreement and (B) prompt transfer to the Secured Parties
Representative from time to time of all funds in the Custodial
Account, the Escrow Account and proceeds and products of the
Collateral.
SECTION 3.6 Disposition of and Release of Security Interest. (a)
Direction of Controlling Class. Notwithstanding anything else to the contrary
contained in this Section 3.6, neither the sale, transfer or other disposition
of a Pledged Investment, nor the release of the Security Interest, shall occur
other than in accordance with the provisions of this Agreement and the
Custodial Agreement.
(b) Further Assurances by Administrative Agent and Secured Parties
Representative. Upon any sale, transfer or other disposition of a Pledged
Investment or other Collateral (or portion thereof) that is permitted by this
Article III, the Security Interest and any other security interests of the
Secured Parties in such Pledged Investment or other Collateral (or the portion
thereof which has been sold or otherwise disposed of in accordance with the
terms of this Agreement and the Custodial Agreements), and in all collections
and rights under Related Contracts with respect to such Pledged Investment or
other Collateral (but not in the proceeds of such sale or other disposition),
shall, immediately upon the sale or other disposition of such Pledged
Investment or other Collateral (or such portion) and without any further action
on the part of the Secured Parties Representative, the Controlling Class or any
Secured Party, be released. In connection with any release of Collateral under
Article III, each of the Administrative Agent and the Secured Parties
Representative shall take or instruct the Custodian to take such action
(including execution and delivery (or causing execution and delivery) to the
Borrower or its transferee all such instruments, documents and UCC termination
statements (as provided to it in complete form, in the case of the Custodian)
and any other action that may be necessary or desirable) as the Borrower or the
Investment Manager may reasonably request, for the purpose of enabling the
Borrower to receive and retain or transfer the released Collateral, free and
clear of the Security Interest.
SECTION 3.7 Limitation by Law. All the provisions of this Article III
are intended to be subject to all applicable mandatory provisions of law which
may be controlling in the premises and to be limited to the extent necessary so
that they will not render this Agreement invalid, unenforceable in whole or in
part or not entitled to be recorded, registered, or filed under the provisions
of any Applicable Law.
ARTICLE IV
RIGHTS OF CONTROLLING CLASS AND SECURED PARTIES
SECTION 4.1 Rights of Controlling Class. The Controlling Class may
direct the Secured Parties Representative to foreclose on the Security Interest
Granted to the Secured Parties Representative or sell the Collateral securing
payment of the relevant Secured Obligations pursuant to the terms of this
Agreement in any commercially reasonable manner that the Controlling Class, in
its sole discretion, may elect even though a higher price might have been
obtained had the Security Interest been foreclosed upon or the Collateral sold
in another manner.
SECTION 4.2 Certain Rights of Secured Parties . Any Secured Parties
shall have the right, from time to time, in their sole discretion, without
notice or demand, to modify, amend, waive or release any of such Secured
Parties' respective rights under the Transaction Documents and to exercise or
refrain (or direct the Secured Parties Representative to exercise or refrain)
from exercising any powers or rights conferred upon such Secured Parties or
their Representatives or the Secured Parties Representative thereunder.
ARTICLE V
REMEDIES
SECTION 5.1 Remedies. (a) The Secured Parties Representative (on
behalf of the Secured Parties) shall be entitled to exercise the rights and
remedies as provided in this Agreement and the other Transaction Documents, it
being acknowledged and understood by all parties hereto that the exercise of
such rights shall be made in accordance with the terms of this Agreement and
not independently through such Transaction Documents. Instructions from the
Secured Parties Representative with respect to the disposition of Collateral
(including as to method, manner, time, place and terms thereof) shall be given
in accordance with Sections 9-610 and 9-611 of the New York Uniform Commercial
Code.
(b) The Borrower hereby irrevocably constitutes and appoints the
Secured Parties Representative and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact, which
appointment shall be coupled with an interest, with full power and authority in
the name of the Borrower, or in its own name, from time to time in the Secured
Parties Representative's discretion, upon the receipt by the Secured Parties
Representative of a Liquidation Direction and so long as such Liquidation
Direction is in effect, for the purpose of carrying out the terms of this
Agreement and the other Transaction Documents as provided in this Agreement, to
take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes
hereof and thereof and, without limiting the generality of the foregoing,
hereby gives the Secured Parties Representative, upon the receipt of a
Liquidation Direction and so long as such Liquidation Direction is in effect as
aforesaid, the power and right on behalf and in the name of the Borrower,
without notice to or assent by the Borrower, to the extent permitted by
Applicable Law, to do the following, in each case on behalf of the
Representatives:
(i) to ask for, demand, ▇▇▇ for, collect, receive and give
acquittance for any and all moneys due or to become due with
respect to the Collateral;
(ii) to receive, take, endorse, assign and deliver any and all
checks, notes, drafts, acceptances, documents and other
negotiable and non-negotiable instruments, documents and
chattel paper taken or received by the Secured Parties
Representative in connection herewith and therewith;
(iii) to commence, file, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to
the Collateral;
(iv) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and
conditions hereunder and thereunder and vote proxies with
respect to securities and other property in the Liquidation
Account;
(v) to transfer all or any part of the Collateral into the name
of the Secured Parties Representative or its nominee, with or
without disclosing that such Collateral is subject to the
Security Interest under the Transaction Documents;
(vi) to notify the parties obligated on any of the Collateral to
make payment to the Secured Parties Representative of any
amount due or to become due thereunder; and
(vii) to do, at its option and at the expense and for the account
of the Borrower, at any time or from time to time, all acts
and things which the Secured Parties Representative
reasonably deems necessary to protect or preserve the
Collateral and to realize upon the Collateral.
Any sale of the Collateral or any part thereof pursuant to
any or all of the Transaction Documents may, with three Business Days' prior
written notice to the Borrower (subject to the requirements of Section 5.7) and
the Investment Manager and as otherwise provided herein and therein, be made in
one or more lots at public or private sale, for cash, on credit or for future
delivery, and upon such other terms as the Secured Parties Representative may
deem commercially reasonable. Any Secured Party, the Investment Manager and/or
any of their Affiliates may be a purchaser at any such sale if such purchase is
for cash and is made without netting any amounts owed by the Borrower to the
purchaser. The Secured Parties Representative shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. The
Secured Parties Representative may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. The Borrower shall cooperate with the Secured Parties Representative
in all reasonable ways in order to assist the Secured Parties Representative in
the sale and other disposition of the Collateral. The Secured Parties
Representative agrees for the benefit of the Representatives that it shall not
undertake any of the activities specified in Sections 5.1(b)(iii), (iv) and
(vii) (as Section 5.1(b)(vii) relates to realization upon the Collateral),
except as directed pursuant to Section 3.5(c)(iv) or Section 5.4(a).
Furthermore, any sale of the Collateral by the Secured Parties Representative
or the Custodian at the direction of the Secured Parties Representative shall
be on such terms and in such manner as directed in a Liquidation Direction by
the Controlling Class pursuant to Section 3.5(c)(iv).
SECTION 5.2 Right to Initiate Judicial Proceedings, etc. The Secured
Parties Representative shall have the right and power to institute and maintain
such suits and proceedings as it may deem appropriate to protect and enforce
the rights vested in it, the Representatives and the other Secured Parties by
this Agreement and the other Transaction Documents. After the Secured Parties
Representative shall have received a Liquidation Direction and so long as such
Liquidation Direction is in effect, the Secured Parties Representative may,
either after entry or without entry, proceed by suit or suits at law or in
equity to enforce such rights and to foreclose upon the Collateral and to sell
all, or from time to time any, of the Collateral under the judgment or decree
of a court of competent jurisdiction. The Secured Parties Representative shall
not take any of the actions permitted by this Section 5.2 unless directed to do
so pursuant to Section 3.5(c)(iv) or Section 5.4(a).
SECTION 5.3 Appointment of a Receiver. If a receiver of the Collateral
shall be appointed in judicial proceedings, the Secured Parties Representative
may be appointed as such receiver. Notwithstanding the appointment of a
receiver, but subject to an order of the court in the judicial proceedings
referred to above, each of the Secured Parties Representative and the Custodian
shall be entitled to retain possession and control of all Cash or property held
by or deposited with it or its agents pursuant to any provision of this
Agreement or the Custodial Agreement, as applicable.
SECTION 5.4 Directions Originated by the Controlling Class. (a)
Subject to Section 5.4(b), if a Liquidation Direction shall have been delivered
to the Secured Parties Representative and so long as such Liquidation Direction
is in effect, the Controlling Class Representative shall have the right, by an
instrument in writing executed and delivered to the Secured Parties
Representative, to direct the Secured Parties Representative as to (i) the
exercise of any right or remedy available to the Secured Parties Representative
or any Representative in respect of the Security Interest for the benefit of
the Secured Parties and as agent for the Representatives, (ii) the time, method
and place of conducting any proceeding for any such right or remedy or of
exercising any power conferred on the Secured Parties Representative or any
Representative, (iii) the appointment of a receiver, or (iv) the taking of any
other action authorized by this Article V. The Secured Parties Representative
hereby agrees to comply with (and act under Article V only pursuant to) such
directions, provided, however, that the Secured Parties Representative shall
have received adequate security or indemnity as provided in Section 10.11(e).
(b) The Secured Parties Representative shall not be obligated to
follow any written directions received pursuant to Section 3.5(c)(iv) or this
Section 5.4 to the extent such written directions are in conflict with any
provisions of law or this Agreement; provided, however, that under no
circumstances shall the Secured Parties Representative be liable hereunder for
acting or refraining from acting in accordance with the instructions of the
Controlling Class.
(c) Nothing in Section 3.5(c)(iv) or this Section 5.4 shall impair the
right of the Secured Parties Representative in its discretion to take or omit
to take any action deemed proper by the Secured Parties Representative in
connection with a direction pursuant to Section 3.5(c)(iv) or this Section 5.4
and which action or omission is not inconsistent with the direction of the
Controlling Class Representative pursuant to Section 3.5(c)(iv) or this Section
5.4, provided, however, that the Secured Parties Representative shall not be
under any obligation, as a result of Section 3.5(c)(iv) or this Section 5.4, to
take any action which is discretionary with the Secured Parties Representative
under the provisions hereof.
SECTION 5.5 Remedies Not Exclusive. (a) No remedy conferred upon or
reserved to the Secured Parties Representative or the other Secured Parties
herein is intended to be exclusive of any other remedy or remedies, but every
such remedy shall be cumulative and shall be in addition to every other remedy
conferred herein or now or hereafter existing at law or in equity or by
statute.
(b) No delay by or omission of the Secured Parties Representative, any
Representative or any other Secured Party to exercise any right, remedy or
power accruing upon the occurrence and continuance of any Event of Default
shall impair any such right, remedy or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein; and every
right, power and remedy given by this Agreement to the Secured Parties
Representative may be exercised from time to time and as often as may be deemed
expedient by the Secured Parties Representative, subject to the provisions of
this Agreement and the other Transaction Documents.
(c) In case the Secured Parties Representative shall have proceeded to
enforce any right, remedy or power under this Agreement or any other
Transaction Document and the proceeding for the enforcement thereof shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Secured Parties Representative or any other Secured Party,
then and in every such case the Borrower, the Secured Parties Representative
and the other Secured Parties shall, subject to any effect of or determination
in such proceeding, severally and respectively be restored to their former
positions and rights hereunder with respect to the Collateral and in all other
respects, and thereafter all rights, remedies and powers of the Secured Parties
Representative and the other Secured Parties shall continue as though no such
proceeding had been taken.
(d) All rights of action and rights to assert claims upon or under
this Agreement may be enforced by the Secured Parties Representative without
the possession of this Agreement, the Credit Agreement, any Lender Note, the
Insurance Agreements, any other Transaction Document or any other document or
Instrument evidencing any of the Secured Obligations or the production thereof
in any trial or other proceeding relative thereto, and any such suit or
proceeding instituted by the Secured Parties Representative shall be brought in
its name as Secured Parties Representative and any recovery of judgment shall
be held as part of the Collateral.
SECTION 5.6 Waiver of Certain Rights. The Borrower, to the extent it
may lawfully do so, on behalf of itself and all who may claim through or under
it, including any and all subsequent creditors, vendees, assignees and lienors,
except as provided in Section 5.7, expressly waives and releases any, every and
all rights to presentment, demand, protest or any notice (to the extent
permitted by Applicable Law and except as specifically provided in this
Agreement) of any kind in connection with this Agreement or any Collateral or
to have any marshalling of the Collateral upon any sale, whether made under any
power of sale granted hereunder or any other Transaction Document, or pursuant
to judicial proceedings or upon any foreclosure or any enforcement of this
Agreement or any other Transaction Document and consents and agrees that all
the Collateral may at any such sale be offered and sold as an entirety or in
lots or otherwise as the Secured Parties Representative may determine or be
directed hereunder.
SECTION 5.7 Notice of Secured Parties Representative Actions. The
Secured Parties Representative agrees to give the Borrower a minimum of ten
Business Days' prior notice of any sale of Collateral if notice thereof is
required by law and the Borrower agrees that, to the extent the notice of the
sale or other disposition of any of the Collateral shall be required by law,
ten Business Days' prior notice to the Borrower shall constitute reasonable
notification of such sale or other disposition.
SECTION 5.8 Limitation by Law. All the provisions of this Article V
are intended to be subject to all applicable mandatory provisions of law which
may be controlling in the premises and to be limited to the extent necessary so
that they will not render this Agreement invalid, unenforceable in whole or in
part or not entitled to be recorded, registered, or filed under the provisions
of any Applicable Law.
ARTICLE VI
LIQUIDATION ACCOUNT; APPLICATION OF PROCEEDS
SECTION 6.1 The Liquidation Account. On the Closing Date, there shall
be established and, at all times thereafter until this Agreement shall
terminate, there shall be maintained by the Secured Parties Representative an
Eligible Account which shall be held in the name of the Secured Parties
Representative, and entitled the "Special Value Opportunities Fund Secured
Parties Liquidation Account" (the "Liquidation Account"). The Liquidation
Account shall be established initially with ▇▇▇▇▇ Fargo Bank, N.A. and
maintained by the Secured Parties Representative for the benefit of the
Representatives and the Secured Parties. After the occurrence of a Liquidation
Acceleration or a Final Maturity Payment Default and so long as a Liquidation
Notice is in effect, all proceeds and other amounts in respect of the
Collateral which are received by the Secured Parties Representative shall be
deposited in the Liquidation Account and thereafter shall be held and applied
by the Secured Parties Representative in accordance with the terms of this
Agreement.
SECTION 6.2 Control of the Liquidation Account. All right, title and
interest in and to the Liquidation Account shall vest in the Secured Parties
Representative, and all funds on deposit in the Liquidation Account shall
constitute part of the Collateral. The Liquidation Account shall be subject to
the exclusive dominion and control of the Secured Parties Representative for
the benefit of the Representatives and the respective Secured Parties they
represent, in each case in accordance with their interests set forth herein;
provided that the Secured Parties Representative may exert such control over
the Liquidation Account as is necessary to perform its duties hereunder.
SECTION 6.3 Investment of Funds Deposited in the Liquidation Account.
Until the Secured Parties Representative shall have distributed Cash held by it
in the Liquidation Account pursuant to Section 6.5, the Secured Parties
Representative may invest such Cash in Cash Equivalents in its sole discretion
and the income from such Cash Equivalents shall be retained by the Secured
Parties Representative in the Liquidation Account as part of the Collateral. On
or before the date of any disbursement under Section 6.5(a), the Secured
Parties Representative shall convert any such Cash Equivalents into Cash.
Subject to the provisions of Section 10.9, the Secured Parties Representative
shall not be liable or responsible in any manner for any losses in connection
with any such investments in Cash Equivalents, and all of said losses shall be
borne by the Liquidation Account.
SECTION 6.4 Limitation on Disbursements from Liquidation Account;
Reliance on Liquidation Direction. (a) Except as otherwise expressly provided
in this Agreement, the Secured Parties Representative shall not make
disbursements of funds, if any, from the Liquidation Account without the
approval of the Controlling Class.
(b) The Secured Parties Representative shall have no obligation to
ascertain the existence of a Liquidation Acceleration or a Final Maturity
Payment Default and may rely, and shall be fully protected in relying, upon a
Liquidation Direction to any such effect.
SECTION 6.5 Distributions. (a) After receiving a Liquidation Direction
and for as long as the related Liquidation Notice is in effect (or as otherwise
provided in Section 3.5(b)(iii)), the Secured Parties Representative shall as
soon as practicable (but in any event not less than monthly) make disbursements
of the entire amount of Cash in the Liquidation Account from time to time in
the priority set forth below:
First: ratably to (i) any Administrative Expenses (up to a maximum of
$9,000,000 during any calendar year) in accordance with the order set forth in
the definition thereof, (ii) any taxes owed by the Borrower that the Borrower
was not permitted to pay, as a result of the provisions of this Agreement or
the Credit Agreement, as certified by an Authorized Officer of the Borrower
(which taxes shall be paid directly to the relevant tax authority); (iii)
expenses of collection then due and payable to the Secured Parties
Representative and the Custodian, and (iv) upon written direction by the
Controlling Class to the Secured Parties Representative, any Management Fees so
directed by the Controlling Class to be paid to the Investment Manager;
Second: (i) to interest then due and payable to the Administrative Agent on
behalf of the Lenders under the Credit Agreement, (ii) to the Insurer for
premiums and reimbursement of interest paid by the Insurer in respect of the
Loans as a result of a Policy Draw under the Senior Facility Insurance Policy
and (iii) to the payment of dividends declared on the Preferred Shares, ratably
until such amounts have been paid in full;
Third: to first, (A) (i) principal then due and payable to the Administrative
Agent on behalf of the Lenders under the Credit Agreement and (ii) net
settlement amounts then due and payable to the counterparties under any Secured
Hedging Transactions, ratably until such amounts in this clause (A) have been
paid in full; and second (B) amounts then due and payable to the Insurer for
reimbursement of claims paid by the Insurer in respect of principal of the
Loans, until such amounts in this clause (B) have been paid in full;
Fourth: to (i) Commitment Fees and Premium due and payable under the Credit
Agreement, any remaining amounts then due and payable to the counterparties
under any Secured Hedging Transactions or to the Insurer in accordance with the
Senior Facility Insurance Agreement and, except for amounts specified in the
following subclause (ii)(x), any remaining amounts then due and payable to the
Lenders under the Credit Agreement, ratably until such amounts have been paid
in full and (ii) thereafter, (x) to amounts then due and payable to the Lenders
pursuant to Sections 3.4.4 and 3.4.5 of the Credit Agreement and (y) to all
other Senior Obligations (including any indemnities under the Credit Agreement)
then due and payable, ratably until such amounts have been paid in full;
provided that, so long as the Insurer is the Controlling Class, the aggregate
amount payable under clause (ii)(y) shall not exceed $10,000,000;
Fifth: to the Insurer (i) for premiums and reimbursement of dividends paid by
the Insurer in respect of the Preferred Shares, (ii) amounts then due and
payable to the Insurer for any claims under the Preferred Shares Insurance
Agreement in respect of any breach thereof, (iii) amounts then due and payable
to the Insurer for reimbursement of claims paid by the Insurer in respect of a
Policy Draw under the Preferred Shares Insurance Policy, and (iv) any remaining
amounts then due and payable to the Insurer in accordance with the Preferred
Shares Insurance Policy;
Sixth: to the relevant party in respect of any other Secured Obligations and
to any Administrative Expenses not paid pursuant to clause First above in this
Section 6.5(a); and
Seventh: to the Borrower or its successors or assigns, or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds, it being understood that the Borrower shall remain liable (but
subject to the limited recourse provisions in Section 2.2(b)) to the extent of
any deficiency between the amount of the proceeds of the Collateral and the
aggregate of the sums payable to the Secured Parties pursuant to clauses First
through Sixth above in this Section 6.5(a).
Any amounts paid by the Borrower with regard to any such deficiency
shall be distributed in accordance with the provisions of this Section 6.5(a).
During the pendency of any legal proceeding to determine whether any claim of
any Person is a Secured Obligation hereunder, the Secured Parties
Representative shall segregate any funds allocable to the Person whose claim is
the subject of such proceeding and hold such segregated funds until the matter
has been resolved, such resolution being evidenced either by a written
direction to the Secured Parties Representative by the parties to such
proceeding or by a final, nonappealable order of a court of competent
jurisdiction.
(b) All distributions made by or at the direction of the Secured
Parties Representative pursuant to and in accordance with Section 6.5(a) and
3.5 shall be (subject to any final order of any court of competent
jurisdiction) final with respect to the Secured Parties Representative and the
Secured Parties Representative shall have no duty to inquire as to the
application by a Representative or any other Person of any amounts distributed
to such Person.
(c) If a Liquidation Acceleration has occurred but is duly revoked and
no Liquidation Notice is in effect, assets of the Borrower shall be subject to
Section 3.5.
SECTION 6.6 Administration of the Liquidation Account. The Secured
Parties Representative shall perform all tasks necessary to make distributions
from time to time pursuant to Section 6.5, including (a) collecting invoices
with respect to Administrative Expenses and, to the extent appropriate,
collection expenses and Management Fees and (b) determining the amount of
principal, interest, premium and fund breakage costs and other payments due and
payable to the Secured Parties. Further, the Secured Parties Representative
shall send to the Borrower and each Representative, five days prior to each
distribution under Section 6.5, a report which shows the Persons to receive
such proposed distribution and the amounts of such proposed distribution. Each
Secured Party and Representative shall provide documents and information
requested by the Secured Parties Representative and shall cooperate with the
Secured Parties Representative in reasonable ways in order to assist the
Secured Parties Representative in making distributions under Section 6.5. In
particular, upon the request of the Secured Parties Representative prior to any
distribution under Section 6.5(a), each Secured Party and each Representative
shall promptly provide to the Secured Parties Representative certificates, in
form and substance reasonably satisfactory to the Secured Parties
Representative, setting forth the respective amounts referred to in clauses
First through Sixth of Section 6.5(a) which such Person believes it is entitled
to receive. The Secured Parties Representative may conclusively rely upon
information supplied to it by the Secured Parties (absent manifest error), the
Representatives and the Borrower in connection with the administration of the
Liquidation Account and the Secured Parties Representative shall have no
liability to any of such Persons for actions taken in reliance on such
information.
SECTION 6.7 Receipt by Representative. Except for amounts paid by the
Secured Parties Representative to a Representative as contemplated herein, all
cash proceeds received by a Representative in respect of any sale of,
collection from or other realization upon, all or part of the Collateral shall
be promptly transferred to the Secured Parties Representative for application
in accordance with this Agreement.
ARTICLE VII
TERMINATION OF SECURITY INTEREST
SECTION 7.1 Termination of Security Interest; Release of Collateral.
Upon the payment in full of all Secured Obligations and after all Commitments
are no longer in effect, this Agreement and the Security Interest shall
terminate and, subject to the terms hereof and of the Transaction Documents,
all rights to the Collateral Granted hereunder shall revert to the Borrower.
Upon the payment in full of all Lender Obligations due and payable and after
all Loan Commitments are no longer in effect, subject to the terms hereof and
of the other Credit Documents, all rights of the Lenders to the Collateral
Granted hereunder shall revert to the Borrower. Upon the payment in full of all
Insurer Obligations under the Insurance Agreements, subject to the terms of the
Insurance Agreements, all rights of the Insurer to the Collateral Granted
hereunder shall revert to the Borrower. In addition, Collateral shall be
released from the Security Interest on the terms set forth for such release in
Sections 3.4 and 3.5. In any such case, the Administrative Agent, the Insurer
and/or the Secured Parties Representative shall, or shall instruct the
Custodian to, at the Borrower's expense, execute and deliver to the Borrower
such documents (as provided to it in complete form, in the case of the
Custodian) as are necessary to evidence such termination of the Security
Interest or such release of Collateral. Furthermore, at any time and from time
to time prior to the termination of the Security Interest as provided in the
first sentence of this Section 7.1, the Secured Parties Representative may
release any of the Collateral (not otherwise released pursuant to Article III)
with the prior written consent of the Administrative Agent and, so long as
either Insurance Policy is in effect, the Insurer; it being understood that the
release of Collateral with respect to the Credit Agreement shall be governed by
the applicable voting provisions set forth therein. In any such case, the
Secured Parties Representative shall, or shall instruct the Custodian to, at
the Borrower's expense, execute and deliver to the Borrower such documents (as
provided to it in complete form, in the case of the Custodian) as are necessary
to evidence such termination of the Security Interest or such release of
Collateral.
SECTION 7.2 Termination Statements. The Secured Parties Representative
shall, upon the payment in full of all Secured Obligations to the Secured
Parties, and after all Commitments are no longer in effect, prepare and file
where appropriate UCC-3 termination statements releasing the Security Interest.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.1 The Borrower. (a) The Borrower represents and warrants
that:
(i) Perfection of Security Interest. The representations and
warranties of this Section 8.1(a)(i) shall survive the execution of
this Agreement and be deemed to be repeated on each date on which any
item constituting Collateral is delivered as if made at and as of that
time.
(A) Upon transfer of the Collateral in the manner
specified in the Custodial Agreement and this Agreement and
after the other actions described in the Custodial Agreement
and this Agreement have been taken by the appropriate
parties, the Secured Parties Representative for the benefit
of the Secured Parties shall have a perfected pledge of and
security interest in such Collateral and all proceeds thereof
(subject to Section 9-315 of the UCC), which security
interest shall be prior to all other interests in such
Collateral (subject to Permitted Liens) and shall be
enforceable as such against creditors of the Borrower.
(B) The Borrower caused or will cause, within ten days
of the Closing Date, the filing of all appropriate financing
statements in the proper filing offices in the appropriate
jurisdictions under applicable law in order to perfect the
security interest in the Collateral Granted to the Secured
Parties Representative hereunder. The Borrower hereby
authorizes the filing of such financing statements including
a collateral description of "all personal property". No other
filings of the Uniform Commercial Code financing statements
or any other action other than those described herein and in
the Custodial Agreement shall be necessary to perfect such
security interest.
(C) The Borrower owns and has good and marketable title
to the Collateral free and clear of any Lien, claim or
encumbrance of any person, other than (a) the Global Lien and
(b) Permitted Liens.
(D) The Borrower has received all consents and
approvals required by the terms of each piece of Collateral
to the Granting of the security interest in the Collateral to
the Secured Parties Representative.
(E) All Collateral has been credited to the Custodial
Account or the Escrow Account.
(F) The Borrower will cause the Custodial Agreement to
contain provisions under which the Custodian will agree to
treat all account property (other than Cash or Money)
credited to the Custodial Account or the Escrow Account as
"financial assets" within the meaning of the Uniform
Commercial Code.
(G) The Borrower has taken all steps necessary to cause
the Custodian to identify in its records the Secured Parties
Representative as the person having the security entitlement
against the Custodian in the Custodial Account and the Escrow
Account. Each of the Custodial Account and the Escrow Account
is not in the name of any person other than the Borrower or
the Custodian. The Borrower has not consented for the
Custodian to comply with entitlement orders of any person
other than the Secured Parties Representative.
(H) Other than as permitted by the Credit Agreement or
this Agreement, the Borrower has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any
part of the Collateral. The Borrower has not authorized the
filing of and is not aware of any financing statement against
the Borrower other than any financing statement relating to
the security interest granted to the Secured Parties
Representative under this Agreement. The Borrower is not
aware of any judgment or tax lien filing against the
Borrower.
(ii) Location. On the date hereof, the location of the
Borrower within the meaning of Section 9-307 of the UCC and the
location of the chief executive office or sole place of business of
the Borrower are as specified on Annex II.
(iii) Status. (i) The Borrower is a limited liability company
duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite power and authority to
enter into and perform its obligations under this Agreement and (ii)
the execution, delivery and performance by it of this Agreement have
been duly authorized by all necessary action on its part.
(b) The Secured Parties Representative. The Secured Parties
Representative hereby represents and warrants that (i) it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to enter into and
perform its obligations under this Agreement and (ii) the execution, delivery
and performance by it of this Agreement have been duly authorized by all
necessary corporate action on its part.
(c) The Administrative Agent. The Administrative Agent hereby
represents and warrants that (i) it is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to enter into and perform its
obligations under this Agreement and (ii) the execution, delivery and
performance by it of this Agreement have been duly authorized by all necessary
corporate action on its part.
(d) The Insurer. The Insurer hereby represents and warrants that (i)
it is a Wisconsin stock insurance corporation, duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization and
has all requisite corporate power and authority to enter into and perform its
obligations under this Agreement and (ii) the execution, delivery and
performance by it of this Agreement have been duly authorized by all necessary
corporate action on its part.
(e) Execution and Delivery. Each party hereto hereby represents and
warrants that this Agreement has been duly executed and delivered by such party
and constitutes the legal, valid and binding obligation of such party
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles relating
to enforceability.
ARTICLE IX
COVENANTS
SECTION 9.1 Title Covenants. The Borrower covenants that at no time
shall it (a) create, permit or suffer to be created any Lien or other security
interest in the Collateral other than the Security Interest and Permitted
Liens; or (b) except as expressly permitted under Article III, sell, transfer,
assign, deliver or otherwise dispose of any Collateral or any interest therein
without the prior written consent of the Administrative Agent or the Secured
Parties Representative, as applicable. The Borrower further covenants and
agrees, subject to the terms of this Agreement, to defend the Collateral
against the claims and demands of all other parties.
SECTION 9.2 Further Assurances.
(a) Filings, etc. (i) The Borrower shall at its sole expense file,
record, make, execute and deliver all such notices, instruments, statements and
other documents, and perform such acts as the Secured Parties Representative
may reasonably request in writing from time to time, or otherwise as necessary
to perfect, preserve or otherwise protect the Security Interest in the
Collateral or any part thereof, or to give effect to the rights, powers and
remedies of the Representatives and the Secured Parties Representative
hereunder and under the other Transaction Documents, including execution and
delivery of financing statements. The Borrower shall be obligated to perform
its obligations under this Agreement notwithstanding the ability of any other
Person to take such actions pursuant to the provisions of Section 9.5.
(ii) The Borrower agrees that a carbon, photographic,
photostatic or other reproduction of this Agreement or of a financing
statement is sufficient as a financing statement and that the Secured
Parties Representative may file financing statements naming the
Borrower as debtor with respect to the Collateral without the
signature of the Borrower.
(iii) The Borrower shall pay the reasonable costs of,
or incidental to, any recording or filing of any financing or
continuation statements concerning the Collateral.
(b) Location of Borrower; Name Change. The Borrower shall not change
its jurisdiction of organization or change the location of its chief executive
office or chief place of business or any records relating to the Collateral
from the applicable locations described in Annex II hereto and the Custodial
Agreement, unless it shall have given each Representative and the Secured
Parties Representative at least 30 days' (or such shorter period as is
acceptable to the Secured Parties Representative) prior written notice thereof.
The Borrower shall not change its name (within the meaning of UCC Section
9-507(c)) in any manner, unless it shall have given each Representative and the
Secured Parties Representative at least 30 days' (or such shorter period as is
acceptable to each Representative and the Secured Parties Representative) prior
written notice thereof.
SECTION 9.3 Notices. The Borrower shall advise the Custodian, the
Secured Parties Representative and each Representative promptly after becoming
aware thereof, in reasonable detail, of any Lien (other than the Security
Interest or other Permitted Liens) on, or claim asserted against, any of the
Collateral.
SECTION 9.4 Costs of Transfer; Taxes; and Expenses. The Borrower shall
pay all transfer taxes and other costs incurred in connection with all
transfers of Collateral made in respect of this Agreement. The Borrower shall
pay the Secured Parties Representative the reasonable costs and expenses,
including reasonable attorneys' fees and other charges, incurred by the Secured
Parties Representative or its designee in connection with making collections on
any Collateral.
SECTION 9.5 Secured Parties Representative May Perform. If the
Borrower fails to perform any agreement contained herein to be performed by it,
the Secured Parties Representative may, upon the written instruction of the
Controlling Class (or the Controlling Class Representative, on its behalf), and
to the extent reasonably practicable, after 10 Business Days' prior written
notice to the Borrower of its intention to do so, itself file, record, make,
execute and deliver all such notices, instruments, statements and other
documents, and take such acts, as the Controlling Class may reasonably
determine to be necessary or desirable from time to time to perfect, preserve
or otherwise protect the Security Interest of the Secured Parties and otherwise
perform, or cause performance of, any other such actions as the Controlling
Class shall reasonably determine is necessary or desirable, and the reasonable
out-of-pocket expenses of the Secured Parties Representative incurred in
connection therewith shall be payable by the Borrower and shall be part of the
Secured Obligations. The powers conferred on the Secured Parties Representative
hereunder are solely to protect its interest (on behalf of the Secured Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers. Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Secured Parties
Representative shall have no duty as to any Collateral or responsibility for
(a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not the Secured Parties Representative has or is deemed to have
knowledge of such matters or (b) taking any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
SECTION 9.6 Pledged Investments. If the Borrower shall become entitled
to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the capital stock of any issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any Pledged
Investments, or otherwise in respect thereof, the Borrower shall accept the
same as the agent of the Secured Parties Representative and the Secured Parties
and hold the same in trust therefor and deliver the same forthwith to the
Custodian in the exact form received, together with an undated stock or bond
power covering such certificate duly executed in blank by the Borrower or, if
required, duly indorsed by the Borrower in blank, and with, if the Secured
Parties Representative so requests, signature guaranteed, to be held by the
Custodian as additional collateral security for the Secured Obligations (except
as released pursuant to Sections 3.4 or 3.5). Any sums paid upon or in respect
of the Pledged Investments upon the liquidation or dissolution of any issuer
shall be paid over to the Custodian to be held by it as additional collateral
security for the Secured Obligations, and in case any distribution of capital
shall be made on or in respect of the Pledged Investments or any property shall
be distributed upon or with respect to the Pledged Investments pursuant to the
recapitalization or reclassification of the capital of any issuer or pursuant
to the reorganization thereof, the property so distributed shall be delivered
to the Custodian to be held by it as additional collateral security for the
Secured Obligations. If any sums of money or property so paid or distributed in
respect of the Pledged Investments shall be received by the Borrower, the
Borrower shall, until such money or property is paid or delivered to the
Custodian, hold such money or property in trust for the Secured Parties
Representative and the Secured Parties, segregated from other funds of the
Borrower, as additional collateral security for the Secured Obligations.
SECTION 9.7 Delivery of Instruments. If (a) any distribution in
respect of any of the Collateral shall be evidenced by, or any of the
Collateral shall otherwise be converted to an Instrument, (b) such Instrument
is transferred to the Borrower or otherwise at its direction (other than to the
Custodian) in a physical form and (c) such Instrument is the type of Collateral
which customarily would be registered in the name of an Approved Depository,
Euroclear or any nominee thereof and concurrently credited to the Custodial
Account or the Escrow Account, as the case may be, the Borrower shall
immediately transfer, or cause to be transferred, such Instrument to the
Custodian, duly endorsed in a manner reasonably satisfactory to the Custodian,
to be held as Collateral pursuant to this Agreement.
ARTICLE X
SECURED PARTIES REPRESENTATIVE'S ROLE
SECTION 10.1 Appointment and Duties of the Secured Parties
Representative. (a) Each Representative hereby designates and appoints the
Secured Parties Representative to act as the agent and representative for such
Representative and each of the other Secured Parties for which it acts as a
Representative hereunder and, as provided herein, with respect to the Custodial
Agreement, and each such Representative, subject to Sections 5.2 and 10.7,
hereby authorizes the Secured Parties Representative to take such actions on
its behalf and on behalf of each of the other Secured Parties for which it acts
as a Representative hereunder and under the Custodial Agreement and to exercise
such powers and perform such duties as are expressly granted to such
Representative or the Secured Parties Representative by this Agreement and the
Custodial Agreement, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
the Transaction Documents, the Secured Parties Representative shall not have
any fiduciary relationship with any Secured Party in its capacity as such, and
no implied covenants, functions, obligations or responsibilities shall be read
into this Agreement, the other Transaction Documents or otherwise exist against
the Secured Parties Representative. Each Representative agrees not to take any
action to enforce any of its rights or remedies in respect of the Collateral to
the extent inconsistent with the terms hereof.
(b) The Secured Parties Representative shall give notice pursuant to
Section 11.3 to the Representatives of any material action taken hereunder to
enforce its rights and remedies under this Agreement or the Custodial
Agreement, and such notice shall be given promptly after the taking of any such
action.
(c) Notwithstanding anything to the contrary in this Agreement or in
any of the other Transaction Documents, the Secured Parties Representative
shall not be required to exercise any rights or remedies under any of the
Transaction Documents to which it is a party or give any consent under any of
the Transaction Documents to which it is a party or enter into any agreement
amending, modifying, supplementing or waiving any provision of any Transaction
Document to which it is a party unless it shall have been directed to do so in
accordance with Section 5.4, Section 10.7, Article VI, or Section 11.1, as
applicable. In the event of any conflict or inconsistency with respect to
anything contained herein between this Agreement and any of the other
Transaction Documents, this Agreement shall control in all respects.
(d) The Borrower shall provide to the Secured Parties Representative
and each Representative prompt notice of the occurrence of any Default of which
it has knowledge. The Borrower shall promptly forward to the Secured Parties
Representative copies of all notices, certificates and other documents relating
to any such Default required to be delivered by the Borrower to a
Representative or any other party pursuant to the terms of the Transaction
Documents. The Secured Parties Representative shall send copies of such
notices, certificates and other documents to all Representatives. Each
Representative shall provide prompt notice to the Secured Parties
Representative, each other Representative, ▇▇▇▇▇'▇ and S&P of any Event of
Default of which it has knowledge.
(e) Each Representative shall give notice to each other Representative
and to the Custodian and the Secured Parties Representative in the event that
it takes any action, or receives a written request from one or more holders of
Secured Obligations under the Credit Agreement entitled to give such request,
to accelerate any such Secured Obligations.
SECTION 10.2 Delivery of Agreements and Information as to Holders. (a)
On the date hereof, the Borrower shall deliver to the Secured Parties
Representative a copy of each of the Credit Agreement, the Custodial Agreement,
the Insurance Agreements, and the Insurance Policies as in effect on the date
hereof, each of which shall be certified by the Borrower as a true and complete
copy thereof. The Borrower shall deliver to the Secured Parties Representative
and each Representative, promptly following the execution thereof, all
amendments, modifications or supplements to any of such documents. The Borrower
shall deliver to the Secured Parties Representative true and complete copies of
all Secured Hedging Agreements and Defensive Hedge Agreements entered into by
the Borrower.
(b) The Borrower and/or each Representative shall deliver to the
Secured Parties Representative from time to time, upon request of the Secured
Parties Representative to the Borrower and/or such Representative, a
certificate, which if delivered by the Borrower shall be of an Authorized
Officer, setting forth, as relevant, for each Secured Obligations Agreement to
which the Borrower is a party or such Representative is a party (i) the
aggregate principal amount outstanding thereunder, (ii) the accrued and unpaid
interest thereunder, (iii) the accrued and unpaid fees, including facility,
non-use and commitment fees and premium, thereunder, if any, (iv) the accrued
and unpaid redemption amount or premium thereunder and (v) such other
information regarding the Transaction Documents as the Secured Parties
Representative may reasonably request in order to carry out its
responsibilities under this Agreement. Unless otherwise specified herein and
unless otherwise specified by the Borrower or such Representative, the Secured
Parties Representative may for all purposes hereunder rely on such certificates
delivered by the Borrower and such Representative unless the Secured Parties
Representative shall have actual knowledge of an inaccuracy. The Secured
Parties Representative may request such a certificate as a condition to taking
any action at the direction of the Controlling Class. If the Borrower or a
Representative shall not have given such certificate to the Secured Parties
Representative, the Borrower or such Representative (and Persons for whom such
Representative acts), as applicable, shall not be entitled to receive
distributions hereunder (in which case such distributions, as established by
the Secured Parties Representative on the basis of the information available to
it, shall be held in trust for the Borrower or such Representative) until the
Borrower or such Representative (or the Secured Parties represented by such
Representative) has given such certificate to the Secured Parties
Representative.
SECTION 10.3 Compensation and Expenses. The Borrower shall pay to the
Secured Parties Representative (including any successor Secured Parties
Representative appointed hereunder), from time to time within ten days after
demand, all reasonable out-of-pocket costs and expenses of the Secured Parties
Representative (including reasonable out-of-pocket fees and expenses of legal
counsel) arising in connection with the preparation, execution, delivery,
modification and/or termination of this Agreement and each other Transaction
Document.
SECTION 10.4 Stamp and Other Similar Taxes. The Borrower shall
indemnify and hold harmless the Secured Parties Representative from any present
or future claim for liability for any stamp or other similar tax and any
penalties or interest with respect thereto, which may be assessed, levied or
collected by any jurisdiction in connection with this Agreement, any other
Transaction Document, the Collateral or the attachment or perfection of the
Security Interest granted to the Secured Parties Representative in the
Collateral. The obligations of the Borrower under this Section 10.4 shall
survive the termination of the other provisions of this Agreement.
SECTION 10.5 Filing Fees, Excise Taxes, etc. The Borrower shall (a)
pay or reimburse the Secured Parties Representative for any and all amounts in
respect of all search, filing, recording and registration fees, taxes (other
than Excluded Taxes), excise taxes and other similar imposts which may be
payable or determined to be payable by the Secured Parties Representative in
respect of the execution, delivery, performance and/or enforcement of this
Agreement and/or any other Transaction Document and (b) save the Secured
Parties Representative harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
and fees. The obligations of the Borrower under this Section 10.5 shall survive
the termination of the other provisions of this Agreement.
SECTION 10.6 Indemnification.
(a) Indemnity in favor of Secured Parties Representative. To the
fullest extent permitted by Applicable Law, the Borrower shall protect,
indemnify and save harmless the Secured Parties Representative and each agent
or attorney-in-fact appointed by the Secured Parties Representative and each of
their respective officers, directors, shareholders, controlling persons,
employees, agents and servants (each an "Indemnified Party") from and against,
any and all liabilities, obligations, losses, claims, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to or in connection with the execution,
delivery, enforcement, performance and/or administration of this Agreement
and/or any other Transaction Document or any of the powers granted to the
Secured Parties Representative hereunder unless arising from the gross
negligence, bad faith or willful misconduct of any Indemnified Party. If for
any reason the indemnification provided above in this Section 10.6 is declared
unenforceable by a court of law, the Borrower shall contribute to the amount
paid or payable by such Indemnified Party as a result of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements in such proportion as is appropriate to reflect not
only the relative benefits received by such Indemnified Party, on the one hand
and the Borrower on the other hand but also the relative fault of such
Indemnified Party, as well as any other relevant equitable considerations.
(b) Suits, etc. In any suit, proceeding or action brought by the
Secured Parties Representative under or with respect to the Transaction
Documents for any sum owing thereunder or to enforce any provisions thereof,
the Borrower shall save, indemnify and keep the Secured Parties Representative
harmless from and against all loss, damage and reasonable, out-of-pocket
expense suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction of liability whatsoever of the obligor thereunder (unless such
expense, loss or damage is caused by the gross negligence, bad faith or willful
misconduct of the Secured Parties Representative) arising out of a breach by
the Borrower of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
obligor or its successors from the Borrower and all such obligations of the
Borrower shall be and remain enforceable against and only against the Borrower
and shall not be enforceable against the Secured Parties Representative or any
other Secured Party.
(c) Limitation on Expenses. The indemnification obligations of the
Borrower pursuant to this Section 10.6 shall be, in the case of any expenses
and reimbursement obligations incurred by the Secured Parties Representative,
limited to the reasonable out-of-pocket expenses (including reasonable
out-of-pocket fees and expenses of legal counsel) so incurred.
(d) Survival. The obligations of the Borrower under this Section 10.6
shall survive the termination of the other provisions of this Agreement.
SECTION 10.7 Direction of the Secured Parties Representative. (a)
Except as provided in Section 5.4(b) and 10.11 (e), the Controlling Class may
from time to time direct the Secured Parties Representative to take any action
or refrain from taking any action which the Secured Parties Representative is
permitted to take under this Agreement. Any direction from the Controlling
Class to the Secured Parties Representative to take any action or refrain from
taking any such action shall be evidenced by the delivery of a certificate from
the Controlling Class Representative to the Secured Parties Representative
(with copies to the Representatives and the Borrower) specifying (i) that such
Person represents the Controlling Class and the identities of the Secured
Parties making up such Controlling Class and their respective holdings of
Secured Obligations and (ii) the actions the Controlling Class is directing the
Secured Parties Representative to take or refrain from taking. Each
Representative and, by its acceptance of the benefits hereof, each other
Secured Party agrees that it shall be bound pursuant to the directions of the
Controlling Class and that it shall have no right of dissent or any similar
rights; provided, however, that (x) such direction complies with the terms of
this Agreement and (y) such Representative and other Secured Parties shall
otherwise remain entitled to the benefits of this Agreement. If any consent,
approval, direction, action or non-action (a "Consent Action") is to be taken
by the Controlling Class, to the extent practicable, the Secured Parties
Representative shall confirm (except with respect to any Consent Action taken
pursuant to Sections 3.5(b)(ii), 3.5(b)(iii), 3.5(c)(ii), 3.5(c)(iii) or
3.5(c)(iv)), at least two Business Days prior to the date such Consent Action
is required to be taken under this Agreement, with the Representatives
representing the Secured Parties that such Secured Parties are aware of such
Consent Action.
(b) Any certificate delivered by the Controlling Class Representative
or a Liquidation Direction delivered by the Controlling Class Representative
directing the Secured Parties Representative to take or refrain from taking any
action must be delivered to the Secured Parties Representative (with copies to
the Representatives and the Borrower) reasonably in advance of the date on
which such action or inaction is sought but in no event less than two Business
Days before the date such action or inaction is sought (except with respect to
any Consent Action taken pursuant to Sections 3.5(b)(ii), 3.5(b)(iii),
3.5(c)(ii), 3.5(c)(iii) or 3.5(c)(iv)).
(c) Nothing herein contained shall prohibit the Controlling Class,
before the Secured Parties Representative is entitled to take any particular
action under this Agreement or any other Transaction Document (a "Collateral
Action"), from directing the Secured Parties Representative, pursuant to the
mechanism provided in this Article X, to take any action not prohibited by this
Agreement or any other Transaction Document in preparation of taking such
Collateral Action.
SECTION 10.8 Acceptance of Appointment. The Secured Parties
Representative hereby accepts the appointment as agent and representative on
behalf of the Secured Parties under this Agreement and the other Transaction
Documents upon the terms and conditions hereof and the other Transaction
Documents.
SECTION 10.9 Exculpatory Provisions. (a) The Secured Parties
Representative shall not be responsible in any manner whatsoever for the
correctness of any recitals, statements, representations or warranties
contained herein or in the other Transaction Documents, unless specifically
made by the Secured Parties Representative. The Secured Parties Representative
makes no representations as to the value or condition of the Collateral or any
part thereof, or as to the title of the Borrower thereto or as to the security
interest afforded by the Transaction Documents, the perfection or priority of
any security interest created thereby or, as to the validity, execution (except
its own execution), enforceability, legality or sufficiency of this Agreement
or any other Transaction Document, and, except as otherwise provided herein,
the Secured Parties Representative shall incur no liability or responsibility
in respect of any such matters. The Secured Parties Representative shall not be
responsible for insuring the Collateral or for the payment of taxes, charges,
assessments or liens upon the Collateral or for perfecting or maintaining the
perfection of the Security Interest in the Collateral or for recording any
documents in connection with patents or trademarks or otherwise as to the
maintenance of the Collateral, except in the event that the Secured Parties
Representative enters into possession of a part or all of the Collateral, the
Secured Parties Representative shall preserve the part in its possession;
provided, however, that the Secured Parties Representative shall not be
required to expend any of its own funds to preserve the Collateral if it shall
reasonably determine that reimbursement therefor is not reasonably assured to
it hereunder.
(b) The Secured Parties Representative shall not be required to
ascertain or inquire as to the performance by the Borrower of any of the
covenants or agreements contained herein or in any other Transaction Document.
(c) The Secured Parties Representative shall not be liable for any
action taken or omitted to be taken by it in accordance with this Agreement or
any other Transaction Document or in connection herewith or therewith or in
connection with the Collateral, unless found by a court of competent
jurisdiction in a final, nonappealable adjudication to have been caused by its
own gross negligence, bad faith or willful misconduct (or by its failure to
exercise reasonable care in the custody and preservation of Collateral in its
possession as provided in Section 10.14).
SECTION 10.10 Reliance by Secured Parties Representative. (a) Whenever
in the administration of this Agreement the Secured Parties Representative
shall deem it necessary or desirable that a matter with respect to the Borrower
be proved or established in connection with the taking, suffering or omitting
any action hereunder and/or any other Transaction Document by the Secured
Parties Representative, unless otherwise specifically provided herein, such
matter may be deemed to be conclusively proved or established by a certificate
of an Authorized Officer of the Borrower delivered to the Secured Parties
Representative (a copy of which certificate the Borrower shall deliver
simultaneously to each Representative which shall forward a copy to each
Secured Party it represents), and such certificate may be conclusively relied
upon by the Secured Parties Representative and shall constitute a full warranty
to the Secured Parties Representative for any action taken, suffered or omitted
in reliance thereon, unless (i) the Secured Parties Representative shall have
actual knowledge of an inaccuracy therein or (ii) any Secured Party shall
provide contrary information in writing to the Secured Parties Representative
with respect to such matter, in which case, unless such Secured Party and
Borrower can reach agreement on such issue within a period of ten Business Days
from the time a certificate is submitted, the Secured Parties Representative
shall appoint at the direction of the applicable Representative an independent
arbitrator (who shall be acceptable to the Borrower and such Secured Party and
whose reasonable fees and/or expenses shall be paid by the Borrower) to resolve
the dispute; provided that the Secured Parties Representative shall have no
responsibility to take any action until such matter is resolved.
(b) Subject to Section 10.11, the Secured Parties Representative may
consult with counsel and any opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by the
Secured Parties Representative hereunder in accordance therewith. In the
absence of any direction pursuant to Sections 10.7 and 5.4, the Secured Parties
Representative shall have the right, after no such direction is provided 20
days after a request therefor by the Secured Parties Representative to the
Controlling Class, to seek instructions concerning the administration of the
Collateral from any court of competent jurisdiction; provided, however, that,
if, prior to receipt of instructions concerning the administration of the
Collateral from such a court, the Secured Parties Representative receives
direction pursuant to Sections 10.7 and 5.4, such direction shall control and
the Secured Parties Representative shall withdraw any such court action or
process it may have commenced.
(c) The Secured Parties Representative may rely and shall be fully
protected in acting upon any resolution, statement, certificate, instrument,
opinion, report, notice, request, consent, order, bond or other paper or
document which it has no reason to believe to be other than genuine and to have
been signed or presented by the proper party or parties or, in the case of
cables, telecopies and telexes, to have been sent by the proper party or
parties. In the absence of its gross negligence, bad faith or willful
misconduct, the Secured Parties Representative may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Secured Parties
Representative that conform to the requirements of this Agreement or any other
Transaction Document.
SECTION 10.11 Limitations on Duties of the Secured Parties
Representative. (a) The Secured Parties Representative undertakes to perform
only the duties expressly set forth herein, together with such powers as are
reasonably incidental thereto.
(b) The Secured Parties Representative may exercise the rights and
powers granted to it by this Agreement and the other Transaction Documents, but
only pursuant to the terms of this Agreement, and the Secured Parties
Representative shall not be liable with respect to any action taken or omitted
by it in accordance with a direction of the Controlling Class.
(c) Except as herein otherwise expressly provided, the Secured Parties
Representative shall not be under any obligation to take any action which is
discretionary on the part of the Secured Parties Representative under the
provisions hereof or under any Transaction Document, except upon the written
request of the Controlling Class pursuant to this Agreement. The Secured
Parties Representative shall make available for inspection and copying by each
Secured Party each certificate or other paper furnished to the Secured Parties
Representative, in its capacity as such, by the Borrower, any Secured Party or
any Holder, under or in respect of this Agreement, any other Transaction
Document or any of the Collateral at the expense of the Borrower.
(d) The Secured Parties Representative shall not be liable for any
error of judgment made in good faith by an officer of it, unless it shall be
proved that the Secured Parties Representative was grossly negligent in
ascertaining the pertinent facts.
(e) The Secured Parties Representative shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement at the
request or direction of the Controlling Class pursuant to this Agreement,
unless the Controlling Class shall have provided to the Secured Parties
Representative adequate security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction. For purposes of this Section 10.11(e), adequate indemnity shall be
deemed to include an unsecured indemnity agreement with a banking or other
financial institution with (a) a tangible net worth of at least $1,000,000,000
or (b) (i) in the case of a banking institution, the long-term debt obligations
of the holding company of such banking institution are rated at ▇▇▇▇▇ "▇▇" by
▇▇▇▇▇'▇ or "A+" by S&P or (ii) in the case of a financial institution other
than a banking institution, the senior unsecured, unguaranteed long-term debt
of such financial institution or its claims-paying ability or financial
strength is rated at ▇▇▇▇▇ "▇▇" by ▇▇▇▇▇'▇ or "A" by S&P.
SECTION 10.12 Resignation and Removal of the Secured Parties
Representative. (a) The Secured Parties Representative (i) may at any time
(with or without cause) by giving 60 days' prior written notice to the
Borrower, the Representatives, ▇▇▇▇▇'▇, S&P and all other Secured Parties,
resign and be discharged of the responsibilities hereby created, such
resignation to become effective upon the appointment of a successor Secured
Parties Representative, the assignment of the Global Lien to the successor
Secured Parties Representative and the acceptance of such appointment and
assignment by such successor Secured Parties Representative and (ii) may be
removed at any time for cause by the affirmative vote of the Controlling Class,
such removal to become effective upon the appointment of a successor Secured
Parties Representative, the assignment of the Global Lien to the successor
Secured Parties Representative and the acceptance of such appointment and
assignment by such successor Secured Parties Representative; provided, however,
that the predecessor Secured Parties Representative shall be entitled to its
reasonable fees and expenses up to and including the effective date of any such
resignation or removal and the indemnity set out in Section 10.6 shall survive
any such resignation or removal to the benefit of the predecessor Secured
Parties Representative. Where no Liquidation Direction shall have been given
and be in effect, the Borrower shall appoint any successor Secured Parties
Representative with the consent of the Controlling Class, with such consent not
to be unreasonably withheld. Where a Liquidation Direction shall have been
given and be in effect or in any event if no successor Secured Parties
Representative shall have been appointed by the Borrower and shall have
accepted such appointment within ten Business Days after such resignation or
removal of the Secured Parties Representative, a successor Secured Parties
Representative may be appointed by the affirmative vote of the Controlling
Class, which successor shall be a financial institution which shall (i) be
reasonably acceptable to the Borrower (so long as no Liquidation Direction
shall have been given and be in effect), (ii) be organized under the laws of
the United States or one of the states thereof, (iii) have a combined capital
and surplus of at least $2,000,000,000 and (iv) have a long-term debt rating of
at least "Baa1" by ▇▇▇▇▇'▇ and at least "BBB" by S&P. Any appointment by the
Borrower or the Controlling Class shall be effective upon the making of such
appointment, the assignment of the Global Lien to the successor Secured Parties
Representative and the acceptance of such appointment and assignment by such
successor Secured Parties Representative. Notice of any such appointment shall
be promptly given by the successor Secured Parties Representative to ▇▇▇▇▇'▇
and S&P.
(b) If at any time the Secured Parties Representative shall become
incapable of acting, or if at any time a vacancy shall occur in the office of
the Secured Parties Representative for any other cause, a successor Secured
Parties Representative shall be appointed and the Global Lien shall be assigned
to such successor Secured Parties Representative as provided in Section
10.12(a), and the powers, duties, authority and title of the predecessor
Secured Parties Representative shall be terminated and canceled without
procuring the resignation of such predecessor Secured Parties Representative,
and without any formality (except as may be required by Applicable Law) other
than appointment and designation of a successor Secured Parties Representative
and acceptance of such assignment of the Global Lien in writing, duly
acknowledged, delivered to the predecessor Secured Parties Representative and
the Borrower and filed for record in each public office, if any, in which this
Agreement is required to be filed.
(c) Upon the acceptance of any appointment as Secured Parties
Representative hereunder by a successor Secured Parties Representative and
payment of all of the predecessor Secured Parties Representative's reasonable
fees and expenses incurred hereunder, such successor Secured Parties
Representative shall be entitled to receive from the predecessor Secured
Parties Representative such documents of transfer and assignment (without
recourse or representation) as such successor Secured Parties Representative
may reasonably request, and shall thereupon succeed to and become vested with
all estates, properties, rights, powers, privileges, trusts, duties, authority
and title of the predecessor Secured Parties Representative, and the
predecessor Secured Parties Representative shall be discharged from its duties
and obligations as Secured Parties Representative under this Agreement. The
predecessor Secured Parties Representative shall assign and transfer, or cause
to be assigned and transferred, and shall deliver or cause to be delivered to
the successor Secured Parties Representative, the Global Lien and all property,
including all moneys, instruments and securities, of the Borrower then held by
the predecessor Secured Parties Representative, if any. Should any written
conveyance or other instrument or document from the Borrower be required by any
successor Secured Parties Representative for more fully and certainly vesting
in such successor Secured Parties Representative the estates, properties,
rights, power, privileges, trusts, duties, authority and title vested or
intended to be vested in the predecessor Secured Parties Representative, any
and all such written conveyances and other instruments or documents, including
financing statements, shall, on request of such successor Secured Parties
Representative, be executed and delivered by the Borrower. All reasonable
out-of-pocket costs and expenses, including reasonable out-of-pocket fees and
expenses of legal counsel, incurred in connection with actions taken under this
subsection shall be paid promptly by the Borrower to the predecessor Secured
Parties Representative and the successor Secured Parties Representative, as
applicable.
(d) The installation of a successor Secured Parties Representative
shall not prejudice the rights of the predecessor Secured Parties
Representative to charge and be reimbursed for any reasonable expenditures
which it may thereafter incur in connection herewith.
SECTION 10.13 Merger of the Secured Parties Representative. Any
corporation into which the Secured Parties Representative may be merged, or
with which it may be converted or consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Secured Parties
Representative shall be a party or any corporation succeeding to all or
substantially all of the business of the Secured Parties Representative shall
be the Secured Parties Representative under this Agreement without the
execution or filing of any paper or any further act on the part of any parties
hereto.
SECTION 10.14 Reasonable Care. The Secured Parties Representative
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Secured Parties Representative
accords its own property and the property of its other customers, consistent
with the degree of care used by other banking or financial institutions
exercising similar functions, it being understood that the Secured Parties
Representative shall not have any responsibility for ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders,
votes or other matters relative to any Collateral, whether or not the Secured
Parties Representative has or is deemed to have knowledge of such matters.
SECTION 10.15 Delegation of Duties. The Secured Parties Representative
may execute any of the powers hereof and perform any duty hereunder either
directly or by or through agents or attorneys-in-fact, which may include
officers and employees of the Secured Parties Representative or otherwise. If
such agents or attorneys-in-fact are not officers or employees of the Secured
Parties Representative (or an Affiliate thereof) or the Custodian, then the
Borrower (provided that no Liquidation Direction shall then be in effect) and
the Representatives shall have the right to consent to such appointment, which
consent shall not be unreasonably withheld. The Secured Parties Representative
shall be entitled to have the advice of counsel concerning all matters
pertaining to such powers and duties. None of such agents or attorneys-in-fact
shall be personally liable to the Borrower or the Secured Parties for any
action taken or omitted to be taken by it in accordance with its appointment
except for its own gross negligence, bad faith or willful misconduct or failure
to exercise reasonable care in the custody and preservation of Collateral in
its custody, as the case may be. Neither the Secured Parties Representative nor
the Borrower shall be responsible for the negligence, bad faith or willful
misconduct of any agents or attorneys-in-fact selected by the Secured Parties
Representative with due care.
SECTION 10.16 Certain Voting Matters. At any time of determination,
for any vote needed to direct the Secured Parties Representative, (A) the vote
of the applicable Secured Parties (other than the Secured Hedging Creditors)
shall be determined with reference to (i) both the principal amounts under the
Credit Agreement then outstanding plus (ii) amounts then due and payable for
interest, fees, premiums and other charges and reimbursements under the
Insurance Agreements and the Credit Agreement plus (iii) if applicable, the
aggregate of unused commitments available under the Credit Agreement, (B) the
vote of any Secured Hedging Creditors shall be determined with reference to the
termination value of the Secured Hedging Transactions as of three Business Days
prior to that date and (C) the vote relating to any Secured Obligations, or
unused Commitments in respect thereof, held by the Borrower and its Affiliates
shall be disregarded and the Secured Obligations, and unused commitments in
respect thereof, held by the Borrower and its Affiliates shall be excluded from
the calculation of the aggregate outstanding principal amount of Secured
Obligations or commitments in respect thereof for purposes of determining
whether the requisite percentage of any such Secured Obligations or commitments
in respect thereof have authorized or approved any such direction. Other
creditors not secured by the Collateral shall not have any vote for any purpose
of directing the Secured Parties Representative. In connection with any
proposed vote, the Insurer, the Lenders and Secured Hedging Creditors shall
share information in reasonable detail and with reasonable promptness (and, in
no event, later than the second Business Day after a request) concerning
outstanding and other liabilities to permit calculation of exposure and voting
power.
SECTION 10.17 Confidentiality; Investment Company Act. (a) The Secured
Parties Representative shall (and shall cause its employees, directors, agents,
attorneys, accountants and other professional advisors to) hold all non-public
information obtained pursuant to the requirements of this Agreement, in
accordance with its customary procedure for handling confidential information
of this nature and in accordance with safe and sound industry practices, and in
any event may make disclosure reasonably required (i) to its employees who have
a need to know such information, its directors, agents, attorneys, accountants
and other professional advisors in connection with the administration of this
Agreement and compliance with its internal control requirements, (ii) which has
been publicly disclosed other than in breach of this Agreement, (iii) as
required or requested by any governmental agency or representative thereof,
(iv) pursuant to legal process, or (v) in connection with the exercise of any
remedy hereunder; provided, that, unless specifically prohibited by applicable
law or court order, the Secured Parties Representative shall notify the
Borrower of any request by any governmental agency or representative thereof
(other than any such request in connection with an examination of its financial
condition by such governmental agency or other routine examination or audit of
its books and records by such governmental agency) for disclosure of any such
non-public information prior to disclosure of such information; and provided,
further, that in no event shall the Secured Parties Representative be obligated
or required to return any materials furnished by the Borrower.
(b) The Secured Parties Representative shall maintain any records that
would constitute records required to be maintained by the Borrower under the
Investment Company Act in accordance with the Investment Company Act, as
advised by the Borrower from time to time.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Amendments, Supplements and Waivers. (a) No amendment or
waiver of any provision of this Agreement, nor consent to any departure by the
Borrower therefrom, nor instruction to the Secured Parties Representative,
shall in any event be effective unless the same shall be in writing and (x)
signed by the Controlling Class Representative and (y) contain a statement of
such Controlling Class Representative to the effect that such writing is being
delivered at the request or direction of the Controlling Class (except as
otherwise provided in this Agreement), and any such waiver, consent or
instruction shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that:
(i) no such amendment, waiver or consent shall, unless
in writing and signed by the Borrower, adversely affect the rights and
duties of the Borrower under this Agreement or any other Transaction
Document or otherwise adversely affect the Borrower;
(ii) if the terms of any of the Transaction Documents
would prohibit such amendment, waiver or consent unless a specified
percentage or group of Holders shall agree to the same, then such
amendment, waiver or consent shall also require the approval of such
specified percentage or group;
(iii) no such amendment, waiver or consent shall,
unless in writing and signed by the Secured Parties Representative,
modify the rights or duties of the Secured Parties Representative
under this Agreement or any other Transaction Document;
(iv) no such amendment, waiver or consent shall, unless
in writing and signed by each affected Secured Party, adversely affect
the priority or amount (or percentage share, as the case may be) of
distributions to such Secured Party under Section 6.5;
(v) no such amendment, waiver or consent shall
materially adversely affect the duties, obligations, rights or
immunities of any party to this Agreement without such party's prior
written consent; and
(vi) any such amendment, waiver or consent shall
require, in any event, the approval of the Insurer (so long as either
Insurance Policy is in effect) and the Required Lenders (as defined in
the Credit Agreement).
(b) The Borrower shall promptly deliver to the Secured Parties
Representative, ▇▇▇▇▇'▇ and S&P and each Representative any amendment,
modification or supplement to any Transaction Document.
(c) Prior to requesting any amendment, waiver or consent contemplated
by this Section 11.1, the Borrower shall give ten days' prior written notice
(or, if ten days' prior written notice is not reasonably practicable under the
circumstances, the maximum amount of prior written notice that is reasonably
practicable) thereof to ▇▇▇▇▇'▇ and S&P.
SECTION 11.2 Notices. Unless otherwise specifically provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile transmission or cable communication)
and mailed, transmitted or delivered to the applicable party at its address set
forth in Annex III; provided, that any notice provided for hereunder to a
Secured Party that is a non-U.S. Secured Party set forth on Annex III shall be
by facsimile transmission if such non-U.S. Secured Party has provided current
facsimile contact information and if to any other or subsequent Secured Party
(including a transferee from any Secured Party of any Secured Obligations), to
it at its address designated pursuant to the Credit Agreement, or at such other
address as may be designated by it in a written notice pursuant hereto. Any
such notice or communication shall be deemed to have been given or made as of
the date so delivered, if delivered personally or by overnight courier; when
receipt is acknowledged, if transmitted; and five calendar days after mailing,
if sent by registered, certified or first class mail (except notice of change
of address shall not be deemed to have been given until actually received by
the addressee). Where this Agreement provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice.
SECTION 11.3 Notices to the Borrower. Each Representative shall
provide to each other Representative and the Borrower copies of each notice, if
any, which is given by it to the Borrower or the Secured Parties Representative
pursuant to any Transaction Document provided, however, that the failure to
provide any such notice shall not impair any rights which the Representative or
any other Secured Party may have against the Borrower and, unless otherwise set
forth herein, the failure to provide any such notice shall not alter or impair
the agreements between the parties hereto.
SECTION 11.4 Headings. The table of contents of this Agreement and
Section, clause and other headings used in this Agreement are for convenience
of reference only and shall not affect the construction of this Agreement.
SECTION 11.5 Severability. In each case to the extent permitted by
Applicable Law, any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 11.6 Separate Liability. The obligations of each Secured Party
under this Agreement (if any) shall be several and not joint, and no Secured
Party shall be liable or responsible for the acts or omissions of any other
Secured Party.
SECTION 11.7 Sharing of Payments. If at any time following a
Liquidation Direction any Secured Party (a "Receiving Party") shall have
received any payment or distribution (whether voluntary, involuntary, through
the exercise of any rights of set-off, or otherwise, and whether in cash,
property or securities) in excess of the payments or distributions such
Receiving Party would have received through the operation of Section 6.5 (such
excess payments or distributions being referred to as "Excess Payments"), then
such Receiving Party shall hold such Excess Payments in trust for the benefit
of all Secured Parties, and shall promptly pay over such Excess Payments in the
form received (duly endorsed, if necessary, to the Secured Parties
Representative) to the Secured Parties Representative, for distribution by the
Secured Parties Representative pursuant to Section 6.5.
SECTION 11.8 Secured Parties Representative Actions, Rights and
Remedies. (a) All actions permitted to be taken by the Secured Parties
Representative hereunder with respect to the Collateral or the Transaction
Documents, including the exercise of rights and remedies by the Secured Parties
Representative, the giving of notices and the appointment of nominees,
sub-agents or other representatives, shall be taken by the Secured Parties
Representative in its capacity as secured party, for the benefit of the Secured
Parties, under the Global Lien and as agent and representative for the
respective Representatives pursuant to the rights and remedies granted to such
Representatives under the respective Transaction Documents to which they are a
party and Applicable Law; and each of the agreements by the Representatives
hereunder are solely in their respective representative capacities under the
Transaction Documents to which they are a party (and not individually).
(b) Except as set forth in or contemplated by Section 10.3, each grant
of any right or remedy to the Secured Parties Representative hereunder is not
given to the Secured Parties Representative in its individual capacity but
rather to the Secured Parties Representative acting in its capacity as secured
party, for the benefit of the Secured Parties, under the Global Lien and as
agent and representative for the Representatives, and any exercise by the
Secured Parties Representative of any such rights or remedies shall be as
secured party, for the benefit of the Secured Parties, under the Global Lien
and on behalf of, and as agent and representative for, the Representatives
under the respective Transaction Documents to which they are a party.
(c) To the extent of any inconsistency in the rights and remedies
granted to the Secured Parties Representative in its capacity as agent and
representative for any Representative hereunder and the rights and remedies
granted to such Representative under any Transaction Document, the rights and
remedies granted hereunder shall control.
SECTION 11.9 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of each of the parties hereto and shall inure to the
benefit of the Secured Parties and their respective successors and assigns;
provided, however, that (a), except in connection with a merger or
consolidation permitted by the Credit Agreement and the Insurance Agreements,
the Borrower may not assign or transfer any of its rights or obligations
hereunder without the prior consent of the Administrative Agent, the Insurer
and the Secured Parties Representative, and (b) the Administrative Agent, the
Insurer and the Secured Parties Representative may not assign or transfer any
of their respective rights or obligations hereunder except in accordance with
the provisions of the Credit Agreement, or the Insurance Agreements and this
Agreement, as applicable. Nothing herein is intended or shall be construed to
give any other Person any right, remedy or claim under, to or in respect of
this Agreement or the Collateral.
SECTION 11.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE PERFECTION (AND THE EFFECT OF PERFECTION OR NONPERFECTION) OF
ANY SECURITY INTEREST IN SOME PORTION OF THE COLLATERAL IS GOVERNED BY THE LAW
OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK AND EXCEPT TO THE EXTENT
INCONSISTENT WITH ANY MANDATORY PROVISION OF THE INVESTMENT COMPANY ACT WHICH
SHALL CONTROL.
SECTION 11.11 Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same instrument.
SECTION 11.12 Other Transactions. Nothing contained herein shall
preclude any Secured Party from engaging in any transaction, in addition to
those contemplated by this Agreement, with the Borrower or any of its
Affiliates in which the Borrower or such Affiliate is not restricted hereby
from engaging with any such Person.
SECTION 11.13 Limitation on Actions, Inconsistency. Notwithstanding
anything contained herein to the contrary, for so long as this Agreement is in
effect neither the Secured Parties Representative nor any other Secured Party
(a) may take any action to attach, foreclose or realize upon the Collateral,
whether pursuant to the Security Interest or otherwise, except pursuant to the
terms of this Agreement or (b) shall take any other action inconsistent with
the rights and remedies granted to the Secured Parties Representative or the
Secured Parties under this Agreement, including the right of the Secured
Parties Representative to give instructions to the Custodian or any other
Person or agent.
SECTION 11.14 Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO MAY, IN THE SOLE DISCRETION OF THE
APPLICABLE PARTY HERETO, BE BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE
OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK, SITTING IN THE BOROUGH OF MANHATTAN; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
THE SECURED PARTIES REPRESENTATIVE'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH PARTY HERETO
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, SITTING IN THE BOROUGH OF MANHATTAN, FOR THE PURPOSE OF
ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. EACH PARTY HERETO FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT ANY PARTY HERETO HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH PARTY HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT. THIS SECTION 11.14 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT
AND THE PAYMENT OF ALL OBLIGATIONS.
SECTION 11.15 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. EACH PARTY HERETO
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
REPRESENTATIVES AND SECURED PARTIES REPRESENTATIVE ENTERING INTO THIS
AGREEMENT.
SECTION 11.16 Non-Recourse to Investment Manager, Co-Manager or
Holders of Preferred Shares or Common Shares. The Secured Parties acknowledge
and understand that no Secured Party shall have any recourse to the assets of
the Investment Manager, the Special Member, the Co-Manager or the holders of
Preferred Shares or Common Shares in connection with any satisfaction of the
Obligations of the Borrower.
SECTION 11.17 No Petition. Each party hereto (other than the Borrower)
hereby covenants and agrees that, prior to the date which is one year and one
day after the termination of the Credit Agreement and the payment in full of
any amounts owed under the Credit Agreement, such Person will not acquiesce,
petition or otherwise invoke or cause the Borrower to invoke the process of any
court or government authority for the purpose of commencing or sustaining a
case against the Borrower under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Borrower or any substantial part
of the property of the Borrower, or ordering the winding up or liquidation of
the affairs of the Borrower. Each of the parties hereto hereby covenants and
agrees that, prior to the date which is one year and one day after the payment
in full of all outstanding commercial paper notes and other indebtedness for
borrowed money of any CP Conduit or SPC, including the Swingline Lender if it
is a CP Conduit or SPC, such Person shall not institute against, or join any
other Person in instituting against, such CP Conduit or SPC, including the
Swingline Lender if it is a CP Conduit or SPC, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar
proceedings. This provision shall survive the termination of the Credit
Agreement and the making and repayment of the Loans.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
SPECIAL VALUE OPPORTUNITIES FUND, LLC,
as Borrower
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Secretary
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as Custodian
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Trust Officer
CDC FINANCIAL PRODUCTS INC.,
as Administrative Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Director
CDC FINANCIAL PRODUCTS INC.,
as Secured Parties Representative
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Director
AMBAC ASSURANCE CORPORATION,
as Insurer
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: First Vice President
PAGE>
ANNEX I
Definitions
Terms not otherwise defined herein are used as defined in the
Credit Agreement.
"Acceleration" means that all or any portion of the Senior
Obligations shall have been declared, become or deemed to have become due and
payable on an accelerated basis under the Credit Agreement or pursuant to the
terms of the Insurance Agreements, and such declaration or acceleration shall
not have been rescinded.
"Acceleration Notice" means any notice given hereunder by the
Administrative Agent to the Secured Parties Representative of an Acceleration
under the Credit Agreement or any notice given hereunder by the Insurer to the
Secured Parties Representative (expressly stating that such notice constitutes
an Acceleration Notice hereunder) of a Policy Draw under either Insurance
Policy, in each case which notice shall also act as a Notice of Suspension if a
Notice of Suspension is not already in effect.
"Account Property" has the meaning set forth in the Custodial
Agreement.
"Administrative Agent" has the meaning set forth in the
Credit Agreement.
"Administrative Expenses" means the sum of the following
amounts payable by the Borrower:
(a) amounts required to be paid or reimbursed to the
Secured Parties Representative hereunder;
(b) amounts required to be paid or reimbursed to the
Custodian pursuant to the Custodial Agreement;
(c) amounts required to be paid or reimbursed to the
Administrative Agent pursuant to the Credit
Agreement;
(d) expenses required to be paid or reimbursed to the
Insurer pursuant to the Insurance Agreements (it
being understood that such expenses shall not
include any premium, any reimbursement of interest
or dividends paid by the Insurer in respect of the
Loans and the Preferred Shares, respectively, or any
reimbursement of claims paid by the Insurer in
respect of principal of the Loans or in respect of
liquidation preference of the Preferred Shares);
(e) reasonable expenses relating to the maintenance of
the Company Investments and the other Collateral;
(f) reasonable expenses incurred for general business
operations of the Borrower (including the legal,
accounting and administration fees and expenses);
(g) reasonable expenses (but not Management Fees) then
due and payable pursuant to the Investment
Management Agreement and the Co-Management
Agreement;
(h) any fees and expenses (including monitoring fees and
expenses) then due and payable to ▇▇▇▇▇'▇ and S&P or
any other Rating Agency; and
(i) all other fees and expenses of the Borrower relating
to the issuance of the equity securities (other than
the Preferred Shares) permitted by the Credit
Agreement, including legal fees and expenses of
counsel and accountants not to exceed the proceeds
received in connection with such issuance;
provided, however, that Administrative Expenses shall not include expenses of
the Borrower relating to the issuance of such debt paid on the Closing Date and
any taxes required to be paid by the Borrower in accordance with the Credit
Agreement.
"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under common control
with, such former Person. As used in this definition of "Affiliate," the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"Agreement" is defined in the preamble.
"Applicable Law" with respect to any Person or matter means
any law, rule, regulation, order, decree or other requirement having the force
of law relating to such Person or matter and, where applicable, any
interpretation thereof by any Person having jurisdiction with respect thereto
or charged with the administration or interpretation thereof.
"Approved Depository" has the meaning assigned to the term
"Depository" in the Custodial Agreement.
"Authorized Officer" means with respect to the Borrower, the
Chairman of the Board of Directors, any Director, the President, any Vice
President, the Secretary, an Assistant Secretary, the Treasurer or an Assistant
Treasurer or another Person whose signature and incumbency shall have been
certified to the Lenders pursuant to Section 4.1.1 of the Credit Agreement or
such other representatives or agents as are thereafter certified in a similar
manner from time to time and with respect to the Investment Manager, those of
the Investment Manager's officers, managing members, members, representatives
and agents whose signatures and incumbency shall have been certified to the
Lenders pursuant to Section 4.1.1 of the Credit Agreement or such other
representatives or agents as are thereafter certified in a similar manner from
time to time.
"Bank Loans" has the meaning set forth in the Collateral
Valuation Schedule.
"Borrower" has the meaning set forth in the preamble to this
Agreement.
"Borrower Custodial Account" has the meaning set forth in the
Custodial Agreement.
"Business Day" means (i) for all purposes other than as
covered by clause (ii) below, any day except a Saturday, Sunday or other day on
which commercial banks are authorized or obligated by law, regulation or
executive order to close in Columbia, Maryland, Minneapolis, Minnesota, New
York City or Los Angeles, California and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Rate Loans (as defined in the Credit Agreement), any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in Eurodollar deposits in the applicable interbank Eurodollar
market.
"Cash" has the meaning set forth in the Collateral Valuation
Schedule.
"Cash Equivalents" has the meaning set forth in the
Collateral Valuation Schedule.
"Closing Date" means July 13, 2004.
"Co-Management Agreement" has the meaning set forth in the
Credit Agreement.
"Collateral" means, collectively, all of the following,
whether now owned or existing or hereafter acquired or arising: (a) the Pledged
Investments, (b) the Custodial Account and the Escrow Account and all contents
thereof (including all Cash and Cash Equivalents held therein or credited
thereto from time to time, and all securities and investments, including
Pledged Investments, and other "investment property" and "financial assets," as
each such term is defined in the relevant UCC, of any kind held therein or
credited thereto from time to time), (c) all rights and privileges of the
Borrower with respect to the Pledged Investments and Related Contracts
(including all representations, warranties, registration rights and other
undertakings of any Person inuring to the benefit of the Borrower in respect
thereof), and all rights and privileges with respect to the Custodial Account
and the Escrow Account and the contents thereof (including all "securities
entitlements" and "financial assets," as defined in the relevant UCC, with
respect thereto), (d) all right, title and interest of the Borrower in or
pursuant to the Investment Management Agreement, the Co-Management Agreement,
the Insurance Agreements, any Secured Hedging Agreement and any other contract
to which the Borrower is a party to and in connection with which a Pledged
Investment becomes part of the Collateral, (e) all right, title and interest of
the Borrower in or pursuant to any Defensive Hedge Transaction, (f) all funds
on deposit in the Liquidation Account and (g) all Proceeds of any or all of the
foregoing, other than, in each of the foregoing clauses (a), (b), (c), (d),
(e), (f) and (g), (1) any Excluded Investments referred to in clause (i) of the
definition thereof as set forth in each Collateral Valuation Schedule and (2)
any item referenced in the clauses (a) through (g) above which has been
released or transferred (including, without limitation, to the Borrower
Custodial Account and the Escrow Account) in accordance with this Agreement and
the Custodial Agreement.
"Collateral Action" is defined in Section 10.7(c).
"Collateral Valuation Schedule" has the meaning set forth in
the Credit Agreement.
"Collections" means, with respect to any Company Investment,
(i) all Principal Payments and Interest Payments received by the Borrower with
respect to such Company Investment, (ii) all other amounts paid with respect to
such Company Investment, including dividends of any type (whether in cash,
equity interests or other property), distributions with respect thereto and any
damages payable on account of any breach of warranty with respect to such
Company Investment and any proceeds of collateral for, or any guaranty of, such
Company Investment or the relevant issuer's obligation to make payments with
respect thereto.
"Co-Manager" has the meaning set forth in the Credit
Agreement.
"Commitment" means each Loan Commitment.
"Commitment Fees and Premium" means any commitment fees due
and payable to the Administrative Agent on behalf of the Lenders under Section
2.4.1 of the Credit Agreement and any commitment reduction premium with respect
to commitment fees due and payable pursuant to Section 2.2 of the Credit
Agreement.
"Commitment Termination Date" has the meaning set forth in
the Credit Agreement.
"Company Investments" has the meaning set forth in the Credit
Agreement.
"Consent Action" is defined in Section 10.7(a).
"Controlling Class" means
(a) so long as the Senior Facility Insurance Agreement
is in effect and no Insurer Default shall have
occurred and be continuing, the Insurer;
(b) if an Insurer Default shall have occurred and be
continuing, (i) at any time prior to any Liquidation
Direction, the Lenders under the Credit Agreement
and Secured Hedging Creditors representing in
aggregate more than 50% of the sum of (x) the
aggregate amount of all Senior Obligations
outstanding at such time and (y) the aggregate
amount of all unused Commitments under the Credit
Agreement at such time; and (ii) on the date of and
after (and for purposes of giving or revoking) a
Liquidation Direction, the Lenders under the Credit
Agreement and Secured Hedging Creditors representing
in aggregate amount more than 50% of all Senior
Obligations outstanding at such time; and
(c) at any time after the date on which all Loans
Commitments have been terminated and all Senior
Obligations have been paid in full and prior to the
date on which all amounts due in respect of the
Insurance Agreements have been paid in full, the
Insurer.
"Controlling Class Representative" means a representative
designated by the Controlling Class as having the authority to provide notices
from the Controlling Class to the Secured Parties Representative as required
herein.
"Credit Agreement" means (a) the Credit Agreement, dated as
of the Closing Date, among the Borrower, the lenders listed on the signature
pages thereof, Ambac Assurance Corporation, as insurer, CDC Financial Products
Inc., as Administrative Agent and CDC Financial Products Inc., as arranger, as
the same may be amended, extended, restated, supplemented, modified,
refinanced, refunded or replaced (in whole or in part) (including with lenders
other than the initial lenders) from time to time in accordance with the terms
thereof, including any of the foregoing which increases borrowings thereunder,
and (b) any agreements or instruments approved by the Insurer (so long as
either Insurance Policy is in effect) in respect of any amendment, extension,
restatement, supplement, modification, refinancing, refunding or replacement of
the foregoing (including one or more replacement credit agreements); provided
that (i) any section references to the Credit Agreement herein apply to
sections in the Credit Agreement described in clause (a) above and the section
references of any replacement Credit Agreement shall be deemed substituted for
such references herein and (ii) there shall be at any time only one instrument
that is the Credit Agreement under this Agreement.
"Credit Document" has the meaning set forth in the Credit
Agreement.
"Custodial Account" has the meaning set forth in the
Custodial Agreement.
"Custodial Agreement" has the meaning set forth in the Credit
Agreement.
"Custodian" means ▇▇▇▇▇ Fargo Bank, National Association, as
Custodian under the Custodial Agreement.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Defensive Hedge Agreement" means a Related Contract in
respect of a Defensive Hedge Transaction.
"Defensive Hedge Transaction" has the meaning set forth in
the Collateral Valuation Schedule.
"Dollar" or "$" means dollars in lawful currency of the
United States of America.
"Eligible Account" means an account which is (a) segregated
and (b) (i) maintained as a trust account or (ii) maintained at a United States
bank (which may include any of the Secured Parties that are banks) which has
the Required Rating with respect to its demand and time deposits and
certificates of deposit.
"Escrow Account" has the meaning set forth in the Custodial
Agreement.
"Euroclear" means Euroclear Bank, S.A./N.V. as operator of
the Euroclear System.
"Event of Default" means any Event of Default under and as
defined in the Credit Agreement or either Insurance Agreement.
"Excess Payments" has the meaning assigned to that term in
Section 11.7.
"Excluded Taxes" means amounts in respect of backup
withholding taxes on or measured by the net income of any Lender or amounts
imposed pursuant to the laws of the jurisdiction in which such Person or a
Person related thereto is organized, managed or controlled or the jurisdiction
in which the applicable office of such Person or related Person is located,
managed or controlled.
"Final Maturity Payment Default" means that (a) the Senior
Obligations shall have become due and payable on the Commitment Termination
Date under the Credit Agreement, and (b) such applicable Senior Obligations,
shall not have been paid in full on the Commitment Termination Date.
"Final Maturity Payment Default Notice" means any notice
given pursuant to Section 3.5(c)(iii) by the Administrative Agent to the
Secured Parties Representative of a Final Maturity Payment Default under the
Credit Agreement, which notice shall also act as a Notice of Suspension if a
Notice of Suspension is not already in effect.
"GAAP" means generally accepted accounting principles in
effect from time to time in the United States.
"Global Lien" is defined in Section 2.1.
"Grant" means to grant, bargain, sell, warrant, alienate,
remise, demise, release, convey, assign, transfer, mortgage, pledge, create and
grant a security interest in, general lien upon, and right of set-off against,
deposit, set over and confirm. A Grant in respect of the Company Investments,
or in respect of any other agreement or instrument (including any Related
Contract), shall encompass all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate
continuing right to claim for, collect and receive Collections in respect of
the Company Investments, Secured Hedging Agreements and Defensive Hedge
Agreements, and all other monies payable thereunder, to give and receive
notices and other communications, to make waivers or other agreements, to
exercise all rights and options, to bring proceedings in the name of the
granting party or otherwise, and generally to do and receive anything that the
granting party is or may be entitled to do or receive thereunder or with
respect thereto.
"Hedging Representative" means the trustee, paying agent or
other similar representative for the Secured Hedging Creditors from time to
time appointed by and on behalf of the Secured Hedging Creditors.
"Hedging SPE" has the meaning set forth in the Collateral
Valuation Schedule.
"Holder" means, at any date, with respect to any outstanding
Lender Note or Loan, the Lender registered with the Administrative Agent on the
register maintained pursuant to the Credit Agreement as the record owner of
such Lender Note (or the Loans and obligations represented by such Lender Note
or Loan). The Insurer shall be deemed to be the Holder of the Lender Notes (and
the Loans and obligations represented by such Lender Note or Loan) with respect
to any matters requiring the voting of Holders hereunder (but not with respect
to distributions unless the Insurer has made payments on behalf of the Borrower
pursuant to the Insurance Policies) so long as the Senior Facility Insurance
Agreement is in effect and no Insurer Default has occurred and is continuing.
"Indemnified Party" is defined in Section 10.6(a).
"Insolvency Event" means any event described under Section
7.1.9 of the Credit Agreement.
"Insurance Agreements" means the Senior Facility Insurance
Agreement and the Preferred Shares Insurance Agreement.
"Insurance Policies" means the Senior Facility Insurance
Policy and the Preferred Shares Insurance Policy.
"Insurer" means Ambac Assurance Corporation, a monoline
insurance company incorporated under the laws of the State of Wisconsin.
"Insurer Default" means any one of the following events shall
have occurred and be continuing:
(i) the Insurer fails to make a payment required under the
Insurance Policies in accordance with its terms;
(ii) the Insurer (A) files any petition or commences any case
or proceeding under any provision or chapter of the United States
Bankruptcy Code or other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization,
(B) makes a general assignment for the benefit of its creditors, or
(C) has an order for relief entered against it under the United States
Bankruptcy Code or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization,
which is final and nonappealable or not dismissed or discharged within
sixty (60) days
(iii) a court of competent jurisdiction, the Wisconsin
Department of Insurance or other competent regulatory authority enters
an order, judgment or decree (1) appointing a custodian, trustee,
agent or receiver for the Insurer or for all or any material portion
of its property or (2) authorizing the taking of possession by a
custodian, trustee, agent or receiver of the Insurer (or the taking of
possession of all or any material portion of the property of the
Insurer), which in each case is final and nonappealable or continues
undismissed or undischarged for a period of sixty (60) days.
"Insurer Obligations" means the obligations of the Borrower
to the Insurer under the Insurance Agreements and the other Transaction
Documents, whether for principal, interest, premium, fees, indemnities,
expenses or other amounts payable (including interest that would accrue but for
the filing of a petition initiating a Proceeding, whether or not a claim for
such interest is allowed in the Proceeding).
"Instrument" means an "instrument" within the meaning of
Section 9-105(1)(i) of the UCC.
"Interest Payment" means, with respect to any Company
Investment, any payment received by the Borrower with respect to such Company
Investment that is attributable to interest or yield in accordance with the
Related Contract with respect to such Company Investment and includes any
regularly scheduled payment or distribution in respect of any Secured Hedging
Agreement.
"Investment Management Agreement" has the meaning set forth
in the Credit Agreement.
"Investment Manager" has the meaning set forth in the Credit
Agreement.
"Lender" has the meaning set forth in the Credit Agreement.
"Lender Note" has the meaning set forth in the Credit
Agreement.
"Lender Obligations" means the obligations of the Borrower to
the Lenders and the Administrative Agent under the Credit Agreement (and any
promissory notes issued to the Lenders thereunder) and the other Credit
Documents, whether for principal, interest, premium, fees, indemnities,
expenses or other amounts payable (including interest that would accrue but for
the filing of a petition initiating a Proceeding, whether or not a claim for
such interest is allowed in the Proceeding).
"Lien" has the meaning set forth in the Credit Agreement.
"Liquidation Acceleration" means an Acceleration and an
approval by the Controlling Class to foreclose and enforce the Security
Interest and sell or otherwise dispose of the Collateral and close out any
Secured Hedging Transaction.
"Liquidation Account" is defined in Section 6.1.
"Liquidation Conditions" means the provisions of the Credit
Documents which set forth the conditions and procedures governing the rights of
the Secured Parties to initiate the foreclosure and enforcement of the Security
Interest in favor of any of the Secured Parties and the sale or other
disposition of the Collateral following an Event of Default and any revocation
thereof.
"Liquidation Direction" is defined in Section 3.5(c)(iv).
"Liquidation Notice" means a written notice from the Secured
Parties Representative to the Custodian indicating that the Secured Parties
Representative has received a Liquidation Direction, which notice shall also
act as a Notice of Suspension if a Notice of Suspension is not already in
effect.
"Loan" has the meaning set forth in the Credit Agreement.
"Loan Commitment" means a commitment of the Lenders to make
Loans under the terms of the Credit Agreement.
"Management Fee" has the meaning set forth in the Investment
Management Agreement.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. or any
successor thereto, and if such corporation shall for any reason no longer
perform the function of securities rating agency, Moody's shall be deemed to
refer to any other rating agency designated by the Borrower with the written
consent of the Administrative Agent and, so long as the Insurer is the
Controlling Class, the Insurer.
"Notice of Suspension" has the meaning assigned to that term
in Section 3.5(c)(i) and shall include any such notice automatically provided
pursuant to the definitions of Acceleration Notice, Final Maturity Payment
Default Notice and Liquidation Notice.
"Obligations" means all obligations and liabilities of the
Borrower to the Administrative Agent, any of the Lenders, any of the Secured
Hedging Creditors, the Insurer and the Secured Parties Representative,
howsoever created, arising or evidenced, whether direct or indirect, absolute
or contingent, now or hereafter existing, or due or to become due, under or in
connection with any of the Transaction Documents.
"Over-Collateralization Test Deficiency" means, as of any
date of determination, a failure to satisfy any Over-Collateralization Test (as
defined in the Collateral Valuation Schedule) or the failure to comply with
Section 2.2(g) of the Preferred Shares Insurance Agreement at such date (in
each case, after giving effect to any grace period provided for in the Credit
Agreement or the Preferred Shares Insurance Agreement, as applicable).
"Payment Default" means a Senior Payment Default.
"Permitted Liens" means Liens permitted by Section 6.2.3 of
the Credit Agreement.
"Person" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Pledged Investments" means collectively, all Cash and Cash
Equivalents at any time and from time to time transferred to or held in the
Custodial Account or the Escrow Account or listed on a Transmittal Letter
(including an initial Transmittal Letter) and without limitation, all Company
Investments delivered to the Custodian and credited to the Custodial Account or
the Escrow Account at any time and from time to time, all Pledged Loans, all
Pledged Securities, all Pledged Structured Product Transactions, all Defensive
Hedge Transactions, all Pledged Trade Payables and Pledged Trade Claims and
other Company Investments credited to the Custodial Account and the Escrow
Account.
"Pledged Loans" means all Bank Loans now owned or hereafter
acquired by the Borrower that are transferred to or held in the Custodial
Account at any time and from time to time or listed on a Transmittal Letter
(including an initial Transmittal Letter) delivered to the Custodian or
otherwise pledged under this Agreement in accordance with the terms and
provisions of this Agreement and the Custodial Agreement.
"Pledged Securities" means all Securities now owned or
hereafter acquired by the Borrower that are transferred to or held in the
Custodial Account at any time and from time to time or listed on a Transmittal
Letter (including an initial Transmittal Letter) delivered to the Custodian or
otherwise pledged under this Agreement in accordance with the terms and
provisions of this Agreement and the Custodial Agreement.
"Pledged Structured Product Transactions" means all
Structured Product Transactions now owned or hereafter acquired by the Borrower
that are transferred to or held in the Custodial Account at any time and from
time to time or listed on a Transmittal Letter (including an initial
Transmittal Letter) delivered to the Custodian or otherwise pledged under this
Agreement in accordance with the terms and provisions of this Agreement and the
Custodial Agreement.
"Pledged Trade Payables and Pledged Trade Claims" means all
Trade Payables and Trade Claims now owned or hereafter acquired by the Borrower
that are transferred to or held in the Custodial Account at any time and from
time to time or listed on a Transmittal Letter (including an initial
Transmittal Letter) delivered to the Custodian or otherwise pledged under this
Agreement in accordance with the terms and provisions of this Agreement and the
Custodial Agreement.
"Policy Draw" means any payment by the Insurer under either
the Senior Facility Insurance Policy or the Preferred Shares Insurance Policy.
"Preferred Shares" means the Money Market Cumulative
Preferred Shares issued by the Borrower identified in the Preferred Shares
Insurance Policy or any endorsement thereto.
"Preferred Shares Insurance Agreement" means the Insurance
and Indemnity Agreement dated as of the Closing Date between the Borrower and
the Insurer, as amended or supplemented in accordance with the provisions
thereof, relating to certain preferred shares issued by the Borrower.
"Preferred Shares Insurance Policy" means Financial Guaranty
Insurance Policy No. AB0780BE issued by the Insurer pursuant to the Preferred
Shares Insurance Agreement with respect to certain preferred shares issued by
the Borrower, including any endorsement thereto.
"Principal Payment" means, with respect to any Company
Investment, any payment received by the Borrower with respect to such Company
Investment that is attributable to principal in accordance with the Related
Contract with respect to such Company Investment and includes any termination
or similar payment and distribution in respect of any Secured Hedging
Agreement.
"Proceeding" means the making of a trust, mortgage or
assignment for the benefit of creditors; the voluntary or involuntary
dissolution, winding up, total or partial liquidation, reorganization,
bankruptcy, insolvency, receivership or marshalling of assets or liabilities of
the Borrower including a case under the federal Bankruptcy code, as amended
from time to time; or any other statutory, common law or contractual proceeding
or arrangement for the postponement or adjustment of all or a substantial part
of the liabilities of the Borrower.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-102(a)(64) of the UCC and, in any event, shall include without
limitation, all interest, dividends or other earnings, income or distributions
from or in respect of, or investments or reinvestments of, the Cash and Cash
Equivalents from time to time on deposit in the Custodial Account and the
Escrow Account and the Pledged Investments and all other proceeds of
Collateral, including settlement and termination payments in respect of Secured
Hedging Transactions (whether the same arise or are acquired before or after
the commencement of a Proceeding in which the Borrower is a debtor).
"Rating Agency" has the meaning set forth in the Credit
Agreement.
"Receiving Party" has the meaning assigned to that term in
Section 11.7.
"Related Contracts" means all credit agreements, promissory
notes, security agreements, leases, financing statements, guaranties and other
contracts, agreements, instruments and other papers evidencing, securing,
guaranteeing or otherwise relating to any Pledged Investment (excluding the
Investment Management Agreement), together with all of the Borrower's right,
title and interest in and to all inventory and other goods (including returned
or repossessed goods) securing, guaranteeing or otherwise relating to any
Pledged Investment or any Related Contract.
"Representative" means (as the context requires) (a) the
Administrative Agent as agent and representative on behalf of the Lenders under
the Credit Agreement and other Transaction Documents to which it is a party,
(b) provided that no Insurer Default has occurred and is continuing, the
Insurer and/or (c) the Hedging Representative as trustee, paying agent or other
similar representative for the Secured Hedging Creditors.
"Required Rating" means a rating of at least "P-l" by Moody's
or at least "A-l" by S&P, as applicable.
"Requirements of Law" for any Person, means the certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other governmental authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.
"S&P" means Standard & Poor's Rating Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., a New York corporation, or any successor
thereto, and if such corporation shall for any reason no longer perform the
function of securities rating agency, S&P shall be deemed to refer to any other
rating agency designated by the Borrower with the written consent of the
Administrative Agent and, so long as the Insurer is the Controlling Class, the
Insurer.
"Secured Hedging Agreement" means any agreement evidencing a
Secured Hedging Transaction so long as at the time of entering into such
transaction, the Borrower delivers to the Administrative Agent and the Secured
Parties Representative a copy of such agreement and a notice describing such
transaction and stating that such transaction is a "Secured Hedging
Transaction" for all purposes of this Agreement and the Credit Documents.
"Secured Hedging Creditor" means any Lender or Affiliate of
any Lender that is a counterparty to a Secured Hedging Transaction with the
Borrower.
"Secured Hedging Transaction" has the meaning set forth in
the Collateral Valuation Schedule.
"Secured Obligations" means (a) the Senior Obligations, (b)
the reasonable fees and expenses (and indemnities) of the Custodian payable
under the Custodial Agreement, (c) the reasonable fees and expenses (and
indemnities) of the Administrative Agent under the Credit Agreement, and (d)
the reasonable fees and expenses (and indemnities) of the Secured Parties
Representative under this Agreement.
"Secured Obligations Agreement" means any agreement, document
or instrument that creates or evidences any of the Secured Obligations.
"Secured Parties" means the Representatives, the Lenders, the
Administrative Agent, the Insurer, the Secured Parties Representative, the
Custodian, the Secured Hedging Creditors and the Hedging Representative.
"Secured Parties Representative" has the meaning set forth in
the preamble to this Agreement.
"Securities" has the meaning set forth in the Collateral
Valuation Schedule.
"Securities Intermediary" has the meaning assigned to such
term in ss.8-102(14) of the UCC.
"Security Interest" means the security interest Granted under
this Agreement and the Custodial Agreement in the Collateral securing any of
the Obligations including, for the avoidance of doubt, the Global Lien.
"Senior Creditors" means the Insurer, the Lenders and/or the
other holders of Senior Obligations (including Secured Hedging Creditors), as
the context requires.
"Senior Facility Insurance Agreement" means the Insurance and
Indemnity Agreement dated as of the Closing Date between the Borrower and the
Insurer, as amended or supplemented in accordance with the provisions thereof,
relating to the Loans under the Credit Agreement.
"Senior Facility Insurance Policy" means the Financial
Guaranty Senior Facility Insurance Policy No. AB0779BE issued by the Insurer
with respect to the Loans under the Credit Agreement pursuant to the Senior
Facility Insurance Agreement, including any endorsement thereto.
"Senior Obligations" means, collectively, the Lender
Obligations, the Insurer Obligations, the obligations of the Borrower to any
Secured Hedging Creditors under any Secured Hedging Agreement and to any
Hedging Representative under, or with respect to, any Secured Hedging
Agreement, whether such Secured Hedging Agreement is now existing or hereafter
arising.
"Structured Product Transaction" has the meaning set forth in
the Collateral Valuation Schedule.
"Trade Claims" means secured and unsecured obligations
incurred in connection with the acquisition of goods and/or services, including
participations therein.
"Trade Payables" means all "accounts" and "chattel paper" as
such terms are used in Sections 9-102(a)(2) and 9-102(a)(ii), respectively, of
the UCC.
"Transaction Documents" means the Credit Documents.
"Transmittal Letter" has the meaning set forth in the
Custodial Agreement.
"UCC" means at any time the Uniform Commercial Code as in
effect in the State of New York; provided, however, that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the Security Interest in any collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other the State of New
York, "UCC" means the Uniform Commercial Code as in effect in the other
jurisdiction for purposes of the provisions hereof relating to such perfection
or the effect of perfection or non-perfection (and for purposes of definitions
related to such provisions).
"United States" or "U.S." means the United States of America,
its ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ and the Commonwealth of Puerto Rico.
ANNEX II
Locations
The Borrower:
Special Value Opportunities Fund, LLC
Jurisdiction of Organization:
----------------------------
State of Delaware
Chief Executive Office:
----------------------
Los Angeles, California
Mailing Address until August 1, 2004: County: State:
------------------------------------ ------ ------
11100 Santa ▇▇▇▇▇▇ Boulevard Los Angeles California
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Record Location until August 1, 2004:
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Mailing Address after August 1, 2004: County: State:
------------------------------------ ------ -----
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Record Location after August 1, 2004:
------------------------------------
▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ANNEX III
Addresses for Notices
BORROWER
--------
Special Value Opportunities Fund, LLC
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and on or after August 1, 2004:
Special Value Opportunities Fund, LLC
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
ADMINISTRATIVE AGENT
--------------------
CDC Financial Products Inc.
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
INSURER
-------
AMBAC ASSURANCE CORPORATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
Attention: Attention: Risk Management,
Structured Finance and Credit Derivatives
CUSTODIAN
---------
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Corporate Trust Services -- Special Value Opportunities Fund, LLC
RATINGS AGENCIES
----------------
▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Standard & Poor's Ratings Services
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
ANNEX IV
Transfers and Perfection of Pledged Loans, Pledged Trade Payables
and Pledged Trade Claims, and Pledged Structured Product Transactions
and Defensive Hedge Transactions
Pledged Loans
-------------
A. With respect to any Pledged Loan, at the time of settlement
therefor, the Borrower shall send to the Custodian an initial Transmittal
Letter which shall provide (1) a notice describing such Pledged Loan, (2) that
a copy of any documents evidencing its purchase is attached thereto, (3) any
promissory note evidencing such Pledged Loan, (4) a copy of the executed Loan
Agreement relating thereto, and (5) confirmation that instructions have been
given to the agent, borrower or selling institution in respect of such Pledged
Loan to make all payments to the Custodial Account.
B. With respect to any Pledged Loan constituting a participation
interest in a loan evidenced by a participation certificate issued initially in
the name of the Borrower or acquired by the Borrower as assignee, the Borrower
shall deliver to the Custodian (1) the executed participation agreement
pursuant to which the Borrower holds such loan participation and (2) such
executed participation certificate, together with any form of assignment
provided for in the participation agreement or in the loan documentation,
endorsed in blank by the Borrower, which endorsement shall be undated.
C. With respect to any Pledged Loan that is a participation interest
in a loan that is not evidenced by a participation certificate, the Borrower
shall deliver to the Custodian the executed participation agreement pursuant to
which the Borrower holds such loan participation.
D. The procedures described in paragraphs A through C above may be
revised and supplemented from time to time with the written consent of all of
the parties to this Agreement (without the consent of the Lenders under the
Credit Agreement). The parties agree to negotiate in good faith such revisions
and supplements as may be reasonable or necessary to enable the Borrower to
continue to acquire Pledged Loans and the Custodian to hold them for credit to
the Custodial Account and the benefit of the Party In Interest (as defined in
the Custodial Agreement).
Pledged Trade Payables and Pledged Trade Claims
-----------------------------------------------
A. With respect to any Pledged Trade Payable and Pledged Trade Claim,
at the time of settlement, the Borrower shall send the Custodian a notice
describing such Pledged Trade Payable and Pledged Trade Claim (which shall
constitute an initial Transmittal Letter for purposes of the definition of
"Pledged Investments") and a copy of any documents evidencing its purchase
thereof and shall thereafter promptly forward the items specified in
subparagraph B or C below after its receipt thereof.
B. With respect to any Pledged Trade Payable and Pledged Trade Claim,
the Borrower shall deliver to the Custodian a Documentation Package containing
(1) all chattel paper, if any, constituting such Pledged Trade Payable and
Pledged Trade Claim and (2) a Transmittal Letter expressly stating that all
chattel paper, if any, described in such Transmittal Letter is contained in
such Documentation Package.
C. With respect to any Pledged Trade Payable and Pledged Trade Claim
as to which the account debtor or obligor thereunder subsequently files for
protection under the Federal Bankruptcy Code, in addition to the foregoing
actions, the Borrower shall file a proof of claim setting forth the terms of
the pledge in accordance with Rule 3001(e)(3) of the Federal Rules of
Bankruptcy Procedure unless otherwise directed by the Administrative Agent.
With respect to any Pledged Trade Payable and Pledged Trade Claim purchased or
acquired by the Borrower after a proof of claim against the account debtor or
obligor thereunder has already been filed, the Borrower hereby waives its
rights to object to any evidence of the terms of the pledge thereof filed by
the Administrative Agent, the Secured Parties Representative or the Custodian
in accordance with Rule 3001(e)(4) of the Federal Rules of Bankruptcy
Procedure, provided, that the terms of such filing are consistent with, and do
not violate any provision of, the Credit Agreement, this Agreement or the
Custodial Agreement. To the extent that the terms of such filing are
inconsistent with, or violate any provision of, the Credit Agreement, this
Agreement or the Custodial Agreement, the Borrower retains, and does not waive,
its right to object to any filing made by the Administrative Agent or the
Custodian under Rule 3001(e)(4) of the Federal Rules of Bankruptcy Procedure
Pledged Structured Product Transactions and Defensive Hedge Transactions
------------------------------------------------------------------------
A. With respect to any Pledged Structured Product Transaction or
Defensive Hedge Transaction, at the time of settlement therefor, the Borrower
shall send to the Custodian an initial Transmittal Letter which shall provide:
(1) a notice describing such Pledged Structured Product Transaction or
Defensive Hedge Transaction, (2) that a copy of any documents evidencing its
purchase is attached thereto, (3) confirmation that instructions have been
given to the Eligible Counterparty in respect of such Pledged Structured
Product Transaction or Defensive Hedge Transaction to make all payments owing
thereunder to the Custodial Account, and (4) confirmation that the grant of a
security interest in such Structured Product Transaction or Defensive Hedge
Transaction is not prohibited by the terms thereof, and shall promptly forward
the item specified in the subparagraphs below, to the extent applicable, after
its receipt thereof.
B. The procedures described in paragraph A above may be revised and
supplemented from time to time with the written consent of all of the parties
to this Agreement (without the consent of the Lenders under the Credit
Agreement). The parties agree to negotiate in good faith such revisions and
supplements as may be reasonable or necessary to conform the procedures set
forth above to changes in market procedures followed in other transactions of
similar type.