Exhibit J
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CUSTODIAL AGREEMENT
Dated as of July 13, 2004
among
SPECIAL VALUE OPPORTUNITIES FUND, LLC,
as Borrower,
CDC FINANCIAL PRODUCTS INC.,
as Administrative Agent,
CDC FINANCIAL PRODUCTS INC.,
as Secured Parties Representative,
and
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Custodian
CUSTODIAL AGREEMENT
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AGREEMENT (as amended, supplemented or otherwise modified from time to
time, this "Agreement"), dated as of July 13, 2004, by and among (a) Special
Value Opportunities Fund, LLC, a Delaware limited liability company (the
"Borrower"), (b) CDC Financial Products Inc., as Administrative Agent (in such
capacity and together with any successor thereto, the "Administrative Agent")
under the Credit Agreement, dated as of July 13, 2004, by and among the
Borrower, the Lenders party thereto (the "Lenders"), Ambac Assurance
Corporation, as Insurer (the "Insurer"), the 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, together with any agreements or instruments in respect of any amendment,
extension, restatement, supplement, modification, refinancing, refunding or
replacement thereof, the "Credit Agreement"), (c) CDC Financial Products Inc.,
as Secured Parties Representative (in such capacity and together with any
successor thereto, the "Secured Parties Representative") under the Pledge and
Intercreditor Agreement, dated as of July 13, 2004, by and among the Borrower,
the Custodian (as defined below), the Administrative Agent, Ambac Assurance
Corporation, as Insurer, and the Secured Parties Representative (as amended,
supplemented or otherwise modified from time to time, the "Pledge and
Intercreditor Agreement") and (d) ▇▇▇▇▇ Fargo Bank, National Association, as
agent, bailee, custodian and securities intermediary for the Borrower, the
Secured Parties Representative and the Administrative Agent (in such capacity
and together with any successor thereto, the "Custodian").
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words shall have the
meanings set forth below:
1.1 "Acceleration Notice" shall have the meaning assigned thereto
under the Pledge and Intercreditor Agreement.
1.2 "Account Property" shall have the meaning set forth in Section 2.1.
1.3 "Assignment Agreement" shall mean the definitive agreement
pursuant to which a bank, fund, or other financial institution either assigns
or obtains an assignment of all or any portion of any of its rights and
obligations under a Bank Loan.
1.4 "Authorized Person" shall mean, with respect to each Customer, any
person, whether or not an officer or employee thereof, duly authorized thereby
(in the case of the Borrower, by the Borrower's Board of Directors), to give
Written Instructions on behalf thereof, such person to be designated in a
Certificate of Authorized Persons which contains a specimen signature of such
person.
1.5 "Bank Loan" shall mean each item of Other Account Property which,
in accordance with Section 3.8, is marked as a "Bank Loan."
1.6 [Reserved]
1.7 "Borrower Account Property" shall have the meaning set forth in
Section 2.5(a).
1.8 "Borrower Custodial Account" shall have the meaning set forth in
Section 2.5(a).
1.9 "Business Day" shall mean any day upon which the Custodian shall
be conducting its normal custody business in the State of Minnesota or the
State of California.
1.10 "Certificate of Authorized Persons" shall mean a certificate
signed on behalf of a Customer and delivered to the Custodian hereunder.
1.11 "Certificated Security" shall have the meaning assigned thereto
in Section 8-102(a)(4) of the NYUCC, but shall in no event include Foreign
Securities, Bank Loans or Trade Payables.
1.12 "Chattel Paper" shall have the meaning assigned thereto in
Section 9-102(a)(11) of the NYUCC, but shall in no event include Bank Loans.
1.13 "Country Risk" shall mean all factors reasonably related to the
systemic risk of a holder of Foreign Securities in a particular country
including, but not limited to, such country's political environment, economic
and financial infrastructure (including any foreign depository operating in the
country), prevailing or developing custody and settlement practices, and laws
and regulations applicable to the safekeeping and recovery of Foreign
Securities held in custody in that country.
1.14 "Custodial Account" shall have the meaning set forth in Section
2.1.
1.15 "Customer" shall mean the Borrower, the Secured Parties
Representative or the Administrative Agent, as the case may be, and "Customers"
shall mean the Borrower, the Secured Parties Representative and the
Administrative Agent, collectively.
1.16 "Disposition Letter" shall have the meaning set forth in Section
4.1.
1.17 "Eligible Foreign Custodian" has the meaning set forth in section
(a)(1) of Rule 17f-5 under the Investment Company Act, including a
majority-owned or indirect subsidiary of a U.S. Bank (as defined in Rule
17f-5), a bank holding company meeting the requirements of an Eligible Foreign
Custodian (as set forth in Rule 17f-5 or by other appropriate action of the
Securities and Exchange Commission), or foreign branch of a Bank (as defined in
Section 2(a)(5) of the Investment Company Act) meeting the requirements of a
custodian under Section 17(f) of the Investment Company Act; the term does not
include Eligible Securites Depository.
1.18 "Eligible Securities Depository" shall have the meaning set forth
in section (b)(1) of Rule 17f-7 under the Investment Company Act.
1.19 "Escrow Account" shall have the meaning set forth in Section 2.1.
1.20 "Final Maturity Payment Default Notice" shall have the meaning
assigned thereto in the Pledge and Intercreditor Agreement.
1.21 "Foreign Custody Manager" has the meaning set forth in section
(a)(3) of Rule 17f-5 under the Investment Company Act.
1.22 "Foreign Securities" shall include (i) securities issued by a
government other than the United States government or by a corporation or other
entity organized under the laws of any country other than the United States and
(ii) securities issued by the United States government or by any state or any
political subdivision thereof or by any agency thereof or by any entity
organized under the laws of the United States or of any state thereof which
have been issued and sold primarily outside the United States; provided,
however, in no event shall "Foreign Securities" include Bank Loans or Trade
Payables.
1.23 "Foreign Subcustodian" shall have the meaning set forth in
Section 2.3.
1.24 "Institutional Account Property" shall mean Account Property
which has been delivered to the Custodian through usual and customary banking,
clearing and settlement channels in accordance with the Custodian's ordinary
course custody business, and shall in no event include any Account Property
delivered to the Custodian directly by the Borrower.
1.25 "Instructing Party" shall mean (I) with respect to the Custodial
Account and the Account Property, (x) at any time prior to the receipt by the
Custodian of a Payoff Notice from the Administrative Agent, (a) at any time
other than during a Suspension Period, the Borrower, and, after the receipt by
the Custodian of an election by the Secured Parties Representative to act as
Instructing Party, the Borrower and the Secured Parties Representative, jointly
(it being understood that this provision shall not confer on the Secured
Parties Representative any rights with respect to the Custodial Account not
granted to it under the Pledge and Intercreditor Agreement), (b) at any time
during any Suspension Period (other than any Suspension Period occurring as a
result of the delivery of a Liquidation Notice), the Secured Parties
Representative and, to the extent permitted by Section 6.14(b) hereof (and by
Section 3.5 of the Pledge and Intercreditor Agreement), the Borrower and (c) at
any time during any Suspension Period commenced as a result of the delivery of
a Liquidation Notice, the Secured Parties Representative, and (y) at any time
after the receipt by the Custodian of a Payoff Notice from the Administrative
Agent and the Insurer, the Borrower, and (II) with respect to the Borrower
Custodial Account and the Borrower Account Property, the Borrower as sole
Instructing Party. In the event of any contrary or conflicting instruction with
respect to the Custodial Account or the Account Property from the Borrower and
the Secured Parties Representative when each is an Instructing Party, the
instruction of the Secured Parties Representative shall govern.
1.26 "Instrument" shall have the meaning assigned thereto in Section
9-105 of the NYUCC, but shall in no event include Foreign Securities, Bank
Loans or Trade Payables.
1.27 "Investment Company Act" shall mean the Investment Company Act of
1940, as amended.
1.28 "Liquidation Direction" shall have the meaning assigned thereto
in the Pledge and Intercreditor Agreement.
1.29 "Liquidation Notice" shall have the meaning assigned thereto in
the Pledge and Intercreditor Agreement.
1.30 "Loan Documents' shall mean with respect to any Bank Loan the
definitive credit agreement executed and delivered in connection therewith, and
each other agreement, instrument or other document executed or delivered in
connection therewith, in each case as amended or supplemented.
1.31 "Money" shall have the meaning assigned thereto in Section 1-201
of the NYUCC.
1.32 "Negotiable Document" shall mean a "Document" as defined in
Section 9-102(a)(30) of the NYUCC, but shall in no event include Bank Loans or
Trade Payables.
1.33 "NYUCC" shall mean the UCC as in effect from time to time in the
State of New York.
1.34 "Notice of Suspension" shall have the meaning assigned thereto in
the Pledge and Intercreditor Agreement.
1.35 "Ordinary Document" shall mean (a) a Bank Loan, (b) a Trade
Payable, and (c) each other contract, agreement or instrument, in each case
under this clause (c) which is in writing and which is not an Instrument,
Chattel Paper or a Negotiable Document.
1.36 "Other Account Property" shall mean all Account Property other
than Institutional Account Property.
1.37 "Participation Agreement" shall mean the definitive agreement
pursuant to which a bank, fund, or other financial institution either acquires
or sells all of any portion of any of its rights and obligations under a Bank
Loan.
1.38 "Party In Interest" shall mean (a) prior to receipt by the
Custodian of a Payoff Notice from the Administrative Agent and the Insurer, the
Secured Parties Representative and (b) at all other times, the Borrower;
provided, however, that with respect to the Borrower Custodial Account and the
Borrower Account Property, the Borrower shall at all times be the sole Party In
Interest.
1.39 "Payoff Notice" shall mean a written notice, in the form of
Exhibit A hereto, duly completed and dated, signed on behalf of an Authorized
Person of the Administrative Agent or the Insurer, as applicable, and given in
accordance with Article VIII.
1.40 "Secured Parties" shall have the meaning assigned thereto in the
Pledge and Intercreditor Agreement.
1.41 "Security" shall have the meaning assigned thereto in Section
8-102 of the NYUCC, but shall in no event include Foreign Securities, Bank
Loans or Trade Payables.
1.42 "Suspension Period" shall mean each period of time commencing on
the date of the delivery of a Notice of Suspension, which Notice of Suspension
shall be deemed automatically delivered upon the delivery of any Acceleration
Notice, Final Maturity Payment Default Notice or Liquidation Notice, and ending
upon the date of delivery of a Withdrawal Notice with respect to each Notice of
Suspension previously delivered.
1.43 "Trade Payables" shall mean all items of Other Account Property
which, in accordance with Section 3.9, are clearly marked as "Trade Payables."
1.44 "Transmittal Letter" shall have the meaning set forth in Section
3.7.
1.45 "Type" shall mean, with respect to each item of Other Account
Property, such item constituting one of the following types of Account
Property: a Certificated Security, Chattel Paper, an Instrument (other than a
Certificated Security), a Negotiable Document, an Ordinary Document, a Bank
Loan, or Trade Payables.
1.46 "UCC" shall mean, with respect to any jurisdiction, Articles 1, 8
and 9 of the Uniform Commercial Code as from time to time in effect in such
jurisdiction.
1.47 "Withdrawal Notice" shall mean a written notice, in the form of
Exhibit B hereto, duly completed and dated, signed on behalf of an Authorized
Person of the Secured Parties Representative or the Administrative Agent, as
applicable, and given in accordance with Article VIII.
1.48 "Written Instructions" shall mean, with respect to each Customer,
any notices, instructions or other instruments in writing received by the
Custodian from an Authorized Person of such Customer, or from a person
reasonably believed by the Custodian to be an Authorized Person of such
Customer, by letter, telex, telecopy, facsimile, the Custodian's on-line
communication system, or any other method whereby the Custodian is able to
verify with a commercially reasonable degree of certainty the identity of the
sender of such communications or the sender is required to provide a password
or other identification code.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings set forth in the Credit Agreement.
ARTICLE II
APPOINTMENT OF CUSTODIAN; CUSTODIAL ACCOUNT;
REPRESENTATIONS AND WARRANTIES;
BORROWER CUSTODIAL ACCOUNT
2.1 (a) The Administrative Agent and the Secured Parties
Representative hereby jointly and severally appoint the Custodian, as agent,
bailee, securities intermediary and custodian of all Money, Foreign Securities,
Chattel Paper, Instruments, Negotiable Documents, Ordinary Documents,
Securities and other identified tangible or intangible property at any time
delivered to the Custodian and identified for deposit in the Custodial Account
by or on behalf of the Borrower during the term of this Agreement, including
all distributions from and proceeds of the foregoing received by the Custodian
during such term, but not including any Borrower Account Property
(collectively, together with such property, if any, that may be transferred to
the Custodial Account from the Borrower Custodial Account from time to time at
the instruction of the Borrower, the "Account Property") and authorize the
Custodian to hold or credit to the Custodial Account the Account Property as
herein provided. The Custodian hereby accepts such appointment and agrees to
hold and physically segregate for the account of the Borrower, in accordance
with the requirements of the Section 17(f) of the Investment Company Act and
Rule 17f-1 thereunder, a securities account, designated as Account No. ▇▇▇▇▇▇▇▇
(the "Custodial Account"), which may include one or more sub-accounts for
record-keeping purposes, in which it will hold the Account Property as provided
herein, and a securities account, designated as Account No. ▇▇▇▇▇▇▇▇ (the
"Escrow Account"), which may include one or more sub-accounts for
record-keeping purposes, in which it will hold payments or distributions made
by the Borrower for the purpose of maintaining its income tax status as a
regulated investment company or to avoid the imposition of the excise tax under
Section 4882 of the Internal Revenue Code of 1986, as amended. Shareholders of
the Borrower shall retain a claim against the Borrower to the extent of any
amounts paid to the Secured Parties (or any other creditors of the Borrower)
from the Escrow Account. The name of the Custodial Account shall be "Special
Value Opportunities Fund, LLC, Pledged to CDC Financial Products Inc., as
Secured Parties Representative, as secured party".
(b) The Custodian shall hold in the Custodial Account, subject to the
provisions hereof, all cash received by it from or for the account of the
Borrower, including cash maintained by the Borrower in a bank account
established and used in accordance with Rule 17f-3 under the Investment Company
Act. Funds held by the Custodian for the Borrower may be deposited by it to its
credit as Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; provided, however that every such bank
or trust company shall be qualified to act as a custodian under the Investment
Company Act and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be approved by vote of a
majority of the board of directors of the Borrower. Such funds shall be
deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
(c) Within the Custodial Account, the Custodian shall establish two
sub-accounts to be designated the "Equity Sub-Account" and the "Debt
Sub-Account". The Equity Sub-Account and the Debt Sub-Account are each referred
to herein as a "Sub-Account" and collectively as the "Sub-Accounts". All
proceeds from the sale of membership interests or other equity securities of
the Borrower, including any common shares and preferred shares, whenever
received, shall be deposited in the Custodial Account and credited to the
Equity Sub-Account, and all proceeds from draws under the Credit Agreement and
from the issuance or sale of any other debt obligations of the Borrower,
whenever received, shall be deposited in the Custodial Account and credited to
the Debt Sub-Account pursuant to Written Instructions from the Borrower.
Account Property purchased with amounts credited to the Equity Sub-Account
shall, subject to transfers permitted by this Agreement, be held in the Equity
Sub-Account, and Account Property purchased with amounts credited to the Debt
Sub-Account shall, subject to transfers permitted by this Agreement, be held in
the Debt Sub-Account. All payments and distributions on, and all proceeds with
respect to the sale, conversion or exchange of, any item of Account Property,
whether in the form of cash, securities or other property ("Proceeds"), shall
be deposited in the Custodial Account and credited to the Sub-Account in which
the Account Property giving rise to such Proceeds is held pursuant to Written
Instructions from the Borrower. Amounts on deposit in the Equity Sub-Account
and any Proceeds of Account Property held in the Equity Sub-Account may be
disbursed to purchase or acquire any type of Account Property. Amounts on
deposit in the Debt Sub-Account which constitute the proceeds of draws under
the Credit Agreement or the proceeds from the sale or issuance of any other
debt obligations of the Borrower and all Proceeds of Account Property
originally acquired with the proceeds of draws under the Credit Agreement or
any such other debt obligations may be used to purchase or acquire any type of
Account Property which does not constitute Margin Stock. Account Property in
the Debt Sub-Account that becomes Margin Stock shall, pursuant to Written
Instructions from the Borrower, be transferred to the Equity Sub-Account.
(d) At the direction of the Administrative Agent, the Custodian shall
establish a single, segregated trust account which shall be designated as the
"Senior Facility Insurance Policy Payment Account" and shall be held for the
benefit of the Lenders, over which the Administrative Agent shall have
exclusive control and the sole right of withdrawal.
(e) Each party hereto agrees that each item constituting "Account
Property" (other than cash or Money) is to be treated as a "financial asset"
within the meaning of Section 8-102(a)(9) of the NYUCC. Any cash or Money
constituting Account Property shall be maintained by the Custodian in a demand
deposit account constituting a component of the Custodial Account or the
Borrower Custodial Account. The Custodian agrees that if at any time it shall
receive any order from the Secured Party (i) directing disposition of funds in
the Custodial Account or the Escrow Account or (ii) directing transfer or
redemption of the financial assets relating to the Custodial Account or the
Escrow Account, the Custodian shall comply with such entitlement order or
instruction without further consent by the Borrower or any other person.
However, each party hereto agrees that the Custodian does not have, directly or
indirectly, an entitlement permitting it to grant an entitlement until such
time as it actually receives the relevant and necessary documents. In the event
of a conflict between an entitlement order or instruction, as the case may be,
of the Borrower and an entitlement order or instruction, as the case may be, of
the Secured Parties Representative, the entitlement order or instruction of the
Secured Parties Representative shall prevail. It is the intent of the parties
that the Secured Parties Representative shall have "control," within the
meaning of Sections 8-106(d)(2), 9-104 and 9-106 of the NYUCC, of the Custodial
Account and the Escrow Account. Without limiting the effect of the foregoing,
the Administrative Agent authorizes the Borrower and the Secured Parties
Representative to give, and the Custodian to accept, the instructions
contemplated herein to be given by the Borrower or the Secured Parties
Representative, as applicable, in accordance with the Pledge and Intercreditor
Agreement.
(f) 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.
(g) All of the provisions of this Agreement applicable to the
Custodial Account (including Sub-Accounts) and Account Property shall, mutatis
mutandis, be applicable to the Escrow Account.
2.2 Each Customer hereby represents and warrants, which
representations and warranties shall be continuing and shall be deemed to be
reaffirmed upon Written Instruction given by it or on its behalf, that:
(a) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to enter into this Agreement
and to perform its obligations hereunder;
(b) This Agreement has been duly authorized, executed and delivered by
it, constitutes its valid and legally binding obligation, enforceable against
it in accordance with the terms hereof, and no statute, regulation, rule, order
or judgment binding on it prohibits its execution or performance of this
Agreement; and
(c) All Written Instructions given by it are consistent with its
rights as from time to time in effect under the Credit Documents and the
Financing Documents (as defined in the Credit Agreement).
(d) Except to the extent that the Custodian acts as the Borrower's
foreign custody manager, its board of directors or its foreign custody manager,
as defined in the Rule 17f-5 under the Investment Company Act, has determined
that use of each Foreign Subcustodian (as defined below in Section 2.3(a))
satisfies the applicable requirements of the Investment Company Act and the
Rule 17f-5 thereunder.
(e) The Borrower or its investment adviser has determined that the
custody arrangements of each Eligible Foreign Custodian provide reasonable
safeguards against the custody risks associated with maintaining assets with
such Eligible Foreign Custodian within the meaning of Rule 17f-7 under the
Investment Company Act.
(f) The Borrower shall manage its borrowings, including, without
limitation, any advance or overdraft (including any day-light overdraft) in the
Custodial Account, so that the aggregate of its total borrowings does not
exceed the amount the Borrower is permitted to borrow under the Investment
Company Act; provided, however, that the Borrower shall have 90 calendar days
from each date on which the Borrower first fails to comply with this
representation to cure any violation of this representation.
(g) Its transmission or giving of, and Custodian acting upon and in
reliance on, Certificates of Authorized Persons or Written Instructions
pursuant to this Agreement shall at all times comply with the Investment
Company Act.
2.3 (a) The Borrower hereby delegates to the Custodian, subject to
Section (b) of Rule 17f-5 under the Investment Company Act, the
responsibilities set forth in this Section 2.3 with respect to Foreign
Securities held outside the United States, and the Custodian hereby accepts
such delegation as Foreign Custody Manager of the Borrower. The Foreign Custody
Manager shall be responsible for performing the responsibilities as described
in this Section 2.3 only with respect to the countries and custody arrangements
for each such country listed on Schedule I to this Agreement, which list of
countries may be amended from time to time by the Borrower with the agreement
of the Foreign Custody Manager.
(b) Each Customer hereby authorizes the Custodian to appoint one or
more banking institutions located outside of the United States (other than a
Foreign Depository) (each, a "Foreign Subcustodian") in connection with the
purchase, sale or custody of Foreign Securities. Each agreement pursuant to
which the Custodian employs a Foreign Subcustodian shall require the Foreign
Subcustodian to exercise reasonable care in the performance of its duties and
to indemnify, and hold harmless, the Custodian and each Customer from and
against any loss, damage, cost, expense, liability or claim arising out of or
in connection with the Foreign Subcustodian's performance of such obligations
and that such contract governing the foreign custody arrangements with each
Eligible Foreign Custodian selected by the Foreign Custody Manager shall
satisfy the requirements of Rule 17f-5(c)(2) under the Investment Company Act.
At the election of a Customer, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims against a Foreign
Subcustodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Customer has not been made
whole for any such loss, damage, cost, expense, liability or claim. With
respect to losses incurred by any Customer as a result of the acts or the
failure to act of any Foreign Subcustodian, the Custodian shall take
appropriate action to recover such losses from such Foreign Subcustodian; and
the Custodian's sole responsibility and liability to any Customer shall be
limited to amounts so received from such Foreign Subcustodian (exclusive of
costs and expenses incurred by the Custodian). The Customers authorize the
Custodian to hold securities recorded to the Custodial Account in accounts
which the Custodian has established with one or more of the Custodian's
branches or Foreign Subcustodians. The Custodian and Foreign Subcustodians are
authorized to hold any of Foreign Securities in the Custodian's accounts with
any Depository in which the Custodian or they participate. The Custodian may
add new, replace or remove Foreign Subcustodians. Upon the Borrower's request,
the Custodian shall identify the name, address and principal place of business
of any Foreign Subcustodian of the Borrower's securities. In the event the
Custodian replaces a Foreign Subcustodian, the Custodian shall not utilize such
replacement Foreign Subcustodian until after the Foreign Custody Manager has
determined that utilization of such Foreign Subcustodian satisfies the
requirements of the Investment Company Act and Rule 17f-5 thereunder.
(c) In each case in which the Foreign Custody Manager maintains
Foreign Securities with an Eligible Foreign Custodian selected by the Foreign
Custody Manager, the Foreign Custody Manager shall establish a system to
monitor (i) the appropriateness of maintaining the Foreign Securities with such
Eligible Foreign Custodian and (ii) the contract governing the custody
arrangements with an Eligible Foreign Custodian. In the event the Foreign
Custody Manager determines that the custody arrangements with an Eligible
Foreign Custodian it has selected are no longer appropriate, the Foreign
Custody Manager shall notify the Borrower.
(d) For purposes of this Section 2.3, the board of directors of
Borrower shall be deemed to have considered and determined to accept such
Country Risk as is incurred by placing and maintaining the Foreign Securities
in each country for which the Custodian is serving as Foreign Custody Manager
of the Borrower.
(e) The Foreign Custody Manager shall make written reports notifying
the board of directors of the Borrower of any material change in the foreign
custody arrangements of the Borrower as described in this Section 2.3.
(f) In performing the responsibilities delegated to it, the Foreign
Custody Manager agrees to exercise reasonable care, prudence and diligence such
as a person having responsibility for the safekeeping of assets of management
investment companies registered under the Investment Company Act would
exercise.
(g) The Foreign Custody Manager represents to the Borrower that it is
a U.S. Bank as defined in section (a)(7) of Rule 17f-5 under the Investment
Company Act. The Borrower represents to the Custodian that its board of
directors has determined that it is reasonable for the board to rely on the
Custodian to perform the responsibilities delegated pursuant to this Agreement
to the Custodian as Foreign Custody Manager of the Borrower.
(h) The Custodian shall credit Foreign Securities (whether or not held
by or through any Foreign Subcustodian) to the appropriate Sub-Account of the
Custodial Account or the Borrower Custodial Account, as applicable. A Foreign
Subcustodian shall hold the Borrower's Foreign Securities together with
financial assets belonging to other of the Custodian's or ▇▇▇▇▇ Fargo Bank,
National Association's customers in accounts identified on such Foreign
Subcustodian's books as for the exclusive benefit of the Custodian's or ▇▇▇▇▇
Fargo Bank, National Association's customers. Any Account Property in the
accounts held by a Foreign Subcustodian shall be subject only to the
instruction of the Custodian or the Custodian's agent. Any Account Property
held in a Depository for the account of a Foreign Subcustodian shall be subject
only to the directions of such Foreign Subcustodian. Any agreement the
Custodian enters into with a Foreign Subcustodian for holding the Custodian's
customers' assets shall provide that such assets shall not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Foreign Subcustodian except for safe custody or administration, and that the
beneficial ownership of such assets shall be freely transferable without the
payment of money or value other than for safe custody or administration.
(i) With respect to Account Property maintained outside the United
States, "Depository" shall mean a securities depository or clearing agency
which operates a system for the central holding of securities or any equivalent
book entries in that country or a securities depository or clearing corporation
that operates a transnational system for central holding of securities or
equivalent book entries in the country or a Compulsory Depository. A
"Compulsory Depository" shall mean an eligible foreign custodian: (a) the use
of which is mandatory because (1) its use is required by law or regulation, (2)
securities cannot be withdrawn from the depository or (3) maintaining
securities outside the depository is not consistent with prevailing custodial
practices.
(j) Any Foreign Securities held in a foreign jurisdiction shall be
held in a manner that is standard and customary in such foreign jurisdiction
for holding securities for the benefit of a secured party or protecting the
interests of a beneficial owner thereof or the equivalent in such jurisdiction.
(k) With respect to each Eligible Securities Depository, the Custodian
shall exercise reasonable care, prudence and diligence (i) to provide the
Borrower with an analysis of the custody risks associated with maintaining
assets with the Eligible Securities Depository in accordance with section
(a)(1)(i)(A) of Rule 17f-7 under the Investment Company Act, and (ii) to
monitor such custody risks on a continuing basis and promptly notify the
Borrower of any material change in such risks. The Custodian agrees to exercise
reasonable care, prudence and diligence performing the duties set forth in this
paragraph.
2.4 (a) The Administrative Agent hereby represents and warrants that
it is the duly authorized administrative agent under the Credit Agreement
acting on behalf of and for the benefit of the Lenders (as defined in the
Credit Agreement), and hereby covenants that any actions taken by it hereunder
will be solely for the benefit of the Lenders (as defined in the Credit
Agreement) in accordance with the Credit Agreement and the Pledge and
Intercreditor Agreement.
(b) The Secured Parties Representative hereby represents and warrants
that it is the duly authorized agent for the Secured Parties (as defined in the
Pledge and Intercreditor Agreement) under the Pledge and Intercreditor
Agreement, and covenants that any actions it takes under or pursuant to this
Agreement shall be solely for the benefit of such Secured Parties under, and
shall be taken strictly in accordance with, the Pledge and Intercreditor
Agreement.
2.5 (a) The Borrower hereby appoints the Custodian as agent, bailee,
securities intermediary and custodian of all Money, Foreign Securities, Chattel
Paper, Instruments, Negotiable Documents, Ordinary Documents, Securities and
other identified tangible or intangible property at any time delivered to the
Custodian and identified for deposit in the Borrower Custodial Account by or on
behalf of the Borrower during the term of this Agreement, including all
distributions from and proceeds of the foregoing received by the Custodian
during such term, but not including any Account Property (collectively,
together with such property, if any, that may be transferred to the Borrower
Custodial Account from the Custodial Account from time to time at the
instruction of the Instructing Party, the "Borrower Account Property") and
authorizes the Custodian to hold or credit to the Borrower Custodial Account
the Borrower Account Property as herein provided. If it is not expressly stated
by the Borrower that any such property is being delivered as Borrower Account
Property pursuant to this Section 2.5, the Custodian shall treat such property
for all purposes hereunder as Account Property. The Custodian hereby accepts
such appointment and agrees to establish and maintain a securities account,
which shall be designated Account No. ▇▇▇▇▇▇▇▇ (the "Borrower Custodial
Account"), which may include one or more sub-accounts for record-keeping
purposes, in which it will hold the Borrower Account Property as provided
herein. The name of the Borrower Custodial Account shall be "Special Value
Opportunities Fund Not Pledged".
(b) All of the provisions of this Agreement applicable to the
Custodial Account (including Sub-Accounts) and Account Property shall, mutatis
mutandis, be applicable to the Borrower Custodial Account and the Borrower
Account Property, except that the Borrower shall be the sole and exclusive
Instructing Party and Party In Interest with respect to the Borrower Custodial
Account and the Borrower Account Property, and neither the Borrower Custodial
Account nor the Borrower Account Property shall be subject to the lien of the
Pledge and Intercreditor Agreement in favor of the Secured Parties
Representative. The agreement of the Custodian set forth in Section 2.1 to
comply with "entitlement orders" from the Secured Parties Representative shall
not include or apply to the Borrower Custodial Account, and the Borrower
Custodial Account shall not be subject to the control or dominion of the
Administrative Agent or the Secured Parties Representative.
(c) Notwithstanding any term hereof to the contrary, if a Liquidation
Notice has been delivered to the Custodian and not withdrawn, the Custodian
shall not transfer any Account Property to the Borrower Custodial Account
without the prior express written permission of the Secured Parties
Representative.
ARTICLE III
CUSTODY OF ACCOUNT PROPERTY
3.1 (a) Account Property shall be delivered to the Custodian, to be
held in custody hereunder.
(b) The Borrower hereby appoints the Custodian its true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution
for the Borrower and in the Borrower's name, place and stead, following a
Liquidation Notice and until such Liquidation Notice is withdrawn, to take any
further actions required to register the transfer of any such Account Property
to the Custodian or the Secured Parties Representative (or to otherwise
transfer or dispose of such Account Property pursuant to the terms of this
Agreement).
(c) The Borrower covenants and agrees to take all actions reasonably
requested by the Custodian in order to facilitate the delivery of Account
Property delivered hereunder, including, without limitation, providing
certifications required in connection with the transfer of any Account Property
subject to restrictions on transfer.
(d) The Custodian is authorized, in its discretion, to register
ownership of any Account Property in its nominee name or through any clearing
agency or Depository Institution without increase or decrease of its liability.
The Borrower shall accept the return or delivery of Account Property of the
same class and denomination as those deposited with the Custodian by the
Borrower or otherwise received by the Custodian for the appropriate Sub-Account
of the Custodial Account, and the Custodian need not retain the particular
certificates so deposited or received. If any of the Borrower's Account
Property registered in the Custodian's name or the name of the Custodian's
nominee or held in a Depository and registered in the name of the Depository's
nominee are called for partial redemption by the issuer of such Account
Property, the Custodian is authorized to allot the called portion to the
Borrower.
3.2 For purposes of this Section 3.2, the Custodian shall list each
Bank Loan and other items of Other Account Property (through the use of dummy
CUSIP or loan numbers, for example) on its custody system, but in no event
shall the Custodian have any obligation to make modifications to such custody
system or any related computer or other programs. The Custodian shall furnish
(a) the Borrower and the Secured Parties Representative with evidence of daily
transactions, and (b) the Customers (i) with a monthly summary of all transfers
to or from the Custodial Account (including Sub-Accounts), (ii) an account
statement, as of the last Business Day of each week, setting forth in
reasonable detail a list of all Institutional Account Property, all Other
Account Property (to the extent listed on the Custodian's system), and a copy
of each Transmittal Letter and each Disposition Letter received by the
Custodian during such week, and (iii) to the extent delivered to the Custodian,
the periodic reports required pursuant to Section 6.1.2 of the Credit
Agreement.
3.3 With respect to all Account Property, the Custodian shall, unless
otherwise instructed to the contrary pursuant to Written Instructions given by
the Instructing Party:
(a) Receive all income and other payments and, with respect to all
Institutional Account Property, advise the Instructing Party and the Borrower
as promptly as practicable of any such amounts due but not paid;
(b) With respect to all Institutional Account Property, present for
payment and receive the amount paid upon all instruments which may mature and
advise the Instructing Party and the Borrower as promptly as practicable of any
such amounts due but not paid;
(c) Forward to the Instructing Party, with a copy to the Borrower, all
the information or documents that it may receive from an issuer which, in the
opinion of the Custodian, are intended for the beneficial owner thereof;
(d) Execute, as Custodian, any certificates of ownership, affidavits,
declarations or other certificates under the Code in connection with the
collection of bond and note coupons which it receives and is requested to
execute (provided, however, that it shall not be obligated to execute any such
instrument which it deems, in its reasonable judgment, is not required, not in
appropriate form or would impose upon it liability or expense, the
reimbursement of which is not satisfactorily assured to it hereunder or
otherwise);
(e) Hold in accordance with the provisions hereof, all rights and
similar Negotiable Documents, Instruments or Securities, as the case may be,
issued with respect to any Negotiable Documents, Instruments or Securities, as
the case may be, held by the Custodian hereunder;
(f) Endorse for collection checks, drafts or other negotiable
instruments;
(g) Exchange Account Property for other Account Property where the
exchange is purely ministerial as, for example, the exchange of Account
Property in temporary form for Account Property in definitive form or the
mandatory exchange of Account Property; and
(h) Sell Account Property with fractional interests resulting from a
stock split or a stock dividend and to credit the Custodial Account with the
proceeds thereof.
3.4 Upon receipt by the Custodian of Written Instructions from the
Instructing Party, the Custodian will exchange Negotiable Documents,
Instruments and Securities held hereunder in connection with any conversion
privilege, reorganization, recapitalization, redemption in kind, consolidation,
tender offer or exchange offer, or any exercise of subscription, purchase or
other similar rights represented by Negotiable Documents, Instruments and
Securities. Upon receipt by the Custodian of Written Instructions from the
Borrower, the Custodian shall transfer Account Property which does not
constitute Margin Stock from the Equity Sub-Account to the Debt Sub-Account in
exchange for (i) transfers of cash in an amount equal to the historical cost of
such non-Margin Stock Account Property, or other Account Property having the
same historical cost as such non-Margin Stock Account Property, from the Debt
Sub-Account to the Equity Sub-Account or (ii) disbursements of cash from the
Debt Sub-Account of equal amounts, each as directed by the Borrower.
3.5 (a) The Custodian is not at any time under any duty to supervise
the investment of (other than to forward promptly all notices of corporate
actions with respect to any investment), or to advise or make any
recommendation for the purchase, sale, retention or disposition of, Account
Property.
(b) Any instruction by an Instructing Party shall be complete and
contain sufficient information to enable the Custodian to perform the
instruction. Without limiting the foregoing, each instruction (i) to forward
amounts to any Person shall identify the nature of such payment, and (ii) in
any situation in which there is not sufficient available cash in the Custodial
Account to make the requested payments, shall specify the priority and
allocation of which the Custodian shall follow with respect to distribution or
application of such available amounts (provided, however, that in all such
instances prior to the receipt by the Custodian of a Liquidation Notice, it
shall be entitled to apply available amounts first to unpaid amounts owing to
itself, the Administrative Agent and the Secured Parties Representative,
notwithstanding receiving instruction to the contrary).
(c) At any time prior to receipt of a Liquidation Notice, the
Custodian shall be entitled to pay periodically from the Custodial Account
without instruction of (but with notice to the Borrower) any Instructing Party
(i) to itself, amounts due and payable to it as ordinary fees and expenses
pursuant to this Agreement, (ii) to the Administrative Agent, such amounts as
the Administrative Agent may instruct (as set forth in a written certification,
if the Custodian shall so request) are due and payable to it as ordinary fees
and expenses pursuant to the Credit Agreement and (iii) to the Secured Parties
Representative, such amounts as the Secured Parties Representative may instruct
(as set forth in a written certification, if the Custodian shall so request)
are due and payable to it as ordinary fees and expenses pursuant to the Pledge
and Intercreditor Agreement. Subject to Section 6.15(d) hereof and in
accordance with Section 6.15(g), the Custodian shall be entitled to follow the
instructions of any requesting party with respect to any payment or
disbursements of funds pursuant to and in accordance with this Section 3.5(c)
without liability on its part and without any obligation or duty to inquire
into, investigate, monitor or other wise determine compliance with the
applicable terms, restrictions, limitations or requirements or any other
Transaction Document.
(d) Any release or distribution of Account Property by the Custodian
pursuant to the instruction of an Instructing Party (including but not limited
to any transfer of property from the Custodial Account to the Borrower
Custodial Account) shall automatically and without further action or consent by
the Insurer, the Administrative Agent or the Secured Parties Representative
(but subject to the consent of the Secured Parties Representative if a
Liquidation Notice has been delivered to the Custodian, as provided in Section
2.5(c)) release such property free and clear from the lien of the Pledge and
Intercreditor Agreement.
3.6 (a) Each Customer agrees that the Custodian shall have no
obligation hereunder to purchase any Account Property, including but not
limited to any Foreign Securities, unless one or more of the Customers shall
have provided the Custodian with sufficient immediately available funds to
settle all transactions (and the Custodian shall have received adequate Written
Instructions from the Instructing Party). As used herein, "sufficient
immediately available funds" shall mean either (i) sufficient United States
currency to purchase the necessary foreign currency or (ii) sufficient
applicable foreign currency, to cover scheduled purchases. The Custodian shall
credit the appropriate Sub-Account of the Custodial Account with immediately
available funds each day which result from the contractual settlement of all
sale transactions, based upon advice received by the Custodian from its agents
and depositories. Such funds shall be in Dollars or such other currency as the
Instructing Party may specify to the Custodian. Should the Borrower fail to
have sufficient immediately available funds in such Sub-Account to settle these
deliveries of Account Property pursuant to the preceding sentence (a
"Deficit"), the Custodian, in its sole discretion, may elect (i) to reject the
settlement of any or all of the Account Property delivered to the Custodian
that day to such Sub-Account, (ii) to settle the deliveries on the Borrower's
behalf and debit such Sub-Account (A) for the amount of such Deficit and (B)
for the amount of the funding or other cost or expense incurred or sustained by
the Custodian for the Borrower's failure to have sufficient immediately
available funds in such Sub-Account by the applicable settlement deadlines for
the Custodian, or (iii) to reverse the posting of the Account Property credited
to such Sub-Account. The foregoing rights are in addition to and not in
limitation of any other rights or remedies available to the Custodian under
this Agreement or otherwise. Any advances made by the Custodian to the Borrower
in connection with the purchase, sale, redemption, transfer or other
designation of Account Property or in connection with disbursements of funds to
any party, which create or result in an over-draft in the Custodial Account
(including Sub-Accounts) shall be deemed a loan by the Custodian to the
Borrower, payable on demand, and bear interest on the amount of the loan each
day that the loan remains unpaid at the Custodian's prime rate in effect as
announced by the Custodian from time to time (unless another rate has been
separately agreed upon, in writing, between the Custodian and the Borrower in
respect of such advances). No prior action or course of dealing on the
Custodian's part with respect to the settlement of Account Property
transactions on the Borrower's behalf shall be used by or give rise to any
claim or action by the Borrower against the Custodian for the Custodian's
refusal to pay or settle for Account Property transactions the Borrower has not
timely funded as required herein.
(b) In acting upon instructions to settle the purchase or sale of
Account Property, the Custodian is authorized to act in accordance with
customary securities processing practices for the relevant market, including,
without limitation, in the case of a sale, to deliver such Account Property to
the purchaser thereof or dealer therefor (including to an agent for any such
purchaser or dealer) against a receipt, with the expectation of collecting
payment from the purchaser, dealer or agent to whom the Account Property was so
delivered.
(c) The Custodian is authorized and hereby agrees to effect currency
exchange transactions in connection with transactions in Foreign Securities, or
as otherwise may be requested by the Instructing Party and agreed to by the
Custodian, through customary banking channels, including through ▇▇▇▇▇ Fargo
Bank, National Association or an affiliate of ▇▇▇▇▇ Fargo Bank, National
Association. All expenses and risks incident to the collection and conversion
of such currency exchange transactions shall be assumed by the Borrower. The
Custodian shall have no responsibility for the fluctuation in exchange rates
affecting such conversion.
3.7 Notwithstanding anything to the contrary contained herein, the
Custodian shall have the same obligations hereunder with respect to each item
of Other Account Property as shall apply to Institutional Account Property to
the extent such Other Account Property conforms to the usual and customary form
of Institutional Account Property of a similar Type. Each Customer acknowledges
and agrees that all Other Account Property delivered by or on behalf of such
Customer to the Custodian shall (a) conform in both form and substance to the
terms of this Agreement and (b) be listed on a trade ticket (each a
"Transmittal Letter") delivered to the Custodian prior or simultaneously
therewith. With respect to Other Account Property, the Custodian shall be
obligated to treat the same in accordance with the Type thereof, and shall be
fully justified and entitled to act hereunder in accordance with and in
reliance on the Type marked thereon with respect thereto. In the event that any
item of Other Account Property shall not be clearly marked as to Type, the
Custodian shall promptly notify the Borrower and the Instructing Party thereof
and, until such time as the Instructing Party shall identify such item by Type
pursuant to Written Instructions, the Custodian shall treat such item as an
Ordinary Document.
3.8 (a) In the case of any Bank Loan that is to be delivered, assigned
or transferred to the Custodian, the Borrower shall deliver to the Custodian,
for the benefit of the Secured Parties, as soon as practicable: (i) a copy of
all documents evidencing the purchase or acquisition of the Bank Loan by the
Borrower; and (ii) all originals of any promissory notes or participation
certificates issued to, or held by the Borrower, representing such Bank Loan.
(i) Promptly after each determination by the Borrower to purchase
a Bank Loan, the Borrower shall deliver to the Custodian on or before the
settlement date for such purchase Written Instructions specifying with respect
to such purchase: (a) the particular Bank Loan purchased, including, where
available, any CUSIP number, the facility amount, the date of such Bank Loan,
and such other information as the Custodian may reasonably require to identify
the particular Bank Loan; (b) whether such purchase is to be accomplished
pursuant to an Assignment Agreement or a Participation Agreement; (c) the
settlement date for such purchase; (d) the total amount payable upon such
purchase, including any assignment fee and/or any processing fee, and the
institutions to which such amounts are to be paid; (e) the name of the
financial institution from whom the purchase was made and (f) the name of the
financial institution from whom the Loan Documents are to be received by the
Custodian. The Custodian shall pay to the financial institution specified in
the Written Instructions out of the money held hereunder for the amounts
payable as set forth in such Written Instructions, such payment may be without,
and not against, delivery to the Custodian of either (A) an executed Assignment
Agreement in favor of Borrower and any related promissory note delivered to the
Custodian in connection therewith; (B) an executed Participation Agreement in
favor of the Borrower, or (C) any promissory note or Loan Documents. In the
event Written Instructions described in the first sentence of this Section are
received on the settlement date, the Custodian shall use commercially
reasonable efforts to settle the purchase on such settlement date, but shall
not be liable for a failure to do so.
(ii) Promptly after each determination by the Borrower to sell a
Bank Loan, the Borrower shall deliver to the Custodian on or before the
settlement date for such sale Written Instructions specifying with respect to
such sale: (a) the particular Bank Loan sold, including, where available, any
CUSIP number, the facility amount, the date of such Bank Loan, and such other
information as the Custodian may reasonably require to identify the particular
Bank Loan; (b) the amount of such sale; (c) whether such sale is to be
accomplished by an Assignment Agreement or a Participation Agreement; (d) the
settlement date for such sale; (e) the total amount payable upon such sale; (f)
the name of the financial institution to whom the sale was made; (g) the amount
of fees or charges, if any, to be paid by the Borrower in connection with such
sale, and the financial institutions to whom the same are to be paid; and (h)
in the case of a sale accomplished by an Assignment Agreement, the name of the
financial institution to whom the Loan Documents (or in the case of a sale of
less than all of the Bank Loan, copies of the Loan Documents) held by the
Custodian hereunder are to be delivered. Upon receipt of the total amount
payable upon such sale, provided the same conforms to the total amount payable
as set forth in such Written Instructions, the Custodian shall arrange for the
delivery of the Loan Documents and any promissory note (or in the case of a
sale of less than all of the Bank Loan accomplished by an Assignment Agreement,
a portion thereof) held by the Custodian and an executed Assignment Agreement
or Participation Agreement prepared by the Borrower, whichever is indicated by
the Written Instructions, to the financial institution specified in the Written
Instructions. In the event the Written Instructions described in the first
sentence of this Section are received on the settlement date, the Custodian
shall use commercially reasonable efforts to settle the sale on such settlement
date, but shall not be liable for a failure to do so.
(iii) Promptly after any determination by the Borrower to make a
disbursement pursuant to a borrowing request with respect to a Bank Loan
acquired through an assignment or purchase of a participation, Borrower shall
deliver to the Custodian, prior to noon New York City time on the date on which
such disbursement is to be made, Written Instructions specifying with respect
to such disbursement; (a) the dollar amount to be disbursed; (b) the name of
the person or financial institution to whom such disbursement is to be made;
and (c) and the date on which such disbursement is to be made. The Custodian
shall make such disbursement of the amount set forth in the Written
Instructions out of the moneys hereunder on the dates specified in the Written
Instructions. In the event the Written Instructions described in the first
sentence of this Section are received on the date specified therein on which
the disbursement is to be made after noon New York City time, the Custodian
shall use commercially reasonable efforts to make such disbursement on such
date, but shall not be liable for a failure to do so.
(iv) Whenever a payment of interest or principal or any other
payment is due to the Borrower in connection with a Bank Loan held hereunder,
the Custodian shall accept payment of such amount and hold the same hereunder.
The Custodian may, in its absolute discretion, provisionally credit such
amounts on the due date therefor, such credit subject to reversal at the
Custodian's discretion at any time prior to actual receipt of final payment. If
any such amount is not timely received the Custodian shall, at the cost and
expense of the Borrower, take such action as it deems commercially reasonable
to effect collection. In the case of any payment with respect to which the
Borrower wishes to disburse a portion thereof to another financial or other
institution, the Custodian shall make such disbursement out of the moneys held
hereunder upon receipt of Written Instructions specifying: (a) the dollar
amount of such disbursement; and (b) the date on which such disbursement is to
be made.
(v) The Custodian shall act as custodian of the Loan Documents,
Assignment Agreements, and Participation Agreements, together with any related
promissory notes delivered to Custodian hereunder, but only when, as and if the
same are delivered to and actually received by the Custodian.
(b) The Custodian shall forward to Borrower all information, notices,
or documents that it may receive with respect to a Bank Loan from time to time,
including, without limitation, borrowing requests or disbursement notices,
unless the Custodian reasonably believes the Borrower has received the same.
With respect to any borrowing request, disbursement notice, or similar
document, the Custodian shall act only upon timely Written Instructions of the
Borrower, and shall have no liability or responsibility for any representations
in such request or for any similar representations in any of the Loan
Documents, shall have no duty to make any investigation, and shall have no
notice of any event of default or failure of a condition precedent, and shall
not be required to determine, or make any inquiry with respect to, the use the
Borrower intends to make of any disbursement. All such determinations shall be
made by the Borrower. In connection with any roll-over notice, notice of
conversion, or interest-rate election request, or similar notice, the Custodian
shall upon receipt of Written Instructions from the Borrower make appropriate
entries in its books and records.
(i) Notwithstanding any other provision to the contrary, when the
Custodian is instructed to make payment for a purchase of a Bank Loan, whether
such purchase is accomplished by an Assignment Agreement or a Participation
Agreement, such payment need not be made against delivery to the Custodian of
an Assignment Agreement, Participation Agreement, Loan Documents or any
promissory note. The Borrower assumes all responsibility and liability for all
risks involved in connection with the Custodian's making such payment and for
any failure of the foregoing to be delivered to the Custodian at the time of
such payment or any time thereafter.
(ii) Notwithstanding any other provision contained in this
Agreement, the Custodian shall not be liable for any loss or damage, including
counsel fees, resulting from its actions or omissions to act with respect to
Bank Loans, except for any loss or damage arising out of its own gross
negligence or willful misconduct with respect to its express duties. In no
event shall the Custodian be liable to the Borrower or any third party for
special, indirect or consequential damages, or lost profits or loss of
business, arising under or in connection with Bank Loans, even if previously
informed of the possibility of such damages and regardless of the form of
action. The Borrower agrees to indemnify the Custodian against, and save the
Custodian harmless from, all liability, claims, losses and demands whatsoever,
including reasonable counsel fees, however arising or incurred because of or in
connection with the actions or omissions to act of the Custodian with respect
to Bank Loans, except to the extent the same constitutes direct money damages
arising out of Custodian's own gross negligence or willful misconduct.
(c) The procedures described in clauses (a) and (b) 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 Bank Loans and the Custodian to hold them for the benefit
of the Secured Parties.
(d) The Custodian shall have no obligation or duty to take any
action to vote upon, consent to or approve, or otherwise take or exercise any
action upon any request, notice or solicitation from the issuer (or agent on
behalf of the issuer) of, or similar matter with respect to, any Account
Property, such as, without limitation, any proposed reorganization, amendment,
modification, extension, conversion, consolidation, tender offer or exchange
offer or similar matter, or otherwise to preserve rights against minor parties,
absent instruction from the Instructing Party; and the Custodian shall have no
duty or obligation to evaluate or render advice to the Instructing Party with
regard to any such matter.
3.9 (a) With respect to any Trade Payable to be transferred to the
Custodial Account, at the time of settlement, the Borrower shall send the
Custodian a notice describing such Trade Payable and a copy of any documents
evidencing its purchase thereof and shall thereafter promptly forward the items
specified in clause (b) or (c) below after its receipt thereof.
(b) With respect to any Trade Payable to be transferred to the
Custodial Account, the Borrower shall deliver to Custodian a Documentation
Package containing all Chattel Paper, if any, constituting such Pledged Trade
Payable.
(c) With respect to any Trade Payable transferred to the Custodial
Account as to which the account debtor or obligor thereunder has filed or
subsequently files for protection under the federal Bankruptcy Code, in
addition to the foregoing actions, the Party In Interest shall file a proof of
claim setting forth the terms of the pledge in accordance with Rule 3001(o)(3)
of the Federal Rules of Bankruptcy Procedure. With respect to any Trade Payable
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 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 Pledge and
Intercreditor 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 Pledge and Intercreditor Agreement, the Borrower retains, and
does not waive, its right to object to any filing made by the Secured Parties
Representative or the Custodian under Rule 3001(a)(4) of the Federal Rules of
Bankruptcy Procedure.
3.10 (a) Notwithstanding any term of Section 3.1 to the contrary, the
Custodian shall be entitled in any instance to take delivery of and hold any
Account Property by such other means and procedures (whether or not as
described in, or in compliance with, the terms of said Section 3.1) as it may
deem appropriate or expedient, or as may be consistent with its then applicable
procedures, including without limitation using nominees or other methods of
good delivery (but not in "street name"), utilizing or holding through other
agents, intermediaries, brokers, dealers, clearing or depository banks,
subcustodians or other depositories, or through any "direct paper" book-entry
or other recognized securities system, in each case in any combination, as it
may deem appropriate or, where appropriate, holding of securities as part of a
fungible bulk; subject, however, to its duties under applicable law.
(b) The Custodian shall, upon request, provide the Borrower with any
report obtained by the Custodian relating to any securities system's accounting
system or its internal accounting control and procedures for safeguarding
securites deposited in such securities system.
3.11 The Custodian, the Borrower, the Administrative Agent and the
Secured Parties Representative each hereby agrees that each item of Account
Property (and other property, if any) other than cash or Money contained in or
credited to the Custodian Account or Borrower Custodian Account from time to
time, of whatever nature or kind, shall be treated as a "financial asset"
within the meaning of, and under, Article 8 of the NYUCC.
3.12 All items of income, gain, expense and loss recognized in the
Custodial Account or Borrower Custodian Account which the Custodian determines
it is required by law to report to the Internal Revenue Service (or any state
or local taxing authorities) shall be reported under the name and taxpayer
identification number of the Borrower. The Borrower shall provide the Custodian
the Borrower's taxpayer identification number promptly following the execution
and delivery of this Agreement.
3.13 The Custodian hereby represents and warrants that it has not
entered into, and hereafter during the term of this Agreement shall not enter
into, any agreement granting "control" (within the meaning of ss. 8-106(d)(2),
9-104 and 9-106 of the NYUCC) with respect to the Custodial Account (or any
Sub-Account) or the Account Property to any person, other than as set forth in
this Agreement. The Custodian is a bank, broker or trust company which in the
ordinary course of its business maintains security accounts for others and is
acting in that capacity as Custodian under this Agreement.
3.14 Notwithstanding anything to the contrary herein, the Custodian
agrees that financial assets, money and other items credited to the Custodial
Account and the Escrow Account will not be subject to deduction, set-off,
recoupment, banker's lien, or any other right in favor of any person other than
the Secured Party Representatives under the Pledge and Intercreditor Agreement;
provided, however, the Custodian may set off (i) all amounts due to the
Custodian in respect of customary fees and expenses for the routine maintenance
and operation of Custodial Account and the Escrow Account and (ii) the face
amount of any checks which have been credited to a Custodial Account or the
Escrow Account but are subsequently returned unpaid because of uncollected or
insufficient funds.
ARTICLE IV
PURCHASE AND SALE OF ACCOUNT PROPERTY;
CREDITS TO CUSTODIAL ACCOUNT
4.1 Promptly after each purchase or sale of Account Property (and
prior to the time at which the Custodian is required to release or deliver any
Account Property (including any cash purchase price) in connection therewith),
the Instructing Party and, to the extent reasonably required by the Custodian
at its option (provided however, that the Custodian shall have no obligation to
seek such instruction), the Borrower and the Administrative Agent shall deliver
to the Custodian Written Instructions specifying all information necessary for
the Custodian to deliver such Account Property (and sufficient to indicate that
the same is in compliance with the requirements of this Agreement). The
Custodian shall account for all purchases and sales of Account Property on the
contractual settlement date unless otherwise agreed to by the Custodian. In
connection with each sale or other transfer of Other Account Property, the
Instructing Party shall deliver to the Custodian a trade ticket (each, a
"Disposition Letter") listing each item of Other Account Property subject to
such sale or transfer. In connection with settlements of purchases of privately
placed notes or certificates on shares of beneficial interest, in each case,
upon original issuance, the Custodian need not make payment on delivery versus
payment basis and may pay for the same prior delivery of such note, certificate
or share or of any receipt or commitment therefor.
4.2 Each Customer understands that when the Custodian is instructed to
deliver Account Property against payment, delivery of such Account Property and
receipt of payment therefor may not be completed simultaneously. Each Customer
agrees that the Custodian shall have no responsibility or liability for any
credit risks involved in connection with the Custodian's delivery of Account
Property pursuant to instructions of the Instructing Party; provided, however,
that the Custodian shall not deliver Account Property prior to receipt of
payment therefor unless specifically authorized by the Instructing Party. In
the event of such specific authorization, the Custodian agrees that in the
event no payment is received by the Custodian in connection with any delivery
of Account Property, the Custodian shall, upon the request of the Instructing
Party and at the sole cost and expense of the Borrower, use reasonable and
customary efforts (in accordance with its ordinary custody business practices)
to seek the return of such Account Property or the payment therefor; provided,
however, that the Custodian shall have no obligation hereunder to commence or
engage in any litigation or arbitration in connection therewith.
4.3 The Custodian may, as a matter of bookkeeping convenience or by
separate agreement with the Instructing Party, credit the Custodial Account
with the proceeds from the sale, redemption or other disposition of Account
Property or interest, dividends or other distributions payable on Account
Property prior to its actual receipt of final payment therefor. All such
credits shall be conditional until the Custodian's actual receipt of final
payment and may be reversed by the Custodian to the extent that final payment
is not received. Payment with respect to a transaction will not be "final"
until the Custodian shall have received immediately available funds which under
applicable law or rule are irreversible and not subject to any security
interest, levy or other encumbrance (other than those contemplated by the
Credit Agreement), and which are specifically applicable to such transaction.
4.4 The Custodian shall have no obligation, and shall not be liable,
for any loss or damage whatsoever resulting from its failure to settle any
Account Property transaction where the rules of a Depository prevent the
receipt or delivery of such Account Property (i.e., that such Account Property
has been "chilled"). The Custodian may, but shall have no obligation to,
attempt to utilize alternative methods of delivering securities from time to
time offered by a Depository.
4.5 Unless otherwise invested overnight as directed in a timely manner
by the Instructing Party, all Dollars in the Custodial Account at the end of a
business day will be invested in Cash Equivalents by the Custodian (which
investment shall be in the name of the Custodian and shall be solely under the
control and dominion of the Custodian, subject to the duties and covenants of
the Custodian under this Agreement).
4.6 Each of the Borrower and the Secured Parties Representative hereby
covenants and agrees that in any instance in which it shall or may act as
Instructing Party, it shall only instruct the Custodian, with respect to the
Custodial Account and Account Property, in a way that is consistent with and in
compliance with the Pledge and Intercreditor Agreement, this Agreement and the
other Transaction Documents to which it is a party and that may be applicable.
4.7 In no instance shall the Custodian be required to receive, and the
Instructing Party shall not cause, the assignment to the Custodian of any Other
Account Property (including without limitation any Bank Loans) unless (i) the
terms of such assignment and Other Account Property do not impose upon the
Custodian, as assignee, any obligations or liabilities (including without
limitation any funding or lending obligations) and (ii) the terms of such
assignment expressly state that such assignment is made strictly and solely to
the Custodian in its capacity as a nominee, that the Custodian in its
individual corporate capacity shall not have and does not assume any
obligations or liabilities thereunder, and such assignment is subject to the
condition that there shall be no recourse in respect of any obligations or
liabilities arising out of such assignment or assigned property against the
Custodian in its individual or corporate capacity (or against its assets or
properties owed in its individual or corporate capacity).
4.8 With respect to all transactions for the Custodial Account,
including, without limitation, dividend and interest payments and sales and
redemptions of Account Property, availability of funds credited to the
Custodial Account shall be based on the type of funds used in the trade
settlement or payment, including, but not limited to, same day availability for
federal or same day funds and next business day availability for clearing house
or next day funds.
4.9 The following special provisions relate to all Foreign Securities:
(a) Cash may be held pursuant to the Borrower's instructions in either
interest or non-interest bearing accounts as may be available for the
particular currency. To the extent the Custodian can comply with the Borrower's
instructions to the Custodian, the Custodian is authorized to maintain cash
balances on deposit for the Borrower with the Custodian or one of the
Custodian's or ▇▇▇▇▇ Fargo Bank, National Association's affiliates at such
reasonable rates of interest as may from time to time be paid on such accounts,
or in non-interest bearing accounts as the Borrower may direct, if acceptable
to the Custodian.
(b) Account Property shall be transferred, exchanged or delivered by
the Custodian or Foreign Subcustodian upon receipt by the Custodian of
instructions which include all information required by the Custodian.
Settlement and payment for Account Property received for, and delivery of
Account Property out of, the Custodial Account may be made in accordance with
the customary or established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivery of securities to a purchaser,
dealer or their agents against a receipt with the expectation of receiving
later payment and free delivery. Delivery of Account Property out of the
Custodial Account may be made in any manner specifically required by the
Borrower's instructions acceptable to the Custodian.
(c) When a rights entitlement or a fractional interest resulting from
a rights issue, stock dividend, stock split or similar corporate action is
received which bears an expiration date, the Custodian shall endeavor to obtain
instructions from the Instructing Party, but if instructions are not received
in time for the Custodian to take timely action, or actual notice of such
corporate action was received too late to seek instructions, the Custodian is
authorized to sell such rights entitlement or fractional interest and to credit
the Custodial Account with the proceeds or to take any other action the
Custodian deems, in good faith, to be appropriate in which case the Custodian
shall be held harmless for any such action.
4.10 The Custodian may provide proxy voting services, if elected by
the Instructing Party and agreed to by the Custodian, in accordance with the
then customary proxy voting services procedures of the Custodian. Proxy voting
services may be provided by the Custodian or, in whole or in part, by one or
more third parties appointed by the Custodian (which may be the Custodian's
affiliates).
The Custodian shall endeavor to promptly notify each Customer of such
rights or discretionary actions or of the date or dates by when such rights
must be exercised or such action must be taken provided that the Custodian has
received, from the issuer (with respect to Securities issued in the United
States) or from one of the nationally or internationally recognized bond or
corporate action services to which the Custodian subscribes, timely notice of
such rights or discretionary corporate action or of the date or dates such
rights must be exercised or such action must be taken.
In the event that the Instructing Party does not elect to have the
Custodian provide proxy voting services or does not instruct otherwise, the
following shall apply. With respect to all Securities, however registered, the
voting rights are to be exercised by the Borrower or its designee. With respect
to Securities issued in the United States, the Custodian's only duty shall be
to promptly mail to the Borrower any documents (including proxy statements,
annual reports and signed proxies) relating to the exercise of such voting
rights. With respect to Foreign Securities, at the request of the Borrower, the
Custodian will provide the Borrower with access to a provider of global proxy
services (the cost of which will be paid by the Borrower). If the Borrower
determines not to utilize the services of such global proxy services provider,
the Custodian will provide the Borrower with proxy material actually received
by the Custodian from Foreign Subcustodians, but otherwise shall have no
obligations with respect to voting.
4.11 The Custodian shall not be liable to the Borrower or any third
party for any taxes, fines or penalties payable by the Custodian or the
Borrower, and shall be indemnified accordingly, whether these result form the
inaccurate completion of documents by the Borrower or any third party, or as a
result of the provision to the Custodian or any third party of inaccurate or
misleading information or the withholding of material information by the
Borrower or any other third party, or as a result of any delay of any revenue
authority or any other matter beyond the Custodian's control. The Borrower
confirms that, if the Custodian notifies the Borrower prior to taking any such
action, the Custodian is authorized to deduct from any cash received or
credited to the Custodial Account any taxes or levies required by any revenue
or governmental authority for whatever reason in respect of the Custodial
Account. Other than as expressly provided in this subclause, the Custodian
shall have no responsibility with regard to the Borrower's tax position or
status in any jurisdiction. The Borrower confirms that the Custodian is
authorized to disclose any information requested by any revenue authority or
any governmental body in relation to the Borrower or the securities and/or cash
held for the Borrower.
4.12 To facilitate the administration of the Borrower's trading and
investment activity, the Custodian is authorized to enter into spot or forward
foreign exchange contracts with the Borrower or an Authorized Person for the
Borrower and may also provide foreign exchange through the Custodian's
subsidiaries or affiliates, ▇▇▇▇▇ Fargo Bank, National Association or its
affiliates or Foreign Subcustodians. Instructions including standing
instructions, may be issued with respect to such contracts but the Custodian
may establish rules or limitation concerning any foreign exchange facility made
available. In all cases where the Custodian and the Custodian's subsidiaries or
affiliates, ▇▇▇▇▇ Fargo Bank, National Association or its affiliates or Foreign
Subcustodians enter into a foreign exchange contract related to the Custodial
Account, the terms and conditions shall be determined by the Custodian in its
absolute discretion.
ARTICLE V
OVERDRAFTS OR INDEBTEDNESS
If the Custodian in its sole discretion advances funds into or for the
benefit of the Custodial Account in the ordinary course of the Custodian's
custody business, or there shall arise for whatever reason an overdraft in the
Custodial Account in the ordinary course of the Custodian's custody business,
or if the Borrower is for any other reason indebted to the Custodian hereunder,
the Borrower shall repay the Custodian on demand the amount of the advance,
overdraft or indebtedness plus accrued interest at a rate ordinarily charged by
the Custodian to its institutional custody customers. Except as contemplated by
the immediately preceding sentence, the Custodian shall not make any loans or
otherwise extend any credit to the Borrower. The Borrower hereby grants to the
Custodian a first lien and security interest in and to the Custodial Account
and all Account Property now or hereafter existing or acquired or held in the
Custodial Account as security for all obligations owed by the Borrower or any
other person to the Custodian under or pursuant to this Agreement, and
acknowledges and agrees that it has the right to grant such lien and security
interest free of any right of redemption or prior claim by any other person.
Each Customer hereby acknowledges and agrees that the Custodian has a
continuing first lien and security interest in and to the Custodial Account and
all Account Property now or hereafter existing or acquired or held in the
Custodial Account in order to secure all of the obligations owed by the
Customers to the Custodian hereunder. The Custodian shall be entitled to all
the rights and remedies of a pledgee under common law and a secured party under
the UCC and any other applicable laws or regulations as then in effect;
provided, however, that to the extent the Custodian shall seek payment of any
sum due hereunder from the Custodial Account or the Account Property, the
Custodian shall first, apply all cash in the form of Dollars in the Custodial
Account thereto and, thereafter, liquidate any remaining Account Property and
apply the cash proceeds thereof to such sum; provided, further that Custodian
shall not liquidate any collateral security pursuant to this Article V unless
such sum is in excess of ten days past due. The Custodian's security interest
in the Custodial Account shall be a first lien and security interest subject to
no setoffs, counter-claims or other liens prior to or on a parity with it in
favor of any other party (other than specific liens granted preferred status by
statute), and the Borrower shall take any and all additional steps which the
Custodian requires to assure itself of such priority and status, including
notifying third parties of, or obtaining their consent to, the Custodian's
security interest.
ARTICLE VI
CONCERNING CUSTODIAN
6.1 (a) The Custodian shall exercise the degree of care of a prudent
professional custodian for hire in carrying out the provisions of this
Agreement. Except as otherwise expressly provided herein, the Custodian shall
not be liable for any costs, expenses, damages, liabilities or claims
(including, without limitation, attorneys' and accountants' fees) incurred by
or asserted against the Customers, or any one or more of them, except those
costs, expenses, damages, liabilities or claims arising out of the negligence,
bad faith or willful misconduct of the Custodian. The Custodian shall have no
obligation hereunder for costs, expenses, damages, liabilities or claims
(including, without limitation, attorneys' or accountants' fees) which are
sustained or incurred by reason of any action or inaction by any depository
(including any Depository or Compulsory Depository), clearing corporation or
other or other agent, sub-custodian or intermediary, unless such action or
inaction is caused by the negligence, bad faith or willful misconduct of the
Custodian. The Custodian's responsibility with respect to any Account Property
held by a Foreign Subcustodian is limited to the failure on the part of
Custodian to (i) comply with the provisions of Section 2.3 or (ii) exercise
reasonable care in the selection or retention of such Foreign Subcustodian in
light of prevailing settlement and securities handling practices, procedures
and controls in the relevant market. With respect to any costs, expenses,
damages, liabilities, or claims (including, without limitation, attorneys' and
accountants' fees) incurred by the Customers as a result of the acts or the
failure to act by any Foreign Subcustodian, the Custodian shall take
appropriate action to recover such costs, expenses, damages, liabilities, or
claims from such Foreign Subcustodian. In no event shall the Custodian be
liable to any customer or any third party for special, indirect or
consequential damages, or lost profits or loss of business, arising in
connection with this Agreement.
(b) The Borrower hereby agrees to indemnify the Custodian and hold the
Custodian harmless from and against any and all costs, expenses, damages,
liabilities and claims (including, without limitation, reasonable attorneys'
fees and accountants' fees), sustained or incurred by or asserted against the
Custodian by reason of or as a result of any action or inaction, or arising out
of the Custodian's performance hereunder or under the Pledge and Intercreditor
Agreement, including, without limitation, reasonable fees and expenses of
counsel incurred by the Custodian in a successful defense of claims by any one
or more of the Customers; provided, that the Borrower shall not have any
obligation hereunder to indemnify the Custodian for those costs, expenses,
damages, liabilities or claims for which the Custodian has accepted liability
under Section 6.1(a). This indemnity shall be a continuing obligation of the
Borrower and its respective successors and assigns, notwithstanding the
termination of this Agreement.
6.2 Without limiting the generality of the foregoing, the Custodian
shall be under no obligation to inquire into, and shall not be liable for, the
validity or genuineness of any Account Property purchased or sold by the
Customers or any of them, the legality of their purchase or sale, the propriety
of the amount paid therefor upon purchase or sale, or any actions of third
parties with respect to the negotiability of Account Property, and the
Custodian shall not be liable for any non-delivery of documentation required to
be delivered under Sections 3.8 and 3.9.
6.3 The Custodian may, with respect to questions of law specifically
regarding the Custodial Account and Account Property, obtain the advice of
counsel, at the expense of the Borrower, and shall be fully protected with
respect to anything done or omitted by it in good faith in conformity with such
advice. The Custodian shall have the right, but not the obligation, to consult
with the Party In Interest regarding all matters hereunder.
6.4 The Custodian shall be under no obligation to take action to
collect any amount payable on Account Property in default, or if payment is
refused.
6.5 The Borrower agrees to pay to the Custodian the fees set forth in
a separate fee letter agreement, dated June 8, 2004, between the Custodian and
the Borrower or as may be agreed upon from time to time. The Borrower agrees to
reimburse Custodian for all costs associated with the conversion of Account
Property and the transfer of Account Property and records kept in connection
with this Agreement. The Borrower agrees to reimburse the Custodian for
out-of-pocket expenses (including without limitation attorney's fees and
expenses) incurred in the administration of this Agreement or performance of
its duties hereunder, including those which are a normal incident of the
services provided hereunder.
6.6 The Custodian shall be entitled to rely upon any Written
Instruction actually received by the Custodian. If, at any time, Written
Instructions through an on-line communication system offered by the Custodian
is utilized, such use shall be subject to the Terms and Conditions provided by
the Custodian to the parties hereto.
6.7 Upon reasonable request and provided the Custodian shall suffer no
significant disruption of its normal activities, each Customer shall have
reasonable access to the Custodian's books and records relating to the
Custodial Account and Account Property during the Custodian's normal business
hours and upon reasonable advance request. Upon reasonable request by any
Customer, copies of any such books and records shall be provided to such
Customer at its expense.
6.8 The books and records pertaining to the Custodial Account and
Account Property, the Borrower Custodial Account, the Escrow Account and the
Borrower Account Property which are in possession of the Custodian shall be the
property of the Borrower. Such books and records shall be prepared and
maintained as required by Section 17(f) of the Investment Company Act and Rule
17f-1 thereunder.
6.9 It is understood that the Custodian is authorized to supply any
information regarding the Custodial Account and Account Property which is
required by any law or governmental regulation now or hereafter in effect.
6.10 The Custodian shall provide the Borrower, at such times as the
Borrower may reasonable request, with reports by independent public accountants
on the accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures contracts,
including securities deposited and/or maintained in a securites system, or held
by an Eligible Foreign Custodian relating to the services provided by the
Custodian under this Agreement; such reports, shall be of sufficient scope and
in sufficient detail, as may reasonably be required by the Borrower, to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so
state.
6.11 The Custodian shall not be responsible or liable for any failure
or delay in the performance of its obligations under this Agreement arising out
of or caused, directly or indirectly, by circumstances beyond its reasonable
control, including without limitation, acts of God; earthquakes, fires; floods,
wars, civil or military disturbances; sabotage; epidemics; riots;
interruptions, loss or malfunctions of utilities; accidents; labor disputes;
acts of civil or military authority; and governmental actions. The Custodian
shall endeavor to provide notice to the Borrower and the Instructing Party of
the occurrence of any such circumstances as soon as reasonably practicable
thereafter.
6.12 The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied against the Custodian
in connection with this Agreement.
6.13 Notwithstanding anything to the contrary contained herein, during
any Suspension Period, the Custodian shall have the right to refrain from
taking any instructions from the Instructing Party unless the Custodian shall
have reasonably determined that (a) it will be compensated for its services
rendered hereunder at the times and in the amounts set forth in a separate fee
letter dated June 8, 2004, between the Custodian and the Borrower, with any
past due amounts being paid upon demand, and (b) it is and shall be adequately
indemnified for any and all liabilities, losses, damages, costs, expenses and
claims in connection with the performance of its duties hereunder, upon terms
and conditions substantially similar to those terms and conditions set forth
herein, by the Administrative Agent or the Borrower.
6.14 The Custodian hereby agrees that it shall, at the expense of the
Borrower, negotiate in good faith with the other parties hereto with respect to
any amendments, supplements or other modifications to this Agreement which may
be proposed by any such party for the purpose of ensuring the perfection of the
security interests which have been granted by the Borrower in the Account
Property to the Secured Parties Representative; provided, however, that nothing
in this Section 6.12 shall require the Custodian to undertake any obligation,
business, service or activity (a) which it shall have chosen as an
institutional, legal, business or policy matter (1) not to offer to the public
or (2) to discontinue or (b) for which it is not, based on its reasonable
determination, adequately compensated and indemnified.
6.15 The Custodian hereby represents and warrants that:
(i) it is a bank duly organized and validly existing in good
standing under the laws of the United States of America;
(ii) it is empowered under applicable laws and by its charter to
enter into and perform the services contemplated in this Agreement;
(iii) all requisite corporate proceedings have been taken to
authorize it to enter into and per form this Agreement and this Agreement has
been duly executed and is the valid, binding and enforceable obligation of
Custodian; and
(iv) it and its affiliates collectively have and will continue to
have and maintain the necessary facilities, equipment and personnel to perform
its duties and obligations under this Agreement.
6.16 (a) Subject to Section 6.16(b) below, the Custodian shall have no
liability for any actions taken pursuant to or on reliance upon Written
Instructions of the Instructing Party. Without limiting the foregoing, the
Custodian shall be entitled to follow the Written Instructions of the
Instructing Party with respect to any payment or disbursements of funds, or
release or delivery of the Account Property from the Custodial Account without
liability on its part and without any obligation or duty to inquire into,
investigate, monitor or other wise determine compliance with the applicable
terms, restrictions, limitations or requirements of any other Transaction
Document, including without limitation applicable terms of the Advisory
Agreement, the Pledge and Intercreditor Agreement, the Credit Agreement or the
Operating Agreement, and shall not otherwise have any duty to monitor,
determine, inquire as to or ascertain the compliance by the Borrower (or any
other party) with respect to any of the Transaction Documents.
(b) Notwithstanding any term of Section 6.16(a) to the contrary,
(i) during any Suspension Period (other than any Suspension Period
occurring as a result of the delivery of a Liquidation Notice), the Borrower
shall continue to be entitled to instruct the Custodian (as Instructing Party),
and the Custodian shall continue to follow such instructions, with respect to
the Custodial Account, except that:
(A) any instruction by the Borrower to release, deliver, sell
or otherwise dispose of Account Property, shall be accompanied by written
evidence acceptable to the Custodian (at its option and on which it may
conclusively rely) of the consent or approval by the Controlling Class (as
defined in the Pledge and Intercreditor Agreement) or Secured Parties
Representative; or, if not accompanied by such consent, the Custodian shall
promptly give written notice to the Secured Parties Representative and if
within three Business Days of the Secured Parties Representative's receipt of
such notice (or, if such instruction is accompanied by a certificate of an
Authorized Officer of the Borrower to the effect that such Account Property has
a Market Value, as defined in the Credit Agreement, of $24,000,000 or less, on
which the Custodian may conclusively rely, within two Business Days of the
Secured Parties Representative's receipt of such notice), the Custodian shall
not have received written objection thereto from the Secured Parties
Representative, it shall follow such instruction of the Borrower provided, that
the foregoing shall not apply to sales or dispositions of Account Property to
the extent such sales and dispositions do not exceed $8,000,000 in the
aggregate during the existence of such Suspension Period;
(B) any instructions by the Borrower to release or deliver any
Account Property (including cash) for the purpose of purchasing or acquiring
any Account Property other than Cash Equivalents (as defined in the Pledge and
Intercreditor Agreement) shall be accompanied by written evidence acceptable to
the Custodian (at its option and on which it conclusively may rely) of the
prior written consent of the Controlling Class (as defined in the Pledge and
Intercreditor Agreement); and
(C) during any Suspension Period occurring as a result of the
delivery of a Liquidation Notice, the Custodian shall (1) not follow any
directions regarding the funds or other property on deposit in the Custodial
Account from the Borrower and (2) take all reasonable actions to assist the
Secured Parties Representative in a foreclosure and enforcement in the manner
set forth herein, including, without limitation, the prompt transfer to the
Secured Parties Representative from time to time at its request of all funds in
the Custodial Account and of all proceeds and products of the Collateral.
6.17 Notwithstanding any term hereof to the contrary:
(a) In no instance shall the Custodian be liable or responsible for
the actions or omissions of the Borrower, the Administrative Agent, the Secured
Parties Representative, the Investment Manager or the Co-Manager, or the
failure of the Borrower to provide any documentation required by Sections 3.8
and 3.9.
(b) The Custodian shall not be responsible for the accuracy or
sufficiency of any recitals (including without limitation recital of federal
book-entry regulations) set forth herein.
(c) In the absence of bad faith on its part, the Custodian may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Custodian and conforming to the requirements of this Agreement; provided,
however, that in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Custodian,
the Custodian shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Agreement and shall promptly
notify the party delivering the same if such certificate or opinion does not so
conform; provided, further, that the Custodian shall not be required to
determine whether it has received the documentation required by Sections 3.8
and 3.9
(d) The Custodian shall not be liable for any error of judgment made
in good faith and with the reasonable belief that the action taken (or
forbearance, as the case may be) was authorized or within its rights or powers
hereunder, unless it shall be proven that the Custodian was negligent in
ascertaining the pertinent facts.
(e) No provision of this Agreement shall require the Custodian to
expend or risk its own funds or otherwise incur any financial or other
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk,
or liability is not reasonably assured to it; provided, however, that the
reasonable costs of performing its ordinary services under this Agreement shall
not require such indemnity.
(f) The Custodian shall not be liable for interest on any money
received by it except as the Custodian may agree in writing with the
Instructing Party.
(g) The Custodian may rely on any resolution, certificate, statement,
instrument, opinion, request, direction, consent, order, note or other document
believed by it to be genuine and to have been signed or presented by the proper
person.
(h) The Custodian may consult with counsel (and may when it deems
necessary or appropriate require an opinion of counsel) and shall not be liable
for any action it takes or omits to take in good faith in reliance on the
advice of counsel selected by it with due care (or in reliance upon any opinion
of counsel).
(i) Although the Custodian shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, notice, request, direction, consent, order, or
other paper or document, it may, in its discretion, make such further inquiry
or investigation into such fact or matters as it may see fit.
(j) The Custodian shall not be deemed to have notice or knowledge of
any matter (including without limitation any event of default or acceleration,
or rescission of acceleration) unless an officer of the Custodian assigned to
the administration of this Agreement has actual knowledge thereof or unless
written notice thereof from the Borrower, the Administrative Agent or the
Secured Parties Representative is received by the Custodian at the office of
the Custodian identified pursuant to Section 8.2 hereof and such notice makes
reference to this Agreement.
(k) The permissive right of the Custodian to take or refrain from
taking any actions enumerated in this Agreement shall not be construed as a
duty.
ARTICLE VII
TERMINATION
The Custodian and, prior to the commencement of any Suspension Period,
the Administrative Agent and the Secured Parties Representative, acting
collectively and, thereafter, the Instructing Party, may each terminate this
Agreement by giving to the other parties hereto a notice in writing specifying
the date of such termination, which shall be not less than ninety (90) days
after the date of such notice. Upon termination hereof, the Borrower shall pay
to the Custodian such compensation as may be due to the Custodian, and shall
likewise reimburse the Custodian for other amounts payable or reimbursable to
the Custodian hereunder. The Custodian shall follow such reasonable Written
Instructions concerning the transfer of custody of records, Account Property
and other items as the Instructing Party shall give; provided, that (a) the
Custodian shall have no liability for shipping and insurance costs associated
therewith, and (b) full payment shall have been made to the Custodian of all
its compensation, costs, expenses and other amounts hereunder. If any Account
Property remains in the Custodial Account on the date of termination of this
Agreement, the Custodian may deliver to the Party In Interest such Account
Property. Upon termination of this Agreement, except as otherwise provided
herein, all obligations of the parties to each other hereunder shall cease
(provided, however, that all indemnifications in favor of the Custodian
hereunder shall continue and survive).
ARTICLE VIII
MISCELLANEOUS
8.1 Substantially contemporaneously with the execution and delivery of
this Agreement, each Customer shall provide to the Custodian a Certificate of
Authorized Persons, which may be changed or altered from time to time by
delivery of a subsequent Certificate of Authorized Persons (from any Authorized
Person), upon which the Custodian shall be entitled to rely conclusively. Each
Customer agrees to furnish to the Custodian a new Certificate of Authorized
Persons in the event of any change in the then present Authorized Persons.
Until such new Certificate is received, the Custodian shall be fully protected
in acting upon Written Instructions of such present Authorized Persons.
8.2 Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and received by it at its offices at ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Services--Special Value Opportunities Fund, LLC or at such other place as such
Customer may from time to time designate in writing, or by facsimile at (410)
715-3748, Attention: Corporate Trust Services--Special Value Opportunities
Fund, LLC.
8.3 Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Administrative Agent shall be sufficiently
given if addressed to the Administrative Agent and received by it at its
offices at ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place
as such Customer may from time to time designate in writing, or by facsimile at
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
8.4 Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Secured Parties Representative shall be
sufficiently given if addressed to the Secured Parties Representative and
received by it at its offices at ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
or at such other place as such Customer may from time to time designate in
writing, or by facsimile at (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇.
8.5 Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Borrower shall be sufficiently given if
addressed to the Borrower and received by it at its offices until August 1,
2004 at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇, and thereafter at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, or at such other place as such Customer may from time to time designate
in writing; or by facsimile at (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
8.6 Each and every right granted to any party hereunder or under any
other document delivered hereunder or in connection herewith, or allowed it by
law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of any party to exercise, and no delay in exercising, any
right will operate as a waiver thereof, nor will any single or partial exercise
by either party of any right preclude any other or future exercise thereof or
the exercise of any other right.
8.7 In case any provision or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
thereby. This Agreement may not be amended or modified in any manner except by
a written agreement executed by the parties hereto. This Agreement shall extend
to and shall be binding upon the parties hereto, and their respective
successors and assigns; provided, however, that this Agreement shall not be
assignable by any party without the written consent of the other parties.
8.8 Each of this Agreement, the Custodial Account and Escrow Account
and the securities entitlements (as defined in Section 8-102(a)(17) of the
NYUCC) or any instructions pertaining thereto shall be construed in accordance
with and governed by the substantive laws of the State of New York. Regardless
of any provision in any other agreement, for purposes of the UCC, New York
shall be the location of Custodian as the bank for purposes of Sections 9-301,
9-304 and 9-307 of the UCC and as the securities intermediary for purposes of
Sections 9-301 and 9-307 and Section 8-110 of the UCC. Each party hereby
consents to the exclusive jurisdiction of a state or federal court situated in
the State of New York in connection with any dispute arising hereunder. To the
extent that in any jurisdiction the Custodian, the Secured Parties
Representative, the Administrative Agent or the Borrower, as the case may be,
may now or hereafter be entitled to claim, for itself or its assets, immunity
from suit, execution, attachment (before or after judgment) or other legal
process, the Custodian, the Secured Parties Representative, the Administrative
Agent or the Borrower, as the case may be, irrevocably agrees not to claim, and
it hereby waives, such immunity. The Customers and the Custodian hereby
irrevocably waive any objection on the ground of venue, forum non conveniens,
or any similar grounds, and irrevocably consent to service of process by mail
or in any manner permitted by New York law, and irrevocably waive their
respective rights to any jury trial.
8.9 Except as set forth in the following sentence, in performing
hereunder, the Custodian is acting solely on behalf of the Secured Parties, and
no contractual or service relationship shall be deemed to be established hereby
between the Custodian and any other person (other than the Borrower, the
Administrative Agent and the Secured Parties Representative to the extent
provided herein). Ambac Assuance Corporation is an express third-party
beneficiary of this Agreement with full rights of enforcement hereunder.
8.10 This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
8.11 Each party hereto acknowledges and agrees that the obligations of
the Secured Parties Representative and the Administrative Agent hereunder are
only those expressly set forth herein with respect to such party. The
Administrative Agent shall act hereunder on the terms and conditions set forth
in Article VIII of the Credit Agreement, and the Secured Parties Representative
shall act hereunder on the terms and conditions set forth in Article X of the
Pledge and Intercreditor Agreement.
8.12 The Administrative Agent and the Secured Parties Representative
shall hold all non-public information obtained pursuant to the requirements of
this Agreement in accordance with the confidentiality standard applicable under
the Credit Agreement or the Pledge and Intercreditor Agreement, as applicable.
The Custodian will maintain the confidentiality of all Confidential Information
(as defined below) in accordance with procedures the Custodian ordinarily
utilizes in maintaining similar confidential information to protect
Confidential Information delivered to the Custodian; provided that the
Custodian may deliver or disclose Confidential Information to (i) the
Custodian's directors, trustees, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure is reasonably required for the
administration of this Agreement), (ii) the Custodian's financial advisors and
other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 8.13 to
the extent such disclosure is reasonably required for the administration of
this Agreement, (iii) any federal or state regulatory, governmental or judicial
authority having jurisdiction over the Custodian, (iv) ▇▇▇▇▇'▇ and S&P, (v) any
other Person with the consent of the Borrower or (vi) any Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to such Person, (x) in
response to any subpoena or other legal process upon prior notice to the
Borrower (unless prohibited by applicable law, rule, order or decree or other
requirement having the force of law) or (y) in connection with any litigation
to which such Person is a party upon prior notice to the Borrower (unless
prohibited by applicable law, rule, order or decree or other requirement having
the force of law). In the event of any required disclosure of the Confidential
Information by the Custodian, the Custodian agrees to use reasonable efforts to
protect the confidentiality of the Confidential Information.
For the purposes of this Section 8.13, "Confidential Information"
means information delivered to the Custodian by or on behalf of the Borrower in
connection with and relating to the transactions contemplated by or otherwise
pursuant to this Agreement; provided that such term does not include
information that (a) was publicly known or otherwise known to the Custodian
prior to the time of such disclosure, (b) subsequently becomes publicly known
through no act or omission by the Custodian or any Person acting on behalf of
the Custodian, (c) otherwise is known or becomes known to the Custodian other
than (i) through disclosure by the Borrower or (ii) as a result of the breach
of a fiduciary duty to the Borrower or a contractual duty to the Borrower and
(d) is allowed to be treated as non-confidential by consent of the Borrower.
8.13 No amendment of any provision of this Agreement shall be
effective unless in writing and signed by all of the parties hereto.
8.14 (a) The Custodian agrees that no recourse shall be had with
respect to any obligation to the Custodian under this Agreement against any
past, present or future members, incorporators, directors, officers, partners,
employees or securityholders of the Borrower (collectively, "Borrower Control
Persons"), and in no event shall any Borrower Control Person be held liable,
personally or otherwise, with respect to the obligations of the Borrower
hereunder whether by virtue of any statute or rule of law or by the enforcement
of any assessment, penalty or otherwise, all such liability being expressly
waived and released by the Custodian. The foregoing provision of this Section
8.15 shall not, in any event, limit the right of any Person to name the
Borrower as a defendant in any action or suit or in the exercise of any other
remedy under this Agreement, so long as no judgment in the nature of a
deficiency judgment or seeking personal liability shall be asked for or (if
obtained) enforced against any Borrower Control Person. The Custodian agrees
that all obligations of the Borrower to the Custodian under this Agreement
shall be subject to Section 6.5 of the Pledge and Intercreditor Agreement.
(b) 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; provided, however, that nothing in this Section
8.15(b) shall constitute a waiver of any right to indemnification,
reimbursement or other payment from the Borrower pursuant to this Agreement.
(c) 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, such Person shall not institute against, or join any
other Person in instituting against, such 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.
WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the day
and year first above written.
SPECIAL VALUE OPPORTUNITIES FUND, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Secretary
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers, thereunto duly authorized, as of the
day and year first above written.
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
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers, thereunto duly authorized, as of the
day and year first above written.
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Custodian
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Trust Officer
EXHIBIT A TO CUSTODIAL AGREEMENT
FORM OF PAYOFF NOTICE
---------------------
The undersigned individual[s], [Authorized Person[s] (as defined in
the Custodial Agreement referred to below) of CDC Financial Products Inc.] [an
authorized officer of Ambac Assurance Corp.] (the "Notice Party"), hereby
certifies, represents and warrants to the Custodian (as defined below) as
follows with respect to the Custodial Agreement, dated as of July 13, 2004 (as
amended, supplemented or otherwise modified from time to time, the "Custodial
Agreement"), by and among (a) Special Value Opportunities Fund, LLC, a Delaware
limited liability company (the "Borrower"), (b) CDC Financial Products Inc., as
Administrative Agent (in such capacity and together with any successor thereto,
the "Administrative Agent"), under the Credit Agreement, dated as of July 13,
2004, by and among the Borrower, the Lenders party thereto (the "Lenders"),
Ambac Assurance Corporation, as Insurer, the Administrative Agent, 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, together with any agreements or instruments in respect of any amendment,
extension, restatement, supplement, modification, refinancing, refunding or
replacement thereof, the "Credit Agreement"), (c) CDC Financial Products Inc.,
as Secured Parties Representative (in such capacity and together with any
successor thereto, the "Secured Parties Representative") under the Pledge and
Intercreditor Agreement, dated as of July 13, 2004, by and among the Borrower,
the Custodian, the Administrative Agent, Ambac Assurance Corporation, as
Insurer, and the Secured Parties Representative (as amended, supplemented or
otherwise modified from time to time, the "Pledge and Intercreditor Agreement")
and (e) ▇▇▇▇▇ Fargo Bank, National Association, as agent, bailee, custodian and
securities intermediary for the Borrower, the Secured Parties Representative
and the Administrative Agent (in such capacity and together with any successor
thereto, the "Custodian"):
I. The Borrower has satisfied all of its monetary obligations which,
as of the date hereof, are due and owing under the [Credit Agreement]
[Insurance and Indemnity Agreement, dated as of July 13, 2004, between the
Borrower and Ambac Assurance Corporation].
IN WITNESS WHEREOF, this certificate has been executed this ____ day
of ____________, ____.
[CDC FINANCIAL PRODUCTS INC.,
as Administrative Agent
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
[AMBAC ASSURANCE CORPORATION,
as Insurer
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
EXHIBIT B TO CUSTODIAL AGREEMENT
FORM OF WITHDRAWAL NOTICE
-------------------------
The undersigned individuals, Authorized Persons (as defined in the
Custodial Agreement referred to below) of the Secured Parties Representative
(as defined below), hereby certifies, represents and warrants to the Custodian
(as defined below), as follows with respect to the Custodial Agreement, dated
as of July 13, 2004 (as amended, supplemented or other wise modified from time
to time, the "Custodial Agreement"), by and among (a) Special Value
Opportunities Fund, LLC, a Delaware limited liability company (the "Borrower"),
(b) CDC Financial Products Inc., as Administrative Agent (in such capacity and
together with any successor thereto, the "Administrative Agent"), under the
Credit Agreement, dated as of July 13, 2004, by and among the Borrower, the
Lenders party thereto (the "Lenders"), Ambac Assurance Corporation, as Insurer,
the Administrative Agent, 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, together with any agreements or
instruments in respect of any amendment, extension, restatement, supplement,
modification, refinancing, refunding or replacement thereof, the "Credit
Agreement"), (c) CDC Financial Products Inc., as Secured Parties Representative
(in such capacity and together with any successor thereto, the "Secured Parties
Representative") under the Pledge and Intercreditor Agreement, dated as of July
13, 2004, by and among the Borrower, the Custodian, the Administrative Agent,
Ambac Assurance Corporation, as Insurer, and the Secured Parties Representative
(as amended, supplemented or otherwise modified from time to time, the "Pledge
and Intercreditor Agreement") and (d) ▇▇▇▇▇ Fargo Bank, National Association,
as agent, bailee, custodian and securities intermediary for the Borrower, the
Secured Parties Representative and the Administrative Agent (in such capacity
and together with any successor thereto, the "Custodian").
I. The [Notice of Suspension], [Acceleration Notice] or [Liquidation
Notice] (copy attached) previously delivered to you by the undersigned is
hereby withdrawn.
IN WITNESS WHEREOF, this certificate has been executed this ____ day
of __________, ____.
CDC Financial Products Inc.
as Secured Parties Representative
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
By: _______________________________________
Name: _______________________________________
Title:_______________________________________
SCHEDULE I
COUNTRY LIST
