ANGEL OAK FINANCIAL STRATEGIES INCOME TERM TRUST 5,076,333 Shares of Beneficial Interest Issuable Upon Exercise of Transferable Rights to Subscribe for Such Shares DEALER MANAGER AGREEMENT
ANGEL OAK FINANCIAL STRATEGIES INCOME TERM TRUST
5,076,333 Shares of Beneficial Interest
Issuable Upon Exercise of Transferable Rights
to Subscribe for Such Shares
September 20, 2021
UBS Securities LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
Ladies and Gentlemen:
Each of Angel Oak Financial Strategies Income Term Trust, a Delaware statutory trust (the “Fund”) and Angel Oak Capital Advisors, LLC, a Delaware limited liability company (the “Adviser”), hereby confirms the agreement with and appointment of UBS Securities LLC to act as dealer manager (the “Dealer Manager”) in connection with the issuance by the Fund to the holders of record (the “Record Date Shareholders”) at the close of business on the record date set forth in the Prospectus (as defined herein) (the “Record Date”) transferable rights entitling such Record Date Shareholders to subscribe for up to 5,076,333 common shares (each a “Share” and, collectively, the “Shares”) of beneficial interest, par value $0.001 per share (the “Common Shares”), of the Fund (the “Offer”). Pursuant to the terms of the Offer, the Fund is issuing each Record Date Shareholder one transferable right (each a “Right” and, collectively, the “Rights”) for each Common Share held by such Record Date Shareholder on the Record Date. Such Rights entitle their holders to acquire during the subscription period set forth in the Prospectus (the “Subscription Period”), at the price set forth in such Prospectus (the “Subscription Price”), one (1) Share for each three (3) Rights exercised (except that any Record Date Shareholder who owns fewer than three Common Shares as of the Record Date will be able to subscribe for one full Share pursuant to the primary subscription), on the terms and conditions set forth in such Prospectus. No fractional shares will be issued. Any Record Date Shareholder who fully exercises all Rights initially issued to such Record Date Shareholder (other than those Rights that cannot be exercised because they represent the right to acquire less than one Share) will be entitled to subscribe for, subject to certain limitations and subject to allocation, additional Shares (the “Over-Subscription Privilege”) on the terms and conditions set forth in the Prospectus. The Rights are transferable and are expected to be admitted for trading on the New York Stock Exchange (the “NYSE”) under the symbol “FINS.RT”.
The Fund has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form N-2 (File Nos. 333-240132 and 811-23358) including a related preliminary prospectus for the Offer (including the preliminary statement of additional information incorporated by reference therein) under the Investment Company Act of 1940, as amended (the “Investment Company Act”), the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations of the Commission under the Investment Company Act (the “Investment Company Act Rules and Regulations”) and the rules and regulations of the Commission under the Securities Act (the “Securities Act Rules and Regulations” and, together with the Investment Company Act Rules and Regulations, the “Rules and Regulations”), and has filed such amendments to such registration statement on Form N-2, if any, as may have been required to the date hereof. The registration statement was initially declared effective by the Commission on September 9, 2021. If any prospectus contained in the registration statement omits certain
information at the time of effectiveness pursuant to Rule 430B of the Securities Act Rules and Regulations, a final prospectus containing such omitted information will promptly be filed by the Fund with the Commission in accordance with Rule 424(b) of the Rules and Regulations. The term “Registration Statement” means the registration statement, as amended, at the time it became effective, including financial statements and all exhibits and all documents incorporated therein by reference, and any information deemed to be included by Rule 430B of the Securities Act Rules and Regulations. Except where the context otherwise requires, “Base Prospectus,” as used herein, means the prospectus dated September 9, 2021 (including the statement of additional information and all documents incorporated therein by reference), included in the Registration Statement. Except where the context otherwise requires, “Prospectus,” as used herein, means the Base Prospectus and the prospectus supplement (including the statement of additional information and all documents incorporated therein by reference) as filed by the Fund with the Commission in accordance with Rule 424(b) of the Rules and Regulations.
“Issuer Free Writing Prospectus” means any “written communication” (as defined in Rule 405 under the 1933 Act) that constitutes an offer to sell or solicitation of an offer to buy in connection with the Offer.
The Prospectus, any Issuer Free Writing Prospectus and any letters to owners of Common Shares of the Fund, subscription certificates and other forms used to exercise rights, brochures, wrappers, any letters from the Fund to securities dealers, commercial banks and other nominees and any newspaper announcements, press releases and other offering materials and information that the Fund may use, approve, prepare or authorize for use in connection with the Offer are collectively referred to hereinafter as the “Offering Materials.”
| 1. | Representations and Warranties. |
| (a) | The Fund and the Adviser jointly and severally represent and warrant to, and agree with, the Dealer Manager as of the date hereof, as of the date of the commencement of the Offer (such date being hereinafter referred to as the “Representation Date”) and as of the Expiration Date (as defined below) that: |
| (i) | The Fund meets the requirements for use of Form N-2 under the Securities Act and the Investment Company Act and the Rules and Regulations. The Registration Statement became effective on September 9, 2021. At the time the Registration Statement became effective under the Securities Act, the Registration Statement contained all statements required to be stated therein in accordance with, and complied in all material respects with, the requirements of the Securities Act, the Investment Company Act and the Rules and Regulations and did not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. From the time the Registration Statement became effective through the expiration date of the Offer set forth in the Prospectus, as it may be extended as provided in the Prospectus (the “Expiration Date”), the Offering Materials will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Offering Materials made in reliance upon and in conformity with information relating to the Dealer Manager furnished to the Fund in writing by the Dealer Manager for the express use in the Registration Statement or Offering Materials. |
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| (ii) | The Fund (A) has been duly organized and is validly existing as a statutory trust in good standing under the laws of the State of Delaware, (B) has full power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement and the Prospectus, (C) owns, possesses or has obtained and currently maintains all necessary licenses, permits, consents, orders, approvals, and other authorizations (collectively, the “Licenses and Permits”), whether foreign or domestic, necessary to carry on its business as contemplated in the Prospectus, (D) has made all necessary filings required under any federal, state, local or foreign law, regulation or rule, and (E) is duly licensed and qualified to do business and is in good standing in each jurisdiction where it owns or leases real property or in which the conduct of its business requires such qualification, except in the case of (C), (D) and (E) to the extent that the failure to maintain such Licenses and Permits, make such filings, be so qualified or be in good standing could not reasonably be expected to (x) a material adverse effect on the Fund’s performance of this Agreement or the consummation of any of the transactions contemplated by this Agreement or (y) a material adverse effect on the condition (financial or otherwise), earnings, business affairs, business prospects, properties, net assets or results of operation of the Fund (a “Fund Material Adverse Effect”). |
| (iii) | The Fund is duly registered with the Commission under the Investment Company Act as a diversified, closed-end management investment company; no order of suspension or revocation of such registration has been issued or proceedings therefor initiated or, to the knowledge of the Fund or the Adviser, threatened by the Commission; subject to the filing of the Prospectus pursuant to Rule 424(b) of the Rules and Regulations and the filing of a post-effective amendment to the Registration Statement pursuant to Rule 462(d) of the Rules and Regulations, if not already filed, all required action has been taken by the Fund under the Securities Act and the Investment Company Act to make the Offer and to consummate the issuance of the Rights and the issuance and sale of the Shares by the Fund upon exercise of the Rights; and the provisions of the Fund’s declaration of trust and by-laws comply with the requirements of the Investment Company Act and the Investment Company Act Rules and Regulations. |
| (iv) | ▇▇▇▇▇ & Company, Ltd., the independent registered public accounting firm that certified the financial statements of the Fund set forth or incorporated by reference in the Registration Statement and the Prospectus, is an independent registered public accounting firm with respect to the Fund as required by the Investment Company Act, the Securities Act, the Rules and Regulations, the Exchange Act and the rules and regulations thereunder and by the rules of the Public Company Accounting Oversight Board. |
| (v) | The financial statements of the Fund, together with the related notes and schedules thereto, set forth or incorporated by reference in the Registration Statement and the Prospectus present fairly the financial condition of the Fund as of the dates or for the periods indicated in accordance with generally accepted accounting principles in the United States applied on a consistent basis, and complies in all material respects with all applicable accounting requirements under the Securities Act and the Investment Company Act; and the information set forth in the Prospectus under the headings “Summary of Fund Expenses” and “Financial Highlights” presents fairly the information stated therein. |
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| (vi) | The documents incorporated by reference in the Registration Statement and the Prospectus, at the time they became effective or were filed with the Commission, as the case may be, complied in all material respects with the requirements of the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as applicable, and the Investment Company Act and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and any further documents so filed and incorporated by reference in the Registration Statement and the Prospectus, as amended or supplemented, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the Investment Company Act and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. |
| (vii) | The Fund has an authorized and outstanding capitalization as set forth in the Prospectus (subject to the issuance of any Shares pursuant to the Dividend Reinvestment Plan (as defined below) after the date of such Prospectus); the issued and outstanding Common Shares have been duly authorized and are validly issued, fully paid and non-assessable and conform to the description thereof in the Prospectus under the headings “Description of the Securities” and “Description of Capital Structure—Shares”; the Rights have been duly authorized by all requisite action on the part of the Fund for issuance pursuant to the Offer; the certificates, if any, for the Shares are in due and proper form; the Shares have been duly authorized by all requisite action on the part of the Fund for issuance and sale pursuant to the terms of the Offer and, when issued and delivered by the Fund pursuant to the terms of the Offer against payment of the consideration set forth in the Prospectus, will be validly issued, fully paid and non-assessable; and the Shares and the Rights conform in all material respects to the statements relating thereto contained in the Registration Statement, the Prospectus and the other Offering Materials; and the issuance of each of the Rights and the Shares has been done in compliance with all applicable federal and state securities laws. No person is entitled to any preemptive or other similar rights or has registration rights with respect to the issuance of each of the Rights and the Shares. |
| (viii) | Except as set forth in the Prospectus, subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, (A) the Fund has not incurred any material liabilities or obligations, direct or contingent, or entered into any transactions, other than in the ordinary course of business; and (B) there has not been any material change in the Common Shares or long-term debt of the Fund, or any event that resulted in a Fund Material Adverse Effect, (C) there has been no dividend or distribution declared or paid in respect of the Fund’s capital stock (other than ordinary or customary distributions declared and paid in the ordinary course) and (D) the Fund has not incurred any long-term debt. |
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| (ix) | Each of (A) this agreement (the “Agreement”); (B) the Subscription Agent Agreement (the “Subscription Agency Agreement”) dated as of September 15, 2021 by and among the Fund and Computershare Inc. and its wholly-owned subsidiary, Computershare Trust Company, N.A. (the “Subscription Agent”); (C) the Information Agent Agreement (the “Information Agent Agreement”) dated as of August 12, 2021 between the Fund and ▇▇▇▇▇▇▇▇▇, LLC (the “Information Agent”); (D) the Investment Advisory Agreement dated as of April 26, 2019 between the Fund and the Adviser (the “Advisory Agreement”); (F) the Fund Administration Servicing Agreement dated as of August 1, 2018 between the Fund and U.S. Bancorp Fund Services, LLC (the “Administration Agreement”); (G) the Custody Agreement dated as of August 1, 2018 between the Fund and U.S. Bank National Association (the “Custody Agreement”); (H) the Transfer Agent Servicing Agreement dated as of August 1, 2018 by and between the Fund and U.S. Bancorp Fund Services, LLC (the “Transfer Agency Agreement”); (I) the Fund Accounting Servicing Agreement dated as of August 1 2018 between the Fund and U.S. Bancorp Fund Services, LLC (the “Fund Accounting Agreement”); (J) the Secondary Market Support Services Agreement dated as of March 20, 2019 between the Fund and Destra Capital Advisors LLC (the “Investor Support Services Agreement”); and (K) the Operating Expense Limitation Agreement dated as of April 27, 2020 between the Fund and the Adviser (the “Expense Limitation Agreement”) (collectively, all the foregoing are referred to herein as the “Fund Agreements”), has been duly authorized, executed and delivered by the Fund; each of the Fund Agreements and the Dividend Reinvestment Plan of the Fund (the “Dividend Reinvestment Plan”) complies with all applicable provisions of the Investment Company Act, the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and the rules and regulations under such Acts; and, assuming due authorization, execution and delivery by the other parties thereto, each of the Fund Agreements constitutes a legal, valid, binding and enforceable obligation of the Fund, subject to the qualification that the enforceability of the Fund’s obligations thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, receivership, moratorium and other similar laws relating to or affecting creditors’ rights generally, whether statutory or decisional, and to general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law), and except as enforcement of rights to indemnity or contribution thereunder may be limited by federal or state securities laws. |
| (x) | Neither the issuance of the Rights, nor the issuance and sale of the Shares upon the exercise of the Rights, nor the execution, delivery, performance and consummation by the Fund of any other of the transactions contemplated in this Agreement, or to the extent applicable to the Rights or the Shares in the Fund Agreements, nor the consummation of the transactions contemplated in this Agreement or in the Registration Statement nor the fulfillment of the terms thereof will (A) conflicts with or will conflict with, or results in or will result in a breach or violation of the declaration of trust (as amended or restated) or bylaws of the Fund, (B) conflicts with or will conflict with, results in or will result in a breach or violation of, or constitutes or will constitute a default or an event of default under, or results in or will result in the creation or imposition of any lien, charge or encumbrance upon any properties or assets of the Fund under the terms and provisions of any agreement, indenture, mortgage, loan agreement, note, insurance or surety agreement, lease or other instrument to which the Fund is a party or by which it is bound or to which any of the property or assets of the Fund is subject or (C) results |
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| in or will result in any violation of any order, law, rule or regulation of any court, governmental instrumentality, securities exchange or association or arbitrator, whether foreign or domestic, applicable to the Fund or having jurisdiction over the Fund’s properties, other than state securities or “blue sky” laws applicable in connection with the offer or sale of the Shares in such state or jurisdiction; except with respect to clauses (B) or (C), any conflict, breach, violation, default or lien that could not reasonably be expected to have either (x) a material adverse effect on the Fund’s performance of this Agreement or the consummation of any of the transactions contemplated by this Agreement or (y) a Fund Material Adverse Effect. |
| (xi) | Except as otherwise set forth in the Registration Statemen or the Prospectus, there is no action, suit, claim, inquiry, investigation or proceeding affecting the Fund or to which the Fund is a party before or brought by any court, commission, regulatory body, administrative agency or other governmental agency or body, whether foreign or domestic, now pending or, to the knowledge of the Fund or the Adviser, as applicable, threatened against the Fund, except which, if adversely decided, could not reasonably be expected to have either (A) a material adverse effect on the Fund’s performance of this Agreement or the consummation of any of the transactions contemplated by this Agreement or (B) a Fund Material Adverse Effect. |
| (xii) | There are no franchises, contracts or other documents of the Fund required to be described in the Registration Statement or the Prospectus, or to be filed or incorporated by reference as exhibits to the Registration Statement which are not described or filed or incorporated by reference therein as required by the Securities Act, the Investment Company Act or the Rules and Regulations. |
| (xiii) | No consent, approval, authorization, notification or order of, or filing with, or the issuance of any license or permit by, any federal, state, local or foreign court or governmental or regulatory agency, commission, board, authority or body or with any self-regulatory organization, other non-governmental regulatory authority, securities exchange or association, whether foreign or domestic, is required by the Fund for the consummation by the Fund of the transactions to be performed by the Fund or the performance by the Fund of all the terms and provisions to be performed by or on behalf of it in each case as contemplated in the Fund Agreements, the Registration Statement or the Prospectus, except the filing of the Prospectus in accordance with the requirements of the Securities Act and the Rules and Regulations and such as (A) may be required and have been obtained prior to the commencement of the Offer under the Securities Act, the Exchange Act, the Investment Company Act or the Advisers Act, (B) may be required by the NYSE, FINRA or under state securities or “blue sky” laws, in connection with the offer and sale of the Shares, and (C) the failure to obtain could not reasonably be expected to have either (x) a material adverse effect on the Fund’s performance of this Agreement or the consummation of any of the transactions contemplated by this Agreement or (y) Fund Material Adverse Effect. |
| (xiv) | The Fund is not currently in breach of, or in default under, any written agreement or instrument to which it is a party or by which it or its property is bound or affected, except which breach or default could not reasonably be expected to have either (A) a material adverse effect on the Fund’s performance of this Agreement |
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| or the consummation of any of the transactions contemplated by this Agreement or (B) a Fund Material Adverse Effect. |
| (xv) | There are no restrictions, limitations or regulations with respect to the ability of the Fund to invest its assets as described in the Registration Statement and the Prospectus, other than as described therein. |
| (xvi) | No person has any right to the registration of any securities of the Fund because of the filing of the Registration Statement with the Commission. No person has tag along rights or other similar rights included in the transaction contemplated by this Agreement. |
| (xvii) | The Common Shares have been duly listed on the NYSE and, prior to their issuance, the Rights will have been admitted for trading and the Shares duly approved for listing, subject to official notice of issuance, on the NYSE. The Fund has not received any notice from the NYSE that it is not in compliance with the listing or maintenance requirements of the NYSE with respect to the Common Shares |
| (xviii) | The Fund is eligible for and has filed with the Commodity Futures Trading Commission and the National Futures Association a notice of eligibility for relief from inclusion within the definition of a commodity pol operator pursuant to Section 4.5 of the general regulations under the Commodity Exchange Act, as amended. |
| (xix) | The Fund (A) has not taken, directly or indirectly, any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Fund to facilitate the issuance of the Rights or the sale or resale of the Rights and the Shares, (B) has not since the filing of the Registration Statement sold, bid for or purchased, or paid anyone any compensation for soliciting purchases of, Common Shares of the Fund (except for the solicitation of exercises of the Rights pursuant to this Agreement) and (C) will not, until the later of the expiration of the Rights or the completion of the distribution (within the meaning of the anti-manipulation rules under the Exchange Act) of the Shares, sell, bid for or purchase, pay or agree to pay to any person any compensation for soliciting another to purchase any other securities of the Fund (except for the solicitation of exercises of the Rights pursuant to this Agreement); provided that any action in connection with the Fund’s Dividend Reinvestment Plan will not be deemed to be within the terms of this Section 1(a)(xix). |
| (xx) | The Fund has complied in all previous tax years, and intends to direct the investment of the proceeds of the Offer described in the Registration Statement and the Prospectus in such a manner as to continue to comply, with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (“Subchapter M of the Code”), and is qualified and intends to continue to qualify as a regulated investment company under Subchapter M of the Code. |
| (xxi) | The Fund has complied, and will direct the investment of the proceeds of the Offer described in the Registration Statement and the Prospectus in such a manner as to continue to comply, with the asset coverage requirements of the Investment Company Act. |
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| (xxii) | The Fund has (a) appointed a Chief Compliance Officer and (b) adopted and implemented written policies and procedures which the Board of Trustees of the Fund has determined are reasonably designed to prevent violations of the federal securities laws in a manner required by and consistent with Rule 38a-1 under the Investment Company Act, and is in compliance with such Rule, including policies and procedures that provide oversight of compliance for each investment adviser, administrator and transfer agent of the Fund. |
| (xxiii) | The Offering Materials complied and will comply with the requirements of the Securities Act and the Securities Act Rules and Regulations. |
| (xxiv) | Other than the Offering Materials, the Fund has not, without the written permission of the Dealer Manager, used, approved, prepared or authorized any letters to beneficial owners of the Common Shares of the Fund, forms used to exercise rights, any letters from the Fund to securities dealers, commercial banks and other nominees or any newspaper announcements or other offering materials and information in connection with the Offer; provided, however, that any use of transmittal documentation and subscription documentation independently prepared by the Dealer Manager, broker-dealers, trustees, nominees or other financial intermediaries shall not cause a violation of this Section 1(a)(xxiv). |
| (xxv) | Any Offering Materials authorized in writing by or prepared by the Fund or the Adviser used in connection with the Offer does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Moreover, all Offering Materials complied and will comply with the applicable requirements of the Securities Act, the Investment Company Act, the Rules and Regulations and the rules and interpretations of FINRA. |
| (xxvi) | The Fund maintains a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with U.S. generally accepted accounting principles and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with existing assets through an asset reconciliation procedure or otherwise at reasonable intervals and appropriate action is taken with respect to any differences. |
| (xxvii) | The Fund has established and maintains disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act); such disclosure controls and procedures are designed to ensure that material information relating to the Fund is made known to the Fund’s principal executive officer and its principal financial officer by others within the Fund, and such disclosure controls and procedures are effective to perform the functions for which they were established. The Fund is not aware of any material weakness in its internal controls over financial reporting since its inception. The Fund’s independent registered public accounting firm and the Audit Committee of the Board of Trustees of the Fund have been advised of: (A) any deficiencies in the design or operation of internal control over financial reporting which could adversely affect the Fund’s ability to record, process, summarize, and report financial information; (B) any |
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| fraud, whether or not material, that involves management or other employees who have a role in the Fund’s internal controls over financial reporting; and (C) any weaknesses in the Fund’s internal controls over financial reporting have been identified for the Fund’s independent registered public accounting firm; and since the date of the most recent evaluation of such disclosure controls and procedures, there have been no changes in internal controls over financial reporting or in other factors that could materially affect internal controls over financial reporting, including any corrective actions with regard to significant deficiencies and material weaknesses. |
| (xxviii) | The Fund and its officers and trustees, in their capacities as such, are in compliance with the applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated thereunder. |
| (xxix) | No person is serving or acting as an officer, trustee or investment adviser of the Fund except in accordance with the provisions of the Investment Company Act. Except as disclosed in the Registration Statement and the Prospectus, no trustee of the Fund is (A) an “interested person” (as defined in the Investment Company Act) of the Fund or (B) an “affiliated person” (as defined in the Investment Company Act) of the Dealer Manager; provided, however, that the Fund and the Adviser may rely on representations from such officers and trustees in respect of the representation made in this Section 1(a)(xxix). |
| (xxx) | There are no transfer taxes or other similar fees or charges under federal law or the laws of any state, or any political subdivision thereof, required to be paid in connection with the execution and delivery of this Agreement, the issuance of the Rights or the issuance or sale of the Shares by the Fund pursuant to this Agreement. |
| (xxxi) | The Fund’s Board of Trustees has validly appointed an audit committee whose composition satisfies the requirements of Rules 303A.06 and 303A.07(a) of the NYSE Listed Company Manual (as modified by Rule 303A.00 of the NYSE Listed Company Manual for closed-end funds) and the Board of Trustees and/or the audit committee has adopted a charter that satisfiea the requirements of Rule 303A.07(b) of the NYSE Listed Company Manual. The audit committee has reviewed the adequacy of its charter within the past twelve months. |
| (xxxii) | Any statistical, demographic or market-related data included in the Registration Statement, the Prospectus or the other Offering Materials are based on or derived from sources that the Fund and the Adviser believe to be reasonably reliable and accurate and all such data included in the Registration Statement, the Prospectus and the other Offering Materials accurately reflects the materials upon which it is based or from which it was derived, and, to the extent required, the Fund has obtained the written consent to the use of such data from such sources. |
| (xxxiii) | No transaction has occurred between or among the Fund and any of its officers or trustees, shareholders or affiliates or any affiliate or affiliates of any such officer or trustee or shareholder or affiliate that is required to be described in and is not described in the Registration Statement and the Prospectus. |
| (xxxiv) | Neither the Fund nor, to the knowledge of the Fund or the Adviser, any employee or agent of the Fund has made any payment of funds of the Fund or received or retained any funds on behalf of the Fund, which payment, receipt or retention of |
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| funds is of a character required to be disclosed in the Registration Statement or Prospectus and is not so disclosed. |
| (xxxv) | The Fund has filed all U.S. federal, state, local and foreign tax returns that are required to be filed through the date hereof, which returns are true and correct or has received timely extensions thereof, and has paid all taxes shown on such returns and all assessments received by it to the extent that the same are material and have become due. There are no tax audits or investigations pending; nor are there any proposed additional tax assessments against the Fund. |
| (xxxvi) | The Fund is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which it is engaged; all policies of insurance insuring the Fund or its business, assets, employees, officers and trustees, including the Fund’s trustees and officers errors and omissions insurance policy and its fidelity bond required by Rule 17g-1 of the Investment Company Act, are in full force and effect; the Fund is in compliance with the terms of such policy and fidelity bond in all material respects; there are no claims by the Fund under any such policy or fidelity bond as to which any insurance company is denying liability or defending under a reservation of rights clause; the Fund has not been refused any insurance coverage sought or applied for; and the Fund has no reason to believe that it will not be able to renew its existing insurance coverage and fidelity bond as and when such coverage and fidelity bond expires or to obtain similar coverage and fidelity bond from similar insurers as may be necessary to continue its business. |
| (xxxvii) | The Fund owns or possesses, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems, or procedures), trademarks, service marks, trade names or other intellectual property (collectively, “Intellectual Property”) necessary to carry on the business operated by the Fund, except which the failure to own, possess or have the right to acquire, individually or in the aggregate, could not reasonably be expected to have either (A) a material adverse effect on the Fund’s performance of this Agreement or the consummation of any of the transactions contemplated by this Agreement or (B) a Fund Material Adverse Effect; and the Fund has not received any notice or is not otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Fund, except for such infringement or conflict (if the subject of any unfavorable decision ruling or finding) or invalidity or inadequacy could not reasonably be expected to have either (x) a material adverse effect on the Fund’s performance of this Agreement or the consummation of any of the transactions contemplated by this Agreement or (y) a Fund Material Adverse Effect. |
| (xxxviii) | Neither the Fund nor, to the knowledge of the Fund or the Adviser, as applicable, after reasonable inquiry, any other person associated with or acting on behalf of the Fund including, without limitation, any trustee, officer, agent or employee of the Fund, has directly or indirectly, while acting on behalf of the Fund (A) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (B) made any unlawful |
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| payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds; (C) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (collectively, the “FCPA”); or (D) made any other unlawful payment. |
| (xxxix) | The operations of the Fund are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Bank Secrecy Act of 1970, as amended, the applicable money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Fund with respect to the Money Laundering Laws is pending, or to the knowledge of the Fund or the Adviser, threatened. |
| (xl) | Neither the Fund nor, to the knowledge of the Fund or the Adviser, any trustee, officer, agent or employee of the Fund or the Adviser is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Fund will not directly or indirectly use the proceeds of the Offer, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC. |
| (xli) | All of the information provided to the Underwriters or to counsel for the Underwriters by the Fund, its officers and trustees in connection with letters, filings or other supplemental information provided to FINRA pursuant to FINRA’s conduct rules is true, complete and correct. |
| (b) | The Adviser represents and warrants to, and agrees with, the Dealer Manager as of the date hereof, as of the Representation Date and as of the Expiration Date that: |
| (i) | The Adviser (A) has been duly organized and is validly existing and in good standing as a limited liability company under the laws of the State of Delaware; (B) has full power and authority to own, lease and operate its properties and assets, and conduct its business and other activities conducted by it as described in the Registration Statement and the Prospectus enter into this Agreement and carry out all the terms and provisions hereof and thereof to be carried out by it; (C) is duly licensed and qualified to do business and is in good standing in each jurisdiction where it owns or leases property or in which the conduct of its business or other activity requires such qualification; and (D) owns, possesses or has obtained and currently maintains all Licenses and Permits, whether foreign or domestic, necessary to carry on its business as contemplated in the Registration Statement and the Prospectus; except in the cases of clauses (C) and (D) to the extent that the failure to be so licensed and qualified or be in good standing or to own, possess, obtain or maintain could not reasonably be expected to have either (1) a material adverse effect on the Adviser’s performance of the Advisory Agreement or this Agreement or the consummation of any of the transactions contemplated by this Agreement or (2) a material adverse effect on the condition (financial or |
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| otherwise), earnings, business affairs, business prospects, properties, net assets or results of operation of the Adviser (an “Adviser Material Adverse Effect”). |
| (ii) | The Adviser is (A) duly registered with the Commission as an investment adviser under the Advisers Act and no order or suspension or revocation of such registration has been issued or proceedings therefor initiated or, to the knowledge of the Adviser, threatened by the Commission and (B) not prohibited by the Advisers Act or the Investment Company Act from acting as an investment adviser for the Fund as contemplated by the Registration Statement and the Prospectus. |
| (iii) | Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as otherwise stated therein, (A) there has been no Adviser Material Adverse Effect and (B) there have been no transactions entered into by the Adviser which are material with respect to the Adviser other than those in the ordinary course of its business as described in the Initial Registration Statement and the Prospectus. |
| (iv) | Each of this Agreement, the Advisory Agreement, the Administration Agreement, the Investor Support Services Agreement and the Expense Limitation Agreements (collectively, all the foregoing are referred to herein as the “Adviser Agreements”) to which the Adviser is a party has been duly authorized, executed and delivered by each applicable Adviser and complies in all material respects with the applicable provisions of the Investment Company Act, the Advisers Act and the rules and regulations under such Acts, and is, assuming due authorization, execution and delivery by the other parties thereto, a legal, valid, binding and enforceable obligation of the Adviser in accordance with its terms, subject to the qualification that the enforceability of the Adviser’s obligations thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, receivership, moratorium and other similar laws relating to or affecting creditors’ rights generally, whether statutory or decisional, and to general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law), and except as enforcement of rights to indemnity or contribution thereunder may be limited by federal or state securities laws. |
| (v) | Neither the execution, delivery, performance and consummation by the Adviser of its obligations under the Adviser Agreements to which it is a party, nor the consummation of the transactions contemplated therein or in the Prospectus or the Registration Statement nor the fulfillment of the terms thereof (A) conflicts with or will conflict with, or results in or will result in a breach or violation of the limited liability company operating agreement of the Adviser, (B) conflicts with or will conflict with, results in or will result in a breach or violation of, or constitutes or will constitute a default or an event of default under, or result in the creation or imposition of any lien, charge or encumbrance upon any properties or assets of the Adviser under the terms and provisions of any agreement, indenture, mortgage, loan agreement, note, insurance or surety agreement, lease or other instrument to which the Adviser is a party or by which it is bound or to which any of the property or assets of the Adviser is subject or (C) results in or will result in any violation of any order, law, rule or regulation of any court, governmental instrumentality, securities exchange or association or arbitrator, whether foreign or domestic, applicable to the Adviser or having jurisdiction over the Adviser’s properties; except with respect to clauses (B) or (C), any conflict, breach, violation, default or |
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| lien which could not reasonably be expected to have either (x) a material adverse effect on the Adviser’s performance of the Advisory Agreement or this Agreement or the consummation of any of the transactions contemplated by this Agreement or (2) an Adviser Material Adverse Effect. |
| (vi) | Except as set forth in the Registration Statement or the Prospectus, there is no action, suit, claim, inquiry, investigation or proceeding affecting the Adviser or to which the Adviser is a party before or brought by any court, commission, regulatory body, administrative agency or other governmental agency or body, whether foreign or domestic now pending or, to the knowledge of the Adviser, threatened against or affecting the Adviser which (i) if determined adversely could reasonably be expected to result in an Adviser Material Adverse Effect or (ii) is of a character required to be described in the Registration Statement or the Prospectus and is not described as required. |
| (vii) | No consent, approval, authorization, notification or order of, or filing with, or the issuance of any license or permit by, any federal, state, local or foreign court or governmental or regulatory agency, commission, board, authority or body or with any self-regulatory organization, other non-governmental regulatory authority, securities exchange or association, whether foreign or domestic, is required by the Adviser for the consummation by the Adviser of the transactions to be performed by the Adviser or the performance by the Adviser of all the terms and provisions to be performed by or on behalf of it in each case as contemplated in this Agreement, the Registration Statement or the Prospectus, except the filing of the Prospectus in accordance with the requirements of the Securities Act and the Rules and Regulations and such as (A) may be required and have been obtained prior to the commencement of the Offer under the Securities Act, the Exchange Act, the Investment Company Act or the Advisers Act, (B) may be required by the NYSE, FINRA or under state securities or “blue sky” laws, in connection with the purchase and distribution of the Shares, and (C) the failure to obtain could not reasonably be expected to have either (x) a material adverse effect on the Adviser’s performance of the Advisory Agreement or this Agreement or the consummation of any of the transactions contemplated by this Agreement or (y) an Adviser Material Adverse Effect. |
| (viii) | The Adviser (A) has not taken any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Fund to facilitate the issuance of the Rights or the sale or resale of the Rights and the Shares, (B) has not since the filing of the Registration Statement sold, bid for or purchased, or paid anyone any compensation for soliciting purchases of, Common Shares of the Fund (except for the solicitation of exercises of the Rights pursuant to this Agreement) and (C) will not, until the later of the expiration of the Rights or the completion of the distribution (within the meaning of the anti-manipulation rules under the Exchange Act) of the Shares, sell, bid for or purchase, pay or agree to pay any person any compensation for soliciting another to purchase any other securities of the Fund (except for the solicitation of exercises of the Rights pursuant to this Agreement); provided that any action in connection with the Fund’s Dividend Reinvestment Plan will not be deemed to be within the terms of this Section 1(b)(viii). |
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| (ix) | The Adviser has adopted and implemented written policies and procedures under Rule 206(4)-7 under the Advisers Act reasonably designed to prevent violation of the Advisers Act by the Adviser and its supervised persons. |
| (x) | The Adviser owns or possesses, or can acquire on reasonable terms, the Intellectual Property necessary to act as investment adviser for the Fund as contemplated in the Prospectus the Registration Statement, the Advisory Agreement and the Sub-Advisory Agreement, except to the extent that the failure to own or possess such Intellectual Property could not reasonably be expected to have either (A) a material adverse effect on the Adviser’s performance of the Advisory Agreement or this Agreement or the consummation of any of the transactions contemplated by this Agreement or (B) an Adviser Material Adverse Effect, and the Adviser has not received any notice or is not otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Adviser, except for that which if determined to be invalid or inadequate could not reasonably be expected to have either (x) a material adverse effect on the Adviser’s performance of the Advisory Agreement or this Agreement or the consummation of any of the transactions contemplated by this Agreement or (y) an Adviser Material Adverse Effect. |
| (xi) | Neither the Adviser nor, to the knowledge of the Adviser, after reasonable inquiry, any other person associated with or acting on behalf of the Adviser including, without limitation, any member, director, trustee, officer, agent or employee of the Adviser, has not, directly or indirectly, while acting on behalf of the Adviser (A) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (B) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds; (C) violated any provision of the FCPA; or (D) made any other unlawful payment. |
| (xii) | The operations of the Adviser are and have been conducted at all times in compliance with applicable Money Laundering Laws and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Adviser with respect to the Money Laundering Laws is pending, or to the best knowledge of the Adviser, threatened. |
| (xiii) | Neither the Adviser nor, to the knowledge of the Adviser, after reasonable inquiry, any member, director, trustee, officer, agent, employee or affiliate of the Adviser is currently subject to any U.S. sanctions administered by OFAC; and the Adviser will not directly or indirectly direct the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC. |
| (xiv) | The Adviser intends to direct the proceeds of the Offer described in the Registration Statement and the Prospectus in such a manner as to cause the Fund to comply with the requirements of Subchapter M of the Code. |
| (xv) | The Adviser has the financial resources available to it necessary for the performance of its services and obligations as contemplated by the Registration Statement and the Prospectus and the Advisory Agreement, the Administration |
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| Agreement, the Investor Support Services Agreement and the Expense Limitation Agreements. |
| (xvi) | Each of the Advisory Agreement, the Administration Agreement, the Investor Support Services Agreement and the Expense Limitation Agreements is in full force and effect and neither the Fund nor the Adviser party thereto is in default thereunder, and no event has occurred which with the passage of time or the giving of notice or both would constitute a default under such document, except to the extent that such default could not reasonably be expected to have either (x) a material adverse effect on the Adviser’s performance of the Advisory Agreement or this Agreement or the consummation of any of the transactions contemplated by this Agreement or (y) an Adviser Material Adverse Effect |
| (xvii) | All information furnished by the Adviser including, without limitation, the description of the Adviser, for use in the Registration Statement and Prospectus complies with the requirements of the Securities Act and the Investment Company Act in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary to make such information, in light of the circumstances under which such statements were made, not misleading. |
| (xviii) | The Adviser is eligible for and has filed with the Commodity Futures Trading Commission (“CFTC”) and the National Futures Association (“NFA”) a notice of eligibility for relief from inclusion within the definition of a commodity pool operator pursuant to Section 4.5 of the general regulations under the Commodity Exchange Act, as amended (“CEA”), with respect to the Fund. |
| (xix) | The Adviser maintains a system of internal controls sufficient to provide reasonable assurances that (i) transactions effectuated by it under the Advisory Agreement are executed in accordance with its management’s general or specific authorization; and (ii) access to the Fund’s assets is permitted only in accordance with its management’s general or specific authorization. |
| (c) | Any certificate required by this Agreement that is signed by any officer of the Fund or the Adviser and delivered to the Dealer Manager or counsel for the Dealer Manager shall be deemed a representation and warranty by the Fund or the Adviser, as the case may be, to the Dealer Manager, as to the matters covered thereby. |
| 2. | Agreement to Act as Dealer Manager. |
| (a) | On the basis of the representations and warranties contained herein, and subject to the terms and conditions of the Offer: |
| (i) | The Fund hereby appoints the Dealer Manager to solicit the exercise of Rights and authorizes the Dealer Manager to sell Shares purchased by the Dealer Manager from the Fund through the exercise of Rights as described herein and in accordance with the Securities Act, the Investment Company Act and the Exchange Act; the Fund hereby authorizes the Dealer Manager to form and manage a group of selling broker-dealers (each a “Selling Group Member” and collectively the “Selling Group”) that enter into a Selling Group Agreement with the Dealer Manager in the form attached hereto as Exhibit A to solicit the exercise of Rights and to sell Shares purchased by the Selling Group Member from the Dealer Manager as described herein. The Dealer Manager ▇▇▇▇▇▇ agrees to solicit the exercise of Rights in |
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| accordance with its customary practice subject to the terms and conditions of this Agreement and the procedures described in the Registration Statement, the Prospectus; and the Dealer Manager hereby agrees to form and manage the Selling Group to solicit the exercise of Rights and to sell to the Selling Group Shares purchased by the Dealer Manager from the Fund through the exercise of Rights as described herein in accordance with its customary practice subject to the terms and conditions of this Agreement, the procedures described in the Registration Statement, the Prospectus and, where applicable, the terms and conditions of the Selling Group Agreement. |
The Fund hereby authorizes other soliciting broker-dealers (each a “Soliciting Dealer” and collectively the “Soliciting Dealers”) to enter into a Soliciting Dealer Agreement with the Dealer Manager in the form attached hereto as Exhibit B to solicit the exercise of Rights. The Fund authorizes and directs the Dealer Manager to enter into, and the Dealer Manager agrees to enter into, a Soliciting Dealer Agreement with each qualified Soliciting Dealer, as set forth in the Soliciting Dealer Agreement. All questions as to the form, validity and eligibility (including time of receipt) of a Soliciting Dealer Agreement will be determined by the Fund, in its sole discretion, which determination shall be final and binding.
| (ii) | The Fund hereby authorizes the Dealer Manager to buy, facilitate the sale of and exercise Rights, including unexercised Rights delivered to the Subscription Agent for resale and Rights of Record Date Shareholders whose record addresses are outside the United States held by the Subscription Agent for which no instructions are received, on the terms and conditions set forth in such Prospectus, and to sell Shares to the public or to Selling Group Members at the offering price set by the Dealer Manager from time to time. Sales of Shares by the Dealer Manager or Selling Group Members shall not be at a price higher than the offering price set by the Dealer Manager from time to time. The proceeds from the sale of Rights will be remitted to the Record Date Shareholders as set forth in the Prospectus. |
| (b) | To the extent permitted by applicable law, the Fund agrees to furnish, or cause to be furnished, to the Dealer Manager, lists, or copies of those lists, showing the names and addresses of, and number of Common Shares held by, Record Date Shareholders as of the Record Date, and the Dealer Manager agrees to use such information only in connection with the Offer to identify those securities brokers and dealers that are subscribing to the offering, and not to furnish the information to any other person except for securities brokers and dealers that have been identified by the Dealer Manager as soliciting exercises of Rights. |
| (c) | The Dealer Manager agrees to provide to the Fund, in addition to the services described in Section 2(a), financial structuring and solicitation services in connection with the Offer. No fee, other than the fees provided for in Section 3 of this Agreement and the reimbursement of the Dealer Manager’s out-of-pocket expenses as described in Section 5 of this Agreement, will be payable by the Fund, or any other party hereto, to the Dealer Manager in connection with the financial structuring and solicitation services provided by the Dealer Manager pursuant to this Section 2(c). |
| (d) | The Fund and the Dealer Manager agree that the Dealer Manager is an independent contractor with respect to the solicitation of the exercise of the Rights, and that the Dealer Manager’s performance of financial structuring and solicitation services for the Fund is |
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| pursuant to a contractual relationship created solely by this Agreement entered into on an arm’s length basis, and in no event do the parties intend that the Dealer Manager act or be responsible as a fiduciary to the Fund, its management, shareholders, creditors or any other person, including Selling Group Members and Soliciting Dealers, in connection with any activity that the Dealer Manager may undertake or has undertaken in furtherance of its engagement pursuant to this Agreement, either before or after the date hereof. The Dealer Manager hereby expressly disclaims any fiduciary or similar obligations to the Fund, either in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions, and the Fund hereby confirms its understanding and agreement to that effect. The Fund and the Dealer Manager agree that they are each responsible for making their own independent judgments with respect to any such transactions, and that any opinions or views expressed by the Dealer Manager to the Fund regarding such transactions, including but not limited to any opinions or views with respect to the subscription price or market for the Fund’s Shares, do not constitute advice or recommendations to the Fund. The Fund confirms its understanding and agreement that pursuant to the applicable Selling Group Agreement or Soliciting Dealer Agreement each Selling Group Member and Soliciting Dealer will disclaim any fiduciary or similar obligations to the Fund, either in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions. The Fund agrees that each Selling Group Member and Soliciting Dealer is responsible for making their own independent judgments with respect to any such transactions, and that any opinions or views expressed by the Selling Group Members or Soliciting Dealers to the Fund regarding such transactions, including but not limited to any opinions or views with respect to the subscription price or market for the Fund’s Shares, do not constitute advice or recommendations to the Fund. The Fund hereby waives and releases, to the fullest extent permitted by law, any claims that the Fund may have against the Dealer Manager, Selling Group Members and Soliciting Dealers with respect to any breach or alleged breach of any fiduciary or similar duty to the Fund in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions; provided that this release shall not protect or purport to protect the Dealer Manager, Selling Group Members and Soliciting Dealers against any liability to which they would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence, in the performance of their duties, or by reason of their reckless disregard of their obligations and duties under this Agreement. |
| (e) | In rendering the services contemplated by this Agreement, the Dealer Manager will not be subject to any liability to the Fund or the Adviser or any of their affiliates, for any act or omission on the part of any Selling Group Members, Soliciting Dealers or other soliciting broker or dealer (except with respect to the Dealer Manager acting in such capacity) or any other person, and the Dealer Manager will not be liable for acts or omissions in performing its obligations under this Agreement, except for any losses, claims, damages, liabilities and expenses that are finally judicially determined to have resulted primarily from the bad faith, willful misconduct or gross negligence or reckless disregard of the Dealer Manager or by reason of the reckless disregard of the obligations and duties of the Dealer Manager under this Agreement. |
| 3. | Dealer Manager Fees. In full payment for the financial structuring and solicitation services rendered and to be rendered hereunder by the Dealer Manager, the Fund agrees to pay the Dealer Manager a fee (the “Dealer Manager Fee”) equal to 3.75% of the aggregate Subscription Price for the Shares issued pursuant to the exercise of Rights and the Over-Subscription Privilege, a portion of which may be reallowed to an affiliate of the Dealer Manager. In full payment for the soliciting and selling efforts to be rendered by Selling Group Members, the Fund authorizes and directs the Dealer |
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| Manager to reallow, and the Dealer Manager agrees to reallow, selling fees (the “Selling Fees”) to Selling Group Members equal to 2.00% of the Subscription Price per Share for each Share issued pursuant to either (a) the exercise of Rights and the Over-Subscription Privilege where such Selling Group Member is so designated on the subscription form or (b) the purchase for resale from the Dealer Manager in accordance with the Selling Group Agreement. With respect to Shares purchased by a Selling Group Member from the Dealer Manager in accordance with the Selling Group Agreement, such fee may from time to time vary from 2.00% of the Subscription Price per Share. In full payment for the soliciting efforts to be rendered by Soliciting Dealers, the Fund authorizes and directs the Dealer Manager to reallow, and the Dealer Manager agrees to reallow, soliciting fees (the “Soliciting Fees”) to Soliciting Dealers who comply with the procedures set forth in the Soliciting Dealer Agreement equal to 0.50% of the Subscription Price per Share for each Share issued pursuant to the exercise of Rights and the Over-Subscription Privilege where such Soliciting Dealer is so designated on the subscription form, subject to a maximum fee based on the number of Common Shares held by such Soliciting Dealer through The Depository Trust Company (“DTC”) on the Record Date. The Dealer Manager agrees to pay the Selling Fees or Soliciting Fees, as the case may be, to the broker-dealer designated on the applicable portion of the form used by the holder to exercise Rights and the Over-Subscription Privilege, and if no broker-dealer is so designated or a broker-dealer is otherwise not entitled to receive compensation pursuant to the terms of the Selling Group Agreement or Soliciting Dealer Agreement, then the Dealer Manager shall retain such Selling Fee or Soliciting Fee for Shares issued pursuant to the exercise of Rights and the Over-Subscription Privilege. Payment to the Dealer Manager by the Fund will be in the form of a wire transfer of same day funds to an account or accounts identified by the Dealer Manager. Such payment will be made on each date on which the Fund issues Shares after the Expiration Date. Payment to a Selling Group Member or Soliciting Dealer will be made by the Dealer Manager directly to such Selling Group Member or Soliciting Dealer by check to an address identified by such broker-dealer. Such payments shall be made on or before the tenth business day following the day the Fund issues Shares after the Expiration Date. |
| 4. | Other Agreements. |
| (a) | The Fund covenants with the Dealer Manager as follows: |
| (i) | The Fund will use its best efforts to maintain the effectiveness of the Registration Statement under the Securities Act. |
| (ii) | The Fund will notify the Dealer Manager immediately (A) of the effectiveness of any amendment to the Registration Statement (including any post-effective amendment), (B) of the receipt of any comments from the Commission, (C) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, (D) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose and (E) of the receipt of any written notice regarding the suspension of the qualification of the Shares or the Rights for offering or sale in any jurisdiction. The Fund will make every reasonable effort to prevent the issuance of any stop order described in subsection (D) hereunder and, if any such stop order is issued, to obtain the lifting thereof at the earliest possible moment. |
| (iii) | The Fund will give the Dealer Manager notice of its intention to file any amendment to the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus (including any |
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| revised prospectus which the Fund proposes for use by the Dealer Manager in connection with the Offer, which differs from the prospectus on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the Securities Act Rules and Regulations), whether pursuant to the Investment Company Act, the Securities Act, or otherwise, and will furnish the Dealer Manager with copies of any such amendment or supplement a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file any such amendment or supplement to which the Dealer Manager or counsel for the Dealer Manager shall reasonably object. |
| (iv) | The Fund will file any Issuer Free Writing Prospectus to the extent required by Rule 433. |
| (v) | The Fund will, without charge, deliver to the Dealer Manager, as soon as practicable, the number of copies of the Registration Statement as originally filed and of each amendment thereto as it may reasonably request, in each case with the exhibits filed therewith. |
| (vi) | The Fund will, without charge, furnish to the Dealer Manager, from time to time during the period when the Prospectus is required to be delivered under the Securities Act, such number of copies of the Prospectus (as amended or supplemented) and any Issuer Free Writing Prospectus as the Dealer Manager may request for the purposes contemplated by the Securities Act or the Securities Act Rules and Regulations. |
| (vii) | If any event shall occur as a result of which it is necessary, in the reasonable opinion of counsel for the Dealer Manager, to amend or supplement the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus (or the other Offering Materials) to make the Prospectus or any Issuer Free Writing Prospectus (or such other Offering Materials) not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a Record Date Shareholder, the Fund will forthwith amend or supplement the Prospectus or any Issuer Free Writing Prospectus by preparing and filing with the Commission (and furnishing to the Dealer Manager a reasonable number of copies of) an amendment or amendments of the Registration Statement or an amendment or amendments of or a supplement or supplements to the Prospectus (in form and substance reasonably satisfactory to counsel for the Dealer Manager), at the Fund’s expense, which will amend or supplement the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus (or otherwise will amend or supplement such other Offering Materials) so that the Prospectus or any Issuer Free Writing Prospectus (or such other Offering Materials) will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances existing at the time the Prospectus or any Issuer Free Writing Prospectus (or such other Offering Materials) is delivered to a Record Date Shareholder, not misleading. |
| (viii) | The Fund will endeavor, in cooperation with the Dealer Manager and its counsel, to qualify the Rights and the Shares for offering and sale under the applicable |
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| securities laws of such states and other jurisdictions of the United States as the Dealer Manager may designate and maintain such qualifications in effect for the duration of the Offer. The Fund will file such statements and reports as may be required by the laws of each jurisdiction in which the Rights and the Shares have been qualified as above provided. |
| (ix) | The Fund, during the period when the Prospectus is (or, but for the exception afforded by Rule 172 of the Securities Act, would be) required to be delivered under the Securities Act, will file all documents required to be filed with the Commission pursuant to the Exchange Act within the time periods required by the Exchange Act. |
| (x) | The Fund will make generally available to its security holders as soon as practicable, an earnings statement (which need not be audited) (in form complying with the provisions of Rule 158 of the Securities Act Rules and Regulations) covering a twelve-month period beginning not later than the first day of the Fund’s fiscal semi-annual period next following the “effective” date (as defined in said Rule 158) of the Registration Statement. |
| (xi) | For a period of 180 days from the date of this Agreement, the Fund will not, without the prior consent of the Dealer Manager, offer or sell, or enter into any agreement to sell, any equity or equity related securities of the Fund or securities convertible into such securities, other than the Rights and the Shares and the Common Shares issued in reinvestment of dividends or distributions. |
| (xii) | The Fund will cause the Rights to be admitted for trading and the Shares to be duly authorized for listing by the NYSE prior to the time the Rights and the Shares are issued, respectively. |
| (xiii) | The Fund will use its reasonable best efforts to maintain its qualification as a regulated investment company under Subchapter M of the Code. |
| (xiv) | The Fund will apply the net proceeds from the Offer in such a manner as to continue to comply with the requirements of the Prospectus as set forth under “Use of Proceeds” and the Investment Company Act. |
| (xv) | The Fund will advise or cause the Subscription Agent (A) to advise the Dealer Manager and, only where specifically noted, each Selling Group Member who specifically requests, from day to day during the period of, and promptly after the termination of, the Offer, the total number of Rights exercised by each Record Date Shareholder during the immediately preceding day, indicating the total number of Rights verified to be in proper form for exercise, rejected for exercise and being processed and, for the Dealer Manager and each Selling Group Member, the number of Rights exercised on subscription certificates indicating the Dealer Manager or such Selling Group Member, as the case may be, as the broker-dealer with respect to such exercise, and as to such other information as the Dealer Manager may reasonably request; and will notify the Dealer Manager and each Selling Group Member, not later than 5:00 P.M., New York City time, on the first business day following the Expiration Date, of the total number of Rights exercised and Shares related thereto, the total number of Rights verified to be in proper form for exercise, rejected for exercise and being processed and, for the Dealer Manager and each Selling Group Member, the number of Rights exercised on subscription |
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| certificates indicating the Dealer Manager or such Selling Group Member, as the case may be, as the broker-dealer with respect to such exercise, and as to such other information as the Dealer Manager may reasonably request; (B) to offer to sell any Rights received for resale from Record Date Shareholders, including clients of Selling Group Members, exclusively to or through the Dealer Manager, which may, at its election, purchase such Rights as principal or act as agent for the resale thereof, provided that if the Dealer Manager declines to purchase the Rights received by the Subscription Agent for resale from Record Date Shareholders, the Subscription Agent may attempt to sell such Rights in the open market; and (C) to issue Shares upon the Dealer Manager’s exercise of Rights prior to the Expiration Date at a price equal to the greater of 92.5% of the last reported sale price of a Common Share on the NYSE on the date of such exercise or 86% of the last reported NAV of a Common Share prior to the date of exercise, such Shares to be issued no later than the close of business on the business day following the day that full payment for such Shares has been received by the Subscription Agent.. |
| (b) | Neither the Fund nor the Adviser will take, directly or indirectly, any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Fund to facilitate the issuance of the Rights or the sale or resale of the Rights or the Shares; provided that any action in connection with the Fund’s Dividend Reinvestment Plan will not be deemed to be within the meaning of this Section 4(b). |
| (c) | Except as required by applicable law, the use of any reference to the Dealer Manager in any Offering Materials or any other document or communication prepared, approved or authorized by the Fund or the Adviser in connection with the Offer is subject to the prior approval of the Dealer Manager, provided that if such reference to the Dealer Manager is required by applicable law, the Fund and the Adviser agree to notify the Dealer Manager within a reasonable time prior to such use but the Fund and the Adviser are nonetheless permitted to use such reference. |
| 5. | Payment of Expenses. |
| (a) | The Fund will pay all expenses incident to the performance of its obligations under this Agreement and in connection with the Offer, including, but not limited to, (i) expenses relating to the printing and filing of the Registration Statement as originally filed and of each amendment thereto, (ii) expenses relating to the preparation, issuance and delivery of the certificates, if any, for the Shares and subscription certificates relating to the Rights, (iii) the fees and disbursements of the Fund’s counsel (including the fees and disbursements of local counsel) and accountants, (iv) expenses relating to the qualification of the Rights and the Shares under securities laws in accordance with the provisions of Section 4(a)(vii) of this Agreement, including filing fees, (v) expenses relating to the printing or other production and delivery to the Dealer Manager of copies of the Registration Statement as originally filed and of each amendment thereto and of the Prospectus and any amendments or supplements thereto, (vi) the fees and expenses incurred with respect to filing with FINRA, including filing fees, if any, paid to FINRA by the Dealer Manager’s counsel with respect thereto, (vii) the fees and expenses incurred in connection with the listing of the Rights and the Shares on the NYSE, (viii) expenses relating to the printing or other production, mailing and delivery expenses incurred in connection with Offering Materials, including all reasonable out-of-pocket fees and expenses, if any and not to exceed $10,000, incurred by the Dealer Manager, Selling Group Members, Soliciting Dealers and other |
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| brokers, dealers and financial institutions in connection with their customary mailing and handling of materials related to the Offer to their customers, (ix) the fees and expenses incurred with respect to the Subscription Agent and the Information Agent and (x) all other fees and expenses (excluding the announcement, if any, of the Offer in The Wall Street Journal, the expenses of which will be incurred by the Dealer Manager, subject to the reimbursement of expenses pursuant to paragraph (b) below) incurred in connection with or relating to the Offer. The Fund agrees to pay the foregoing expenses whether or not the transactions contemplated under this Agreement are consummated. |
| (b) | In addition to any fees that may be payable to the Dealer Manager under this Agreement, the Fund agrees to reimburse the Dealer Manager upon request made from time to time for a portion of its reasonable out-of-pocket expenses incurred in connection with its activities under this Agreement, including the reasonable fees and disbursements of its legal counsel (excluding fees and expenses pursuant to Section 5(a)(iv) which are to be paid directly by the Fund), upon proper presentation of documentation therefor, in an amount not to exceed $150,000. |
| (c) | If this Agreement is terminated by the Dealer Manager in accordance with the provisions of Section 6 or Section 9(a), the Fund agrees to reimburse the Dealer Manager for all of its reasonable out-of-pocket expenses incurred in connection with its performance hereunder, including the reasonable fees and disbursements of counsel for the Dealer Manager, in an amount not to exceed $150,000. In the event the transactions contemplated hereunder are not consummated, the Fund agrees to pay all of the costs and expenses set forth in Sections 5(a) and 5(b) which the Fund would have paid if such transactions had been consummated. |
| 6. | Conditions of the Dealer Manager’s Obligations. The obligations of the Dealer Manager hereunder (including any obligation to pay for Shares issuable upon exercise of Rights by the Dealer Manager) are subject to the accuracy of the respective representations and warranties of the Fund and the Adviser contained herein, to the performance by the Fund and the Adviser of their respective obligations hereunder, and to the following further conditions: |
| (a) | The Prospectus and any amendment or supplement thereto shall have been filed with the Commission in the manner and within the time period required by Rule 424(b) under the Securities Act; no stop order suspending the effectiveness of the Registration Statement or any amendment thereto shall have been issued, and no proceedings for that purpose shall have been instituted or threatened or, to the knowledge of the Fund, the Adviser or the Dealer Manager, shall be contemplated by the Commission; and the Fund shall have complied with any request of the Commission for additional information (to be included in the Registration Statement, the Prospectus or otherwise). |
| (b) | On the Representation Date and the Expiration Date, the Dealer Manager shall have received: |
| (i) | The opinion, dated the Representation Date and the Expiration Date, of Dechert LLP, counsel for the Fund, substantially in the form of Exhibit C hereto. |
| (ii) | The opinion, dated the Representation Date and the Expiration Date, of Dechert LLP, counsel for the Adviser, substantially in the form of Exhibit D hereto. |
| (c) | The Dealer Manager shall have received from Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Dealer Manager, such opinion or opinions, dated the Representation Date and the Expiration Date, with respect to the Offer, the Registration Statement, the |
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| Prospectus and other related matters as the Dealer Manager may reasonably require, and the Fund shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters. |
| (d) | The Fund shall have furnished to the Dealer Manager certificates of the Fund, signed on behalf of the Fund by the President or other senior officer of the Fund, dated the Representation Date and the Expiration Date, to the effect that the signer(s) of such certificate carefully examined the Registration Statement, the Prospectus, any supplement to the Prospectus and this Agreement and that: |
| (i) | the representations and warranties of the Fund in this Agreement are true and correct on and as of the Representation Date or the Expiration Date, as the case may be, with the same effect as if made on the Representation Date or the Expiration Date, as the case may be, and the Fund has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Representation Date or the Expiration Date, as the case may be (to the extent not waived in writing by the Dealer Manager); |
| (ii) | no stop order suspending the effectiveness of the Registration Statement has been issued, no revocation of registration has been issued and no proceedings for such purposes have been instituted or threatened by the Commission or any other regulatory body, whether foreign or domestic; |
| (iii) | since the date of the most recent statement of assets and liabilities included or incorporated by reference in the Prospectus, there has been no material adverse change, or any development involving a prospective material adverse change, in the condition (financial or otherwise), earnings, business affairs, business prospects, properties, net assets or results of operation of the Fund (excluding fluctuations in the Fund’s net asset value due to investment activities in the ordinary course of business), except as set forth in or contemplated in the Prospectus; and |
| (iv) | the Fund has performed all of its respective obligations that this Agreement requires it to perform by the Representation Date or the Expiration Date, as the case may be (to the extent not waived in writing by the dealer manager). |
| (e) | The Adviser shall have furnished to the Dealer Manager certificates of the Adviser, signed on behalf of the Adviser by the President or other senior officer, dated the Representation Date and the Expiration Date, to the effect that the signer(s) of such certificate carefully examined the Registration Statement, the Prospectus, any supplement to the Prospectus and this Agreement and that: |
| (i) | the representations and warranties of the Adviser in this Agreement are true and correct on and as of the Representation Date or the Expiration Date, as the case may be, with the same effect as if made on the Representation Date or the Expiration Date, as the case may be, and the Adviser has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Representation Date or the Expiration Date, as the case may be (to the extent not waived in writing by the Dealer Manager); |
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| (ii) | no order having an adverse effect on the ability of the Adviser to fulfill its obligations under this Agreement or the Advisory Agreement, as the case may be, has been issued and no proceedings for any such purpose are pending or threatened by the Commission or any other regulatory body, whether foreign or domestic; |
| (iii) | since the date of the most recent balance sheet included or incorporated by reference in the Prospectus, there has been no material adverse change, or any development involving a prospective material adverse change, in the condition (financial or otherwise), earnings, business affairs, business prospects, properties, net assets or results of operation of the Fund (excluding fluctuations in the Fund’s net asset value due to investment activities in the ordinary course of business), except as set forth in or contemplated in the Prospectus; and |
| (iv) | the Adviser has performed all of its respective agreements that this Agreement requires it to perform by the Representation Date or the Expiration Date, as the case may be (to the extent not waived in writing by the Dealer Manager). |
| (f) | ▇▇▇▇▇ & Company, Ltd. shall have furnished to the Dealer Manager letters, dated the Representation Date and the Expiration Date, in form and substance satisfactory to the Dealer Manager, stating in effect that: |
| (i) | it is an independent registered public accounting firm with respect to the Fund within the meaning of the Securities Act and the applicable Securities Act Rules and Regulations, and the rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board; |
| (ii) | in its opinion, the audited financial statements examined by it and included or incorporated by reference in the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Investment Company Act and the respective Rules and Regulations with respect to registration statements on Form N-2; |
| (iii) | it has performed specified procedures, not constituting an audit in accordance with generally accepted auditing standards, including a reading of latest available unaudited financial information of the Fund, a reading of the minute books of the Fund, and inquiries of officials of the Fund responsible for financial and accounting matters, and on the basis of such inquiries and procedures nothing came to its attention that caused it to believe that at a specified date prior to the Representation Date or the Expiration Date, as the case may be, there was any change in the Common Shares, any decrease in net assets or any increase in long-term debt of the Fund as compared with amounts shown in the most recent statement of assets and liabilities included or incorporated by reference in the Registration Statement, except as the Registration Statement discloses has occurred or may occur, or they shall state any specific changes, increases or decreases; and |
| (iv) | in addition to the procedures referred to in clause (iii) above, it has compared certain dollar amounts (or percentages as derived from such dollar amounts) and other financial information regarding the operations of the Fund appearing in the Registration Statement, which have previously been specified by the Dealer |
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| Manager and which shall be specified in such letter, and have found such items to be in agreement with the accounting and financial records of the Fund. |
| (g) | Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus (excluding an amendment or supplement subsequent to the Representation Date), (i) there shall not have been any change, increase or decrease specified in the letter or letters referred to in Section 6(f), (ii) no adverse change, or any development involving a prospective adverse change, in the condition (financial or otherwise), earnings, business affairs, business prospects, properties, net assets or results of operation of the Fund shall have occurred or become known and (iii) no transaction which is material and adverse to the Fund shall have been entered into by the Fund. |
| (h) | There shall not have been any decrease in or withdrawal of the rating of any securities of the Fund by any “nationally recognized statistical rating organization” (as defined in Section 3(a)(62) of the Exchange Act) or any notice given of any intended or potential decrease in or withdrawal of any such rating or of a possible change in any such rating that does not indicate the direction of the possible change. |
| (i) | Prior to the Representation Date, the Fund shall have furnished to the Dealer Manager such further information, certificates and documents as the Dealer Manager may reasonably request. |
| (j) | If any of the conditions specified in this Section 6 shall not have been fulfilled when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be satisfactory in form and substance to the Dealer Manager and its counsel, this Agreement and all obligations of the Dealer Manager hereunder may be canceled at, or at any time prior to, the Expiration Date by the Dealer Manager. Notice of such cancellation shall be given to the Fund in writing or by telephone confirmed in writing. |
| 7. | Indemnity and Contribution. |
| (a) | Each of the Fund and the Adviser, jointly and severally, agrees to indemnify, defend and hold harmless the Dealer Manager, each Selling Group Member and each Soliciting Dealer, and their respective partners, directors, officers, employees, agents and affiliates and any person who controls the Dealer Manager, a Selling Group Member and or a Soliciting Dealer within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, the Dealer Manager, a Selling Group Member, a Soliciting Dealer or any such person may incur under the Securities Act, the Exchange Act, the Investment Company Act, the Advisers Act, common law or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof by the Fund) or in a Prospectus (the term “Prospectus” for the purpose of this Section 7 being deemed to include any preliminary prospectus, the Offering Materials, the Prospectus and the Prospectus as amended or supplemented by the Fund), or arises out of or is based upon any omission or alleged omission to state a material fact required to be stated in either such Registration Statement or Prospectus or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading, except insofar as |
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| any such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or omission or alleged untrue statement or omission of a material fact contained in and in conformity with information furnished in writing by or on behalf of the Dealer Manager, Selling Group Members or Soliciting Dealers to the Fund or the Adviser expressly for use with reference to the Dealer Manager, Selling Group Members or Soliciting Dealers in such Registration Statement or such Prospectus. |
If any action, suit or proceeding (together, a “Proceeding”) is brought against the Dealer Manager, a Selling Group Member, a Soliciting Dealer or any such person in respect of which indemnity may be sought against the Fund or the Adviser pursuant to the foregoing paragraph, the Dealer Manager, a Selling Group Member, a Soliciting Dealer or such person shall promptly notify the Fund and the Adviser in writing of the institution of such Proceeding and the Fund shall assume the defense of such Proceeding, including the employment of counsel reasonably satisfactory to such indemnified party and payment of all reasonable fees and expenses; provided, however, that the failure to so notify the Fund and the Adviser shall not relieve the Fund from any liability which the Fund or the Adviser may have to the Dealer Manager, a Selling Group Member, a Soliciting Dealer or any such person or otherwise, unless such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. The Dealer Manager, a Selling Group Member, a Soliciting Dealer or such person shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of the Dealer Manager, a Selling Group Member, a Soliciting Dealer or of such person unless the employment of such counsel shall have been authorized in writing by the Fund or the Adviser, as the case may be, in connection with the defense of such Proceeding or the Fund or the Adviser shall not have, within a reasonable period of time in light of the circumstances, employed counsel to have charge of the defense of such Proceeding or such indemnified party or parties shall have reasonably concluded (based on advice from counsel) that there may be defenses available to it or them which are different from, additional to or in conflict with those available to the Fund or the Adviser (in which case the Fund or the Adviser shall not have the right to direct the defense of such Proceeding on behalf of the indemnified party or parties, but the Fund or the Adviser may employ counsel and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Fund or the Adviser, as the case may be), in any of which events the reasonable fees and expenses shall be borne by the Fund or the Adviser and paid as incurred (it being understood, however, that the Fund and the Adviser shall not be liable for the expenses of more than one separate counsel (in addition to any local counsel) in any one Proceeding or series of related Proceedings in the same jurisdiction representing the indemnified parties who are parties to such Proceeding). The Fund and the Adviser shall not be liable for any settlement of any Proceeding effected without their written consent, but if a Proceeding is settled with the written consent of the Fund or the Adviser, the Fund or the Adviser, as the case may be, agree to indemnify and hold harmless the Dealer Manager, a Selling Group Member, a Soliciting Dealer and any such person from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second sentence of this paragraph, then the indemnifying party agrees that it shall be liable for any settlement of any Proceeding effected without its written consent if (i) such settlement is entered into more than 60 business days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement and (iii) such indemnified party shall have given the indemnifying party at least 30 days’ prior
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notice of its intention to settle. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened Proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such Proceeding and does not include an admission of fault, culpability or a failure to act, by or on behalf of such indemnified party unless such indemnified party gives written consent to such admission of fault, culpability or a failure to act.
| (b) | The Dealer Manager agrees to indemnify, defend and hold harmless the Fund and the Adviser, and their directors or trustees (as applicable) and officers, and any person who controls the Fund or the Adviser, within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons to the same extent as the foregoing indemnity from the Fund or the Adviser to the Dealer Manager, from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, the Fund, the Adviser or any such person may incur under the Securities Act, the Exchange Act, the Investment Company Act, the Advisers Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in and in conformity with information furnished in writing by or on behalf of the Dealer Manager, Selling Group Members or Soliciting Dealers to the Fund expressly for use with reference to the Dealer Manager in the Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof by the Fund) or in a Prospectus, or arises out of or is based upon any omission or alleged omission to state a material fact in connection with such information required to be stated in such Registration Statement or such Prospectus or necessary to make such information not misleading (with respect to the Prospectus, in light of the circumstances under which they were made). |
If any Proceeding is brought against the Fund, the Adviser or any such person in respect of which indemnity may be sought against the Dealer Manager pursuant to the foregoing paragraph, the Fund, the Adviser or such person shall promptly notify the Dealer Manager in writing of the institution of such Proceeding and the Dealer Manager shall assume the defense of such Proceeding, including the employment of counsel reasonably satisfactory to such indemnified party and payment of all reasonable fees and expenses; provided, however, that the omission to so notify the Dealer Manager shall not relieve the Dealer Manager from any liability which the Dealer Manager may have to the Fund or any such person or otherwise, unless such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. The Fund, the Adviser or such person shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of the Fund, the Adviser or such person, as the case may be, unless the employment of such counsel shall have been authorized in writing by the Dealer Manager in connection with the defense of such Proceeding or such Dealer Manager shall not have, within a reasonable period of time in light of the circumstances, employed counsel to have charge of the defense of such Proceeding or such indemnified party or parties shall have reasonably concluded (based on advice from counsel) that there may be defenses available to it or them which are different from or additional to or in conflict with those available to the Dealer Manager (in which case the Dealer Manager shall not have the right to direct the defense of such Proceeding on behalf of the indemnified party or parties, but the Dealer Manager may employ counsel and participate in the defense thereof
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but the fees and expenses of such counsel shall be at the expense of the Dealer Manager), in any of which events the reasonable fees and expenses shall be borne by the Dealer Manager and paid as incurred (it being understood, however, that the Dealer Manager shall not be liable for the expenses of more than one separate counsel (in addition to any local counsel) in any one Proceeding or series of related Proceedings in the same jurisdiction representing the indemnified parties who are parties to such Proceeding). The Dealer Manager shall not be liable for any settlement of any such Proceeding effected without the written consent of the Dealer Manager but if settled with the written consent of the Dealer Manager, the Dealer Manager agrees to indemnify and hold harmless the Fund, the Adviser and any such person from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second sentence of this paragraph, then the indemnifying party agrees that it shall be liable for any settlement of any Proceeding effected without its written consent if (i) such settlement is entered into more than 60 business days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement and (iii) such indemnified party shall have given the indemnifying party at least 30 days’ prior notice of its intention to settle. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened Proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such Proceeding and does not include an admission of fault, culpability or a failure to act, by or on behalf of such indemnified party unless such indemnified party gives written consent to such admission of fault, culpability or a failure to act.
| (c) | If the indemnification provided for in this Section 7 is unavailable to an indemnified party under subsections (a) and (b) of this Section 7 in respect of any losses, damages, expenses, liabilities or claims referred to therein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, damages, expenses, liabilities or claims (i) in such proportion as is appropriate to reflect the relative benefits received by the Fund or the Adviser on the one hand and the Dealer Manager, Selling Group Member(s) or Soliciting Dealer(s) on the other hand from the offering of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Fund or the Adviser on the one hand and of the Dealer Manager on the other in connection with the statements or omissions which resulted in such losses, damages, expenses, liabilities or claims, as well as any other relevant equitable considerations with respect to the Offer. The relative benefits received by the Fund or the Adviser on the one hand and the Dealer Manager, Selling Group Member(s) or Soliciting Dealer(s) on the other shall be deemed to be in the same respective proportions as the total proceeds from the Offer (net of the Dealer Manager Fee but before deducting expenses) received by the Fund or the Adviser and the total Dealer Manager Fee received by the Dealer Manager, bear to the aggregate public offering price of the Shares. The relative fault of the Fund or the Adviser on the one hand and of the Dealer Manager, Selling Group Member(s) or Soliciting Dealer(s) on the other shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or omission or alleged omission relates to information supplied by the Fund or the Adviser or |
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| the Dealer Manager and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, damages, expenses, liabilities and claims referred to in this subsection shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with investigating, preparing to defend or defending any Proceeding. |
| (d) | The Fund, the Adviser and the Dealer Manager agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in subsection (c) above. Notwithstanding the provisions of this Section 7, neither the Dealer Manager nor any Selling Group Member or Soliciting Dealer shall be required to contribute any amount in excess of the fees received by it. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. |
| (e) | Notwithstanding any other provisions in this Section 7, no party shall be entitled to indemnification or contribution under this Agreement against any loss, claim, liability, expense or damage arising by reason of such person’s willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder or by reason of such person’s reckless disregard of such person’s obligations and duties thereunder. The parties hereto acknowledge that the foregoing provision shall not be construed to impose upon any such parties any duties under this Agreement other than as specifically set forth herein (it being understood that the Dealer Manager, Selling Group Members and Soliciting Dealers have no duty hereunder to the Fund or the Adviser to perform any due diligence investigation). |
| (f) | The indemnity and contribution agreements contained in this Section 7 and the covenants, warranties and representations of the Fund and the Adviser contained in this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the Dealer Manager, a Selling Group Member, a Soliciting Dealer, and their respective partners, directors or officers or any person (including each partner, officer or director of such person) who controls the Dealer Manager, a Selling Group Member or a Soliciting Dealer within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, or by or on behalf of the Fund or the Adviser, their directors, trustees or officers or any person who controls the Fund or the Adviser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and shall survive any termination of this Agreement or the issuance and delivery of the Rights. The Fund, the Adviser and the Dealer Manager agree promptly to notify each other of the commencement of any Proceeding against it and, in the case of the Fund or the Adviser against any of their officers or directors in connection with the issuance of the Rights, or in connection with the Registration Statement or Prospectus. |
| (g) | The Fund and the Adviser acknowledge that the statements under the heading “Distribution Policy” in the Prospectus constitute the only information furnished in writing to the Fund by the Dealer Manager expressly for use in such document, and the Dealer Manager confirms that such statements are correct in all material respects. |
| 8. | Representations, Warranties and Agreements to Survive Delivery. The respective agreements, representations, warranties, indemnities and other statements of the Fund or its officers, of the Adviser and of the Dealer Manager set forth in or made pursuant to this Agreement shall survive |
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| the Expiration Date and will remain in full force and effect, regardless of any investigation made by or on behalf of Dealer Manager or the Fund or the Adviser or any of their officers, directors or controlling persons referred to in Section 7 hereof, and will survive delivery of and payment for the Shares pursuant to the Offer. The provisions of Sections 5 and 7 hereof shall survive the termination or cancellation of this Agreement. |
| 9. | Termination of Agreement. |
| (a) | The obligations of the Dealer Manager hereunder shall be subject to termination in the absolute discretion of the Dealer Manager, by notice given to the Fund prior to 5:00 p.m., New York time on the Expiration Date, if (x) since the time of execution of this Agreement or the earlier respective dates as of which information is given in the Registration Statement and the Prospectus, there has been any material adverse change, or any development involving a prospective material adverse change, in the condition (financial or otherwise), earnings, business affairs, business prospects, properties, net assets or results of operation of the Fund, which would, in the Dealer Manager’s judgment, make it impracticable or inadvisable to proceed with the Offer on the terms and in the manner contemplated in the Registration Statement and the Prospectus, or (y) since the time of execution of this Agreement, there shall have occurred: (i) a suspension or material limitation in trading in securities generally on the NYSE, NYSE American or the NASDAQ Stock Market; (ii) a suspension or material limitation in trading in the Fund’s Common Shares or in the Rights on the NYSE; (iii) a general moratorium on commercial banking activities declared by either federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) a material adverse change in the financial or securities markets in the United States or the international financial markets; (v) acts of terrorism or a material outbreak or escalation of hostilities involving the United States or a declaration by the United States of a national emergency or war; or (vi) any other calamity or crisis or any change in financial, political, economic, currency, banking or social conditions in the United States, if the effect of any such event specified in clause (v) or (vi) in the Dealer Manager’s judgment makes it impracticable or inadvisable to proceed with the Offer on the terms and in the manner contemplated in the Registration Statement and the Prospectus. |
| (b) | If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 5 and the Dealer Manager shall not have any obligation to purchase any Shares upon exercise of Rights. |
| 10. | Notices. All communications hereunder will be in writing and effective only on receipt, and, if sent to the Dealer Manager, will be mailed, delivered or telegraphed and confirmed to UBS Securities LLC, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: Syndicate Group and, if to the Fund or the Adviser, shall be sufficient in all respects if delivered or sent to the Fund or the Adviser at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. |
| 11. | Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns and will inure to the benefit of the officers and directors and controlling persons referred to in Section 7 hereof, and no other person will have any right or obligation hereunder. |
| 12. | Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York. |
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| 13. | Submission to Jurisdiction. Except as set forth below, no claim (a “Claim”) which relates to theterms of this Agreement or the transactions contemplated hereby may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts shall have jurisdiction over the adjudication of such matters, and each of the Fund and the Adviser consent to the jurisdiction of such courts and personal service with respect thereto. Each of the Fund and the Adviser hereby consents to personal jurisdiction, service and venue in any court in which any Claim arising out of or in any way relating to this Agreement is brought by any third party against the Dealer Manager or any indemnified party. Each of the Dealer Manager, the Fund (on its behalf and, to the extent permitted by applicable law, on behalf of its shareholders and affiliates) and the Adviser (on its behalf and, to the extent permitted by applicable law, on behalf of its shareholders and affiliates) waive all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) in any way arising out of or relating to this Agreement. Each of the Fund and the Adviser agrees that a final judgment in any such action, proceeding or counterclaim brought in any such court shall be conclusive and binding upon the Fund or the Adviser, as the case may be, and may be enforced in any other courts in the jurisdiction of which the Fund or the Adviser is or may be subject, by suit upon such judgment. |
| 14. | Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile transmission or other similar electronic transmission (such as e-mail) shall be effective as delivery of a manually executed counterpart hereof. |
[Signature Pages Follow]
3
If the foregoing is in accordance with your understanding of our agreement, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement among the Fund, the Adviser and the Dealer Manager.
| Very truly yours,
| ||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ | |
| By: ▇▇▇▇ ▇. ▇▇▇▇▇ | ||
| Title President | ||
| ANGEL OAK CAPITAL ADVISORS, LLC | ||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ | |
| By: ▇▇▇▇ ▇. ▇▇▇▇▇ | ||
| Title Secretary | ||
[Signature Page to Dealer Manager Agreement]
| The foregoing Agreement is hereby confirmed and accepted as of the date first above written. | ||
| UBS SECURITIES LLC | ||
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | ||
| Title: Managing Director | ||
| By: | /s/ ▇▇▇▇▇ ▇▇ ▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇▇ ▇▇▇▇ | ||
| Title: Associate Director | ||
[Signature Page to Dealer Manager Agreement]
Exhibit A
ANGEL OAK FINANCIAL STRATEGIES INCOME TERM TRUST
5,076,333 Shares of Beneficial Interest
Issuable Upon Exercise of Transferable Rights
to Subscribe for Such Shares
SELLING GROUP AGREEMENT
New York, New York
September 20, 2021
UBS Securities LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
New York, New York 10019
Ladies and Gentlemen:
We understand that Angel Oak Financial Strategies Income Term Trust, a Delaware statutory trust (the “Fund”), proposes to issue to holders of record (the “Record Date Shareholders”) as of the close of business on the record date (the “Record Date”) set forth in the Prospectus (as defined in the Dealer Manager Agreement (the “Dealer Manager Agreement”), dated September 20, 2021, among the Fund, Angel Oak Capital Advisors, LLC (the “Adviser”) and UBS Securities LLC, as the dealer manager (the “Dealer Manager”)) transferable rights entitling such Record Date Shareholders to subscribe for up to 5,076,333 common shares (each, a “Share,” and collectively, the “Shares”) of beneficial interest, par value $0.001 per share (the “Common Shares”), of the Fund (the “Offer”). Pursuant to the terms of the Offer, the Fund is issuing each Record Date Shareholder one transferable right (each, a “Right,” and collectively, the “Rights”) for each Common Share held by such Record Date Shareholder on the Record Date. Such Rights entitle their holders to acquire during the subscription period set forth in the Prospectus (the “Subscription Period”), at the price set forth in such Prospectus (the “Subscription Price”), one (1) Share for each three (3) Rights (except that any Record Date Shareholder who owns fewer than three Common Shares as of the Record Date will be able to subscribe for one full Share pursuant to the primary subscription), on the terms and conditions set forth in such Prospectus. No fractional shares will be issued. Any Record Date Shareholder who fully exercises all Rights initially issued to such Record Date Shareholder (other than those Rights that cannot be exercised because they represent the right to acquire less than one Share) will be entitled to subscribe for, subject to allocation, additional Shares (the “Over-Subscription Privilege”) on the terms and conditions set forth in such Prospectus. The Rights are transferable and are admitted for trading on the New York Stock Exchange under the symbol “FINS.RT”.
We further understand that the Fund has appointed UBS Securities LLC to act as the Dealer Manager in connection with the Offer and has authorized the Dealer Manager to form and manage a group of broker-dealers (each, a “Selling Group Member,” and collectively, the “Selling Group”) to solicit the exercise of Rights and to sell Shares purchased by the Dealer Manager from the Fund through the exercise of Rights.
We hereby express our interest in participating in the Offer as a Selling Group Member.
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We hereby agree with you as follows:
| 1. | We have received and reviewed the Fund’s Prospectus relating to the Offer and we understand that additional copies of the Prospectus (or of the Prospectus as it may be subsequently supplemented or amended, if applicable) and any other solicitation materials authorized by the Fund relating to the Offer (“Offering Materials”) will be supplied to us in reasonable quantities upon our request therefor to you. We agree that we will not use any solicitation material other than the Prospectus (as supplemented or amended, if applicable) and such Offering Materials and we agree not to make any representation, oral or written, to any shareholders or prospective shareholders of the Fund that are not contained in the Prospectus, unless previously authorized to do so in writing by the Fund. |
| 2. | From time to time during the Subscription Period commencing on September 20, 2021, and ending at 5:00 p.m., New York City time, on the Expiration Date (the term “Expiration Date” means October 14, 2021, unless and until the Fund shall, in its sole discretion, have extended the period for which the Offer is open, in which event the term “Expiration Date” with respect to the Offer will mean the latest time and date on which the Offer, as so extended by the Fund, will expire), we may solicit the exercise of Rights in connection with the Offer. We will be entitled to receive fees in the amounts and at the times described in Section 4 of this Selling Group Agreement with respect to Shares purchased pursuant to the exercise of Rights and with respect to which Computershare Inc. and Computershare Trust Company, N.A. (the “Subscription Agent”) have received, no later than 5:00 p.m., New York City time, on the Expiration Date, either (i) a properly completed and executed Subscription Certificate identifying us as the broker-dealer having been instrumental in the exercise of such Rights, and full payment for such Shares, or (ii) a Notice of Guaranteed Delivery guaranteeing to the Subscription Agent by the close of business of the second business day after the Expiration Date a properly completed and duly executed Subscription Certificate, similarly identifying us, and full payment for such Shares. We understand that we will not be paid these fees with respect to Shares purchased pursuant to an exercise of Rights for our own account or for the account of any of our affiliates. We also understand and agree that we are not entitled to receive any fees in connection with the solicitation of the exercise of Rights other than pursuant to the terms of this Selling Group Agreement and, in particular, that we will not be entitled to receive any fees under the Fund’s Soliciting Dealer Agreement. We agree to solicit the exercise of Rights in accordance with the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Investment Company Act of 1940, as amended, and the rules and regulations under each such Act, any applicable securities laws of any state or jurisdiction where such solicitations may be lawfully made, the applicable rules and regulations of any self-regulatory organization or registered national securities exchange and customary practice and subject to the terms of the Subscription Agent Agreement between the Fund and the Subscription Agent and the procedures described in the Fund’s registration statement on Form N-2 (File Nos. 333-240132 and 811-23358), as amended (the “Registration Statement”). For the avoidance of doubt and without limiting the foregoing, we acknowledge and agree that the Dealer Manager has no responsibility for compliance by any person other than the Dealer Manager and its affiliated purchasers (“Affiliated Purchasers”), as that term is defined in Rule 100 of Regulation M (“Regulation M”) under the Exchange Act, with Regulation M, including with respect to all bids for, purchases of, or attempts to induce any person to bid for or purchase, including any solicitation of, the Rights or Shares. |
A-2
| 3. | From time to time during the Subscription Period, we may indicate interest in purchasing Shares from the Dealer Manager. We understand that from time to time the Dealer Manager intends to offer Shares obtained or to be obtained by the Dealer Manager through the exercise of Rights to Selling Group Members who have so indicated interest at prices which shall be determined by the Dealer Manager (the “Offering Price”). We agree that, with respect to any such Shares purchased by us from the Dealer Manager, the sale of such Shares to us shall be irrevocable, and we will offer them to the public at the Offering Price at which we purchase them from the Dealer Manager. Shares not sold by us at such Offering Price may be offered by us after the next succeeding Offering Price is set at the latest Offering Price set by the Dealer Manager. The Dealer Manager agrees that, if requested by any Selling Group Member, and subject to applicable law, the Dealer Manager will set a new Offering Price prior to 4:00 p.m., New York City time, on any business day. We agree to advise the Dealer Manager from time to time upon request, prior to the termination of this Selling Group Agreement, of the number of Shares remaining unsold which were purchased by us from the Dealer Manager and, upon the Dealer Manager’s request, we will resell to the Dealer Manager any of such Shares remaining unsold at the purchase price thereof if in the Dealer Manager’s opinion such Shares are needed to make delivery against sales made to other Selling Group Members. Any shares purchased hereunder from the Dealer Manager shall be subject to regular way settlement through the facilities of The Depository Trust Company (“DTC”). |
| 4. | We understand that you will remit to us on or before the tenth business day following the day the Fund issues Shares after the Expiration Date, following receipt by you from the Fund of the Dealer Manager Fee (as defined in the Dealer Manager Agreement), a fee (the “Selling Fee”) equal to 2.00% of the Subscription Price per Share for (A) each Share issued pursuant to the exercise of Rights or the Over-Subscription Privilege pursuant to each Subscription Certificate upon which we are designated, as certified to you by the Subscription Agent, as a result of our solicitation efforts in accordance with Section 2 and (B) each Share sold by the Dealer Manager to us in accordance with Section 3 less any Shares resold to the Dealer Manager in accordance with Section 3. We understand that with respect to each Share sold by the Dealer Manager to us in accordance with Section 3 less any Shares resold to the Dealer Manager in accordance with Section 3, such fee may from time to time vary from 2.00% of the Subscription Price per Share. Your only obligation with respect to payment of the Selling Fee to us is to remit to us amounts owing to us and actually received by you from the Fund. Except as aforesaid, you shall be under no liability to make any payments to us pursuant to this Selling Group Agreement. We also understand that the Fund and the Adviser have agreed to indemnify us pursuant to the terms set forth in the Dealer Manager Agreement. |
| 5. | We agree that you, as Dealer Manager, have full authority to take such action as may seem advisable to you in respect of all matters pertaining to the Offer. You are authorized to approve on our behalf any amendments or supplements to the Registration Statement or the Prospectus. |
| 6. | We represent that we are a member in good standing of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and, in making sales of Shares, agree to comply with all applicable rules of FINRA including, without limitation, FINRA Rules 2040, 5130 and 5141. We understand that no action has been taken by you or the Fund to permit the solicitation of the exercise of Rights or the sale of Shares in any jurisdiction (other than the United States) where action would be required for such purpose. We agree that we |
A-3
| will not, without your approval in advance, buy, sell, deal or trade in, on a when-issued basis or otherwise, the Rights or the Shares or any other option to acquire or sell Shares for our own account or for the accounts of customers, except as provided in Sections 2 and 3 hereof and except that we may buy or sell Rights or Shares in brokerage transactions on unsolicited orders which have not resulted from activities on our part in connection with the solicitation of the exercise of Rights and which are executed by us in the ordinary course of our brokerage business. We will keep an accurate record of the names and addresses of all persons to whom we give copies of the Registration Statement, the Prospectus, any preliminary prospectus (or any amendment or supplement thereto) or any Offering Materials and, when furnished with any subsequent amendment to the Registration Statement and any subsequent prospectus, we will, upon your request, promptly forward copies thereof to such persons. |
| 7. | We expressly disclaim any fiduciary or similar obligations to the Fund, either in connection with the transactions contemplated by the Dealer Manager Agreement or any matters leading up to such transactions, and understand that pursuant to the Dealer Manager Agreement the Fund has confirmed its understanding and agreement with respect to such disclaimer. |
| 8. | Nothing contained in this Selling Group Agreement will constitute the Selling Group Members partners with the Dealer Manager or with one another or create any association between those parties, or will render the Dealer Manager or the Fund liable for the obligations of any Selling Group Member. The Dealer Manager will be under no liability to make any payment to any Selling Group Member other than as provided in Section 4 of this Selling Group Agreement, and will be subject to no other liabilities to any Selling Group Member, and no obligations of any sort will be implied. We agree to indemnify and hold harmless the Fund, the Adviser, you and each other Selling Group Member and each person, if any, who controls you and any such Selling Group Member within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, against loss or liability caused by any breach by us of the terms of this Selling Group Agreement. |
| 9. | We agree to pay any transfer taxes which may be assessed and paid on account of any sales or transfers for our account. |
| 10. | All communications to you relating to the Offer will be addressed to: UBS Securities LLC, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: Syndicate Group. |
| 11. | This Selling Group Agreement will be governed by the internal laws of the State of New York. |
[Signature Page Follows]
A-4
A signed copy of this Selling Group Agreement will be promptly returned to the Selling Group Member at the address set forth below.
| Very truly yours, | ||
| UBS SECURITIES LLC | ||
| By: |
| |
| Name: | ||
| Title: | ||
| By: |
| |
| Name: | ||
| Title: | ||
PLEASE COMPLETE THE INFORMATION BELOW
| Printed Firm Name | Address | |
| Contact at Selling Group Member | ||
| Authorized Signature | Area Code and Telephone | |
| Number | ||
| Name and Title | Facsimile Number | |
Dated:
Payment of the Selling Fee shall be mailed
by check to the following address:
A-5
Exhibit B
ANGEL OAK FINANCIAL STRATEGIES INCOME TERM TRUST
5,076,333 Shares of Beneficial Interest
Issuable Upon Exercise of Transferable Rights
to Subscribe for Such Shares
SOLICITING DEALER AGREEMENT
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
October 14, 2021, UNLESS EXTENDED
New York, New York
September 20, 2021
To Securities Dealers and Brokers:
Angel Oak Financial Strategies Income Term Trust, a Delaware statutory trust (the “Fund”), is issuing to its shareholders of record (“Record Date Shareholders”) as of the close of business on September 20, 2021 (the “Record Date”) transferable rights (“Rights”) to subscribe for an aggregate of up to 5,076,333 common shares (the “Shares”) of beneficial interest, par value $0.001 per share (the “Common Shares”), of the Fund upon the terms and subject to the conditions set forth in the Fund’s Prospectus (the “Offer”). Each such Record Date Shareholder is being issued one (1) Right for each full Common Share owned on the Record Date. Such Rights entitle their holders to acquire during the Subscription Period (as hereinafter defined) at the Subscription Price (as hereinafter defined) one Share for each three (3) Rights (except that any Record Date Shareholder who owns fewer than three (3) Common Shares as of the Record Date will be able to subscribe for one full Share pursuant to the primary subscription), on the terms and conditions set forth in such Prospectus. No fractional shares will be issued. Any Record Date Shareholder who fully exercises all Rights initially issued to such Record Date Shareholder (other than those Rights that cannot be exercised because they represent the right to acquire less than one Share) will be entitled to subscribe for, subject to allocation, additional Shares (the “Over-Subscription Privilege”) on the terms and conditions set forth in such Prospectus. The Rights are transferable and are admitted for trading on the New York Stock Exchange (the “NYSE”) under the symbol “FINS.RT.”
The Subscription Price will be determined based on a formula equal to 92.5% of the average of the last reported sales price of a Common Share on the NYSE on the date on which the Offer expires, as such date may be extended from time to time, and each of the four (4) preceding trading days (the “Formula Price”). If, however, the Formula Price is less than 86% of the net asset value (“NAV”) per Common Share at the close of trading on the NYSE on the date on which the Offer expires, as such date may be extended from time to time, then the Subscription Price will be 86% of the NAV per Common Share at the close of trading on the NYSE on that day. The Subscription Period will commence on September 20, 2021, and end at 5:00 p.m., New York City time on the Expiration Date (the term “Expiration Date” means October 14, 2021, unless and until the Fund shall, in its sole discretion, have extended the period for which the Offer is open, in which event the term “Expiration Date” with respect to the Offer will mean the latest time and date on which the Offer, as so extended by the Fund, will expire).
For the duration of the Offer, the Fund has authorized and directed the Dealer Manager (as hereinafter defined) to reallow, and the Dealer Manager has agreed to reallow, a fee to any qualified broker or dealer executing a Soliciting Dealer Agreement who solicits the exercise of Rights and the Over-
B-1
Subscription Privilege in connection with the Offer and who complies with the procedures described below (a “Soliciting Dealer”). Upon timely delivery to Computershare Inc. and Computershare Trust Company, N.A., the Fund’s Subscription Agent for the Offer, of payment for Shares purchased pursuant to the exercise of Rights and the Over-Subscription Privilege and of properly completed and executed documentation as set forth in this Soliciting Dealer Agreement, a Soliciting Dealer will be entitled to receive a fee (the “Soliciting Fee”) equal to 0.50% of the Subscription Price per Share so purchased subject to a maximum fee based on the number of Common Shares held by such Soliciting Dealer through The Depository Trust Company (“DTC”) on the Record Date; provided, however, that no payment shall be due with respect to the issuance of any Shares until payment therefor is actually received. A qualified broker or dealer is a broker or dealer which is a member of a registered national securities exchange in the United States or the Financial Industry Regulatory Authority, Inc. (“FINRA”) or any foreign broker or dealer not eligible for membership who is not making solicitations outside the United States, who is relying on Rule 15a-6 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to be exempt from registration in the United States as a broker or dealer, and who agrees to conform to the Rules of FINRA, including, without limitation, FINRA Rules 2040, 5130 and 5141 thereof, in making solicitations in the United States to the same extent as if it were a member thereof.
The Fund has authorized and directed the Dealer Manager to pay, and the Dealer Manager has agreed to pay, the Soliciting Fees payable to the undersigned Soliciting Dealer, and the Fund and the Adviser (as defined below) have agreed to indemnify such Soliciting Dealer on the terms set forth in the Dealer Manager Agreement (the “Dealer Manager Agreement”), dated September 20, 2021, among the Fund, Angel Oak Capital Advisors, LLC (the “Adviser”) and UBS Securities LLC, as the dealer manager (the “Dealer Manager”). Solicitation and other activities by Soliciting Dealers may be undertaken only in accordance with the applicable rules and regulations of the Securities and Exchange Commission and only in those states and other jurisdictions where such solicitations and other activities may lawfully be undertaken and in accordance with the laws thereof. Compensation will not be paid for solicitations in any state or other jurisdiction in which, in the opinion of counsel to the Fund or counsel to the Dealer Manager, such compensation may not lawfully be paid. No Soliciting Dealer shall be paid Soliciting Fees with respect to Shares purchased pursuant to an exercise of Rights and the Over-Subscription Privilege for its own account or for the account of any affiliate of the Soliciting Dealer. No Soliciting Dealer or any other person is authorized by the Fund or the Dealer Manager to give any information or make any representations in connection with the Offer other than those contained in the Prospectus and other authorized solicitation material furnished by the Fund through the Dealer Manager. No Soliciting Dealer is authorized to act as agent of the Fund or the Dealer Manager in any connection or transaction. In addition, nothing herein contained shall constitute the Soliciting Dealers partners with the Dealer Manager or with one another, or agents of the Dealer Manager or of the Fund, or create any association between such parties, or shall render the Dealer Manager or the Fund liable for the obligations of any Soliciting Dealer. The Dealer Manager shall be under no liability to make any payment to any Soliciting Dealer, and shall be subject to no other liabilities to any Soliciting Dealer, and no obligations of any sort shall be implied.
In order for a Soliciting Dealer to receive Soliciting Fees, the Subscription Agent must have received from such Soliciting Dealer no later than 5:00 p.m., New York City time, on the Expiration Date, either (i) a properly completed and duly executed Subscription Certificate with respect to Shares purchased pursuant to the exercise of Rights and the Over-Subscription Privilege and full payment for such Shares or (ii) a Notice of Guaranteed Delivery guaranteeing delivery to the Subscription Agent by close of business on the second business day after the Expiration Date of (a) a properly completed and duly executed Subscription Certificate with respect to Shares purchased pursuant to the exercise of Rights and the Over-Subscription Privilege and (b) full payment for such Shares. Soliciting Fees will only be paid after receipt by the Subscription Agent of a properly completed and duly executed Soliciting Dealer Agreement and a Subscription Certificate designating the Soliciting Dealer in the applicable portion hereof. In the case of a Notice of Guaranteed Delivery, Soliciting Fees will only be paid after delivery in accordance with such
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Notice of Guaranteed Delivery has been effected. Soliciting Fees will be paid by the Fund (through the Subscription Agent) to the Soliciting Dealer by check to an address designated by the Soliciting Dealer below by the tenth business day following the day the Fund issues Shares after the Expiration Date.
All questions as to the form, validity and eligibility (including time of receipt) of this Soliciting Dealer Agreement will be determined by the Fund, in its sole discretion, which determination shall be final and binding. Unless waived, any irregularities in connection with a Soliciting Dealer Agreement or delivery thereof must be cured within such time as the Fund shall determine. None of the Fund, the Dealer Manager, the Subscription Agent, the Information Agent for the Offer or any other person will be under any duty to give notification of any defects or irregularities in any Soliciting Dealer Agreement or incur any liability for failure to give such notification.
The acceptance of Soliciting Fees from the Fund by the undersigned Soliciting Dealer shall constitute a representation by such Soliciting Dealer to the Fund that: (i) it has received and reviewed the Prospectus; (ii) in soliciting purchases of Shares pursuant to the exercise of the Rights and the Over-Subscription Privilege, it has complied with the applicable requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the applicable rules and regulations thereunder, any applicable securities laws of any state or jurisdiction where such solicitations were made, and the applicable rules and regulations of any self-regulatory organization or registered national securities exchange; (iii) in soliciting purchases of Shares pursuant to the exercise of the Rights and the Over-Subscription Privilege, it has not published, circulated or used any soliciting materials other than the Prospectus and any other authorized solicitation material furnished by the Fund through the Dealer Manager and has not made any written representations concerning the Fund to any holders or prospective holders of Shares or Rights other than those contained in such materials or otherwise previously authorized in writing by the Fund or otherwise permitted by applicable law; (iv) it has not purported to act as agent of the Fund or the Dealer Manager in any connection or transaction relating to the Offer; (v) the information contained in this Soliciting Dealer Agreement is, to its best knowledge, true and complete; (vi) it is not affiliated with the Fund; (vii) it will not accept Soliciting Fees paid by the Fund pursuant to the terms hereof with respect to Shares purchased by the Soliciting Dealer pursuant to an exercise of Rights and the Over-Subscription Privilege for its own account or the account of any affiliates; (viii) it will not remit, directly or indirectly, any part of Soliciting Fees paid by the Fund pursuant to the terms hereof to any beneficial owner of ▇▇▇▇▇▇ purchased pursuant to the Offer; and (ix) it has agreed to the amount of the Soliciting Fees and the terms and conditions set forth herein with respect to receiving such Soliciting Fees. For the avoidance of doubt and without limiting clause (ii) of the foregoing sentence, the undersigned Soliciting Dealer acknowledges and agrees that the undersigned Soliciting Dealer is solely responsible for compliance by it and its Affiliated Purchasers with Rule 101 of Regulation M under the Exchange Act, including with respect to all bids for, purchases of, or attempts to induce any person to bid for or purchase, including any solicitation of, the Rights or Shares, and that the Dealer Manager has no responsibility for ensuring that that the Soliciting Dealer’s solicitation activities comply with Regulation M. By returning a Soliciting Dealer Agreement and accepting Soliciting Fees, a Soliciting Dealer will be deemed to have agreed to indemnify the Fund, the Adviser and the Dealer Manager against losses, claims, damages and liabilities to which the Fund may become subject as a result of the breach of such Soliciting Dealer’s representations made herein and described above. In making the foregoing representations, Soliciting Dealers are reminded of the possible applicability of the anti-manipulation rules under the Exchange Act if they have bought, sold, dealt in or traded in any Shares for their own account since the commencement of the Offer. By returning a Soliciting Dealer Agreement, the Soliciting Dealer expressly disclaims any fiduciary or similar obligations to the Fund, either in connection with the transactions contemplated by the Dealer Manager Agreement or any matters leading up to such transactions, and understand that pursuant to the Dealer Manager Agreement the Fund has confirmed its understanding and agreement with respect to such disclaimer.
B-3
Upon expiration of the Offer, no Soliciting Fees will be payable to Soliciting Dealers with respect to ▇▇▇▇▇▇ purchased thereafter.
Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Dealer Manager Agreement or, if not defined therein, in the Prospectus.
This Soliciting Dealer Agreement will be governed by the laws of the State of New York.
Please execute this Soliciting Dealer Agreement below accepting the terms and conditions hereof and confirming that you are a member firm of FINRA or a foreign broker or dealer not eligible for membership who is not making solicitations outside the United States, who is relying on Rule 15a-6 under the Exchange Act to be exempt from registration in the United States, and who has conformed to the Rules of FINRA, including, without limitation, FINRA Rules 2040, 5130 and 5141 thereof, in making solicitations of the type being undertaken pursuant to the Offer in the United States to the same extent as if you were a member thereof, and certifying that you have solicited the purchase of the Shares pursuant to exercise of the Rights and the Over-Subscription Privilege, all as described above, in accordance with the terms and conditions set forth in this Soliciting Dealer Agreement. Please forward two executed copies of this Soliciting Dealer Agreement to: UBS Securities LLC, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: Syndicate Group.
[Signature Page Follows]
B-4
A signed copy of this Soliciting Dealer Agreement will be promptly returned to the Soliciting Dealer at the address set forth below.
| Very truly yours, | ||
| UBS SECURITIES LLC | ||
| By: |
| |
| Name: | ||
| Title: | ||
| By: |
| |
| Name: | ||
| Title: | ||
PLEASE COMPLETE THE INFORMATION BELOW
| Printed Firm Name | Address | |
| Contact at Soliciting Dealer | ||
| Authorized Signature | Area Code and Telephone | |
| Number | ||
| Name and Title | Facsimile Number | |
Dated:
Payment of the Soliciting Fee shall be mailed
by check to the following address:
B-5
EXHIBIT C
FORM OF OPINION OF
DECHERT LLP, COUNSEL FOR THE FUND
UBS Securities LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
New York, New York 10019
Re: Angel Oak Financial Strategies Income Term Trust Issuance of Transferable Rights to Purchase up to 5,076,333 Common Shares of Beneficial Interest
Ladies and Gentlemen:
We have acted as counsel to Angel Oak Financial Strategies Income Term Trust, a Delaware statutory trust (the “Fund”), in connection with the issuance by the Fund to the holders of the Fund’s common shares of beneficial interest, par value $0.001 per share (the “Common Shares”), of transferable rights (the “Rights”) entitling the holders of such Rights to purchase upon the exercise of the Rights, up to an aggregate of 5,076,333 Common Shares (the “Shares”), pursuant to a dealer manager agreement dated September 20, 2021 (the “Dealer Manager Agreement”), by and among (i) the Fund, (ii) Angel Oak Capital Advisors, LLC, a Delaware Corporation (the “Investment Adviser”), and (iii) you as the dealer manager (the “Dealer Manager”). This opinion is given pursuant to Section 6(b)(i) of the Dealer Manager Agreement. Except as otherwise indicated, capitalized terms used in this letter have the meanings given to them in the Dealer Manager Agreement.
As to matters of fact relating to our opinions, we have relied upon written representations of the parties in the Documents (as defined below), written representations made by the Fund, and written representations of officers and other representatives of the Fund, and we have examined originals, or certified copies or otherwise identified to our satisfaction, of the following documents (hereinafter collectively referred to as the “Documents”), without independent verification of the accuracy of such representations or of the information contained in the Documents.
| 1. | The notification of registration on Form N-8A (File No. 811-23358 ) of the Fund filed with the U.S. Securities and Exchange Commission (the “Commission”) under the Investment Company Act of 1940, as amended (the “1940 Act”), on June 28, 2018; |
| 2. | The registration statement on Form N-2 filed by the Fund with the U.S. Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “1933 Act”), and the 1940 Act (1933 Act File No. 333-240132 and 1940 Act File No. 811-23358); the registration statement, as amended at the time when it became effective, including the information deemed to be part thereof at the time of effectiveness pursuant to Rule 430B under the 1933 Act, being hereinafter referred to as the “Registration Statement”; |
| 3. | The prospectus, dated September 9, 2021 in the form it was filed with the Commission on September 20, 2021, pursuant to Rule 424(b) promulgated under the 1933 Act, including the Statement of Additional Information, dated September 9, 2021, included in such filing (the “Base Prospectus”); |
| 4. | The prospectus supplement, dated September 20, 2021, in the form it was filed with the Commission on September 20, 2021, pursuant to Rule 424(b) promulgated under the 1933 Act (the “Prospectus Supplement” and, together with the Base Prospectus, the “Prospectus”); |
| 5. | An executed copy of the officer’s certificate of ▇▇▇▇ ▇▇▇▇▇, President of the Fund, dated the date hereof (the “Officer’s Certificate”); |
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| 6. | An executed copy of the secretary’s certificate of ▇▇▇▇ ▇▇▇, Secretary of the Fund, dated the date hereof (the “Secretary’s Certificate”); |
| 7. | A certificate from the Secretary of State of the State of Delaware as to the existence and good standing of the Fund, as of a recent date (the “Delaware Certificate”); |
| 8. | The Agreement and Declaration of Trust of the Fund (as amended, the “Declaration of Trust”), including the statement of preferences relating to the Preferred Shares, certified pursuant to the Secretary’s Certificate; |
| 9. | The bylaws of the Fund (the “Bylaws” and, together with the Declaration of Trust, the “Organizational Documents”), certified pursuant to the Secretary’s Certificate; |
| 10. | Copies of certain resolutions of the Board of Trustees of the Fund (the “Board of Trustees”), adopted on September 8, 2021 certified pursuant to the Secretary’s Certificate; |
| 11. | The form of subscription certificate evidencing the Rights (the “Subscription Certificate”), certified as of the date hereof by an officer of the Fund; |
| 12. | An executed copy of the Dealer Manager Agreement; |
| 13. | An executed copy of the Subscription Agent Agreement between the Fund and Computershare Trust Company, N.A. and Computershare Inc. (together, “Computershare”), dated as of September 15, 2021 (the “Subscription Agent Agreement”); |
| 14. | An executed copy of the Information Agent Agreement between the Fund and ▇▇▇▇▇▇▇▇▇ LLC, dated as of August 12, 2021 (the “Information Agent Agreement”); |
| 15. | An executed copy of the Investment Advisory Agreement dated April 26, 2019, by and between the Fund and the Investment Adviser (the “Advisory Agreement” and, together with the Dealer Manager Agreement, the Subscription Agent Agreement and the Information Agent Agreement, the “Transaction Agreements”); and |
| 16. | An executed copy of the Expense Limitation Letter Agreement dated as of April 27, 2020, by and between the Investment Adviser and the Fund (the “Expense Limitation Agreement”). |
In addition, we have examined originals or copies of such other corporate records of the Fund, the Investment Adviser, certificates of public officials and officers of such persons and agreements and other documents as we have deemed necessary or appropriate as a basis for the opinions expressed below.
In our examination, we have assumed the genuineness of all signatures, the legal capacity and competence of all natural persons, the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. We have further assumed that there has been no oral modification of, or amendment or supplement (including any express or implied waiver however arising) to, the Dealer Manager Agreement or any other instrument or document used by us to form the basis of the opinions expressed herein. Representatives of this firm also attended meetings of the board of directors of the Fund at which certain actions were taken. In addition, we have assumed that (i) all natural persons who are signatories to the Dealer Manager Agreement have the legal capacity to enter into and perform their respective obligations under the Dealer Manager Agreement, (ii) each of the parties thereto (other than the Fund) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (iii) each of the parties thereto (other than the Fund) has the legal power
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and authority to enter into and perform all of its respective obligations under the Dealer Manager Agreement, (iv) the Dealer Manager Agreement has been duly authorized, executed and delivered by each of the parties thereto (other than the Fund) and (v) the Dealer Manager Agreement is the legal, valid and binding obligation of each party thereto (other than the Fund), enforceable against such persons in accordance with its terms. We further assume after due inquiry that (a) there has been no mutual mistake of fact or misunderstanding or fraud, duress or undue influence in connection with the negotiation, delivery and execution of the Dealer Manager Agreement and (b) there are and have been no agreements or understandings among parties, written or oral, and there is and has been no usage of trade or course of prior dealing among the parties that would, in either case, vary, supplement or qualify the terms of the Dealer Manager Agreement.
When an opinion set forth below refers to “our knowledge” or any similar expressions as used herein, it is limited to the actual knowledge of the attorneys of this firm who have rendered substantive legal services to the Fund in connection with the transactions contemplated by the Dealer Manager Agreement and our attorneys who have principal responsibility for representing the Fund on other matters in areas relevant to the opinions being rendered, which knowledge has been obtained by such attorneys in such capacity. Except to the extent expressly set forth in this letter, we have not undertaken any independent investigation to determine the existence or absence of those facts, and no inference as to the knowledge of the existence or absence of those facts should be drawn from our representation of the Fund. Without limiting the generality of the foregoing, it is expressly understood that no opinion is expressed with regard to: (a) the financial ability of the Investment Advisor to meet its obligations under the Advisory Agreement; (b) the truthfulness or accuracy of any applications, reports, plans, documents or financial statements furnished to the Dealer Manager by (or on behalf of) the Fund in connection with the Dealer Manager Agreement, the Registration Statement or the Prospectus; or (c) the truthfulness or accuracy of any representations or warranties made by the Fund in the Dealer Manager Agreement, the Registration Statement, the Prospectus or other documents described herein, which are not the subject of any of the opinions stated herein. Other than as set forth herein, we have not undertaken, for purposes of this opinion, any independent investigation to determine the existence or the absence of such facts, and no inference as to our knowledge of the existence or absence of such facts should be drawn from the fact of our representation of the Fund. Moreover, we have not searched the dockets of any court, administrative body, agency or other filing office in any jurisdiction.
We received telephonic confirmation from the staff at the Commission that the Registration Statement most recently became effective under the Securities Act on September 9, 2021.
Based upon and subject to the foregoing and such examination of law as we have deemed necessary and subject to the limitations, qualifications, exceptions and assumptions set forth herein, we are of the opinion that:
| i. | Based solely on our review of the Delaware Certificate, the Fund is in good standing and has a valid existence under the Delaware Statutory Trust Act (“DSTA”). |
| ii. | The Fund has the power and authority under the Declaration of Trust to operate as and carry on the business of an investment company, and exercise all the powers necessary and appropriate to the conduct of such operations, in each case as described in the Prospectus; |
| iii. | The Fund has the statutory trust power and authority under the DSTA to execute and deliver the Dealer Manager Agreement, Subscription Agent Agreement and Information Agent Agreement and to consummate the issuance of the Rights and the issuance and sale of the Shares upon the exercise of the Rights. |
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| iv. | The Fund is registered with the Commission under the 1940 Act as a diversified, closed-end management investment company. |
| v. | To our knowledge, the Fund Agreements are in full force and effect and, to our knowledge, neither the Fund nor any other party to any such agreement is in default thereunder, and to our knowledge, no event has occurred which with the passage of time or the giving of notice or both would constitute a default thereunder. |
| vi. | Each of the Dealer Manager Agreement, Subscription Agent Agreement and Information Agent Agreement has been duly authorized, executed and delivered by all requisite action on the part of the Fund under the DSTA. |
| vii. | Each of the Subscription Agent Agreement, Information Agent Agreement, Advisory Agreement and Expense Limitation Agreement is a valid and binding obligation of the Fund, enforceable against the Fund, in accordance with its terms. |
| viii. | Each of the Dealer Manager Agreement, Advisory Agreement and Expense Limitation Agreement complies in all material respects with the applicable provisions of the laws of the State of New York, the 1940 Act, the general rules and regulations adopted under the 1940 Act, the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and the rules and regulations adopted under the Advisers Act. |
| ix. | The execution and delivery by the Fund of, and the performance by the Fund of its obligations under, the Dealer Manager Agreement, Subscription Agent Agreement and Information Agent Agreement, and the issuance of the Rights and the issuance and sale of the Shares upon the exercise of the Rights as contemplated by the Dealer Manager Agreement will not conflict with the Organizational Documents. The performance by the Fund of its obligations under Advisory Agreement will not conflict with the Organizational Documents. |
| x. | The execution and delivery by the Fund of, and the performance by the Fund of its obligations under, the Dealer Manager Agreement, the Subscription Agent Agreement and the Information Agent Agreement, and the issuance of the Rights and the issuance and sale of the Shares upon the exercise of the Rights as contemplated by the Dealer Manager Agreement, (i) will not contravene: (a) any provision of the laws of the State of New York, the DSTA or any federal law of the United States of America that in our experience is normally applicable to Delaware statutory trusts of the same type as the Fund in relation to transactions of the type contemplated by the Transaction Agreements, provided that we express no opinion as to federal, state or foreign securities or Blue Sky laws (other than the 1940 Act); (b) any agreement or other instrument binding upon the Fund that is filed or incorporated by reference as an exhibit to the Registration Statement; or (c) to our knowledge, any judgment, injunction, order or decree binding upon the Fund, and (ii) will not cause the creation of any security interest or lien upon any of the property of the Fund. The performance by the Fund of its obligations under Advisory Agreement (i) will not contravene: (a) any provision of the laws of the State of New York, the DSTA or any federal law of the United States of America that in our experience is normally applicable to Delaware statutory trust of the same type as the Fund in relation to transactions of the type contemplated by the Transaction Agreements, provided that we express no opinion as to federal, state or foreign securities or Blue Sky laws (other than the 1940 Act); (b) any agreement or other instrument binding upon the Fund that is filed or incorporated by reference as an exhibit to the Registration Statement; or (c) to our knowledge, any |
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| judgment, injunction, order or decree binding upon the Fund, and (ii) will not cause the creation of any security interest or lien upon any of the property of the Fund. |
| xi. | No consent, approval, authorization, or order of, or qualification with, any governmental body, agency or, to our knowledge, court, under the laws of the State of New York, the DSTA or any federal law of the United States of America that in our experience is normally applicable to Delaware statutory trusts of the same type as the Fund in relation to transactions of the type contemplated by the Transaction Agreements is required for the performance by the Fund of its obligations under the Dealer Manager Agreement, the Subscription Agent Agreement or the Information Agent Agreement, except for: (a) the registration of the Shares and of the offering of the Rights under the 1933 Act pursuant to the Registration Statement, under the Exchange Act and under the 1940 Act; (b) such as may be required under state or foreign securities or Blue Sky laws as to which we express no opinion and (c) such other approvals as have been obtained. No consent, approval, authorization, or order of, or qualification with, any governmental body, agency or, to our knowledge, court, under the laws of the State of New York, the DSTA or any federal law of the United States of America that in our experience is normally applicable to Delaware statutory trusts of the same type as the Fund in relation to transactions of the type contemplated by the Transaction Agreements is required for the enforceability of the Advisory Agreement against the Fund, except for: (a) such as may be required under state or foreign securities or Blue Sky laws as to which we express no opinion and (b) such other approvals as have been obtained. |
| xii. | The provisions of the Organizational Documents do not violate the 1940 Act and the applicable rules and regulations under the 1940 Act. |
| xiii. | The Fund has authority to issue an unlimited number of Common Shares in accordance with the provisions set forth in the Declaration of Trust. The Rights and the Shares have been duly authorized by all requisite action on the part of the Fund under the DSTA and, when issued upon the exercise of the Rights in accordance with the terms of the Subscription Certificate, the Shares will be validly issued and fully paid and nonassessable, and free and clear of any preemptive rights or any similar rights arising under the DSTA or the Organizational Documents. |
| xiv. | The statements in the Prospectus under the caption “Description of Securities” insofar as such statements purport to summarize certain provisions of the Organizational Documents, 1940 Act or the DSTA fairly summarize such provisions in all material respects. The statements in the Prospectus under the captions “U.S. Federal Income Tax Consequences” and “Tax Matters,” insofar as they purport to describe provisions of U.S. federal income tax laws or legal conclusions with respect thereto, in our opinion fairly and accurately summarize the matters referred thereto in all material respects. |
The opinions stated herein are subject to the following qualifications:
| i. | The opinions expressed herein are limited by principles of equity (regardless of whether considered in a proceeding in equity or at law) that may limit the availability of certain rights and remedies and do not reflect the effect of bankruptcy (including preferences), insolvency, fraudulent conveyance, receivership, reorganization, moratorium and other laws or decisions relating to or affecting debtors’ obligations or creditors’ rights generally and, as to rights of indemnification and contribution, by principles of public policy. The opinions expressed above also do not reflect the effect of laws and equitable doctrines (including requirements that the |
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| parties to agreements act reasonably and in good faith and, with respect to collateral, in a commercially reasonable manner, and give reasonable notice prior to exercising rights and remedies) or the effect of the exercise of discretion of the court before which any proceeding may be brought. |
| ii. | Without limiting the generality of the foregoing, we express no opinion with respect to: (1) provisions in the Dealer Manager Agreement that provide that certain rights or obligations are absolute or unconditional; (2) provisions that restrict access to or waive legal or equitable remedies or access to courts; (3) provisions that affect or confer jurisdiction or purport to bind the Fund to the exclusive jurisdiction of any particular court or courts; (4) any provision of the Dealer Manager Agreement that may be construed as a forfeiture or penalty; or (5) any provision of the Dealer Manager Agreement that purports to provide that the terms thereof may not be varied or waived except in writing or that the express terms thereof supersede any inconsistent course of performance and/or usage of the trade. |
| iii. | Except to the extent expressly stated herein, we do not express any opinion as to (a) the compliance or non-compliance of any party (other than the Fund) to any of the Transaction Agreements with any state, federal or other laws or regulations applicable to such party or (b) the legal or regulatory status or the nature of the business of such party. |
| iv. | Except to the extent expressly stated herein with respect to the Fund, we do not express any opinion with respect to any law, rule or regulation that is applicable to any party to any of the Transaction Agreements or the transactions contemplated thereby solely because such law, rule or regulation is part of a regulatory regime applicable to any such party or any of its affiliates as a result of the specific assets or business operations of such party or such affiliates. |
| v. | Except with respect to the 1940 Act and the rules and regulations under the 1940 Act, to the extent referred to in paragraphs (xii) and (xiv) above, we do not express any opinion with respect to any securities, antifraud, consumer credit, debt collection, privacy, derivatives or commodities laws, rules or regulations or Regulations T, U or X of the Board of Governors of the Federal Reserve System or laws, rules or regulations relating to national security. |
| vi. | Except to the extent expressly stated in the opinions contained herein, the opinions stated herein are limited to the agreements and documents specifically identified in the opinions contained herein without regard to any agreement or other document referenced in such agreement or document (including agreements or other documents incorporated by reference or attached or annexed thereto). |
| vii. | We do not express any opinion whether the execution or delivery of the Dealer Manager Agreement by the Fund, or the performance by the Fund of its obligations under any Transaction Agreement, including the issuance of the Rights and the issuance and sale of the Shares upon the exercise of the Rights, will constitute a violation of, or a default under, any covenant, restriction or provision with respect to financial ratios or tests or any aspect of the financial condition or results of operations of the Fund. |
| viii. | We do not express any opinion with respect to the enforceability of any provision contained in any Transaction Agreement relating to any indemnification, contribution, non-reliance, exculpation, release, limitation or exclusion of remedies, waiver or other provisions having similar effect that may be contrary to public policy or violative of federal or state securities laws, rules or regulations, or to the extent any such provision purports to, or has the effect of, waiving or altering the statute of limitations. |
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| ix. | We do not express any opinion with respect to the enforceability of any provision contained in any Transaction Agreement purporting to prohibit, restrict or condition the assignment of rights under such Transaction Agreement to the extent that such prohibition, restriction or condition on assignability is ineffective pursuant to the Uniform Commercial Code. |
| x. | We have assumed that all conditions precedent contained in Section 6 of the Dealer Manager Agreement, which conditions require the delivery of documents, evidence or other items satisfactory in form, scope and/or substance to the Dealer Manager or the satisfaction of which is otherwise in the discretion or control of the Dealer Manager, have been, or contemporaneously with the delivery hereof will be, fully satisfied or waived. |
| xi. | We do not express any opinion with respect to the enforceability of any provision of any Transaction Agreement to the extent that such provision purports to bind the Fund to the exclusive jurisdiction of any particular court or courts. |
| xii. | Irrespective of the agreement of the parties to any Transaction Agreement concerning personal jurisdiction over them, a court may decline to hear a case on grounds of forum non conveniens or other doctrine limiting the availability of such court as a forum for resolution of disputes. In addition, we do not express any opinion with respect to the subject matter jurisdiction of the federal courts of the United States of America in any action arising out of or relating to any Transaction Agreement. |
| xiii. | We do not express any opinion with respect to the enforceability of any provision contained in the Transaction Agreements with respect to the choice of law or choice of forum of the parties to the Transaction Agreements. |
| xiv. | We do not express any opinion with respect to any of the fees paid or payable pursuant to any of the Transaction Agreements. |
| xv. | We do not express any opinion with respect to the enforceability of any provision contained in any Transaction Agreement granting any person any right to set off or apply any deposit, property or indebtedness except to the extent that the debt between the Fund and such person is a mutual debt. |
| xvi. | We do not express any opinion with respect to any of Section 13 of the Dealer Manager Agreement to the extent that such section provides for a waiver of trial by jury. |
| xvii. | Certain of the remedial and procedural provisions with respect to the security contained in the Transaction Agreements may be unenforceable in whole or in part. |
| xviii. | We do not express any opinion with respect to the enforceability of any provision contained in any Transaction Agreements providing any waiver, release, disclaimer or any other variation of any right or duty of any party to the extent that any such waiver, release, disclaimer or other variation is not enforceable pursuant to Sections 1-302 or 9-602 of the Uniform Commercial Code. |
| xix. | We do not express any opinion with respect to the creation, perfection or priority of any security interest. |
In addition, in rendering the foregoing opinions we have assumed that:
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| i. | the Organizational Documents are the only governing instruments, as defined under the DSTA, of the Fund; the Fund has, and since the time of its formation has had, at least one validly admitted and existing trustee of the Fund and (i) no procedures have been instituted for, and no other event has occurred, including, without limitation, any action taken by the Fund or its Board of Trustees or beneficial holders, as applicable, that would result in the liquidation, dissolution or winding-up of the Fund, (ii) no event has occurred that has adversely affected the good standing of the Fund under the DSTA, and the Fund has taken all actions required by the laws of the State of Delaware to maintain such good standing and (iii) no grounds exist for the revocation or forfeiture of the Fund’s Declaration of Trust; and |
We express no opinion herein as to any matters governed by any laws other than the laws of the State of New York, the DSTA, and the federal securities laws of the United States of America normally applicable to transactions of the type contemplated by the Dealer Manager Agreement by closed-end management investment companies registered under the 1940 Act.
The opinions expressed herein are limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated. This opinion speaks only as of the date hereof. We assume no obligation to supplement these opinions if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinions expressed herein after the date hereof.
The opinions expressed herein are solely for your benefit in connection with the transactions contemplated by the Dealer Manager Agreement and, without our express written consent, neither our opinion nor this opinion letter may be assigned or provided to or relied upon by any other person or by you for any other purpose (in each case other than the successor in interest of the Dealer Manager by means of merger, consolidation, transfer of business or other similar transaction).
Very truly yours,
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EXHIBIT D
FORM OF OPINION OF
DECHERT LLP, COUNSEL FOR THE ADVISER
UBS Securities LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
New York, New York 10019
Re: Angel Oak Capital Advisors, LLC
Ladies and Gentlemen:
We have acted as counsel for Angel Oak Capital Advisors, LLC, a limited liability corporation organized under the laws of Delaware (the “Investment Adviser”), in connection with the transactions contemplated by the Dealer Manager Agreement dated as of September 20, 2021 (the “Dealer Manager Agreement”), by and among (i) Angel Oak Financial Strategies Income Term Trust (the “Fund”), (ii) the Adviser, and (iii) you as the dealer manager (the “Dealer Manager”). This opinion is given pursuant to Section 6(b)(ii) of the Dealer Manager Agreement. Except as otherwise indicated, capitalized terms used in this letter have the meanings given to them in the Dealer Manager Agreement.
As to matters of fact relating to our opinions, we have relied upon written representations of the parties in the Documents (as defined below), written representations made by the Investment Adviser, and written representations of officers and other representatives of the Investment Adviser, and we have examined originals, or certified copies or otherwise identified to our satisfaction, of the following documents (hereinafter collectively referred to as the “Documents”), without independent verification of the accuracy of such representations or of the information contained in the Documents.
| 1. | The registration statement on Form N-2 filed by the Fund with the U.S. Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “1933 Act”), and the Investment Company Act of 1940, as amended (the “1940 Act”) (1933 Act File No. 333-240132 and 1940 Act File No. 811-23358); the registration statement, as amended at the time when it became effective, including the information deemed to be part thereof at the time of effectiveness pursuant to Rule 430B under the 1933 Act, being hereinafter referred to as the “Registration Statement”; |
| 2. | The prospectus, dated September 9, 2021 in the form it was filed with the Commission on September 20, 2021, pursuant to Rule 424(b) promulgated under the 1933 Act, including the Statement of Additional Information, dated September 9, 2021, included in such filing (the “Base Prospectus”); |
| 3. | The prospectus supplement, dated September 20, 2021, in the form it was filed with the Commission on September 20, 2021, pursuant to Rule 424(b) promulgated under the 1933 Act (the “Prospectus Supplement” and, together with the Base Prospectus, the “Prospectus”); |
| 4. | An executed copy of the officer’s certificate of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Authorized Signatory of the Investment Adviser, dated the date hereof (the “Officer’s Certificate”); |
| 5. | An executed copy of the secretary’s certificate of ▇▇▇▇ ▇. ▇▇▇▇▇, Company Secretary of the Investment Adviser, dated the date hereof (the “Secretary’s Certificate”); |
| 6. | A copy of the Certificate of Formation of the Investment Adviser, certified as of July 8, 2019 by the Secretary of State of the State of Delaware, and certified pursuant to the Secretary’s Certificate; |
| 7. | A copy of the Limited Liability Company Agreement of the Investment Adviser, as amended through the date hereof and currently in effect, and certified pursuant to the Secretary’s Certificate; |
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| 8. | A certificate, dated September 20, 2021, from the Secretary of State of the State of Delaware with respect to the Investment Adviser’s formation, good standing and existence in the State of Delaware (the “Delaware Certificate”); |
| 9. | A certificate, dated September 20, 2021, from the Secretary of State of the State of New York as to the Investment Adviser’s authorization to do business in the State of New York (the “New York Certificate”); |
| 10. | A certificate, dated September 20, 2021, from the Secretary of State of the State of Georgia as to the Investment Adviser’s authorization to do business in the State of Georgia (the “Georgia Certificate”); |
| 11. | A certificate, dated September 20, 2021, from the Secretary of State of the State of Washington as to the Investment Adviser’s authorization to do business in the State of Washington (the “Washington Certificate”); |
| 12. | A copy of the Investment Adviser’s Uniform Application for Investment Adviser Registration, filed on Form ADV; |
| 13. | An executed copy of the Dealer Manager Agreement; |
| 14. | An executed copy of the investment advisory agreement dated April 26, 2019, by and between the Fund and the Investment Adviser (the “Advisory Agreement” and, together with the Dealer Manager Agreement, the “Transaction Documents”); and |
| 15. | An executed copy of the Expense Limitation Letter Agreement, dated as of April 27, 2020, by and between the Fund and the Investment Adviser (the “Expense Limitation Agreement”). |
In addition, we have examined originals or copies of such other corporate records of the Fund and the Investment Adviser, certificates of public officials and officers of such persons and agreements and other documents as we have deemed necessary or appropriate as a basis for the opinions expressed below.
In making such examination and rendering the opinions set forth below, we have assumed the genuineness of all signatures, the legal capacity and competence of all persons, the authenticity of all documents submitted to us as originals, and the conformity to authentic original documents of all documents submitted to us as certified, conformed, photostatic or electronic copies of such documents. We have also assumed that each individual executing a Transaction Document on behalf of a party (other than the Investment Adviser) is authorized to do so, and that each of the parties (other than the Investment Adviser) executing any of the Transaction Documents had the requisite corporate, trust, limited liability company or partnership power to enter into and perform all obligations under such Transaction Documents and has validly executed and delivered each of the Transaction Documents to which such party is a signatory, and such party’s obligations set forth therein are valid and binding and are enforceable against such party in accordance with their terms. In addition, we have assumed that: (a) each of the parties to the Transaction Documents (other than the Investment Adviser) is validly existing and in good standing under the laws of the jurisdiction of its organization or formation; and (b) each of the parties to the Transaction Documents has received all agreed upon consideration for each Transaction Document to which it purports to be a party. We assume that (a) there has been no mutual mistake of fact, or misunderstanding or fraud, duress or undue influence in connection with the negotiation, delivery and execution of the Transaction Documents and (b) there are and have been no agreements or understandings among the parties, written or oral, and there is and has been no usage of trade or course of prior dealing among the parties that would, in either case, vary, supplement or qualify the terms of the Transaction Documents.
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When an opinion set forth below refers to “our knowledge” or any similar expressions as used herein, it is limited to the actual knowledge of the attorneys of this firm who have rendered substantive legal services to the Investment Adviser in connection with the transactions contemplated by the Dealer Manager Agreement and our attorneys who have principal responsibility for representing the Investment Adviser on other matters in areas relevant to the opinions being rendered, which knowledge has been obtained by such attorneys in such capacity. Except to the extent expressly set forth in this letter, we have not undertaken any independent investigation to determine the existence or absence of those facts, and no inference as to the knowledge of the existence or absence of those facts should be drawn from our representation of the Investment Adviser. Without limiting the generality of the foregoing, it is expressly understood that no opinion is expressed with regard to: (a) the truthfulness or accuracy of any applications, reports, plans, documents or financial statements furnished to the Dealer Manager by (or on behalf of) the Investment Adviser in connection with the Dealer Manager Agreement, the Registration Statement or the Prospectus; or (b) the truthfulness or accuracy of any representations or warranties made by the Investment Adviser in the Dealer Manager Agreement, the Registration Statement, the Prospectus or other documents described herein, which are not the subject of any of the opinions stated herein. Other than as set forth herein, we have not undertaken, for purposes of this opinion, any independent investigation to determine the existence or the absence of such facts, and no inference as to our knowledge of the existence or absence of such facts should be drawn from the fact of our representation of the Investment Adviser. Moreover, we have not searched the dockets of any court, administrative body, agency or other filing office in any jurisdiction.
We have not obtained special written rulings of the Commission, state securities commissions or other administrative bodies or officials charged with the administration of such statutes, regulations and rulings and we have not obtained and do not rely on opinions of other counsel in connection with our representation of the Investment Adviser as counsel.
Based on, and subject to, the foregoing, the assumptions, limitations and qualifications stated herein and such examination of law as we have deemed necessary, we are of the opinion that:
| i. | The Investment Adviser has been duly organized and is validly existing as a limited liability company in good standing under the laws of the State of Delaware. |
| ii. | The Investment Adviser has the power and authority to own, lease and operate its property and to conduct its business as described in the Registration Statement and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have an Adviser Material Adverse Effect. |
| iii. | The Investment Adviser is registered with the Commission as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and, to our knowledge, is not prohibited by the Advisers Act or the 1940 Act from acting under the Investment Advisory Agreement as an Investment Adviser to the Fund as contemplated by the Registration Statement or the Prospectus. |
| iv. | The Dealer Manager Agreement has been duly authorized, executed and delivered by the Investment Adviser. |
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| v. | Each of the Advisory Agreement and Expense Limitation Agreement constitutes a valid and binding obligation of the Investment Adviser, enforceable against the Investment Adviser in accordance with its terms under the laws of the State of Delaware. |
| vi. | The execution and delivery by the Investment Adviser of, and the performance by the Investment Adviser of its obligations under, the Dealer Manager Agreement will not (a) violate the Delaware Limited Liability Company Act, any applicable laws of the State of New York, the 1940 Act, the general rules and regulations adopted under the 1940 Act, the Advisers Act or the rules and regulations adopted under the Advisers Act, (b) conflict with any provision of the Certificate of Formation or Limited Liability Company Agreement of the Investment Adviser, or (c) to our knowledge constitute a breach or default under or result in the creation or imposition of any lien, charge or encumbrance upon any properties or assets of the Adviser under the Advisory Agreement or any other material agreement, indenture, lease or other instrument to which the Investment Adviser is a party or any of its property or assets is subject, except where such breach, default, lien, charge or encumbrance does not or could not materially and adversely affect the ability of the Adviser to perform its obligations under the Dealer Manager Agreement. |
| vii. | The performance by the Investment Adviser of its obligations under the Advisory Agreement, the Expense Limitation Agreement and the Dealer Manager Agreement does not violate the Delaware Limited Liability Company Act, the applicable laws of the State of New York, the 1940 Act, the general rules and regulations adopted under the 1940 Act, the Advisers Act or the rules and regulations adopted under the Advisers Act. |
| viii. | The description in the Registration Statement and the Prospectus of the Investment Adviser and its business complies in all material respects with all applicable requirements of the 1933 Act and the 1940 Act. |
| ix. | No consent, approval, authorization, or license with any governmental authority under the Delaware Limited Liability Company Act, any law, rule or regulation of the State of New York or any federal law of the United States of America is required for the performance by the Investment Adviser of its obligations under each of the Transaction Documents and the Expense Limitation Agreement, except such as have been obtained or such as to which the failure to obtain would have neither (a) an Adviser Material Adverse Effect nor (b) an adverse effect on the consummation of the transactions contemplated by the Dealer Manager Agreement. |
The opinions stated herein are subject to the following qualifications:
| i. | We call to your attention that irrespective of the agreement of the parties to the Dealer Manager Agreement or the Advisory Agreement concerning personal jurisdiction over them, a court may decline to hear a case on grounds of forum non conveniens or other doctrine limiting the availability of such court as a forum for resolution of disputes; in addition, we call to your attention that we do not express any opinion with respect to the subject matter jurisdiction of the federal courts of the United States of America in any action arising out of or relating to the Dealer Manager Agreement or the Advisory Agreement. |
| ii. | Except to the extent expressly stated herein, we do not express any opinion as to (a) the compliance or noncompliance of any other party (other than the Investment Adviser) to the Dealer Manager Agreement and the Advisory Agreement with any state, federal or other laws or regulations applicable to such party or (b) the legal or regulatory status or the nature of the business of such party. |
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| iii. | Except to the extent expressly stated in the opinions contained herein, the opinions stated herein are limited to the agreements specifically identified herein without regard to any agreement or other document referenced in such agreement (including agreements or other documents incorporated by reference or attached or annexed thereto). |
| iv. | We do not express any opinion with respect to any of the fees to be paid pursuant to the Advisory Agreement. |
| v. | We express no opinion as to whether the execution, delivery or performance by the Investment Adviser of the Dealer Manager Agreement and the Advisory Agreement will constitute a violation of, or a default under, any covenant, restriction or provision with respect to financial ratios or tests or any aspect of the financial condition or results of operations of the Investment Adviser or any of its subsidiaries. |
| vi. | The opinion set forth in paragraph (iv) above is based solely on our discussions with the officers or other representatives of the Investment Adviser responsible for the matters discussed therein, our review of documents furnished to us by the Investment Adviser and our reliance on the representations and warranties of the Investment Adviser contained in the Dealer Manager Agreement, Advisory Agreement, Officer’s Certificate and Secretary’s Certificate. In addition, we call to your attention that we have not been engaged by, nor have we rendered any advice to, the Investment Adviser in connection with any legal or governmental proceedings. Accordingly, we do not have any special knowledge with respect to such matters. |
| vii. | We have assumed that there are no actions, suits or proceedings pending or threatened to which the Investment Adviser is a party, before any court, governmental agency or arbitrator which would reasonably be expected to affect adversely the registration of the Investment Adviser with the Commission. |
We express no opinion herein as to any matters governed by any laws other than the laws of the State of Delaware, the State of New York and the federal securities laws of the United States of America that are normally applicable to transactions of the type contemplated by the Dealer Manager Agreement by closed-end management investment companies registered under the 1940 Act.
The opinions expressed herein are limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated. This opinion speaks only as of the date hereof. We assume no obligation to supplement these opinions if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinions expressed herein after the date hereof.
The opinions expressed herein are solely for the benefit of the Dealer Manager in connection with the transactions contemplated by the Dealer Manager Agreement and, without our express written consent, this opinion letter may not be assigned or provided to or relied upon by any other person for any other purpose (in each case other than the successor in interest of the Dealer Manager by means of merger, consolidation, transfer of business or other similar transaction).
Very truly yours,
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