Exhibit J
AMENDED AND RESTATED CUSTODIAL AGREEMENT
Dated as of November 17, 2004
Among
SPECIAL VALUE EXPANSION FUND, LLC,
as Borrower,
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent,
IXIS FINANCIAL PRODUCTS INC.,
as Secured Parties Representative,
and
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Custodian
AMENDED AND RESTATED CUSTODIAL AGREEMENT
AMENDED AND RESTATED AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Agreement"), dated as of November 17, 2004,
by and among (a) Special Value Expansion Fund, LLC, a Delaware limited
liability company (the "Fund"), (b) ▇▇▇▇▇ Fargo Bank, National Association, as
agent, bailee, custodian and securities intermediary for the Fund, the Secured
Parties Representative (as defined below) and the Administrative Agent (as
defined below) (in such capacity and together with any successor thereto, the
"Custodian"), (c) Union Bank of California, N.A., as Administrative Agent (in
such capacity and together with any successor thereto, the "Administrative
Agent") under the Credit Agreement, dated as of November 17, 2004, by and
among the Fund, the Lenders party thereto (the "Lenders"), Ambac Assurance
Corporation, as Insurer (the "Insurer"), the Administrative Agent and IXIS
Financial Products Inc., as Arranger (the "Arranger") (as the same may be
amended, extended, restated, supplemented, modified, refinanced, refunded or
replaced (in whole or in part) (including with lenders other than the initial
lenders) from time to time, together with any agreements or instruments in
respect of any amendment, extension, restatement, supplement, modification,
refinancing, refunding or replacement thereof, the "Credit Agreement") and (d)
IXIS Financial Products Inc. as Secured Parties Representative (in such
capacity and together with any successor thereto, the "Secured Parties
Representative") under the Pledge and Intercreditor Agreement, dated as of
November 17, 2004, by and among the Fund, the Custodian, the Administrative
Agent, the Insurer and the Secured Parties Representative (as amended,
supplemented or otherwise modified from time to time, the "Pledge and
Intercreditor Agreement").
This Agreement amends and restates in its entirety the Custodial
Agreement, dated as of September 1, 2004, between the Custodian and the Fund
(the "Initial Agreement"), in accordance with the introductory recital in such
Initial Agreement.
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words shall have the
meanings set forth below:
1.1 "Acceleration Notice" shall have the meaning assigned thereto
under the Pledge and Intercreditor Agreement.
1.2 "Account Property" shall have the meaning set forth in Section
2.1.
1.3 "Assignment Agreement" shall mean the definitive agreement
pursuant to which a bank, fund, or other financial institution either assigns
or obtains an assignment of all or any portion of any of its rights and
obligations under a Bank Loan.
1.4 "Authorized Person" shall mean, with respect to each Customer,
any person, whether or not an officer or employee thereof, duly authorized
thereby (in the case of the Fund, by the Fund's Board of Directors), to give
Written Instructions on behalf thereof, such person to be designated in a
Certificate of Authorized Persons which contains a specimen signature of such
person.
1.5 "Bank Loan" shall mean each item of Other Account Property which,
in accordance with Section 3.8, is marked as a "Bank Loan."
1.6 [Reserved]
1.7 "Business Day" shall mean any day upon which the Custodian shall
be conducting its normal custody business in the State of Minnesota or the
State of California.
1.8 "Certificate of Authorized Persons" shall mean a certificate
signed on behalf of a Customer and delivered to the Custodian hereunder.
1.9 "Certificated Security" shall have the meaning assigned thereto
in Section 8-102(a)(4) of the NYUCC, but shall in no event include Foreign
Securities, Bank Loans or Trade Payables.
1.10 "Chattel Paper" shall have the meaning assigned thereto in
Section 9-102(a)(11) of the NYUCC, but shall in no event include Bank Loans.
1.11 "Country Risk" shall mean all factors reasonably related to the
systemic risk of a holder of Foreign Securities in a particular country
including, but not limited to, such country's political environment, economic
and financial infrastructure (including any foreign depository operating in
the country), prevailing or developing custody and settlement practices, and
laws and regulations applicable to the safekeeping and recovery of Foreign
Securities held in custody in that country.
1.12 "Custodial Account" shall have the meaning set forth in Section
2.1.
1.13 "Customer" shall mean the Fund, the Secured Parties
Representative or the Administrative Agent, as the case may be, and
"Customers" shall mean the Fund, the Secured Parties Representative and the
Administrative Agent, collectively.
1.14 "Disposition Letter" shall have the meaning set forth in Section
4.1.
1.15 "Eligible Foreign Custodian" has the meaning set forth in
section (a)(1) of Rule 17f-5 under the Investment Company Act, including a
majority-owned or indirect subsidiary of a U.S. Bank (as defined in Rule
17f-5), a bank holding company meeting the requirements of an Eligible Foreign
Custodian (as set forth in Rule 17f-5 or by other appropriate action of the
Securities and Exchange Commission), or foreign branch of a Bank (as defined
in Section 2(a)(5) of the Investment Company Act) meeting the requirements of
a custodian under Section 17(f) of the Investment Company Act; the term does
not include Eligible Securites Depository.
1.16 "Eligible Securities Depository" shall have the meaning set
forth in section (b)(1) of Rule 17f-7 under the Investment Company Act.
1.17 "Escrow Account" shall have the meaning set forth in Section
2.1.
1.18 "Final Maturity Payment Default Notice" shall have the meaning
assigned thereto in the Pledge and Intercreditor Agreement.
1.19 "Foreign Custody Manager" has the meaning set forth in section
(a)(3) of Rule 17f-5 under the Investment Company Act.
1.20 "Foreign Securities" shall include (i) securities issued by a
government other than the United States government or by a corporation or
other entity organized under the laws of any country other than the United
States and (ii) securities issued by the United States government or by any
state or any political subdivision thereof or by any agency thereof or by any
entity organized under the laws of the United States or of any state thereof
which have been issued and sold primarily outside the United States; provided,
however, in no event shall "Foreign Securities" include Bank Loans or Trade
Payables.
1.21 "Foreign Subcustodian" shall have the meaning set forth in
Section 2.3.
1.22 "Fund Account Property" shall have the meaning set forth in
Section 2.5(a).
1.23 "Fund Custodial Account" shall have the meaning set forth in
Section 2.5(a).
1.24 "Institutional Account Property" shall mean Account Property
which has been delivered to the Custodian through usual and customary banking,
clearing and settlement channels in accordance with the Custodian's ordinary
course custody business, and shall in no event include any Account Property
delivered to the Custodian directly by the Fund.
1.25 "Instructing Party" shall mean (I) with respect to the Custodial
Account and the Account Property, (x) at any time prior to the receipt by the
Custodian of a Payoff Notice from the Administrative Agent, (a) at any time
other than during a Suspension Period, the Fund, and, after the receipt by the
Custodian of an election by the Secured Parties Representative to act as
Instructing Party, the Fund and the Secured Parties Representative, jointly
(it being understood that this provision shall not confer on the Secured
Parties Representative any rights with respect to the Custodial Account not
granted to it under the Pledge and Intercreditor Agreement), (b) at any time
during any Suspension Period (other than any Suspension Period occurring as a
result of the delivery of a Liquidation Notice), the Secured Parties
Representative and, to the extent permitted by Section 6.14(b) hereof (and by
Section 3.5 of the Pledge and Intercreditor Agreement), the Fund and (c) at
any time during any Suspension Period commenced as a result of the delivery of
a Liquidation Notice, the Secured Parties Representative, and (y) at any time
after the receipt by the Custodian of a Payoff Notice from the Administrative
Agent and the Insurer, the Fund and (II) with respect to the Fund Custodial
Account and the Fund Account Property, the Fund as sole Instructing Party. In
the event of any contrary or conflicting instruction with respect to the
Custodial Account or the Account Property from the Fund and the Secured
Parties Representative when each is an Instructing Party, the instruction of
the Secured Parties Representative shall govern.
1.26 "Instrument" shall have the meaning assigned thereto in Section
9-105 of the NYUCC, but shall in no event include Foreign Securities, Bank
Loans or Trade Payables.
1.27 "Investment Company Act" shall mean the Investment Company Act
of 1940, as amended.
1.28 "Liquidation Direction" shall have the meaning assigned thereto
in the Pledge and Intercreditor Agreement.
1.29 "Liquidation Notice" shall have the meaning assigned thereto in
the Pledge and Intercreditor Agreement.
1.30 "Loan Documents' shall mean with respect to any Bank Loan the
definitive credit agreement executed and delivered in connection therewith,
and each other agreement, instrument or other document executed or delivered
in connection therewith, in each case as amended or supplemented.
1.31 "Money" shall have the meaning assigned thereto in Section 1-201
of the NYUCC.
1.32 "Negotiable Document" shall mean a "Document" as defined in
Section 9-102(a)(30) of the NYUCC, but shall in no event include Bank Loans or
Trade Payables.
1.33 "NYUCC" shall mean the UCC as in effect from time to time in the
State of New York.
1.34 "Notice of Suspension" shall have the meaning assigned thereto
in the Pledge and Intercreditor Agreement.
1.35 "Ordinary Document" shall mean (a) a Bank Loan, (b) a Trade
Payable, and (c) each other contract, agreement or instrument, in each case
under this clause (c) which is in writing and which is not an Instrument,
Chattel Paper or a Negotiable Document.
1.36 "Other Account Property" shall mean all Account Property other
than Institutional Account Property.
1.37 "Participation Agreement" shall mean the definitive agreement
pursuant to which a bank, fund, or other financial institution either acquires
or sells all of any portion of any of its rights and obligations under a Bank
Loan.
1.38 "Party In Interest" shall mean (a) prior to receipt by the
Custodian of a Payoff Notice from the Administrative Agent and the Insurer,
the Secured Parties Representative, and (b) at all other times, the Fund;
provided, however, that with respect to the Fund Custodial Account and the
Fund Account Property, the Fund shall at all times be the sole Party In
Interest.
1.39 "Payoff Notice" shall mean a written notice, in the form of
Exhibit A hereto, duly completed and dated, signed on behalf of an Authorized
Person of the Administrative Agent or the Insurer, as applicable, and given in
accordance with Article VIII.
1.40 "Secured Parties" shall have the meaning assigned thereto in the
Pledge and Intercreditor Agreement.
1.41 "Security" shall have the meaning assigned thereto in Section
8-102 of the NYUCC, but shall in no event include Foreign Securities, Bank
Loans or Trade Payables.
1.42 "Suspension Period" shall mean each period of time commencing on
the date of the delivery of a Notice of Suspension, which Notice of Suspension
shall be deemed automatically delivered upon the delivery of any Acceleration
Notice, Final Maturity Payment Default Notice or Liquidation Notice, and
ending upon the date of delivery of a Withdrawal Notice with respect to each
Notice of Suspension previously delivered.
1.43 "Trade Payables" shall mean all items of Other Account Property
which, in accordance with Section 3.9, are clearly marked as "Trade Payables."
1.44 "Transmittal Letter" shall have the meaning set forth in Section
3.7.
1.45 "Type" shall mean, with respect to each item of Other Account
Property, such item constituting one of the following types of Account
Property: a Certificated Security, Chattel Paper, an Instrument (other than a
Certificated Security), a Negotiable Document, an Ordinary Document, a Bank
Loan, or Trade Payables.
1.46 "UCC" shall mean, with respect to any jurisdiction, Articles 1,
8 and 9 of the Uniform Commercial Code as from time to time in effect in such
jurisdiction.
1.47 "Withdrawal Notice" shall mean a written notice, in the form of
Exhibit B hereto, duly completed and dated, signed on behalf of an Authorized
Person of the Secured Parties Representative or the Administrative Agent, as
applicable, and given in accordance with Article VIII.
1.48 "Written Instructions" shall mean, with respect to each
Customer, any notices, instructions or other instruments in writing received
by the Custodian from an Authorized Person of such Customer, or from a person
reasonably believed by the Custodian to be an Authorized Person of such
Customer, by letter, telex, telecopy, facsimile, the Custodian's on-line
communication system, or any other method whereby the Custodian is able to
verify with a commercially reasonable degree of certainty the identity of the
sender of such communications or the sender is required to provide a password
or other identification code.
Capitalized terms used but not otherwise defined herein shall have
the respective meanings set forth in the Credit Agreement.
ARTICLE II
APPOINTMENT OF CUSTODIAN; CUSTODIAL ACCOUNT;
REPRESENTATIONS AND WARRANTIES;
FUND CUSTODIAL ACCOUNT
2.1 (a) The Administrative Agent and the Secured Parties
Representative hereby jointly and severally appoint the Custodian as agent,
bailee, securities intermediary and custodian of all Money, Foreign
Securities, Chattel Paper, Instruments, Negotiable Documents, Ordinary
Documents, Securities and other identified tangible or intangible property at
any time delivered to the Custodian and identified for deposit in the
Custodial Account by or on behalf of the Fund during the term of this
Agreement, including all distributions from and proceeds of the foregoing
received by the Custodian during such term, but not including any Fund Account
Property (collectively, together with such property, if any, that may be
transferred to the Custodial Account from the Fund Custodial Account from time
to time at the instruction of the Fund, the "Account Property") and authorize
the Custodian to hold or credit to the Custodial Account the Account Property
as herein provided. The Custodian hereby accepts such appointment and agrees
to hold and physically segregate for the account of the Fund, in accordance
with the requirements of the Section 17(f) of the Investment Company Act and
Rule 17f-1 thereunder, a securities account, designated as Account No.
▇▇▇▇▇▇▇▇ (the "Custodial Account"), which may include one or more sub-accounts
for record-keeping purposes, in which it will hold the Account Property as
provided herein, and a securities account, designated as Account No. ▇▇▇▇▇▇▇▇
(the "Escrow Account"), which may include one or more sub-accounts for
record-keeping purposes, in which it will hold payments or distributions made
by the Fund for the purpose of maintaining its income tax status as a
regulated investment company or to avoid the imposition of the excise tax
under Section 4882 of the Internal Revenue Code of 1986, as amended.
Shareholders of the Fund shall retain a claim against the Fund to the extent
of any amounts paid to the Secured Parties (or any other creditors of the
Fund) from the Escrow Account. The name of the Custodial Account shall be
"Special Value Expansion Fund, LLC, Pledged to IXIS Financial Products Inc.,
as Secured Parties Representative, as secured party".
(b) The Custodian shall hold in the Custodial Account, subject to the
provisions hereof, all cash received by it from or for the account of the
Fund, including cash maintained by the Fund in a bank account established and
used in accordance with Rule 17f-3 under the Investment Company Act. Funds
held by the Custodian for the Fund may be deposited by it to its credit as
Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; provided, however that every such bank
or trust company shall be qualified to act as a custodian under the Investment
Company Act and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be approved by vote of a
majority of the board of directors of the Fund. Such funds shall be deposited
by the Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
(c) Within the Custodial Account, the Custodian shall establish two
sub-accounts to be designated the "Equity Sub-Account" and the "Debt
Sub-Account". The Equity Sub-Account and the Debt Sub-Account are each
referred to herein as a "Sub-Account" and collectively as the "Sub-Accounts".
All proceeds from the sale of membership interests or other equity securities
of the Fund, including any common shares and preferred shares, whenever
received, shall be deposited in the Custodial Account and credited to the
Equity Sub-Account, and all proceeds from draws under the Credit Agreement and
from the issuance or sale of any other debt obligations of the Fund, whenever
received, shall be deposited in the Custodial Account and credited to the Debt
Sub-Account pursuant to Written Instructions from the Fund. Account Property
purchased with amounts credited to the Equity Sub-Account shall, subject to
transfers permitted by this Agreement, be held in the Equity Sub-Account, and
Account Property purchased with amounts credited to the Debt Sub-Account
shall, subject to transfers permitted by this Agreement, be held in the Debt
Sub-Account. All payments and distributions on, and all proceeds with respect
to the sale, conversion or exchange of, any item of Account Property, whether
in the form of cash, securities or other property ("Proceeds"), shall be
deposited in the Custodial Account and credited to the Sub-Account in which
the Account Property giving rise to such Proceeds is held pursuant to Written
Instructions from the Fund. Amounts on deposit in the Equity Sub-Account and
any Proceeds of Account Property held in the Equity Sub-Account may be
disbursed to purchase or acquire any type of Account Property. Amounts on
deposit in the Debt Sub-Account which constitute the proceeds of draws under
the Credit Agreement or the proceeds from the sale or issuance of any other
debt obligations of the Fund and all Proceeds of Account Property originally
acquired with the proceeds of draws under the Credit Agreement or any such
other debt obligations may be used to purchase or acquire any type of Account
Property which does not constitute Margin Stock. Account Property in the Debt
Sub-Account that becomes Margin Stock shall, pursuant to Written Instructions
from the Fund, be transferred to the Equity Sub-Account.
(d) At the direction of the Administrative Agent, the Custodian shall
establish a single, segregated trust account which shall be designated as the
"Senior Facility Insurance Policy Payment Account" and shall be held for the
benefit of the Lenders, over which the Administrative Agent shall have
exclusive control and the sole right of withdrawal.
(e) Each party hereto agrees that each item constituting "Account
Property" (other than cash or Money) is to be treated as a "financial asset"
within the meaning of Section 8-102(a)(9) of the NYUCC. Any cash or Money
constituting Account Property shall be maintained by the Custodian in a demand
deposit account constituting a component of the Custodial Account or the Fund
Custodial Account. The Custodian agrees that if at any time it shall receive
any order from the Secured Party (i) directing disposition of funds in the
Custodial Account or the Escrow Account or (ii) directing transfer or
redemption of the financial assets relating to the Custodial Account or the
Escrow Account, the Custodian shall comply with such entitlement order or
instruction without further consent by the Fund or any other person. However,
each party hereto agrees that the Custodian does not have, directly or
indirectly, an entitlement permitting it to grant an entitlement until such
time as it actually receives the relevant and necessary documents. In the
event of a conflict between an entitlement order or instruction, as the case
may be, of the Fund and an entitlement order or instruction, as the case may
be, of the Secured Parties Representative, the entitlement order or
instruction of the Secured Parties Representative shall prevail. It is the
intent of the parties that the Secured Parties Representative shall have
"control," within the meaning of Sections 8-106(d)(2), 9-104 and 9-106 of the
NYUCC, of the Custodial Account and the Escrow Account. Without limiting the
effect of the foregoing, the Administrative Agent authorizes the Fund and the
Secured Parties Representative to give, and the Custodian to accept, the
instructions contemplated herein to be given by the Fund or the Secured
Parties Representative, as applicable, in accordance with the Pledge and
Intercreditor Agreement.
(f) All actions that the Fund is permitted or required to take in
accordance with the terms hereof (including, without limitations, providing
any notices to any Person or giving instructions to the Custodian in
accordance with the terms hereof) may be taken by the Investment Manager on
the behalf of the Fund.
(g) All of the provisions of this Agreement applicable to the
Custodial Account (including Sub-Accounts) and Account Property shall, mutatis
mutandis, be applicable to the Escrow Account.
2.2 Each Customer hereby represents and warrants, which
representations and warranties shall be continuing and shall be deemed to be
reaffirmed upon Written Instruction given by it or on its behalf, that:
(a) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to enter into this Agreement
and to perform its obligations hereunder;
(b) This Agreement has been duly authorized, executed and delivered
by it, constitutes its valid and legally binding obligation, enforceable
against it in accordance with the terms hereof, and no statute, regulation,
rule, order or judgment binding on it prohibits its execution or performance
of this Agreement; and
(c) All Written Instructions given by it are consistent with its
rights as from time to time in effect under the Credit Documents and the
Financing Documents (as defined in the Credit Agreement).
(d) Except to the extent that the Custodian acts as the Fund's
foreign custody manager, its board of directors or its foreign custody
manager, as defined in the Rule 17f-5 under the Investment Company Act, has
determined that use of each Foreign Subcustodian (as defined below in Section
2.3(a)) satisfies the applicable requirements of the Investment Company Act
and the Rule 17f-5 thereunder.
(e) The Fund or its investment adviser has determined that the
custody arrangements of each Eligible Foreign Custodian provide reasonable
safeguards against the custody risks associated with maintaining assets with
such Eligible Foreign Custodian within the meaning of Rule 17f-7 under the
Investment Company Act.
(f) The Fund shall manage its borrowings, including, without
limitation, any advance or overdraft (including any day-light overdraft) in
the Custodial Account, so that the aggregate of its total borrowings does not
exceed the amount the Fund is permitted to borrow under the Investment Company
Act; provided, however, that the Fund shall have 90 calendar days from each
date on which the Fund first fails to comply with this representation to cure
any violation of this representation.
(g) Its transmission or giving of, and Custodian acting upon and in
reliance on, Certificates of Authorized Persons or Written Instructions
pursuant to this Agreement shall at all times comply with the Investment
Company Act.
2.3 (a) The Fund hereby delegates to the Custodian, subject to
Section (b) of Rule 17f-5 under the Investment Company Act, the
responsibilities set forth in this Section 2.3 with respect to Foreign
Securities held outside the United States, and the Custodian hereby accepts
such delegation as Foreign Custody Manager of the Fund. The Foreign Custody
Manager shall be responsible for performing the responsibilities as described
in this Section 2.3 only with respect to the countries and custody
arrangements for each such country listed on Schedule I to this Agreement,
which list of countries may be amended from time to time by the Fund with the
agreement of the Foreign Custody Manager.
(b) Each Customer hereby authorizes the Custodian to appoint one or
more banking institutions located outside of the United States (other than a
Foreign Depository) (each, a "Foreign Subcustodian") in connection with the
purchase, sale or custody of Foreign Securities. Each agreement pursuant to
which the Custodian employs a Foreign Subcustodian shall require the Foreign
Subcustodian to exercise reasonable care in the performance of its duties and
to indemnify, and hold harmless, the Custodian and each Customer from and
against any loss, damage, cost, expense, liability or claim arising out of or
in connection with the Foreign Subcustodian's performance of such obligations
and that such contract governing the foreign custody arrangements with each
Eligible Foreign Custodian selected by the Foreign Custody Manager shall
satisfy the requirements of Rule 17f-5(c)(2) under the Investment Company Act.
At the election of a Customer, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims against a Foreign
Subcustodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Customer has not been made
whole for any such loss, damage, cost, expense, liability or claim. With
respect to losses incurred by any Customer as a result of the acts or the
failure to act of any Foreign Subcustodian, the Custodian shall take
appropriate action to recover such losses from such Foreign Subcustodian; and
the Custodian's sole responsibility and liability to any Customer shall be
limited to amounts so received from such Foreign Subcustodian (exclusive of
costs and expenses incurred by the Custodian). The Customers authorize the
Custodian to hold securities recorded to the Custodial Account in accounts
which the Custodian has established with one or more of the Custodian's
branches or Foreign Subcustodians. The Custodian and Foreign Subcustodians are
authorized to hold any of Foreign Securities in the Custodian's accounts with
any Depository in which the Custodian or they participate. The Custodian may
add new, replace or remove Foreign Subcustodians. Upon the Fund's request, the
Custodian shall identify the name, address and principal place of business of
any Foreign Subcustodian of the Fund's securities. In the event the Custodian
replaces a Foreign Subcustodian, the Custodian shall not utilize such
replacement Foreign Subcustodian until after the Foreign Custody Manager has
determined that utilization of such Foreign Subcustodian satisfies the
requirements of the Investment Company Act and Rule 17f-5 thereunder.
(c) In each case in which the Foreign Custody Manager maintains
Foreign Securities with an Eligible Foreign Custodian selected by the Foreign
Custody Manager, the Foreign Custody Manager shall establish a system to
monitor (i) the appropriateness of maintaining the Foreign Securities with
such Eligible Foreign Custodian and (ii) the contract governing the custody
arrangements with an Eligible Foreign Custodian. In the event the Foreign
Custody Manager determines that the custody arrangements with an Eligible
Foreign Custodian it has selected are no longer appropriate, the Foreign
Custody Manager shall notify the Fund.
(d) For purposes of this Section 2.3, the board of directors of Fund
shall be deemed to have considered and determined to accept such Country Risk
as is incurred by placing and maintaining the Foreign Securities in each
country for which the Custodian is serving as Foreign Custody Manager of the
Fund.
(e) The Foreign Custody Manager shall make written reports notifying
the board of directors of the Fund of any material change in the foreign
custody arrangements of the Fund as described in this Section 2.3.
(f) In performing the responsibilities delegated to it, the Foreign
Custody Manager agrees to exercise reasonable care, prudence and diligence
such as a person having responsibility for the safekeeping of assets of
management investment companies registered under the Investment Company Act
would exercise.
(g) The Foreign Custody Manager represents to the Fund that it is a
U.S. Bank as defined in section (a)(7) of Rule 17f-5 under the Investment
Company Act. The Fund represents to the Custodian that its board of directors
has determined that it is reasonable for the board to rely on the Custodian to
perform the responsibilities delegated pursuant to this Agreement to the
Custodian as Foreign Custody Manager of the Fund.
(h) The Custodian shall credit Foreign Securities (whether or not
held by or through any Foreign Subcustodian) to the appropriate Sub-Account of
the Custodial Account or the Fund Custodial Account, as applicable. A Foreign
Subcustodian shall hold the Fund's Foreign Securities together with financial
assets belonging to other of the Custodian's or ▇▇▇▇▇ Fargo Bank, National
Association's customers in accounts identified on such Foreign Subcustodian's
books as for the exclusive benefit of the Custodian's or ▇▇▇▇▇ Fargo Bank,
National Association's customers. Any Account Property in the accounts held by
a Foreign Subcustodian shall be subject only to the instruction of the
Custodian or the Custodian's agent. Any Account Property held in a Depository
for the account of a Foreign Subcustodian shall be subject only to the
directions of such Foreign Subcustodian. Any agreement the Custodian enters
into with a Foreign Subcustodian for holding the Custodian's customers' assets
shall provide that such assets shall not be subject to any right, charge,
security interest, lien or claim of any kind in favor of such Foreign
Subcustodian except for safe custody or administration, and that the
beneficial ownership of such assets shall be freely transferable without the
payment of money or value other than for safe custody or administration.
(i) With respect to Account Property maintained outside the United
States, "Depository" shall mean a securities depository or clearing agency
which operates a system for the central holding of securities or any
equivalent book entries in that country or a securities depository or clearing
corporation that operates a transnational system for central holding of
securities or equivalent book entries in the country or a Compulsory
Depository. A "Compulsory Depository" shall mean an eligible foreign
custodian: (a) the use of which is mandatory because (1) its use is required
by law or regulation, (2) securities cannot be withdrawn from the depository
or (3) maintaining securities outside the depository is not consistent with
prevailing custodial practices.
(j) Any Foreign Securities held in a foreign jurisdiction shall be
held in a manner that is standard and customary in such foreign jurisdiction
for holding securities for the benefit of a secured party or protecting the
interests of a beneficial owner thereof or the equivalent in such
jurisdiction.
(k) With respect to each Eligible Securities Depository, the
Custodian shall exercise reasonable care, prudence and diligence (i) to
provide the Fund with an analysis of the custody risks associated with
maintaining assets with the Eligible Securities Depository in accordance with
section (a)(1)(i)(A) of Rule 17f-7 under the Investment Company Act, and (ii)
to monitor such custody risks on a continuing basis and promptly notify the
Fund of any material change in such risks. The Custodian agrees to exercise
reasonable care, prudence and diligence performing the duties set forth in
this paragraph.
2.4 (a) The Administrative Agent hereby represents and warrants that
it is the duly authorized administrative agent under the Credit Agreement
acting on behalf of and for the benefit of the Lenders (as defined in the
Credit Agreement), and hereby covenants that any actions taken by it hereunder
will be solely for the benefit of the Lenders (as defined in the Credit
Agreement) in accordance with the Credit Agreement and the Pledge and
Intercreditor Agreement.
(b) The Secured Parties Representative hereby represents and warrants
that it is the duly authorized agent for the Secured Parties (as defined in
the Pledge and Intercreditor Agreement) under the Pledge and Intercreditor
Agreement, and covenants that any actions it takes under or pursuant to this
Agreement shall be solely for the benefit of such Secured Parties under, and
shall be taken strictly in accordance with, the Pledge and Intercreditor
Agreement.
2.5 (a) The Fund hereby appoints the Custodian as agent, bailee,
securities intermediary and custodian of all Money, Foreign Securities,
Chattel Paper, Instruments, Negotiable Documents, Ordinary Documents,
Securities and other identified tangible or intangible property at any time
delivered to the Custodian and identified for deposit in the Fund Custodial
Account by or on behalf of the Fund during the term of this Agreement,
including all distributions from and proceeds of the foregoing received by the
Custodian during such term, but not including any Account Property
(collectively, together with such property, if any, that may be transferred to
the Fund Custodial Account from the Custodial Account from time to time at the
instruction of the Instructing Party, the "Fund Account Property") and
authorizes the Custodian to hold or credit to the Fund Custodial Account the
Fund Account Property as herein provided. If it is not expressly stated by the
Fund that any such property is being delivered as Fund Account Property
pursuant to this Section 2.5, the Custodian shall treat such property for all
purposes hereunder as Account Property. The Custodian hereby accepts such
appointment and agrees to establish and maintain a securities account, which
shall be designated Account No. ▇▇▇▇▇▇▇▇ (the "Fund Custodial Account"), which
may include one or more sub-accounts for record-keeping purposes, in which it
will hold the Fund Account Property as provided herein. The name of the Fund
Custodial Account shall be "Special Value Expansion Fund Not Pledged".
(b) All of the provisions of this Agreement applicable to the
Custodial Account (including Sub-Accounts) and Account Property shall, mutatis
mutandis, be applicable to the Fund Custodial Account and the Fund Account
Property, except that the Fund shall be the sole and exclusive Instructing
Party and Party In Interest with respect to the Fund Custodial Account and the
Fund Account Property, and neither the Fund Custodial Account nor the Fund
Account Property shall be subject to the lien of the Pledge and Intercreditor
Agreement in favor of the Secured Parties Representative. The agreement of the
Custodian set forth in Section 2.1 to comply with "entitlement orders" from
the Secured Parties Representative shall not include or apply to the Fund
Custodial Account, and the Fund Custodial Account shall not be subject to the
control or dominion of the Administrative Agent or the Secured Parties
Representative.
(c) Notwithstanding any term hereof to the contrary, if a Liquidation
Notice has been delivered to the Custodian and not withdrawn, the Custodian
shall not transfer any Account Property to the Fund Custodial Account without
the prior express written permission of the Secured Parties Representative.
ARTICLE III
CUSTODY OF ACCOUNT PROPERTY
3.1 (a) Account Property shall be delivered to the Custodian, to be
held in custody hereunder.
(b) The Fund hereby appoints the Custodian its true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution
for the Fund and in the Fund's name, place and stead, following a Liquidation
Notice and until such Liquidation Notice is withdrawn, to take any further
actions required to register the transfer of any such Account Property to the
Custodian or the Secured Parties Representative (or to otherwise transfer or
dispose of such Account Property pursuant to the terms of this Agreement).
(c) The Fund covenants and agrees to take all actions reasonably
requested by the Custodian in order to facilitate the delivery of Account
Property delivered hereunder, including, without limitation, providing
certifications required in connection with the transfer of any Account
Property subject to restrictions on transfer.
(d) The Custodian is authorized, in its discretion, to register
ownership of any Account Property in its nominee name or through any clearing
agency or Depository Institution without increase or decrease of its
liability. The Fund shall accept the return or delivery of Account Property of
the same class and denomination as those deposited with the Custodian by the
Fund or otherwise received by the Custodian for the appropriate Sub-Account of
the Custodial Account, and the Custodian need not retain the particular
certificates so deposited or received. If any of the Fund's Account Property
registered in the Custodian's name or the name of the Custodian's nominee or
held in a Depository and registered in the name of the Depository's nominee
are called for partial redemption by the issuer of such Account Property, the
Custodian is authorized to allot the called portion to the Fund.
3.2 For purposes of this Section 3.2, the Custodian shall list each
Bank Loan and other items of Other Account Property (through the use of dummy
CUSIP or loan numbers, for example) on its custody system, but in no event
shall the Custodian have any obligation to make modifications to such custody
system or any related computer or other programs. The Custodian shall furnish
(a) the Fund and the Secured Parties Representative with evidence of daily
transactions, and (b) the Customers (i) with a monthly summary of all
transfers to or from the Custodial Account (including Sub-Accounts), (ii) an
account statement, as of the last Business Day of each week, setting forth in
reasonable detail a list of all Institutional Account Property, all Other
Account Property (to the extent listed on the Custodian's system), and a copy
of each Transmittal Letter and each Disposition Letter received by the
Custodian during such week, and (iii) to the extent delivered to the
Custodian, the periodic reports required pursuant to Section 6.1.2 of the
Credit Agreement.
3.3 With respect to all Account Property, the Custodian shall, unless
otherwise instructed to the contrary pursuant to Written Instructions given by
the Instructing Party:
(a) Receive all income and other payments and, with respect to all
Institutional Account Property, advise the Instructing Party and the Fund as
promptly as practicable of any such amounts due but not paid;
(b) With respect to all Institutional Account Property, present for
payment and receive the amount paid upon all instruments which may mature and
advise the Instructing Party and the Fund as promptly as practicable of any
such amounts due but not paid;
(c) Forward to the Instructing Party, with a copy to the Fund, all
the information or documents that it may receive from an issuer which, in the
opinion of the Custodian, are intended for the beneficial owner thereof;
(d) Execute, as Custodian, any certificates of ownership, affidavits,
declarations or other certificates under the Code in connection with the
collection of bond and note coupons which it receives and is requested to
execute (provided, however, that it shall not be obligated to execute any such
instrument which it deems, in its reasonable judgment, is not required, not in
appropriate form or would impose upon it liability or expense, the
reimbursement of which is not satisfactorily assured to it hereunder or
otherwise);
(e) Hold in accordance with the provisions hereof, all rights and
similar Negotiable Documents, Instruments or Securities, as the case may be,
issued with respect to any Negotiable Documents, Instruments or Securities, as
the case may be, held by the Custodian hereunder;
(f) Endorse for collection checks, drafts or other negotiable
instruments;
(g) Exchange Account Property for other Account Property where the
exchange is purely ministerial as, for example, the exchange of Account
Property in temporary form for Account Property in definitive form or the
mandatory exchange of Account Property; and
(h) Sell Account Property with fractional interests resulting from a
stock split or a stock dividend and to credit the Custodial Account with the
proceeds thereof.
3.4 Upon receipt by the Custodian of Written Instructions from the
Instructing Party, the Custodian will exchange Negotiable Documents,
Instruments and Securities held hereunder in connection with any conversion
privilege, reorganization, recapitalization, redemption in kind,
consolidation, tender offer or exchange offer, or any exercise of
subscription, purchase or other similar rights represented by Negotiable
Documents, Instruments and Securities. Upon receipt by the Custodian of
Written Instructions from the Fund, the Custodian shall transfer Account
Property which does not constitute Margin Stock from the Equity Sub-Account to
the Debt Sub-Account in exchange for (i) transfers of cash in an amount equal
to the historical cost of such non-Margin Stock Account Property, or other
Account Property having the same historical cost as such non-Margin Stock
Account Property, from the Debt Sub-Account to the Equity Sub-Account or (ii)
disbursements of cash from the Debt Sub-Account of equal amounts, each as
directed by the Fund.
3.5 (a) The Custodian is not at any time under any duty to supervise
the investment of (other than to forward promptly all notices of corporate
actions with respect to any investment), or to advise or make any
recommendation for the purchase, sale, retention or disposition of, Account
Property.
(b) Any instruction by an Instructing Party shall be complete and
contain sufficient information to enable the Custodian to perform the
instruction. Without limiting the foregoing, each instruction (i) to forward
amounts to any Person shall identify the nature of such payment, and (ii) in
any situation in which there is not sufficient available cash in the Custodial
Account to make the requested payments, shall specify the priority and
allocation of which the Custodian shall follow with respect to distribution or
application of such available amounts (provided, however, that in all such
instances prior to the receipt by the Custodian of a Liquidation Notice, it
shall be entitled to apply available amounts first to unpaid amounts owing to
itself, the Administrative Agent and the Secured Parties Representative,
notwithstanding receiving instruction to the contrary).
(c) At any time prior to receipt of a Liquidation Notice, the
Custodian shall be entitled to pay periodically from the Custodial Account
without instruction of (but with notice to the Fund ) any Instructing Party
(i) to itself, amounts due and payable to it as ordinary fees and expenses
pursuant to this Agreement, (ii) to the Administrative Agent, such amounts as
the Administrative Agent may instruct (as set forth in a written
certification, if the Custodian shall so request) are due and payable to it as
ordinary fees and expenses pursuant to the Credit Agreement and (iii) to the
Secured Parties Representative, such amounts as the Secured Parties
Representative may instruct (as set forth in a written certification, if the
Custodian shall so request) are due and payable to it as ordinary fees and
expenses pursuant to the Pledge and Intercreditor Agreement. Subject to
Section 6.15(d) hereof and in accordance with Section 6.15(g), the Custodian
shall be entitled to follow the instructions of any requesting party with
respect to any payment or disbursements of funds pursuant to and in accordance
with this Section 3.5(c) without liability on its part and without any
obligation or duty to inquire into, investigate, monitor or other wise
determine compliance with the applicable terms, restrictions, limitations or
requirements or any other Transaction Document.
(d) Any release or distribution of Account Property by the Custodian
pursuant to the instruction of an Instructing Party (including but not limited
to any transfer of property from the Custodial Account to the Fund Custodial
Account) shall automatically and without further action or consent by the
Administrative Agent or the Secured Parties Representative (but subject to the
consent of the Secured Parties Representative if a Liquidation Notice has been
delivered to the Custodian, as provided in Section 2.5(c)) release such
property free and clear from the lien of the Pledge and Intercreditor
Agreement.
3.6 (a) Each Customer agrees that the Custodian shall have no
obligation hereunder to purchase any Account Property, including but not
limited to any Foreign Securities, unless one or more of the Customers shall
have provided the Custodian with sufficient immediately available funds to
settle all transactions (and the Custodian shall have received adequate
Written Instructions from the Instructing Party). As used herein, "sufficient
immediately available funds" shall mean either (i) sufficient United States
currency to purchase the necessary foreign currency or (ii) sufficient
applicable foreign currency, to cover scheduled purchases. The Custodian shall
credit the appropriate Sub-Account of the Custodial Account with immediately
available funds each day which result from the contractual settlement of all
sale transactions, based upon advice received by the Custodian from its agents
and depositories. Such funds shall be in Dollars or such other currency as the
Instructing Party may specify to the Custodian. Should the Fund fail to have
sufficient immediately available funds in such Sub-Account to settle these
deliveries of Account Property pursuant to the preceding sentence (a
"Deficit"), the Custodian, in its sole discretion, may elect (i) to reject the
settlement of any or all of the Account Property delivered to the Custodian
that day to such Sub-Account, (ii) to settle the deliveries on the Fund's
behalf and debit such Sub-Account (A) for the amount of such Deficit and (B)
for the amount of the funding or other cost or expense incurred or sustained
by the Custodian for the Fund's failure to have sufficient immediately
available funds in such Sub-Account by the applicable settlement deadlines for
the Custodian, or (iii) to reverse the posting of the Account Property
credited to such Sub-Account. The foregoing rights are in addition to and not
in limitation of any other rights or remedies available to the Custodian under
this Agreement or otherwise. Any advances made by the Custodian to the Fund in
connection with the purchase, sale, redemption, transfer or other designation
of Account Property or in connection with disbursements of funds to any party,
which create or result in an over-draft in the Custodial Account (including
Sub-Accounts) shall be deemed a loan by the Custodian to the Fund, payable on
demand, and bear interest on the amount of the loan each day that the loan
remains unpaid at the Custodian's prime rate in effect as announced by the
Custodian from time to time (unless another rate has been separately agreed
upon, in writing, between the Custodian and the Fund in respect of such
advances). No prior action or course of dealing on the Custodian's part with
respect to the settlement of Account Property transactions on the Fund's
behalf shall be used by or give rise to any claim or action by the Fund
against the Custodian for the Custodian's refusal to pay or settle for Account
Property transactions the Fund has not timely funded as required herein.
(b) In acting upon instructions to settle the purchase or sale of
Account Property, the Custodian is authorized to act in accordance with
customary securities processing practices for the relevant market, including,
without limitation, in the case of a sale, to deliver such Account Property to
the purchaser thereof or dealer therefor (including to an agent for any such
purchaser or dealer) against a receipt, with the expectation of collecting
payment from the purchaser, dealer or agent to whom the Account Property was
so delivered.
(c) The Custodian is authorized and hereby agrees to effect currency
exchange transactions in connection with transactions in Foreign Securities,
or as otherwise may be requested by the Instructing Party and agreed to by the
Custodian, through customary banking channels, including through ▇▇▇▇▇ Fargo
Bank, National Association or an affiliate of ▇▇▇▇▇ Fargo Bank, National
Association. All expenses and risks incident to the collection and conversion
of such currency exchange transactions shall be assumed by the Fund. The
Custodian shall have no responsibility for the fluctuation in exchange rates
affecting such conversion.
3.7 Notwithstanding anything to the contrary contained herein, the
Custodian shall have the same obligations hereunder with respect to each item
of Other Account Property as shall apply to Institutional Account Property to
the extent such Other Account Property conforms to the usual and customary
form of Institutional Account Property of a similar Type. Each Customer
acknowledges and agrees that all Other Account Property delivered by or on
behalf of such Customer to the Custodian shall (a) conform in both form and
substance to the terms of this Agreement and (b) be listed on a trade ticket
(each a "Transmittal Letter") delivered to the Custodian prior or
simultaneously therewith. With respect to Other Account Property, the
Custodian shall be obligated to treat the same in accordance with the Type
thereof, and shall be fully justified and entitled to act hereunder in
accordance with and in reliance on the Type marked thereon with respect
thereto. In the event that any item of Other Account Property shall not be
clearly marked as to Type, the Custodian shall promptly notify the Fund and
the Instructing Party thereof and, until such time as the Instructing Party
shall identify such item by Type pursuant to Written Instructions, the
Custodian shall treat such item as an Ordinary Document.
3.8 (a) In the case of any Bank Loan that is to be delivered,
assigned or transferred to the Custodian, the Fund shall deliver to the
Custodian, for the benefit of the Secured Parties, as soon as practicable: (i)
a copy of all documents evidencing the purchase or acquisition of the Bank
Loan by the Fund; and (ii) all originals of any promissory notes or
participation certificates issued to, or held by the Fund, representing such
Bank Loan.
(i) Promptly after each determination by the Fund to purchase a Bank
Loan, the Fund shall deliver to the Custodian on or before the settlement date
for such purchase Written Instructions specifying with respect to such
purchase: (a) the particular Bank Loan purchased, including, where available,
any CUSIP number, the facility amount, the date of such Bank Loan, and such
other information as the Custodian may reasonably require to identify the
particular Bank Loan; (b) whether such purchase is to be accomplished pursuant
to an Assignment Agreement or a Participation Agreement; (c) the settlement
date for such purchase; (d) the total amount payable upon such purchase,
including any assignment fee and/or any processing fee, and the institutions
to which such amounts are to be paid; (e) the name of the financial
institution from whom the purchase was made and (f) the name of the financial
institution from whom the Loan Documents are to be received by the Custodian.
The Custodian shall pay to the financial institution specified in the Written
Instructions out of the money held hereunder for the amounts payable as set
forth in such Written Instructions, such payment may be without, and not
against, delivery to the Custodian of either (A) an executed Assignment
Agreement in favor of Fund and any related promissory note delivered to the
Custodian in connection therewith; (B) an executed Participation Agreement in
favor of the Fund, or (C) any promissory note or Loan Documents. In the event
Written Instructions described in the first sentence of this Section are
received on the settlement date, the Custodian shall use commercially
reasonable efforts to settle the purchase on such settlement date, but shall
not be liable for a failure to do so.
(ii) Promptly after each determination by the Fund to sell a Bank
Loan, the Fund shall deliver to the Custodian on or before the settlement date
for such sale Written Instructions specifying with respect to such sale: (a)
the particular Bank Loan sold, including, where available, any CUSIP number,
the facility amount, the date of such Bank Loan, and such other information as
the Custodian may reasonably require to identify the particular Bank Loan; (b)
the amount of such sale; (c) whether such sale is to be accomplished by an
Assignment Agreement or a Participation Agreement; (d) the settlement date for
such sale; (e) the total amount payable upon such sale; (f) the name of the
financial institution to whom the sale was made; (g) the amount of fees or
charges, if any, to be paid by the Fund in connection with such sale, and the
financial institutions to whom the same are to be paid; and (h) in the case of
a sale accomplished by an Assignment Agreement, the name of the financial
institution to whom the Loan Documents (or in the case of a sale of less than
all of the Bank Loan, copies of the Loan Documents) held by the Custodian
hereunder are to be delivered. Upon receipt of the total amount payable upon
such sale, provided the same conforms to the total amount payable as set forth
in such Written Instructions, the Custodian shall arrange for the delivery of
the Loan Documents and any promissory note (or in the case of a sale of less
than all of the Bank Loan accomplished by an Assignment Agreement, a portion
thereof) held by the Custodian and an executed Assignment Agreement or
Participation Agreement prepared by the Fund, whichever is indicated by the
Written Instructions, to the financial institution specified in the Written
Instructions. In the event the Written Instructions described in the first
sentence of this Section are received on the settlement date, the Custodian
shall use commercially reasonable efforts to settle the sale on such
settlement date, but shall not be liable for a failure to do so.
(iii) Promptly after any determination by the Fund to make a
disbursement pursuant to a borrowing request with respect to a Bank Loan
acquired through an assignment or purchase of a participation, Fund shall
deliver to the Custodian, prior to noon New York City time on the date on
which such disbursement is to be made, Written Instructions specifying with
respect to such disbursement; (a) the dollar amount to be disbursed; (b) the
name of the person or financial institution to whom such disbursement is to be
made; and (c) and the date on which such disbursement is to be made. The
Custodian shall make such disbursement of the amount set forth in the Written
Instructions out of the moneys hereunder on the dates specified in the Written
Instructions. In the event the Written Instructions described in the first
sentence of this Section are received on the date specified therein on which
the disbursement is to be made after noon New York City time, the Custodian
shall use commercially reasonable efforts to make such disbursement on such
date, but shall not be liable for a failure to do so.
(iv) Whenever a payment of interest or principal or any other payment
is due to the Fund in connection with a Bank Loan held hereunder, the
Custodian shall accept payment of such amount and hold the same hereunder. The
Custodian may, in its absolute discretion, provisionally credit such amounts
on the due date therefor, such credit subject to reversal at the Custodian's
discretion at any time prior to actual receipt of final payment. If any such
amount is not timely received the Custodian shall, at the cost and expense of
the Fund, take such action as it deems commercially reasonable to effect
collection. In the case of any payment with respect to which the Fund wishes
to disburse a portion thereof to another financial or other institution, the
Custodian shall make such disbursement out of the moneys held hereunder upon
receipt of Written Instructions specifying: (a) the dollar amount of such
disbursement; and (b) the date on which such disbursement is to be made.
(v) The Custodian shall act as custodian of the Loan Documents,
Assignment Agreements, and Participation Agreements, together with any related
promissory notes delivered to Custodian hereunder, but only when, as and if
the same are delivered to and actually received by the Custodian.
(b) The Custodian shall forward to Fund all information, notices, or
documents that it may receive with respect to a Bank Loan from time to time,
including, without limitation, borrowing requests or disbursement notices,
unless the Custodian reasonably believes the Fund has received the same. With
respect to any borrowing request, disbursement notice, or similar document,
the Custodian shall act only upon timely Written Instructions of the Fund, and
shall have no liability or responsibility for any representations in such
request or for any similar representations in any of the Loan Documents, shall
have no duty to make any investigation, and shall have no notice of any event
of default or failure of a condition precedent, and shall not be required to
determine, or make any inquiry with respect to, the use the Fund intends to
make of any disbursement. All such determinations shall be made by the Fund.
In connection with any roll-over notice, notice of conversion, or
interest-rate election request, or similar notice, the Custodian shall upon
receipt of Written Instructions from the Fund make appropriate entries in its
books and records.
(i) Notwithstanding any other provision to the contrary, when the
Custodian is instructed to make payment for a purchase of a Bank Loan, whether
such purchase is accomplished by an Assignment Agreement or a Participation
Agreement, such payment need not be made against delivery to the Custodian of
an Assignment Agreement, Participation Agreement, Loan Documents or any
promissory note. The Fund assumes all responsibility and liability for all
risks involved in connection with the Custodian's making such payment and for
any failure of the foregoing to be delivered to the Custodian at the time of
such payment or any time thereafter.
(ii) Notwithstanding any other provision contained in this Agreement,
the Custodian shall not be liable for any loss or damage, including counsel
fees, resulting from its actions or omissions to act with respect to Bank
Loans, except for any loss or damage arising out of its own gross negligence
or willful misconduct with respect to its express duties. In no event shall
the Custodian be liable to the Fund or any third party for special, indirect
or consequential damages, or lost profits or loss of business, arising under
or in connection with Bank Loans, even if previously informed of the
possibility of such damages and regardless of the form of action. The Fund
agrees to indemnify the Custodian against, and save the Custodian harmless
from, all liability, claims, losses and demands whatsoever, including
reasonable counsel fees, however arising or incurred because of or in
connection with the actions or omissions to act of the Custodian with respect
to Bank Loans, except to the extent the same constitutes direct money damages
arising out of Custodian's own gross negligence or willful misconduct.
(c) The procedures described in clauses (a) and (b) may be revised
and supplemented from time to time with the written consent of all of the
parties to this Agreement (without the consent of the Lenders under the Credit
Agreement). The parties agree to negotiate in good faith such revisions and
supplements as may be reasonable or necessary to enable the Fund to continue
to acquire Bank Loans and the Custodian to hold them for the benefit of the
Secured Parties.
(d) The Custodian shall have no obligation or duty to take any action
to vote upon, consent to or approve, or otherwise take or exercise any action
upon any request, notice or solicitation from the issuer (or agent on behalf
of the issuer) of, or similar matter with respect to, any Account Property,
such as, without limitation, any proposed reorganization, amendment,
modification, extension, conversion, consolidation, tender offer or exchange
offer or similar matter, or otherwise to preserve rights against minor
parties, absent instruction from the Instructing Party; and the Custodian
shall have no duty or obligation to evaluate or render advice to the
Instructing Party with regard to any such matter.
3.9 (a) With respect to any Trade Payable to be transferred to the
Custodial Account, at the time of settlement, the Fund shall send the
Custodian a notice describing such Trade Payable and a copy of any documents
evidencing its purchase thereof and shall thereafter promptly forward the
items specified in clause (b) or (c) below after its receipt thereof.
(b) With respect to any Trade Payable to be transferred to the
Custodial Account, the Fund shall deliver to Custodian a Documentation Package
containing all Chattel Paper, if any, constituting such Pledged Trade Payable.
(c) With respect to any Trade Payable transferred to the Custodial
Account as to which the account debtor or obligor thereunder has filed or
subsequently files for protection under the federal Bankruptcy Code, in
addition to the foregoing actions, the Party In Interest shall file a proof of
claim setting forth the terms of the pledge in accordance with Rule 3001(o)(3)
of the Federal Rules of Bankruptcy Procedure. With respect to any Trade
Payable purchased or acquired by the Fund after a proof of claim against the
account debtor or obligor thereunder has already been filed, the Fund hereby
waives its rights to object to any evidence of the terms of the pledge thereof
filed by the Secured Parties Representative or the Custodian in accordance
with Rule 3001(e)(4) of the Federal Rules of Bankruptcy Procedure, provided
that the terms of such filing are consistent with, and do not violate any
provision of the Credit Agreement, this Agreement or the Pledge and
Intercreditor Agreement. To the extent that the terms of such filing are
inconsistent with, or violate any provision of the Credit Agreement, this
Agreement or the Pledge and Intercreditor Agreement, the Fund retains, and
does not waive, its right to object to any filing made by the Secured Parties
Representative or the Custodian under Rule 3001(a)(4) of the Federal Rules of
Bankruptcy Procedure.
3.10 (a) Notwithstanding any term of Section 3.1 to the contrary, the
Custodian shall be entitled in any instance to take delivery of and hold any
Account Property by such other means and procedures (whether or not as
described in, or in compliance with, the terms of said Section 3.1) as it may
deem appropriate or expedient, or as may be consistent with its then
applicable procedures, including without limitation using nominees or other
methods of good delivery (but not in "street name"), utilizing or holding
through other agents, intermediaries, brokers, dealers, clearing or depository
banks, subcustodians or other depositories, or through any "direct paper"
book-entry or other recognized securities system, in each case in any
combination, as it may deem appropriate or, where appropriate, holding of
securities as part of a fungible bulk; subject, however, to its duties under
applicable law.
(b) The Custodian shall, upon request, provide the Fund with any
report obtained by the Custodian relating to any securities system's
accounting system or its internal accounting control and procedures for
safeguarding securites deposited in such securities system.
3.11 The Custodian, the Fund, the Administrative Agent and the
Secured Parties Representative each hereby agrees that each item of Account
Property (and other property, if any) other than cash or Money contained in or
credited to the Custodian Account or Fund Custodian Account from time to time,
of whatever nature or kind, shall be treated as a "financial asset" within the
meaning of, and under, Article 8 of the NYUCC.
3.12 All items of income, gain, expense and loss recognized in the
Custodial Account or Fund Custodian Account which the Custodian determines it
is required by law to report to the Internal Revenue Service (or any state or
local taxing authorities) shall be reported under the name and taxpayer
identification number of the Fund. The Fund shall provide the Custodian the
Fund's taxpayer identification number promptly following the execution and
delivery of this Agreement.
3.13 The Custodian hereby represents and warrants that it has not
entered into, and hereafter during the term of this Agreement shall not enter
into, any agreement granting "control" (within the meaning of ss. 8-106(d)(2),
9-104 and 9-106 of the NYUCC) with respect to the Custodial Account (or any
Sub-Account) or the Account Property to any person, other than as set forth in
this Agreement. The Custodian is a bank, broker or trust company which in the
ordinary course of its business maintains security accounts for others and is
acting in that capacity as Custodian under this Agreement.
3.14 Notwithstanding anything to the contrary herein, the Custodian
agrees that financial assets, money and other items credited to the Custodial
Account and the Escrow Account will not be subject to deduction, set-off,
recoupment, banker's lien, or any other right in favor of any person other
than the Secured Party Representatives under the Pledge and Intercreditor
Agreement; provided, however, the Custodian may set off (i) all amounts due to
the Custodian in respect of customary fees and expenses for the routine
maintenance and operation of Custodial Account and the Escrow Account and (ii)
the face amount of any checks which have been credited to a Custodial Account
or the Escrow Account but are subsequently returned unpaid because of
uncollected or insufficient funds.
ARTICLE IV
PURCHASE AND SALE OF ACCOUNT PROPERTY;
CREDITS TO CUSTODIAL ACCOUNT
4.1 Promptly after each purchase or sale of Account Property (and
prior to the time at which the Custodian is required to release or deliver any
Account Property (including any cash purchase price) in connection therewith),
the Instructing Party and, to the extent reasonably required by the Custodian
at its option (provided however, that the Custodian shall have no obligation
to seek such instruction), the Fund and the Administrative Agent shall deliver
to the Custodian Written Instructions specifying all information necessary for
the Custodian to deliver such Account Property (and sufficient to indicate
that the same is in compliance with the requirements of this Agreement). The
Custodian shall account for all purchases and sales of Account Property on the
contractual settlement date unless otherwise agreed to by the Custodian. In
connection with each sale or other transfer of Other Account Property, the
Instructing Party shall deliver to the Custodian a trade ticket (each, a
"Disposition Letter") listing each item of Other Account Property subject to
such sale or transfer. In connection with settlements of purchases of
privately placed notes or certificates on shares of beneficial interest, in
each case, upon original issuance, the Custodian need not make payment on
delivery versus payment basis and may pay for the same prior delivery of such
note, certificate or share or of any receipt or commitment therefor.
4.2 Each Customer understands that when the Custodian is instructed
to deliver Account Property against payment, delivery of such Account Property
and receipt of payment therefor may not be completed simultaneously. Each
Customer agrees that the Custodian shall have no responsibility or liability
for any credit risks involved in connection with the Custodian's delivery of
Account Property pursuant to instructions of the Instructing Party; provided,
however, that the Custodian shall not deliver Account Property prior to
receipt of payment therefor unless specifically authorized by the Instructing
Party. In the event of such specific authorization, the Custodian agrees that
in the event no payment is received by the Custodian in connection with any
delivery of Account Property, the Custodian shall, upon the request of the
Instructing Party and at the sole cost and expense of the Fund, use reasonable
and customary efforts (in accordance with its ordinary custody business
practices) to seek the return of such Account Property or the payment
therefor; provided, however, that the Custodian shall have no obligation
hereunder to commence or engage in any litigation or arbitration in connection
therewith.
4.3 The Custodian may, as a matter of bookkeeping convenience or by
separate agreement with the Instructing Party, credit the Custodial Account
with the proceeds from the sale, redemption or other disposition of Account
Property or interest, dividends or other distributions payable on Account
Property prior to its actual receipt of final payment therefor. All such
credits shall be conditional until the Custodian's actual receipt of final
payment and may be reversed by the Custodian to the extent that final payment
is not received. Payment with respect to a transaction will not be "final"
until the Custodian shall have received immediately available funds which
under applicable law or rule are irreversible and not subject to any security
interest, levy or other encumbrance (other than those contemplated by the
Credit Agreement), and which are specifically applicable to such transaction.
4.4 The Custodian shall have no obligation, and shall not be liable,
for any loss or damage whatsoever resulting from its failure to settle any
Account Property transaction where the rules of a Depository prevent the
receipt or delivery of such Account Property (i.e., that such Account Property
has been "chilled"). The Custodian may, but shall have no obligation to,
attempt to utilize alternative methods of delivering securities from time to
time offered by a Depository.
4.5 Unless otherwise invested overnight as directed in a timely
manner by the Instructing Party, all Dollars in the Custodial Account at the
end of a business day will be invested in Cash Equivalents by the Custodian
(which investment shall be in the name of the Custodian and shall be solely
under the control and dominion of the Custodian, subject to the duties and
covenants of the Custodian under this Agreement).
4.6 Each of the Fund and the Secured Parties Representative hereby
covenants and agrees that in any instance in which it shall or may act as
Instructing Party, it shall only instruct the Custodian, with respect to the
Custodial Account and Account Property, in a way that is consistent with and
in compliance with the Pledge and Intercreditor Agreement, this Agreement and
the other Transaction Documents to which it is a party and that may be
applicable.
4.7 In no instance shall the Custodian be required to receive, and
the Instructing Party shall not cause, the assignment to the Custodian of any
Other Account Property (including without limitation any Bank Loans) unless
(i) the terms of such assignment and Other Account Property do not impose upon
the Custodian, as assignee, any obligations or liabilities (including without
limitation any funding or lending obligations) and (ii) the terms of such
assignment expressly state that such assignment is made strictly and solely to
the Custodian in its capacity as a nominee, that the Custodian in its
individual corporate capacity shall not have and does not assume any
obligations or liabilities thereunder, and such assignment is subject to the
condition that there shall be no recourse in respect of any obligations or
liabilities arising out of such assignment or assigned property against the
Custodian in its individual or corporate capacity (or against its assets or
properties owed in its individual or corporate capacity).
4.8 With respect to all transactions for the Custodial Account,
including, without limitation, dividend and interest payments and sales and
redemptions of Account Property, availability of funds credited to the
Custodial Account shall be based on the type of funds used in the trade
settlement or payment, including, but not limited to, same day availability
for federal or same day funds and next business day availability for clearing
house or next day funds.
4.9 The following special provisions relate to all Foreign Securities:
(a) Cash may be held pursuant to the Fund's instructions in either
interest or non-interest bearing accounts as may be available for the
particular currency. To the extent the Custodian can comply with the Fund's
instructions to the Custodian, the Custodian is authorized to maintain cash
balances on deposit for the Fund with the Custodian or one of the Custodian's
or ▇▇▇▇▇ Fargo Bank, National Association's affiliates at such reasonable
rates of interest as may from time to time be paid on such accounts, or in
non-interest bearing accounts as the Fund may direct, if acceptable to the
Custodian.
(b) Account Property shall be transferred, exchanged or delivered by
the Custodian or Foreign Subcustodian upon receipt by the Custodian of
instructions which include all information required by the Custodian.
Settlement and payment for Account Property received for, and delivery of
Account Property out of, the Custodial Account may be made in accordance with
the customary or established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of securities to a
purchaser, dealer or their agents against a receipt with the expectation of
receiving later payment and free delivery. Delivery of Account Property out of
the Custodial Account may be made in any manner specifically required by the
Fund's instructions acceptable to the Custodian.
(c) When a rights entitlement or a fractional interest resulting from
a rights issue, stock dividend, stock split or similar corporate action is
received which bears an expiration date, the Custodian shall endeavor to
obtain instructions from the Instructing Party, but if instructions are not
received in time for the Custodian to take timely action, or actual notice of
such corporate action was received too late to seek instructions, the
Custodian is authorized to sell such rights entitlement or fractional interest
and to credit the Custodial Account with the proceeds or to take any other
action the Custodian deems, in good faith, to be appropriate in which case the
Custodian shall be held harmless for any such action.
4.10 The Custodian may provide proxy voting services, if elected by
the Instructing Party and agreed to by the Custodian, in accordance with the
then customary proxy voting services procedures of the Custodian. Proxy voting
services may be provided by the Custodian or, in whole or in part, by one or
more third parties appointed by the Custodian (which may be the Custodian's
affiliates).
The Custodian shall endeavor to promptly notify each Customer of such
rights or discretionary actions or of the date or dates by when such rights
must be exercised or such action must be taken provided that the Custodian has
received, from the issuer (with respect to Securities issued in the United
States) or from one of the nationally or internationally recognized bond or
corporate action services to which the Custodian subscribes, timely notice of
such rights or discretionary corporate action or of the date or dates such
rights must be exercised or such action must be taken.
In the event that the Instructing Party does not elect to have the
Custodian provide proxy voting services or does not instruct otherwise, the
following shall apply. With respect to all Securities, however registered, the
voting rights are to be exercised by the Fund or its designee. With respect to
Securities issued in the United States, the Custodian's only duty shall be to
promptly mail to the Fund any documents (including proxy statements, annual
reports and signed proxies) relating to the exercise of such voting rights.
With respect to Foreign Securities, at the request of the Fund, the Custodian
will provide the Fund with access to a provider of global proxy services (the
cost of which will be paid by the Fund). If the Fund determines not to utilize
the services of such global proxy services provider, the Custodian will
provide the Fund with proxy material actually received by the Custodian from
Foreign Subcustodians, but otherwise shall have no obligations with respect to
voting.
4.11 The Custodian shall not be liable to the Fund or any third party
for any taxes, fines or penalties payable by the Custodian or the Fund, and
shall be indemnified accordingly, whether these result form the inaccurate
completion of documents by the Fund or any third party, or as a result of the
provision to the Custodian or any third party of inaccurate or misleading
information or the withholding of material information by the Fund or any
other third party, or as a result of any delay of any revenue authority or any
other matter beyond the Custodian's control. The Fund confirms that, if the
Custodian notifies the Fund prior to taking any such action, the Custodian is
authorized to deduct from any cash received or credited to the Custodial
Account any taxes or levies required by any revenue or governmental authority
for whatever reason in respect of the Custodial Account. Other than as
expressly provided in this subclause, the Custodian shall have no
responsibility with regard to the Fund's tax position or status in any
jurisdiction. The Fund confirms that the Custodian is authorized to disclose
any information requested by any revenue authority or any governmental body in
relation to the Fund or the securities and/or cash held for the Fund.
4.12 To facilitate the administration of the Fund's trading and
investment activity, the Custodian is authorized to enter into spot or forward
foreign exchange contracts with the Fund or an Authorized Person for the Fund
and may also provide foreign exchange through the Custodian's subsidiaries or
affiliates, ▇▇▇▇▇ Fargo Bank, National Association or its affiliates or
Foreign Subcustodians. Instructions including standing instructions, may be
issued with respect to such contracts but the Custodian may establish rules or
limitation concerning any foreign exchange facility made available. In all
cases where the Custodian and the Custodian's subsidiaries or affiliates,
▇▇▇▇▇ Fargo Bank, National Association or its affiliates or Foreign
Subcustodians enter into a foreign exchange contract related to the Custodial
Account, the terms and conditions shall be determined by the Custodian in its
absolute discretion.
ARTICLE V
OVERDRAFTS OR INDEBTEDNESS
If the Custodian in its sole discretion advances funds into or for
the benefit of the Custodial Account in the ordinary course of the Custodian's
custody business, or there shall arise for whatever reason an overdraft in the
Custodial Account in the ordinary course of the Custodian's custody business,
or if the Fund is for any other reason indebted to the Custodian hereunder,
the Fund shall repay the Custodian on demand the amount of the advance,
overdraft or indebtedness plus accrued interest at a rate ordinarily charged
by the Custodian to its institutional custody customers. Except as
contemplated by the immediately preceding sentence, the Custodian shall not
make any loans or otherwise extend any credit to the Fund. The Fund hereby
grants to the Custodian a first lien and security interest in and to the
Custodial Account and all Account Property now or hereafter existing or
acquired or held in the Custodial Account as security for all obligations owed
by the Fund or any other person to the Custodian under or pursuant to this
Agreement, and acknowledges and agrees that it has the right to grant such
lien and security interest free of any right of redemption or prior claim by
any other person. Each Customer hereby acknowledges and agrees that the
Custodian has a continuing first lien and security interest in and to the
Custodial Account and all Account Property now or hereafter existing or
acquired or held in the Custodial Account in order to secure all of the
obligations owed by the Customers to the Custodian hereunder. The Custodian
shall be entitled to all the rights and remedies of a pledgee under common law
and a secured party under the UCC and any other applicable laws or regulations
as then in effect; provided, however, that to the extent the Custodian shall
seek payment of any sum due hereunder from the Custodial Account or the
Account Property, the Custodian shall first, apply all cash in the form of
Dollars in the Custodial Account thereto and, thereafter, liquidate any
remaining Account Property and apply the cash proceeds thereof to such sum;
provided, further that Custodian shall not liquidate any collateral security
pursuant to this Article V unless such sum is in excess of ten days past due.
The Custodian's security interest in the Custodial Account shall be a first
lien and security interest subject to no setoffs, counter-claims or other
liens prior to or on a parity with it in favor of any other party (other than
specific liens granted preferred status by statute), and the Fund shall take
any and all additional steps which the Custodian requires to assure itself of
such priority and status, including notifying third parties of, or obtaining
their consent to, the Custodian's security interest.
ARTICLE VI
CONCERNING CUSTODIAN
6.1 (a) The Custodian shall exercise the degree of care of a prudent
professional custodian for hire in carrying out the provisions of this
Agreement. Except as otherwise expressly provided herein, the Custodian shall
not be liable for any costs, expenses, damages, liabilities or claims
(including, without limitation, attorneys' and accountants' fees) incurred by
or asserted against the Customers, or any one or more of them, except those
costs, expenses, damages, liabilities or claims arising out of the negligence,
bad faith or willful misconduct of the Custodian. The Custodian shall have no
obligation hereunder for costs, expenses, damages, liabilities or claims
(including, without limitation, attorneys' or accountants' fees) which are
sustained or incurred by reason of any action or inaction by any depository
(including any Depository or Compulsory Depository), clearing corporation or
other or other agent, sub-custodian or intermediary, unless such action or
inaction is caused by the negligence, bad faith or willful misconduct of the
Custodian. The Custodian's responsibility with respect to any Account Property
held by a Foreign Subcustodian is limited to the failure on the part of
Custodian to (i) comply with the provisions of Section 2.3 or (ii) exercise
reasonable care in the selection or retention of such Foreign Subcustodian in
light of prevailing settlement and securities handling practices, procedures
and controls in the relevant market. With respect to any costs, expenses,
damages, liabilities, or claims (including, without limitation, attorneys' and
accountants' fees) incurred by the Customers as a result of the acts or the
failure to act by any Foreign Subcustodian, the Custodian shall take
appropriate action to recover such costs, expenses, damages, liabilities, or
claims from such Foreign Subcustodian. In no event shall the Custodian be
liable to any customer or any third party for special, indirect or
consequential damages, or lost profits or loss of business, arising in
connection with this Agreement.
(b) The Fund hereby agrees to indemnify the Custodian and hold the
Custodian harmless from and against any and all costs, expenses, damages,
liabilities and claims (including, without limitation, reasonable attorneys'
fees and accountants' fees), sustained or incurred by or asserted against the
Custodian by reason of or as a result of any action or inaction, or arising
out of the Custodian's performance hereunder or under the Pledge and
Intercreditor Agreement, including, without limitation, reasonable fees and
expenses of counsel incurred by the Custodian in a successful defense of
claims by any one or more of the Customers; provided, that the Fund shall not
have any obligation hereunder to indemnify the Custodian for those costs,
expenses, damages, liabilities or claims for which the Custodian has accepted
liability under Section 6.1(a). This indemnity shall be a continuing
obligation of the Fund and its respective successors and assigns,
notwithstanding the termination of this Agreement.
6.2 Without limiting the generality of the foregoing, the Custodian
shall be under no obligation to inquire into, and shall not be liable for, the
validity or genuineness of any Account Property purchased or sold by the
Customers or any of them, the legality of their purchase or sale, the
propriety of the amount paid therefor upon purchase or sale, or any actions of
third parties with respect to the negotiability of Account Property, and the
Custodian shall not be liable for any non-delivery of documentation required
to be delivered under Sections 3.8 and 3.9.
6.3 The Custodian may, with respect to questions of law specifically
regarding the Custodial Account and Account Property, obtain the advice of
counsel, at the expense of the Fund, and shall be fully protected with respect
to anything done or omitted by it in good faith in conformity with such
advice. The Custodian shall have the right, but not the obligation, to consult
with the Party In Interest regarding all matters hereunder.
6.4 The Custodian shall be under no obligation to take action to
collect any amount payable on Account Property in default, or if payment is
refused.
6.5 The Fund agrees to pay to the Custodian the fees set forth in a
separate fee letter agreement, dated as of September 1, 2004, between the
Custodian and the Fund or as may be agreed upon from time to time. The Fund
agrees to reimburse Custodian for all costs associated with the conversion of
Account Property and the transfer of Account Property and records kept in
connection with this Agreement. The Fund agrees to reimburse the Custodian for
out-of-pocket expenses (including without limitation attorney's fees and
expenses) incurred in the administration of this Agreement or performance of
its duties hereunder, including those which are a normal incident of the
services provided hereunder.
6.6 The Custodian shall be entitled to rely upon any Written
Instruction actually received by the Custodian. If, at any time, Written
Instructions through an on-line communication system offered by the Custodian
is utilized, such use shall be subject to the Terms and Conditions provided by
the Custodian to the parties hereto.
6.7 Upon reasonable request and provided the Custodian shall suffer
no significant disruption of its normal activities, each Customer shall have
reasonable access to the Custodian's books and records relating to the
Custodial Account and Account Property during the Custodian's normal business
hours and upon reasonable advance request. Upon reasonable request by any
Customer, copies of any such books and records shall be provided to such
Customer at its expense.
6.8 The books and records pertaining to the Custodial Account and
Account Property, the Fund Custodial Account, the Escrow Account and the Fund
Account Property which are in possession of the Custodian shall be the
property of the Fund. Such books and records shall be prepared and maintained
as required by Section 17(f) of the Investment Company Act and Rule 17f-1
thereunder.
6.9 It is understood that the Custodian is authorized to supply any
information regarding the Custodial Account and Account Property which is
required by any law or governmental regulation now or hereafter in effect.
6.10 The Custodian shall provide the Fund, at such times as the Fund
may reasonable request, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a securites system, or held by an
Eligible Foreign Custodian relating to the services provided by the Custodian
under this Agreement; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund, to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so
state.
6.11 The Custodian shall not be responsible or liable for any failure
or delay in the performance of its obligations under this Agreement arising
out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including without limitation, acts of God; earthquakes,
fires; floods, wars, civil or military disturbances; sabotage; epidemics;
riots; interruptions, loss or malfunctions of utilities; accidents; labor
disputes; acts of civil or military authority; and governmental actions. The
Custodian shall endeavor to provide notice to the Fund and the Instructing
Party of the occurrence of any such circumstances as soon as reasonably
practicable thereafter.
6.12 The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set
forth in this Agreement, and no covenant or obligation shall be implied
against the Custodian in connection with this Agreement.
6.13 Notwithstanding anything to the contrary contained herein,
during any Suspension Period, the Custodian shall have the right to refrain
from taking any instructions from the Instructing Party unless the Custodian
shall have reasonably determined that (a) it will be compensated for its
services rendered hereunder at the times and in the amounts set forth in a
separate fee letter dated as of September 1, 2004, between the Custodian and
the Fund, with any past due amounts being paid upon demand, and (b) it is and
shall be adequately indemnified for any and all liabilities, losses, damages,
costs, expenses and claims in connection with the performance of its duties
hereunder, upon terms and conditions substantially similar to those terms and
conditions set forth herein, by the Administrative Agent or the Fund.
6.14 The Custodian hereby agrees that it shall, at the expense of the
Fund, negotiate in good faith with the other parties hereto with respect to
any amendments, supplements or other modifications to this Agreement which may
be proposed by any such party for the purpose of ensuring the perfection of
the security interests which have been granted by the Fund in the Account
Property to the Secured Parties Representative; provided, however, that
nothing in this Section 6.12 shall require the Custodian to undertake any
obligation, business, service or activity (a) which it shall have chosen as an
institutional, legal, business or policy matter (1) not to offer to the public
or (2) to discontinue or (b) for which it is not, based on its reasonable
determination, adequately compensated and indemnified.
6.15 The Custodian hereby represents and warrants that:
(i) it is a bank duly organized and validly existing in good standing
under the laws of the United States of America;
(ii) it is empowered under applicable laws and by its charter to
enter into and perform the services contemplated in this Agreement;
(iii) all requisite corporate proceedings have been taken to
authorize it to enter into and per form this Agreement and this Agreement has
been duly executed and is the valid, binding and enforceable obligation of
Custodian; and
(iv) it and its affiliates collectively have and will continue to
have and maintain the necessary facilities, equipment and personnel to perform
its duties and obligations under this Agreement.
6.16 (a) Subject to Section 6.16(b) below, the Custodian shall have
no liability for any actions taken pursuant to or on reliance upon Written
Instructions of the Instructing Party. Without limiting the foregoing, the
Custodian shall be entitled to follow the Written Instructions of the
Instructing Party with respect to any payment or disbursements of funds, or
release or delivery of the Account Property from the Custodial Account without
liability on its part and without any obligation or duty to inquire into,
investigate, monitor or other wise determine compliance with the applicable
terms, restrictions, limitations or requirements of any other Transaction
Document, including without limitation applicable terms of the Advisory
Agreement, the Pledge and Intercreditor Agreement, the Credit Agreement or the
Operating Agreement, and shall not otherwise have any duty to monitor,
determine, inquire as to or ascertain the compliance by the Fund (or any other
party) with respect to any of the Transaction Documents.
(b) Notwithstanding any term of Section 6.16(a) to the contrary,
(i) during any Suspension Period (other than any Suspension Period
occurring as a result of the delivery of a Liquidation Notice), the Fund shall
continue to be entitled to instruct the Custodian (as Instructing Party), and
the Custodian shall continue to follow such instructions, with respect to the
Custodial Account, except that:
(A) any instruction by the Fund to release, deliver, sell or
otherwise dispose of Account Property, shall be accompanied by written
evidence acceptable to the Custodian (at its option and on which it may
conclusively rely) of the consent or approval by the Controlling Class (as
defined in the Pledge and Intercreditor Agreement) or Secured Parties
Representative; or, if not accompanied by such consent, the Custodian shall
promptly give written notice to the Secured Parties Representative and if
within three Business Days of the Secured Parties Representative's receipt of
such notice (or, if such instruction is accompanied by a certificate of an
Authorized Officer of the Fund to the effect that such Account Property has a
Market Value, as defined in the Credit Agreement, of $11,000,000 or less, on
which the Custodian may conclusively rely, within two Business Days of the
Secured Parties Representative's receipt of such notice), the Custodian shall
not have received written objection thereto from the Secured Parties
Representative, it shall follow such instruction of the Fund provided, that
the foregoing shall not apply to sales or dispositions of Account Property to
the extent such sales and dispositions do not exceed $3,500,000 in the
aggregate during the existence of such Suspension Period;
(B) any instructions by the Fund to release or deliver any Account
Property (including cash) for the purpose of purchasing or acquiring any
Account Property other than Cash Equivalents (as defined in the Pledge and
Intercreditor Agreement) shall be accompanied by written evidence acceptable
to the Custodian (at its option and on which it conclusively may rely) of the
prior written consent of the Controlling Class (as defined in the Pledge and
Intercreditor Agreement); and
(C) during any Suspension Period occurring as a result of the
delivery of a Liquidation Notice, the Custodian shall (1) not follow any
directions regarding the funds or other property on deposit in the Custodial
Account from the Fund and (2) take all reasonable actions to assist the
Secured Parties Representative in a foreclosure and enforcement in the manner
set forth herein, including, without limitation, the prompt transfer to the
Secured Parties Representative from time to time at its request of all funds
in the Custodial Account and of all proceeds and products of the Collateral.
6.17 Notwithstanding any term hereof to the contrary:
(a) In no instance shall the Custodian be liable or responsible for
the actions or omissions of the Fund, the Administrative Agent, the Secured
Parties Representative, the Investment Manager or the Co-Manager, or the
failure of the Fund to provide any documentation required by Sections 3.8 and
3.9.
(b) The Custodian shall not be responsible for the accuracy or
sufficiency of any recitals (including without limitation recital of federal
book-entry regulations) set forth herein.
(c) In the absence of bad faith on its part, the Custodian may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the
Custodian and conforming to the requirements of this Agreement; provided,
however, that in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Custodian,
the Custodian shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Agreement and shall promptly
notify the party delivering the same if such certificate or opinion does not
so conform; provided, further, that the Custodian shall not be required to
determine whether it has received the documentation required by Sections 3.8
and 3.9
(d) The Custodian shall not be liable for any error of judgment made
in good faith and with the reasonable belief that the action taken (or
forbearance, as the case may be) was authorized or within its rights or powers
hereunder, unless it shall be proven that the Custodian was negligent in
ascertaining the pertinent facts.
(e) No provision of this Agreement shall require the Custodian to
expend or risk its own funds or otherwise incur any financial or other
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk, or liability is not reasonably assured to it; provided, however, that
the reasonable costs of performing its ordinary services under this Agreement
shall not require such indemnity.
(f) The Custodian shall not be liable for interest on any money
received by it except as the Custodian may agree in writing with the
Instructing Party.
(g) The Custodian may rely on any resolution, certificate, statement,
instrument, opinion, request, direction, consent, order, note or other
document believed by it to be genuine and to have been signed or presented by
the proper person.
(h) The Custodian may consult with counsel (and may when it deems
necessary or appropriate require an opinion of counsel) and shall not be
liable for any action it takes or omits to take in good faith in reliance on
the advice of counsel selected by it with due care (or in reliance upon any
opinion of counsel).
(i) Although the Custodian shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, notice, request, direction, consent, order, or
other paper or document, it may, in its discretion, make such further inquiry
or investigation into such fact or matters as it may see fit.
(j) The Custodian shall not be deemed to have notice or knowledge of
any matter (including without limitation any event of default or acceleration,
or rescission of acceleration) unless an officer of the Custodian assigned to
the administration of this Agreement has actual knowledge thereof or unless
written notice thereof from the Fund, the Administrative Agent or the Secured
Parties Representative is received by the Custodian at the office of the
Custodian identified pursuant to Section 8.2 hereof and such notice makes
reference to this Agreement.
(k) The permissive right of the Custodian to take or refrain from
taking any actions enumerated in this Agreement shall not be construed as a
duty.
ARTICLE VII
TERMINATION
The Custodian and, prior to the commencement of any Suspension
Period, the Administrative Agent and the Secured Parties Representative,
acting collectively and, thereafter, the Instructing Party, may each terminate
this Agreement by giving to the other parties hereto a notice in writing
specifying the date of such termination, which shall be not less than ninety
(90) days after the date of such notice. Upon termination hereof, the Fund
shall pay to the Custodian such compensation as may be due to the Custodian,
and shall likewise reimburse the Custodian for other amounts payable or
reimbursable to the Custodian hereunder. The Custodian shall follow such
reasonable Written Instructions concerning the transfer of custody of records,
Account Property and other items as the Instructing Party shall give;
provided, that (a) the Custodian shall have no liability for shipping and
insurance costs associated therewith, and (b) full payment shall have been
made to the Custodian of all its compensation, costs, expenses and other
amounts hereunder. If any Account Property remains in the Custodial Account on
the date of termination of this Agreement, the Custodian may deliver to the
Party In Interest such Account Property. Upon termination of this Agreement,
except as otherwise provided herein, all obligations of the parties to each
other hereunder shall cease (provided, however, that all indemnifications in
favor of the Custodian hereunder shall continue and survive).
ARTICLE VIII
MISCELLANEOUS
8.1 Substantially contemporaneously with the execution and delivery
of this Agreement, each Customer shall provide to the Custodian a Certificate
of Authorized Persons, which may be changed or altered from time to time by
delivery of a subsequent Certificate of Authorized Persons (from any
Authorized Person), upon which the Custodian shall be entitled to rely
conclusively. Each Customer agrees to furnish to the Custodian a new
Certificate of Authorized Persons in the event of any change in the then
present Authorized Persons. Until such new Certificate is received, the
Custodian shall be fully protected in acting upon Written Instructions of such
present Authorized Persons.
8.2 Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and received by it at its offices at ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Services--Special Value Expansion Fund, LLC or at such other place as such
Customer may from time to time designate in writing, or by facsimile at (410)
715-3748, Attention: Corporate Trust Services--Special Value Expansion Fund,
LLC.
8.3 Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Administrative Agent shall be
sufficiently given if addressed to the Administrative Agent and received by it
at its offices at Union Bank of California, N.A., ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as such Customer
may from time to time designate in writing, or by facsimile at (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇▇.
8.4 Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Secured Parties Representative shall be
sufficiently given if addressed to the Secured Parties Representative and
received by it at its offices at ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
or at such other place as such Customer may from time to time designate in
writing, or by facsimile at (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇.
8.5 Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Fund shall be sufficiently given if
addressed to the Fund and received by it at its offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as such
Customer may from time to time designate in writing; or by facsimile at (310)
566-1010, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
8.6 Each and every right granted to any party hereunder or under any
other document delivered hereunder or in connection herewith, or allowed it by
law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of any party to exercise, and no delay in exercising, any
right will operate as a waiver thereof, nor will any single or partial
exercise by either party of any right preclude any other or future exercise
thereof or the exercise of any other right.
8.7 In case any provision or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be
affected thereby. This Agreement may not be amended or modified in any manner
except by a written agreement executed by the parties hereto. This Agreement
shall extend to and shall be binding upon the parties hereto, and their
respective successors and assigns; provided, however, that this Agreement
shall not be assignable by any party without the written consent of the other
parties.
8.8 Each of this Agreement, the Custodial Account and Escrow Account
and the securities entitlements (as defined in Section 8-102(a)(17) of the
NYUCC) or any instructions pertaining thereto shall be construed in accordance
with and governed by the substantive laws of the State of New York. Regardless
of any provision in any other agreement, for purposes of the UCC, New York
shall be the location of Custodian as the bank for purposes of Sections 9-301,
9-304 and 9-307 of the UCC and as the securities intermediary for purposes of
Sections 9-301 and 9-307 and Section 8-110 of the UCC. Each party hereby
consents to the exclusive jurisdiction of a state or federal court situated in
the State of New York in connection with any dispute arising hereunder. To the
extent that in any jurisdiction the Custodian, the Secured Parties
Representative, the Administrative Agent or the Fund, as the case may be, may
now or hereafter be entitled to claim, for itself or its assets, immunity from
suit, execution, attachment (before or after judgment) or other legal process,
the Custodian, the Secured Parties Representative, the Administrative Agent or
the Fund, as the case may be, irrevocably agrees not to claim, and it hereby
waives, such immunity. The Customers and the Custodian hereby irrevocably
waive any objection on the ground of venue, forum non conveniens, or any
similar grounds, and irrevocably consent to service of process by mail or in
any manner permitted by New York law, and irrevocably waive their respective
rights to any jury trial.
8.9 Except as set forth in the following sentence, in performing
hereunder, the Custodian is acting solely on behalf of the Secured Parties,
and no contractual or service relationship shall be deemed to be established
hereby between the Custodian and any other person (other than the Fund, the
Administrative Agent and the Secured Parties Representative to the extent
provided herein). The Insurer is an express third party beneficiary of this
Agreement with full rights of enforcement hereunder.
8.10 This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
8.11 Each party hereto acknowledges and agrees that the obligations
of the Secured Parties Representative and the Administrative Agent hereunder
are only those expressly set forth herein with respect to such party. The
Administrative Agent shall act hereunder on the terms and conditions set forth
in Article VIII of the Credit Agreement, and the Secured Parties
Representative shall act hereunder on the terms and conditions set forth in
Article X of the Pledge and Intercreditor Agreement.
8.12 The Administrative Agent and the Secured Parties Representative
shall hold all non-public information obtained pursuant to the requirements of
this Agreement in accordance with the confidentiality standard applicable
under the Credit Agreement or the Pledge and Intercreditor Agreement, as
applicable. The Custodian will maintain the confidentiality of all
Confidential Information (as defined below) in accordance with procedures the
Custodian ordinarily utilizes in maintaining similar confidential information
to protect Confidential Information delivered to the Custodian; provided that
the Custodian may deliver or disclose Confidential Information to (i) the
Custodian's directors, trustees, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure is reasonably required for the
administration of this Agreement), (ii) the Custodian's financial advisors and
other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 8.13 to
the extent such disclosure is reasonably required for the administration of
this Agreement, (iii) any federal or state regulatory, governmental or
judicial authority having jurisdiction over the Custodian, (iv) ▇▇▇▇▇'▇ and
S&P, (v) any other Person with the consent of the Fund or (vi) any Person to
which such delivery or disclosure may be necessary or appropriate (w) to
effect compliance with any law, rule, regulation or order applicable to such
Person, (x) in response to any subpoena or other legal process upon prior
notice to the Fund (unless prohibited by applicable law, rule, order or decree
or other requirement having the force of law) or (y) in connection with any
litigation to which such Person is a party upon prior notice to the Fund
(unless prohibited by applicable law, rule, order or decree or other
requirement having the force of law). In the event of any required disclosure
of the Confidential Information by the Custodian, the Custodian agrees to use
reasonable efforts to protect the confidentiality of the Confidential
Information.
For the purposes of this Section 8.13, "Confidential Information"
means information delivered to the Custodian by or on behalf of the Fund in
connection with and relating to the transactions contemplated by or otherwise
pursuant to this Agreement; provided that such term does not include
information that (a) was publicly known or otherwise known to the Custodian
prior to the time of such disclosure, (b) subsequently becomes publicly known
through no act or omission by the Custodian or any Person acting on behalf of
the Custodian, (c) otherwise is known or becomes known to the Custodian other
than (i) through disclosure by the Fund or (ii) as a result of the breach of a
fiduciary duty to the Fund or a contractual duty to the Fund and (d) is
allowed to be treated as non-confidential by consent of the Fund.
8.13 No amendment of any provision of this Agreement shall be
effective unless in writing and signed by all of the parties hereto.
8.14 (a) The Custodian agrees that no recourse shall be had with
respect to any obligation to the Custodian under this Agreement against any
past, present or future members, incorporators, directors, officers, partners,
employees or securityholders of the Fund (collectively, "Fund Control
Persons"), and in no event shall any Fund Control Person be held liable,
personally or otherwise, with respect to the obligations of the Fund hereunder
whether by virtue of any statute or rule of law or by the enforcement of any
assessment, penalty or otherwise, all such liability being expressly waived
and released by the Custodian. The foregoing provision of this Section 8.15
shall not, in any event, limit the right of any Person to name the Fund as a
defendant in any action or suit or in the exercise of any other remedy under
this Agreement, so long as no judgment in the nature of a deficiency judgment
or seeking personal liability shall be asked for or (if obtained) enforced
against any Fund Control Person. The Custodian agrees that all obligations of
the Fund to the Custodian under this Agreement shall be subject to Section 6.5
of the Pledge and Intercreditor Agreement.
(b) Each party hereto (other than the Fund) hereby covenants and
agrees that, prior to the date which is one year and one day after the
termination of the Credit Agreement and the payment in full of any amounts
owed under the Credit Agreement, such Person will not acquiesce, petition or
otherwise invoke or cause the Fund to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case
against the Fund under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Fund or any substantial part of
the property of the Fund, or ordering the winding up or liquidation of the
affairs of the Fund; provided, however, that nothing in this Section 8.15(b)
shall constitute a waiver of any right to indemnification, reimbursement or
other payment from the Fund pursuant to this Agreement.
(c) Each of the parties hereto hereby covenants and agrees that,
prior to the date which is one year and one day after the payment in full of
all outstanding commercial paper notes and other indebtedness for borrowed
money of any CP Conduit or SPC, such Person shall not institute against, or
join any other Person in instituting against, such CP Conduit or SPC, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceedings. This provision shall survive the termination of
the Credit Agreement and the making and repayment of the Loans.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers, thereunto duly authorized, as of the
day and year first above written.
SPECIAL VALUE EXPANSION FUND, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Secretary
[Signature Page to Amended and Restated Custodial Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers, thereunto duly authorized, as of the
day and year first above written.
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Custodian
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Trust Officer
[Signature Page to Amended and Restated Custodial Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers, thereunto duly authorized, as of the
day and year first above written.
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
[Signature Page to Amended and Restated Custodial Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers, thereunto duly authorized, as of the
day and year first above written.
IXIS FINANCIAL PRODUCTS INC.,
as Secured Parties Representative
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
[Signature Page to Amended and Restated Custodial Agreement]
EXHIBIT A TO CUSTODIAL AGREEMENT
FORM OF PAYOFF NOTICE
The undersigned individual[s], [Authorized Person[s] (as defined in
the Custodial Agreement referred to below) of Union Bank of California, N.A.]
[an authorized officer of Ambac Assurance Corporation (the "Insurer")] (the
"Notice Party"), hereby certifies, represents and warrants to the Custodian
(as defined below) as follows with respect to the Amended and Restated
Custodial Agreement, dated as of November 17, 2004 (as amended, supplemented
or otherwise modified from time to time, the "Custodial Agreement"), by and
among (a) Special Value Expansion Fund, LLC, a Delaware limited liability
company (the "Fund"), (b) Union Bank of California, N.A., as Administrative
Agent (in such capacity and together with any successor thereto, the
"Administrative Agent") under the Credit Agreement, dated as of November 17,
2004, by and among the Fund, the Lenders party thereto (the "Lenders"), the
Administrative Agent, IXIS Financial Products Inc., as arranger and Ambac
Assurance Corporation, as Insurer (as the same may be amended, extended,
restated, supplemented, modified, refinanced, refunded or replaced (in whole
or in part) (including with lenders other than the initial lenders) from time
to time, together with any agreements or instruments in respect of any
amendment, extension, restatement, supplement, modification, refinancing,
refunding or replacement thereof, the "Credit Agreement"), (c) IXIS Financial
Products Inc., as Secured Parties Representative (in such capacity and
together with any successor thereto, the "Secured Parties Representative")
under the Pledge and Intercreditor Agreement, dated as of November 17, 2004,
by and among the Fund, the Custodian, the Administrative Agent, the Insurer
and the Secured Parties Representative (as amended, supplemented or otherwise
modified from time to time, the "Pledge and Intercreditor Agreement") and (d)
▇▇▇▇▇ Fargo Bank, National Association, as agent, bailee, custodian and
securities intermediary for the Fund, the Secured Parties Representative and
the Administrative Agent (in such capacity and together with any successor
thereto, the "Custodian"):
I. The Fund has satisfied all of its monetary obligations which, as
of the date hereof, are due and owing under the [Credit Agreement] [Insurance
and Indemnity Agreement, dated as of November 17, 2004, between the Fund and
the Insurer].
IN WITNESS WHEREOF, this certificate has been executed this ____ day
of ____________, ____.
[UNION BANK OF CALIFORNIA, N.A.,]
[AMBAC ASSURANCE CORPORATION,]
[as Administrative Agent] [as Insurer]
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
EXHIBIT B TO CUSTODIAL AGREEMENT
FORM OF WITHDRAWAL NOTICE
The undersigned individuals, Authorized Persons (as defined in the
Custodial Agreement referred to below) of the Secured Parties Representative
(as defined below), hereby certifies, represents and warrants to the Custodian
(as defined below), as follows with respect to the Amended and Restated
Custodial Agreement, dated as of November 17, 2004 (as amended, supplemented
or other wise modified from time to time, the "Custodial Agreement"), by and
among (a) Special Value Expansion Fund, LLC, a Delaware limited liability
company (the "Fund"), (b) Union Bank of California, N.A., as Administrative
Agent (in such capacity and together with any successor thereto, the
"Administrative Agent") under the Credit Agreement, dated as of November 17,
2004, by and among the Fund, the Lenders party thereto (the "Lenders"), the
Administrative Agent, IXIS Financial Products Inc., as arranger and Ambac
Assurance Corporation, as Insurer (as the same may be amended, extended,
restated, supplemented, modified, refinanced, refunded or replaced (in whole
or in part) (including with lenders other than the initial lenders) from time
to time, together with any agreements or instruments in respect of any
amendment, extension, restatement, supplement, modification, refinancing,
refunding or replacement thereof, the "Credit Agreement"), (c) IXIS Financial
Products Inc., as Secured Parties Representative (in such capacity and
together with any successor thereto, the "Secured Parties Representative")
under the Pledge and Intercreditor Agreement, dated as of November 17, 2004,
by and among the Fund, the Custodian, the Administrative Agent, the Insurer
and the Secured Parties Representative (as amended, supplemented or otherwise
modified from time to time, the "Pledge and Intercreditor Agreement") and (d)
▇▇▇▇▇ Fargo Bank, National Association, as agent, bailee, custodian and
securities intermediary for the Fund, the Secured Parties Representative and
the Administrative Agent (in such capacity and together with any successor
thereto, the "Custodian").
I. The [Notice of Suspension], [Acceleration Notice] or [Liquidation
Notice] (copy attached) previously delivered to you by the undersigned is
hereby withdrawn.
IN WITNESS WHEREOF, this certificate has been executed this ____ day
of __________, ____.
IXIS FINANCIAL PRODUCTS INC.,
as Secured Parties Representative
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
SCHEDULE I
COUNTRY LIST
