Exhibit 10.1
EXECUTION
NOTE PURCHASE AGREEMENT
NOTE PURCHASE AGREEMENT dated as of January 19, 2006 among
XXXXXXX XXXXX HEDGE FUND PARTNERS II, LLC, a limited liability company
organized under the laws of Delaware (the "Issuer") and BARCLAYS BANK PLC
(together with any successor pursuant to Section 9(h), collectively, the
"Noteholder").
In consideration of the premises and of the mutual covenants and
agreements contained herein and for good and valuable consideration the
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. The Note.
--------
(a) Advances Under the Note. Subject to the satisfaction by the
Issuer of the terms and conditions set forth in this Agreement, the
Noteholder agrees to make advances to the Issuer under a promissory note in
substantially the form of Exhibit A hereto (the "Note") from time to time
on any Business Day (each, an "Advance") during the Term (as hereinafter
defined) in an aggregate principal amount at any time outstanding not to
exceed the lesser of (i) $50,000,000, and (ii) an amount equal to 10.0% of
the Issuer's most recent "NAV" (as hereinafter defined) delivered pursuant
to Section 6(d) (the lesser of clause (a)(i) and (ii) from time to time,
the "Commitment"). Each request for an Advance will be made from the Issuer
to the Noteholder by telephone, which shall be irrevocable, not later than
11:00 A.M. (New York time) two Business Days prior to the date of the
requested Advance and confirmed promptly in writing or by telecopier or (to
the extent permitted by Section 9(b)) electronic mail in substantially the
form of Exhibit C hereto (each, a "Notice of Advance"). The Note shall be
governed by, and the rights and the benefits of the Noteholder shall be
determined in accordance with, the terms and conditions of this Agreement.
Upon fulfillment of the applicable conditions precedent set forth in
Section 4, the Noteholder will make such funds available to the Issuer at
such account as the Issuer shall designate for such purpose, and shall note
the Advance date, the principal amount of such Advance and the aggregate
then-outstanding principal balance of the Note on Schedule A to the Note;
provided that the failure of the Noteholder to make any such notation, or
any error therein, shall not affect the obligation of the Issuer to repay
the Advances in accordance with the terms of this Agreement. Within the
limits of the Commitment in effect from time to time, the Issuer may borrow
under this Section 1(a), prepay the principal amount thereof pursuant to
Section 3(b) and reborrow under this Section 1(a). There shall not be more
than three Advances outstanding simultaneously at any time.
(b) Commitment Fee. The Issuer shall pay to the Noteholder a
monthly fee in an amount equal to 0.25% per annum of the greater of (i)
$20,000,000 less the average daily aggregate principal amount of all
Advances outstanding; and (ii) the average daily aggregate unused portion
of the Commitment then in effect (the "Commitment Fee"), calculated on a
basis of actual days elapsed and a year of 360 days and, unless capitalized
in accordance with Section 1(c)(ii), payable monthly in arrears on the
first Business Day of each calendar month for the immediately preceding
calendar month (each, an "Monthly Payment Date"); provided, that whenever a
Monthly Payment Date would otherwise occur on a date subsequent to the
expiration of the Term, such Monthly Payment Date shall be the date on
which the Term shall expire (whether by maturity, acceleration or
otherwise), and will not extend the maturity of the Note. "Business Day"
means a day, other than a Saturday or Sunday, on which banks are open in
New York, New York and London, England.
(c) Interest. (i) The Issuer shall pay interest on the
outstanding principal amount of the Advances from the date of borrowing
thereof until such principal amount shall be paid in full, at a rate per
annum equal to the Applicable LIBOR (as hereinafter defined) plus 0.65%
(the "Interest Rate"), calculated on a basis of actual days elapsed and a
year of 360 days and, unless capitalized in accordance with Section
1(c)(ii), payable in arrears on the applicable Monthly Payment Date for the
immediately preceding calendar month, and on the date such Advance shall be
paid in full.
"APPLICABLE LIBOR" means (i) with respect to any Advance for
which notice is given later than 11:00 A.M. (New York time) three Business
Days prior to the date of the requested Advance, a rate per annum equal to
the overnight LIBOR (as hereinafter defined) ("OVERNIGHT LIBOR") for the
initial day of such Advance, and such Advance shall thereafter be deemed to
be continued on the next Business Day at a rate per annum equal to the
one-week LIBOR ("WEEKLY LIBOR"), and (ii) with respect to all other
Advances, a rate per annum equal to the Weekly LIBOR.
"LIBOR" means the rate per annum appearing on Moneyline Telerate
Markets Page 3750 (or on any successor or substitute page of such service,
or any successor to or substitute service, providing rate quotations
comparable to those currently provided on such page of such service, as
determined by the Noteholder) as the London interbank offered rate for
overnight or one-week deposits, as applicable, in U.S. dollars at
approximately 11:00 A.M. (London time) two Business Days prior to the first
day of such interest period, as adjusted by any applicable reserve
percentage required for banks in New York in accordance with Regulation D
of the Board of Governors of the Federal Reserve System.
(ii) Capitalization of Commitment Fees, Interest. Interest
accruing on Advances at the Overnight LIBOR shall, so long as no Event of
Default has occurred and is outstanding or would result therefrom,
automatically capitalize and be added to the principal amount of such
Advance on the next Business Day.
So long as no Event of Default (as hereinafter defined) has
occurred and is continuing or would result therefrom, unless the Issuer has
given prior written notice to the Noteholder not later than 11:00 A.M. (New
York time) two Business Days prior to a Monthly Payment Date that it will
pay the full amount in cash of any accrued and unpaid Commitment Fees and
interest on each Advance on such date, then (x) the Issuer will be deemed
to have given a Notice of Advance requesting an Advance at Weekly LIBOR on
such Monthly Payment Date in an amount equal to the aggregate amount of
Commitment Fees and interest that would otherwise be due and payable on
such Monthly Payment Date, and (y) such amount shall automatically
capitalize and be added to the principal amount of the Advances outstanding
as of such Monthly Payment Date. Notwithstanding the foregoing,
capitalization of Commitment Fees and interest pursuant to this Section
1(c)(ii) shall not be permitted if the Commitment then in effect would be
exceeded as a result thereof. The principal amount of all Commitment Fees
and interest capitalized pursuant to this Section 1(c)(ii) shall be deemed
to utilize the Commitment from the date of such capitalization for all
purposes hereof.
(iii) Interest Savings. Notwithstanding anything to the contrary
herein, if at any time the applicable Interest Rate payable for the account
of the Noteholder hereunder (the "Stated Rate") would exceed the highest
rate of interest permitted under any applicable law to be charged by the
Noteholder (the "Maximum Lawful Rate"), then for so long as the Maximum
Lawful Rate would be so exceeded, the applicable Interest Rate payable for
the account of the Noteholder shall be equal to the Maximum Lawful Rate;
provided, that if at any time thereafter the Stated Rate is less than the
Maximum Lawful Rate, the Issuer shall, to the extent permitted by law,
continue to pay interest for the account of the Noteholder at the Maximum
Lawful Rate until such time as the total interest received by the
Noteholder is equal to the total interest which the Noteholder would have
received had the Stated Rate been (but for the operation of this provision)
the interest rate payable.
(d) Use of Proceeds. The Issuer shall use the proceeds of the
Advances for purposes of financing subscriptions and redemptions of its
investments in certain "Investment Funds" referred to in the PPM (as
hereinafter defined) (collectively, "Fund Assets") from time to time and
for other general corporate purposes of the Issuer not prohibited by the
terms hereof or the Investment Guidelines attached as Exhibit B hereto (the
"Investment Guidelines"). The Issuer is not, and shall not become, engaged
in the business of extending credit for the purpose of purchasing or
carrying any "margin stock" (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System (12 CFR 221)). The Issuer
hereby agrees that none of the proceeds of any Advance will be used
directly or indirectly to purchase or carry any margin stock in violation
of Regulation T, U or X of the Board of Governors of the Federal Reserve
System.
(e) Note Register. Acting for this purpose, but only for this
purpose, as an agent of the Issuer, the Noteholder shall maintain at its
address, referred to immediately below its signature on the signature pages
to this Agreement, a register for the recordation of the names and
addresses of all Noteholders, and the principal amount of the Advances
owing to each such Noteholder from time to time (the "REGISTER"); provided,
that the Noteholder may resign as registrar in connection with any
assignment of all its rights and obligations hereunder and under the Note
in accordance with Section 9(h). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Issuer and the Noteholder may treat each Person (as hereinafter defined)
whose name is recorded in the Register as a "Noteholder" for all purposes
of this Agreement; provided, that assignments shall be subject to Section
9(h). No transfer or assignment of the Note or any portion thereof in
accordance with Section 9(h) shall be effective for purposes of this
Agreement unless such assignment has been recorded in the Register pursuant
to this Section 1(e). The Register shall be available for inspection by the
Issuer or any Noteholder at any reasonable time and from time to time upon
reasonable prior notice. "PERSON" means an individual, firm, unincorporated
organization, corporation, partnership, governmental authority or any other
entity.
Section 2. Term and Termination.
--------------------
(a) The Noteholder's commitment to make any Advance will commence
on the date first written above and terminate on the first to occur of any
of the following (the "TERM"): (i) January 17, 2007 (the "MATURITY DATE"),
(ii) the day on which (A) an Optional Prepayment of all of the Advances
outstanding under the Note has occurred and (B) at least two Business Days
have elapsed since the Noteholder has received notice by the Issuer of its
election to terminate the Noteholder's obligation to make Advances
hereunder in full (an "OPTIONAL COMMITMENT TERMINATION"), and (iii) at the
Noteholder's option, the day on which an Event of Default has occurred and
is continuing; provided, that the Term will automatically terminate upon
the occurrence of any event or circumstance described in Section 8(f). The
Noteholder may, but shall not be required to, commence discussions with the
Issuer about extending or renewing the Term within 60 days of the
expiration thereof.
(b) In the event of any termination of the Noteholder's
obligation to make Advances pursuant to--
(i) Section 2(a)(i), the Issuer shall immediately pay to the
Noteholder the aggregate principal outstanding amount of all Advances
outstanding, all accrued and unpaid interest, any accrued and unpaid
Commitment Fees (if applicable) and all other amounts payable
hereunder and with respect to the Note (collectively, the "OUTSTANDING
AMOUNT"); or
(ii) Section 2(a)(ii), the Issuer shall, no later than the day on
which an Optional Commitment Termination has become effective, pay to
the Noteholder the sum of
(x) the Outstanding Amount; plus
(y) an amount equal to the product of 0.25% per annum times
the greater of (I) $20,000,000 and (II) the Commitment in effect
immediately prior to such Optional Commitment Termination times
M; where "M" equals the period commencing on the date of such
Optional Commitment Termination and ending on January 17, 2007,
calculated on a basis of actual days elapsed and a year of 360
days (the "EARLY CLOSEOUT FEE");
provided, that the Issuer shall not be obligated to pay the
Early Closeout Fee in connection with any Optional Commitment
Termination made within 30 days of any request by the Noteholder
for indemnification arising from any Change in Law (as
hereinafter defined) pursuant to Section 9(c) or any Taxes (as
hereinafter defined) pursuant to Section 9(d); or
(iii) Section 2(a)(iii), other than as a result of any Event of
Default solely under Section 8(o), the Issuer shall immediately pay to
the Noteholder (x) the Outstanding Amount, plus (y) the Early Closeout
Fee.
(c) All calculations with respect to amounts payable to the
Noteholder shall be determined by the Noteholder and shall be binding on
the Issuer absent manifest error. Whenever any payment hereunder shall be
stated to be due on a day other than a Business Day, such payment shall be
made on the preceding Business Day, and such adjustment of time shall in
such case be included in the computation of payment of interest or fees, as
the case may be. The principal amount of any Advance made or repaid on any
day shall affect the calculation of the Commitment Fee as of the next
succeeding Business Day. All payments will be made to the Noteholder by
certified or bank cashier's check or wire transfer of immediately available
funds, at such address and to such account as the Noteholder shall specify
in writing to the Issuer from time to time in accordance with the notice
provisions hereof.
Section 3. Repayment.
---------
(a) Repayment at Maturity. The Issuer shall repay the Outstanding
Amount of all Advances and all other amounts payable hereunder on the
earlier of (i) the Maturity Date, and (ii) such earlier date on which such
amounts become due and payable in accordance with the provisions of this
Agreement or the Note, whether by maturity, acceleration, demand or
otherwise.
(b) Prepayment. (i) Optional. The Issuer may prepay the Advances
in whole or part (each, an "OPTIONAL PREPAYMENT") prior to maturity on any
Business Day by written notice given to the Noteholder not later than two
Business Days prior to the date thereof, in each case specifying the date
(which shall be a Business Day) and the principal amount thereof. If notice
of an Optional Prepayment is given, the Issuer shall prepay the Advances in
the amount and at the time specified in each such notice. Each partial
Optional Prepayment shall be in an aggregate principal amount of not less
than $1,000,000, or, if less, the remaining outstanding principal balance
of the Note. Each Optional Prepayment shall be made together with all
accrued and unpaid interest thereon at the applicable Interest Rate.
(ii) Mandatory. The Issuer shall prepay all Advances outstanding
in full, together with all interest and other amounts payable in respect
thereof (including, without limitation, the Early Closeout Fee), not later
than 90 days following the date on which the Noteholder shall have given
written notice of the occurrence and continuance of any failure of the
Issuer to comply with either or both of section 4(b) or 5(c) of the
Investment Guidelines (a "LOOK-THROUGH FAILURE") within the five-Business
Days of the "Remediation Period" referred to in Section 6 of the Investment
Guidelines; provided, that no Event of Default or event that, with notice
or lapse of time or both, would become an Event of Default (a "DEFAULT")
shall be deemed to have occurred with respect to such failure during such
90-day period.
(c) Compliance with Trigger Amounts. If the aggregate principal
amount of all Advances outstanding at any time (less the estimated value
(as reasonably determined by the Issuer in consultation with the
Noteholder) of all pending redemptions of Fund Assets, if any, as to which
copies of redemption notices have been delivered to the Noteholder in
accordance with the reporting requirements of Schedule I hereto) (the
"ADJUSTED AMOUNT") exceeds 12% of the NAV (the "DEBT TO EQUITY TRIGGER
THRESHOLD") most recently delivered pursuant to Section 6(d), the Issuer
shall as soon as practicable but in any event not later than five Business
Days after the date thereof take all action necessary and reasonably
requested by the Noteholder to redeem Fund Assets in an amount equal to
120% of the amount by which the Adjusted Amount exceeds the Commitment in
effect at such time. Promptly and in any event not later than five Business
Days after receipt by the Issuer of the proceeds of any such redemption,
the Issuer shall repay Advances by an amount not less than the excess of
the Adjusted Amount over the Commitment in effect at such time, together
with interest and all other amounts payable in respect thereof.
Section 4. Conditions to Purchase.
----------------------
The Noteholder's obligation to make Advances hereunder is subject
to the fulfilment, to the satisfaction of the Noteholder, of each of the
following conditions:
(a) Solely with respect to the initial Advance under the Note,
the Noteholder shall have received certified or original copies of the
following documents, all duly executed and delivered by the respective
parties thereto and in full force and effect and otherwise in form and
substance reasonably satisfactory to the Noteholder: (i) the certificate of
formation and limited liability company agreement of the Issuer (including
any amendments thereto), (ii) the resolutions of Xxxxxxx Sachs Hedge Fund
Strategies LLC, a limited liability company organized under the laws of
Delaware (the "MANAGING MEMBER"), the managing member of the Issuer,
authorizing and approving the issuance by the Issuer of the Note and the
borrowing of Advances up to the Commitment, (iii) a certificate issued by
the Secretary of State of Delaware as to the good standing of the Issuer,
(iv) the Issuer's Private Placement Memorandum dated as of June 2003, and
all amendments, supplements and modifications thereto (as so amended,
supplemented and otherwise modified as of the date hereof, the "PPM") and
all forms of subscription agreements, in each case, as in effect as of such
date, (v) the Investment Management Agreement dated as of August 1, 2003
between the Managing Member and Issuer, (vi) the Amended and Restated
Services Agreement dated as of May 4, 2004 among the Issuer, the Managing
Member and SEI Global Investors, Inc. (the "FUND ADMINISTRATOR"); (vii) a
certificate of the secretary of the Managing Member attesting as to
incumbency of all officers signing this Agreement and the Note and
addressing such other matters as the Noteholder may reasonably request,
(viii) the legal opinion of internal staff counsel of the Issuer with
respect to such matters as the Noteholder may reasonably request, (ix)
evidence reasonably satisfactory to the Noteholder that the NAV of the
Issuer as of the date of the initial Advance is not less than $450,000,000,
and (x) such other approvals, opinions and documents relating to this
Agreement and the transactions contemplated hereby as the Noteholder shall
have reasonably requested (the documents and agreements referred to in
clauses (i)-(vi) of this Section 4(a), collectively, the "SPECIFIED
AGREEMENTS").
(b) The Noteholder shall have received a duly executed Notice of
Advance with respect to each such Advance.
(c) The representations and warranties of the Issuer herein shall
be true and correct in all material respects as of the date of each
Advance, before and after giving effect to each such Advance.
(d) The Issuer shall have performed and complied in all material
respects with all obligations and agreements required herein and in the
Note to be performed or complied with by it.
(e) No Event of Default or event that with the lapse of time or
the giving of notice or both would constitute an Event of Default shall
have occurred and be continuing hereunder or under the Note, or would
result from the making of such Advance or from the application of the
proceeds therefrom.
(f) The Issuer shall have complied with, or caused the compliance
of, to the reasonable satisfaction of the Noteholder the reporting
requirements set forth in SCHEDULE I hereto as of the date of such Advance.
(g) After giving effect to each such Advance, the sum of the
principal amount of all Advances outstanding shall not exceed Commitment,
as determined by the Noteholder.
Section 5. Representations and Warranties.
------------------------------
(a) The Issuer represents and warrants to the Noteholder as
follows:
(i) The Issuer (A) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation, (B) is
duly qualified and in good standing as a foreign limited liability company
in each other jurisdiction in which it owns or leases property or in which
the conduct of its business requires it to so qualify or be licensed
except, in each case, where a failure so to qualify and be in good standing
could not reasonably be expected to result in a material adverse effect on
the business, condition (financial or otherwise), assets or properties of
the Issuer, or on the legality, validity or enforceability of any provision
of this Agreement or the Note (a "MATERIAL ADVERSE EFFECT") and (C) has all
requisite power and authority to own or lease and operate its properties
and to carry on its business as now conducted and as proposed to be
conducted.
(ii) The execution, delivery and performance by the Issuer of
this Agreement and the Note are within its limited liability company
powers, have been duly authorized by all necessary limited liability
company action, and do not (A) contravene the Issuer's organizational
documents, (B) contravene any contractual restriction binding on it or
require any consent under any agreement or instrument to which it is a
party or by which any of its properties or assets is bound or result in or
require the creation or imposition of any lien, pledge, security interest
or other charge or encumbrance of any kind, or any other type of
preferential arrangement (each, a "LIEN") upon any property or assets of
the Issuer or (C) violate any applicable law, or writ, judgment,
injunction, decree, determination or award. The Issuer is not in violation
of any such applicable law, writ, judgment, injunction, decree,
determination or award or in breach of any contractual restriction binding
upon it, except for such violation or breach which could not reasonably be
expected to result in a Material Adverse Effect.
(iii) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption or
waiver by, any governmental authority or any other third party (except as
have been obtained or made and are in full force and effect), is required
to authorize, or is required for, (A) the execution, delivery and
performance by the Issuer of this Agreement or the Note or (B) the
legality, validity, binding effect or enforceability hereof or thereof.
(iv) This Agreement is and the Note when delivered for value
hereunder will be the legal, valid and binding obligations of the Issuer
enforceable against the Issuer in accordance with its respective terms.
(v) There is no pending or, to the knowledge of the Issuer,
threatened action or proceeding affecting the Issuer before any
governmental authority or arbitrator which could reasonably be expected to
result in a Material Adverse Effect.
(vi) The Issuer is not an "investment company," or a person
"controlled by" an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(vii) The Issuer has filed all income tax returns and all other
tax returns which are required to have been filed by it in all
jurisdictions and has paid all taxes or claims, governmental charges or
levies imposed on it or its properties which are required to have been paid
by it, except (i) taxes or claims, governmental charges or levies contested
in good faith as to which adequate reserves have been provided in
accordance with generally accepted accounting principles in the United
States of America consistently applied ("U.S. GAAP") or (ii) where the
failure to file such tax returns or to pay such taxes or claims,
governmental charges or levies could not reasonably be expected to result
in a Material Adverse Effect.
(viii) All information (A) provided, with respect to the Issuer,
by or on behalf of the Issuer or the Managing Member, to the Noteholder in
connection with the negotiation, execution and delivery of this Agreement
and the Note, including, without limitation, any financial statements of
the Issuer provided to the Noteholder, or (B) provided or to be provided by
the Issuer or the Managing Member in any offering document of the Issuer is
or will be, as of the applicable date of provision thereof, complete and
correct in all material respects and do not (or will not) contain any
untrue statement of a material fact or omit to state a fact necessary to
make the statements contained therein not misleading in light of the time
and circumstances under which such statements were made.
(ix) Each Specified Agreement is in full force and effect, as the
same may be amended, supplemented or otherwise modified from time to time
solely to the extent permitted by Section 7(e).
(x) All licenses, permits, approvals, concessions or other
authorizations necessary to the conduct of the business of the Issuer have
been duly obtained and are in full force and effect other than those where
the failure to obtain and maintain any of the foregoing could not
reasonably be expected to result in a Material Adverse Effect. There are no
restrictions or requirements which limit the Issuer's ability to lawfully
conduct its business or perform its obligations under this Agreement or the
Note.
(b) The Noteholder and each transferee thereof hereby severally
represents and warrants (solely as to itself) to the Issuer as follows:
(i) Such Person is a "Qualified Institutional Buyer" (as
hereinafter defined), and understands that the Note has not been registered
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), and
may be resold only if registered pursuant to the provisions of the
Securities Act or if an exemption from registration is available, except
under circumstances where neither such registration nor such an exemption
is required by law, and that the Issuer is not required to register the
Note. "QUALIFIED INSTITUTIONAL BUYER" has the meaning set forth in Rule
144A, as amended, under the Securities Act.
(ii) Such Person is a "Qualified Purchaser" (as hereinafter
defined) and is acquiring the Note for its own account and is the sole
registered and beneficial owner of the Note. No other Person has an
interest in the Note. "Qualified Purchaser" has the meaning set forth in
Section 2(a)(51) of the U.S. Investment Company Act of 1940, as amended
from time to time.
Section 6. Affirmative Covenants. So long as the Noteholder has a
commitment to make Advances, or any amounts hereunder or under the Note
shall remain unpaid (whether for principal, interest, fees, or other
amounts), the Issuer covenants and agrees that:
(a) The Issuer shall (i) maintain its existence, legal structure,
organization, rights, permits, licenses, approvals and privileges, and (ii)
comply with all laws, rules, regulations and ordinances applicable to it
and the operation of its businesses, except, in each case, for any such
failure as could not reasonably be expected to result in a Material Adverse
Effect.
(b) The Issuer shall furnish, or shall cause same to be
furnished, to the Noteholder: (i) as soon as available and in any event
within 180 days after the end of each fiscal year of the Issuer, its
audited annual financial statements, including all notes thereto, which
statements shall include a statement of financial position as of the end of
the relevant fiscal year and statement of operations and a statement of
cash flows for such fiscal year, all setting forth in comparative form the
corresponding figures from the previous fiscal year, all prepared in
conformity with U.S. GAAP, accompanied by an unqualified opinion of Ernst &
Young, LLP or other independent public accountants reasonable acceptable to
the Noteholder, and (ii) promptly from time to time upon the reasonable
request of the Noteholder, such additional information and documentation as
the Noteholder may reasonably request. The Issuer shall furnish to the
Noteholder, at the time it furnishes its financial statements, a
certificate of an authorized officer of the Issuer that no Event of Default
has occurred and no event has occurred and is continuing which with the
lapse of time or the giving of notice or both would constitute an Event of
Default.
(c) The Issuer shall furnish to the Noteholder as soon as
possible and in any event within three Business Days after the Issuer
obtains the knowledge of the occurrence of (x) any Event of Default
hereunder (other than with respect to matters described in the proviso to
Section 6(h)), or (y) any actual or threatened litigation or other event
which, if adversely determined to the Issuer, could reasonably be expected
to result in a Material Adverse Effect, a statement of an authorized
officer of the Issuer setting forth the details thereof and the action
which the Issuer has taken and proposes to take with respect thereto.
(d) The Issuer shall deliver or cause to be delivered all
reporting documents and information to the Noteholder as and when required
by such person pursuant to SCHEDULE I attached hereto, including, without
limitation, a certification of the net asset value (the "NAV") of the
Issuer and of each Fund Assets by the Fund Administrator, in each case
determined in accordance with U.S. GAAP (collectively, the "NAV
CALCULATION"), all in form reasonably satisfactory to the Noteholder.
(e) The Issuer shall at all times keep proper books of record and
account in which full and accurate entries shall be made of all of the
financial transactions and all Fund Assets, in each case, in accordance
with U.S. GAAP and all applicable requirements of law and as are necessary
to prepare financial statements in accordance with U.S. GAAP.
(f) The Issuer shall remain principally engaged in the business
conducted by it as of the date hereof, and shall maintain in effect all
governmental authorizations that are necessary to conduct its business as
conducted as of the date hereof in all material respects.
(g) The Issuer shall pay and discharge, before the same shall
become delinquent, all income taxes and other taxes, assessments, claims
and governmental charges or levies imposed upon it or upon its property,
except for any tax, assessment, claim or governmental charge or levy the
failure to pay or discharge could not reasonably be expected to result in a
Material Adverse Effect and except that the Issuer shall not be required to
pay or discharge any such tax, assessment, claim or governmental charge or
levy that is being diligently contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained in
accordance with U.S. GAAP.
(h) The Issuer shall comply with the Investment Guidelines at all
times, as amended from time to time upon the receipt by the Issuer of the
Noteholder's consent to any such amendment (which consent shall not be
unreasonably withheld or delayed); provided that, prior to receipt of a
notice from the Noteholder of any Look-through Failure, the Issuer shall
not be (and shall not be deemed to be) responsible for (or for monitoring
or certifying) compliance pursuant to section 4(b) or 5(c) of the
Investment Guidelines.
(i) The Issuer shall, at any reasonable time during normal
business hours and upon reasonable prior notice, (i) so long as no Event of
Default has occurred and is continuing, permit the Noteholder or any agent
or representative thereof no more than two times per year in the aggregate,
and (ii) if an Event of Default has occurred and is continuing, permit the
Noteholder or any agent or representative thereof without limitation in the
number of visits, in either case, to visit the Investment Manager, inspect
the books and records thereof (as pertains to the Issuer and/or performance
of this Agreement and the Note) and have access to senior financial
management thereof.
Section 7. Negative Covenants. So long as the Noteholder has a
commitment to make Advances, or any amounts hereunder or under the Note
shall remain unpaid (whether for principal, interest, fees, or other
amounts), the Issuer covenants and agrees that:
(a) The Issuer shall not, directly or indirectly, create, incur,
assume, suffer to exist, guarantee any Debt, other than (i) the Advances,
and (ii) fees and expenses incurred or accrued in the ordinary course of
business, including, without limitation, those referred to in the PPM;
provided, that any "management" or other incentive-based fees payable to
the Managing Member or any other affiliate of the Issuer shall not be paid
if any Event of Default pursuant to Section 8(a), 8(f) or 8(i) has occurred
and is continuing or would result therefrom; provided, further, that the
aggregate amount of all Debt permitted by clause (ii) of this Section 7(a)
shall not exceed 5% of the Issuer's NAV as most recently reported pursuant
to Section 6(d) at any time. "DEBT" means at any date without duplication
(A) indebtedness for borrowed money, (B) obligations evidenced by bonds,
debentures, notes or other similar instruments, (C) obligations to pay the
deferred purchase price of property or services (excluding trade payables
and current accounts payable incurred in the ordinary course of business),
(D) capital lease obligations, (E) indebtedness of others secured by a Lien
on the Issuer's property, (F) the maximum amount available to be drawn
under all letters of credit and all unpaid drawings in respect of such
letters of credit, (G) all obligations to pay a specified purchase price
for goods or services, whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations, (H) all obligations created or arising
under any conditional sale or other title retention agreement or incurred
as financing, (I) the net obligations under derivative transactions,
including, without limitation, swap agreements or commodity transactions,
but excluding all obligations under foreign currency swap, forward
transactions and other derivative transactions permitted by the Investment
Guidelines, and (J) obligations under a guaranty of debt of others of the
kinds referred to in clauses (A) through (I) above; provided, that a
guaranty shall not include any endorsements for collection or deposit in
the ordinary course of business; and provided, further, that "Debt" shall
not include (x) overnight drafts from any bank or other financial
institution in the ordinary course of business, or (y) obligations in
connection with redemptions of membership interests in the Issuer by its
investors from time to time (provided, that such redemptions shall comply
with Section 7(d)).
(b) The Issuer shall not create, incur, assume or suffer to exist
any Lien upon any of its property, revenues or assets, whether now owned or
hereafter acquired, except for Liens set forth in the organizational or
subscription documents with respect to any Fund Asset, so long as such
Liens arise in the ordinary course of business and do not extend to any
property or asset of the Issuer other than such Fund Asset.
(c) The Issuer shall not merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of, whether in one transaction
or in a series of related transactions, all or substantially all of the
property and assets (whether now owned or hereafter acquired) of the Issuer
to, any Person. The Issuer shall not dissolve or liquidate in whole or in
part.
(d) The Issuer shall not (i) sell, transfer, lend or otherwise
dispose of any assets (other than investments permitted by the proviso to
this Section 7(d)), or grant any option or other right to purchase, lease
or otherwise acquire any assets from the Issuer, (ii) declare or pay any
dividends, purchase, redeem, retire, defease or otherwise acquire for value
any of its membership units or other equity interests now or hereafter
outstanding, return any capital to its stockholders, partners or members,
make any distribution of assets, equity interests, obligations or
securities to its stockholders, partners or members; if, in any such case,
after giving effect thereto, either (x) the sum of the principal amount of
all Advances outstanding would exceed the Commitment then in effect; or (y)
there has occurred and is continuing an Event of Default pursuant to
Section 8(a), 8(f) or 8(i); provided, however, that the Issuer may invest
in Fund Assets in compliance with the Investment Guidelines so long no
Event of Default pursuant to Section 8(a), 8(f) or 8(i) has occurred and is
continuing, or would result from any such investment. For the avoidance of
doubt, the Issuer's right to redeem its investments and subscriptions in
Fund Assets from time to time shall not be limited by this Section 7(d).
(e) Without the Noteholder's consent, which will not be
unreasonably withheld, the Issuer shall not enter into any, or consent to
any material amendment, supplement or other modification of any of the
terms or provisions of any, organizational documents or other agreements of
the type described in paragraph 10 of the certificate delivered pursuant to
Section 4(a)(vii), in any such case relating to (i) valuation of assets or
the determination of the NAV or the value of any investor's interest in and
to the Issuer, (ii) the power to borrow money and pledge assets, (iii) its
investment objectives and investment guidelines (iv) its material capital
stock or other equity interests, (iv) its jurisdiction of organization, (v)
the composition, voting rights of or limitations on the powers of its
Managing Member or (vi) any other matter if the effect thereof would be a
material alteration of the Investment Guidelines or could reasonably be
expected to result in a Material Adverse Effect.
(f) None of the Fund Assets shall suspend or otherwise limit
redemptions or dividends with respect to investments held by or for the
account of the Issuer, unless any such suspension or limitation is then in
effect with respect to all of its other subscribers, members and investors.
Section 8. Events of Default. If any of the following events (each, an
"EVENT OF DEFAULT") shall occur and be continuing:
(a) (i) the Issuer shall fail to pay any principal hereunder or
under the Note when due (whether at stated maturity or by acceleration,
prepayment, demand or otherwise); or (ii) the Issuer shall fail to pay any
interest or any other amount payable hereunder or under the Note when such
amount shall become due and in any such case such failure remains
unremedied for three Business Days; or
(b) any representation or warranty by the Issuer herein shall be
incorrect in any material respect when made or deemed made; or
(c) the Issuer shall fail to perform or observe any term,
covenant or agreement herein or in the Note and in each case such failure
remains unremedied for five Business Days (other than any failure that is
otherwise referred to in this Section 8) after notice thereof has been
given to the Issuer by the Noteholder; or
(d) the Issuer shall deny its obligations under this Agreement or
the Note; or
(e) there shall have occurred any material breach or default in
the representations, warranties, covenants, terms or conditions of any of
the Specified Agreements by any party thereto, after giving effect to any
applicable grace period with respect thereto specified in the applicable
Specified Agreement; or
(f) the Issuer shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors;
or any proceeding shall be instituted by or against the Issuer seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, dissolution,
winding-up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substantial part of its property
and assets and, in the case of any such proceeding instituted against the
Issuer, such proceeding shall remain undismissed or unstayed for a period
of 60 days; or the Issuer shall take any limited liability company action
to authorize any of the actions set forth above in this subsection (f); or
(g) any judgment or order for the payment of money in excess of
$1,000,000 shall be rendered against the Issuer and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order which shall not have been stayed or dismissed within 30 days after
the commencement of such proceedings or (ii) there shall be any period of
30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect,
or any failure by the Issuer to satisfy when due any non-monetary judgment
if the failure so to do could reasonably be expected to result in a
Material Adverse Effect; or
(h) any event or condition shall occur or exist which (i) has
resulted in a Material Adverse Effect, or (ii) could reasonably be expected
to result in a Material Adverse Effect after five Business Days' written
notice to the Issuer by the Noteholder; or
(i) a "person" or "group" (within the meaning of Section 13(d)
and 14(d) of the U.S. Securities Exchange Act of 1934) (other than The
Xxxxxxx Xxxxx Group Inc. and its affiliates) becomes the "beneficial owner"
(as defined in Rule 13d-3 under said Act), directly or indirectly, of 50%
or more of the total voting power of the Managing Member or otherwise has
the power to direct or cause the direction of the management or policies of
the Managing Member, or the Managing Member resigns or is removed as the
investment manager of the Issuer, or ceases to have substantial involvement
in the day-to-day operations of the Issuer, or the Managing Member ceases
to be a wholly owned direct or indirect subsidiary of The Xxxxxxx Sachs
Group, Inc.; in each case, unless the Noteholder has given its prior
written consent; or
(j) the Managing Member commits a material violation of
applicable law, or there is any material change to the investment
objectives or investment guidelines of the Issuer, without the prior
written consent of the Noteholder; or
(k) the occurrence of (i) any investigation or seizure made by
any governmental authority for an actual or alleged violation or breach of
law that could reasonably be expected to result in a Material Adverse
Effect upon (x) the Issuer or the Managing Member, or (y) any director,
executive officer or managing member of the Issuer or the Managing Member;
or (ii) a revocation, suspension or termination of any license, permit or
approval held by the Issuer, the Managing Member (or any fund managed
thereby), the Issuer's administrator or the Issuer's custodian, or any
director, executive officer or managing member thereof that, in the
reasonable judgment of Noteholder, is necessary for the conduct of the
Issuer's or such other Person's business, and in each case a replacement
acceptable to Noteholder is not agreed to within one month following such
event and officially engaged or subscribed to (as the case may be) within
three months of such event; or
(l) the Issuer suspends redemptions of its equity interests for
any reason, except to comply with the terms of this Agreement or the Note;
or
(m) there occurs any market disruption event for a period of five
consecutive Business Days, where "market disruption event" means (a) the
failure of the Issuer or the Managing Member to announce or calculate the
NAV or any information necessary for determining the NAV in accordance with
its normal procedures; or (b) a material change in the formula for or the
method of determining the NAV; or
(n) the Adjusted Amount exceeds the Debt to Equity Trigger Amount
and all actions required in accordance with Section 3(c) shall have not
been taken or satisfied by the Issuer within the applicable time period
specified therein; or
(o) the occurrence of (i) the adoption or taking effect of any
law, rule, regulation or treaty, (ii) any change in any law, rule,
regulation or treaty or in the administration, interpretation or
application thereof by any governmental authority or (iii) the making or
issuance of any request, guideline or directive (whether or not having the
force of law) by any governmental authority which, in any such case,
purports to render invalid, suspends or precludes enforcement of, any
provision of this Agreement or the Note or impairs performance of the
Issuer's obligations hereunder or thereunder;
then, and in any such event, the Noteholder may by written notice
to the Issuer declare all amounts owing under the Note and all other
amounts payable hereunder (including, without limitation, principal,
interest, fees, indemnities and other amounts) to be forthwith due and
payable, whereupon all such amounts shall become and be forthwith due and
payable without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Issuer; provided, however,
that upon the occurrence of any event in subsection (f) of this Section 8,
all amounts owing under the Note and all other amounts payable hereunder
(including, without limitation, principal, interest, fees, indemnities and
other amounts) shall automatically become and be due and payable without
presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Issuer. If an Event of Default occurs and is
continuing, the Noteholder may pursue any available remedy to collect the
payment of the principal amount of, and any accrued interest on, the
Advances or to enforce the performance of any provision of the Note, this
Agreement, and/or under applicable law. No failure on the part of the
Noteholder to exercise, and no delay in exercising, any right hereunder or
under the Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies provided herein
and in the Note are cumulative and not exclusive of any remedies provided
by applicable law.
Section 9. Miscellaneous.
-------------
(a) Amendments. Neither this Agreement nor any provision hereof
may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Issuer and the Noteholder. No
amendment or waiver of any provision of this Agreement or the Note, or
consent to any departure by any of the Issuer therefrom, shall in any event
be effective unless the same shall be in writing and signed by the
Noteholder, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(b) Notices. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail, electronic mail or
sent by facsimile to the Issuer or the Noteholder, as the case may be, at
its address set forth on the signature page hereto. Notices sent by hand or
overnight courier service, or mailed by certified or registered mail, shall
be deemed to have been given when received; notices sent by facsimile shall
be deemed to have been given when sent and a receipt of successful
transmission has been received by the sender (except that, if not given
during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient). Notices and other communications between the Noteholder and the
Issuer may be delivered by electronic mail pursuant to procedures approved
by the Noteholder and the Issuer; provided, that approval of such
procedures may be limited to particular notices or communications, and
shall be effective only when received. The Issuer and the Noteholder may
change its address, telecopier number or (to the extent approved pursuant
to the previous sentence) electronic mail address for notices and other
communications hereunder by notice to the other.
(c) Increased Costs. (i) Generally. If any Change in Law (as
hereinafter defined) shall (A) impose or modify any reserve, special
deposit, compulsory loan, insurance charge or similar requirement against
the Noteholder or its assets, (B) subject the Noteholder to any tax with
respect to this Agreement or the Note, or change the basis of taxation of
payments to the Noteholder in respect thereof (except for Taxes covered by
Section 9(d) and Excluded Taxes and except for any change in the basis of
taxation with respect to Taxes covered by Section 9(d) or Excluded Taxes),
or (C) impose on the Noteholder any other condition, cost or expense
affecting this Agreement or the Note; and, in each case, the result shall
be to reduce the amount of any sum received or receivable by such
Noteholder hereunder or under the Note then, upon request of the
Noteholder, the Issuer will, reasonably promptly after notice thereof by
the Noteholder to the Issuer, pay such additional amount as will compensate
the Noteholder for such additional costs incurred or reduction suffered.
"CHANGE IN LAW" means the occurrence, after the date of this Agreement of
(x) the adoption or taking effect of any law, rule, regulation or treaty,
(y) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any governmental
authority or (z) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any governmental
authority which imposes on the Noteholder any material condition, cost or
expense affecting this Agreement or the Note and which results in an
increase in the cost to the Noteholder of maintaining its obligation to
Purchase, an increase in the cost to the Noteholder, or a reduction in the
amount of any sum received or receivable by the Noteholder hereunder or
under the Note (whether of principal, interest or any other amount).
(ii) Capital Requirements. If the Noteholder determines that
a Change in Law affecting it, any of its lending offices or its holding
company regarding capital requirements has or would have the effect of
reducing the rate of return on the Noteholder's capital or on the capital
of the Noteholder's holding company as a consequence of this Agreement or
the Note to a level below that which the Noteholder or its holding company
could have achieved but for such Change in Law, then from time to time the
Issuer will, reasonably promptly after notice thereof by the Noteholder to
the Issuer, pay to the Noteholder such additional amounts as will
compensate the Noteholder or its holding company for any such reduction
suffered.
(iii) Notice; Timing. The Noteholder shall promptly notify
the Issuer of any Change in Law of which it actually becomes aware for
which it determines to demand compensation under this Section 9(c).
Notwithstanding clauses (i) or (ii) of this Section 9(c), the Issuer shall
not be required to compensate the Noteholder for any increased costs or
reductions suffered or incurred more than 90 days prior to the date that
the Noteholder notifies the Issuer of the Change in Law giving rise to such
increased costs or reductions and of the Noteholder's intention to claim
compensation therefor.
(d) Taxes. (i) Payments Free of Taxes. Any and all payments by or
on account of any obligation of the Issuer hereunder or under the Note
shall be made free and clear of and without deduction or withholding for
any Taxes (as hereinafter defined) unless such deduction or withholding is
required by applicable law (or by the interpretation or administration
thereof), provided that if the Issuer shall be required by applicable law
(or by the interpretation or administration thereof) to deduct any Taxes
from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions of such Taxes
(including deductions of such Taxes applicable to additional sums payable
under this Section 9(d)) the Noteholder receives an amount equal to the sum
it would have received had no such deductions of such Taxes been made, (ii)
the Issuer shall make such deductions of such Taxes and (iii) the Issuer
shall timely pay the full amount of Taxes deducted to the relevant
governmental authority in accordance with applicable law. "TAXES" means all
present or future taxes, levies, imposts, duties, deductions, withholdings,
assessments, fees or other charges imposed by any governmental authority
(including, without limitation, (A) any interest, additions to tax or
penalties applicable thereto, and (B) all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or the Note); provided, that
"Taxes" does not include (x) any taxes imposed on or measured by the
Noteholder's overall net income (however denominated), any franchise taxes
imposed on it (in lieu of net income taxes) and any branch profits tax (or
any similar tax) imposed on it, in any case, by the jurisdiction (or any
political subdivision thereof) under the laws of which the Noteholder is
organized or in which its principal office is located or in which its
applicable lending office or the office which purchased, holds or owns its
Note is located, (y) any Taxes imposed, deducted or withheld on or from any
payments to the Noteholder by or on account of any obligation of the Issuer
hereunder or under the Note by reason of such Noteholder's failure to
comply with Section 9(d)(iii), and (z) any Taxes imposed, deducted or
withhold on or from any such payments to any transferee of the Noteholder
at the time such transferee became a Noteholder hereunder or to any such
Person at the time it changes its applicable lending office or the office
which holds or owns its Note, except to the extent that such Person was
entitled, at the time of such transfer or assignment or at the time of such
change of office, to receive additional amounts with respect to Taxes under
this Section 9(d) (the Taxes described in clauses (x), (y) and (z) of this
Section 9(d)(i), collectively, "EXCLUDED TAXES").
(ii) Tax Indemnity. The Issuer shall indemnify the
Noteholder promptly upon written demand therefor for the full amount of any
Taxes (including whether imposed or asserted on or attributable to amounts
payable under this Section 9(d)) paid by the Noteholder and any penalties,
interest and reasonable out-of-pocket expenses arising therefrom or with
respect thereto.
(iii) Foreign Noteholder. With respect to the Noteholder and
any transferee thereof that is not a "United States person" within the
meaning of Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended from time to time (the "CODE"), such Person shall deliver to the
Issuer on or before the date it acquires a Note hereunder or becomes a
party to this Agreement and on or before the date, if any, that such Person
changes its applicable lending office or its office which owns or holds its
Note (i) a duly executed and completed Internal Revenue Service Forms
W-8ECI or W-8BEN (with respect to the benefit of an income tax treaty), or
successor forms, certifying to such Person's entitlement to a complete
exemption from United States withholding tax with respect to all payments
by or on account of any obligation of the Issuer hereunder to be made to it
and under its Note, or (ii) if such Noteholder or transferee is not a
"bank" within the meaning of Section 881(c)(3)(A) of the Code, either (x)
the forms referred to in clause (i) above certifying to such Person's
entitlement to a complete exemption from United States withholding tax with
respect to all payments by or on account of any obligation of the Issuer
hereunder to be made to it or under its Note, or (y) a duly executed and
completed Internal Revenue Service Forms W-8BEN (or successor forms) and a
duly executed certificate (a "PORTFOLIO INTEREST EXEMPTION CERTIFICATE")
certifying that it is entitled to a complete exemption from United States
withholding tax with respect to all payments by or on account of any
obligation of the Issuer hereunder to be made to it and under its Note
under Section 871(h) or 881(c) of the Code; provided, however, that in the
event that such Noteholder or transferee, as applicable, is not classified
as a corporation for United States federal income tax purposes, such Person
shall deliver to the Issuer all additional (or alternative) Internal
Revenue Service forms and Portfolio Interest Exemption Certificates
necessary to establish such Noteholder's entitlement to complete exemption
from United States withholding tax on all payments by or on account of any
obligation of the Issuer hereunder to be made to it and under the Note.
Each such Person shall deliver such Internal Revenue Service forms and the
Portfolio Interest Exemption Certificate (as applicable) to the Issuer
promptly from time to time as necessary upon the obsolescence, inaccuracy
or invalidity of any such Internal Revenue Service forms or Portfolio
Interest Exemption Certificate previously delivered by such Noteholder.
(e) Illegality. Notwithstanding any other provision of this
Agreement, if the Noteholder determines that the introduction of or any
change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that
it is unlawful, for the Noteholder or its applicable LIBOR lending office
to perform its obligations hereunder to make Advances according to LIBOR or
to fund or maintain Advances according to LIBOR hereunder, then (i) each
Advance according to LIBOR will automatically convert into a Base Rate
Advance (as hereinafter defined) as to which interest shall be calculated
on a basis of actual days elapsed and a year of 360 days and shall be
payable in arrears on each Monthly Payment Date for the immediately
preceding calendar month and on the date such Base Rate Advance shall be
paid in full, and (ii) the obligation of the Noteholder to make or continue
Advances according to LIBOR shall be suspended until the Noteholder shall
notify the Issuer that the circumstances causing such suspension no longer
exist. A "BASE RATE ADVANCE" shall mean an Advance as to which interest
accrues on the outstanding principal amount thereof from the date of
issuance or conversion thereof, as the case may be, until such principal
amount shall be paid in full, at a rate per annum equal to the highest of
(x) the rate of interest announced by Barclays Bank PLC in New York, New
York, from time to time, as its "base rate"; and (y) 1/2 of one percent per
annum above the Federal Funds Rate (as hereinafter defined). The "FEDERAL
FUNDS RATE" means, for any period, a fluctuating interest rate per annum
equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average of the quotations for such day
on such transactions received by the Noteholder from three Federal funds
brokers of recognized standing selected by it.
(f) Costs. Each of the Issuer and the Noteholder will bear its
own costs and expenses in connection with the negotiation and documentation
this Agreement and the Note issued to the Noteholder hereunder. All
reasonable costs and expenses of the Noteholder in connection with any
formal or informal enforcement, restructuring, workout or settlement hereof
or thereof, will be paid by the Issuer promptly upon demand.
(g) Indemnification. Other than with respect to legal costs and
expenses expressly agreed to be borne by the Noteholder pursuant to Section
9(c), (d) or (f), the Issuer shall indemnify the Noteholder and its
affiliates and its and its affiliates, partners, directors, officers,
employees, agents and advisors (each such person being called an
"INDEMNITEE") against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses (including the
fees, charges and disbursements of any counsel for any Indemnitee whether
incurred in any action or proceeding between the parties or otherwise)
reasonably incurred by any Indemnitee or asserted against any Indemnitee by
any third party or by the Issuer or any affiliate, partner, director,
officer, employee, agent or advisor of the Issuer arising out of, in
connection with, or as a result of (a) the execution or delivery of this
Agreement, the Note or any other agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby, (b) the making of any Advance
or the use or proposed use of the proceeds therefrom, or (c) any actual or
prospective claim, litigation, investigation or proceeding relating to any
of the foregoing, whether based on contract, tort or any other theory,
whether brought by a third party or by the Issuer or any affiliate,
partner, director, officer, employee, agent or advisor of the Issuer, and
regardless of whether any Indemnitee is a party thereto, provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of
such Indemnitee or (y) relate to a settlement, compromise or similar action
by an Indemnitee of any action, proceeding or investigation without the
prior written consent of the Issuer, which consent shall not be
unreasonably withheld or delayed. The provisions of this Section 9(g) shall
survive and remain in full force and effect regardless of the consummation
of the transactions contemplated hereby, the repayment of the Note, the
expiration or termination of the commitment to make Advances and/or the
termination of this Agreement or any provisions hereof or thereof.
(h) Assignment. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that the Issuer may not
assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Noteholder. The Noteholder may
assign or otherwise transfer any of its rights or obligations hereunder
upon the consent of the Issuer, which consent shall not be unreasonably
withheld or delayed. Assignment of the Note shall be further subject to the
restrictions specified therein.
(i) Counterparts; Integration. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which
when taken together shall constitute a single contract. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier
shall be effective as delivery of an originally executed counterpart of
this Agreement. This Agreement and the Note constitutes the entire contract
between the parties relating to the subject matter hereof and supersedes
any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof.
(j) Governing Law; Jurisdiction. (i) This Agreement shall be
governed by, and construed in accordance with, the law of the State of New
York.
(ii) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR THE NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURTS SITTING
IN THE BOROUGH OF MANHATTAN, NEW YORK, NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE ISSUER AND THE NOTEHOLDER CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE ISSUER AND THE NOTEHOLDER
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT, THE NOTE OR ANY OTHER DOCUMENT
RELATED THERETO. EACH OF THE ISSUER AND THE NOTEHOLDER WAIVES PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY
ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.
(iii) Without prejudice to any other mode of service, each party
to this Agreement consents to the service of process relating to any
proceedings in connection with this Agreement by a notice given in
accordance with Section 9(b).
(k) Confidentiality. The Noteholder agrees to maintain the
confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its affiliates and their
directors, officers, employees and agents, including accountants, legal
counsel and other advisors involved in the administration of this Agreement
or who otherwise have a reasonable need to know (it being understood that
the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) in connection with the
exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or the enforcement of rights hereunder, (e) to a
actual or potential transferee in accordance with Section 9(h) if such
transferee agrees to be bound by an agreement containing substantially
similar terms as this Section 9(k), (f) with the consent of the Issuer or
(g) to the extent such Information (i) becomes publicly available other
than as a result of a breach of this Section 9(k) or (ii) becomes available
to such Noteholder on a nonconfidential basis from a source other than the
Issuer. Any Person required to maintain the confidentiality of Information
as provided in this Section 9(k) shall be considered to have complied with
its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person
would accord to its own confidential information. "INFORMATION" means all
information received from the Issuer relating to the Issuer or its business
including, without limitation information received from the Issuer pursuant
to Sections 4(a), 4(f), 6(b), 6(c), 6(d), 6(e) and 6(i), other than any
such information that is available to the Noteholder on a nonconfidential
basis prior to disclosure by the Issuer.
[Signature pages follow.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as
of the date first above written.
XXXXXXX XXXXX HEDGE FUND PARTNERS II, LLC
By: XXXXXXX SACHS HEDGE FUND STRATEGIES LLC,
its managing member
By: /s/ Xxxxx Xxxxxxx
------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
Notice Details:
Xxxxxxx Xxxxx Hedge Fund Partners II, LLC
000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxx.xxxxxx@xx.xxx
BARCLAYS BANK PLC
By: /s/ Philippe El-Asmar
---------------------------------
Name: Philippe El-Asmar
Title: Managing Director, Head of
Investor Solutions, Americas
Notice Details: With a copy to:
Barclays Capital Services Barclays Bank PLC
LLC c/o Barclays Capital Securities Limited
000 Xxxxx Xxxxxx Xx, 5 The North Colonnade
Building E Canary Wharf
4th Floor Drop 4x London E14 4BB
Xxxxxxxx, XX 00000 England
Attention: Xxxx Xxxxxxx Attention: Fund Bookrunning/Fund Risk
Cc Xxxxx Xxxxxxxxx Management
Telephone: 000-000-0000 Telephone: x00 (0) 00 000 00000
Facsimile: 000-000-0000 Facsimile: x00 (0) 00 000 00000
EXHIBIT A
FORM OF NOTE
XXXXXXX XXXXX HEDGE FUND PARTNERS II, LLC
PROMISSORY NOTE
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR REGULATORY AUTHORITY OF ANY STATE.
THIS NOTE HAS BEEN OFFERED AND SOLD PRIVATELY. THE NOTE OWNER
HEREOF ACKNOWLEDGES THAT THIS SECURITY IS A "RESTRICTED SECURITY"
THAT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND AGREES
FOR THE BENEFIT OF THE ISSUER AND ITS AFFILIATES THAT THIS
SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT TO A PERMITTED TRANSFEREE (A) WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER JURISDICTION AND (B) WHO IS A QUALIFIED PURCHASER
WITHIN THE MEANING OF SECTION 2(A)(51) OF THE INVESTMENT COMPANY
ACT OF 1940, AS AMENDED.
BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, THE HOLDER OF THIS NOTE
IS DEEMED TO REPRESENT THAT (I) IT IS A QUALIFIED INSTITUTIONAL
BUYER, (II) IT IS A QUALIFIED PURCHASER AND (III) THAT IT IS
ACQUIRING THIS NOTE FOR ITS OWN ACCOUNT AND IT IS THE SOLE
REGISTERED AND BENEFICIAL OWNER OF THE NOTE. NO OTHER PERSON HAS
AN INTEREST IN THIS NOTE.
THIS NOTE HAS BEEN ISSUED IN A MAXIMUM PRINCIPAL AMOUNT UP TO
$[_], BUT AT ANY TIME MAY HAVE AN OUTSTANDING PRINCIPAL BALANCE
LESS THAN THAT AMOUNT, WHICH BALANCE IS INDICATED, FOR
INFORMATIONAL PURPOSES, ON SCHEDULE A HERETO, AND MAY BE
CONFIRMED BY THE NOTEHOLDER IN ACCORDANCE WITH THE TERMS OF THE
NOTE PURCHASE AGREEMENT REFERRED TO BELOW.
U.S. $[_] Dated: January [_], 2006
FOR VALUE RECEIVED, the undersigned, XXXXXXX SACHS HEDGE FUND
PARTNERS II, LLC, a limited liability company organized under the laws of
Delaware (the "ISSUER"), HEREBY PROMISES TO PAY to BARCLAYS BANK PLC or its
registered assigns (the "NOTEHOLDER") the principal amount of [AMOUNT OF
UNITED STATES DOLLARS] (U.S. $[_]) (or such lesser amount as shall equal
the unpaid principal amount hereunder) owing to the Noteholder by the
Issuer pursuant to the NOTE PURCHASE AGREEMENT dated as of January [_],
2006 (as amended, supplemented or otherwise modified from time to time, the
"NOTE PURCHASE AGREEMENT") among the Issuer and the Noteholder on January
[_], 2007. Capitalized terms not otherwise defined in this Promissory Note
shall have the same meanings as specified therefor in the Note Purchase
Agreement.
The Issuer promises to pay to the Noteholder interest on the
unpaid principal amount of this Note from the date first written above
until such principal amount is paid in full at the applicable Interest
Rate, and all fees, expenses, indemnities and other amounts as are
specified in the Note Purchase Agreement payable at such times as are
specified therein.
Both principal and interest are payable in lawful money of the
United States of America to the Noteholder at its offices at 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or at such other location as shall be
designated by the Noteholder in a written notice to the Issuer), in same
day funds. The principal amount owing to the Noteholder by the Issuer
hereunder and all payments made on account of principal thereof, shall be
recorded by the Noteholder on Schedule A to this Note; provided that the
failure to make any such recordation or endorsement shall not affect the
Debt of the Issuer under this Note or any of the other obligations of the
Noteholder under the Note Purchase Agreement.
All calculations with respect to amounts payable to the
Noteholder shall be determined by the Noteholder and shall be binding on
the Issuer absent manifest error. Whenever any payment hereunder shall be
stated to be due on a day other than a Business Day, such payment shall be
made on the preceding Business Day, and such adjustment of time shall in
such case be included in the computation of payment of interest or fees, as
the case may be.
This is the Note referred to in, and is entitled to the benefits
of, the Note Purchase Agreement. The Note Purchase Agreement, among other
things, (a) provides for the issuance by the Issuer and purchase by the
Noteholder of this Note and the making of Advances from time to time during
the Term in an aggregate amount not to exceed at any time outstanding the
U.S. dollar amount first above written, and (b) is subject to optional and
mandatory prepayments and repayments on account of principal hereof, in
whole or in part, prior to the maturity hereof on the terms and conditions
specified in Sections 2 and 3 of the Note Purchase Agreement.
Upon the occurrence and during the continuance of one or more
Events of Default, the unpaid principal amount of this Note and all accrued
and unpaid interest hereon, fees and other amounts payable in respect
hereof and under the Note Purchase Agreement may become, or may be declared
to be, immediately due and payable as provided in Section 8 of the Note
Purchase Agreement.
The terms of this Note may be amended, supplemented or otherwise
modified only in the manner provided in the Note Purchase Agreement.
The Noteholder hereby waives presentment, demand, protest and
(except as expressly specified in the Note Purchase Agreement) notice of
any kind. No failure on the part of the holder hereof to exercise, and no
delay in exercising, any right, power or privilege hereunder shall operate
as a waiver thereof or a consent thereto; nor shall a single or partial
exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURTS SITTING IN THE BOROUGH OF MANHATTAN,
NEW YORK, NEW YORK. BY EXECUTION AND DELIVERY OF THIS NOTE THE ISSUER
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. THE ISSUER IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS NOTE OR
OTHER DOCUMENT RELATED THERETO. THE ISSUER HEREBY WAIVES PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER
MEANS PERMITTED BY THE LAW OF SUCH STATE.
If an Event of Default shall have occurred and be continuing, the
Noteholder may set off and apply any and all deposits at any time held and
other obligations (in whatever currency) at any time owing by the
Noteholder to or for the credit of the Issuer against any and all of the
obligations of the Issuer now or hereafter existing under this Note or the
Note Purchase Agreement to the Noteholder, irrespective whether the
Noteholder shall have made any demand under this Note or the Note Purchase
Agreement and although such obligations may be contingent or unmatured. The
setoff rights of the Noteholder are in addition to other rights and
remedies the Noteholder may have, all of which are cumulative. The
Noteholder agrees to notify the Issuer promptly after any such setoff and
application, provided, that the failure to give such notice shall not
affect the validity thereof.
This Note is a registered instrument and is not a bearer
instrument. This Note is registered as to both principal and interest with
the Issuer and all payments hereunder shall be made to the named Noteholder
or, in the event of a transfer pursuant to the next paragraph hereof, to
the transferee identified in the Register maintained by the Noteholder on
behalf of the Issuer.
Transfer of this Note may be effected only by (i) surrender of
this Note to the Issuer and the re-issuance of this Note to the transferee,
or the Issuer's issuance to the Noteholder of a new note in the same form
as this Note but with the transferee denoted as the Noteholder, or (ii) the
recording by the Noteholder of the identity of the transferee in a record
of ownership of this Note in the Register maintained by the Noteholder
under the Note Purchase Agreement. The terms and conditions of this Note
shall be binding upon and inure to the benefit of the Issuer and the
Noteholder and their permitted assigns. Any attempted transfer in violation
of this paragraph shall be void and of no force and effect. Until there has
been a valid transfer of this Note and of all of the rights hereunder by
the Noteholder in the Register in accordance with this section, the Issuer
shall deem and treat the Noteholder as the absolute beneficial owner and
holder of this Note and of all of the rights hereunder for all purposes
(including, without limitation, for the purpose of receiving all payments
to be made under this Note).
This Note shall be governed by, and construed in accordance with,
the laws of the State of New York.
XXXXXXX XXXXX HEDGE FUND PARTNERS II, LLC
By: XXXXXXX SACHS HEDGE FUND STRATEGIES LLC,
its managing member
By
-------------------------------
Name:
Title:
SCHEDULE A
PAYMENTS OF PRINCIPAL
---------------------
===============================================================================
Amount Amount of Unpaid
of Principal Paid Principal
Date Advance or Prepaid Balance Notation Made By
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
===============================================================================
EXHIBIT B
INVESTMENT GUIDELINES
1. PERMITTED INSTRUMENTS
The Fund will invest exclusively in the following:
a) Shares of Funds and Fund of Funds; without limitation, the Fund
is expected to be invested in the following Single Strategy,
Multi Manager Funds of Hedge Funds:
----------------------------------------------
Xxxxxxx Xxxxx Global Equity Long/Short, LLC
Xxxxxxx Sachs Global Tactical Trading II, LLC
Xxxxxxx Xxxxx Global Relative Value II, LLC
Xxxxxxx Sachs Global Event Driven, LLC
---------------------------------------------
b) Managed accounts with Limited Liability of Funds and Fund of
Funds;
c) The Fund may invest in Money Market Funds or Money Market
instruments with a maturity of 3 months or less issued by a
financial counterparty rated at least P1 by Xxxxx or A1 by S&P;
d) For hedging purposes, the Fund may enter into spot and forward FX
contracts with financial counterparties rated at least P1 by
Xxxxx or A1 by S&P.
2. STRATEGY LIMITS
-------------------------------------------------------------------
Limits on
Percentage of
Net Asset Value
of the Fund
invested in
Sub-Fund employed by Strategy Active Assets
Minimum Maximum Comments
-------------------------------------------------------------------
Equity Long/Short Fund 40%
Relative Value Fund 40%
Global Macro/CTA Fund 40%
Event Driven Fund 40%
-------------------------------------------------------------------
Each sub-strategy is constrained by any constraint at the strategy level.
The inclusion of strategies (and their respective restrictions) other than
those detailed above shall be agreed by the Noteholder prior to any
investment in such a strategy.
3. LEVERAGE AND BORROWING
The Issuer may not incur or permit leverage except as provided in Section
7(a) of the Note Purchase Agreement. The underlying Single Strategy Funds
will not borrow more than 10% of their Net Asset Value at the time of
incurrence, and the proceeds of any such borrowing will be used solely for
liquidity management purposes; provided, that if such borrowing thereafter
exceeds 15% of such Single Strategy's Fund's Net Asset Value (less the
estimated value (as reasonably determined by the Issuer in consultation
with the Noteholder) of all pending redemptions, if any, as to which copies
of redemption notices have been delivered to the Noteholder in accordance
with the reporting requirements of Schedule I to the Note Purchase
Agreement), the Issuer shall as soon as practicable but in any event not
later than five Business Days after the date thereof take all action
necessary and reasonably requested by the Noteholder to undertake
redemptions in an amount equal to 120% of the amount by which such
borrowing exceeds such 10% Net Asset Value threshold at such time. Promptly
and in any event not later than five Business Days after receipt by the
Issuer of the proceeds of any such redemption, the Issuer shall repay such
borrowings to the extent necessary to comply with such 10% Net Asset Value
threshold with respect to such Single Strategy Fund.
4. LIQUIDITY
a) Liquidity Schedule on a Non-look-through basis, not including lock-ups,
will satisfy the constraint in the table below.
-----------------------------------------------
EXIT PERIOD MINIMUM NET ASSET
VALUE OF FUND
INVESTED
-----------------------------------------------
181 days or less 100%
-----------------------------------------------
-----------------------------------------------
b) The Liquidity Schedule on a Look-through basis will satisfy the
constraint in the table below; provided, however, that all determinations
as to such compliance shall be made by the Noteholder in its sole
discretion, and, prior to receipt of a notice from the Noteholder of any
Look-through Failure, the Issuer shall have no responsibility to comply (or
to monitor or certify compliance) with this section 4(b).
-----------------------------------------------
EXIT PERIOD MINIMUM NET ASSET
VALUE OF FUND
INVESTED
-----------------------------------------------
175 days or less 50%
-----------------------------------------------
456 days or less 60%
-----------------------------------------------
720 days or less 85%
-----------------------------------------------
1200 days or less 100%
-----------------------------------------------
Exit Period is defined as the maximum amount of time required to effect a
redemption request from an underlying fund. Exit Period is the sum of the
following terms with respect to the underlying funds (1) Notice Period
Component and (2) Frequency and Lock-Up Component, but without duplication
of time periods that may run concurrently.
o The Notice Period Component is the number of days notice
required.
o The Frequency and Lock-Up Component is either
a) 30 days for monthly liquidity, 90 days for quarterly
liquidity, 182 days for semi-annual liquidity, 365 days for
annual liquidity, if there is no lock-up period or if a
redemption is allowable during the lock-up period for a fee
of less than or equal to 5% of the redemption amount, no
matter what the length of the initial lock-up, or b) the
number of days remaining in the lock-up period plus 30 days.
5. DIVERSIFICATION
a) The minimum number of sub-funds invested in by the Fund on a
non-Look-through basis shall be 4.
b) The minimum number of sub-funds invested in by the Fund on a
Look-through basis shall be 50.
c) The holding of any sub-fund on a Look-through basis shall not result
in the holding of that sub-fund exceeding 8% of the Net Asset Value
of the Fund; provided, however, that all determinations as to
compliance with this section 5(c) shall be made by the Noteholder in
its sole discretion, and, prior to receipt of a notice from the
Noteholder of any Look-through Failure, the Issuer shall have no
responsibility to comply (or to monitor or certify compliance) with
this section 5(c).
6. REMEDIATION
Limits and restrictions specified in these Investment Guidelines are to be
observed by the Issuer at all times (except as specified in the provisos to
sections 4(c) and 5(c) of these Investment Guidelines).
Unless explicitly agreed by the Noteholder in advance, upon notice from the
Noteholder to the Issuer, any breach of any of these limits or restrictions
must be remedied by the Issuer. Failure to initiate appropriate action
plans to rectify the breaches within the Remediation Period defined below
shall constitute an Event of Default under the Note Purchase Agreement at
the sole discretion of the Noteholder. During such remediation periods all
contractual rights and obligations of the parties remain unaffected.
Initiation of appropriate action plans to rectify any such breaches within
such remediation period shall constitute a cure of any such Event of
Default under the Note Purchase Agreement for so long as such action plans
remain in effect.
The "Remediation Period" shall be five (5) Business Days from the date of
notice from the Noteholder.
FURTHER DEFINITIONS
"NON-LOOK-THROUGH BASIS": looks at the portfolio of hedge funds, including,
without limitation, the 4 multi-manager single strategy funds of hedge
funds managed by Xxxxxxx Xxxxx Hedge Fund Strategies as detailed in
Paragraph 1.a).
"LOOK-THROUGH BASIS": considers the investments in underlying portfolio of
Hedge Funds that the 4 multi-manager single strategy funds of hedge funds
managed by Xxxxxxx Sachs Hedge Fund Strategies invest in.
EXHIBIT C
[XXXXXXX XXXXX HEDGE FUND PARTNERS II, LLC LETTERHEAD]
NOTICE OF ADVANCE
[Date]
Barclays Capital Services LLC
000 Xxxxx Xxxxxx Xx, Xxxxxxxx X
4th Floor Drop 4x
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Cc Xxxxx Xxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Barclays Bank PLC
c/o Barclays Capital Securities Limited
5 Xxx Xxxxx Xxxxxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Attention: Fund Bookrunning/Fund Risk Management
Telephone: x00 (0) 00 000 00000
Facsimile: x00 (0) 00 000 00000
Ladies and Gentlemen:
The undersigned, XXXXXXX SACHS HEDGE FUND PARTNERS II, LLC, (the "ISSUER"),
refers to that certain Note Purchase Agreement (the "NOTE PURCHASE
AGREEMENT") between the Issuer and BARCLAYS BANK PLC (the "NOTEHOLDER"),
dated as of January 19, 2006 (as amended, supplemented or otherwise
modified from time to time). The terms defined in the Note Purchase
Agreement (and any schedules and exhibits thereto) are being used herein as
therein defined. The undersigned hereby gives you notice, irrevocably, that
the undersigned hereby requests the Noteholder to make an Advance and in
that connection sets forth below the information relating to such Advance
(the "PROPOSED ADVANCE"):
The Business Day of the Proposed Advance is _________________ __,
____.(1)
The Issuer requests an Advance in the aggregate principal amount of
$_____________.
The undersigned hereby certifies that on the date hereof and on the
date of the Proposed Advance:
The representations and warranties contained in the Note issued to the
Noteholder are true and correct in all material respects.
--------
(1) Note, if date of Requested Advance is less than three Business Days
from the date of the Notice of Advance, the Advance will be made at
Overnight LIBOR and converted on the Business Day following the date of
such Advance into an Advance at Weekly LIBOR pursuant to Section 1.
Based on the most recently delivered estimated weekly NAV from the
Fund Administrator, a copy of which is attached hereto as Annex 1, the
net asset value of the Issuer is estimated in good faith by the
undersigned to be $[_] as of the date of such estimated weekly NAV.
No Event of Default has occurred and is continuing and no event has
occurred that, with the lapse of time or the giving of notice or both,
would constitute an Event of Default, or would result from the
Proposed Advance or from the application of the proceeds therefrom.
After giving effect to the Proposed Advance, the sum of the principal
amount of all Advances outstanding does not exceed the Debt to Equity
Trigger Amount.
Very truly yours,
XXXXXXX XXXXX HEDGE FUND PARTNERS II, LLC
By: XXXXXXX SACHS HEDGE FUND STRATEGIES LLC,
its managing member
By:
------------------------------
Name:
Title:
ANNEX 1
MOST RECENT WEEKLY NAV OF THE ISSUER
[ATTACHED]
SCHEDULE I
REPORTING REQUIREMENTS
The Noteholder shall be entitled to the following information from the
Investment Manager within 5 Business Days of any request by the Noteholder:
(a) the name of any fund (a "FUND ASSET") into which the Issuer or any
Single Strategy Fund invests
(b) the aggregate amount invested by the Issuer in each Fund Asset
(c) the performance history of such Fund Asset
(d) the frequency in relation to which subscription for, and redemptions
of, units in such Fund Asset may be effected, and
(e) any notice periods relating to any subscriptions or redemptions to be
effected pursuant to (e) above, and
(f) any minimum periods during which redemption of an investment in the
Fund Asset is not possible (a "lock-in period")
The Issuer shall furnish to the Noteholder promptly after delivery thereof
all notices of investments in and/or redemption of Fund Assets from time to
time.
The Noteholder shall be entitled to the following information from the Fund
Administrator and/or the Issuer within 35 calendar days of the last day of
each calendar month:
(a) the official NAV of the Issuer prepared by the Fund
Administrator, and
(b) full details from the Fund Administrator relating to all
investments by the Issuer into each Fund Asset (including,
without limitation, all outstanding liabilities, current assets,
cash balances and any unfilled subscription and redemption
orders).
