LETTER AGREEMENT
This Letter Agreement, dated as of January 25, 2005, is made among
Sandler X'Xxxxx & Partners, L.P. ("Sandler X'Xxxxx"), Nuveen Investments LLC
("Nuveen") and Spectrum Asset Management, Inc. ("Spectrum").
In connection with Nuveen's sponsorship of the proposed Nuveen
Tax-Advantaged Floating Rate Fund (the "Fund"), the parties wish to make the
following acknowledgements and agreements.
Section 1. It is currently intended that Sandler X'Xxxxx will either act
as (i) the initial purchaser of adjustable rate or fixed rate noncumulative
perpetual preferred stock ("Preferred Securities") issued by one or more banks,
thrifts or holding companies of banks or thrifts with total assets not less than
$200 million and not greater than $10 billion ("Middle Market Banking
Companies") and will sell such Preferred Securities to the Fund or (ii) the
placement agent for the sale of Preferred Securities by one or more Middle
Market Banking Companies to the Fund. It is acknowledged that Sandler X'Xxxxx'x
sole economic interest in the foregoing matters shall be the compensation
represented by (a) if it acts as initial purchaser, the difference between the
price at which it purchases the Preferred Securities from the Middle Market
Banking Companies and the price at which it sells the Preferred Securities to
the Fund or (b) if it acts as placement agent, the commissions or fees, if any,
that are payable to it by such Middle Market Banking Companies in connection
with the sale of such Preferred Securities to the Fund.
Section 2. The parties hereto agree that the following information shall
be considered "Information" within the meaning of this Agreement: (i)
information supplied by Sandler X'Xxxxx to Nuveen or Spectrum or its agents or
investment advisory clients, including the Fund, with respect to the structuring
of purchases of direct or indirect poolings of multiple Preferred Securities of
Middle Market Banking Companies ("Poolings") as well as the advantages of
investing in such Poolings; (ii) the names of Middle Market Banking Companies
supplied by Sandler X'Xxxxx that have formally engaged, or that Sandler X'Xxxxx
reasonably believes may engage, Sandler X'Xxxxx or its investment banking agents
to facilitate the sale of their Preferred Securities (based, among other things,
on the reasonable absence of a belief by Sandler X'Xxxxx that such Middle Market
Banking Companies have engaged another investment banking firm to facilitate the
sale of their Preferred Securities) or are otherwise identified in a sale or
offer of Preferred Securities made by Sandler X'Xxxxx (such Middle Market
Banking Companies being referred to herein as " Sandler Middle Market Banking
Companies"); (iii) the terms of the Preferred Securities of any specific Sandler
Middle Market Banking Company supplied in connection with the matters
contemplated by this Agreement; (iv) information supplied to Nuveen or Spectrum
or their agents or investment advisory clients by Sandler Middle Market Banking
Companies in connection with the matters contemplated by this Agreement,
directly or through Sandler X'Xxxxx; (v) information supplied by Sandler X'Xxxxx
to Nuveen or Spectrum or their agents or investment advisory clients with
respect to specific Sandler Middle Market Banking Companies; and (vi) any and
all other nonpublic information supplied by Sandler X'Xxxxx in connection with
the matters contemplated under this Agreement.
Section 3. Without Sandler X'Xxxxx'x prior written consent, Nuveen and
Spectrum shall not, and shall not permit any of their investment advisory
clients, including the Fund, officers, directors, employees or agents, during
the term of this Agreement, to, (i) disclose Information to any third party;
(ii) disclose the existence of Information being preserved as
Letter Agreement January 25, 2005
confidential, whether or not relating to a possible sale of Preferred
Securities; (iii) use the Information for any purpose other than for evaluating
and analyzing a potential investment in Preferred Securities of Sandler Middle
Market Banking Companies or Poolings of such Preferred Securities from or
through Sandler X'Xxxxx; or (iv) use the Information to solicit, or (for a
period ending on the later of (m) the 60th day after the initial closing with
respect to the public offering of the Fund's common shares or (n) the 60th day
after Sandler X'Xxxxx first offered such Preferred Securities to Spectrum to be
purchased by the Fund) otherwise enter into, an agreement to purchase Preferred
Securities from any Sandler Middle Market Banking Company in a transaction in
which Sandler X'Xxxxx is not acting as initial purchaser or placement agent.
Nuveen or Spectrum, as applicable, shall notify Sandler X'Xxxxx immediately upon
discovery of the unauthorized disclosure or use of Information by Nuveen,
Spectrum or their respective investment advisory clients, officers, directors,
employees or agents, or any other actual or threatened breach of this Agreement.
Nuveen and Spectrum may disclose Information to those of their respective
employees and agents who shall reasonably need to know such Information in order
to perform the aforementioned evaluation and analysis and who agree to comply
with the terms of this Agreement. Except with respect to the use of information
relating to the solicitation of agreements to purchase Preferred Securities of
Sandler Middle Market Banking Companies, the limitations of this Section 3 shall
not apply to Information that Nuveen or Spectrum, as applicable, can demonstrate
(a) was publicly available prior to its receipt or became publicly available
after its receipt other than as a result of its breach of this Agreement; (b)
was developed by it independently of its receipt of any Information under this
Agreement; or (c) was available to it prior to its receipt pursuant to this
Agreement or became available to it thereafter, provided that the source of such
Information was not known by it to be bound by a confidentiality agreement with,
or other contractual or other obligation of confidentiality to, Sandler X'Xxxxx.
Furthermore, nothing herein shall prevent Nuveen or Spectrum from disclosing
Information required to be disclosed by applicable law, regulation or legal
process; provided, however, that prior to any such disclosure Nuveen or
Spectrum, as applicable, shall (y) notify Sandler X'Xxxxx promptly in writing of
any order to request to disclose and of the facts and circumstances surrounding
such order or request so that Sandler X'Xxxxx may seek an appropriate protective
order, and (z) reasonably cooperate with Sandler X'Xxxxx, at Xxxxxxx X'Xxxxx'x
expense, in any proceeding to obtain an appropriate protective order. Sandler
X'Xxxxx agrees to reciprocal obligations and duties with respect to any and all
other nonpublic information supplied by Nuveen in connection with the matters
contemplated under this Agreement and any and all other nonpublic information
supplied by Spectrum in connection with the matters contemplated under this
Agreement (collectively, "N/S Information") and shall not be released during the
term of this Agreement from such obligations or duties without the prior written
consent of Nuveen or Spectrum, as the case may be.
Section 4. No representation or warranty, express or implied, is made by
Sandler X'Xxxxx as to the accuracy or completeness of any Information, and
nothing contained in the Information is, or shall be, relied upon as a promise
as to the future. In particular, Sandler X'Xxxxx does not warrant (i) that the
Information contains all of the information that is required to evaluate and
analyze an investment in the Preferred Securities of one or more Middle Market
Banking Companies or Poolings of such Preferred Securities or (ii) that any
Sandler Middle Market Banking Company will issue Preferred Securities. Nuveen
and Spectrum agree that none of Sandler X'Xxxxx or its affiliates or their
respective partners, directors, officers, employees, agents, representatives or
controlling persons shall have any liability to any such person or their
investment advisory clients, including the Fund, officers, directors, employees
or agents for any loss, liability, claim, damage or expense incurred by, imposed
upon, or asserted against, it arising from the use of any Information.
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Letter Agreement January 25, 2005
Section 5. The parties hereto agree that the offer by Sandler X'Xxxxx of
Preferred Securities of one or more Middle Market Banking Companies or Pooling
of such Preferred Securities or any similar securities shall not be considered
as advice from or a recommendation by Sandler X'Xxxxx to Nuveen or Spectrum or
their investment advisory clients, including the Fund, officers, directors,
employees or agents to purchase such securities or as a representation and
warranty, express or implied, by Sandler X'Xxxxx as to (i) the condition
(financial or other), results of operations, business, business affairs or
business prospects of any Middle Market Banking Company, (ii) information that
is publicly available with respect to any Middle Market Banking Company or (iii)
the terms of any such securities. Any purchase of such securities by Nuveen or
Spectrum on behalf of its investment advisory clients, including the Fund, shall
be based upon such party's own independent investment decision, without any
advice from or recommendation by Sandler X'Xxxxx whatsoever.
Section 6. Notwithstanding the provisions of Sections 4 and 5 hereof,
Sandler X'Xxxxx, in its capacity as initial purchaser or placement agent of any
Preferred Securities from Middle Market Banking Companies, shall not be relieved
of any liability or responsibility it may have under applicable securities laws
or definitive agreements in which Sandler X'Xxxxx is a party in connection with
any Preferred Securities or Poolings of such Preferred Securities that are sold
by or through Sandler X'Xxxxx as contemplated hereby to the Fund.
Section 7. During the term of this Agreement, except as otherwise
provided herein, Sandler X'Xxxxx agrees that Preferred Securities of Sandler
Middle Market Banking Companies issued on a primary basis to Sandler X'Xxxxx as
initial purchaser or through Sandler X'Xxxxx as placement agent shall be offered
for sale by Sandler X'Xxxxx first to Nuveen and Spectrum for the benefit of the
Fund, whether pursuant to this Agreement or otherwise. In the event that Nuveen
or Spectrum, on behalf of the Fund, fails to accept any offer of Preferred
Securities made by Sandler X'Xxxxx in accordance with this Section 7 within a
period of time consistent with customary market practice after such offer is
made, thereafter the rights of Nuveen and Spectrum and the obligations of
Sandler under this Section 7 in respect of such Preferred Securities shall
terminate and be of no further force or effect and Sandler X'Xxxxx shall be
entitled to sell, or facilitate the sale of, such Preferred Securities to any
other person or entity. Notwithstanding the foregoing, Sandler X'Xxxxx shall not
be required to offer Preferred Securities of a Middle Market Banking Company
first to Nuveen and Spectrum for the benefit of the Fund if (a) based on the
aggregate liquidation preference of such Preferred Securities, the credit
quality of such Middle Market Banking Company, the timing of the proposed
issuance of Preferred Securities or the desire of the applicable Middle Market
Banking Company, Sandler X'Xxxxx does not then intend to offer or sell any of
such Preferred Securities directly to one or more closed-end investment
companies or (b) all of such Preferred Securities are part of an offering by
such Middle Market Banking Companies to or through Sandler X'Xxxxx that is
registered with the Securities and Exchange Commission under the Securities Act
of 1933. If the aggregate liquidation preference of the Preferred Securities of
a Middle Market Banking Company exceeds 5.0% of the Fund's anticipated managed
assets, Sandler X'Xxxxx shall not be required to offer such excess aggregate
liquidation preference of Preferred Securities to Nuveen and Spectrum in
accordance with this Section 7. During the marketing and initial invest-up
period of the Fund, upon request of Spectrum, Sandler X'Xxxxx shall periodically
notify Spectrum of the status of all Sandler Middle Market Banking Companies,
the Preferred Securities of which Sandler X'Xxxxx anticipates will be offered to
Nuveen and Spectrum in accordance with this Section 7.
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Letter Agreement January 25, 2005
Section 8. Nuveen expects that initially the Fund will purchase a
substantial portion of its intended allocation of investments in the Preferred
Securities issued by Middle Market Banking Companies through Sandler X'Xxxxx.
Nuveen's expectation is premised upon (a) the expectation of a successful
initial public offering and closing of the Fund, (b) Sandler X'Xxxxx'x stated
expectation to originate Preferred Securities issued by Sandler Middle Market
Banking Companies and (c) the Fund's stated expectation to purchase such
Preferred Securities that will reasonably satisfy the investment plan of the
Fund through Sandler X'Xxxxx. Nuveen and Spectrum, on behalf of the Fund, agree
to recommend and purchase all Preferred Securities offered by Sandler X'Xxxxx in
accordance with Section 7, subject to the following conditions: (i) the price
and terms of such Preferred Securities shall have been approved by Spectrum, as
portfolio manager, after reasonable negotiation of such terms with Sandler
X'Xxxxx; (ii) Spectrum, in its judgment, shall have approved the
creditworthiness of each Middle Market Banking Company and (iii) Spectrum shall
have determined in accordance with its reasonable judgment and the policies of
the Fund that the Preferred Securities are an appropriate addition to the Fund's
portfolio (based upon, by way of example and without limitation, considerations
such as geographic diversification, size-of-issuer diversification and
availability of alternative investments).
Section 9. Based on its evaluation of the market opportunity, Nuveen may
initiate and sponsor the organization and launch of future similar or identical
closed-end fund offerings in which the fund allocates a majority of its managed
assets to Preferred Securities of Middle Market Banking Companies (each, a
"Similar Fund") during the term of this Agreement. Such determination shall be
at the sole discretion of Nuveen and shall be subject to Nuveen receiving
suitable commitments from major underwriting firms to underwrite the initial
public offering of common stock and any preferred stock of such Similar Fund(s).
Nuveen intends to propose that Spectrum will serve as portfolio manager with
respect to any such Similar Funds. With respect to any such Similar Funds,
Nuveen and Spectrum, on behalf of any such Similar Funds, agree to use their
commercially reasonable efforts to recommend and purchase from Sandler X'Xxxxx,
and, subject to Xxxxxxx 0, Xxxxxxx X'Xxxxx agrees to use its commercially
reasonable efforts to offer to Nuveen and Spectrum for the benefit of such
Similar Funds, Preferred Securities of Sandler Middle Market Banking Companies
on terms substantially consistent with those set forth in Sections 7 and 8 of
this Agreement. Further, during the term of this Agreement, each of Nuveen and
Spectrum agrees, with respect to any such Similar Fund, not to enter into a
business arrangement with any dealer or investment banking firm, other than
Sandler X'Xxxxx, pursuant to which such dealer or investment banking firm would
be designated as the primary offeror of Preferred Securities of Middle Market
Banking Companies to Nuveen, Spectrum or such Similar Fund. The foregoing shall
not be interpreted to be binding upon the Board of Trustees of the potential
Similar Funds that may be created prospectively during the term of this
Agreement. In the event that Nuveen and Spectrum launch a Similar Fund during
the term of this Agreement, Sandler X'Xxxxx agrees that it will not enter into a
business arrangement with any sponsor of a Similar Fund, other than one
sponsored and managed by Nuveen and Spectrum respectively, during the term of
this Agreement pursuant to which Sandler X'Xxxxx would be designated as the
primary offeror of Preferred Securities of Middle Market Banking Companies to
such sponsor or Similar Fund.
Section 10. The parties acknowledge that extensive discussions regarding
the range of prices of the Preferred Securities to be offered by Sandler X'Xxxxx
pursuant to Section 7 have occurred and that, based on such discussions, Sandler
X'Xxxxx has informed its clients that under current market conditions, any
Preferred Securities of Sandler Middle Market Banking Companies so offered by
Sandler X'Xxxxx will have an annual dividend rate equal to three-month LIBOR
plus a spread of between 360 and 400 basis points. Based upon its analysis of
the
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Letter Agreement January 25, 2005
financial and economic factors pertaining to various clients of Sandler X'Xxxxx,
among other factors, Spectrum believes this preliminary price range indication
reasonably reflects current market conditions and represents a reasonable range
in which a fair market price may be negotiated for the adjustable rate Preferred
Securities that may be issued by those Sandler Middle Market Banking Companies.
The parties acknowledge that such preliminary price indications are based upon
current market conditions, are not binding, and that the actual price ranges may
differ subject to prevailing market conditions at the time such securities are
offered for purchase by the Fund.
Section 11. This Agreement shall terminate, and the respective
obligations of the parties hereto that are contained herein shall be of no
further force or effect, on December 31, 2005 (the "Expiration Date"), unless
otherwise extended, or terminated, by mutual consent in writing. In the event of
substantial non-performance by any party in the performance of its obligations
hereunder, this Agreement may be subject to earlier termination with notice
customary to market practice.
Section 12. Each party hereto acknowledges that damages alone may not be
an adequate remedy for any breach of the covenants or agreements set forth
herein and that any other party hereto, in addition to any other remedies that
it may have, shall be entitled to seek injunctive relief, including specific
performance or other equitable relief, in any court of competent jurisdiction
with respect to any actual or threatened breach of any such covenant or
agreement; and each party hereto agrees to waive any requirement for the
securing or posting of any bond or any other security in connection with such
remedy. Such remedy shall not be deemed to be the exclusive remedy for a breach
of this Agreement, but shall be in addition to all other remedies available to a
party at law or in equity.
Section 13. The parties agree that "N-XxxXXX" is a servicemark of
Sandler X'Xxxxx and that such servicemark and all Information supplied by
Sandler X'Xxxxx shall remain its sole and exclusive property and shall be
promptly returned, if in written form, with all copies if requested. Nothing in
this Agreement is intended to grant any intellectual property rights of Sandler
X'Xxxxx or otherwise to Nuveen or Spectrum or any of their investment advisory
clients, including the Fund, officers, directors, employees or agents. If title
to the "N-XxxXXX" servicemark or any Information supplied by Sandler X'Xxxxx
does not or may not, by operation of law, rest in Sandler X'Xxxxx, then Nuveen
and Spectrum agree to assign to Sandler X'Xxxxx any and all of their right,
title and interest to such servicemark and Information and waive any equitable,
moral or similar rights in such servicemark and Information. Sandler X'Xxxxx
agrees to reciprocal obligations and duties with respect to N/S Information
furnished by either Nuveen or Spectrum pursuant to the terms hereof.
Section 14. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and to their respective successors and assigns,
provided that no Information or N/S Information may be disclosed or used by the
receiving party except as provided herein without the prior written consent of
the party who supplied such Information or N/S Information, as the case may be.
Section 15. This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior understandings, written or oral, with respect thereto, including the
confidentiality and non-circumvention agreement, dated October 1, 2004, among
Sandler X'Xxxxx, Nuveen and Spectrum.
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Letter Agreement January 25, 2005
Section 16. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Failure to enforce any provision of this Agreement shall not
constitute a waiver of any term of this Agreement, including such provision.
Section 17. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
Section 18. Notwithstanding any other provision contained in this
Agreement or any other document with respect to any assignment or transaction
entered into hereafter, a party shall have no duties, responsibilities or
authority, except those expressly set forth herein or therein, or any fiduciary
relationship with the other party, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against any party.
Section 19. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to the
principles of conflicts of laws.
IN WITNESS WHEREOF, the undersigned have hereunto executed this
Agreement as of the above date.
Sandler X'Xxxxx & Partners, L.P.
By: Sandler X'Xxxxx & Partners Corp.,
the sole general partner
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: An Officer of the Corporation
Nuveen Investments, LLC
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
Spectrum Asset Management, Inc.
By: /s/ Xxxx X. Xxxx
------------------------------------
Name: Xxxx X. Xxxx
Title: Executive Director
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