EXECUTION COPY
AMENDMENT NO. 2 TO CREDIT AGREEMENT
AND
AMENDMENT NO. 2 TO SECURITY AGREEMENT
AMENDMENT NO. 2, dated as of May 12, 2009, to the Credit Agreement (the
"Credit Agreement Amendment"), dated as of May 13, 2008, between First
Trust/Four Corners Senior Floating Rate Income Fund, a Massachusetts business
trust (the "Borrower"), and The Bank of Nova Scotia (the "Bank"), as amended by
Consent No. 1 and Amendment No. 1 to Credit Agreement, dated as of July 11, 2008
(as the same may be amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), and AMENDMENT NO. 2, dated as of May __, 2009, to
the Security Agreement (the "Security Agreement Amendment" and, together with
the Credit Agreement Amendment, this "Amendment"), dated as of May 13, 2008,
between the Borrower and the Bank, as amended by Amendment No. 1 to Security
Agreement, dated as of July 11, 2008 (as the same may be amended, supplemented
or otherwise modified from time to time, the "Security Agreement").
RECITALS
I. Capitalized terms used herein and not herein defined shall have the
respective meanings ascribed thereto in the Credit Agreement.
II. The Borrower has requested an amendment to the Credit Agreement to,
among other things, extend the term thereof, and the Bank is willing to agree
thereto subject to the terms and conditions hereof.
Accordingly, in consideration of the Recitals and the covenants, conditions
and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. Each of the defined terms "Adjusted Asset Coverage", "Alternate
Base Rate", "Applicable Rate", "Control Agreement", "Custodian", "Custody
Agreement", "Interest Period" and "Investment Limitation Default" contained in
Section 1.1 of the Credit Agreement is hereby amended and restated in its
entirety as follows:
"Adjusted Asset Coverage" means, with respect to the Borrower as
of any date, the ratio on such date of (a)(i) Adjusted Total Net Assets of
the Borrower minus (ii) the Ineligible Asset Value to (b) Adjusted Senior
Debt of the Borrower.
"Administrator" means (a) prior to the Custody Transfer Time,
JPMorgan Chase Bank, N.A., and (b) at all other times, PFPC Trust Company.
"Alternate Base Rate" means, as of any day, a fluctuating rate of
interest per annum equal to the highest of the following: (i) the Prime
Rate, (ii) 0.50% plus the Federal Funds Effective Rate, (iii) 0.50% plus
the Overnight Eurodollar Rate, and (iv) 7.00%.
"Applicable Rate" means, with respect to each (a) ABR Loan, the
Alternate Base Rate plus 1.25%, (b) LIBOR Loan, the Adjusted LIBO Rate plus
2.25%.
"Control Agreement" means (a) prior to the Custody Transfer Time,
the Control Agreement, dated as of July 11, 2008, among the Borrower,
JPMorgan Chase Bank, N.A. and the Bank, and (b) at all other times, the
Successor Control Agreement.
"Custodian" means (a) prior to the Custody Transfer Time, JPMorgan
Chase Bank, N.A., in its capacity as custodian under the Custody Agreement,
and (b) at all other times, PFPC Trust Company, in its capacity as
custodian under the Custody Agreement.
"Custody Agreement" means (a) prior to the Custody Transfer Time,
the Domestic Custody Agreement, dated as of June 1, 2008, by and between
the Borrower and JPMorgan Chase Bank, N.A, and (b) at all other times, the
Successor Custody Agreement.
"Interest Period" means, with respect to any LIBOR Loan, the
period commencing (a) on the date of the commencement thereof and ending on
the numerically corresponding day in the calendar month that is one, two,
three or six months thereafter, or (b) during the 30 day period immediately
preceding the Scheduled Commitment Termination Date, on the date of the
commencement thereof and ending one or two weeks thereafter, in each case
as the Borrower may elect; provided that (i) if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day, unless such next succeeding
Business Day would fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (ii) any
Interest Period (other than an Interest Period of one or two weeks) that
commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month
of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period, and (iii) the Borrower shall not be
permitted to select any Interest Period if it would end after the Scheduled
Commitment Termination Date.
"Investment Limitation Default" means, as of any date:
(a) the aggregate Value of all Illiquid Investments of the
Borrower exceeds 5% of Total Net Assets;
(b) the aggregate Value of all Unrated Investments of the
Borrower exceeds 20% of Total Net Assets;
(c) as of any date, Unrated Investments of the Borrower
having an aggregate Value in excess of 50% of the Value of all Unrated
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Investments of the Borrower shall not (i) have been privately
rated or been the subject of an appropriate request by the
Borrower for a private rating, in either case within the
immediately preceding 365 days, or (ii) have been privately rated
within the immediately preceding 410 days;
(d) the aggregate Value of all Distressed Investments of
the Borrower exceeds 20% of Total Net Assets;
(e) the sum of the Value of (1) all Distressed Investments
of the Borrower, plus (2) all Illiquid Investments of the Borrower,
plus (3) all Unrated Investments of the Borrower, exceeds 35% of
Total Net Assets;
(f) the Borrower makes or maintains any investment in any
Asset-backed Security;
(g) the aggregate Value of all Investments of the Borrower
issued by any single issuer exceeds 5% of Total Net Assets;
(h) the aggregate Value of all Investments of the Borrower
issued by any single issuer exceeds 10% of the outstanding voting
securities of such issuer;
(i) the aggregate Value of all Investments of the Borrower
in any single industry exceeds 25% of Total Net Assets;
(j) the Borrower makes or maintains any Investment that is
not denominated in dollars;
(k) the Value of all Investments of the Borrower issued by
one or more Persons organized under the laws of a Developed Market
Country exceeds 15% of Total Net Assets;
(l) the Borrower makes or maintains any Investment issued
by a Person who is not organized under the laws of (i) a Developed
Market Country, or (ii) the United States of America or a state,
province or other political subdivision thereof; or
(m) the Borrower shall hold in excess of 10% of the
aggregate outstanding principal balance of all loans and advances to
a borrower or group of borrowers under any single syndicated credit
facility.
2. Section 1.1 of the Credit Agreement is hereby amended by
adding the following defined terms thereto in appropriate alphabetic order:
"Asset-backed Security" means a type of bond or note that is based
on one or more pools of assets, or collateralized by the cash flows
from
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one or more pools of underlying assets, and includes collateralized
bond obligations, collateralized loan obligations and collateralized
mortgage obligations, but excluding U.S. Government Securities.
"Custody Transfer Time" means the first moment in time upon which
(a) the Borrower shall have delivered to the Bank a certified copy of
the Successor Custody Agreement, (b) the Borrower, PFPC Trust Company
and the Bank shall have executed and delivered the Successor Control
Agreement, (c) all of the assets of the Borrower that are capable of
being held by a custodian shall have been delivered to PFPC Trust
Company under the terms of the Successor Custody Agreement, (d) the
Bank shall have received an opinion of counsel to the Borrower in form
and substance satisfactory to the Bank, (e) the Borrower shall have
delivered to the Bank a notice stating that all of the assets of the
Borrower that are capable of being held by a custodian shall have been
delivered to PFPC Trust Company under the terms of the Successor
Custody Agreement, and (f) the Bank shall have received such other
documents and agreements in connection with all of the foregoing as
the Bank may request.
"Developed Market Country" means the Commonwealth of Australia,
Canada, the United Kingdom, New Zealand, Japan, Singapore, Austria,
Belgium, Finland, France, Germany, Greece, the Hong Kong Special
Administrative Region, Ireland, Italy, Luxembourg, the Netherlands,
Portugal, Spain, Denmark, Norway, Poland, Sweden, and Switzerland.
"Ineligible Asset Value" means, as of any date, an amount equal to
the sum, without duplication, of (a) the Value of all Distressed
Investments of the Borrower in excess of 15% of Total Net Assets plus
(b) the Value of all Unrated Investments of the Borrower in excess of
15% of Total Net Assets plus (c) to the extent in excess of 30% of
Total Net Assets, the sum of (i) the Value of all Illiquid Investments
of the Borrower, plus (ii) the Value of all Distressed Investments of
the Borrower, plus (iii) the Value of all Unrated Investments of the
Borrower.
"Interest Payment Date" means (i) with respect to any ABR Loan,
the last day of each month, (ii) with respect to any LIBOR Loan, the
last day of the Interest Period applicable to such LIBOR Loan and, in
the case of a LIBOR Loan with an Interest Period of more than three
months' duration, each day prior to the last day of such Interest
Period that occurs at intervals of three months' duration after the
first day of such Interest Period and (iii) with respect to all Loans,
the Maturity Date.
"Overnight Eurodollar Rate" means, with respect to any ABR Loan as
of any date, the rate of interest per annum that appears on the
Reuters LIBOR01 Page as of 11:00 a.m., London time, on such date as
Interbank Rates (Overnight) for Dollars, provided that if the Reuters
LIBOR01 Page does not include such a rate or is then unavailable, then
Overnight Eurodollar Rate shall mean with respect to any ABR Loan, the
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rate of interest per annum quoted by the Bank to leading banks in the
London interbank market as the rate at which the Bank is offering
dollar deposits in an amount equal to $1,000,000 for overnight dollar
deposits at approximately 11:00 a.m., London time, provided further
that if the day for which such rate is to be determined is not a
Business Day, the Overnight Eurodollar Rate for such day shall be such
rate on the next preceding Business Day.
"Remaining MMP Shares" means, as of any date, all of the MMP
Shares other than those MMP Shares that have been redeemed.
"Successor Control Agreement" means a control agreement among the
Borrower, PFPC Trust Company and the Bank, the terms of which provide
that it is the Successor Control Agreement for purposes of this Credit
Agreement.
"Successor Custody Agreement" means a custody agreement between
the Borrower and PFPC Trust Company, (a) the terms of which provide
that it is the Successor Custody Agreement for purposes of this Credit
Agreement, and (b) the form and substance of which has been approved
by the Bank.
"U.S. Government Securities" means debt securities the timely
payment of the principal thereof and interest thereon is backed by the
full faith and credit of the United States of America.
3. The defined term "Commitment" contained in Section 1.1 of the
Credit Agreement is hereby amended by deleting the amount "$35,000,000"
contained therein and replacing such amount with "$25,000,000".
4. The defined term "Scheduled Commitment Termination Date" contained
in Section 1.1 of the Credit Agreement is hereby amended by deleting the date
"May 12, 2009" contained therein and replacing such date with "May 11, 2010".
5. Section 3.1(b) of the Credit Agreement is hereby amended and
restated in its entirety as follows:
(b) Accrued and unpaid interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan, provided
that (1) interest accrued and unpaid pursuant to each of clauses
(i) and (ii) of paragraph (a) of this Section shall be payable on
demand, and (2) in the event of any repayment or prepayment of
any Loan, accrued and unpaid interest on the principal amount
repaid or prepaid shall be payable on the date of such repayment
or prepayment. All interest hereunder shall be computed (from and
including the day a Loan is made to but excluding the date of
repayment thereof) for the actual number of days elapsed on the
basis of a year of (i) in the case of the Prime Rate, 365 days,
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and (ii) in all other cases, 360 days. The Alternate Base Rate,
the Federal Funds Effective Rate, the LIBO Rate, the Overnight
Eurodollar Rate and the Prime Rate shall be determined by the
Bank in accordance with the provisions of this Credit Agreement,
and such determination shall be conclusive absent manifest error.
6. Section 3.2(a) of the Credit Agreement is hereby amended by
deleting the percentage "0.10%" contained therein and replacing it with "0.50%".
7. Section 7.1(b) of the Credit Agreement is hereby amended and
restated in its entirety as follows:
(b) issue, sell, create, incur, assume or suffer to exist any
Senior Security, except (i) Senior Securities Representing
Indebtedness otherwise permitted hereunder, and (ii) that, as of
any date, the Borrower may suffer to exist the Remaining MMP
Shares.
8. Section 7.7 of the Credit Agreement is hereby amended by adding a
new subsection (c) as follows:
(c) The Borrower will not permit the Net Asset Value (i) as of
the close of business on the last Business Day of any calendar
month, to be less than 75% of the Net Asset Value as of the close
of business on the last Business Day of the immediately preceding
calendar month, or (b) fall below $37,500,000. In connection with
any redemption or other retirement of any or all of the Remaining
MMP Shares, the parties hereto agree that they shall negotiate in
good faith an amendment to this Section 7.7(c) to reflect such
redemption or other retirement in light of the then existing
facts and circumstances.
9. Section 8.1(d) of the Credit Agreement is hereby amended by
inserting the following immediately after the word "Sections" appearing therein:
"6.1(d), ".
10. Section 8.1(k) of the Credit Agreement is hereby amended and
restated in its entirety as follows:
(k) (1) the Investment Adviser shall fail to be First Trust
Advisors L.P., or an Affiliate thereof, (2) the custodian for all
of the assets of the Borrower shall fail to be the Custodian or
an Affiliate thereof, or any successor thereto agreed to in
writing by the Bank in its sole and absolute discretion, (3) the
sole administrator for the Borrower shall fail to be the
Administrator, or an Affiliate thereof, or any successor thereto
agreed to in writing by the Bank in its sole and absolute
discretion, or (4) the independent auditors for the Borrower
shall fail to be reasonably acceptable to the Bank;
11. Section 5 of the Security Agreement is hereby amended by (a)
inserting the phrase "; Power of Attorney" immediately after the word
"Distributions" contained in the heading thereof and (b) inserting the following
subsections (c), (d) and (e) after subsection (b) thereof:
(c) The Borrower irrevocably authorizes the Bank at any time and
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from time to time in the sole discretion of the Bank and appoints
the Bank as its attorney in fact (i) to execute on behalf of the
Borrower as debtor and to file financing statements necessary or
desirable in the Bank's sole discretion to perfect and to
maintain the perfection and priority of the Bank's security
interest in the Collateral, (ii) to endorse and collect any cash
proceeds of the Collateral, (iii) to file a carbon, photographic
or other reproduction of this Security Agreement or any financing
statement with respect to the Collateral as a financing statement
and to file any other financing statement or amendment of a
financing statement (which does not add new collateral or add a
debtor) in such offices as the Bank in its sole discretion deems
necessary or desirable to perfect and to maintain the perfection
and priority of the Bank's security interest in the Collateral,
(iv) to contact and enter into one or more agreements with the
issuers of uncertificated securities which are Collateral or with
securities intermediaries holding Collateral as may be necessary
or advisable to give the Bank "control" (within the meaning of
the UCC) over such Collateral, (v) to apply the proceeds of any
Collateral received by the Bank to the Obligations, (vi) to
discharge past due taxes, assessments, charges, fees or Liens on
the Collateral (except for such Liens as are specifically
permitted hereunder), (vii) to contact "account debtors" (within
the meaning of the UCC) for any reason, (viii) to demand payment
or enforce payment of all Collateral in the name of the Bank or
the Borrower and to endorse any and all checks, drafts, and other
instruments for the payment of money relating to the Collateral,
(ix) to exercise all of the Borrower's rights and remedies with
respect to the collection of the Collateral, (x) to settle,
adjust, compromise, extend or renew any Collateral, (xi) to
settle, adjust or compromise any legal proceedings brought to
collect on any Collateral, (xii) to prepare, file and sign the
Borrower's name on a proof of claim in bankruptcy or similar
document against any account debtor of the Borrower, (xiii) to
prepare, file and sign the Borrower's name on any notice of Lien,
assignment or satisfaction of Lien or similar document in
connection with the Collateral, (xiv) to change the address for
delivery of mail addressed to the Borrower to such address as the
Bank may designate and to receive, open and dispose of all mail
addressed to the Borrower, and (xv) to do all other acts and
things necessary to carry out this Security Agreement; and the
Borrower agrees to reimburse the Bank on demand for any payment
made or any expense incurred by the Bank in connection with any
of the foregoing; provided that, this authorization shall not
relieve the Borrower of any of its obligations under this
Security Agreement or under the Credit Agreement. All acts of
said attorney or designee are hereby ratified and approved. The
powers conferred on the Bank under this Section 5 are solely to
protect the Bank's interests in the Collateral and shall not
impose any duty upon the Bank to exercise any such powers. The
Bank agrees that, except for the powers granted in Section
5(c)(i), (iii), (iv), and (vi), it shall not exercise any power
or authority granted to it unless an Event of Default has
occurred and is continuing; provided that the foregoing shall not
be deemed to restrict the power or authority granted to the Bank
pursuant to Section 6.
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(d) The Borrower hereby irrevocably constitutes and appoints the
Bank as its proxy and attorney-in-fact (as set forth in this
Section 5) with respect to the Collateral, including the right to
vote Collateral, with full power of substitution to do so. In
addition to the right to vote any Collateral, the appointment of
the Bank as proxy and attorney-in-fact shall, subject to
subsections (a) and (b) above, include the right to exercise all
other rights, powers, privileges and remedies to which a holder
of Collateral would be entitled (including giving or withholding
written consents of shareholders, calling special meetings of
shareholders and voting at such meetings). Such proxy shall be
effective, automatically and without the necessity of any action
(including any transfer of any Collateral on the record books of
the issuer thereof) by any Person (including the issuer of such
Collateral or any officer or agent thereof), solely upon the
occurrence and during the continuance of an Event of Default.
(e) The appointment of the Bank as proxy and attorney-in-fact in
this Section 5 is coupled with an interest and shall be
irrevocable until the date on which this Security Agreement is
terminated in accordance with the terms hereof. Notwithstanding
anything contained herein, neither the Bank nor any Related Party
thereof shall have any duty to exercise any right or power
granted hereunder or otherwise or to preserve the same and shall
not be liable for any failure to do so or for any delay in doing
so, except in respect of damages attributable solely to their own
gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction; provided that, in no event shall
they be liable for any punitive, exemplary, indirect or
consequential damages.
12. Section 16(a) of the Security Agreement is hereby amended by
deleting the term "Commitment Expiration Date" appearing therein and inserting
in its place the term "Commitment Termination Date".
13. Exhibit F of the Credit Agreement is hereby amended and restated
in the form of Exhibit F hereto.
14. Paragraphs 1 - 13 of this Amendment shall not be effective until
each of the following conditions is satisfied (the date, if any, on which such
conditions shall have first been satisfied being referred to herein as the
"Amendment Effective Date"):
(i) the Bank shall have received from the Borrower either (a) a
counterpart of this Amendment executed on behalf of the Borrower or (b)
written evidence satisfactory to the Bank (which may include telecopy
transmission of a signed signature page of this Amendment) that the
Borrower has executed a counterpart of this Amendment;
(ii) the Bank shall have received a certificate from the Secretary of
the Borrower, in all respects satisfactory to the Bank, (a) certifying as
to the incumbency of authorized persons of the Borrower executing this
Amendment, (b) attaching true, complete and correct copies of the
resolutions duly adopted by the board of trustees of the
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Borrower approving this Amendment and the transactions contemplated
hereby, all of which are in full force and effect on the date hereof, (c)
attaching true, complete and correct copies of the current Registration
Statement and annual and semi-annual financial reports, and (d) certifying
that the Borrower's Organization Documents have not been amended,
supplemented or otherwise modified since May 13, 2008 or, if so, attaching
true, complete and correct copies of each such amendment, supplement or
modification;
(iii) the Bank shall have received written opinions from counsel to
the Borrower in form and substance acceptable to the Bank;
(iv) the Bank shall have received an upfront fee in the amount of
$100,000;
(v) the Bank shall have received an administration fee in the amount
of $50,000; and
(vi) the Borrower shall have paid all reasonable out-of-pocket fees
and disbursements incurred by the Bank (including, without limitation,
legal fees and disbursements of counsel to the Bank) in connection
herewith.
15. The Borrower (a) reaffirms and admits the validity and
enforceability of each Loan Document and all of its obligations thereunder, (b)
agrees and admits that it has no defense to or offset against any such
obligation, and (c) represents and warrants that, as of the date of execution
and delivery hereof by the Borrower, no Default has occurred and is continuing.
16. In all other respects, the Loan Documents shall remain in full
force and effect, and no amendment in respect of any term or condition of any
Loan Document shall be deemed to be an amendment in respect of any other term or
condition contained in any Loan Document.
17. This Amendment may be executed in any number of counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute a single contract. It shall not be necessary in making proof of
this Amendment to produce or account for more than one counterpart signed by the
party to be charged.
18. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
19. The Borrower's Declaration of Trust is on file with the Secretary
of the Commonwealth of Massachusetts. This Amendment is executed on behalf of
the Borrower by the Borrower's officers as officers and not individually and the
obligations imposed upon the Borrower by this Amendment are not binding upon any
of the Borrower's trustees, officers or shareholders individually but are
binding only upon the Borrower and it assets and property.
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IN WITNESS WHEREOF, the parties hereto have caused this Consent No. 2 and
Amendment No. 2 to the Credit Agreement and Amendment No. 2 to the Security
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
FIRST TRUST/FOUR CORNERS SENIOR
FLOATING RATE INCOME FUND
By: /s/ Xxxxx X. Xxxxx
-------------------------
Name: Xxxxx X. Xxxxx
-------------------------
Title: President
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[First Trust / Four Corners Senior Floating Rate Income Fund Amendment No. 2]
THE BANK OF NOVA SCOTIA
By: /s/ Xxxxx X. Xxxxxxx
-------------------------
Name: Xxxxx X. Xxxxxxx
-------------------------
Title: Managing Director
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[First Trust / Four Corners Senior Floating Rate Income Fund Amendment No. 2]
