LOAN AGREEMENT
This
LOAN
AGREEMENT (as amended, restated, supplemented or otherwise modified from time
to
time, the "Agreement") is made and entered into as of the ______ day
of
May, 200___ by and between BAIRD
FUNDS, INC.,
a
Wisconsin corporation with its address at 000 Xxxx Xxxxxxxxx Xxxxxx,
00xx
Xxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000 (the “Borrower”) and U.S.
BANK, N.A.,
with
its address at 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000 (the
"Bank").
| 1. |
(a)
Definitions.
The following terms shall have the meanings specified
below:
|
"Act"
shall mean the Investment Company Act of 1940, as amended.
"AMEX
Securities" shall mean securities issued by an entity organized in one of the
states of the United States or the District of Columbia which are listed for
trading and actively traded on the American Stock Exchange.
"Applicable
Law" shall mean and include laws, statutes, ordinances, and rules and
regulations thereunder, and interpretations thereof by any Governmental
Authority charged with the administration or the interpretation thereof, common
law and orders, requests, directives, instructions and notices of any
Governmental Authority having the force of law.
"Authorized
Officer" shall have the meaning set forth in Section 6(a)(i)(C).
"Available
Facility" shall mean at any time, the lesser of (i) $____________ (ii) 33 1/3%
of the Net Assets of the Fund, (iii) 33 1/3% of the market value of the assets
of the Fund which are recorded on the Borrower's books and records as belonging
to the Fund, which are held by the Custodian and in which the Bank has a fully
perfected, first priority security interest and (iv) 33 1/3% of the sum of
the market value of the following assets of the Fund: (A) NYSE Securities,
(B) AMEX Securities, (C) NASDAQ Securities with a market value greater
than or equal to $10.00 a share, (D) debt issues of the United States government
or any of its agencies, (E) debt issues with a Xxxxx'x Investors Service,
Inc. rating of no less than Baa and/or a Standard & Poor's Rating
Service rating of no less than BBB, (F) preferred stocks with a
Standard & Poor's Rating Service or Xxxxx'x Investors Service, Inc.
rating of A or higher, in each case which are recorded on the Borrower-'s books
and records as belonging to the Fund, which are held by the Custodian and in
which the Bank has a fully perfected, first priority security interest (G)
shares of open-end or closed-end regulated investment companies (i.e., mutual
funds) and (H) other assets of the Fund which are expressly approved in writing
by the Bank in its sole discretion; provided, however, that in calculating
Net
Assets for purposes of clause (ii) above and the market value of assets for
purposes of clauses (iii) and (iv) above, the amount by which the aggregate
market value of securities issued by any particular issuer exceeds 5% of the
outstanding principal balance of the Loans shall be excluded.
1
"Bank"
shall have the meaning set forth in the preamble.
"Borrower"
shall have the meaning set forth in the preamble.
"Business
Day" shall mean any day excluding Saturday, Sunday and any day on which banking
institutions in the State of Ohio are authorized or required by law or other
government actions to close.
"Collateral"
shall have the meaning set forth in the Pledge and Security
Agreement.
"Custodian"
shall mean the Bank, as custodian, pursuant to the Custody
Agreement.
"Custody
Agreement" shall mean that certain Custody Agreement dated August 15, 2005
between the Borrower and the Bank, as it may be amended, restated, modified
or
supplemented from time to time.
"Default"
shall mean any event, act or condition which with notice or lapse of time,
or
both, would constitute an Event of Default.
"Effective
Date" shall have the meaning set forth in Section 6(a).
"Event
of
Default" shall have the meaning set forth in Section 7.
"Fund"
shall mean the Series known as the Xxxxx ___________________ Fund.
"Fund
Statement" shall mean the Borrower's Statement of Additional Information dated
May 1, 2005, as supplemented and amended from time to time, relating to the
Xxxxx _________________________ Fund and the other Series of the
Borrower.
"GAAP"
shall mean generally accepted accounting principles in the United States
consistently applied in accordance with past practices.
"Governmental
Authority" shall mean any foreign, federal, state, regional, local, municipal
or
other government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof, or any court.
2
"Indebtedness"
of any person shall mean all of the obligations of such person which, in
accordance with GAAP, would be included as liabilities on the balance sheet
of
such person including, without limitation, (i) any indebtedness, obligation
or
liability of any kind or nature whatsoever and (ii) any guarantee, indemnity,
endorsement, suretyship or other contingent obligation of any kind or nature
whatsoever in respect of the obligations of another person.
"Investment"
shall mean, when used with respect to any person, any direct or indirect
purchase or other acquisition by such person of a beneficial interest in capital
stock, bonds, notes, debentures or other securities issued by any other person
or any direct or indirect advance, loan or other extension of credit or capital
contribution by such person to any other person.
"Lien"
shall mean any mortgage, pledge, security interest, charge, hypothecation,
collateral assignment, deposit arrangement, encumbrance, lien (statutory or
other), or other security agreement of any kind or nature
whatsoever.
"Loan"
and "Loans" shall have the meaning set forth in Section 2(a).
"Loan
Documents" shall mean this Agreement, the Note, the Pledge and Security
Agreement, the Securities Account Control Agreement and all other documents
and
instruments executed in connection herewith and with the Loans.
"Maturity
Date" shall mean the
later of
(a)
twenty (20) business days from the Effective Date, or
(b) if
after repayment in full by Borrower of the initial Loan, the Bank (at its sole
discretion) approves a new Loan to Borrower hereunder, 20 days after the making
of any such new Loan by the Bank or,
(c) in
any case not later than May 15, 200___.
"Net
Assets" shall mean from time to time, the net assets of the Fund, calculated
by
taking the sum of the value of the Fund's securities plus any cash and other
assets (including dividends and interest accrued but not collected) less all
liabilities, including accrued expenses, allocable to the Fund.
"Note"
shall have the meaning set forth in Section 2(b).
"NYSE
Securities" shall mean securities issued by an entity organized in one of the
states of the United States or the District of Columbia which are listed for
trading, and actively traded, on the New York Stock Exchange.
"Obligations"
shall mean all of the Borrower's liabilities, obligations and indebtedness
to
the Bank hereunder, under the Note and the other Loan Documents, or otherwise
incurred in connection with the Fund, whether heretofore, now or hereafter
arising and howsoever evidenced, whether primary, secondary, contingent or
fixed
or arising under oral or written agreement or by operation of law.
3
"Officer's
Certificate" shall mean a certificate signed in the name of the Borrower by
an
Authorized Officer.
"Permitted
Indebtedness" shall mean (i) liabilities incurred in the ordinary course of
business which are not past due (except for those taxes which are being
contested in good faith by appropriate proceedings and for which adequate
reserves in conformity with GAAP have been provided), (ii) liabilities the
Borrower is permitted to incur on behalf of the Fund under the Fund Statement
or
the Prospectus, (iii) the Obligations, (iv) other obligations, liabilities
and
indebtedness owed by the Borrower to the Bank.
"Pledge
and Security Agreement" shall mean a Pledge and Security Agreement between
the
Borrower and the Bank substantially in the form attached hereto as Exhibit
A, as
the same may be amended, supplemented or otherwise modified from time to
time.
"Prime
Rate" shall mean the rate, which the Bank announces as its prime-lending rate,
as in effect from time to time. The Prime Rate is determined solely by the
Bank
pursuant to market factors and its own operating needs and does not necessarily
represent the lowest or best rate actually charged to any customer. The Bank
may
make commercial or other loans at rates of interest at, above or below the
Prime
Rate.
"Prospectus"
shall mean the Prospectus of the Borrower dated May 1, 200__ for its Xxxxx
___________________________ Fund, as amended and supplemented from time to
time
(including, as fully as if it were set forth therein, the Fund
Statement).
"Requirement
of Law" as to any person shall mean the articles or certificate of incorporation
and bylaws or other organizational or governing documents of such person and
any
law, treaty, rule or regulation or determination of an arbitrator or a court
or
other Governmental Authority, in each case applicable to or binding upon such
person or any of its property or to which such person or any of its property
is
subject.
"Securities
Account Control Agreement" shall mean a Securities Account Control Agreement
among the Borrower, the Bank and the Custodian substantially in the form
attached hereto as Exhibit B, as the same may be amended, supplemented or
otherwise modified from time to time.
"Series"
shall mean a separate series established by the Borrower's board of directors
pursuant to the Articles of Incorporation.
(b)
General
Provisions Relating to Definitions.
Terms
for which meanings are defined in this Agreement shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The term "including" means including, without limiting the
generality of any description preceding such term. Each reference herein to
any
person shall include a reference to such person's permitted successors and
assigns.
4
(c)
Cross-References.
Unless
otherwise specified, references in this Agreement and in each Loan Document
to
any Section are references to such Section of this Agreement or such Loan
Document, as the case may be, and unless otherwise specified, references in
any
Section or definition to any clause are references to such clause of such
Section or definition.
| 2. |
Loan
Facility.
|
(a)
Loans.
Subject to the terms and conditions set forth herein, and subject to the
satisfaction of the conditions set forth in Section 6 hereof, the Bank may,
in its sole discretion, lend and/or relend to the Borrower for the account
and
benefit of the Fund, during the period from the Effective Date to
the
earlier of
(i) the Maturity Date or Dates, or
(ii) the date of the occurrence of an Event of Default, unless waived by
the Bank, such amounts as the Borrower may from time to time request (each
individually a "Loan" and collectively, the "Loans") up to an aggregate
principal amount outstanding at any time not to exceed the amount of the
Available Facility. The proceeds of Loans may be used by the Fund for any
purpose permitted under the Fund Statement and the Prospectus.
This
Agreement does not establish a commitment or obligation of the Bank to lend
money to the Borrower. The decision of whether or not to make any Loan shall
be
made by the Bank in its sole and absolute discretion. It is contemplated by
both
parties hereto that this facility shall consist of (a) an initial term Loan
due
in twenty (20) business days, as to which the Bank may but is not obligated
to
relend prepaid amounts up to the Available Facility during such term, followed
by (b) additional term Loans up to the Available Facility with identical
20-business day terms.
(b)
Note.
The
Loans shall be evidenced by a promissory note given by the Borrower to the
Bank
substantially in the form attached hereto as Exhibit C (as such note may be
extended, amended, restated, supplemented or otherwise modified from time to
time, and together with any one or more notes which may be issued in exchange
for such note, the "Note"). The Bank is hereby authorized by the Borrower to
enter from time to time the balance of the Loans and all payments thereon on
the
reverse of the Note or in the Bank's regularly maintained data processing
records, and the aggregate unpaid amount of the Loans set forth thereon or
therein shall be presumptive evidence of the amount owing to the Bank and unpaid
thereon, absent manifest error. The Borrower further authorizes the Bank to
charge any account of the Borrower, solely in the name of the Fund, at the
Bank
or charge or increase any loan balance of the Borrower for the amount of any
payments due to the Bank hereunder.
(c)
Loan
Requests.
The
Borrower shall notify, by written notice in the form attached hereto as Exhibit
D (each such notice, a "Loan Request"), such person at the Bank as the Bank
may,
from time to time, instruct the Borrower, by 2:00 p.m. (Eastern Time) on
each day on which the Borrower desires to obtain a Loan hereunder, which day
must be a Business Day, specifying the amount of the Loan desired.
Notwithstanding the foregoing sentence, the Borrower may verbally request a
Loan
hereunder, whether up to the initial Maturity Date or for a new Maturity Date,
provided that the Borrower shall, on the same day, send the Bank by telecopy
a
follow-up Loan Request in respect thereof. In no event shall the Borrower
request any loan which, if advanced, would cause the aggregate principal amount
of the Loans outstanding to exceed the Available Facility. Each verbal request
for a Loan hereunder shall be deemed to include, and each written request shall
include, a representation that all of the representations and warranties made
by
the Borrower in the Loan Documents are and will be, after giving effect to
the
requested Loan, true and complete, that all the conditions precedent to such
Loan as set forth in Section 6 hereof have been satisfied, and that the
proceeds of the Loan will not be used for any purpose that is not permitted
under the Fund Statement and the Prospectus. Each advance of Loan proceeds
hereunder shall be in a minimum amount of $1,000.00.
5
(d)
Disbursement
of Funds.
Each
Loan shall be effectuated by the Bank crediting an account number maintained
by
the Bank.
(e)
Interest.
(i)
The
Borrower shall pay interest on the outstanding principal balance of the Loans
at
a rate per annum equal to the Prime - 1%, which interest shall be payable (A)
monthly, in arrears, commencing on June 1, 200___ and on the first day of each
month thereafter, (B) whenever all or any part of the Loans are due,
whether on the Maturity Date, by virtue of a mandatory prepayment, or by reason
of demand, acceleration or otherwise (on the amount then due) and (C) whenever
the Borrower repays all of the Loans as a voluntary prepayment.
(ii)
Upon
the
occurrence and during the continuance of any Event of Default hereunder, at
the
option of the Bank, the Loans and other Obligations of the Borrower to the
Bank
shall bear interest (computed and adjusted in the same manner, and with the
same
effect, as interest on the Loans prior to the occurrence of such Event of
Default) payable on demand at a rate equal to three percent (3%) per annum
in
excess of the otherwise applicable rate.
(iii)
Interest
on the Loans shall be computed on the basis of a year consisting of three
hundred sixty (360) days but applied to the actual number of days
elapsed.
(iv)
If
any
payment is not made within ten (10) days after the date due, the Borrower shall
pay the Bank an amount equal to five percent (5%) of such payment or $50.00,
whichever is greater.
6
|
3.
|
Payments.
|
| (a) |
Mandatory
Prepayments.
|
(i)
The
Borrower agrees that if the aggregate principal amount of Loans outstanding
exceeds the Available Facility at any time, such excess shall be immediately
due
and payable to the Bank.
(ii)
The
Borrower agrees to repay the Loans in full in cash together with interest
accrued thereon and any other fees and charges hereunder on the Maturity Date
and, if earlier, the date on which the Loans become due, whether by virtue
of a
mandatory prepayment provision, by demand, acceleration or
otherwise.
(b)
Voluntary
Prepayments.
The Borrower may prepay a Loan in whole or in part from time to time; provided,
however, that each prepayment shall be in an amount equal to, or greater than,
$1,000.00 or, if less, the outstanding balance of such Loan, and shall be made
with interest accrued thereon.
(c)
Increased
Costs.
(i)
If
the
adoption of or any change in any Requirement of Law or in the interpretation
or
application thereof or compliance by the Bank with any request or directive
(whether or not having the force of law) from any Governmental Authority made
subsequent to the Effective Date shall subject the Bank to any tax of any kind
whatsoever with respect to this Agreement, the Note or any Loan made by it,
or
change the basis of taxation of payments to the Bank in respect thereof and
the
result is to increase the cost to the Bank, by an amount which the Bank deems
to
be material, of making or maintaining the Loans, or to reduce any amount
receivable hereunder in respect thereof, then the Borrower shall promptly pay
the Bank, upon its demand, any additional amounts necessary to compensate the
Bank for such increased cost or reduced amount receivable.
(ii)
If
the
Bank shall have determined that the adoption of or any change in any Requirement
of Law regarding capital adequacy or in the interpretation or application
thereof or compliance by the Bank or any corporation controlling the Bank with
any request or directive regarding capital adequacy (whether or not having
the
force of law) from any Governmental Authority made subsequent to the Effective
Date shall have the effect of reducing the rate of return on the Bank's or
such
corporation's capital as a consequence of its obligations hereunder to a level
below that which the Bank or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration the Bank's or such
corporation's policies with respect to capital adequacy) by an amount deemed
by
the Bank to be material, then from time to time, after submission by the Bank
to
the Borrower of a written request therefor, the Borrower shall pay to the Bank
such additional amount or amounts as will compensate the Bank for such
reduction.
7
(iii)
A
certificate as to any amounts payable pursuant to this subsection (c) submitted
by the Bank to the Borrower shall be conclusive in the absence of manifest
error.
(d)
Taxes.
All payments made by the Borrower under this Agreement and the Note shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes). If
any
such non-excluded taxes, levies, imposts, duties, charges, fees, deductions
or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Bank hereunder or under the Note, such amounts shall be increased
to the extent necessary to yield to the Bank (after payment of all Non-Excluded
Taxes) interest or any such other amounts payable hereunder at the rates or
in
the amounts specified in this Agreement and the Note. Whenever any Non-Excluded
Taxes are payable by the Borrower, as promptly as possible thereafter the
Borrower shall send to the Bank a certi-fied copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower fails
to pay any Non-Excluded Taxes when due to the appropriate taxing authority
or
fails to remit to the Bank the required receipts or other required documentary
evidence, the Borrower shall indemnify the Bank for any incremental taxes,
interest or penalties that may become payable by the Bank as a result of any
such failure.
(e)
Place
of Payment.
All
payments of principal and interest hereunder shall be made in immediately
available funds to the Bank at 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000, or
at
such other place as may be designated by the Bank to the Borrower in
writing.
(f)
Business
Day Payments.
Whenever any of the terms and provisions of this Agreement or the other Loan
documents provides that any payment to be made shall be due on a day which
is
not a Business Day, such payment shall be made on the next succeeding Business
Day and such extension of time shall be included in computing interest, if
any,
in connection with such payment.
| 4. |
Representations
and Warranties.
To induce the Bank to enter into this Agreement, the Borrower represents
and warrants to the Bank as
follows:
|
(a)
Existence.
The
Borrower is duly organized, validly existing and in good standing as corporation
under the laws of Wisconsin and is registered as an investment company under
the
Act.
(b)
Authority.
The
Borrower has full power and authority to own its properties and to conduct
its
business as an investment company and to execute, deliver and perform its
obligations under this Agreement and the other Loan Documents.
(c)
Borrowing
Authorization.
The
execution, delivery and performance by the Borrower of this Agreement and the
other Loan Documents: (i) have been duly authorized by all requisite
action; (ii) do not and will not violate (A) any law, regulation, order, writ,
judgment, decree, determination or award currently in effect and applicable
to
the Borrower, (B) the articles of incorporation, declaration of trust or bylaws
or other organizational or governing documents of the Borrower, (C) any
provision of any agreement to which the Borrower is a party, or by which it
or
any of its properties or assets is bound, and (D) any franchise, license,
permit, certificate, authorization, qualification, accreditation or other
similar right, consent or approval of or applicable to the Borrower; and (iii)
do not and will not result in the creation or imposition of any Lien upon any
of
the properties or assets of the Borrower, except in favor of the Bank. No
consents, licenses, permits, applications or authorizations of, notices or
reports to, or registrations, filings or declarations with, any Governmental
Authority or other third party are required to be obtained in connection with
the execution, delivery or performance by the Borrower of any of the Loan
Documents.
8
(d)
Enforceability.
This Agreement and the other Loan Documents have been duly executed and
delivered by the Borrower, pursuant to due authorization, and constitute the
legal, valid and binding obligations of the Borrower, enforceable against the
Borrower in accordance with their terms.
(e)
Financial
Information; Adverse Change.
The Borrower has provided, or prior to the Effective Date will provide, the
Bank
with (i) its audited financial statements for its fiscal year ended December
31,
200___ and (ii) the Prospectus. The Borrower does not have any contingent
liabilities not provided for or disclosed in such financial statements. Such
financial statements present fairly, in all respects, the financial condition
of
the Borrower in accordance with GAAP. There has been no material adverse change
in the business or financial condition of the Borrower since the date of such
financial statements.
(f)
Indebtedness.
The Borrower has no Indebtedness other than Permitted Indebtedness.
(g)
Investments.
None of the Borrower's Series, including the Fund, has Investments which such
Series is not authorized to have or which are inconsistent with or conflict
with
the provisions of the Prospectus relating to such Series and the Borrower
generally or for which it or the Borrower is required to obtain shareholder
approval.
(h)
Litigation.
There is no litigation or other action or proceeding pending or, to the best
of
the knowledge of the Borrower after diligent investigation, threatened against
or affecting the Borrower or any of its Series before any Governmental
Authority.
(i)
Title
to Property.
The Borrower (or, to the extent applicable, each Series) has good, indefeasible
and merchantable title to and ownership of all of its assets, including without
limitation the Collateral, free and clear of all Liens except those in favor
of
the Bank.
9
(j)
Compliance.
The Borrower is in compliance with the Act and all other Applicable Laws.
(k)
No
Default.
No default (or event which, with notice or lapse of time, or both, would
constitute a default) exists under any agreement or instrument to which the
Borrower is a party or pursuant to which any property of the Borrower is
encumbered.
(l)
Taxes.
The
Borrower has filed all federal, state and local tax returns and other reports
which it is required by law to file, has paid all taxes, assessments and other
similar charges that are due and payable, except to the extent that any such
taxes or charges are being contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP have been set aside
on
its books and records, and has withheld all employee and similar taxes which
it
is required by law to withhold.
(m)
Licenses,
Etc.
The Borrower has obtained and holds in full force and effect, all franchises,
licenses, permits, certificates, authorizations, qualifications, accreditations,
and other consents, rights and approvals which are necessary for the operation
of its business. The Borrower is not in violation of the terms of any such
franchise, license, permit, certificate, authorization, qualification,
accreditation, consent, right or approval.
(n)
Broker's
Fees.
No brokerage, finder's or similar fee or commission is due to any party by
reason of the Borrower entering into this Agreement or by reason of any of
the
transactions contemplated hereby, and the Borrower shall indemnify and hold
the
Bank harmless from all such fees and commissions.
5.
Borrower's
Covenants.
The Borrower agrees with the Bank that, from the date of this Agreement and
until the Loans are paid in full and all obligations under this Agreement and
the other Loan Documents are fully performed and this Agreement has been
terminated:
(a)
Books
and Records; Inspection.
The Borrower shall keep and maintain complete books, records and files with
respect to its business in accordance with GAAP and shall accurately and
completely record all transactions therein. The Borrower shall permit the
officers, employees and designated representatives of the Bank, from time to
time to inspect the Borrower's property and to inspect and make copies of or
extracts from the books, records and files of the Borrower, and the Borrower
shall make the same available to the Bank and its agents and representatives
for
such purposes at such reasonable times as the Bank shall request.
(b)
Financial
Statements; Reports.
The Borrower shall furnish to the Bank: (i) within one hundred twenty (120)
days after the last day of each fiscal year of the Borrower, a copy of the
annual audit report of the Borrower prepared in accordance with GAAP, with
detail reasonably satisfactory to the Bank, and consisting of at least a
statement of assets and liabilities for each of the Series (including the Fund)
as at the close of such fiscal year, a Schedule of Investments for each of
the
Series (including the Fund) as at the close of such fiscal year, a statement
of
operations for each of the Series (including the Fund) for such fiscal year
and
a statement of changes in net assets for each of the Series (including the
Fund)
for such fiscal year, and certified by an independent certified public
accountant satisfactory to the Bank; (ii) statements of the Borrower's and
the
Fund's Net Assets and the market value of the assets of each Series (including
the Fund) of the Borrower, whether or not held by the Custodian, on a daily
basis whenever any Loans are outstanding hereunder and otherwise upon the Bank's
request; (iii) promptly upon transmission thereof, copies of all regular and
periodic financial information, proxy materials and other information and
reports, if any, which the Borrower shall file with the Securities and Exchange
Commission or any governmental agencies substituted therefor or which the
Borrower shall send to its shareholders generally; and (iv) such other reports
and information as the Bank may reasonably request from time to
time.
10
(c)
Taxes.
The Borrower shall file all federal, state and local tax returns and other
reports the Borrower is required by law to file, and shall pay when due all
taxes, assessments and other liabilities except for those contested in good
faith by appropriate proceedings for which adequate reserves in conformity
with
GAAP will be provided and shall withhold all employee and similar taxes which
it
is required by law to withhold.
(d)
Existence
and Status.
The Borrower shall maintain its existence as a corporation in good standing
under the laws of Wisconsin, shall continue to be registered as an investment
company under the Act and shall continue to maintain the Fund as a separate
Series of the Borrower.
(e)
Compliance
with Law.
The Borrower shall comply at all times with the Act and all other Applicable
Laws.
(f)
Borrower's
Coverage Ratio.
The Borrower shall not permit the ratio of its (i) total assets minus total
liabilities (other than liabilities of any kind or nature whatsoever for
borrowed money and liabilities in respect of overdrafts in any account (whether
trust, demand deposit or other account) maintained by the Borrower) to (ii)
total liabilities of any kind or nature whatsoever for borrowed money and
liabilities in respect of overdrafts in any account (whether trust, demand
deposit or other account) maintained by the Borrower to be less than 300% at
any
time.
(g)
Fund's
Coverage Ratio.
The Borrower shall not permit the ratio of the Fund's (i) total assets minus
total liabilities (other than liabilities of any kind or nature whatsoever
for
borrowed money and the Fund liabilities in respect of overdrafts in any account
(whether trust, demand deposit or other account) maintained by the Borrower
on
behalf of the Fund) to (ii) total liabilities of any kind or nature whatsoever
for borrowed money and the Fund's liabilities in respect of overdrafts in any
account (whether trust, demand deposit or other account) maintained by the
Borrower on behalf of the Fund to be less than 300% at any time.
11
(h)
Licenses.
The Borrower shall obtain and maintain all franchises, licenses, permits,
certificates, authorizations, qualifications, accreditations, and other
consents, rights and approvals which are required by law or are necessary for
the operation of its business.
(i)
Notice.
The Borrower shall notify the Bank in writing, promptly upon the Borrower's
learning thereof, of: (i) any litigation, suit or administrative proceeding
which may affect the operations, financial condition or business of the Borrower
or the Bank's interest in any of the Collateral; (ii) any default by the
Borrower under any note, indenture, loan agreement, mortgage, lease, deed or
other agreement to which the Borrower is a party or by which the Borrower or
its
assets are bound; (iii) a Default or an Event of Default under this
Agreement; and (iv) any default by any obligor under any note or other evidence
of Indebtedness payable to the Borrower.
(j)
Use
of
Proceeds.
The Borrower shall not use the proceeds of the Loans for any purpose that is
not
permitted under the Fund Statement and the Prospectus.
(k)
Liens.
The Borrower shall not create or permit to exist any Liens with respect to
any
of the assets or property of the Fund, including without limitation the
Collateral, whether now owned or hereafter acquired, except Liens in favor
of
the Bank.
(l)
Investments.
The Borrower shall not make, agree to make, or hold any Investment which it
is
not permitted to make without shareholder approval and shall make only those
Investments which conform with the provisions of the Prospectus. Without
limiting the generality of the foregoing, the Borrower shall not permit the
Fund
to make, agree to make, or hold any Investment which it is not permitted to
make
without shareholder approval and shall comply in all respects with, and shall
make only those Investments which conform with, the provisions of the Prospectus
relating to the Fund and the provisions of the Prospectus relating to the
Borrower generally.
(m)
Transfer
of Property.
The Borrower shall not sell, transfer, convey or lease, any of the assets or
property of the Borrower, including without limitation the Collateral, other
than in the ordinary course of business.
(n)
Change
in Structure; Change in Business.
The Borrower shall not enter into any business which is substantially different
from that presently conducted by the Borrower. The Borrower shall maintain
the
Fund as a Series separate and apart from any other Series.
(o)
Indebtedness.
The Borrower shall not incur or permit to exist any Indebtedness other than
Permitted Indebtedness.
12
(p)
Bank
Accounts.
Other than accounts with U.S. Bank, the Borrower shall not make or maintain
deposits on its own behalf or on behalf of the Fund with any bank or similar
institution which has any right of setoff, bankers' lien, combination or
consolidation of accounts, counterclaim or other similar right under Applicable
Law with respect to such deposit.
(q)
Compliance
with Agreements. The
Borrower shall, and shall cause the Fund to, comply with all agreements and
instruments to which it is a party or pursuant to which any of its property
is
encumbered.
(r)
Solvency.
Immediately after giving effect to the execution and delivery of the Loan
Documents and the making of the Loans hereunder and at all times thereafter
while the Loans or any portion thereof are outstanding, each of the Borrower
and
the Fund shall be solvent, shall be able to pay its debts and obligations as
they become due, and shall have capital sufficient to carry on its
business.
(s)
Contracts.
The Borrower shall not, and shall not permit the Fund to, enter into any
agreement, contract or arrangement which would impair or adversely affect (i)
its right and/or ability to carry on its business as now conducted, (ii) its
right and/or ability to carry on the business of the Fund (as if the Fund were
a
separate business) as now conducted or (iii) the Collateral.
(t)
Insurance.
The Borrower shall maintain such insurance as is typically maintained by prudent
companies in the same line of business as the Borrower, and, without limitation
of the generality of the foregoing, shall maintain all insurance required under
the Act.
(u)
Waiver.
Any variance from the covenants of the Borrower pursuant to this Section 5
shall
be permitted only with the prior written consent and/or waiver of the Bank.
Any
such variance by consent and/or waiver shall relate solely to the variance
addressed in such consent and/or waiver, and shall not operate as the Bank's
consent and/or waiver to any other variance of the same covenant or other
covenants, nor shall it preclude the exercise by the Bank of any power or right
under this Agreement, other than with respect to such variance.
(v)
Further
Assurances.
The Borrower shall take all such further actions and execute all such further
documents and instruments as the Bank may at any time determine may be necessary
to create, perfect, preserve and/or protect or ensure the priority of any Lien
or security interest in any Collateral.
13
|
6.
|
Conditions
Precedent.
|
(a)
Conditions
Precedent to the Effective Date.
This Agreement shall become effective on the date (the "Effective Date") on
which the following conditions precedent shall have been satisfied or waived
by
the Bank in its sole and absolute discretion:
(i)
Proof
of Action; Incumbency.
The Bank shall have received an Officer's Certificate from the Borrower dated
the Effective Date and certifying (A) that attached thereto is a true and
complete copy of the articles of incorporation or declaration of trust and
bylaws or other organizational and governing documents of the Borrower as in
effect as of the Effective Date, (B) that attached thereto is the true and
correct copy of the records of all action taken by the Borrower to authorize
its
execution and delivery of this Agreement and the other Loan Documents (and
the
Loans contemplated hereby and thereby), and (C) as to the incumbency, the name
and specimen signature of each individual who shall be authorized (each an
"Authorized Officer") (1) to sign, in the name of the Borrower, this Agreement
and the other Loan Documents, and (2) to give certificates and notices and
to
take other action on its behalf under this Agreement.
(ii)
Loan
Documents.
The Bank shall have received (A) a fully executed Note, (B) a fully executed
Pledge and Security Agreement and (C) a fully executed Securities Account
Control Agreement.
(iii)
Representations
and Warranties.
The Bank shall have received from the Borrower an Officer's Certificate to
the
effect that each of the representations and warranties made by the Borrower
in
this Agreement and in the other Loan Documents is true and correct.
(iv)
No
Default.
The Bank shall have received from the Borrower an Officer's Certificate to
the
effect that no Default or Event of Default is continuing on the Effective Date,
or would result from the transactions contemplated to occur on the Effective
Date.
(v)
Opinion.
The Borrower shall have delivered to the Bank an opinion of counsel acceptable
to the Bank dated the Effective Date, substantially in the form attached hereto
as Exhibit E.
(vi)
Form
U-1.
The Borrower shall have executed and delivered to the Bank in connection
herewith a Federal Reserve Form U-1, in form and substance satisfactory to
the
Bank ("Form U-1").
(vii)
Expenses.
The Borrower shall have paid to the Bank the fees, expenses and disbursements
required to be paid by the Borrower pursuant to Section 8(d)
hereof.
14
(viii)
Financial
Statements.
The Borrower shall have provided the Bank with (A) its audited financial
statements for its fiscal year ended December 31, 200___, (B) the Prospectus
and
(C) the Fund Statement.
(b)
Conditions
Precedent to Each Loan.
Without committing the Bank to make any Loan hereunder, to the extent the Bank
in its sole discretion is willing to make a Loan, the making of each Loan is
subject to the satisfaction of each of the following conditions precedent,
unless waived by the Bank in its sole and absolute discretion:
(i)
Loan
Request.
The Bank shall have received a request for such Loan in compliance with Section
2(c) hereof.
(ii)
Default.
Before and after giving effect to such Loan, or any portion thereof, no Default
or Event of Default shall have occurred and be continuing.
(iii)
Representations
and Warranties.
Before and after giving effect to such Loan or any portion thereof, the
representations and warranties set forth herein and in the other Loan Documents
shall be true and correct as though made on the date of such Loan.
(iv)
Adverse
Change.
There shall have been no material adverse change in the business or financial
condition of the Borrower or the Fund nor shall there have been a material
adverse change in respect of the validity or enforceability or priority of
any
Liens granted to the Bank under the Loan Documents, in each case, since the
Effective Date.
(v)
Form
U-1.
The Borrower shall have delivered to the Bank as a supplement to Form U-1 a
current list of collateral which adequately supports the credit extended under
this Agreement.
(vi)
Other
Actions.
The Borrower shall take such other actions and deliver to the Bank such other
documents, certificates and instruments as the Bank may reasonably request
to
evidence, protect or perfect the Loans and the Collateral therefor.
7.
Events
of Default.
If any
of the following events (each, an "Event of Default") shall occur, then the
Bank
may by written notice to Borrower, accelerate the Loans and declare them to
be,
and thereupon the Loans shall become, immediately due and payable (except that
upon the occurrence of an Event of Default as described in Section 7(h) or
(i)
below, the Loans shall be automatically due and payable) and the Borrower may
not request further Loans hereunder (or if already requested, may not receive
the proceeds of any Loans hereunder), and, regardless of whether or not the
Loans shall have been accelerated, the Bank shall have all rights provided
herein and in any of the other Loan Documents or otherwise provided by law
to
realize on the Collateral:
15
(a)
The
Borrower shall not have paid or repaid to the Bank any principal of or any
interest on the Loans or any other obligation hereunder or under any of the
other Loan Documents when due, whether by reason of demand, acceleration or
otherwise; or
(b)
There
shall have occurred any other violation or breach or any covenant, agreement
or
condition contained herein or in any other Loan Document except that (i) in
the
event of a Default of the Borrower's obligation to deliver the daily statements
required under Section 5(b)(iii), such Default shall not constitute an Event
of
Default hereunder unless the Bank has notified the Borrower of such Default
and
the Borrower has not cured such Default within thirty-six (36) hours of
receiving such notice; or
(c)
The
Borrower shall not have paid when due any other Indebtedness, or the holder
of
such other Indebtedness shall have declared such Indebtedness due prior to
its
stated maturity because of the Borrower's default thereunder or the Borrower
shall have failed to perform any of its obligations under agreements relating
to
Indebtedness which failure would, if not cured, give the holder of such
Indebtedness the right to accelerate the maturity of such Indebtedness;
or
(d)
There
shall have occurred any violation or breach of any covenant, agreement or
condition contained in any other agreement between the Borrower and the Bank;
or
(e)
The
Borrower shall not have performed its obligations under any agreement material
to its business; or
(f)
Any
representation or warranty made or deemed made herein or in any other Loan
Document or writing furnished in connection with this Agreement shall have
proven to be false when made or when deemed to have been made; or
(g)
The
Borrower shall have been unable to pay its debts as due; or
(h)
The
Borrower shall have made an assignment for the benefit of creditors;
or
(i)
The
Borrower shall have applied for the appointment of a trustee or receiver for
any
part of its assets or shall have commenced any proceedings relating to the
Borrower under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or other liquidation law of any jurisdiction;
or any such application shall have been filed, or any such proceedings shall
have commenced, against the Borrower, and either the Borrower shall have
indicated its approval, consent or acquiescence thereto or such proceedings
shall not have been dismissed within forty-five (45) days; or an order shall
have been entered appointing such trustee or receiver, or adjudicating the
Borrower bankrupt or insolvent, or approving the petition in any such
proceedings; or
16
(j)
Any
part
of the Borrower's operations shall have ceased; or
(k)
Any
final
judgment which, together with other outstanding judgments against the Borrower,
causes the aggregate of such judgments to exceed One Hundred Thousand Dollars
($100,000), shall have been rendered against the Borrower; or
(l)
There
shall have occurred any material adverse change in the business or financial
condition of the Borrower or its ability to repay the Loans or a material
adverse change in respect of the validity or enforceability or priority of
any
Liens granted to the Bank under the Loan Documents; or
(m)
Xxxxxx
X.
Xxxxx & Co., Incorporated shall no longer be the investment advisor to the
Borrower; or
(n)
The
Custodian shall no longer be the custodian of the Collateral.
| 8. |
Miscellaneous.
|
(a)
Lien;
Right of Set-Off.
The
Borrower hereby grants to the Bank a continuing lien and security interest
in
and to any and all moneys, securities and other properties of the Borrower,
attributable to the Fund, and the proceeds thereof now or hereafter held or
received by or in transit to the Bank from or for the account of the Borrower,
whether for safekeeping, pledge, transmission, collection or otherwise, and
also
upon any and all deposits (general and special), account balances and credits
of
the Borrower with the Bank at any time existing. In addition to all statutory
rights of the Bank, the Bank is hereby authorized at any time and from time
to
time, without prior notice to the Borrower, to set-off, appropriate, apply
and
enforce said lien and security interest in any and all items hereinbefore in
this clause (a) referred to against all obligations arising under this Agreement
or any of the other Loan Documents, and the Borrower shall continue to be liable
to the Bank for any deficiency with interest at the rate set forth
herein.
(b)
Delay.
No
delay, omission or forbearance on the part of the Bank in the exercise of any
power or right shall operate as a waiver thereof, nor shall any single or
partial delay, omission or forbearance in the exercise of any other power or
right. The rights and remedies of the Bank herein provided are cumulative,
shall
be interpreted in all respects in favor of the Bank, and are not exclusive
of
any other rights and remedies provided by law.
(c)
Notice.
Except
as otherwise expressly provided in this Agreement, any notice hereunder shall
be
in writing and shall be given by personal delivery, telecopy, or overnight
courier or registered or certified mail, postage prepaid, and addressed to
the
parties at their addresses set forth below:
17
|
Bank:
|
U.S.
Bank, N.A.
|
|
000
Xxxxxx Xxxxxx, Mail Location
CN-OH-W6TC
|
|
Xxxxxxxxxx,
Xxxx 00000
|
|
Attention:
Xxxxxx X. Xxxxx
|
|
Telephone:
(000) 000-0000
|
|
Telecopy:
(000) 000-0000
|
| Borrower: |
Baird
Funds, Inc.
|
|
000
Xxxx Xxxxxxxxx Xxxxxx, 00xx
Xxxxx
|
|
Xxxxxxxxx,Xxxxxxxxx
00000
|
|
Attention:
Xxxxxxx X. Xxxxx
|
|
Telephone:
(000) 000-0000
|
|
Telecopy:
(000) 000-0000
|
The
Borrower or the Bank may, by written notice to the other as provided herein,
designate another address or number for purposes hereunder. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt
if
delivered by hand or overnight courier service or sent by telecopy or on the
date five (5) Business Days after dispatch by certified or registered mail
if
mailed (or, if sooner, on the date of actual receipt), in each case delivered,
sent or mailed (properly addressed) to such party as provided in this Section
8(c) or in accordance with the latest unrevoked direction from such party given
in accordance with this Section 8(c).
(d)
Expenses;
Indemnity.
The Borrower agrees to pay all reasonable out-of-pocket expenses of the Bank
and
its employees (including reasonable attorney's fees and legal expenses, but
excluding the salaries of the Bank's own employees) incurred by the Bank in
entering into and closing this Agreement and preparing the documentation in
connection herewith, and administering or enforcing the obligations of the
Borrower hereunder or under any of the other Loan Documents, and the Borrower
agrees to pay the Bank upon demand for the same. The Borrower further agrees
to
defend, indemnify and hold the Bank harmless from any liability, obligation,
cost, damage or expense, including attorney's fees and legal expenses for taxes,
fees or third party claims which may arise or be related to the execution,
delivery or performance of this Agreement or any of the other Loan Documents,
except in the case of gross negligence or willful misconduct on the part of
the
Bank.
(e)
Survival.
All covenants and agreements of the Borrower made herein or otherwise in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement and the other Loan Documents, and shall remain
in
effect so long as any obligations of the Borrower are outstanding hereunder
or
under any of the other Loan Documents. The obligations of the Borrower set
forth
in Sections 3(c), 3(d) and 8(d) shall survive the termination of this Agreement
and repayment of the Obligations.
18
(f)
Severability.
Any provision of this Agreement or any of the other Loan Documents which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition of enforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability or such provision in any other jurisdiction.
(g)
Governing
Law.
The Loans shall be deemed made in Ohio and this Agreement and all of the other
Loan Documents, and all of the rights and obligations of the Borrower and the
Bank hereunder and thereunder, shall in all respects be governed by and
construed in accordance with the laws of the State of Ohio, including all
matters of construction, validity and performance. Without limitation on the
ability of the Bank to exercise all of its rights as to the Collateral or to
initiate and prosecute any action or proceeding in any applicable jurisdiction
related to loan repayment, the Borrower and the Bank agree that any action
or
proceeding commenced by or on behalf of the parties arising out of or relating
to the Loans and/or this Agreement and/or any of the other Loan Documents shall
be commenced and maintained exclusively in the District Court of the United
States for the Southern District of Ohio, or any other court of applicable
jurisdiction located in Cincinnati, Ohio. The Borrower and the Bank also agree
that a summons and complaint commencing an action or proceeding in any such
Ohio
courts by or on behalf of such parties shall be properly served and shall confer
personal jurisdiction on a party to which said party consents, if (i) served
personally or by registered or certified mail to the other party at any of
its
addresses noted herein, or (ii) as otherwise provided under the laws of the
State of Ohio. The Borrower and the Bank hereby waive all rights to trial by
jury in any proceeding arising out of or related to the transac-tions
contemplated hereunder or under any of the other Loan Documents. The interest
rate and all other terms of the Loans negotiated with the Borrower are, in
part,
related to the aforesaid provisions on jurisdiction, which the Bank deems a
vital part of this loan arrangement.
(h)
Successors.
This Agreement shall be binding upon and inure to the benefit of the Borrower
and the Bank and their respective successors and assigns. The Borrower shall
not
assign its rights or delegate its duties hereunder or under any other Loan
Document without the prior written consent of the Bank.
(i)
Amendment.
This Agreement may not be modified or amended except in writing signed by
authorized officers of the Bank and the Borrower.
(j)
Headings.
The descriptive headings of the several Sections of this Agreement are inserted
for convenience only and do not constitute a part of this
Agreement.
19
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.
THE
BANK:
U.S.
BANK, N.A.
By:
Name:
Xxx X. Xxxxxxx
Title:
Sr. Vice President
THE
BORROWER:
BAIRD
FUNDS, INC.
By:
Name:
Xxxx Xxxxx Xxxxxx
Title:
President
EXHIBITS:
| A - |
Pledge
and Security Agreement
|
| B - |
Securities
Account Control Agreement
|
| C - |
Note
|
| D - |
Form
of Loan Request
|
| E - |
Opinion
of Counsel
|
20
