EXHIBIT (k)(5)
AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT
AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT,
dated as of October 18, 2004 among CRC FUNDING, LLC (formerly Corporate
Receivables Corporation), CITIBANK, N.A., the other Secondary Lenders (as
hereinafter defined) from time to time parties hereto, CITICORP NORTH AMERICA,
INC., as agent for the Lender (as hereinafter defined) and the Secondary Lenders
(in such capacity, together with its successors and assigns, the "Agent") and
HIGHLAND FLOATING RATE ADVANTAGE FUND (together with its permitted successors
and assigns, the "Borrower"), to amend and restate the Credit Agreement entered
into as of September 21, 2001 among the Borrower, the Lenders parties thereto,
the Secondary Lenders parties thereto and Citicorp North America, Inc., as agent
for such Lenders and Secondary Lenders (as amended, supplemented or otherwise
modified as of the date hereof, the "Existing Credit Agreement"), and, from and
after the Restatement Effective Date, the Existing Credit Agreement is hereby
amended and restated in its entirety.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower desires that the Lender and the
Secondary Lenders from time to time make advances to the Borrower on the terms
and subject to the conditions set forth in this Agreement; and
WHEREAS, the Lender and the Secondary Lenders are willing to
make such advances to the Borrower for such purposes on the terms and subject to
the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto agree as follows:
Article I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. DEFINITIONS. As used in this Agreement, the
following terms shall have the meanings indicated:
"ADJUSTED ASSET VALUE" means in respect of any Borrowing Base
Eligible Asset, an amount equal to the product of (i) the Asset Value of such
Borrowing Base Eligible Asset, and (ii) the Applicable Advance Rate for such
Borrowing Base Eligible Asset.
"ADVANCE" means each borrowing by the Borrower pursuant to
Article II.
"ADVANCE NOTE" means each promissory note issued by the
Borrower to CRC or a Secondary Lender evidencing the Advances (or portions of
the Advances) made to the Borrower by CRC or such Secondary Lender,
substantially in the form of Exhibit A hereto.
"ADVERSE CLAIM" means any Lien in, of or on any Person's
assets or properties in favor of any other Person, other than any such Lien in
favor of (i) any Secured Party created by or pursuant to this Agreement or the
Control Agreement or (ii) the Custodian securing the Custodian's Overdraft
Advances to the extent such Custodian's Overdraft Advances do not exceed the
amount permitted by Section 5.02(q).
"ADVISOR" means Highland Capital Management, L.P., or any of
its successors or assigns which is approved by the Agent in writing.
"AFFECTED PERSON" means the Lender, each Secondary Lender, any
other entity which enters into a commitment to make or purchase any Advance or
any interest therein, and any of their respective Affiliates, including any
assignee or participant of the Lender or any Secondary Lender.
"AFFILIATE" means, in respect of a referenced Person, another
Person controlling, controlled by or under common control with such referenced
Person (which in the case of CRC and the Agent, shall also include any Person
who has a relationship to the Agent comparable to that of CRC). The terms
"control," "controlling," "controlled" and the like shall mean the direct or
indirect possession of the power to direct or cause the direction of the
management or policies of a Person or the disposition of its assets or
properties, whether through ownership, by contract, arrangement or
understanding, or otherwise.
"AGENT" shall have the meaning assigned to such term in the
introduction to this Agreement.
"AGENT'S ACCOUNT" means the special account (account number
00000000, ABA No. 000000000) of the Agent maintained at the office of Citibank
at its Principal Office or to such other account in the United States as the
Agent shall designate in writing to the Borrower.
"AGGREGATE CUSTODIAN'S ADVANCE AMOUNT" means the sum of (i)
the aggregate unpaid Dollar amount of all Custodian's Overdraft Advances of
cash, (ii) the aggregate Value of all Custodian's Overdraft Advances of
securities to the extent not reimbursed by the Borrower, and (iii) the accrued
and unpaid interest, if any, on the amounts set forth above.
"AGREEMENT" means this Amended and Restated Revolving Credit
and Security Agreement, as the same may from time to time be amended,
supplemented, waived or modified.
"ALTERNATE BASE RATE" means a fluctuating interest rate per
annum as shall be in effect from time to time, which rate shall be at all times
equal to the Applicable Margin above the highest of:
(a) the Base Rate; and
(b) one half of one percent per annum above the Federal Funds
Rate.
"APPLICABLE ADVANCE RATE" means (i) in respect of Cash, 100%,
(ii) in respect of Eligible Commercial Paper and Eligible Government Securities,
95%, (iii) in respect of Class A Loan Assets, 75%, (iv) in respect of Class B
Loan Assets, 65%, (v) in respect of Class C Loan Assets, 55%, and (vi) in
respect of Class D Loan Assets, 45%.
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"APPLICABLE LAW" means any Law of any Authority, including,
without limitation, all Federal and state banking or securities laws, to which
the Person in question is subject or by which it or any of its property is
bound.
"APPLICABLE MARGIN" means, (i) with respect to the Eurodollar
Rate, 1.00% per annum, and (ii) with respect to the Alternate Base Rate, 0% per
annum; PROVIDED, HOWEVER, that during the continuance of any Event of Default
under Section 6.01(a), the "Applicable Margin" shall mean with respect to the
Eurodollar Rate, 2.00% per annum and in respect of the Alternate Base Rate,
1.00% per annum; PROVIDED, FURTHER, that during any period that Yield in respect
of any Advance is computed by reference to the Post-Default Rate, the
"Applicable Margin" applicable to such Advance during such period shall be
deemed to be zero.
"ASSET" means a collective reference to all items which would
be classified as an "asset" on the balance sheet of the Borrower in accordance
with GAAP.
"ASSET COVERAGE TEST" means the Borrower's "senior securities
representing indebtedness" (as defined in Section 18(g) of the Investment
Company Act) have "asset coverage" (as defined in Section 18(h) of the
Investment Company Act) of at least 300%, computed on each day of determination
regardless of whether or not dividends or distributions are being made on such
day, or whether Debt is being incurred on such day as if each outstanding
Advance constituted a "senior security" and without regard to whether such
Advance is a loan for "temporary purposes" or otherwise excludible from the
definition of "senior securities" under Section 18(g) of the Investment Company
Act.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement
entered into by a Secondary Lender (other than Citibank) concurrently with the
Assignment and Acceptance pursuant to which it became party to this Agreement.
"ASSET VALUE" means, as of any day of determination (a) in
respect of Cash, the amount of such Cash, and (b) in respect of any other Asset,
the Value of such Asset computed in the manner as such Value is required to be
computed by the Borrower in accordance with the Prospectus of the Borrower in
effect on the Closing Date and in accordance with Applicable Law, including
without limitation the rules, regulations and interpretations of the SEC under
the Investment Company Act; PROVIDED, that the Asset Value of any Asset shall be
net of the Borrower's liabilities relating thereto, including without limitation
all of the Borrower's obligations to pay any unpaid portion of the purchase
price therefor; PROVIDED, FURTHER, that for any Asset for which market
quotations are not available (or which is not otherwise valued for the Borrower
by an independent pricing source), the Asset Value of such Asset shall be deemed
to be zero for purposes of this definition.
"ASSIGNED COLLATERAL" shall have the meaning assigned to such
term in Section 7.01.
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"ASSIGNEE RATE" means in respect of any Advance for any
Settlement Period an interest rate per annum equal to the sum of the Applicable
Margin plus the Eurodollar Rate for such Settlement Period; PROVIDED, HOWEVER,
that in case of:
(i) any Settlement Period on or prior to the first day
of which a Lender (other than CRC) or Secondary Lender shall
have notified the Agent that the introduction of or any change
in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority
asserts that it is unlawful, for such Lender or Secondary
Lender to fund such Advance at the Assignee Rate set forth
above (and such Secondary Lender shall not have subsequently
notified the Agent that such circumstances no longer exist),
(ii) any Settlement Period of one to (and including) 27
days,
(iii) any Settlement Period as to which the Agent does
not receive notice, by no later than 12:00 noon (New York City
time) on the third Business Day preceding the first day of
such Settlement Period, that such Advances will not be funded
by issuance of commercial paper, or
(iv) any Settlement Period for which the aggregate
principal amount of the outstanding Advances is less than
$500,000,
the "Assignee Rate" for such Settlement Period shall be an interest rate per
annum equal to the Alternate Base Rate in effect on the first day of such
Settlement Period.
"ASSIGNMENT AND ACCEPTANCE" means the Assignment and
Acceptance, in substantially the form of Exhibit C hereto, entered into by a
Secondary Lender, an Eligible Assignee and the Agent, pursuant to which such
Eligible Assignee may become a party to this Agreement.
"AUTHORITY" means any governmental or quasi-governmental
authority (including the National Association of Securities Dealers, the stock
exchanges and the SEC), whether executive, legislative, judicial, administrative
or other, or any combination thereof, including, without limitation, any
Federal, state, territorial, county, municipal or other government or
governmental or quasi-governmental agency, arbitrator, board, body, branch,
bureau, commission, corporation, court, department, instrumentality, master,
mediator, panel, referee, system or other political unit or subdivision or other
entity of any of the foregoing, whether domestic or foreign.
"BASE RATE" means the rate of interest from time to time
announced publicly by Citibank at its Principal Office as its base rate. The
Base Rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer of Citibank.
"BENEFIT ARRANGEMENT" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
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"BORROWER" shall have the meaning assigned to such term in the
introduction to this Agreement.
"BORROWER OBLIGATIONS" means all indebtedness, whether
absolute, fixed or contingent, at any time or from time to time owing by the
Borrower to any Secured Party under or in connection with this Agreement, the
Advance Notes or the Control Agreement, the Asset Purchase Agreement or any
other Program Document, including without limitation, all amounts payable by the
Borrower in respect of the Advances, with interest thereon, and the amounts
payable under Sections 2.05, 2.06, 2.07, 2.08, 2.09, , 2.12, 2.13, 7.04(b), 9.03
and 9.04 of this Agreement.
"BORROWER'S ACCOUNT" means Account No. 34-34-012-0000000 and
ABA No. 000000000 maintained with PFPC Trust Company or such other account as
the Borrower shall designate in writing to the Agent.
"BORROWING BASE" means on the date any determination thereof
is made, an amount equal to the Net Adjusted Asset Value reduced by the
aggregate Adjusted Asset Value of all Eligible Collateral in which the Agent
does not have a valid and perfected first priority security interest therein,
free and clear of all Adverse Claims.
"BORROWING BASE ELIGIBLE ASSETS" means Cash, Eligible Loan
Assets, Eligible Commercial Paper and Eligible Government Securities which the
Borrower is permitted to purchase in accordance with the Investment Policies and
Restrictions which are free and clear of all Adverse Claims; PROVIDED, that such
Asset (i) does not constitute an option, Derivatives Transaction or an Asset
which is the subject of a Derivatives Transaction, reverse repurchase agreement,
dollar roll or securities lending transaction; (ii) is denominated and payable
in Dollars and is not a Non-OECD Loan Asset, (iii) is not committed to a
repurchase of shares pursuant to Rule 23c-3(b)(10) under the Investment Company
Act, and (iv) does not constitute an Asset held by a sub-custodian which is not
located in the United States.
"BORROWING BASE EXCESS AMOUNT" means as of any date any
determination thereof is made, an amount equal to the sum (without duplication)
of:
(i) the amount by which the aggregate Adjusted Asset
Value of all Eligible Collateral (other than Eligible
Government Securities) issued or Guaranteed by or owing from
any Person (together with all Affiliates of such Person),
exceeds five percent (5%) of the aggregate Adjusted Asset
Value of all Eligible Collateral;
(ii) the amount by which the aggregate Adjusted Asset
Value of all Eligible Collateral issued or Guaranteed by or
owing from Persons in a single Industry Class, exceeds twenty
percent (20%) of the aggregate Adjusted Asset Value of all
Eligible Collateral;
(iii) the amount by which the aggregate Adjusted Asset
Value of all Eligible Collateral which constitutes Foreign
OECD Loan Assets exceeds twenty-five percent (25%) of the
aggregate Adjusted Asset Value of all Eligible Collateral;
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(iv) the amount by which the aggregate Adjusted Asset
Value of all Eligible Collateral which constitutes Foreign
OECD Loan Assets issued or guaranteed by or owing from Persons
in any single OECD Country (other than the United States,
England or Canada) exceeds ten percent (10%) of the aggregate
Adjusted Asset Value of all Eligible Collateral;
(v) the amount by which the aggregate Adjusted Asset
Value of all Eligible Collateral which constitutes Distressed
Loan Assets exceeds ten percent (10%) of the aggregate
Adjusted Asset Value of all Eligible Collateral;
(vi) the amount by which the aggregate Adjusted Asset
Value of all Eligible Collateral which constitutes Eligible
Loan Assets which have a scheduled final maturity date later
than the tenth (10th) anniversary of the Origination Date,
exceeds ten percent (10%) of the aggregate Adjusted Asset
Value of all Eligible Collateral;
(vii) the amount by which the aggregate Adjusted Asset
Value of all Eligible Collateral which constitutes Unsecured
Loan Assets exceeds twenty percent (20%) of the aggregate
Adjusted Asset Value of all Eligible Collateral;
(viii) the amount by which the aggregate Adjusted Asset
Value of all Eligible Collateral which constitutes Eligible
Loan Assets which constitute participation interests purchased
or otherwise acquired from any Selling Institution (together
with all Affiliates of such Selling Institution), exceeds ten
percent (10%) of the aggregate Adjusted Asset Value of all
Eligible Collateral; and
(ix) the aggregate maximum commitments of the Borrower
to fund future advances or extensions of credit under the Loan
Documents relating to the Assigned Collateral.
"BORROWING BASE TEST" means as of any date of determination
that the Borrowing Base shall be at least equal to Credits Outstanding.
"BORROWING DATE" shall have the meaning assigned to such term
in Section 2.02(a).
"BUSINESS DAY" means any day on which (i) banks are not
authorized or required to close in New York City and the New York Stock Exchange
is not authorized or required to close, and (ii) if this definition of "Business
Day" is utilized in connection with a Eurodollar Rate Advance, dealings are
carried out in the London interbank market.
"CASH" means a demand deposit of United States Dollars
immediately available on the day in question in an account maintained by the
Custodian.
"CITIBANK" means Citibank, N.A.
"CLASS A LOAN ASSET" means as of any date of determination, an
Eligible Loan Asset which (i) is not a Distressed Loan Asset, and (ii) has an
Asset Value which is at least ninety percent (90%) of its par value.
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"CLASS B LOAN ASSET" means as of any date of determination, an
Eligible Loan Asset which (i) is not a Distressed Loan Asset, and (ii) has an
Asset Value which is less than ninety percent (90%) of its par value.
"CLASS C LOAN ASSET" means as of any date of determination, an
Eligible Loan Asset which (i) is a Distressed Loan Asset, and (ii) has an Asset
Value which is at least ninety percent (90%) of its par value.
"CLASS D LOAN ASSET" means as of any date of determination, an
Eligible Loan Asset which (i) is a Distressed Loan Asset, and (ii) has an Asset
Value which is less than ninety percent (90%) of its par value.
"CLOSING DATE" means the first date on which the conditions
precedent specified in Section 3.01 had been fully satisfied.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COMMITTED ADVANCE" shall have the meaning assigned to such
term in Section 2.02(b).
"COLLATERAL ACCOUNT" shall have the meaning assigned to such
term in the Control Agreement.
"CONTROL AGREEMENT" means the Control Agreement, dated as of
the date hereof among the Borrower, the Agent and the Custodian, as the same may
from time to time be amended, supplemented, waived or modified.
"CP RATE" for each day during a Settlement Period for any
Advance funded by CRC means to the extent CRC funds such Advance (or portion
thereof) on such day by issuing commercial paper notes, the per annum rate
equivalent to the weighted average of the per annum rates paid or payable by CRC
from time to time as interest on or otherwise (by means of interest rate xxxxxx
or otherwise) in respect of those commercial paper notes issued by CRC that are
allocated, in whole or in part, by the Agent (on behalf of CRC) to fund the
making or maintenance of such Advance (or portion thereof) on such day as
determined by the Agent (on behalf of CRC) and reported to the Borrower, which
rates shall reflect and give effect to the commissions of placement agents
(which currently do not exceed 0.05% per annum of the face amount of the
commercial paper notes) and dealers in respect of such commercial paper notes;
PROVIDED, HOWEVER, that if any component of such rate is a discount rate, in
calculating the "CP Rate" for such day the Agent shall for such component use
the rate resulting from converting such discount rate to an interest bearing
equivalent rate per annum.
"CRC" means CRC Funding, LLC, together with its successors and
assigns that constitute special purpose entities that issue commercial paper
notes or other debt securities.
"CRC MATURITY DATE" shall have the meaning assigned to such
term in Section 2.02(b).
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"CREDITS OUTSTANDING" means at any date a determination
thereof is made, an amount equal to the sum of (i) the outstanding principal
amount of all Advances, PLUS (ii) the Yield that would accrue on the outstanding
principal amount of the Advances for the number of days equal to the sum of (x)
thirty (30) days, plus, (y) the number of days from and including such date of
determination through but excluding the last day of the calendar month in which
such determination is being made, computed by reference to the Eurodollar Rate
plus the Applicable Margin for a thirty (30) day period in effect as of the time
of determination, PLUS (iii) the Aggregate Custodian's Advance Amount, PLUS (iv)
$100,000.
"CUSTODIAL AGREEMENT" means the Custodian Services Agreement
dated as of October 18, 2004, between the Borrower and the Custodian, as may
from time to time be amended, supplemented, waived or modified as permitted
under the Program Documents.
"CUSTODIAN" means PFPC Trust Company, as custodian, securities
intermediary and collateral agent under the Custodial Agreement and the Control
Agreement, and its permitted successors and assigns.
"CUSTODIAN'S OVERDRAFT ADVANCE" means any advance of cash or
securities by the Custodian pursuant to the Custodial Agreement.
"DEBT" means with respect to any Person, at any date, without
duplication, (i) all "senior securities representing indebtedness" (as defined
in Section 18(g) of the Investment Company Act), (ii) all obligations of such
Person for borrowed money, including without limitation, reimbursement
obligations relating to letters of credit, (iii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iv) all
obligations of such Person to pay the deferred purchase price of property or
services, (v) all obligations of such Person as lessee which are capitalized in
accordance with GAAP, (vi) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such Person, (vii) payment
obligations, fixed or contingent, under investment, financial derivative or
similar contracts (other than covered short sales); (viii) all liabilities and
Debt of others Guaranteed by such Person; and (ix) to the extent not otherwise
included, all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liabilities side of such Person's
balance sheet.
"DEFAULT" means any event which, with the passage of time, the
giving of notice, or both, would constitute an Event of Default.
"DERIVATIVES TRANSACTION" means any financial futures
contract, option, forward contract, warrant, swap, swaption, collar, floor, cap
and other agreement, instrument and derivative and other transactions of a
similar nature (whether currency linked, index linked, insurance risk linked,
credit risk linked or otherwise).
"DETERMINATION DATE" means (i) each Borrowing Date, (ii) the
second Business Day of each calendar week, and (iii) at the request of the Agent
or during the continuance of a Default or an Event of Default, each Business
Day.
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"DISTRESSED LOAN ASSET" means a Loan Asset (i) the Obligor of
which is the subject of a bankruptcy, insolvency, liquidation or other similar
proceedings, (ii) which is in default as to payment of principal or interest or
otherwise under the applicable Loan Documents, (iii) in respect of which there
is a default or a breach of a material provision under the related Loan
Documents, or (iv) which is otherwise classified by the Advisor of the Borrower
as "distressed" or "non-performing" pursuant to GAAP, or (v) in respect of which
the related Obligor which is rated "Caa" or lower by Moody's or "CCC" or lower
by S&P or which, if unrated, are in the reasonable judgment of the Advisor, of
equivalent credit quality.
"DOLLARS" and "$" mean lawful money of the United States of
America.
"ELIGIBLE ASSIGNEE" means Citicorp North America, Inc.,
Citibank, any of their respective Affiliates, any Person managed by Citibank,
Citicorp North America, Inc. or any of their respective Affiliates or, subject
to the Borrower's consent, as set forth in Sections 9.06(a) and 9.06(b), any
other financial or other institution acceptable to the Agent.
"ELIGIBLE COMMERCIAL PAPER" means a promissory note issued in
the United States commercial paper market, having a maturity of not more than
270 days and which is rated "A-1" or better by S&P or "P-1" by Moody's, and is
held in an account maintained by the Custodian.
"ELIGIBLE GOVERNMENT SECURITIES" means all "Government
securities" (as defined in the Investment Company Act and which for the purposes
hereof shall include any securities issued or guaranteed as to principal and
interest by an agency of the government of the United States) held in an account
maintained by the Custodian.
"ELIGIBLE COLLATERAL" means at any time the Assigned
Collateral which constitutes Borrowing Base Eligible Assets.
"ELIGIBLE LOAN ASSET" at any time means a Loan Asset:
(i) with respect to which the interest payable on the
principal amount thereof by the related Obligor is payable in
cash;
(ii) in respect of which the Borrower's interest is not
a subparticipation;
(iii) which has a scheduled final maturity date no
later than the twelfth (12th) anniversary after the related
Origination Date;
(iv) with respect to which the interest payable on the
principal amount thereof is calculated by reference to a
Floating Rate;
(v) which is part of a syndicated credit facility with
an aggregate outstanding principal amount of all loans under
such facility on the Origination Date of such Loan Asset of at
least $50,000,000;
(vi) which relates to Loan Documents in which the
Borrower's interest (direct or participating) in the aggregate
outstanding principal amount of all loans thereunder is no
greater than 33.3%;
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(vii) which is part of a senior credit facility, with
respect to which such Loan Asset is not by its terms
subordinated (pursuant to contractual provisions or otherwise)
to the prior payment of any other liabilities or any equity
interests of the related Obligor;
(viii) in which the Borrower's interest in all
collateral security therefor and principal and interest
payments thereunder is no less than pro rata and PARI PASSU
with all other lenders thereunder and participants therein;
(ix) in respect of which the credit rating of the
related Transaction Agent or its controlling Affiliate is no
less than "A-" from S&P and "A3" from Moody's;
(x) in respect of which, if the Borrower's interest
therein is that of a participant, the credit rating of the
related Selling Institution is no less than "A-" from S&P and
"A3" from Moody's; and
(xi) the pledge of which under Article VII of this
Agreement, would not conflict with or constitute a default
under or be prohibited by any anti-assignment or other
provisions contained in the related Loan Documents, except for
anti-assignment provisions rendered ineffective by applicable
law.
"EQUITY SECURITIES" means common and preferred stock and
securities that are convertible into common or preferred stock, including,
without limitation, common stock purchase warrants and rights, equity interests
in trusts, partnerships, joint ventures or similar enterprises and depositary
receipts.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA GROUP" means the Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414 of the Code.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to
such term in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"EURODOLLAR ADDITIONAL YIELD" means additional Yield on the
outstanding principal of each Advance during the Settlement Period in respect of
such Advance in respect of which Yield is computed by reference to the
Eurodollar Rate, for such Settlement Period, at a rate per annum equal at all
times during such Settlement Period to the remainder obtained by subtracting (i)
the Eurodollar Rate for such Settlement Period from (ii) the rate obtained by
dividing such Eurodollar Rate referred to in clause (i) above by that percentage
equal to one hundred percent (100%) minus the Eurodollar Rate Reserve Percentage
of the Lender or a Secondary Lender, as the case may be, for such Settlement
Period.
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"EURODOLLAR RATE" means, for any Advance for any Settlement
Period, an interest rate per annum equal to the rate per annum at which deposits
in Dollars are offered by the principal office of Citibank in London, England to
prime banks in the London interbank market at 11:00 A.M. (London time) two (2)
Business Days before the first day of such Settlement Period in an amount
substantially equal to the outstanding principal amount of such Advance on such
first day and for a period substantially equal to such Settlement Period.
"EURODOLLAR RATE ADVANCE" means an Advance the Yield on which
is computed with reference to the Eurodollar Rate.
"EURODOLLAR RATE RESERVE PERCENTAGE" for any Settlement Period
for any Eurodollar Rate Advance means the reserve percentage applicable during
such Settlement Period under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) (or if more than
one such percentage shall be applicable, the daily average of such percentages
for those days in such Settlement Period during which any such percentage shall
be so applicable) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement) for the Lender or any Secondary Lender with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities (or any other
category of liabilities that includes deposits by reference to which the
interest rate on Eurocurrency Liabilities is determined) having a term
comparable to such Settlement Period.
"EVENT OF DEFAULT" means any of the events, acts or
occurrences set forth in Section 6.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder, all as from time
to time in effect, or any successor law, rules or regulations, and any reference
to any statutory or regulatory provision shall be deemed to be a reference to
any successor statutory or regulatory provision.
"EXISTING CONTROL AGREEMENT" means the Control and Collateral
Agency Agreement dated as of September 21, 2001 among the Borrower, the Agent
and the Existing Custodian, as the same may have been from time to time amended,
supplemented, waived or modified.
"EXISTING CUSTODIAL AGREEMENT" means the Custodian Contract
and the Addendum Custodian Contract, each dated as of January 14, 2000 between
the Borrower and the Existing Custodian, together with the Loan Services
Addendum thereto, as the same may have been from time to time amended,
supplemented, waived or modified as permitted under the Program Documents.
"EXISTING CUSTODIAN" means State Street Bank and Trust Company
and its permitted successors ands assigns.
"EXISTING RESCISSION OFFER" shall have the meaning assigned to
the term "Rescission Offer" set forth in the Prospectus dated May 4, 2001.
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"FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by Citibank from three Federal funds brokers of
recognized standing selected by it.
"FEE LETTER" means that certain letter agreement dated the
date hereof between the Borrower and the Agent, as the same may from time to
time be amended, supplemented, waived or modified.
"FLOATING RATE" means an interest rate calculated by reference
to the prime rate, the London interbank offered rate, the certificate of deposit
rate, the Federal Funds Rate or any other per annum rate commonly referred to in
the United States banking industry as a "floating rate".
"FOREIGN OECD LOAN ASSET" means any Loan Asset the Obligor of
which is organized under the laws of any OECD Country (other than the United
States).
"GAAP" means generally accepted accounting principles in the
United States, in effect from time to time, consistently applied.
"GOVERNMENTAL AUTHORIZATIONS" means all franchises, permits,
licenses, approvals, consents and other authorizations of all Authorities.
"GOVERNMENTAL FILINGS" means all filings, including franchise
and similar tax filings, and the payment of all fees, assessments, interests and
penalties associated with such filing with all Authorities.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); PROVIDED that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"INDUSTRY CLASS" means each industry class as determined by
the Manager based upon the criteria set forth on Schedule III hereto, as amended
and supplemented in accordance with this Agreement.
12
"INVESTMENT COMPANY ACT" means the Investment Company Act of
1940, as amended, and the rules and regulations of the SEC thereunder as
modified or interpreted by orders of the SEC, or other interpretative releases
or letters issued by the SEC or its staff, all as from time to time in effect,
or any successor law, rules or regulations, and any reference to any statutory
or regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
"INVESTMENT POLICIES AND RESTRICTIONS" means the provisions
dealing with investment policies, distributions, investment restrictions, tender
offers, repurchases, leverage and diversified status as set forth in the
Borrower's Prospectus in effect on the Closing Date as modified as permitted
under this Agreement.
"INVESTOR REPORT" means the Investor Report of the Borrower
substantially in the form of Schedule I hereto.
"LAW" means any action, code, consent decree, constitution,
decree, directive, enactment, finding, guideline, law, injunction,
interpretation, judgment, order, ordinance, policy statement, proclamation,
promulgation, regulation, requirement, rule, rule of law, rule of public policy,
settlement agreement, statute, or writ, of any Authority, or any particular
section, part or provision thereof.
"LENDER" means CRC, together with all Persons which acquire
any interest in any Advance under the Asset Purchase Agreement.
"LENDER TERMINATION DATE" means the date which is the earliest
to occur of (i) the date which is one (1) Business Day prior to the Secondary
Lender Stated Expiration Date, and (ii) the date on which the Total Commitment
shall terminate pursuant to Section 2.10 or Section 6.01.
"LETTER AGREEMENT" means the amended and restated letter
agreement dated as of October 18, 2004 from the Advisor to the Agent on behalf
of the Secured Parties, as the same may from time to time be amended,
supplemented, waived or modified.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien or security interest (statutory or
other), or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the UCC or comparable law of any jurisdiction).
"LIQUIDATION FEE" means, in respect of any Advance for any
Settlement Period during which the principal on such Advance is repaid by the
Borrower in whole or in part, the amount, if any, by which (i) the additional
Yield (calculated without taking into account any Liquidation Fee or any
shortened duration of such Settlement Period) which would have accrued during
such Settlement Period on the reduction of the outstanding principal amount of
such Advance relating to such Settlement Period had such reductions remained as
outstanding principal, exceeds (ii) that income, if any, received by the
Lender's investing the proceeds of such reductions of principal.
13
"LOAN ASSET" means a direct or participation or
subparticipation interest in or assignment or novation of a loan or other
extension of credit. For the avoidance of doubt, Loan Assets shall not include
any Equity Security.
"LOAN DOCUMENTS" means with respect to any Loan Asset, each
loan agreement, promissory note, participation certificate, security agreement,
guarantee and any other agreement or document evidencing, securing, governing or
executed in connection with such Loan Asset, including without limitation, the
agreements and instruments in respect of which the Borrower acquired such Loan
Asset.
"MANAGEMENT AGREEMENT" means the Management Agreement dated as
of July 30, 2004, between the Advisor and the Borrower, as the same may be
amended, supplemented, waived or modified as permitted under the Program
Documents, including any replacement investment management agreement between the
Borrower and any successor Advisor permitted under this Agreement.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect
on the ability of the Borrower or the Advisor to perform its obligations under
this Agreement, any other Program Document or any Loan Document, (ii) an adverse
effect on the validity or enforceability of this Agreement or any other Program
Document or Loan Document, (iii) a material adverse effect on any Secured
Party's right, title and interest in the Assigned Collateral or on the rights
and remedies of any Secured Party under any Program Document, (iv) a material
adverse effect on the business, financial position, operations, Assets or
properties of the Borrower or the Advisor, (v) a material Adverse Claim on any
of the Assets of the Borrower, or (vi) a Default or Event of Default.
"MATURITY DATE" means (i) with respect to any Advance made by
the Lender, the Lender Termination Date (or if such day is not a Business Day,
the Business Day immediately preceding such date) or such earlier date as
provided in Section 6.01, and (ii) with respect to any Advance made by a
Secondary Lender, the date which is two (2) years after the Borrowing Date of
such Advance (or if such day is not a Business Day, the Business Day immediately
preceding such date) or such earlier date as provided in Section 6.01.
"MOODY'S" means Xxxxx'x Investors Service, Inc., together with
its successors.
"MULTIEMPLOYER PLAN" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five-year period.
"NET ADJUSTED ELIGIBLE ASSET VALUE" means on the date any
determination thereof is made, an amount equal to the aggregate Adjusted Asset
Value of all Eligible Collateral LESS the Borrowing Base Excess Amount.
"NON-OECD LOAN ASSET" means a Loan Asset, the Obligor of which
is not organized under the laws of an OECD Country.
14
"NOTICE OF BORROWING" shall have the meaning assigned to such
term in Section 2.02(a).
"NOTICE OF EXCLUSIVE CONTROL" shall have the meaning assigned
to such term in the Control Agreement.
"OBLIGOR" means in respect of any Loan Asset, the Person
primarily obligated under the related Loan Documents to repay the loan or
extension of credit which is the subject of such Loan Asset.
"OECD COUNTRY" means any country which is a member of the
Organization for Economic Cooperation and Development which has a sovereign
credit rating for "foreign currency" of at least "AA-" and "Aa3" from S&P and
Moody's, respectively.
"ORIGINATION DATE" means in respect of any Loan Asset the
initial date on which the proceeds of the loan or other extension of credit
which is the subject of such Loan Asset was advanced to the Obligor under the
related Loan Documents.
"PERCENTAGE" of any Secondary Lender means, (a) with respect
to Citibank, the percentage set forth on the signature page to this Agreement,
or such amount as reduced by any Assignment and Acceptance entered into with an
Eligible Assignee, or (b) with respect to a Secondary Lender that has entered
into an Assignment and Acceptance, the amount set forth therein as such
Secondary Lender's Percentage, or such amount as reduced by an Assignment and
Acceptance entered into between such Secondary Lender and an Eligible Assignee.
"PERMITTED DEBT" means (i) accrued expenses and current trade
accounts payable incurred in the ordinary course of the Borrower's business
which are not overdue for a period of more than thirty (30) days or which are
being contested in good faith by appropriate proceedings, (ii) Debt in favor of
the Custodian relating to Custodian's Overdraft Advances incurred in the
ordinary course of the Borrower's business, which are not overdue, (iii) fee and
expense obligations to the Custodian and other similar agents which are
providing services in respect of the Borrower's Assets arising in the ordinary
course of the Borrower's business which are not overdue for a period in excess
of thirty (30) days, (iv) Debt (other than Debt for borrowed money) arising in
connection with transactions in the ordinary course of the Borrower's business
in connection with its purchasing of securities, Derivatives Transactions,
reverse repurchase agreements or dollar rolls to the extent such transactions
are permitted under the Investment Company Act and the Borrower's Investment
Policies and Restrictions, (v) obligations of the Borrower to fund future
advances under the Loan Documents which do not exceed twenty percent (20%) of
the Value of the Borrower's Assets and which meet the Borrower's diversification
requirements set forth under the heading "Investment Restrictions" in the
Borrower's Statement of Additional Information, which are not overdue, and (vi)
Debt in respect of judgments or awards that have been in force for less than the
applicable period for taking an appeal so long as such judgments or awards do
not constitute an Event of Default and so long as execution is not levied
thereunder or in respect of which the Borrower (A) shall at the time in good
faith be diligently prosecuting an appeal or proceeding for review and in
respect of which a stay of execution shall have been obtained pending such
appeal or review, or (B) shall have obtained an unsecured performance bond in
respect of such judgment or award.
15
"PERMITTED LIENS" means in respect of any Asset of the
Borrower (i) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or being diligently contested in good faith by
appropriate actions and for which adequate reserves in accordance with GAAP
shall have been set aside on the Borrower's books, (ii) Liens incidental to the
conduct of the Borrower's business securing the performance of fee and expense
obligations to the Custodian and other similar agents which are providing
services in respect of the Borrower's Assets arising in the ordinary course of
the Borrower's business which are not overdue for a period in excess of thirty
(30) days, (iii) Liens in respect of Debt permitted under clause (iv) of the
definition of Permitted Debt, and (iv) Liens for taxes, assessments and other
governmental charges or levies for amounts not yet due or which are being
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves have been set aside in accordance with GAAP,
provided that enforcement of such Liens is stayed pending such contest.
"PERMITTED SENIOR SECURITIES" means "senior securities" within
the meaning of the Investment Company Act which constitute Advances under this
Agreement, preferred shares, Derivatives Transactions, repurchase transactions,
reverse repurchase transactions or commitments of the Borrower to fund future
advances or other extensions of credit under any Loan Document, to the extent
the issuance of any such senior security by the Borrower is not in contravention
of the Investment Company Act or the Borrower's Investment Policies and
Procedures in effect on the Closing Date.
"PERSON" means an individual or a corporation (including a
business trust), partnership, trust, incorporated or unincorporated association,
joint stock company, limited liability company, government (or an agency or
political subdivision thereof) or other entity of any kind.
"PLAN" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"POST-DEFAULT RATE" means in respect of all amounts payable to
any Secured Party under any Program Document not paid when due (whether at
stated maturity, by acceleration or otherwise), including, without limitation,
the principal and Yield on any Advance not paid when due, a rate per annum
during the period commencing on the due date until such amount is paid in full
equal to the Alternative Base Rate as in effect from time to time plus two
percent (2.00%).
"PRINCIPAL OFFICE" means the principal office of Citibank
located at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx or at such other location as the
Agent shall designate in writing to the Borrower.
16
"PRIVATE AUTHORIZATIONS" means all franchises, permits,
licenses, approvals, consents and other authorizations of all Persons (other
than Authorities) including, without limitation, those with respect to
trademarks, service marks, trade names, copyrights, computer software programs,
technical and other know-how.
"PROCEEDS" shall have, with reference to any asset or
property, the meaning assigned to it under the UCC and, in any event, shall
include, but not be limited to, any and all amounts from time to time paid or
payable under or in connection with such asset or property.
"PRODUCT INFORMATION" shall have the meaning assigned to such
term in Section 9.09(a).
"PROGRAM DOCUMENTS" means this Agreement, the Advance Notes,
the Letter Agreement, the Asset Purchase Agreement, the Control Agreement, the
Management Agreement, the Custodial Agreement, the Loan Documents, the Fee
Letter and the other agreements, documents and instruments entered into or
delivered in connection herewith or therewith.
"PROGRAM TERMINATION DATE" means the later to occur of (i) the
Secondary Lender Termination Date, and (ii) the date that all Borrower
Obligations have been finally paid in full; PROVIDED, HOWEVER, that if any
payment in respect of any Borrower Obligation made to any Secured Party must be
rescinded or returned for any reason whatsoever (including the insolvency or
bankruptcy of the Borrower) such Borrower Obligation shall be deemed to be
reinstated as though such payment had not been made and the Program Termination
Date shall be deemed to have not occurred.
"PROSPECTUS" means with respect to the Borrower, the
prospectus filed with the SEC as a part of the Borrower's registration statement
on Form N-2, as amended (or any successor SEC form), and shall include, without
limitation, the related statement of additional information included in such
registration statement.
"QUARTERLY SHARE REPURCHASE" means a quarterly repurchase of
shares of the Borrower, permitted pursuant to Rule 23c-3 of the Investment
Company Act.
"REGULATION T" means Regulation T of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"REGULATION U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"REGULATION X" means Regulation X of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"RESPONSIBLE OFFICER" means with respect to any Person, such
Person's president or any one of its vice presidents, its treasurer or any one
of its assistant treasurers.
"RESTATEMENT EFFECTIVE DATE" means the first date on which the
conditions precedent specified in Section 3.03 had been fully satisfied.
17
"RESTRICTED PAYMENTS" means (a) the declaration of any
distribution or dividends (other than distributions payable solely in shares of
beneficial interest in the Borrower) on, or the payment on account of, or the
setting apart of assets for the purchase, redemption, retirement or other
acquisition of any shares of beneficial interests in the Borrower, including
without limitation all common and preferred shares, whether now or hereafter
outstanding, either directly or indirectly, whether in cash, property or in
obligations of the Borrower, other than Quarterly Share Repurchases, and (b) the
payment of fees and expenses to the Advisor or any Affiliate of the Advisor as
compensation for the provision of managerial, administrative services or
otherwise.
"S&P" means Standard & Poor's Ratings Group, together with its
successors.
"SEC" means the Securities and Exchange Commission or any
other governmental authority of the United States of America at the time
administering the Securities Act, the Investment Company Act or the Exchange
Act.
"SECONDARY LENDER COMMITMENT" means (a) with respect to
Citibank, an amount equal to the Total Commitment, as such amount shall be
reduced by any Assignment and Acceptance entered into between Citibank and an
Eligible Assignee, or (b) with respect to a Secondary Lender that has entered
into an Assignment and Acceptance, the amount set forth therein as such
Secondary Lender's "Secondary Lender Commitment", in each case as such amount
may be reduced by an Assignment and Acceptance entered into between such
Secondary Lender and an Eligible Assignee, and as may be further reduced (or
terminated) pursuant to the next sentence. Any reduction (or termination) of the
Total Commitment pursuant to the terms of this Agreement shall reduce ratably
(or terminate) each Secondary Lender's Secondary Lender Commitment.
"SECONDARY LENDERS" means Citibank and each Eligible Assignee
that becomes a party to this Agreement pursuant to Section 9.06.
"SECONDARY LENDER STATED EXPIRATION DATE" means October 14,
2005, UNLESS, prior to such date (or the date so extended pursuant to this
clause), upon the Borrower's request, made not more than sixty (60) days nor
less than thirty (30) days prior to the then current Secondary Lender Stated
Expiration Date, one or more Secondary Lenders having 100% of the Total
Commitment shall in their sole discretion consent, which consent shall be given
not less than twenty (20) days prior to the then current Secondary Lender Stated
Expiration Date (the date any such consent is given, the "Extension Date"), to
the extension of the Secondary Lender Stated Expiration Date to the date
occurring 364 days after such Extension Date; PROVIDED, HOWEVER, that any
failure of any Secondary Lender to respond to the Borrower's request for such
extension shall be deemed a denial of such request by such Secondary Lender.
"SECONDARY LENDER TERMINATION DATE" means the earlier of (i)
the Secondary Lender Stated Expiration Date, and (ii) the date the Total
Commitment shall terminate pursuant to Section 2.10 or Section 6.01.
"SECURED PARTIES" means the Agent, the Lender, the Secondary
Lenders and their respective successors and assigns.
18
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provisions shall be deemed to be a reference to any
successor statutory or regulatory provision.
"SELLING INSTITUTION" means in respect of any Loan Asset which
constitutes a participation interest, the Person which has granted or sold to
the Borrower a participation interest in the loan or other extension of credit
which is the subject of such Loan Asset.
"SETTLEMENT DATE" means the date which is two (2) Business
Days after the end of each Settlement Period.
"SETTLEMENT PERIOD" means in respect of any Advance:
(a) in the case of any Settlement Period in respect of which
Yield is computed by reference to the CP Rate, the period beginning on the date
such Advance was made and ending on the last day of the calendar month in which
such Advance was made and thereafter each successive period commencing on the
first day of each calendar month during the term of this Agreement and ending on
the last day of such calendar month during the term of this Agreement; PROVIDED,
HOWEVER, that in the case of any Settlement Period for any Advance which
commences before the Maturity Date for such Advance and would otherwise end on a
date occurring after such Maturity Date, such Settlement Period shall end on
such Maturity Date and the duration of each Settlement Period which commences on
or after the Maturity Date for such Advance may be any period (including,
without limitation, a period of one day) as shall be selected from time to time
by the Agent;
(b) in the case of any Settlement Period in respect of which
Yield is computed by reference to the Assignee Rate, the period beginning on the
date such Advance was made and ending on the last day of the calendar month in
which such Advance was made and thereafter each successive period commencing on
the first day of each calendar month during the term of this Agreement and
ending on the last day of such calendar month during the term of this Agreement;
PROVIDED, HOWEVER, that any Settlement Period which is other than the monthly
Settlement Period shall be of such duration as shall be selected by the Agent;
and
(c) in the case of any Settlement Period in respect of which
Yield is computed by reference to the Alternate Base Rate, such Settlement
Period shall be of such duration as shall be selected by the Agent.
"TAXES" shall have the meaning assigned to such term in
Section 9.03(a).
"TOTAL COMMITMENT" means $300,000,000 as such amount may be
reduced pursuant to Section 2.10. References to the unused portion of the Total
Commitment shall mean, at any time, the Total Commitment then in effect, minus
the outstanding principal amount of the Advances.
"TRANSACTION AGENT" means a commercial bank, insurance
company, finance company or other financial institution that is acting as agent
or trustee under the Loan Documents relating to any Loan Asset.
19
"UCC" means the Uniform Commercial Code, as from time to time
in effect in the applicable jurisdictions.
"UNSECURED LOAN ASSETS" means Loan Assets which are not fully
secured under the related Loan Documents by a first priority perfected Lien on
assets or properties of the related Obligor with value as reasonably determined
by the Advisor at the time of the Borrower's purchase of such Loan Asset in
reliance upon appraisals, financial statements or market valuation techniques,
in an amount no less than the outstanding debt of such Obligor under the related
Loan Documents.
"VALUE" shall have the meaning assigned to such term in
Section 2(a)(41) of the Investment Company Act.
"WEEKLY PORTFOLIO REPORT" shall have the meaning assigned to
such term in Section 5.01(d)(ix).
"YIELD" means for each Advance for each Settlement Period:
(i) for each day during such Settlement Period to the extent such
Advance will be funded on such day by CRC through the issuance of
commercial paper notes,
CP X P + LF
------
360
(ii) for each day during such Settlement Period to the extent such
Advance will be funded on such day by the Secondary Lenders or the
Lender, other than CRC,
AR X P + LF
------
360
where:
AR = the Assignee Rate for such Advance for such
Settlement Period
P = the outstanding principal amount of such Advance on
such day
CP = the CP Rate for such Advance on such day
LF = the Liquidation Fee, if any, for such Advance for
such Settlement Period;
PROVIDED, FURTHER, that Yield for any Advance shall not be considered paid by
any distribution to the extent that at any time all or a portion of such
distribution is rescinded or must otherwise be returned for any reason.
20
SECTION 1.02. RULES OF CONSTRUCTION.
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
Singular words shall connote the plural as well as the
singular, and vice versa (except as indicated), as may be appropriate.
The words "herein," "hereof" and "hereunder" and other words
of similar import used in this Agreement refer to this Agreement as a whole and
not to any particular appendix, article, schedule, section, paragraph, clause,
exhibit or other subdivision.
The headings, subheadings and table of contents set forth in
this Agreement are solely for convenience of reference and shall not constitute
a part of this Agreement nor shall they affect the meaning, construction or
effect of any provision hereof.
References in this Agreement to "including" shall mean,
including, without limiting, the generality of any description preceding such
term, and for purposes hereof the rule of EJUSDEM GENERIS shall not be
applicable to limit a general statement, followed by or referable to an
enumeration of specific matters, to matters similar to those specifically
mentioned.
Each of the parties to this Agreement and its counsel have
reviewed and revised, or requested revisions to, this Agreement, and the usual
rule of construction that any ambiguities are to be resolved against the
drafting party shall be inapplicable in the construction and interpretation of
this Agreement.
SECTION 1.03. COMPUTATION OF TIME PERIODS.
Unless otherwise stated in this Agreement, in the computation
of a period of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" both mean "to
but excluding".
ARTICLE II
ADVANCES TO THE BORROWER
SECTION 2.01. ADVANCE FACILITY.
On the terms and conditions hereinafter set forth, including
without limitation, Sections 3.01, 3.02 and 3.03, CRC may, in its sole
discretion, make Advances to the Borrower on any Borrowing Date from the date
hereof to the Lender Termination Date. On the terms and conditions hereinafter
set forth, including without limitation, Sections 3.01, 3.02 and 3.03, and
during the period from the date hereof to the Secondary Lender Termination Date,
the Secondary Lenders shall make Advances to the Borrower, ratably in accordance
with their respective Secondary Lender Commitments, to the extent CRC has
determined not to make such Advance or if the Lender Termination Date has
occurred. Under no circumstances shall CRC or any Secondary Lender be obligated
to make any such Advance, to the extent that after giving effect to the making
of such Advance the aggregate principal amount of all outstanding Advances would
exceed the Total Commitment.
21
SECTION 2.02. MAKING OF ADVANCES.
(a) The Borrower shall give the Agent written notice (which
notice shall be irrevocable and effective only upon receipt by the Agent) of
each request for an Advance (each such request a "Notice of Borrowing") not
later than 12:00 noon (New York City time) on the day which is two (2) Business
Days prior to the proposed borrowing date, which notice shall specify (i) the
proposed borrowing date therefor (each such date, a "Borrowing Date"), and (ii)
the principal amount of the proposed Advance. Any such Notice of Borrowing shall
be substantially in the form of Exhibit B hereto, dated the date such request is
being made, signed by a Responsible Officer of the Borrower and otherwise
appropriately completed. Each Advance shall be in a principal amount of at least
$1,000,000 and in integral multiples of $1,000,000 in excess thereof. During the
period prior to the Lender Termination Date, CRC shall promptly notify the Agent
whether it has determined to make a proposed Advance and the Agent shall
promptly thereafter notify the Borrower whether CRC has determined to make such
Advance. If CRC has determined not to make a proposed Advance, the Agent shall
promptly send notice of the proposed Advance to all of the Secondary Lenders
concurrently specifying the Borrowing Date for such Advance, each Secondary
Lender's Percentage multiplied by the principal amount of such Advance and
whether the Yield for such Advance is calculated based on the Eurodollar Rate or
the Alternate Base Rate. On any Borrowing Date the Lender or the Secondary
Lenders shall, subject to the terms and conditions of this Agreement, make
available to the Borrower at the Borrower's Account the principal amount of the
requested Advance in immediately available funds. To the extent not covered by
Section 2.08, the Borrower shall indemnify CRC, each Secondary Lender and the
Agent against any loss (other than lost profits) or reasonable expense incurred
by them as a result of any failure by the Borrower to accept any Advance
requested in a Notice of Borrowing or as a result of the failure of the Borrower
to receive any Advance requested in a Notice of Borrowing as a result of the
failure of any condition precedent to the making of such Advance to be
satisfied, including, without limitation, any such loss or expense incurred by
reason of the liquidation or reemployment of funds acquired or requested to fund
such Advance.
(b) The parties hereto agree that on the Maturity Date of the
Advances made by CRC (the "CRC Maturity Date"), so long as no Default or Event
of Default shall have occurred and be continuing on such date and subject to the
other terms and conditions of this Agreement (other than the obligation to
deliver a Notice of Borrowing), the Secondary Lenders shall make an Advance (the
"Committed Advance") on such date in a principal amount equal to the outstanding
principal amount of the Advances funded by CRC, unless on or prior to the second
(2nd) Business Day preceding the CRC Maturity Date, the Borrower has delivered a
written notice to the Agent stating that it has elected not to receive such
Committed Advance. Notwithstanding anything in this Agreement to the contrary,
the principal amount of such Committed Advance shall be made ratably by the
Secondary Lenders to the Agent's Account and shall constitute a payment in full
by the Borrower in respect of the outstanding principal amount of the Advances
maturing on the CRC Maturity Date and shall be applied by the Agent on the CRC
Maturity Date to the outstanding principal amount of the Advances made by CRC.
22
SECTION 2.03. ADVANCE NOTES.
(a) All Advances made by CRC and each Secondary Lender to the
Borrower shall be evidenced by separate Advance Notes, with appropriate
insertions, which shall (i) be payable to the order of CRC and each Secondary
Lender and provide for the payment of the unpaid principal amount of the
Advances evidenced thereby on the Maturity Date for such Advances, and (ii)
require that the Borrower pay Yield on the outstanding principal amount as
provided in Section 2.06 hereof. The date and principal amount of each Advance
and of each repayment of principal thereon shall be recorded by CRC or the
Secondary Lenders, as the case may be, or their designee on Schedule I attached
to CRC's or such Secondary Lender's Advance Note and the aggregate unpaid
principal amount shown on such schedules shall be rebuttable presumptive
evidence of the principal amount owing and unpaid on the Advances. The failure
to record or any error in recording any such amount on such schedule shall not,
however, limit or otherwise affect the obligations of the Borrower hereunder or
under any Advance Note to repay the principal amount of the Advances together
with all Yield thereon.
(b) The Borrower agrees that upon any Eligible Assignee
becoming a Secondary Lender hereunder in accordance with Section 9.06, it shall,
promptly upon the request of the Agent, execute and deliver an Advance Note
payable to the order of such Secondary Lender and otherwise appropriately
completed.
SECTION 2.04. MATURITY OF THE ADVANCES.
It is understood and agreed that the principal amount of and
the unpaid Yield on each outstanding Advance shall be due and payable on the
Maturity Date for such Advance.
SECTION 2.05. PREPAYMENT OF THE ADVANCES.
(a) It is understood and agreed that the Borrower shall have
the right at any time and from time to time, upon not less than one (1) Business
Day's prior written or telephonic notice (in the case of telephonic notice,
promptly confirmed in writing) to the Agent specifying the date and amount of
such prepayment, to prepay all or a portion of the outstanding Advances,
together with unpaid Yield thereon, on a Business Day; PROVIDED, that any such
prepayment, if a partial prepayment, shall be an integral multiple of $1,000,000
with a minimum amount of $1,000,000.
(b) If on any Determination Date, the Borrower is not in full
compliance with the Borrowing Base Test, the Borrower shall on such
Determination Date notify the Agent of such failure to comply, (A) prepay
Advances (and pay Yield thereon), and/or (B) pledge to the Agent additional
Borrowing Base Eligible Assets in an amount necessary to cause the Borrower to
be in full compliance with the Borrowing Base Test on such Determination Date;
PROVIDED, HOWEVER, that to the extent the Borrower does not have sufficient
available funds and/or additional Borrowing Base Eligible Assets to pledge to
the Agent in order to fully cure such compliance shortfall on such Determination
Date, then the Borrower shall (i) on such Determination Date prepay outstanding
Advances in the amount of its available funds and pledge all Borrowing Base
Eligible Assets to the Agent; (ii) no later than the close of business on the
fifth (5th) Business Day following such Determination Date either (A) acquire
and pledge to the Agent under this Agreement and the Control Agreement
additional Borrowing Base Eligible Assets having an Adjusted Asset Value at
least sufficient to cause the Borrowing Base to be at least equal to the product
of (x) 1.05, and (y) Credits Outstanding, as determined on the first (1st)
Business Day after such Determination Date, or (B) prepay Advances in a
principal amount (and pay the Yield thereon) at least sufficient to cause the
Borrowing Base to be at least equal to the product of (x) 1.05 and (y) Credits
Outstanding, as determined on the first (1st) Business Day after such
Determination Date; and (iii) no later than the close of business on the second
(2nd) Business Day following such Determination Date, deliver to the Agent a
certificate, signed by a Responsible Officer of the Borrower, that (1) certifies
the amount of the compliance shortfall, (2) specifies whether the Borrower shall
either (x) prepay the Advances in accordance with clause (B) above, or (y)
acquire additional Borrowing Base Eligible Assets in accordance with clause (A)
above and specifies the identity and Adjusted Asset Value of the Borrowing Base
Eligible Assets for which the Borrower has entered into corrective trades in
order to satisfy the requirements of clause (A) of this Section 2.05(b), and (3)
certifies that the requirements of this Section 2.05(b) shall be satisfied on or
prior to the fifth (5th) Business Day following such Determination Date.
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(c) The amount of each prepayment under this Section 2.05
shall be applied to the Advances in the order in which such Advances were made.
SECTION 2.06. YIELD.
The Borrower hereby agrees to pay the Yield computed with
reference to the principal amount of each Advance outstanding from time to time.
Yield accruing in respect of any Advance for any Settlement Period shall be due
and payable on the Settlement Date immediately succeeding such Settlement Period
and as required by Section 2.05. It is the intention of the parties hereto that
the Yield on the Advances shall not exceed the maximum rate permissible under
applicable law. Accordingly, anything herein or in any Advance Note to the
contrary notwithstanding, in the event any Yield is charged to, collected from
or received from or on behalf of the Borrower by the Lender or the Secondary
Lenders pursuant hereto or thereto in excess of such maximum lawful rate, then
the excess of such payment over that maximum shall be applied first to the
payment of amounts owing by the Borrower to the Lender, the Secondary Lenders
and the Agent under the Program Documents (other than in respect of principal
and Yield on Advances) and then to the reduction of the outstanding principal
balance of the Advances.
SECTION 2.07. INCREASED COSTS.
(a) If, due to either (i) the introduction of or any change
(other than any change by way of imposition or increase of reserve requirements
reflected in the Eurodollar Rate Reserve Percentage) in or in the interpretation
of any Applicable Law or (ii) the compliance with any guideline or request from
any central bank or other Authority (whether or not having the force of law,
but, if not having the force of law, which is generally applicable to and
complied with by banks or financial institutions of the same general type as
such Affected Person), there shall be any increase in the cost to any Affected
Person of agreeing to make or making, funding or maintaining Eurodollar Rate
Advances to the Borrower, then the Borrower shall from time to time, upon demand
by the Lender or such Affected Person pay to the Agent for the account of such
Affected Person additional amounts (without duplication of any other amounts
payable hereunder) sufficient to compensate such Affected Person for such
increased cost. In determining such amount, such Affected Person may use any
reasonable averaging and attribution methods, consistent with the averaging and
attribution methods generally used by such Affected Person in determining
amounts of this type with respect to other borrowers. A certificate setting
forth in reasonable detail supporting calculations demonstrating the basis of
such increased cost, submitted to the Borrower by an Affected Person, shall be
conclusive and binding for all purposes, absent manifest error.
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(b) If (i) the introduction of, change in or in the
interpretation of any Applicable Law, or (ii) the compliance with any guideline
or request from any Authority (whether or not having the force of law, but, if
not having the force of law, which is generally applicable to and complied with
by banks or financial institutions of the same general type of such Affected
Person) affects or would affect the amount of capital required or expected to be
maintained by such Affected Person and that the amount of such capital is
increased by or based upon the existence of such Affected Person's commitment
under the Program Documents or upon such Affected Person's making, funding or
maintaining Advances, then, upon demand of such Affected Person (with a copy of
such demand to the Agent), the Borrower shall immediately pay to the Agent for
the account of such Affected Person, from time to time as specified by such
Affected Person, additional amounts sufficient to compensate such Affected
Person in light of the circumstances to the extent that such Affected Person
reasonably determines such increase in capital requirements is allocable to its
obligations hereunder using reasonable averaging and attribution methods. A
certificate setting forth in reasonable detail such detailing supporting
calculations demonstrating the basis of amounts submitted to the Borrower by
such Affected Person shall be conclusive and binding for all purposes, absent
manifest error.
(c) Each Affected Person will use reasonable efforts to
promptly notify the Borrower of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Affected Person to compensation
pursuant to this Section 2.07; PROVIDED, that the failure of such Affected
Person to provide such notice will not affect any Borrower Obligation under this
Section 2.07.
SECTION 2.08. COMPENSATION.
The Borrower shall compensate each Affected Person, upon its
written request (which request shall set forth in reasonable detail the
supporting calculations demonstrating the basis for such amounts the basis for
requesting such amounts), for all reasonable losses (excluding lost profits),
expenses and liabilities (including, without limitation, any interest paid by
such Affected Person to lenders of funds borrowed by it to make or carry its
Eurodollar Rate Advances and any loss (excluding lost profits)sustained by such
Affected Person in connection with the re-employment of such funds), which such
Affected Person may sustain (other than losses and expenses for which the
Borrower has compensated the Lender or the Secondary Lenders through the payment
of a Liquidation Fee): (i) if for any reason (other than a default by such
Affected Person) a borrowing of any Eurodollar Rate Advance by the Borrower does
not occur on a date specified therefor in the Notice of Borrowing (whether or
not withdrawn), (ii) if any prepayment of any of the Borrower's Eurodollar Rate
Advances occurs on a date which is not the last day of a Settlement Period
applicable thereto, (iii) if any prepayment of any of the Borrower's Eurodollar
Rate Advances is not made on any date specified in a notice of prepayment given
by the Borrower, or (iv) as a consequence of any other default by the Borrower
to repay its Eurodollar Rate Advances when required by the terms of this
Agreement.
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SECTION 2.09. ADDITIONAL YIELD ON EURODOLLAR RATE ADVANCES.
So long as any Affected Person shall be required under
regulations of the Board of Governors of the Federal Reserve System to maintain
reserves with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, the Borrower shall pay (without duplication of any
other amounts payable hereunder) to such Affected Person Eurodollar Additional
Yield on the principal amount of each outstanding Advance on each date on which
Yield is payable on such Advance. Such Eurodollar Additional Yield shall be
determined by such Affected Person and notified to the Borrower through the
Agent within thirty (30) days after any payment is made with respect to which
such additional Yield is requested. A certificate as to such Eurodollar
Additional Yield submitted to the Borrower and the Agent shall be conclusive and
binding for all purposes, absent manifest error.
SECTION 2.10. TERMINATION OR REDUCTION OF THE TOTAL
COMMITMENT.
The Borrower may at any time, upon thirty (30) days' prior
written notice to the Agent terminate in whole or reduce in part the unused
portion of the Total Commitment; PROVIDED, that each such partial reduction of
the Total Commitment shall be in an amount equal to at least $5,000,000 or an
integral multiple thereof.
SECTION 2.11. RESCISSION OR RETURN OF PAYMENT.
The Borrower further agrees that, if at any time all or any
part of any payment theretofore made by it to any Secured Party or their
designees is or must be rescinded or returned for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy or reorganization of
the Borrower or any of its Affiliates), the obligation of the Borrower to make
such payment to such Secured Party shall, for the purposes of this Agreement, to
the extent that such payment is rescinded and returned, be deemed to have
continued in existence and this Agreement shall continue to be effective or be
reinstated, as the case may be, as to such obligations, all as though such
payment had not been made.
SECTION 2.12. FEES PAYABLE BY BORROWER.
The Borrower agrees to pay the Agent such fees as are set
forth in the Fee Letter.
SECTION 2.13. POST DEFAULT INTEREST.
The Borrower hereby promises to pay interest on the unpaid
principal amount of each Advance and any other amount payable by the Borrower
hereunder, in each case, which shall not be paid in full when due, for the
period commencing on the due date thereof until but not including the date the
same is paid in full at the Post-Default Rate. Interest payable at the
Post-Default Rate shall be payable on the Agent's demand.
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SECTION 2.14. PAYMENTS.
(a) All amounts owing and payable by the Borrower under this
Agreement, including, without limitation, the principal amount of outstanding
Advances, Yield, fees, expenses and indemnitees, shall be paid in Dollars, in
immediately available funds on or prior to 1:00 p.m. (New York City time) on the
date due without counterclaim, setoff, deduction, defense, abatement, suspension
or deferment to the Agent's Account. Any payment paid after 1:00 p.m. (New York
City time) on any day shall be deemed to have been made on the next Business Day
for all purposes of this Agreement.
(b) All computations of interest at the Post-Default Rate and
all computations of Yield, fees and other amounts payable by the Borrower
hereunder shall be made on the basis of a year of 360 days for the actual number
of days elapsed. Whenever any payment or deposit to be made hereunder shall be
due on a day other than a Business Day, such payment or deposit shall be made on
the next succeeding Business Day and such extension of time shall be included in
the computation of such payment or deposit.
(c) Upon receipt of funds deposited into the Agent's Account,
the Agent shall distribute such funds, FIRST to the Lender and the Secondary
Lenders in payment in full of all accrued and unpaid Yield owing to the Lender
and Secondary Lenders, SECOND to the Lender, the Secondary Lenders or the Agent
in payment of any other fees or other amounts owed by the Borrower to the
Lender, the Secondary Lenders and the Agent under this Agreement and the other
Program Documents (other than in respect of the principal amount of the
Advances), and THIRD to the payment of the principal amount of the Advances.
(d) The Agent shall, on or prior to 3:00 p.m. (New York City
time) on the Business Day immediately preceding each Settlement Date, notify the
Borrower of the Yield, Fees and other amounts due and payable on such Settlement
Date.
SECTION 2.15. RATABLE PAYMENTS.
If any Secondary Lender or Lender (other than CRC), whether by
set-off, bankers' lien, counterclaim or otherwise, has any payment made to it
with respect to any Borrower Obligations owing to it in a greater proportion
than that received by any other Lender or Secondary Lender entitled to receive a
ratable share of such payments, such Lender or Secondary Lender agrees, promptly
upon demand, to purchase for cash without recourse or warranty a portion of the
unpaid Borrower Obligations held by the other Lenders and Secondary Lenders so
that after such purchase each Lender and Secondary Lender will hold its ratable
proportion of such unpaid Borrower Obligations; PROVIDED that if all or any
portion of such excess amount is thereafter recovered from such Secondary Lender
or Lender, as the case may be, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
SECTION 2.16. BORROWER'S OBLIGATIONS ABSOLUTE.
The Borrower's obligations under this Agreement and under the
other Program Documents shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms hereof and thereof, under
any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower, the Advisor or any other Person may have
or have had against the Agent, the Lender, any Secondary Lender or any other
Person.
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ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THE
EXISTING AGREEMENT.
The Borrower hereby confirms that concurrently with the
effectiveness of the Existing Credit Agreement on the Closing Date, the Agent
received on or before the initial borrowing date after the Closing Date under
the Existing Credit Agreement the following:
(a) each of the Program Documents (as defined in the Existing
Credit Agreement in effect of the Closing Date) duly executed and delivered by
the parties thereto, each of which was in full force and effect as of the
Closing Date;
(b) the Prospectus, as in effect on the Closing Date;
(c) the signed opinions of counsel to the Borrower and the
Advisor addressed to each Secured Party as to such matters as the Agent shall
have reasonably requested;
(d) an Advance Note duly executed and completed by the
Borrower to CRC and each Secondary Lender;
(e) all Governmental Authorizations, Private Authorizations
and Governmental Filings, if any, required in connection with the transactions
contemplated by the Program Documents (as defined in the Existing Credit
Agreement) as of the Closing Date;
(f) a certificate of the Secretary or Assistant Secretary of
each of the Borrower and the Advisor certifying (i) as to its declaration of
trust, articles, by-laws or other organizational documents, as applicable, (ii)
as to the resolutions of its Board of Directors or Board of Trustees, as
applicable, approving the Existing Credit Agreement and the other Program
Documents to which it was a party as of the Closing Date and the transactions
contemplated thereby, (iii) that its representations and warranties set forth in
the Program Documents (as defined in the Existing Credit Agreement) were true
and correct, and (iv) the incumbency and specimen signature of each of its
officers authorized to execute the Program Documents (as defined in the Existing
Credit Agreement);
(g) proper financing statements naming the Borrower as debtor
and the Agent as secured party, under the UCC in all jurisdictions that the
Agent deemed necessary or desirable in order to perfect the Agent's first
priority perfected interest in the Assigned Collateral under the Existing Credit
Agreement;
(h) proper termination financing statements, if any, necessary
to release all security interests and other rights of any Person in the
Borrowing Base Eligible Assets of the Borrower previously granted by the
Borrower;
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(i) completed requests for information, dated on or before the
Closing Date and all other effective financing statements filed in the
jurisdictions referred to in subsection (h) above that named the Borrower (under
"Liberty Floating Rate Advantage Fund" or "Liberty-Xxxxx Xxx Advisor Floating
Rate Fund") as debtor, together with copies of such other financing statements
(none of which shall cover any Assets);
(j) a pro-forma Investor Report, which shall evidence
compliance with the Borrowing Base Test, the Asset Coverage Test and the other
terms of the Program Documents (as such terms were defined in the Existing
Credit Agreement) after giving effect to the initial borrowing of Advances under
the Existing Credit Agreement;
(k) the fees to be received by it on or prior to the Closing
Date under the Fee Letter (as such term was defined in the Existing Credit
Agreement on the Closing Date); and
(l) from the Borrower and the Advisor such other instruments,
certificates and documents as the Agent shall have reasonably requested, all in
form and substance reasonably satisfactory to the Agent.
SECTION 3.02. CONDITIONS PRECEDENT TO ALL ADVANCES.
The obligation of the Lender and the Secondary Lenders to make
any Advance (including the initial Advance) on any Borrowing Date shall be
subject to the fulfillment of the following conditions:
(a) each of the representations and warranties of the
Borrower, the Custodian and the Advisor contained in this Agreement, the Control
Agreement, the Letter Agreement and the other Program Documents shall be true
and correct in all material respects;
(b) no Default or Event of Default shall have occurred and be
continuing or shall result from the making of such Advance;
(c) the conditions precedent set forth in Sections 3.01 and
3.03 shall have been fully satisfied;
(d) immediately after giving effect to such Advance the
Borrower shall be in full compliance with each of the Borrowing Base Test and
the Asset Coverage Test;
(e) immediately after the making of any such Advance, the
aggregate outstanding principal amount of all Advances shall not exceed the
Total Commitment;
(f) the Agent shall have received such other instruments,
certificates and documents as the Agent shall reasonably request; and
(g) the Agent shall have received a pro-forma Investor Report,
which shall evidence compliance with the terms of this Agreement after giving
effect to all borrowings on such Borrowing Date.
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SECTION 3.03. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF
THIS AGREEMENT.
The effectiveness of the amendment and restatement of the
Existing Credit Agreement as set forth in this Agreement shall be subject to the
conditions precedent that each Program Document be in full force and effect and
that the Agent shall have received the following, each (unless otherwise
indicated) in form and substance reasonably satisfactory to the Agent and the
Secondary Lenders parties hereto in sufficient copies for the Lenders and the
Secondary Lenders:
(i) duly executed copies of this Agreement from each of
the Borrower, the Lenders, the Secondary Lenders and the
Agent;
(ii) duly executed copies of the Control Agreement from
each of the Borrower, the Agent and the Custodian;
(iii) duly executed copies of the Letter Agreement from
the Advisor and the Agent;
(iv) duly executed copies of the Fee Letter from the
Borrower and the Agent;
(v) duly executed copies of the Custodial Agreement
from the Borrower and the Custodian;
(vi) the signed opinions of counsel to the Borrower and
the Advisor addressed to each Secured Party as to such matters
as the Agent shall have reasonably requested;
(vii) a certificate of the Secretary or Assistant
Secretary of the Borrower certifying that the Prospectus, as
delivered pursuant to Section 3.01 above and the Investment
Policies and Restrictions have not been modified since the
Closing Date;
(viii) a certificate of the Secretary or Assistant
Secretary of each of the Borrower and the Advisor certifying
(i) as to its declaration of trust, articles, by-laws or other
organizational documents, as applicable, (ii) as to the
resolutions of its Board of Directors or Board of Trustees, as
applicable, approving this Agreement and the other Program
Documents and the transactions contemplated thereby, (iii)
that its representations and warranties set forth in the
Program Documents are true and correct, and (iv) the
incumbency and specimen signature of each of its officers
authorized to execute the Program Documents;
(ix) all Governmental Authorizations, Private
Authorizations and Governmental Filings, if any, which may be
required in connection with the transactions contemplated by
the Program Documents;
(x) proper amendments to financing statements filed
naming the Borrower as debtor and the Agent as secured party,
under the UCC in all jurisdictions that the Agent may deem
necessary or desirable in order to perfect the Agent's first
priority perfected interest in the Assigned Collateral;
30
(xi) the results of a recent search by a Person
reasonably satisfactory to the Agent of all UCC lien filings
with respect to the Borrower, and such results shall be
satisfactory to the Agent;
(xii) from the Borrower and the Advisor such other
instruments, certificates and documents as the Agent shall
have reasonably requested, all in form and substance
reasonably satisfactory to the Agent; and
(xiii) evidence reasonably satisfactory to the Agent
that (i) the Custodian shall have established the Collateral
Account (as defined in the Control Agreement) and the Existing
Custodian shall have transferred all of the Assigned
Collateral and cash on deposit or to the Collateral Account
(as defined in the Existing Control Agreement) to the
Custodian for deposit in the Collateral Account maintained
under the Control Agreement, and (ii) the Existing Control
Agreement and the Existing Custodial Agreement shall have each
been terminated.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
The Borrower represents and warrants on and as of the
Restatement Effective Date, each Borrowing Date, each date that any Asset is
included or removed as Assigned Collateral and each Settlement Date (and in
respect of clause (g) below each date such information is provided), as follows:
(a) DUE ORGANIZATION. The Borrower is a business trust, duly
organized and validly existing under the laws of the Commonwealth of
Massachusetts and is duly qualified to do business in each jurisdiction in which
the ownership of its properties or the conduct of its business requires it to be
so qualified, except where the failure to be so qualified could not reasonably
be expected to give rise to a Material Adverse Effect.
(b) POWER AND AUTHORITY. The Borrower has all necessary power
and authority to execute, deliver and enter into each Program Document to which
it is a party, to enter into the transactions contemplated by each Program
Document to which it is a party and to perform all of its obligations
thereunder.
(c) DUE AUTHORIZATION. The execution, delivery and performance
by the Borrower of each Program Document to which it is a party (i) have been
duly authorized by all necessary corporate action, and (ii) do not require that
any Governmental Authorization, Private Authorization or Governmental Filing be
made or obtained.
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(d) NONCONTRAVENTION. Neither the execution and delivery by
the Borrower of this Agreement, the Control Agreement, the Fee Letter or the
Advance Notes, or any instrument or agreement executed or delivered by the
Borrower in connection therewith, nor the consummation of the transactions
herein or therein contemplated, nor compliance with the terms, conditions and
provisions hereof or thereof by it, will (i) conflict with, or result in a
breach or violation of, or constitute a default under its declaration of trust
or other organizational documents, (ii) conflict with or contravene any (A)
Applicable Law, except where such conflict or contravention of Applicable Law
could not be reasonably expected to give rise to a Material Adverse Effect, or
(B) any order, writ, judgment, award, injunction or decree binding on or
affecting the Borrower or any of its Assets, (iii) conflict with, or result in a
breach or violation of, or constitute a default under, or permit the
acceleration of any obligation or liability in, or but for any requirement of
the giving of notice or the passage of time (or both) would constitute such a
conflict with, breach or violation of, or default under, or permit any such
acceleration in, any contractual obligation or any agreement or document to
which it is a party or by which it or any of its properties is bound (or to
which any such obligation, agreement or document relates), including any Loan
Document, except for any anti-assignment provisions contained in any Loan
Document rendered ineffective by applicable law, or (iv) result in any Adverse
Claim upon any Asset of the Borrower.
(e) VALID AND BINDING AGREEMENT. Each Program Document to
which the Borrower is a party has been duly executed by the Borrower and is the
legal, valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms, except as the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights and remedies of creditors generally and by
equitable principles.
(f) PENDING LITIGATION OR OTHER PROCEEDING. There is no
pending action, proceeding or, to the best of the Borrower's knowledge,
investigation before any Authority, against or affecting the Borrower or any of
its Assets which if determined adversely to the Borrower, in the aggregate could
reasonably be expected to give rise to a Material Adverse Effect.
(g) INFORMATION AND REPORTS. The Prospectus, each Investor
Report, each Weekly Portfolio Report, each Notice of Borrowing and all other
written information, reports, certificates and statements provided by or on
behalf of the Borrower or the Advisor to any Secured Party for purposes of or in
connection with this Agreement, the other Program Documents or the transactions
contemplated hereby or thereby is, and all such information hereafter provided
by or on behalf of the Borrower to any Secured Party are true, correct and
complete in all material respects on the date such information is stated or
certified and no such information contains, or will contain, any material
misrepresentation or any omission to state therein matters necessary to make the
statements made therein not misleading in any material respect under the
circumstances in which they were made.
(h) INVESTMENT COMPANY ACT. The Borrower has been and is
registered under the Investment Company Act, as a closed-end investment
management company, and has been (except for the Existing Recission Offer and
except for any shares of the Borrower issued or sold prior to November 20, 2003
that were not registered under Section 5 of the Securities Act) and is in
compliance in all material respects with all Applicable Laws, including without
limitation the Securities Act and the Investment Company Act and the rules and
regulations promulgated thereunder. The Borrower is in compliance in all
material respects with the Investment Policies and Restrictions.
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(i) BORROWING BASE ELIGIBLE ASSETS, ADVERSE CLAIMS, ETC. Each
Asset of the Borrower which constitutes Assigned Collateral is, and at all times
shall constitute, a Borrowing Base Eligible Asset, and the Borrower owns each
Asset which constitutes Assigned Collateral free and clear of Adverse Claims.
The Borrower owns all Assets which do not constitute Assigned Collateral free
and clear of Adverse Claims (other than Permitted Liens). This Agreement and the
Control Agreement and the actions required to be taken pursuant to the terms
hereof and thereof are effective to create and perfect in the Agent, for the
benefit of the Secured Parties, a perfected security interest in the Assigned
Collateral free and clear of all Adverse Claims. As of the initial Borrowing
Date and at all times thereafter, the Agent on behalf of the Secured Parties has
a first priority perfected security interest in the Assigned Collateral free and
clear of all Adverse Claims and, no actions, except as have been taken, are
necessary to perfect or protect such security interest free and clear of Adverse
Claims.
(j) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of
Default has occurred and is continuing.
(k) TAXES. The Borrower has filed all United States Federal
income tax returns and all other material tax returns which are required to be
filed by it, if any, and has paid all taxes due pursuant to such returns, if
any, or pursuant to any assessment received by the Borrower, except for any
taxes or assessments which are being contested in good faith by appropriate
proceedings and with respect thereto adequate reserves have been established in
accordance with GAAP and which could otherwise not give rise to a reasonable
possibility of a Material Adverse Effect; and the charges, accruals and reserves
on the books of the Borrower in respect of taxes or other governmental charges,
if any, are, in the opinion of the Borrower, adequate.
(l) FINANCIAL CONDITION. The statement of assets and
liabilities of the Borrower as of August 31, 2003, certified by
PricewaterhouseCoopers LLP independent auditors, fairly presents in conformity
with GAAP the financial position of the Borrower at such date and since such
date there has been no material adverse change in the business, financial
condition or results of operations of the Borrower.
(m) PRINCIPAL OFFICE. The principal place of business and
chief executive office of the Borrower is located at the address referred to in
Section 5.01(c). The Borrower has not transacted any business under any name
other than "Liberty-Xxxxx Xxx Advisor Floating Rate Advantage Fund", "Liberty
Floating Rate Advantage Fund", "Columbia Floating Rate Advantage Fund" and
"Highland Floating Rate Advantage Fund".
(n) LOAN ASSETS. No restriction in any Loan Document for any
Loan Assets which constitutes Assigned Collateral could materially adversely
affect the Borrower's performance of its obligations hereunder or under any
other Program Document.
(o) INTERNAL REVENUE CODE. The Borrower qualifies as a
"regulated investment company" within the meaning of the Code.
33
(p) ERISA. The Borrower is not a member of an ERISA Group and
has no Benefit Arrangement, Plan or Multiemployer Plan subject to ERISA.
(q) BORROWING BASE TEST, ETC. On each Borrowing Date and
immediately after the making of each Advance it is in full compliance with the
Borrowing Base Test and the Asset Coverage Test and the other conditions
specified in Article III.
(r) REGULATIONS T, U AND X. Neither the making of any Advance
nor the use of the proceeds thereof will violate or be inconsistent with the
provisions of Regulation T, Regulation U or Regulation X.
ARTICLE V
COVENANTS
SECTION 5.01. AFFIRMATIVE COVENANTS OF THE BORROWER.
From the date hereof until the Program Termination Date, the
Borrower will, unless the Agent shall otherwise consent in writing:
(a) COMPLIANCE WITH AGREEMENTS. Comply in all material
respects with the terms and conditions of each Program Document to which it is a
party.
(b) COMPLIANCE WITH LAWS; TAXES. Comply in all material
respects with all Applicable Laws with respect to it, its business and
properties and cause to be paid and discharged when due all taxes, assessments
and other governmental charges or levies imposed upon it, or upon any of its
income or Assets, prior to the day on which penalties are attached thereto,
unless and to the extent that the same (x) shall be contested in good faith by
appropriate actions and with respect to which adequate reserves have been
established on the books of the Borrower in accordance with GAAP, and (y) could
not otherwise reasonably be expected to give rise to a Material Adverse Effect.
(c) CONTINUED EXISTENCE. Maintain its existence and shall at
all times continue to be a Massachusetts business trust having its principal
place of business and chief executive office at the address set forth in Section
9.02 or, upon thirty (30) days' prior written notice to the Agent, at any other
locations in jurisdictions where all actions to protect and perfect the Agent's
first priority perfected security interest in the Assigned Collateral have been
taken (including the filing of UCC-3 financing statements). Remain duly
qualified to do business in each jurisdiction in which the ownership of its
properties or the conduct of its business requires it to be so qualified, except
where the failure to be so qualified does not give rise to a reasonable
possibility of a Material Adverse Effect.
(d) FINANCIAL STATEMENT; ACCOUNTANTS' REPORTS, OTHER
INFORMATION. Keep or cause to be kept in reasonable detail and in accordance
with the requirements of the SEC proper books and records of account of the
Borrower's Assets and business, including, but not limited to, books and records
relating to its purchase of Assets. The Borrower shall furnish to the Agent
(with enough additional copies for the Lender and each Secondary Lender):
34
(i) as soon as available, and in any event within
ninety (90) days after the end of each fiscal year of the
Borrower, a statement of assets and liabilities of the
Borrower as at the end of such fiscal year, and statements of
operations and of changes in net assets of the Borrower for
such fiscal year, and the portfolio of investments as of the
end of such fiscal year, with an audit report thereon issued
by PricewaterhouseCoopers LLP or other independent certified
public accountants of nationally recognized standing, together
with the comparable report for the prior fiscal year;
(ii) as soon as available and in any event within
seventy-five (75) days after the end of each first semi-annual
fiscal period of the Borrower, a statement of assets and
liabilities of the Borrower as at the end of such period, a
statement of operations and of changes in net assets of the
Borrower for such period, and the portfolio of investments as
of the end of such period, all certified (subject to normal
year-end adjustment) as to fairness of presentation in all
material respects by the treasurer, chief financial officer or
controller of the Borrower;
(iii) as soon as possible, and in any event within one
(1) Business Day of the occurrence of any Default or Event of
Default, a certificate of a Responsible Officer of the
Borrower setting forth the details thereof and the action
which the Borrower is taking or proposes to take with respect
thereto;
(iv) as soon as possible, and in any event within two
(2) Business Days, after the Borrower has knowledge of any
failure by the Custodian to perform or observe any term,
covenant or agreement on its part to be performed under the
Custodial Agreement or the Control Agreement which failure
gives rise to a reasonable possibility of a Material Adverse
Effect, written notice thereof executed by a Responsible
Officer of the Borrower;
(v) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all
financial statements, reports and proxy statements so mailed;
(vi) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and
any registration statements on Form S-8 or its equivalent) and
annual and semi-annual reports which the Borrower shall have
filed with the SEC;
(vii) on or before the first Business Day of each week,
weekly portfolio reports and weekly covenant compliance
certificates in substantially the form of Schedule II attached
hereto (each a "Weekly Portfolio Report") with respect to the
immediately preceding calendar week, signed by an authorized
officer of the Borrower;
(viii) on or before the tenth (10th) Business Day of
each calendar month or more frequently as the Agent shall
request (which may be daily), an Investor Report substantially
in the form of Schedule I hereto, together with a certificate
of a Responsible Officer of the Borrower in substantially the
form of Annex A to the Investor Report;
(ix) promptly upon its receipt, a copy of any notice
from the Custodian of its termination of the Custodial
Agreement or Control Agreement; and
35
(x) from time to time such additional information
regarding the financial position or business of the Borrower
as the Agent may reasonably request;
(e) AUDITS. Annually (or more frequently as the Agent may
require after the occurrence of and during the continuance of a Default or an
Event of Default) and at the sole cost and expense of the Borrower (i) cause
PricewaterhouseCoopers LLP, or another independent nationally recognized
accounting firm selected by the Borrower and reasonably satisfactory to the
Agent, to enter the premises of the Borrower and any Person to whom the Borrower
delegates all or any portion of its duties under any Program Document
(including, without limitation, the Advisor and the Custodian) and conduct a
commercial finance examination of the books, records and accounts of the
Borrower relating to its business, financial condition, operations and the
Borrower's performance under the Program Documents, (ii) permit such accounting
firm to discuss the Borrower's affairs and finances with the officers, partners,
employees and accountants of any of them, (iii) cause such accounting firm to
provide to the Agent, for itself and as agent for the Secured Parties, with a
certified report in respect of the foregoing, which shall be in form and scope
reasonably satisfactory to the Agent, and (iv) authorize such accounting firm to
discuss such affairs, finances and performance with representatives of the Agent
and its designees; it being understood that such commercial finance examination
and report of such accountants may be coordinated with the Borrower's regular
annual audit by the Borrower's accountants.
(f) ACCESS TO RECORDS. Permit the Agent or any Person
designated by the Agent to, upon reasonable advance notice and during normal
hours, visit and inspect at reasonable intervals its books, records and accounts
relating to its business, financial condition, operations, Assets and its
performance under the Program Documents and to discuss the foregoing with the
officers, partners, employees and accountants of the Borrower, all as often as
the Agent may reasonably request.
(g) MAINTENANCE OF INSURANCE. Maintain insurance with
financially sound, responsible and reputable insurance companies or associations
in such amounts and covering such risks as are usually carried by companies
engaged in similar businesses and owning similar properties in the same general
areas in which the Borrower operates or as may be required by the Investment
Company Act and the rules and regulations thereunder.
(h) MAINTENANCE OF BUSINESS. Remain at all times a closed-end
investment management company for purposes of the Investment Company Act and
continue to engage in business of the same type as now conducted by it and take
all reasonable action to maintain all rights, privileges, licenses, permits,
charters and franchises necessary in the normal conduct of its business and the
performance of its obligations under the Program Documents to which it is a
party and will at all times remain registered under the Investment Company Act.
(i) INVESTMENT POLICIES AND RESTRICTIONS; BORROWING BASE TEST,
ETC. At all times comply with the Borrowing Base Test, the Asset Coverage Test
(regardless of whether dividends or distributions are being made on such date,
or whether Debt is being incurred on such date) and the Investment Policies and
Restrictions in effect on the date hereof. The Borrower shall maintain necessary
liquidity to meet its obligations to fund future advances or other extensions of
credit under the Loan Documents relating to its Loan Assets.
36
(j) WAIVER OF CONFIDENTIALITY. Upon the occurrence and during
the continuance of an Event of Default, with respect to interests in Loan
Assets, the Borrower will use its best efforts to obtain, on behalf of the
Secured Parties, waivers of any confidentiality provisions or agreements
contained in the related Loan Documents or which are otherwise applicable that
would prevent the Borrower from disclosing confidential information with respect
to such Loan Assets to the Secured Parties.
(k) USE OF PROCEEDS. Agrees that the net proceeds of any
Advance made hereunder shall be used solely for the purposes of (i) purchasing
Assets which do not constitute "margin stock" within the meaning of Regulation
U, and (ii) paying principal and Yield in respect of any outstanding Advances
and other Borrower Obligations.
(l) FURTHER ASSURANCES. Promptly, at the Borrower's expense,
execute and deliver such further instruments and take such further action in
order to (i) establish and protect the rights, interests and remedies created,
or intended to be created, in favor of the Secured Parties including, without
limitation, all such actions which are necessary or advisable to maintain and
protect the Secured Parties' first priority perfected security interest in the
Assigned Collateral free and clear of Adverse Claims (including, without
limitation, take or cause to take any actions required under the laws of the
jurisdiction in which any assets are held by a foreign sub-custodian), (ii)
enable the Secured Parties to enforce their rights and remedies under the
Program Documents, including, without limitation, to do all things necessary at
the request of the Agent during the continuance of an Event of Default to have
each Loan Asset which constitutes Assigned Collateral and the related Loan
Documents assigned to the Agent or its designee, and (iii) effectuate the intent
and purpose of, and to carry out the terms of, the Program Documents.
(m) DEFENSE OF SECURED PARTY'S INTEREST. Defend each of the
Secured Parties' right and interest in and to the Assigned Collateral against
all Adverse Claims of all Persons whomsoever.
(n) CUSTODY AND CONTROL, ETC. At all times, cause the
Custodian to have and maintain in its custody (A) all Loan Documents relating to
the Assigned Collateral, (B) all of its Borrowing Base Eligible Assets in
accordance with the terms of the Custodial Agreement, and (C) all Assigned
Collateral in accordance with the terms of the Custodial Agreement and the
Control Agreement. The Borrower shall, or shall cause the Custodian to, deliver
instruments to all Selling Institutions, Transaction Agents and Obligors related
to such Loan Assets requiring that any instrument evidencing such Loan Asset be
delivered to the Custodian. The Borrower shall maintain the Loan Documents
relating to the Assigned Collateral with the Custodian at its office in New
York, New York or such other location as the Borrower shall designate in writing
to the Agent. Subject to Section 7.02(a), cause all Eligible Commercial Paper,
Eligible Government Securities and Eligible Loan Assets, to constitute Assigned
Collateral.
(o) PROCEEDS OF ASSIGNED COLLATERAL. After a Default or Event
of Default, cause all Proceeds of the Assigned Collateral to be remitted to the
Collateral Account.
(p) INVESTMENT ADVISOR. Except as consented to by the Agent
(which consent shall not be unreasonably withheld), at all times maintain the
Advisor as the Borrower's investment advisor.
37
SECTION 5.02. NEGATIVE COVENANTS OF THE BORROWER.
From the date hereof until the Program Termination Date, the
Borrower will not, unless the Agent shall otherwise consent in writing:
(a) AMENDMENTS TO ORGANIZATIONAL DOCUMENTS. Amend, terminate,
supplement or otherwise modify in any material respect its declaration of trust,
by-laws or other organizational documents if the same could reasonably be
expected to give rise to a material adverse effect.
(b) CREATION OF DEBT. Create, assume or suffer to exist any
Debt or any Guarantee, except for Permitted Debt.
(c) SUBSIDIARIES. Form, or cause to be formed, any
subsidiaries.
(d) LIENS. Create, incur, assume or suffer to exist, any
Adverse Claims, or any other type of preferential arrangement, upon or with
respect to any of its Assets, whether now owned or hereafter acquired, except
(in the case of all Assets other than the Assigned Collateral) for Permitted
Liens.
(e) MERGERS; SALES OF ASSETS. Adopt or carry out any plan of
liquidation, partial liquidation or recapitalization, or merge into or
consolidate with, or convey, transfer, lease or otherwise dispose of (whether in
one transaction or in a series of transactions) any of its Assets other than
ordinary course sales of Assets in the conduct of its business as an investment
company and in accordance with the Investment Policies and Restrictions and
other than as contemplated by this Agreement and the Control Agreement,
PROVIDED, HOWEVER, that in the event such ordinary course sale or transfer of
Assets would result in a decrease in the Net Adjusted Borrowing Base Eligible
Asset Value (as set forth in the most recent Investor Report) equal to or
greater than 10%, such sale shall be permitted only if the Borrower delivers to
the Agent a certificate demonstrating compliance with the Borrowing Base Test
and the Asset Coverage Test after giving effect to such sale.
(f) CONVERSION TO OPEN-END STATUS; ETC. Convert from a
closed-end investment company to an open-end investment company or purchase any
Asset or engage in any line of business not contemplated by the Prospectus in
effect on the Closing Date.
(g) MANAGEMENT AGREEMENT; CUSTODIAL AGREEMENT. Amend,
supplement, waive or otherwise modify or terminate, in either case without the
prior written consent of the Agent (which consent shall not be unreasonably
withheld), the Management Agreement or the Custodial Agreement, except to the
extent the same could not reasonably be expected to give rise to a Material
Adverse Effect.
(h) RESTRICTED PAYMENTS. Make any Restricted Payments;
PROVIDED THAT (i) so long as a Default or an Event of Default shall not have
occurred and be continuing and would not occur as a result thereof and after
giving effect to such Restricted Payment the Borrower would be in full
compliance with the Borrowing Base Test and the Asset Coverage Test, the
Borrower may make Restricted Payments described in clause (a) of the definition
thereof in accordance with its policy to allocate investment income and capital
gains and permitted withdrawals as set forth in the Prospectus and make
distributions to the extent necessary to retain its qualification as a regulated
investment company under Subchapter M of the Code, and in order to not be
subject to the federal excise tax imposed on certain undistributed income, and
(ii) so long as an Event of Default shall not have occurred and be continuing
and would not occur as a result thereof, and after giving effect to such
Restricted Payment the Borrower would be in compliance with the Borrowing Base
Test and the Asset Coverage Test, the Borrower may make the Restricted Payments
described in clause (b) of the definition thereof. The Borrower will not utilize
or dispose of any Assigned Collateral (including without limitation Cash in the
Collateral Account) for any purpose other than to repay Borrower Obligations if
after giving effect thereto the Borrower would not be in full compliance with
the Borrowing Base Test.
38
(i) IMPAIRMENT OF RIGHTS. Enter into any agreement containing
any provision which would be violated or breached by the performance of its
obligations under any Program Document to which it is a party or take any action
not required by law, or fail to take any lawful action, if such action or
failure to take such action will result in a Material Adverse Effect.
(j) ERISA. Be a member of an ERISA Group or have any Benefit
Arrangement, Plan or Multiemployer Plan subject to ERISA.
(k) INVESTMENT POLICIES AND RESTRICTIONS. Permit any change in
the Investment Policies and Restrictions in effect on the Closing Date or the
criteria used to determine any Industry Class set forth on Schedule III hereto,
without, in each case, the prior written consent of the Agent (which consent
shall not be unreasonably withheld).
(l) SENIOR SECURITIES. Issue any "senior securities", as such
term is defined and used in the Investment Company Act other than Permitted
Senior Securities.
(m) MARGIN REQUIREMENTS. Extend credit to others for the
purpose of buying or carrying any "margin stock" in such a manner as to violate
Regulation T, Regulation U or Regulation X. The Borrower shall not use any
proceeds of any Advance to purchase or carry "margin stock" within the meaning
of Regulation U and, without limiting the foregoing, shall not have more than
25% of its total assets represented by margin stock.
(n) NAME CHANGE. Change its name (i) without giving the Agent
at least thirty (30) days' prior written notice, and (ii) unless all actions
necessary and appropriate to protect and perfect the Secured Parties' first
priority perfected security interest in the Assigned Collateral have been taken
and completed.
(o) NOTICE OF EXCLUSIVE CONTROL. After the Agent has delivered
a Notice of Exclusive Control, unless such Notice of Exclusive Control is
revoked in writing by the Agent, give any instruction to the Custodian in
respect of any Assigned Collateral or any amounts deposited in or to the credit
of the Collateral Account without the prior written consent of the Agent.
(p) TENDER OFFERS. Repurchase its shares pursuant to any
tender offer. For the avoidance of doubt, the Borrower shall be permitted to
repurchase shares pursuant to a Quarterly Share Repurchase.
39
(q) CUSTODIAN'S OVERDRAFT ADVANCES. Permit the Aggregate
Custodian's Advance Amount to at any time exceed fifteen percent (15%) of the
net asset value of the Borrower.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT.
If any of the following events (each an "Event of Default")
shall occur:
(a) the Borrower shall fail to make or cause to be made in the
manner and when due any payment or deposit to be made or to be caused to be made
by it under this Agreement or any of the other Program Documents and such
failure shall continue for three (3) Business Days; or
(b) the Borrower shall (i) fail to be in compliance with the
Asset Coverage Test and provided that a Responsible Officer of the Borrower has
certified that the Borrower is taking all steps necessary to cause the Borrower
to be in full compliance with the Asset Coverage Test within five (5) Business
Days after the first date of such noncompliance, such failure shall continue for
five (5) Business Days, or (ii) fail to comply with clauses (h), (m) or (p) of
Section 5.01 or clauses (b), (c), (d), (e), (f), (h), or (l) of Section 5.02 or
the Advisor shall fail to comply with clauses (b), (c), (d) or (e) of the Letter
Agreement; or
(c) (i) the Borrower shall fail to perform or observe any
other term, covenant or agreement on its part to be performed or observed under
this Agreement or any other Program Document, or (ii) the Advisor shall fail to
perform any of its obligations under the Letter Agreement, or (iii) the
Custodian shall fail to perform or observe any term, covenant or agreement on
its part to be performed or observed under the Control Agreement, or (iv) the
Custodian shall fail to perform or observe any term, covenant or agreement on
its part to be performed under the Custodial Agreement and such failure gives
rise to a Material Adverse Effect and such failure described in the cases of
clause (i) through (iv) shall continue for thirty (30) days; or
(d) any representation or warranty made or deemed made by the
Borrower, the Advisor or the Custodian under or in connection with this
Agreement, the Control Agreement, the Letter Agreement or any certificate or
report delivered by or on behalf of the Borrower, the Advisor or the Custodian
in connection therewith shall be false or incorrect in any material respect when
made or deemed made or delivered or any material representation or warranty made
or deemed made by the Borrower, the Advisor or the Custodian in any other
Program Document or any certificate or report delivered by or on behalf of the
Borrower, the Advisor or the Custodian in connection therewith shall be false or
incorrect in any material respect when made or deemed made or delivered;
PROVIDED, HOWEVER, that (A) with respect to any breach of a representation or
warranty made by the Custodian, such breach shall not constitute an Event of
Default if (i) such breach could not result in a Material Adverse Effect, and
(ii) the event giving rise to such breach are cured within fifteen (15) days
after its occurrence, and (B) with respect to any certificate or report provided
by the Custodian which is false or incorrect in any material respect, such event
shall not constitute an Event of Default under this clause (d) if (i) such event
could not result in a Material Adverse Effect, (ii) the incorrect or incomplete
certificate or report giving rise to such event was promptly corrected, (iii)
the Advisor shall have certified that all actions reasonably expected to be
necessary to prevent future reoccurrences of such events or reports of the same
general nature as the failure giving rise to such breach (the "Specified
Reporting Breach") have been taken, and (iv) no breach of the same general type
as such Specified Reporting Breach shall have previously occurred; or
40
(e) the Agent shall for any reason cease to have a valid and
perfected first priority security interest in the Assigned Collateral free and
clear of all Adverse Claims or the Custodian, as Collateral Agent under the
Control Agreement, shall not have custody and control of the Assigned
Collateral, as contemplated by the Control Agreement; or
(f) the Borrower, the Advisor or the Custodian shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against the
Borrower or the Custodian seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it (but not
instituted by it), either such proceeding shall remain undismissed or unstayed
for a period of sixty (60) days, or any of the actions sought in such proceeding
(including an order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or for any substantial part
of its property) shall occur; or the Borrower or the Custodian shall take any
corporate action to authorize any of the actions set forth above in this
subsection; PROVIDED, HOWEVER, that the occurrence of any event set forth in
this clause (f) in respect of the Custodian shall not constitute an Event of
Default if, prior to the day which is forty-five (45) days after the Borrower
has actual knowledge of circumstances which give rise to such event, a successor
custodian, reasonably satisfactory to the Agent, shall have been appointed as
custodian under the Custodial Agreement and shall have assumed the obligations
of the Custodian under the Custodial Agreement and the Control Agreement and the
Agent shall have received such certificates and opinions as it shall have
reasonably requested, all in form, scope and substance reasonably satisfactory
to the Agent; or
(g) any material provision of any Program Document shall cease
to be a legal, valid and binding obligation of any of the parties purported to
be bound thereby, enforceable in accordance with its respective terms or the
Borrower, the Advisor or the Custodian shall so assert in writing; or
(h) any judgment or order, or any series of judgments or
orders, shall have been entered against the Borrower, provided that (i) such
judgments or orders shall aggregate to $3,000,000 or more, and (ii) enforcement
actions have been commenced with respect thereto and have not been dismissed or
stayed pending appeal within thirty (30) days of such entry; or
41
(i) either (1) PFPC Trust Company shall at any time cease to
serve as Custodian under the Custodial Agreement or the Control Agreement,
unless a successor thereto reasonably satisfactory to the Agent shall have
assumed the duties of Custodian thereunder and in accordance with the terms of
the Program Documents, or (2) the Custodian or the Borrower shall have given
notice of the termination of the Custodial Agreement or the Control Agreement;
PROVIDED, HOWEVER, that events specified in clause (2) above shall not
constitute an Event of Default if prior to the fifth (5th) Business Day
immediately preceding the effective date of such termination a successor
custodian reasonably satisfactory to the Agent shall have been appointed as
custodian under the Custodial Agreement and shall have assumed the obligations
of the Custodian under the Custodial Agreement and the Control Agreement and the
Agent shall have received such certificates and opinions as it shall have
reasonably requested; or
(j) any event or condition shall occur which results in the
acceleration of the maturity of any Debt of the Borrower which Debt in the
aggregate is at least $3,000,000 or enables (or, with the giving of notice or
lapse of time or both would enable) the holder of such Debt or any Person acting
on such holder's behalf to accelerate the maturity thereof; or
(k) any change in Law shall be enacted, promulgated or
proposed which would limit the ability of the Agent, or any Secured Party to
foreclose upon its interest in, or in the event of such foreclosure to dispose
of, the Assigned Collateral or to be granted the security interest in Assigned
Collateral as contemplated by the Program Documents; or
(l) the Advisor shall (i) sell or otherwise dispose of all or
substantially all of its assets, or (ii) consolidate with or merge into any
other Person or acquire all or substantially all of the assets of another
Person, unless in each case it is the survivor or the Agent has consented to the
same in writing and such action does not give rise to a reasonable possibility
of a Material Adverse Effect; or
(m) the Management Agreement in effect on the Restatement
Effective Date or any replacement investment management agreement approved of in
writing by the Agent shall be (i) amended, waived or otherwise modified in any
material respect, or (ii) shall be terminated in either case without the prior
written consent of the Agent (which consent shall not be unreasonably withheld);
or
(n) the Borrower shall fail to comply with Section 2.05(b); or
(o) there shall not be in full force and effect a letter
agreement substantially identical to the Letter Agreement from the Advisor to
the Agent;
then, and in any such event, in addition to all rights and remedies specified in
this Agreement, including without limitation, Article VII, and the rights and
remedies of a secured party under Applicable Law including, without limitation
the UCC, the Agent may, by notice to the Borrower, declare the Lender
Termination Date and the Secondary Lender Termination Date to have occurred and
declare the outstanding Advances to be due and payable (in which case the Lender
Termination Date, the Secondary Lender Termination Date and the Maturity Date
shall be deemed to have occurred); PROVIDED, that, upon the occurrence of any
event (without any requirement for the passage of time or the giving of notice,
or both) described in subsection (f) of this Section 6.01, the Lender
Termination Date, the Secondary Lender Termination Date and the Maturity Date
shall be deemed to have automatically occurred.
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ARTICLE VII
PLEDGE OF ASSIGNED COLLATERAL; RIGHTS OF THE AGENT
SECTION 7.01. SECURITY INTERESTS.
In consideration of the Lender and the Secondary Lenders
making and maintaining the Advances, and as collateral security for the prompt,
complete and unconditional payment and performance of all of the Borrower
Obligations, the Borrower hereby pledges (and in the case of all Assigned
Collateral other than the Loan Assets), hypothecates, assigns, transfers, sets
over and delivers to the Agent for the benefit of the Secured Parties and grants
to the Agent for the benefit of the Secured Parties a continuing Lien upon and
security interest in, all of the Borrower's right, title and interest in, to and
under the following assets and properties whether now owned or existing or
hereafter arising or acquired and wheresoever located (collectively, the
"Assigned Collateral"):
(i) all of the assets, investments and property from
time to time credited to the Collateral Account and all
security entitlements with respect to the Collateral Account
and all Loan Assets held by the Custodian for the benefit of
the Agent pursuant to the Control Agreement;
(ii) all interest, dividends, stock dividends, stock
splits, distributions and other money or property of any kind
distributed in respect of the assets, investments, Loan
Assets, property and security entitlements described in clause
(i) above;
(iii) the Collateral Account, together with all other
accounts in which the distributions referred to in clause (ii)
above are remitted;
(iv) all rights and remedies of the Borrower under the
Loan Documents and the Custodial Agreement in respect of the
assets, investments, Loan Assets, property and security
entitlements described in clause (i) above;
(v) all security interests, collateral, liens,
property, guaranties, insurance and agreements or arrangements
of whatever character from time to time supporting or securing
payment of the assets, investments, Loan Assets, property and
security entitlements described in clause (i) above;
(vi) all accounts, contract rights, documents,
instruments, securities, investment property, chattel paper,
general intangibles (including payment intangibles),
inventory, goods, equipment and all other property of every
kind and nature, now owned or hereafter acquired in respect of
the assets, investments, Loan Assets, property and security
entitlements described above;
(vii) all books, records and other information
(including, without limitation, computer programs, tapes,
discs, punch cards, data processing software and related
property and rights) relating to the Assets, investments, Loan
Assets, property and security entitlements described in clause
(i) above; and
43
(viii) all Proceeds of any and all of the foregoing.
Notwithstanding the foregoing provisions of this Section 7.01,
the Assigned Collateral shall not include any "margin" stock within the meaning
of Regulation U. The Agent and the Secured Parties are hereby authorized to file
financing statements describing the Assigned Collateral as "all Assets" or using
similar all-inclusive language.
SECTION 7.02. SUBSTITUTION OF COLLATERAL AND RELEASE OF
SECURITY INTEREST.
(a) So long as no Event of Default shall have occurred and be
continuing and no Default or Event of Default would occur as a consequence of
such sale or disposition, the Borrower may sell or dispose of or substitute
Assigned Collateral in accordance with the terms of this Agreement and the
Control Agreement.
(b) After the Program Termination Date the Agent at the
request of the Borrower shall execute, deliver and file such instruments as the
Borrower shall reasonably request in order to reassign, release or terminate its
security interest in the Assigned Collateral. Any and all actions under this
Section 7.02 shall be without any recourse to, or representation or warranty by,
the Agent or any Secured Party and shall be at the sole cost and expense of the
Borrower.
SECTION 7.03. APPLICATION OF PROCEEDS.
(a) After the occurrence of an Event of Default, all amounts
received in respect of the Borrower Obligations, including without limitation
all Proceeds resulting from the sale or other disposition of the Assigned
Collateral shall be applied by the Agent in the following order and priority:
FIRST, to the payment of all amounts advanced or expended by
the Agent and all costs and expenses incurred by the Agent in connection with
the enforcement of the Secured Parties' rights and remedies under the Program
Documents;
SECOND, to the extent funds are remaining after the above
application, to the Lender and the Secondary Lenders to the payment of all
accrued and unpaid Yield on all outstanding Advances on a pro-rata basis
according to the amount of accrued Yield owing to the Lender and Secondary
Lender;
THIRD, to the extent funds are remaining after the above
applications, to the Secured Parties to the payment of all fees payable under
the Fee Letter on a pro rata basis according to the amount of such fees owing to
each such Secured Party;
FOURTH, to the extent funds are remaining after the above
applications, to the Lender and the Secondary Lenders to the payment of the
principal amount of each outstanding Advance on a pro-rata basis according to
the amount of principal owing to the Lender and each Secondary Lender; and
44
FIFTH, to the extent funds are remaining after the above
applications, to the Secured Parties to the payment of all other amounts payable
to the Secured Parties pursuant to this Agreement and the other Program
Documents on a pro rata basis according to the amounts owed to each such Secured
Party.
The Agent shall, after the Program Termination Date, remit the
remaining excess Proceeds which it had received from the sale or disposition of
the Assigned Collateral to the Borrower's Account.
(b) For purposes of determining the application to be made of
such monies and other cash proceeds by the Agent to the Lender and the Secondary
Lenders pursuant to this Section 7.03, the Agent may rely exclusively upon a
certificate or other statement of the Lender or such Secondary Lender, as the
case may be, setting forth in reasonable detail the amount then owing to the
Lender or such Secondary Lender, as the case may be. The Agent shall not be
liable for any application of funds in accordance with any certificate or
direction delivered pursuant to this Section 7.03; PROVIDED, HOWEVER, that no
application of funds in accordance with any certificate delivered pursuant to
this Section 7.03 shall be deemed to restrict or limit the right of any party to
contest with the purported obligee its respective liability in respect of the
amount set forth in such certificate.
SECTION 7.04. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT.
(a) The Agent (for itself and on behalf of the other Secured
Parties) shall have all of the rights and remedies of a secured party under the
UCC and other Applicable Law. Upon the occurrence and during the continuance of
an Event of Default, the Agent or its designees may (i) deliver a Notice of
Exclusive Control to the Custodian; (ii) instruct the Custodian to deliver any
or all of the Assigned Collateral and any Loan Documents relating to the
Assigned Collateral to the Agent or its designees and otherwise give all
instructions to the Custodian regarding the Assigned Collateral; (iii) sell or
otherwise dispose of the Assigned Collateral, all without judicial process or
proceedings; (iv) take control of the Proceeds of any such Assigned Collateral;
(v) exercise any consensual or voting rights in respect of the Assigned
Collateral, including without limitation the voting and consent rights under the
Loan Documents relating to any Assigned Collateral; (vi) release, make
extensions, discharges, exchanges or substitutions for, or surrender all or any
part of the Assigned Collateral; (vii) to the extent not enforced by the
Borrower under Section 7.06, enforce the Borrower's rights and remedies under
the Custodial Agreement with respect to the Assigned Collateral; (viii)
institute and prosecute legal and equitable proceedings to enforce collection
of, or realize upon, any of the Assigned Collateral; (ix) notify all Selling
Institutions, Transaction Agents and Obligors related to the Loan Assets which
constitute Assigned Collateral to make payment in respect thereof directly to
the Agent; (x) at the request of the Agent execute all documents and agreements
which are necessary or appropriate to have the Assigned Collateral which
constitutes Loan Assets to be assigned to the Agent or its designee; and (xi)
endorse the name of the Borrower upon any items of payment relating to the
Assigned Collateral or upon any proof of claim in bankruptcy against an account
debtor. For purposes of taking the actions described in Subsections (i) through
(xi) of this Section 7.04(a), the Borrower hereby irrevocably appoints the Agent
as its attorney-in-fact (which appointment being coupled with an interest is
irrevocable while any of the Borrower Obligations remain unpaid), with power of
substitution, in the name of the Agent or in the name of the Borrower or
otherwise, for the use and benefit of the Agent, but at the cost and expense of
the Borrower and without notice to the Borrower.
45
(b) All sums paid or advanced by the Agent in connection with
the foregoing and all costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred in connection therewith,
together with interest thereon at the Post-Default Rate from the date of payment
until repaid in full, shall be paid by the Borrower to the Agent on demand and
shall constitute and become a part of the Borrower Obligations secured hereby.
SECTION 7.05. REMEDIES CUMULATIVE.
Each right, power, and remedy of the Agent and the other
Secured Parties, or any of them, as provided for in this Agreement or in the
other Program Documents or now or hereafter existing at law or in equity or by
statute or otherwise shall be cumulative and concurrent and shall be in addition
to every other right, power, or remedy provided for in this Agreement or in the
other Program Documents or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of the exercise by the Agent
or any other Secured Party of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise by such Persons
of any or all such other rights, powers, or remedies.
SECTION 7.06. ENFORCEMENT OF RIGHTS AND REMEDIES BY THE
BORROWER.
The Borrower agrees that it shall (i) upon the request of the
Agent (and at the Borrower's own expense) diligently enforce the rights and
remedies under the Custodial Agreement and at law or equity against the
Custodian for the breach by the Custodian of any term, covenant or agreement
thereunder relating to or affecting any Assigned Collateral, and (ii) diligently
enforce its rights and remedies under the Loan Documents relating to each Loan
Asset and at law or equity. In enforcing such rights and remedies the Borrower
shall exercise the same degree of care that it would exercise if this Agreement
had not been entered into; PROVIDED, that the Borrower shall not, in enforcing
such rights and remedies, settle any claim without the prior written consent of
the Agent (which consent shall not be unreasonably withheld).
ARTICLE VIII
THE AGENT
SECTION 8.01. AUTHORIZATION AND ACTION.
The Lender and the Secondary Lenders hereby irrevocably
appoint and authorize the Agent to take such action as agent on their behalf and
to exercise such powers under this Agreement and the other Program Documents as
are delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. As to any matters not expressly
provided for by this Agreement or the other Program Documents, the Agent shall
not be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Lender or the
Secondary Lenders; PROVIDED, HOWEVER, that the Agent shall not be required to
take any action which exposes the Agent to personal liability or which is
contrary to this Agreement, the other Program Documents or Applicable Law.
46
SECTION 8.02. AGENT'S RELIANCE, ETC.
Neither the Agent nor any of its directors, officers, agents
or employees shall be liable for any action taken or omitted to be taken by it
or them under or in connection with this Agreement or any of the other Program
Documents, except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Agent: (i) may consult
with legal counsel (including counsel for the Borrower or the Advisor) and
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (ii) makes
no warranty or representation to the Lender, any Secondary Lender, or any Person
and shall not be responsible to the Lender, any Secondary Lender or any Person
for any statements, warranties or representations (whether written or oral) made
in or in connection with this Agreement or the other Program Documents; (iii)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement, the
other Program Documents or any Loan Documents on the part of the Borrower, the
Advisor, the Custodian or any other Person or to inspect the property (including
the books and records) of the Borrower or the Advisor; (iv) shall not be
responsible to the Lender, any Secondary Lender or any Person for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, the other Program Documents, any Loan Document or any other
instrument or document furnished pursuant hereto or thereto; and (v) shall incur
no liability under or in respect of this Agreement or any other Program Document
by acting upon any notice, consent, certificate or other instrument or writing
(which may be delivered by telecopier, telegram, cable or telex) believed by it
to be genuine and signed or sent by the proper party or parties.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NO WAIVER; MODIFICATIONS IN WRITING.
No failure or delay on the part of any Secured Party
exercising any right, power or remedy hereunder or with respect to the Advances
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to any Secured Party, at law or in equity. No amendment, modification,
supplement, termination or waiver of this Agreement shall be effective unless
the same shall be in writing and signed by each of the Agent and the Borrower.
Any waiver of any provision of this Agreement, and any consent to any departure
by the Borrower from the terms of any provision of this Agreement, shall be
effective only in the specific instance and for the specific purpose for which
given. No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.
47
SECTION 9.02. NOTICES, ETC.
Except where telephonic instructions are authorized herein to
be given, all notices, demands, instructions and other communications required
or permitted to be given to or made upon any party hereto shall be in writing
and shall be personally delivered or sent by registered, certified or express
mail, postage prepaid, or by prepaid telegram (with messenger delivery specified
in the case of a telegram), or by facsimile transmission, or by prepaid courier
service, and shall be deemed to be given for purposes of this Agreement on the
day that such writing is received by the intended recipient thereof in
accordance with the provisions of this Section 9.02. Unless otherwise specified
in a notice sent or delivered in accordance with the foregoing provisions of
this Section 9.02, notices, demands, instructions and other communications in
writing shall be given to or made upon the respective parties hereto at their
respective addresses (or to their respective facsimile numbers) indicated below,
and, in the case of telephonic instructions or notices, by calling the telephone
number or numbers indicated for such party below:
If to CRC: CRC Funding, LLC
x/x Xxxxxxxx Xxxxx Xxxxxxx, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: U.S. Securitization
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
If to the Agent: Citicorp North America, Inc.
U.S. Securitization
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: U.S. Securitization
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
If to Citibank: Citibank, N.A.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Portfolio Management Unit
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to the Borrower: Highland Floating Rate Advantage Fund
Two Galleria Tower
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Treasurer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
48
SECTION 9.03. TAXES.
(a) Any and all payments by the Borrower under this Agreement,
the Advance Notes or any other Program Document shall be made, in accordance
with this Agreement, free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of the Secured
Parties, (i) United States federal withholding taxes and (ii) income and
franchise taxes imposed on it by any taxing Authority in any jurisdiction which
asserts jurisdiction to impose such taxes on the basis of contacts which the
Secured Party in question maintains with such jurisdiction other than contacts
arising out of the execution, delivery or performance of the Program Documents
or the transactions contemplated thereby (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder, under any Advance Note or
under any other Program Document to any Secured Party, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
9.03) such Secured Party receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with Applicable
Law.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made by the Borrower hereunder,
under the Advance Notes or under any other Program Document or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, the Advance Note or under any other Program Document (hereinafter
referred to as "Other Taxes").
(c) The Borrower will indemnify the Secured Party for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
9.03) paid by any Secured Party in respect of the Borrower and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within thirty (30) days from the
date the Secured Party makes written demand therefor to the Borrower.
(d) Within thirty (30) days after the date of any payment of
Taxes or Other Taxes, the Borrower will furnish to the Agent the original or a
certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreement and obligations of the Borrower
contained in this Section 9.03 shall survive the termination of this Agreement
and the payment in full of principal and Yield on the Advance Notes.
49
SECTION 9.04. COSTS AND EXPENSES; INDEMNIFICATION.
(a) The Borrower agrees to promptly pay on demand all
reasonable costs and expenses of each the Agent, CRC and Citibank in connection
with the preparation, review, negotiation, reproduction, execution and delivery
of this Agreement, the Advance Notes and the other Program Documents, including
without limitation, the reasonable fees and disbursements of counsel to the
Agent, CRC and Citibank. The Borrower also agrees to promptly pay on demand all
reasonable costs and expenses of each Secured Party in connection with the
administration, modification and amendment of this Agreement, the Advance Notes
and the other Program Documents including, without limitation, the reasonable
fees and disbursements of counsel for each Secured Party with respect thereto
and with respect to advising each Secured Party as to their respective rights,
remedies and responsibilities under this Agreement and the other Program
Documents, all actuarial fees, UCC filing fees and periodic auditing expenses.
The Borrower further agrees to pay on demand all reasonable costs and expenses
of the Secured Parties (including, without limitation, the reasonable fees and
disbursements of counsel), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Advance
Notes, the Loan Documents and the other Program Documents.
(b) In addition, the Borrower shall pay on demand (i) any and
all commissions of placement agents and commercial paper dealers in respect of
commercial paper notes issued to fund the Advances, (ii) any and all costs and
expenses of any issuing and paying agent or other Person responsible for the
administration of the Lender's commercial paper program in connection with the
preparation, completion, issuance, delivery or payment of commercial paper notes
issued to fund the Advances, and (iii) in connection with the transaction
contemplated by the Program Documents, the applicable pro-rata costs and
expenses of the rating agencies' rating the Lender's commercial paper notes.
(c) The Borrower agrees to indemnify and hold harmless each
Secured Party and each of their Affiliates and the respective officers,
directors, employees, agents, managers of, and any Person controlling any of,
the foregoing (each, an "Indemnified Party") from and against any and all
claims, damages, losses, liabilities, obligations, expenses, penalties, actions,
suits, judgments and disbursements of any kind or nature whatsoever, (including,
without limitation, the reasonable fees and disbursements of counsel)
(collectively the "Liabilities") that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with
or by reason of the execution, delivery, enforcement, performance,
administration of or otherwise arising out of or incurred in connection with
this Agreement, any Loan Document or any other Program Document to which the
Borrower is a party or any transaction contemplated hereby or thereby (and
regardless of whether or not any such transactions are consummated), including,
without limitation any such Liability that is incurred or arises out of or in
connection with, or by reason of any one or more of the following: (i)
preparation for a defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with this Agreement or any other
Program Document or any of the transactions contemplated hereby or thereby; (ii)
any breach or alleged breach of any covenant by the Borrower or the Custodian
contained in any Program Document; (iii) any representation or warranty made by
the Borrower or the Custodian, contained in any Program Document or in any
certificate, statement or report delivered in connection therewith is, or is
alleged to be, false or misleading; (iv) any failure by the Borrower or the
Custodian to comply with any Applicable Law or contractual obligation binding
upon it; (v) any failure to vest, or delay in vesting, in the Secured Parties a
first priority perfected security interest in all of the Assigned Collateral;
(vi) any action or omission, not expressly authorized by the Program Documents,
by the Borrower or the Custodian, which has the effect of reducing or impairing
the Assigned Collateral or the rights of the Agent or the Secured Parties with
respect thereto; (vii) any Default or Event of Default; and (viii) any
transactions related to the funding, carrying or repayment of the outstanding
principal amount of the Advances in connection with the Program Documents;
EXCEPT to the extent any such Liability payable to an Indemnified Party is found
in a final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
50
(d) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 9.04 shall survive the termination of this Agreement
and the payment in full of principal and Yield on the Advances.
SECTION 9.05. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same Agreement.
SECTION 9.06. ASSIGNABILITY.
(a) This Agreement and the Lender's rights and obligations
herein (including the outstanding Advances) shall be assignable by the Lender
and its successors and assigns; PROVIDED, that without the prior written consent
of the Borrower (which consent shall not be unreasonably withheld), the Lender
shall not assign its rights and obligations to any Person other than to a United
States Affiliate of the Agent or to a Secondary Lender. Each such assignor shall
notify the Agent and the Borrower of any such assignment. Each such assignor
may, in connection with the assignment or participation, disclose to the
assignee or participant any information relating to the Borrower, including the
Assigned Collateral, furnished to such assignor by or on behalf of the Borrower
or by the Agent; PROVIDED, FURTHER, that, prior to any such disclosure, the
assignee or participant agrees to preserve the confidentiality of any
confidential information relating to the Borrower received by it from any of the
foregoing entities.
(b) Each Secondary Lender may, with the consent of the
Borrower (which shall not be unreasonably withheld or delayed), assign to any
Eligible Assignee all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Secondary
Lender Commitment and the outstanding Advances or interests therein owned by
it); PROVIDED, THAT, the Borrower's consent to any such assignment shall not be
required if the assignee is an existing Secondary Lender or an Affiliate of
Citibank or Citicorp North America, Inc. The parties to each such assignment
shall execute and deliver to the Agent an Assignment and Acceptance.
Notwithstanding the foregoing, Citibank or any of its Affiliates may assign any
of its rights (including, without limitation, rights to payment of principal and
Yield on the Advances) under this Agreement to any Federal Reserve Bank without
notice to or consent of the Borrower or the Agent.
51
(c) This Agreement and the rights and obligations of the Agent
herein shall be assignable by the Agent and its successors and assigns;
PROVIDED, that without the prior written consent of the Borrower (which consent
shall not be unreasonably withheld or delayed), the Agent shall not assign its
obligations to any Person other than a U.S. Affiliate of the Agent.
(d) The Borrower may not assign its rights or obligations
hereunder or any interest herein without the prior written consent of the Agent
(which consent shall not be unreasonably withheld or delayed).
(e) The Secondary Lenders may, without the consent of the
Borrower, sell participation interests in their respective Secondary Lender
Commitments. The Borrower agrees that references in Sections 2.06, 2.07, 2.08,
9.03 and 9.04 and the other terms and provisions of this Agreement and the other
Program Documents to rates, determinations, reserve and capital adequacy
requirements, expenses, increased costs, reduced receipts and the like as they
pertain to the Secondary Lenders shall be deemed also to include those of each
of its participants; PROVIDED, THAT, the Borrower shall not be required to
reimburse a participant of a Secondary Lender pursuant to Sections 2.06, 2.07,
2.08, 9.03 or 9.04 in an amount in excess of the amount that would have been
payable to such Secondary Lender had such participation not been made.
SECTION 9.07. GOVERNING LAW.
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE.
SECTION 9.08. SEVERABILITY OF PROVISIONS.
Any provision of this Agreement which 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 or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 9.09. CONFIDENTIALITY.
(a) The Borrower agrees that it shall and shall cause each of
its Affiliates (i) to keep this Agreement, the Control Agreement, the Letter
Agreement, the proposal relating to the structure of the facility contemplated
by this Agreement (the "Facility"), any analyses, computer models, information
or document prepared by the Agent, Citibank or any of their respective
Affiliates in connection with the Facility, the Agent's or its Affiliate's
written reports to the Borrower, the Advisor or any of their respective
Affiliates and any related written information (collectively, the "Product
Information") confidential and to disclose Product Information only to those of
its officers, employees, agents, accountants, legal counsel and other
representatives (collectively, the "Borrower Representatives") who have a need
to know such Product Information for the purpose of assisting in the
negotiation, completion and administration of the Facility; (ii) to use the
Product Information only in connection with the Facility and not for any other
purpose; and (iii) to cause the Borrower Representatives to comply with the
provisions of this Section 9.09 and to be responsible for any failure of any
Borrower Representative to so comply.
52
The provisions of this Section 9.09(a) shall not apply to any
Product Information that is a matter of general public knowledge or that has
heretofore been made available to the public by any Person other than the
Borrower, the Advisor, any of their respective Affiliates or any Borrower
Representative or that is required to be disclosed by applicable law or is
requested by any Authority with jurisdiction over the Borrower, the Advisor or
any of their respective Affiliates.
(b) Each of the Secured Parties agrees (i) to keep all
non-public information with respect to the Borrower and the Advisor and their
respective Affiliates which such Secured Party receives pursuant to the Program
Documents (collectively, the "Borrower Information") confidential and to
disclose Borrower Information only to those of its officers, employees, agents,
accountants, legal counsel and other representatives of the Secured Parties
(collectively, the "Secured Party Representatives"), to providers of
program-wide credit enhancement for CRC and to S&P and Xxxxx'x and any other
rating agency that rates the promissory notes of CRC which, in each case, may
have a need to know or review such Borrower Information for the purpose of
assisting in the negotiation, completion, administration and evaluation of the
Facility; (ii) to use the Borrower Information only in connection with the
Facility and not for any other purpose; and (iii) to cause its related Secured
Party Representatives to comply with the provisions of this Section 9.09(b).
The provisions of this Section 9.09(b) shall not apply to any
Borrower Information that is a matter of general public knowledge or that has
heretofore been made available to the public by any Person other than such
Secured Party Representative or that is required to be disclosed by Applicable
Law or is requested by any Authority with jurisdiction over any Secured Party or
Secured Party Representative or any of their respective Affiliates or as may be
necessary to enforce the Program Documents.
Notwithstanding the foregoing, the Borrower Information may be
disclosed by any Secured Party Entity to permitted assignees and participants
and potential assignees and participants in the Facility to the extent such
disclosure is made pursuant to a written agreement of confidentiality
substantially similar to this Section 9.09(b).
(c) Notwithstanding anything in this Section 9.09 to the
contrary, the Borrower, the Lender, the Secondary Lender and the Agent (and each
employee, representative or other agent of the Borrower, the Lender, the
Secondary Lender and the Agent) may disclose to any and all Persons, without
limitation of any kind, the U.S. tax treatment and/or U.S. tax structure of the
Facility and all materials of any kind (including opinions or other tax
analyses) that are provided to it, relating to such U.S. tax treatment and/or
U.S. tax structure of the Facility, other than any information for which
non-disclosure is reasonably necessary in order to comply with applicable
securities laws."
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SECTION 9.10. MERGER.
The Program Documents taken as a whole incorporate the entire
agreement between the parties thereto concerning the subject matter thereof. The
Program Documents supersede any prior agreements among the parties relating to
the subject matter thereof.
SECTION 9.11. NO PROCEEDINGS.
Each of the Borrower, the Agent, each Secondary Lender, each
assignee of an Advance or any interest therein and each entity which enters into
a commitment to make Advances to the Borrower hereunder hereby agrees that it
will not institute against CRC any proceeding of the type referred to in Section
6.01(f) so long as any commercial paper or other senior indebtedness issued by
CRC shall be outstanding or there shall not have elapsed one year plus one day
since the last day on which any such commercial paper or other senior
indebtedness shall have been outstanding. The obligations of CRC under and in
connection with this Agreement and the other Program Documents are solely the
obligations of the CRC. It is expressly agreed that no recourse shall be had for
the payment of any amount owing in respect of this Agreement or any other
Program Document or for any other obligation or claim arising out of or based
upon this Agreement or any other Program Document, against any member,
stockholder, employee, officer, manager, director, organizer or incorporator of
CRC or against any member, stockholder, employee, officer, manager, director,
organizer or incorporator of any such member, stockholder or manager.
SECTION 9.12. LOAN DOCUMENTS.
No obligation or liability is intended to be assumed by the
Agent or any other Secured Party under or as a result of this Agreement or the
other Program Documents and the transactions contemplated hereby and thereby
and, to the maximum extent permitted under provisions of Law, the Agent and the
other Secured Parties expressly disclaim any such assumption. The Borrower shall
indemnify, defend and hold harmless the Agent and the other Secured Parties from
any loss, liability or expense incurred as a result of any claim that any such
obligation or liability has been so assumed.
If an Event of Default under Section 6.01(f) in respect of the
Borrower shall have occurred and is continuing or the Agent shall have delivered
a Notice of Exclusive Control to the Custodian, and such notice has not been
revoked by the Agent, the Borrower will use its best efforts to obtain and give
all necessary consents under all Loan Documents relating to any Assigned
Collateral and execute and deliver all agreements and documents which are
necessary or appropriate in order to enable the Secured Parties to enforce their
rights and remedies hereunder and under the other Program Documents, including
without limitation, to permit the Assigned Collateral which constitutes Loan
Assets to be assigned to the Agent or its designees. In addition, the Borrower
shall pay all assignment fees which are required to be paid pursuant to the Loan
Documents relating to the Assigned Collateral in connection with the foregoing.
The Agent and the Secured Parties acknowledge that in order to enforce certain
of their remedies in respect of the Assigned Collateral which constitutes Loan
Assets after the occurrence of an Event of Default, certain provisions of the
related Loan Documents may need to be complied with, including provisions
requiring the consent of the related Transaction Agent and/or Obligor.
54
SECTION 9.13. SUBMISSION TO JURISDICTION; WAIVERS.
The Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement or the other Program Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and the appellate courts of any of them;
(b) consents that any such action or proceeding may be brought
in any of such courts and waives any objection that it may now or hereafter have
to the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 9.02 or at such other address as
may be permitted thereunder;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to xxx in any other jurisdiction or court;
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive, indirect or consequential
damages; and
(f) acknowledges and agrees that in addition to any right of
setoff, banker's lien or counterclaim a Secured Party may otherwise have, each
Secured Party shall be entitled, at its option, to set-off any amount owing by
it to the Borrower or any balances held by it for the account of the Borrower
against any Borrower's Obligations which is not paid when due. Each Secured
Party will use reasonable efforts to promptly notify the Borrower after any such
set-off and application made by such Secured Party; PROVIDED, that the failure
of such Secured Party to provide such notice will not affect any Borrower
Obligation under this Agreement or the ability of a Secured Party to set-off any
amount owing by it to the Borrower or any balances held by it for the account of
the Borrower against any Borrower's Obligations which is not paid when due
pursuant to this Section 9.13(f).
SECTION 9.14. E-MAIL REPORTS.
Subject to the following terms and conditions the Borrower
may, unless otherwise notified to the contrary by the Agent, transmit Investor
Reports and Weekly Portfolio Reports to the Agent by electronic mail (each an
"E-Mail Report"):
(i) The Borrower shall make arrangements with VeriSign,
Inc. (or another authenticating organization acceptable to the
Agent) to enable the Borrower to generate digital signatures.
The Borrower shall safeguard the keys, access codes or other
means of generating its digital signature.
55
(ii) Each E-Mail Report shall be formatted as the Agent
may designate from time to time and shall be digitally signed.
Each E-Mail Report shall be sent to the Agent at an electronic
mail address designated by the Agent.
(iii) Each E-Mail Report shall be deemed given when
receipt of such transmission thereof is acknowledged by the
Agent.
SECTION 9.15. WAIVER OF JURY TRIAL.
To the extent permitted by law, each of the Parties hereto
hereby irrevocably and unconditionally waives trial by jury in any legal action
or proceeding relating to this Agreement or any other program document or for
any counterclaim therein or relating thereto.
SECTION 9.16. BUSINESS TRUST NOTICE.
It is expressly agreed that the obligations of the Borrower
under this Agreement shall not be binding upon any past, present or future
trustee, nominee, officer, shareholder, employee or agent of the Borrower
individually, and shall only be binding upon the Borrower and its assets, as
provided in the Borrower's Amended and Restated Agreement and Declaration of
Trust, a copy of which is on file at the office of the Secretary of the
Commonwealth of Massachusetts and at the principal offices of the Borrower. The
Agreement was executed on behalf of the Borrower by an officer of the Borrower
in such capacity, and shall not be deemed to have been executed by such officer
individually or to impose any liability on such officer, or the shareholders of
the Borrower, personally, but shall bind only the assets and property of the
Borrower.
SECTION 9.17. NO NOVATION.
It is the intent of the parties hereto that this Agreement (i)
shall re-evidence, in part, the Borrower's indebtedness under the Existing
Credit Agreement, (ii) is entered into in substitution for, and not in payment
of, the obligations of the Borrower under the Existing Credit Agreement, and
(iii) is in no way intended to constitute a novation of any of the Borrower's
indebtedness which was evidenced by the Existing Credit Agreement or any of the
other Program Documents (as defined in the Existing Credit Agreement).
56
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.
CRC FUNDING, LLC,
as Lender
By: Citicorp North America, Inc.,
its Managing Agent
By:____________________________
Name:
Title:
CITICORP NORTH AMERICA, INC.,
as Agent
By:____________________________
Name:
Title:
CITIBANK, N.A.,
as Secondary Lender
By:____________________________
Name:
Title:
Percentage: 100%
HIGHLAND FLOATING RATE ADVANTAGE FUND,
as Borrower
By:_____________________________
Name:
Title:
--------------------------------------------------------------------------------
AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT
among
HIGHLAND FLOATING RATE ADVANTAGE FUND,
as Borrower
CRC FUNDING, LLC,
as Lender
CITIBANK, N.A.,
as Secondary Lender
and
CITICORP NORTH AMERICA, INC.,
as Agent
Dated as of October 18, 2004
--------------------------------------------------------------------------------
[Type VII-C]
TABLE OF CONTENTS
PAGE
AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT 1
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definitions.........................................................................................1
SECTION 1.02. Rules of Construction..............................................................................21
SECTION 1.03. Computation of Time Periods........................................................................21
ARTICLE II
ADVANCES TO THE BORROWER
SECTION 2.01. Advance Facility...................................................................................21
SECTION 2.02. Making of Advances.................................................................................22
SECTION 2.03. Advance Notes......................................................................................23
SECTION 2.04. Maturity of the Advances...........................................................................23
SECTION 2.05. Prepayment of the Advances.........................................................................23
SECTION 2.06. Yield..............................................................................................24
SECTION 2.07. Increased Costs....................................................................................24
SECTION 2.08. Compensation.......................................................................................25
SECTION 2.09. Additional Yield on Eurodollar Rate Advances.......................................................26
SECTION 2.10. Termination or Reduction of the Total Commitment...................................................26
SECTION 2.11. Rescission or Return of Payment....................................................................26
SECTION 2.12. Fees Payable by Borrower...........................................................................26
SECTION 2.13. Post Default Interest..............................................................................26
SECTION 2.14. Payments...........................................................................................27
SECTION 2.15. Ratable Payments...................................................................................28
SECTION 2.16. Borrower's Obligations Absolute....................................................................27
i
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to the Effectiveness of the Existing Credit Agreement.........................28
SECTION 3.02. Conditions Precedent to All Advances...............................................................29
SECTION 3.01. Conditions Precedent to the Effectiveness of this Agreement........................................30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.....................................................31
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Borrower..............................................................34
SECTION 5.02. Negative Covenants of the Borrower.................................................................38
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default..................................................................................40
ARTICLE VII
PLEDGE OF ASSIGNED COLLATERAL; RIGHTS OF THE AGENT
SECTION 7.01. Security Interests.................................................................................43
SECTION 7.02. Substitution of Collateral and Release of Security Interest........................................44
SECTION 7.03. Application of Proceeds............................................................................44
SECTION 7.04. Rights and Remedies upon Event of Default..........................................................45
SECTION 7.05. Remedies Cumulative................................................................................46
SECTION 7.06. Enforcement of Rights and Remedies by the Borrower.................................................46
ii
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action...........................................................................47
SECTION 8.02. Agent's Reliance, Etc..............................................................................47
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. No Waiver; Modifications in Writing................................................................48
SECTION 9.02. Notices, Etc.......................................................................................48
SECTION 9.03. Taxes..............................................................................................49
SECTION 9.04. Costs and Expenses; Indemnification................................................................50
SECTION 9.05. Execution in Counterparts..........................................................................52
SECTION 9.06. Assignability......................................................................................52
SECTION 9.07. Governing Law......................................................................................53
SECTION 9.08. Severability of Provisions.........................................................................53
SECTION 9.09. Confidentiality....................................................................................53
SECTION 9.10. Merger.............................................................................................54
SECTION 9.11. No Proceedings.....................................................................................54
SECTION 9.12. Loan Documents.....................................................................................55
SECTION 9.13. Submission to Jurisdiction; Waivers................................................................55
SECTION 9.14. E-Mail Reports.....................................................................................51
SECTION 9.15. Waiver Of Jury Trial...............................................................................56
SECTION 9.16. Business Trust Notice..............................................................................56
SECTION 9.17. No Novation........................................................................................56
iii
SCHEDULES
Schedule I Form of Investor Report
Schedule II Form of Weekly Portfolio Report
Schedule III Industry Classifications
EXHIBITS
EXHIBIT A Form of Advance Note
EXHIBIT B Form of Notice of Borrowing
EXHIBIT C Form of Assignment and Acceptance
iv
SCHEDULE I
FORM OF INVESTOR REPORT
Annex A
to
Schedule I
--------------------------------------------------------------------------------
Investor Report Officer's Certificate
The undersigned, ______________, the [INSERT TITLE OF
RESPONSIBLE OFFICER] of Highland Floating Rate Advantage Fund (the "Borrower")
pursuant to that certain Amended and Restated Revolving Credit and Security
Agreement, dated as of October 18, 2004 (the "Credit Agreement") among the
Borrower, CRC Funding, LLC, Citibank, N.A., the other banks and financial
institutions parties thereto and Citicorp North America, Inc., as agent (the
"Agent"), as the same may be amended, modified or supplemented from time to
time, hereby certifies that:
1. Capitalized terms used herein and not otherwise defined
shall have the meaning ascribed to such terms in the
Credit Agreement.
2. The Investor Report furnished herewith to the Agent
pursuant to Section 5.01(d) of the Credit Agreement is
true, accurate and complete as of the day hereof.
3. No event has occurred and is continuing which would
constitute a Default or an Event of Default.
4. As of the date hereof, the Borrower is in compliance
with the Borrowing Base Test and the Asset Coverage
Test.
IN WITNESS WHEREOF, the undersigned has duly signed on behalf
of the Borrower as of the date set forth below.
DATED:
--------------------------
-------------------------------
Name:
Title:
SCHEDULE II
[FORM OF WEEKLY PORTFOLIO REPORT]
Annex A
to
Schedule II
-------------------------------------------------------------------------------
Weekly Portfolio Report and Officer's Certificate
The undersigned, ______________, the [INSERT TITLE OF
RESPONSIBLE OFFICER] of Highland Floating Rate Advantage Fund (the "Borrower")
pursuant to that certain Amended and Restated Revolving Credit and Security
Agreement, dated as of October 18, 2004 (the "Credit Agreement") among the
Borrower, CRC Funding, LLC, Citibank, N.A., the other banks and financial
institutions parties thereto and Citicorp North America, Inc., as agent (the
"Agent"), as the same may be amended, modified or supplemented from time to
time, hereby certifies that:
1. Capitalized terms used herein and not otherwise defined
shall have the meaning ascribed to such terms in the
Credit Agreement.
2. The Borrowing Base as of the date hereof is
$___________________.
3. The aggregate outstanding principal balance of Advances
as of the date hereof is $____________.
4. No event has occurred and is continuing which would
constitute a Default or an Event of Default.
5. The weekly net asset value report to which this
certificate is attached is true, accurate and complete.
6. As of the date hereof the Borrower is in compliance
with the Borrowing Base Test and the Asset Coverage
Test.
IN WITNESS WHEREOF, the undersigned has duly signed on behalf
of the Borrower as of the date set forth below.
DATED:
--------------------------
-------------------------------
Name:
Title:
SCHEDULE III
INDUSTRY CLASSIFICATIONS
Aerospace and Defense
Automobile
Beverage, Food and Tobacco
Broadcasting/Entertainment
Buildings & Real Estate
Cargo Transport
Chemicals, Plastics and Rubber
Containers, Packaging and Glass
Diversified & Conglomerate Manu.
Diversified & Conglomerate Service
Ecological
Electronics
Farming and Agriculture
Finance
Grocery
Healthcare
Home and Office Furnishings
Hotels, Motels, Inns and Gaming
Insurance
Leisure, Amusement, Entertainment
Machinery Nonagriculture, Nonconstruction
Mining, Steel, Iron and Non Precious Metals
Oil and Gas
Personal and Non Durable Consumer Products
Personal, Food and Miscellaneous
Printing and Publishing
Personal Transportation
Retail Stores
Telecommunications
Textiles and Leather
Utilities
Government
EXHIBIT A
[FORM OF ADVANCE NOTE]
$
---------- ---------, ----
FOR VALUE RECEIVED, on the Maturity Date (as defined in the
Credit Agreement hereinafter referred to) of each Advance made by the [INSERT
NAME OF LENDER OR SECONDARY LENDER] (together with its successors and assigns
the ["Lender"] ["Secondary Lender"]) to the undersigned (the "Borrower")
pursuant to the Credit Agreement (defined below), the Borrower hereby promises
to pay to the order of the ["Lender"] ["Secondary Lender"] the unpaid principal
amount of each such Advance, in immediately available funds and in lawful money
of the United States of America, and to pay Yield on the unpaid principal
balance of said Advance from the Borrowing Date thereof, until the principal
amount thereof shall have been paid in full, in like funds and money as provided
in said Credit Agreement for Advances made by the [Lender] [Secondary Lender]
and at the maturity thereof. Capitalized terms used in this promissory note
unless otherwise defined herein shall have the meaning assigned to such terms in
the Credit Agreement.
This promissory note is an Advance Note referred to in the
Amended and Restated Revolving Credit and Security Agreement dated as of October
18, 2004 (as from time to time amended, the "Credit Agreement") among the
Borrower, the [Lender], [Secondary Lender], the other banks and financial
institutions parties thereto and Citicorp North America, Inc., as agent. The
date and principal amount of each Advance made to the Borrower and of each
repayment of principal thereon shall be recorded by the [Lender] [Secondary
Lender] or its designee on Schedule I attached to this Advance Note, and the
aggregate unpaid principal amount shown on such schedule shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on the Advances
made by the [Lender] [Secondary Lender]. The failure to record or any error in
recording any such amount on such schedule shall not, however, limit or
otherwise affect the obligations of the Borrower hereunder or under the Credit
Agreement to repay the principal amount of the Advances together with all Yield
accrued thereon.
A copy of the Trust's Agreement and Declaration of Trust has
been filed with the Secretary of The Commonwealth of Massachusetts. This
promissory note is executed by officers of the Trust not as individuals and is
not binding upon any of the Trustees, officers or shareholders of the Trust
individually but only upon the assets of the Trust.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
HIGHLAND FLOATING RATE ADVANTAGE FUND
By:_____________________________
Name:
Title:
SCHEDULE I
TO EXHIBIT A
This Advance Note evidences Advances made by [INSERT NAME OF LENDER
OR SECONDARY LENDER], (the ["Lender"] ["Secondary Lender"]) under
the Amended and Restated Revolving Credit and Security Agreement
dated as of October 18, 2004 among Highland Floating Rate Advantage
Fund, the [Lender] [Secondary Lender], the other banks and
financial institutions parties thereto and Citicorp North America,
Inc., as agent in the principal amounts and on the dates set forth
below, subject to the payments and prepayments of principal set
forth below:
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT AMOUNT PAID BALANCE NOTATION
DATE ADVANCED OR PREPAID OUTSTANDING BY
---- ---------- ----------- ----------- --
EXHIBIT B
HIGHLAND FLOATING RATE ADVANTAGE FUND
[Address]
Citicorp North America, Inc.,
as Agent
[ADDRESS]
NOTICE OF BORROWING
This Notice of Borrowing is made pursuant to Section 2.02 of
that certain Amended and Restated Revolving Credit and Security Agreement dated
as of October 18, 2004, among CRC FUNDING, LLC, as lender (the "Lender"),
CITIBANK, N.A. the other banks parties thereto, CITICORP NORTH AMERICA, INC., as
agent and HIGHLAND FLOATING RATE ADVANTAGE FUND, as borrower (the "Borrower")
(as the same may from time to time be amended, supplemented, waived or modified,
the "Credit Agreement"). Unless otherwise defined herein, capitalized terms used
herein have the meanings assigned to those terms in the Credit Agreement.
1. The Borrower hereby requests that on ______________, ____
(the "Borrowing Date") it receive an advance under the Credit Agreement in the
principal amount of _____________ Dollars ($_______).
2. The Borrower hereby gives notice of its request for such
Advance to the Agent pursuant to Section 2.02 of the Credit Agreement and
requests the Lender or the Secondary Lenders to remit, or cause to be remitted,
the proceeds thereof to [the Borrower's Account] [SPECIFY OTHER ACCOUNT, IF
APPLICABLE].
3. The Borrower certifies that (i) the representations and
warranties of the Borrower contained or reaffirmed in Section 4.01 of the Credit
Agreement are true and correct in all material respects on and as of the date
hereof to the same extent as though made on and as of the date hereof (except to
the extent such representations and warranties expressly relate to any earlier
date); (ii) no Default or Event of Default has occurred and is continuing under
the Credit Agreement or will result from the proposed borrowing; (iii) the
Borrower has performed in all material respects all agreements and satisfied all
conditions under the Credit Agreement to be performed by it on or before the
date hereof, (iv) the conditions precedent to the making of the proposed Advance
set forth in Article III of the Credit Agreement have been fully satisfied, (v)
immediately after giving effect to such Advance, not more than 25% of its assets
is represented by "margin stock"; and (v) immediately after giving effect to
such advance the Borrowing Base Test and the Total Borrowing Base Eligible Asset
Test will be complied with.
WITNESS my hand on this ____ day of _________, ____.
HIGHLAND FLOATING RATE ADVANTAGE FUND
By:_____________________________
Name:
Title:
EXHIBIT C
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Amended and Restated Revolving Credit and
Security Agreement dated as of October 18, 2004 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement") among CRC FUNDING,
LLC (together with its successors and assigns, the "Lender"), CITIBANK, N.A.
(Citibank, N.A., together with the other banks and financial institutions from
time to time parties to the Credit Agreement, the "Secondary Lenders"), CITICORP
NORTH AMERICA, INC., as agent for the Lender and the Secondary Lenders (in such
capacity, together with its successors and assigns, the "Agent") and HIGHLAND
FLOATING RATE ADVANTAGE FUND (together with its permitted successors and
assigns, the "Borrower"). Terms defined in the Credit Agreement are used herein
with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 hereto
agree as follows:
1. As of the Effective Date (as defined below), the Assignor hereby
absolutely and unconditionally sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse to or
representation of any kind (except as set forth below) from Assignor, an
interest in and to the Assignor's rights and obligations under the Credit
Agreement and under the other Program Documents equal to the percentage interest
specified on Schedule I hereto, including the Assignor's Secondary Lender
Commitment and Percentage and the Assignor's portion of the outstanding
principal amount of the Advances (such rights and obligations assigned hereby
being the "Assigned Interests"). After giving effect to such sale, assignment
and assumption, the Assignee's "Secondary Lender Commitment" and the Assignee's
"Percentage" will be as set forth on Schedule I hereto.
2. The Assignor (i) represents and warrants that immediately prior to
the Effective Date it is the legal and beneficial owner of the Assigned Interest
free and clear of any Adverse Claim created by the Assignor; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Program Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any lien
or security or ownership interest created or purported to be created under or in
connection with, the Program Documents or any other instrument or document
furnished pursuant thereto or the condition or value of the Assigned Interest,
Assigned Collateral, or any interest therein; and (iii) makes no representation
or warranty and assumes no responsibility with respect to the condition
(financial or otherwise) of any of the Borrower, the Agent, the Custodian, the
Advisor or any other person, or the performance or observance by any Person of
any of its obligations under any Program Document or any instrument or document
furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement and the other Program Documents, together with copies of any financial
statements delivered pursuant to Section 5.01 of the Credit Agreement and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (ii)
agrees that it will, independently and without reliance upon the Agent, the
Assignor, the Lender or any other Secondary Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under or in connection with
any of the Program Documents; (iii) confirms that it is an Eligible Assignee;
(iv) appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Program Documents as
are delegated to the Agent by the terms thereof, together with such powers and
discretion as are reasonably incidental thereto; (v) agrees that it will perform
in accordance with their terms all of the obligations that by the terms of the
Program Documents are required to be performed by it as a Secondary Lender; (vi)
confirms that the assignment hereunder complies with any applicable legal
requirements including the Securities Act of 1933, as amended; (vii) confirms
that such Assignee is a United States Person (as defined in Section 7701 (a)(30)
of the Code) or that such Assignee shall have provided the Agent with two
Internal Revenue Service forms W-8BEN or W-8ECI (or a successor form) certifying
that the income from the Assigned Interest is effectively connected with the
conduct of such Person's trade or business in the United States; and (viii)
confirms that such Assignee is not a partnership, grantor trust or S corporation
(as such terms are defined in the Code).
4. Following the execution of this Assignment and Acceptance, it will
be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof by the Agent, unless a later effective date is
specified on Schedule I hereto.
5. Upon such acceptance and recording by the Agent, as of the Effective
Date, (i) the Assignee shall be a party to and bound by the provisions of the
Credit Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Secondary Lender thereunder and under any
other Program Document and (ii) the Assignor shall, to the extent provided in
this Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement and under any other Program Document.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement in
respect of the Assigned Interest to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Credit Agreement
and the Assigned Interests for periods prior to the Effective Date directly
between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of New York.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule I to this Assignment and Acceptance by telecopier shall
be effective as a delivery of a manually executed counterpart of this Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by their officers
thereunto duly authorized as of the date specified thereon.
Schedule I
Percentage interest
transferred by Assignor: ___%
Assignee's "Secondary Lender Commitment": $___
Assignee's "Percentage" ___%
Assignor: [INSERT NAME OF ASSIGNOR],
as Assignor,
By:
-----------------------
Authorized Signatory,
Assignee: [INSERT NAME OF ASSIGNEE]
as Assignee
By:
-----------------------
Authorized Signatory
Accepted, Consented to and
Acknowledged this ___ day of
---------------, ----
CITICORP NORTH AMERICA, INC.,
as Agent
By:
-----------------------
Authorized Signatory
[HIGHLAND FLOATING RATE
ADVANTAGE FUND
By:
-----------------------
Authorized Signatory]*
-----------------
* If required by Section 9.06.
