$25,000,000
REVOLVING CREDIT AGREEMENT
between
M.S.D.&T. FUNDS, INC.
and
FIFTH THIRD BANK
Dated as of April 29, 1999
TABLE OF CONTENTS
Page
Section 1. Definitions......................... 1
1.1. Specific Definitions................ 1
1.2. GAAP and Uniform Commercial Code.... 3
Section 2. Loan and Term....................... 3
2.1. Revolving Credit Loans.............. 3
2.2. Notes............................... 4
2.3. Principal........................... 4
2.4. Interest............................ 4
2.5. Term of Facility.................... 4
2.6. Making Loans; Accounting............ 5
2.7. Use of Proceeds..................... 5
Section 3. Representations and Warranties...... 6
3.1. Organization and Qualification...... 6
3.2. Due Authorization................... 6
3.3. Litigation.......................... 6
3.4. Margin Stock........................ 6
3.5. Laws and Taxes...................... 6
3.6. Financial Condition................. 6
3.7. Representations in Exhibit 3.7...... 7
3.8. Board and Shareholder Action........ 7
3.9. Millennium Compliance............... 7
Section 4. Financial Statements and Information 7
4.1. Financial Statements............
.... 7
Section 5. Covenants........................... 8
5.1. Existence; Merger................... 8
5.2. Pledge or Encumbrance of Assets..... 8
5.3. Business............................ 8
5.4. Compliance with Law................. 8
5.5. Representations..................... 8
Section 6. Conditions Precedent................ 8
6.1. Conditions to Initial Loan.......... 8
6.2. Conditions to Each Loan............. 9
Section 7. Events of Default and Remedies...... 9
7.1. Events of Default................... 9
7.2. Remedies............................ 10
7.3. Cumulative Remedies.
................ 11
Section 8. Miscellaneous Provisions............ 11
8.1. Delays and Waiver................... 11
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8.2. Waiver by Borrower.................. 11
8.3. Complete Agreement.................. 11
8.4. Severability........................ 12
8.5. Binding Effect...................... 12
8.6. Notices............................. 12
8.7. Governing Law; Jurisdiction......... 12
8.8. Confession of Judgment.............. 13
8.9. Separate Liability of Funds......... 13
Exhibits
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Exhibit 1.1 - Fund Borrowing Limits
Exhibit 2.1 - List of Authorized Representatives
Exhibit 2.2 - Revolving Note
Exhibit 3.1 - Certificate of Borrower
Exhi
bit 3.7 - Specific Representations
Appendices
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Appendix A - Pledge and Security Agreement
Appendix B - Report of Pledged Securities
Appendix C - Authorization Letter
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REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement ("Agreement") is entered into as of the
29th day of April, 1999 by and between M.S.D.&T FUNDS, INC., a Maryland
corporation (the "Borrower"), on behalf of the several funds identified herein,
and FIFTH THIRD BANK, an Ohio banking corporation (the "Bank").
Section 1. Definitions.
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1.1. Specific Definitions. The following definitions shall apply:
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"Authorization Letter" means the Authorization Letter(s) in the form
attached as Appendix C hereto and incorporated herein by reference, as executed
by the Borrower and the Investment Adviser from time to time on behalf of each
Fund, including any and all such documents which may be amended from time to
time hereafter.
"Authorized Representative" means, with regard to each Fund, the name of
the individual(s) whose name is listed as the Authorized Representative(s) for
such Fund on Exhibit 2.1 attached hereto, which list may be modified by Borrower
or the Investment Advisor from time to time and which new list shall be
effective two Business Days after receipt of notice thereof by Bank.
"Borrowing Limit", with respect to each Fund, means the maximum amount
of borrowing that such Fund is permitted to borrow pursuant to Borrower's
Articles of Incorporation and such Fund's current statement of Additional
Information for purposes contemplated by this Agreement as set forth on Exhibit
1.1.
"Business Day" shall mean any day on which Bank and the Investment
Adviser shall be open to the public in Cincinnati, Ohio and Baltimore, Maryland,
respectively, for the transaction of its normal banking business.
"Custodian" means Bank's Mutual Fund Services Department.
"Custody Agreement" means that certain Custody Agreement by and between
the Custodian and Borrower dated as of May 28, 1993 and all amendments thereto.
"Default" means any event that, with the giving of notice or the passage
of time, or both, would be an Event of Default.
"Event of Default" has the meaning set forth in Section 7.1.
"Facility" has the meaning set forth in Section 2.1.
"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 on such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day, provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next Business Day as so published on the next succeeding
Business Day, and (b) if such rate is not so published for any day, the Federal
Funds Rate for such day shall be the average rate charged to Bank on such day on
such transactions as determined by the Bank.
"Funds" mean Growth & Income Fund, Equity Income Fund, Equity Growth
Fund, Diversified Real Estate Fund, Prime Money Market Fund, Government Money
Market Fund, Limited Maturity Bond Fund, Total Return Bond Fund, Tax-Exempt
Money Market Fund, Maryland Tax-Exempt Bond Fund, Intermediate Tax-Exempt Bond
Fund and National Tax-Exempt Bond Fund, each of which is a separate investment
portfolio of the Borrower.
"Insolvency Event" means, with respect to a person, any of the
following: a court enters a decree or order for relief in respect to such
person in an involuntary case under any applicable bankruptcy, insolvency or
other similar law then in effect, or appoints a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of such person or
for any substantial part of its property, or orders the wind-up or liquidation
of its affairs; or a petition initiating an involuntary case under any such
bankruptcy, insolvency or similar law is filed against such person; or such
person commences a voluntary case under any applicable bankruptcy, insolvency or
other similar law in effect, or makes any general assignment for the benefit of
creditors, or fails generally to pay its debts as such debts become due, or
takes corporate action in furtherance of any of the foregoing.
"Investment Adviser" means Mercantile - Safe Deposit and Trust Company.
"Lien" means any security interest, mortgage, pledge, assignment, or
voluntary or involuntary lien, charge or other encumbrance of any kind,
including interests of vendors or lessors under conditional sale contracts or
capital leases.
"Loan Documents", with respect to each Fund, means this Agreement, the
Note, the Pledge Agreement and the Authorization Letter executed by the Borrower
and/or the Investment Adviser on behalf of each Fund, including any and all such
documents which may be amended from time to time hereafter.
"Obligation(s)" means all loans, advances, indebtedness and other
obligations of Borrower owed to Bank under this Agreement of every description
whether now existing or hereafter arising and whether direct or indirect,
primary or as guarantor or surety, absolute or contingent, liquidated or
unliquidated, matured or unmatured, secured or unsecured, and all expenses and
attorney's fees incurred by Bank under this Agreement or any other document or
instrument related thereto.
"Person" shall mean and include an individual, business trust,
partnership, corporation, joint stock company, trust, unincorporated
association, joint venture or other entity.
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"Pledge Agreement", with respect to each Fund, means that Pledge and
Security Agreement by and between Bank and Borrower, on behalf of such Fund, in
the form attached as Appendix A hereto and incorporated herein by reference and
as such form may be amended from time to time thereafter.
"Prime Rate" means the rate of interest per annum announced to be its
prime rate from time to time by Bank at its principal office in Cincinnati,
Ohio, whether or not Bank shall at times lend to borrowers at lower rates of
interest or, if there is no such prime rate, then its base rate or such other
rate as may be substituted by Bank for the prime rate.
"Report of Pledged Securities" means the Report of Pledged Securities in
the form attached as Appendix B hereto, and as such form may be amended from
time to time thereafter, executed on behalf of a Fund upon the making of each
Loan hereunder. With respect to Sections 2.5, 7.1 and 7.2 hereof, the term
"Report of Pledged Securities" shall only mean such Report(s) of Pledged
Securities executed in connection with any Loans that are then outstanding.
"Trust Custody Account", with respect to each Fund, means Borrower's
account established with the Custodian on behalf of such Fund pursuant to the
Custody Agreement.
1.2. GAAP and Uniform Commercial Code. All financial terms used in this
--------------------------------
Agreement, other than those defined in this Section 1, shall have the meanings
given to them by generally accepted accounting principles. All other undefined
terms shall have the meanings given to them in the Uniform Commercial Code then
in effect.
Section 2. Loan and Term.
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2.1. Revolving Credit Loans. (a) Subject to the terms and conditions
----------------------
hereof, Bank hereby extends to Borrower a line of credit facility (the
"Facility") under which Bank may make loans (the "Loans") to any Fund from time
to time during the term of this Agreement, in an amount up to $25,000,000;
provided, however, the Borrower shall not at any time incur borrowings on behalf
of the Funds such that the aggregate Loans then outstanding would exceed
$25,000,000. Notwithstanding the foregoing, in no event may Borrower borrow an
amount on behalf of any Fund that would exceed such Fund's Borrowing Limit on
the day that any Loan is requested hereunder. Bank shall utilize its reasonable
discretion at all times as to whether or not to make any Loans. Borrower may
borrow and reborrow hereunder, provided that the principal amount of all Loans
outstanding at any one time to Borrower, shall not exceed $25,000,000 in the
aggregate.
(b) Borrower or the Investment Adviser must give Bank written notice of
Borrower's intention to borrow under this Agreement by 4:00 p.m. local
Cincinnati time on the proposed date. Bank is authorized to make Loans to a
Fund based on the instructions received from any Authorized Representative for
such Fund as listed on Exhibit 2.1 attached hereto and incorporated herein by
reference, which list may be modified by Borrower from time to time and which
new list shall be effective two business days after its receipt by Bank.
Provided that all conditions precedent to the making of any Loan as set forth in
Sections 6 and 2.1(a) have been satisfied and the procedures set forth in
Section 2.6(a) have been followed, Bank will make
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Loans by crediting the amount thereof to the demand deposit account at Bank
established by Borrower in accordance with Section 6.1(g) for the particular
Fund on behalf of which the Loan is made or such other account as Bank and
Borrower may agree (the "Fund Deposit Account").
(c) Borrower may repay principal and accrued interest on the Loans upon
the Authorized Representative of the Fund which incurred such borrowing
directing the Custodian to apply cash held by the Custodian for such Fund, on
Borrower's behalf, to the repayment of such amounts. Subject to Section 8.9,
this Section 2.1(c) shall in no way limit the obligation of Borrower to pay the
Loans nor shall the sources of funds from which Borrower may repay the Loans be
limited to the borrowing Fund's Trust Custody Account.
2.2. Notes. On the Closing Date, Borrower shall duly issue and deliver to
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Bank on behalf of each Fund a Note in the form of Exhibit 2.2 (the "Notes") in
the maximum principal amount permitted to be borrowed by such Fund in accordance
with Section 2.1(a). Each loan made pursuant to a Note shall be made only to
the Fund that executed such Note, used only for the benefit of such Fund, and
only such Fund shall be obligated for such Loan. Bank shall record each Loan
and payments thereof to each Fund separately on its books and records, which
shall be presumptive evidence of the principal owing and unpaid under such Note.
2.3. Principal. The principal balance of all Loans will be payable in
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immediately available funds at the principal office of Bank no later than 2:00
p.m., local Cincinnati time, on the first Business Day following the date any
Loan is made by Bank to Borrower hereunder.
2.4. Interest. All Loans outstanding from time to time shall bear
--------
interest at the Federal Funds Rate in effect on the Business Day that the Loan
is made plus one half of one percent. Interest on each loan will accrue daily,
will be calculated based on a 360 day year and charged for the actual number of
days elapsed, and will be payable in immediately available funds at the
principal office of Bank no later than 2:00 p.m., local Cincinnati time, on the
first Business Day following the date any Loan is made by Bank to Borrower
hereunder. Those amounts, if not timely paid, shall thereupon constitute
Obligations hereunder and shall thereafter accrue interest as provided in this
Agreement.
After the occurrence of an Event of Default, the Loans shall bear interest
at a rate of 2% per annum above the Prime Rate; this provision does not
constitute a waiver of any Event of Default or an agreement by Bank to permit
any late payments whatsoever.
2.5. Term of Facility. Except as otherwise provided in this Section 2.5,
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the term of the Facility shall expire on April 12, 2000, and the entire
outstanding principal balance of the Notes, and all accrued interest, shall
become due and payable not later than that date in the event that any principal
or accrued interest has not been previously repaid. This Facility may be
extended for successive one year terms upon (a) the Bank's executive committee
(or similar committee established from time to time) approving an extension of
the Facility and (b) the Bank giving written notice of such extension to
Borrower no less than thirty days prior to the end of the current or extended
term; provided, however, that the Borrower may elect not to renew the Facility
by giving written notice to the Bank no less than sixty days prior to the end of
the current or extended term. This Facility shall automatically terminate upon
the termination of the Custody
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Agreement except upon the simultaneous execution by Bank and Borrower of a
substantially identical custody agreement in replacement thereof. Until all
Obligations have been fully repaid and this Agreement has terminated, Bank shall
retain its security interest in all collateral, then existing or arising
thereafter, pledged to Bank pursuant to the Pledge Agreements and as identified
in the Reports of Pledged Securities.
2.6. Making Loans; Accounting.
------------------------
(a) The Custodian shall between 1:00 and 2:30 p.m. on each Business Day
determine whether the cash position of any Fund, in the Custodian's best
estimate, will be negative at the close of business on that Business Day. In
the event that the Custodian so estimates that the cash position of a particular
Fund will be negative, the Custodian shall no later than 2:30 p.m. so advise an
Authorized Representative of such Fund. If it appears that $100,000 or more
will be necessary to meet the cash needs of such Fund, the Authorized
Representative may request a Loan on behalf of such Fund in accordance with
Section 2.1 hereof by delivering a fully executed Report of Pledged Securities
on behalf of such Fund to Bank evidencing a Collateral Value of Pledged
Securities of at least the amount of the Loan requested. Upon receipt of such a
completed form by Bank no later than 4:00 p.m., Bank shall promptly determine
whether the amount of the Loan requested is available in accordance with the
maximum available amount set forth in Section 2.1(a). If such amount is so
available and Bank makes the Loan pursuant to its discretion under Section 2.1
hereof, Bank shall then credit the appropriate Fund Deposit Account, notify the
Custodian the Loan has been made and confirm to the Authorized Representative
the making and the amount of the Loan and the interest rate that will apply to
such Loan no later than 5:00 p.m. All times set forth in this subsection (a)
shall be local Cincinnati time. Bank and Borrower agree that written notices
under this subsection (a) may be given by facsimile.
(b) After the end of each calendar month, Bank will render to Borrower a
statement of Borrower's loan account with Bank hereunder, which statement shall
be considered correct and to have been accepted by Borrower and shall be
conclusively binding upon Borrower unless Borrower notifies Bank in writing of
any discrepancy within thirty (30) Business Days from the mailing of such
statement. Such monthly statement shall reflect all borrowings incurred by
Borrower on behalf of each Fund under the Facility during the calendar month to
which such statement relates and the interest rates charged therefore.
2.7. Use of Proceeds. The proceeds of the Loans will be used only for a
---------------
Fund's daily cash needs as a temporary measure for extraordinary or emergency
purposes, or for the clearance of transactions, including without limitation the
payment of redemptions occurring after such Fund's cash funds have already been
committed to overnight investments and which might otherwise require the
untimely disposition of the Fund's portfolio securities. Upon disbursement of a
Loan in accordance with Section 2.1(b), an Authorized Representative of such
Fund may authorize the Custodian, by telephone or otherwise, to apply all or any
portion of such Loan proceeds to the uses specified in this Section 2.7.
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Section 3. Representations and Warranties.
------------------------------
Borrower hereby warrants and represents to Bank the following:
3.1. Organization and Qualification. Borrower is duly organized, validly
------------------------------
existing and in good standing under the laws of the State of Maryland has the
power and authority to carry on its business and to enter into and perform this
Agreement, the Notes, the Pledge Agreements and the Authorization Letter and is
qualified and licensed to do business in each jurisdiction in which such
qualification or licensing is required. All information set forth in Exhibit
3.1 hereto, the Certificate of Borrower, and in all attachments thereto, is true
and correct.
3.2. Due Authorization. The execution, delivery and performance by
-----------------
Borrower of this Agreement, the Notes, the Pledge Agreements and the
Authorization Letter have been duly authorized and approved by all necessary
action, and will not contravene any law or any governmental rule or order
binding on Borrower, or the Articles of Incorporation or Bylaws of Borrower, nor
violate any agreement or instrument by which Borrower is bound nor result in the
creation of a Lien on any assets of Borrower except the Lien to Bank granted
herein. Borrower has duly executed and delivered this Agreement, the Notes, the
Pledge Agreements and the Authorization Letter and they are valid and binding
obligations of Borrower enforceable according to their terms except as limited
by equitable principles and by bankruptcy, insolvency or similar laws affecting
the rights of creditors generally. No notice to or consent by any government
body is needed in connection with this transaction.
3.3. Litigation. There are no material suits or proceedings pending or
----------
threatened against or affecting Borrower, and no proceedings before any
governmental body pending or threatened against Borrower. For purposes of this
Section 3.3, a suit or proceeding shall be deemed material if the amount of
damages claimed or sought by a third party against Borrower exceeds $250,000.
3.4. Margin Stock. The making of the Loans and the performance of the
------------
Loan Documents will not violate Regulations U and X of the Board of Governors of
the Federal Reserve System. If requested by Bank, Borrower will furnish to Bank
statements in conformity with the requirements of Federal Reserve Form U-1.
3.5. Laws and Taxes. Borrower has all approvals, authorizations and other
--------------
rights under the Investment Company Act of 1940 necessary to conduct its
business as currently conducted. To the best of Borrower's knowledge, (a)
Borrower is in material compliance with all laws applicable to it, (b) has filed
all required tax returns, (c) has paid all taxes shown to be due and payable on
those returns, and (d) no taxing authority has asserted or assessed any
additional tax liabilities against Borrower.
3.6. Financial Condition. All financial statements and information
-------------------
relating to Borrower which have been or may hereafter be delivered by Borrower
to Bank are true and correct and have been prepared in accordance with generally
accepted accounting principles consistently applied. To the best of Borrower's
knowledge, (a) Borrower does not have any material obligations or liabilities of
any kind not disclosed in that financial information, and (b)
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there has been no material adverse change in the financial condition of Borrower
since the submission of such financial information to Bank.
3.7. Representations in Exhibit 3.7. The representations and warranties
------------------------------
set forth in Exhibit 3.7, the Specific Representations Exhibit, are true and
correct. Except as otherwise permitted hereunder, neither Borrower nor any Fund
shall change its name, the state of its formation, or transfer its executive
offices to any location other than as specified in that Exhibit.
3.8. Board and Shareholder Action. The Board of Directors of the Borrower
----------------------------
has adopted all resolutions necessary to authorize the Borrower to enter into
the Loan Documents and to carry out the transactions contemplated thereby. No
action on the part of the Borrower's shareholders is required in connection
therewith.
3.9. Millennium Compliance.
---------------------
(a) Borrower shall be "Millennium Compliant." As set forth herein,
Millennium Compliant means that software, hardware, embedded microchips and
other processing capabilities utilized by, and material to, the business
operations ("Systems") of Borrower function accurately and consistently accept
date input, provide date output and perform calculations on dates before, during
and after January 1, 2000 without interruption and without any change in
operations associated with the advent of the year 2000.
(b) Upon request by Bank, Borrower shall provide to Bank its plan to
become Millennium Compliant and status reports on the implementation of the
same, or such other information which is sufficient to demonstrate that Borrower
will be Millennium Compliant.
Section 4. Financial Statements and Information.
------------------------------------
4.1. Financial Statements. So long as any Obligations to Bank are
--------------------
outstanding, Borrower shall maintain a standard and modern system for accounting
in accordance with generally accepted principles of accounting and shall furnish
to Bank:
(a) Within ten Business Days after they are filed by Borrower with the
Securities and Exchange Commission, copies of all prospectuses, statements of
additional information, annual reports, financial information, proxy materials
and other Securities and Exchange Commission filings as reasonably requested by
Bank from time to time; and
(b) copies of all financial information and other reports and documents
distributed by Borrower to the holders of Borrower's securities.
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Section 5. Covenants.
---------
Borrower hereby covenants to Bank the following:
5.1. Existence; Merger. Borrower and each Fund will maintain its
-----------------
existence and will not change its name, capital structure or state of formation
nor merge or consolidate with any corporation or other entity except upon the
prior written consent of Bank.
5.2. Pledge or Encumbrance of Assets. Borrower will not create, incur,
-------------------------------
assume or permit to continue in existence any Lien on any property or asset now
owned or hereafter acquired by Borrower, except for Liens to Bank and Liens of
governmental entities which secure amounts not at the time due and payable and
which are imposed by law without the consent of Borrower and except as permitted
by the Borrower's Articles of Incorporation. Borrower shall not amend its
Articles of Incorporation to revise the permitted borrowings or authorized
pledge provisions contained therein with respect to any Fund, except upon the
prior written consent of Bank.
5.3. Business. Borrower will engage primarily in business of the same
--------
general character as that now conducted.
5.4. Compliance with Law. Borrower will comply with all federal, state
-------------------
and local laws, regulations and orders applicable to Borrower or its assets, in
all respects material to Borrower's business, assets or prospects, including
without limitation the Investment Company Act of 1940 and all applicable blue
sky laws.
5.5. Representations. Borrower covenants that the representations set
---------------
forth in this Agreement will continue to be correct so long as this Agreement is
in effect. Borrower will, within three business days of its knowledge thereof,
give written notice to Bank of the existence of any event which would prohibit
Borrower from continuing to make the representations set forth in this
Agreement.
Section 6. Conditions Precedent.
---------------------
6.1. Conditions to Initial Loan. Bank shall not make any Loan until
---------------------------
Borrower has delivered to Bank, in addition to this Agreement and the Notes, the
following in form and substance satisfactory to Bank:
(a) the Pledge Agreements;
(b) a favorable opinion of counsel to Borrower satisfactory to Bank;
(c) all appropriate financing statements (Form UCC-1);
(d) a Certificate of Borrower in the form of Exhibit 3.1, and all
attachments thereto;
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(e) as Bank may require, UCC searches, tax lien and litigation searches,
insurance certificates, notices, filings, acknowledgments or other documents or
control agreements to reflect, perfect, or protect the priority of Bank's
priority Lien in the collateral pledged to Bank pursuant to the Pledge
Agreements and to fully consummate this transaction;
(f) payment by Borrower of all fees and expenses of Bank, including
without limitation, counsel fees incurred by Bank in connection with the
preparation, negotiation, administration and enforcement of this Agreement, and
all recording fees and taxes, if any;
(g) as Bank may require, all documentation needed to establish a demand
deposit account with Bank for each Fund if necessary for administrative and
operational purposes, which account shall be used to receive proceeds of Loans
made hereunder to each respective Fund;
(h) the Authorization Letter; and
(i) such additional information and materials as Bank may reasonably
request.
6.2. Conditions to Each Loan. Bank shall not make any Loan:
------------------------
(a) if there has occurred, and has not been waived, any Default or Event
of Default; or
(b) if Borrower, its Investment Adviser or other Authorized
Representative has not delivered to Bank a Report of Pledged Securities on
behalf of the Fund requesting such borrowing, executed by an Authorized
Representative of such Fund; it being agreed that this Section 6.2(b) shall be
deemed satisfied upon Bank's receipt of a facsimile copy of such executed Report
of Pledged Securities.
Section 7. Events of Default and Remedies.
-------------------------------
7.1. Events of Default. Any of the following events shall be an Event of
------------------
Default:
(a) any representation or warranty made by Borrower herein, or in any
other Loan Document or any document furnished to Bank by Borrower under this
Agreement, is incorrect when made or when reaffirmed; or
(b) Borrower defaults in the payment of any principal or interest on any
Obligation when due and payable, by acceleration or otherwise; or
(c) Borrower fails to deliver to Bank the original executed Report of
Pledged Securities by 2:00 p.m. local Cincinnati time on the first Business Day
following the making of a Loan; or
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(d) Borrower fails to observe or perform any covenant, condition or
agreement to be observed or performed by Borrower pursuant to the terms hereof;
or
(e) an Insolvency Event occurs with respect to Borrower; or
(f) any of the following occurs: there is a material impairment of the
value or priority of Bank's Lien in collateral pledged to Bank under a Pledge
Agreement and as identified in any Report of Pledged Securities, provided,
however, that no such decline in value shall be an Event of Default so long as
(i) the collateral pledged to Bank by Borrower (including additional Securities
pledged by Pledgor within two Business Days after request by Pledgee) has a
market value at least equal to the greater of (x) the amount of all outstanding
Loans hereunder or (y) 95% of the market value of the collateral as of the date
first pledged to Bank in connection with the then outstanding Loans, and (ii)
the Bank has a first priority Lien in all such collateral; a notice of lien,
levy or assessment is filed against Borrower or an asset of Borrower by any
government authority; or a judgment or other claim becomes a Lien on any
collateral pledged to Bank under a Pledge Agreement and identified in any Report
of Pledged Securities; or any other asset of Borrower of material value is
seized, attached, or otherwise levied upon by a judicial officer; or
(g) any event occurs which might, in Bank's reasonable opinion, have a
material adverse effect on the collateral pledged to Bank under the Pledge
Agreements and as identified in the Reports of Pledged Securities or on
Borrower's financial condition, operations or prospects; or
(h) the Custody Agreement is terminated except upon the simultaneous
execution by Bank and Borrower of a substantially identical custody agreement in
replacement thereof; or
(i) an Event of Default occurs under any Loan Document.
(j) (i) failure of Borrower to be Millennium Compliant (pending full
implementation of Borrower's plan to become Millennium Compliant, Borrower will
not be considered in default under this sub-paragraph until such time as any of
its Systems begins to malfunction as a result of the coming or arrival of the
year 2000), or (ii) if Bank determines, in its sole discretion, that Borrower's
plan to become Millennium Compliant and/or the implementation thereof are
insufficient to ensure that the Borrower will be Millennium Compliant.
7.2. Remedies. If any Event of Default shall occur and be continuing:
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(a) Bank may cease advancing money hereunder, and/or declare all
Obligations to be due and payable immediately (and, upon the occurrence of an
Event of Default based on an Insolvency Event, all Obligations shall become
automatically due and payable without a declaration by Bank), whereupon they
shall immediately become due and payable without presentment, demand, protest,
or notice of any kind, all of which are hereby expressly waived by Borrower.
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(b) Bank may set off against the Obligations owed by a Fund, (i) all
collateral pledged to Bank under the Pledge Agreements of that Fund and as
identified in the Reports of Pledged Securities of such Fund and (ii) all cash
in the Trust Custody Account of that Fund from time to time following the Event
of Default.
(c) Bank may resort to the rights and remedies of a secured party under
the Uniform Commercial Code.
(d) Bank may in its sole discretion pay, purchase, contest or compromise
any encumbrance, charge or lien which in the opinion of Bank appears to be prior
or superior to its Lien, and pay all expenses incurred in connection therewith.
Notwithstanding anything herein to the contrary, no provision of this
Agreement or of any other Loan Document shall be construed to give or vest in
Bank any right of set off against, or any rights to any other assets, property
or securities of any Fund in or under the Bank's control or custody, other than
the cash in the Fund's Trust Custody Account as specified in Section 7.2(b) and
the collateral specifically pledged by Borrower on behalf of the Fund under that
particular Fund's Pledge Agreement and as identified in that particular Fund's
Report of Pledged Securities to the payment of the amounts due hereunder and
under the Note. Moreover, no provision of this Agreement or of any other Loan
Document shall be construed as granting the Bank a security interest in any
collateral for the purpose of paying any attorney's fees constituting any
portion of the Obligations or which may be otherwise due under any such
agreement.
7.3. Cumulative Remedies. No remedy set forth herein is exclusive of any
--------------------
other available remedy or remedies, but each is cumulative and in addition to
every other remedy given under this Agreement or any other agreement or now or
hereafter existing at law or in equity or by statute. Bank may pursue its
rights and remedies concurrently or in any sequence, and no exercise of one
right or remedy shall be deemed to be an election.
Section 8. Miscellaneous Provisions.
-------------------------
8.1. Delays and Waiver. No delay or omission to exercise any right shall
------------------
impair any such right or be a waiver thereof, but any such right may be
exercised from time to time and as often as may be deemed expedient. A waiver
on one occasion shall be limited to that particular occasion.
8.2. Waiver by Borrower. Borrower waives notice of non-payment, demand,
-------------------
presentment or protest; consents to any renewals or extensions of time of
payment with respect to the Notes and any amount due thereunder; and generally
waives any and all suretyship defenses and defenses in the nature thereof.
8.3. Complete Agreement. This Agreement and the Exhibits are the complete
-------------------
agreement of the parties hereto and supersede all previous understandings
relating to the subject matter hereof. This Agreement may be amended only by an
instrument in writing which
-11-
explicitly states that it amends this Agreement, and is signed by the party
against whom enforcement of the amendment is sought. This Agreement may be
executed in counterparts, each of which will be an original and all of which
will constitute a single agreement.
8.4. Severability. If any part of this Agreement or the application
-------------
thereof to any person or circumstance is held invalid, the remainder of this
Agreement shall not be affected thereby. The section headings herein are
included for convenience only and shall not be deemed to be a part of this
Agreement.
8.5. Binding Effect. This Agreement shall be binding upon and inure to
---------------
the benefit of the respective legal representatives, successors and permitted
assigns of the parties hereto; however, neither Borrower nor Bank may assign any
of its respective rights or delegate any of its respective obligations hereunder
without the prior written consent of the other.
8.6. Notices. Any notices under or pursuant to this Agreement shall be
--------
deemed duly sent when delivered in hand or when mailed by registered or
certified mail, return receipt requested, or when sent by electronic mail, or
when sent by facsimile transmission, addressed as follows:
To Borrower: M.S.D.&T. Funds, Inc.
c/o Mercantile Safe Deposit and Trust Company
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile Number: (000) 000-0000
Electronic Mail: xxxxxxxx@xxxxxxxxx.xxx
To Bank: Fifth Third Bank
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Commercial Loan Department
Facsimile Number: (000)000-0000
Electronic Mail: Xxxx.Xxxxxxxxxx@00.xxx or
XXXXX0000@XXX.xxx
with a copy to: Fifth Third Bank
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Mutual Fund Services Department
Facsimile Number: (000) 000-0000
and when confirmed by subsequent telephone conversation. Either party may
change such address by sending notice of the change to the other party.
8.7. Governing Law; Jurisdiction. All acts and transactions
----------------------------
hereunder and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance
-12-
with the laws of the State of Ohio. Borrower agrees that the state and federal
courts in Xxxxxxxx County, Ohio or any other court in which Bank initiates
proceedings have exclusive jurisdiction over all matters arising out of this
Agreement, and that service of process in any such proceeding shall be effective
if mailed to Borrower at its address described in the Notices section of this
Agreement. BANK AND BORROWER HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY
MATTERS ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
8.8. Confession of Judgment.
-----------------------
(a) Borrower authorizes any attorney of record to appear for it in any
court of record in the State of Ohio, after an Obligation becomes due and
payable whether by its terms or upon default, waive the issuance and service of
process, and release all errors, and confess a judgment against it in favor of
the holder of such Obligation, for the principal amount of such Obligation plus
interest thereon, together with court costs and attorneys' fees. Stay of
execution and all exemptions are hereby waived. If an Obligation is referred to
an attorney for collection, and the payment is obtained without the entry of a
judgment, the obligors shall pay to the holder of such obligation its attorneys'
fees.
(b) Bank shall notify Borrower in writing within one Business Day of
the entry of a judgment pursuant to Section 8.8(a) hereof. Bank may not act
upon or enforce any judgment obtained pursuant to confession under Section
8.8(a) hereof until seven days after such notice to Borrower.
8.9. Separate Liability of Funds. All obligations of the Borrower
---------------------------
under this Agreement, the Pledge Agreements and the Notes shall apply only on a
Fund-by-Fund basis, and no Fund shall be liable for the obligations of another
Fund. Without limiting the generality of the foregoing, any amount owed by the
Borrower to the Bank under this Agreement, the Pledge Agreements or the Notes as
a result of a borrowing hereunder or thereunder shall be secured only by and
paid only out of the assets and property of the particular Fund for which such
borrowing is made.
IN WITNESS WHEREOF, Borrower and Bank have executed this Agreement by their
duly authorized officers as of the date first above written.
-13-
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER
CAUSE.
M.S.D.&T. FUNDS, INC. FIFTH THIRD BANK
By:/s/ Xxxxxx X. Xxxxxxxxx By:/s/ Xxxxxxx X. Xxxxxxx
------------------------------------ ----------------------
Name: Xxxxxx X. Xxxxxxxxx Name: Xxxxxxx X. Xxxxxxx
Title: President Title: Assistant Vice President
STATE OF MARYLAND )
) ss:
CITY OF BALTIMORE )
BEFORE ME, a Notary Public, in and for said State, personally appeared
XXXXXX X. XXXXXXXXX, the President of M.S.D.&T. Funds, Inc., a Maryland
corporation, who acknowledged that he did sign the foregoing instrument and that
the same is his free act and deed as such officer and is the free act and deed
of said business trust.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this
19th day of April, 1999.
/s/ Xxxxx X. Xxxx
-----------------
Notary Public
Xxxxx X. Xxxx
My commission expires September 1, 0000
XXXXX XX XXXX )
) ss:
COUNTY OF XXXXXXXX )
BEFORE ME, a Notary Public, in and for said State, personally appeared
XXXXXXX X. XXXXXXX, the Assistant Vice President of Fifth Third Bank, a
corporation, who acknowledged that he did sign the foregoing instrument and that
the same is his free act and deed as such officer and is the free act and deed
of said corporation.
-14-
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this
28th day of April, 1999.
/s/Xxxxx X. Xxxxxx
------------------
Notary Public
Xxxxx X. Xxxxxx
Notary Public, State of Ohio
My commission expires February 19, 2002
-15-
EXHIBIT 1.1
-----------
FUND BORROWING LIMITS
No Fund may borrow money or, with respect to the Non-Money Market Funds,
issue senior securities, except that each Fund may borrow from banks and enter
into reverse repurchase agreements for temporary purposes and then in amounts
not in excess of 10% of the value of its total assets at the time of such
borrowing; or pledge any assets except in connection with any such borrowing and
in amounts not in excess of the lesser of the dollar amounts borrowed or 10% of
the value of its total assets at the time of such borrowing. A Fund (other than
the Tax-Exempt Money Market Funds) will not purchase portfolio securities while
borrowings (including reverse repurchase agreements and borrowings from banks)
in excess of 5% of such Fund's total assets are outstanding. The Tax-Exempt
Money Market Funds will not purchase portfolio securities while any borrowings
(including reverse repurchase agreements and borrowings from banks) are
outstanding. Securities held by a Non-Money Market Fund in escrow or separate
accounts in connection with the Fund's investment practices are not deemed to be
pledged for purposes of this limitation.
-16-
EXHIBIT 2.1
-----------
LIST OF AUTHORIZED REPRESENTATIVES
In accordance with Section 2.1(b) of that certain Revolving Credit
Agreement dated April __, 1999 between M.S.D.&T. Funds, Inc. (the "Borrower")
and Fifth Third Bank (the "Bank"), Borrower hereby authorizes Bank to act upon
the telephonic and/or written instructions of the following authorized
representatives of Borrower:
Investment Adviser: Xxxxxxxx XxXxxxx, (000) 000-0000, xxxxxxxx@xxxxxxxxx.xxx
Xxxxx Xxxxxx (000) 000-0000, xxxxxxx@xxxxxxxxx.xxx
Xxxxxx XxXxxxxxxx (000) 000-0000, xxxxxxxxxxx@xxxxxxxxx.xxx
M.S.D.&T. Funds Administration
00 Xxxxx Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
M.S.D.&T. FUNDS, INC.
Date: April __,1999 By: _______________________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: President
-17-
[Borrower to execute one note on behalf of each fund]
EXHIBIT 2.2
-----------
REVOLVING NOTE
[Name of Fund]
Cincinnati, Ohio
$25,000,000 April __, 1999
M.S.D.&T. FUNDS, INC., a Maryland corporation (the "Borrower"), for value
received, hereby promises to pay to the order of THE FIFTH THIRD BANK (the
"Bank") at its offices, 00 Xxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxx 00000, in
lawful money of the United States of America and in immediately available funds,
the principal sum of $25,000,000 or such lesser unpaid principal amount as may
be advanced by Bank pursuant to the terms of the Revolving Credit Agreement of
even date herewith by and between Borrower and Bank, as same may be amended from
time to time (the "Agreement").
Borrower covenants that the funds borrowed by it from Bank as reflected on
this Note shall be used solely on behalf of [Name of Fund]. Borrower further
acknowledges that only securities held by Borrower for [Name of Fund] are or
will be pledged by Borrower to Bank to secure such borrowing.
The principal balance hereof outstanding from time to time shall bear
interest at the Overnight Funds Rate (as defined below) of Bank in effect from
time to time. Interest on each Loan will accrue daily, will be calculated based
on a 360-day year and charged for the actual number of days elapsed. All
outstanding principal and interest will be payable at 2:00 p.m. local Cincinnati
time of the first Business Day following the making of any Loan hereunder.
After the occurrence of an Event of Default, this Note shall bear interest
(computed and adjusted in the same manner, and with the same effect, as interest
hereon prior to maturity), at a rate per annum equal to two percent (2%) above
the Prime Rate, until paid, and whether before or after the entry of judgment
hereon.
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 on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day,
provided that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next Business Day as so
published on the next succeeding Business Day, and (b) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate charged to Bank on such day on such transactions as determined by the Bank.
-18-
The Prime Rate means the rate of interest per annum announced to be its
prime rate from time to time by Bank at its principal office in Cincinnati,
Ohio, whether or not Bank shall at times lend to borrowers at lower rates of
interest, or, if there is no such prime rate, then its base rate or such other
rate as may be substituted by Bank for the prime rate.
The principal amount of each loan made by Bank and the amount of each
prepayment made by Borrower shall be recorded by Bank on the schedule attached
hereto or in the regularly maintained data processing records of Bank. The
aggregate unpaid principal amount of all loans set forth in such schedule or in
such records shall be presumptive evidence of the principal amount owing and
unpaid on this Note. However, failure by Bank to make any such entry shall not
limit or otherwise affect Borrower's obligations under this Note or the
Agreement.
This Note is the Note referred to in the Agreement, and is entitled to the
benefits, and is subject to the terms, of the Agreement. The principal of this
Note is prepayable in the amounts and under the circumstances, and its maturity
is subject to acceleration upon the terms, set forth in the Agreement. Except
as otherwise expressly provided in the Agreement, if any payment on this Note
becomes due and payable on a day other than one on which Bank is open for
business (a "Business Day"), the maturity thereof shall be extended to the next
Business Day, and interest shall be payable at the rate specified herein during
such extension period.
In no event shall the interest rate on this Note exceed the highest rate
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that a court
determines that Bank has received interest and other charges under this Note in
excess of the highest permissible rate applicable hereto, such excess shall be
deemed received on account of, and shall automatically be applied to reduce the
amounts due to Bank from Borrower under this Note, other than interest, and the
provisions hereof shall be deemed amended to provide for the highest permissible
rate. If there are no such amounts outstanding, Bank shall refund to Borrower
such excess.
Borrower and all endorsers, sureties, guarantors and other persons liable
on this Note, if any, hereby waive notice of non-payment, demand, presentment or
protest in connection with the delivery, performance and enforcement of this
Note; consent to one or more renewals or extensions of this Note; and generally
waive any and all suretyship defenses and defenses in the nature thereof.
This Note may not be changed orally, but only by an instrument in writing.
This Note is being delivered in, is intended to be performed in, shall be
construed and enforceable in accordance with, and be governed by the laws of,
the State of Ohio without regard to principles of conflict of laws. Borrower
agrees that the State and federal courts in Xxxxxxxx County, Ohio or any other
court in which Bank initiates proceedings have exclusive jurisdiction over all
matters arising out of this Note, and that service of process in any such
proceeding shall be effective if mailed to Borrower at its address described in
the Notices section of the Agreement. BORROWER HEREBY WAIVES THE RIGHT TO TRIAL
BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE.
-19-
Each and every obligor hereunder authorizes any attorney of record to
appear for them in any court of record in the state of Ohio, after this Note
becomes due and payable whether by its terms or upon default, waive the issuance
and service of process, and release all errors, and confess a judgment against
them in favor of the holder of this Note, for the principal amount of this Note
plus interest at the Note rate, together with court costs and attorneys' fees.
Stay of execution and all exemptions are hereby waived. If this Note is
referred to any attorney for collection, and the payment is obtained without the
entry of a judgment, the obligors shall pay to Holder its attorneys' fees.
Bank shall notify Borrower in writing within one Business Day of the entry
of a judgment pursuant to the immediately preceding paragraph. Bank may not act
upon or enforce any judgment obtained pursuant to a confession under the
immediately preceding paragraph until seven days after such notice to Borrower.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER
CAUSE.
M.S.D.&T. FUNDS, INC.
[Name of Fund]
ATTEST:
____________________________ By: ____________________________________
Name:
Title:
STATE OF _____________ )
) ss:
COUNTY OF ____________ )
BEFORE ME, a Notary Public, in and for said State, personally appeared
_______________, the ___________________ of M.S.D.&T. Funds, Inc., a Maryland
corporation, who acknowledged that he did sign the foregoing instrument and that
the same is his free act and deed as such officer and is the free act and deed
of said corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this
_____ day of __________ , 1999.
_________________________________
Notary Public
-20-
LOANS AND PAYMENTS OF PRINCIPAL
-------------------------------
Unpaid
AMOUNT OF PRINCIPAL PRINCIPAL
DATE Loan Paid Balance
--------------------------- -------------------- -------------------- --------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
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---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
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-21-
EXHIBIT 3.1
-----------
M.S.D.&T. FUNDS, INC.
CERTIFICATE OF BORROWER
re: $ 25,000,000 Financing
From Fifth Third Bank
The undersigned does hereby certify that he is the duly elected,
qualified and acting Secretary of M.S.D.&T. Funds, Inc., a Maryland
corporation (the "Borrower"), and the undersigned does hereby further
certify as follows:
1. Attached hereto, marked Attachment A, is a true and correct copy
of the current Articles of Incorporation, as in effect on the date
hereof certified by the Secretary of State of Maryland.
2. Attached hereto, marked Attachment B, is a true and correct copy
of the Bylaws of Borrower, as in effect on the date hereof.
3. The following persons are the duly elected officers of Borrower,
holding the office set forth opposite their respective names. Each
officer who has executed or will execute any documents in connection
with this loan transaction has set forth his true and customary
signature opposite his name:
Name Title Signature
Xxxxxx X. Xxxxxxxxx Chairman & ________
President
W. Xxxxx XxXxxxxx, III Secretary ________
Decatur X. Xxxxxx Treasurer ________
4. Each officer whose personal signature appears above has been duly
authorized by resolution of the board of Directors of Borrower to
execute any and all instruments or documents which he may deem
necessary or appropriate in connection with this loan transaction.
5. Borrower is in good standing in the state of its formation.
Attached hereto, marked Attachment C, is a long-form certificate of
good standing issued within the past 30 days by the State of Maryland.
-22-
IN WITNESS WHEREOF, the undersigned hereby certifies the above to be
true and has executed this certificate this _____ day of April, 1999.
_________________________________
W. Xxxxx XxXxxxxx, III, Secretary
The undersigned does hereby certify that he is the President of
Borrower, and does further certify that W. Xxxxx XxXxxxxx, III, is the
Secretary of Borrower, and that his signature set forth above is his true
and customary signature.
_________________________________
Xxxxxx X. Xxxxxxxxx, President
-23-
EXHIBIT 3.7
-----------
Specific Representations
------------------------
1. The exact legal name of Borrower is: M.S.D.&T. Funds, Inc.
2. If Borrower has changed its name since it was established, its past
legal names were: N/A.
-----
3. Borrower uses in its business and owns the following trade names: N/A.
----
4. Borrower was formed on March 7, 1989, under the laws of the State of
Maryland and is in good standing under those laws.
5. Borrower has its chief executive office and principal place of business
at Xxx Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000. Borrower maintains all of
its records with respect to its Accounts at the addresses listed on Annex I
hereto.
6. Borrower also has places of business at: N/A.
----
7. No securities owned by Borrower are located at any other place, nor
were they located at any other place within the past four months, except as
held by Fifth Third Bank, as custodian, and by the agents and sub-
custodians of Fifth Third Bank, except that securities owned by Borrower's
International Equity Fund are held by State Street Bank and Trust Company,
as custodian for such fund, or by the agents and sub-custodians of State
Street Bank and Trust Company.
8. In the past five years Borrower has never maintained its chief
executive office or principal place of business or records with respect to
accounts, nor owned personal property, at any locations except those set
forth above and except as noted in Annex II hereto.
9. The various Funds operated by Borrower are: International Equity Fund,
Growth & Income Fund, Equity Income Fund, Equity Growth Fund, Diversified
Real Estate Fund, Prime Money Market Fund, Government Money Market Fund,
Limited Maturity Bond Fund, Total Return Bond Fund, Tax-Exempt Money Market
Fund, Maryland Tax-Exempt Bond Fund, Intermediate Tax-Exempt Bond Fund and
National Tax-Exempt Bond Fund.
10. If the name of any Fund has been changed since it was formed, its past
names are: Growth & Income Fund was formerly know as the Value Equity Fund
and Limited Maturity Bond Fund was formerly known as the Intermediate Fixed
Income Fund.
-24-
ANNEX I
TO EXHIBIT 3.7
--------------
Location of Borrower's Accounts and Records.
-------------------------------------------
All accounts, books, and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder are maintained at the offices of:
Mercantile-Safe Deposit and Trust Company
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
(records relating to its function as investment adviser)
Mercantile-Safe Deposit and Trust Company
M.S.D. & T. Funds Administration
00 Xxxxx Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
(records relating to its function as administrator)
BlackRock International Ltd.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
and
0 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx XX0 3AM
(records relating to its function as sub-adviser to
Registrant's International Equity Fund)
Fifth Third Bank
Fifth Third Center
Cincinnati, O H 45263
(records relating to its function as custodian)
State Street Bank and Trust Company
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
(records relating to its functions as transfer
agent and dividend disbursing agent)
-25-
BISYS Fund Services Ohio, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
(records relating to its function as fund accounting agent)
State Street Bank and Trust Company
Xxx Xxxxxxxx Xxxxx, X0X
Xxxxx Xxxxxx, XX 00000
(records relating to its function as custodian with respect
to the International Equity Fund)
BISYS Fund Services Limited Partnership
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
(records relating to its function as distributor)
Drinker Xxxxxx & Xxxxx LLP
Philadelphia National Bank Building
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000-0000
(Borrower's Articles of Incorporation, Bylaws and
minute books)
-26-
ANNEX II
TO EXHIBIT 3.7
--------------
Prior to approximately September 1995, the records maintained by BISYS
Fund Services Ohio, Inc. relating to its function as fund accounting agent
and by BISYS Fund Services Limited Partnership relating to its function as
distributor were located at 0000 Xxxx Xxxxxx-Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxx
00000.
Prior to Xxxxx 00, 0000, Xxxxxxx Fund Managers Ltd. served as sub-
adviser to the International Equity Fund and maintained the records
relating to such function at Xxxxxxx Xxxxx, 00 Xxxxxxxxx Xxxxxxx,
Xxxxxxxxx, Xxxxxxxx XX0 0XX.
Prior to approximately January 1998, the records currently maintained
by BlackRock International, Ltd. at its New York address relating to its
function as sub-adviser to the International Equity Fund were located at
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000.
Prior to December 21, 1998, the records maintained by Mercantile-Safe
Deposit and Trust Company relating to its function as administrator were
located at Xxx Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000.
-27-
APPENDIX A
TO REVOLVING CREDIT AGREEMENT
PLEDGE AND SECURITY AGREEMENT
[Name of Fund]
THIS PLEDGE AND SECURITY AGREEMENT ("Agreement"), dated as of April __,
1999 between M.S.D. & T. FUNDS, INC., a Maryland corporation (the "Pledgor")
and FIFTH THIRD BANK, an Ohio banking corporation ("Pledgee").
W I T N E S S E T H:
WHEREAS, Pledgor and Pledgee have previously entered into a Custody
Agreement dated May 28, 1993 , as may be amended from time to time hereafter
("the Custody Agreement") pursuant to which Pledgee holds securities as
custodian for Pledgor on behalf of the [Name of Fund], all as more fully set
forth in the Custody Agreement; and
WHEREAS, contemporaneously with the execution of this agreement, on behalf
of [Name of Fund] Pledgor is issuing to Pledgee a promissory note in the
principal amount of $25,000,000 (the "Note") in connection with the execution on
the date hereof by Pledgor on behalf of the Fund and Pledgee of that certain
Revolving Credit Agreement (the "Loan Agreement"); and
WHEREAS, Pledgee is unwilling to execute the Loan Agreement until this
Agreement is executed and delivered by Pledgor whereby Pledgor is agreeing to
pledge certain securities owned by the [Name of Fund] to secure borrowings
incurred by Pledgor on behalf of [Name of Fund] under the Loan Agreement and as
reflected on the Note.
NOW, THEREFORE, in consideration of the premises and to induce Pledgee to
agree to execute the Loan Agreement, it is agreed as follows:
1. Secured Obligations. "Obligation(s)" means all loans, advances,
-------------------
indebtedness and other obligations of Pledgor owed to Pledgee under the Loan
Agreement, as the same may be amended from time to time hereafter, of every
description whether now existing or hereafter arising and whether direct or
indirect, primary or as guarantor or surety, absolute or contingent, liquidated
or unliquidated, matured or unmatured, secured or unsecured, and all expenses
and attorney's fees incurred by Pledgee under this Agreement or any other
document or instrument related thereto; but the term does not include any
liability or other obligation incurred by Pledgor under the Loan Agreement on
behalf of any portfolio of Borrower other than [Name of Fund].
2. Pledge. The Pledgor pledges, mortgages, assigns, transfers, delivers,
------
deposits, sets over and confirms as a first priority pledge to the Pledgee and
its successors and assigns, with full power and discretion as hereinafter
provided, the Securities (as defined below) now or at any time held or
controlled by Pledgee pursuant to the Custody Agreement or by any third party,
whether or not acting on behalf of the Pledgee, as collateral security for
payment and performance by the Pledgor of the Obligations.
The Pledgor acknowledges and agrees that so long as this Agreement is in
effect, the Pledgee is holding physical possession and/or control of the
Securities for the purpose of perfecting its security interest in the
Securities, as well as for the purposes set forth in the Custody Agreement.
"Securities" shall include, without limitation, whether certificated or
uncertificated, those common and preferred stocks, bonds, call options, put
options, debentures, notes, bank certificates of deposit, banker's acceptances,
mortgage backed securities, U.S. Treasury Securities, money market instruments
or other obligations, repurchase agreements and the underlying collateral,
certificates, receipts, warrants, securities entitlements, securities accounts
or other investment property, instruments or documents, all as owned by the
Pledgor and as identified on the Report of Pledged Securities (as defined in the
Loan Agreement and in the form attached as Appendix B thereto) and incorporated
herein by reference (which Report of Pledged Securities shall be amended from
time to time and such amendments are incorporated herein by reference), and all
additions to the securities identified on the Report of Pledged Securities.
Securities shall also include any rights or other interests therein to receive,
purchase or subscribe for any of the foregoing and all investments and rights
therein. The collateral value of the Securities shall be calculated in
accordance with the procedures set forth in the Report of Pledged Securities on
the date the Loan is made and the Securities shall be selected in accordance
with the priorities listed on the Report of Pledged Securities.
3. Representations and Warranties. The Pledgor represents and warrants
-------------------------------
to the Pledgee that:
(a) As of the date of each Loan, the Pledgor will be the sole
beneficial owner of the Securities free and clear of any security interest,
pledge, or other lien or encumbrance (collectively, "Lien") thereon or affecting
the title thereto, except for Liens to Pledgee and Liens of governmental
entities which secure amounts not at the time due and payable and which are
imposed by law without the consent of Pledgor;
(b) Pledgor has the right and requisite authority to pledge, mortgage,
assign, transfer, deliver, deposit, set over, grant a security interest in and
confirm the Securities to the Pledgee as provided herein;
(c) Pledgor has obtained all permits, consents, approvals,
authorizations or other orders of any person, corporation, partnership, trust,
governmental entity, or other entity required for the execution and delivery of
this Agreement or the delivery of the Securities to the Pledgee as provided
herein; and
(d) Pledgor has good and marketable title to the Securities, and the
Liens granted to the Pledgee pursuant to this Agreement are fully perfected
first priority Liens in and to the Securities assuming that the Pledgee has
physical possession and/or control of the Securities as set forth in Section 2
and that Pledgee makes and continues such UCC-1 financing statement filings as
are necessary to perfect Pledgee's security interest in the Securities.
-2-
The representations and warranties set forth in this Section 3 shall
survive the execution and delivery of this Agreement and shall be deemed to have
been made anew upon the making of each Loan pursuant to the Loan Agreement as of
the date of the making of such Loan.
4. Covenants. The Pledgor covenants and agrees that until payment in
----------
full of all the Obligations:
(a) Without the prior written consent of the Pledgee, it will not
mortgage, pledge or otherwise encumber any of Pledgor's rights in or to the
Securities or any unpaid dividends or other distributions or payments with
respect thereto, or xxxxx x Xxxx in any of the above; and
(b) The Pledgor, at Pledgor's expense, will obtain, execute,
acknowledge and deliver all such instruments and take all such action necessary
(or as the Pledgee from time to time may request) in order to ensure the Pledgee
shall have and retain the benefits of the first priority Lien in the Securities
intended to be created by this Agreement, including without limitation the
delivery of all notices and the procurement of all acknowledgments and/or
control agreements required by Article 8 and/or Article 9 of the Uniform
Commercial Code, as adopted by the applicable jurisdiction and as amended from
time to time.
5. Control of Securities. (a) Except as provided in this Agreement, the
---------------------
Pledgor shall have the rights provided to it in the Custody Agreement. The
Pledgor shall have the right, from time to time, to vote and give consents with
respect to the Securities for all purposes not inconsistent with the provisions
of this Agreement or the Custody Agreement. Notwithstanding anything else set
forth in this Agreement, in the event of a conflict between this Agreement and
the Custody Agreement, the provisions of this Agreement shall control.
(b) The Pledgee (itself or through an agent) is hereby authorized and
empowered, at its election, to transfer and register in its name or in the name
of its nominee the whole or any part of the Securities to collect and receive
all cash dividends and other distributions made thereon, to sell in one or more
sales, but without any previous notice or advertisement, the whole or any part
of the Securities and to otherwise act with respect to the Securities as though
the Pledgee was the outright owner thereof. In the event that the value of the
Securities pledged by Pledgor is insufficient to pay the outstanding Obligations
in full, Pledgee may execute in Pledgor's name a Report of Pledged Securities
granting to Pledgee a security interest in additional securities owned by
Pledgor in an amount equal to the unpaid balance of the Obligations. If the
Pledgee should so execute a Report of Pledged Securities in Pledgor's name, the
Pledgee shall promptly send a copy of such Report of Pledged Securities to the
Pledgor by facsimile transmission at the number specified pursuant to Section 11
of this Agreement. In the event that the Pledgor has pledged any of the
Securities identified on such Report of Pledged Securities to any other party,
the Pledgor shall promptly notify the Pledgee in writing and Pledgee may
substitute other securities of the Pledgor in place thereof. The Pledgor hereby
irrevocably constitutes and appoints the Pledgee as the proxy and attorney-in-
fact of the Pledgor, with full power of substitution to do so; provided,
however, the Pledgee shall not have any duty to exercise any such right or to
preserve the same and shall not be liable for any failure to do so for any delay
in doing so. Except as provided in the Authorization Letter (as defined in
-3-
the Loan Agreement), the Pledgee hereby agrees that it shall not exercise any of
the powers granted in this Section 5(b) unless an Event of Default (as defined
in Section 6) has occurred.
(c) All dividends and other distributions in respect of any of the
Securities, whenever paid or made, shall be delivered to the Pledgee as
contemplated by the Custody Agreement and held by the Pledgee subject to the
Lien created by this Agreement.
6. Events of Default. The following shall each constitute an "Event of
------------------
Default" under this Agreement:
(a) The occurrence of an Event of Default under the terms of the Loan
Agreement or the Note;
(b) Failure by the Pledgor to observe and perform any covenant,
condition, or agreement on the Pledgor's part to be observed or performed under
this Agreement; or
(c) Failure of any representation or warranty of the Pledgor contained
in this Agreement to be true when given.
7. Remedies. (a) If an Event of Default shall occur and be continuing,
---------
then or at any time thereafter, and in addition to the rights and remedies of
Pledgee pursuant to the terms and provisions of the Loan Agreement and the Note,
the Pledgee (itself or through an agent) is hereby authorized and empowered at
its election, to exercise the voting rights with respect to the Securities, to
sell in one or more sales after seven days' notice (which notice the Pledgor
agrees is commercially reasonable) but without any previous notice or
advertisement, the whole or any part of the Securities. Any sale may be either
for cash or upon credit or for future delivery at such price as the Pledgee may
deem fair, and the Pledgee may be the purchaser of the whole or any part of the
Securities so sold and hold the same thereafter in its own right free from any
claim of the Pledgor or any right of redemption. Each sale shall be made to the
highest bidder, but the Pledgee reserves the right to reject any and all bids at
such sale which, in its sole discretion, it shall deem inadequate. Demands of
performance, except as otherwise herein specifically provided for, notices of
sale, advertisements and the presence of property at sale are hereby waived and
any sale hereunder may be conducted by an auctioneer or any officer or agent of
the Pledgee.
(b) If, at the original time or times appointed for the sale of the
whole or any part of the Securities, the highest bid, if there be but one sale,
shall be inadequate to discharge in full all the Obligations, or if the
Securities be offered for sale in lots, if at any of such sales, the highest bid
for the lot offered for sale would indicate to the Pledgee, in its discretion,
the unlikelihood of the proceeds of the sales of all of the Securities being
sufficient to discharge all the Obligations, the Pledgee may, on one or more
occasions, postpone any of said sales by public announcement at the time of sale
or the time of previous postponement of sale, and no other notice of such
postponement or postponements of sale need be given, any other notice being
hereby waived; provided, however, that any sale or sales made after such
postponement shall be after seven days' notice to the Pledgor.
-4-
(c) In the event of any sale(s) hereunder the Pledgee shall, after
deducting all costs or expenses of every kind (including, to the full extent
permitted by law, attorney's fees and disbursements) for care, safekeeping,
collection, sale, delivery or otherwise, apply the residue of the proceeds of
the sale(s) to the payment or reduction, either in whole or in part, of the
Obligations returning the surplus, if any, to the Pledgor.
(d) If, at any time when the Pledgee shall determine to exercise its
right to sell the whole or any part of the Securities hereunder, such Securities
or the part thereof to be sold shall not be effectively registered, for any
reason whatsoever, under the Securities Act of 1933, as then in effect (or any
similar statute then in effect) (the "Securities Act"), the Pledgee may, in its
discretion (subject only to applicable requirements of law), sell such
Securities or part thereof by private sale in such manner and under such
circumstances as the Pledgee may deem necessary or advisable, but subject to the
other requirements of this Section 7, and shall not be required to effect such
registration or to cause the same to be effected. Without limiting the
generality of the foregoing, in any such event the Pledgee in its discretion (a)
may proceed to make such private sale notwithstanding that a registration
statement for the purpose of registering such Securities or part thereof could
be or shall have been filed under said Securities Act (or similar statute), (b)
may approach and negotiate with a single possible purchaser to effect such sale,
and (c) may restrict such sale to a purchaser who will represent and agree that
such purchaser is purchasing for its own account, for investment and not with a
view to the distribution or sale of such Securities or part thereof. In
addition to a private sale as provided above in this Section 7, if any of the
Securities shall not be freely distributable to the public without registration
under the Securities Act (or similar statute) at the time of any proposed sale
pursuant to this Section 7, then the Pledgee shall not be required to effect
such registration or cause the same to be effected but, in its discretion
(subject only to applicable requirements of law), may require that any sale
hereunder (including a sale at auction) be conducted subject to restrictions (i)
as to the financial sophistication and ability of any person permitted to bid or
purchase at sale, (ii) as to the content of legends to be placed upon any
certificates representing the Securities sold in such sale, including
restrictions on future transfer thereof, (iii) as to the representations
required to be made by each person bidding or purchasing at such sale relating
to that person's access to financial information about the Pledgor and such
person's intentions as to the holding of the Securities so sold for investment,
for its own account, and not with a view to the distribution thereof, and (iv)
as to such other matters as the Pledgee may, in its discretion, deem necessary
or appropriate in order that such sale (notwithstanding any failure so to
register) may be effected in compliance with laws affecting the enforcement of
creditors' rights and the Securities Act and all applicable state or other
jurisdictions' securities laws.
(e) The Pledgor acknowledges that any sale under the circumstances
described in this Section 7 shall be deemed to have been held in a manner which
is commercially reasonable. In the event of any such sale under the
circumstances described in this Section 7, the Pledgee shall incur no
responsibility or liability for selling all or any part of the Securities at a
price which the Pledgee may deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sales were deferred until after registration as aforesaid.
-5-
(f) The Pledgor agrees that it will not at any time plead, claim or
take the benefit of any appraisal, valuation, stay, extension, moratorium or
redemption law now or hereafter in force in order to prevent or delay the
enforcement of this Agreement, or the absolute sale of the whole or any part of
the Securities or the possession thereof by any purchaser at any sale hereunder,
and the Pledgor waives the benefit of all such laws to the extent it lawfully
may do so. The Pledgor agrees that it will not interfere with any right, power
and remedy of the Pledgee provided for in this Agreement or now or hereafter
existing at law or in equity or by statute or otherwise, or the exercise or
beginning of the exercise by the Pledgee of any one or more of such rights,
powers or remedies. No failure or delay on the part of the Pledgee to exercise
any such right, power or remedy and no notice or demand which may be given to or
made upon the Pledgor by the Pledgee with respect to any such remedies shall
operate as a waiver hereof, or limit or impair the Pledgee's right to take any
action or to exercise any power or remedy hereunder, without notice or demand,
or prejudice its rights as against the Pledgor in any respect.
8. Waiver. (a) Pledgor waives any right to require Pledgee to: (a)
-------
proceed against or exhaust any security held for the Obligations, or (b) pursue
any other remedy in Pledgee's power whatsoever. Pledgor hereby waives notice of
acceptance of this Agreement, and also presentment, demand, protest and notice
of dishonor of any and all of the Obligations, and promptness in commencing suit
against any party thereto or liable thereon, and in giving notice to or of
making any claim or demand hereunder upon the Pledgor.
(b) No delay on the Pledgee's part in exercising any power of sale,
lien, option or other right hereunder, and no notice or demand which may be
given to or made upon the Pledgor by the Pledgee with respect to any power of
sale, lien, option or other right hereunder, shall constitute a waiver thereof,
or limit or impair the Pledgee's right to take any action or to exercise any
power of sale, lien, option, or any other right hereunder, without notice or
demand, or prejudice the Pledgee's rights as against the Pledgor in any respect.
No act or omission of any kind on Pledgee's part shall in any event affect or
impair this Agreement.
9. Indemnification. The Pledgor agrees to indemnify and hold the Pledgee
----------------
harmless from and against any taxes, liabilities, claims and damages, including
reasonable attorney's fees and disbursements, and other expenses incurred or
arising by reason of the taking or the failure to take action by the Pledgee, in
good faith, under this Agreement and in respect of any transactions effected in
connection with this Agreement, including, without limitation, any taxes payable
in connection with the delivery or registration of any of the Securities as
provided herein. The obligations of the Pledgor under this Section shall
survive the termination of this Agreement.
10. Miscellaneous. (a) The Pledgor agrees to promptly reimburse Pledgee
--------------
for actual out- of-pocket expenses, including, without limitation, reasonable
counsel fees, incurred by the Pledgee in connection with the administration and
enforcement of this Agreement and/or the Note and/or the Loan Agreement;
provided, however, that this Section 10(a) shall not be construed as granting
the Pledgee a security interest in any Securities for the purpose of paying such
counsel fees.
-6-
(b) This Agreement shall be binding upon the Pledgor and the Pledgor's
assigns, and shall inure to the benefit of, and be enforceable by, the Pledgee
and its successors, transferees and assigns. None of the terms or provisions of
this Agreement may be waived, altered, modified or amended except in writing
duly signed for and on behalf of the Pledgee and the Pledgor.
(c) None of the Securities and none of the proceeds thereof shall be
applied to the liability of any portfolio of the Borrower other than [Name of
Fund].
11. Notices. Any notices under or pursuant to this Agreement shall be
--------
deemed duly sent when delivered by hand or when mailed by registered or
certified mail, return receipt requested, or when sent by facsimile
transmission, addressed as follows:
(a) If to Pledgee, at
Fifth Third Bank
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Commercial Loan Department
Facsimile Number: (000) 000-0000
(b) If to Pledgor, at
M.S.D. & T. Funds, Inc.
c/o Mercantile - Safe Deposit and Trust Company
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile Number: (000) 000-0000
Either party may change such address by sending notice of the change to the
other party.
12. Counterparts. This Agreement may be executed in any number of
-------------
counterparts, which shall, collectively and separately, constitute one
agreement.
13. Governing Law; Jurisdiction. All acts and transactions hereunder
----------------------------
and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of Ohio.
Pledgor agrees that the state and federal courts in Xxxxxxxx County, Ohio or any
other court in which Pledgee initiates proceedings have exclusive jurisdiction
over all matters arising out of this Agreement, and that service of process in
any such proceeding shall be effective if mailed to Pledgor at its address
described in the Notices section of this Agreement. PLEDGEE AND PLEDGOR HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
-7-
IN WITNESS WHEREOF, the parties hereto have caused this Pledge and
Security Agreement to be duly executed as of the date first above written.
WITNESSES: FIFTH THIRD BANK, Pledgee
____________________________ By: _____________________________
Name:
____________________________ Title:
M.S.D. & T. FUNDS, INC., Pledgor
[Name of Fund]
____________________________ By: _____________________________
Name:
____________________________ Title:
-0-
XXXXXXXX X
TO REVOLVING CREDIT AGREEMENT
REPORT OF PLEDGED SECURITIES
Name of Borrower: M.S.D. & T. Funds, Inc.
Name of Fund: __________________________________________________
Amount of Borrowing: ___________________________________________
Date of Borrowing: _____________________________________________
1. The above referenced Borrower hereby requests that Fifth Third Bank
("Bank") loan to Borrower for the benefit of the above referenced Fund on the
date hereof the amount shown above pursuant to that certain Revolving Credit
Agreement dated April __, 1999 between Borrower and Bank ("Loan Agreement").
In consideration of, and as a condition precedent to, the making of such loan as
contemplated by the Loan Agreement, Borrower hereby pledges to Bank pursuant to
that certain Pledge and Security Agreement dated April __, 1999 ("Pledge
Agreement"), the Securities of the Fund (as defined in the Pledge Agreement) set
forth on Schedule A hereto.
2. In selecting the Securities to be pledged to the Bank, Borrower shall
select Securities owned by the Fund in accordance with the priorities listed in
this Paragraph 2 as shown below. Borrower shall pledge all Securities owned by
the Fund within the first priority category before pledging any securities
within the second priority category, and so forth, until sufficient Securities
are pledged so that the aggregate Collateral Value (as defined below) of all
Securities pledged by Borrower equals the amount of the loan requested herein.
The Collateral Value shall equal the actual fair market value of the Securities
as determined by the Borrower in good faith multiplied by the applicable
Collateral Percentage as established in this Paragraph 2 as set forth below.
Types of Collateral
Priority Securities Percentage
---------- -------------------- -----------
First Cash Balances 100%
Second U.S. Treasury 95%
Securities
Third U.S. Government 95%
Agency Securities
Fourth Equity Securities 75%
Fifth Municipal Securities 75%
3. For purposes of this Report of Pledged Securities, the following
capitalized terms shall have the meanings set forth below.
"Cash Balances" means the securities purchased by the Borrower upon
the overnight investment of the Fund's cash balances on the date of this Report
of Pledged Securities and as identified more particularly on Schedule A hereto.
"U.S. Treasury Securities" means a direct obligation of the United
States Treasury, including without limitation U.S. Treasury bills, notes and
bonds, and as identified more particularly on Schedule A hereto.
"U.S. Government Agency Securities" means notes, bonds, and discount
notes issued or guaranteed by United States government agencies or
instrumentalities and backed by the full faith and credit of the United States
Treasury, including without limitation participation certificates of the
Government National Mortgage Association and the Federal National Mortgage
Association, and as identified more particularly on Schedule A hereto.
"Equity Securities" means the capital stock of any corporation
incorporated in the United States and as identified more particularly on
Schedule A hereto.
"Municipal Securities" means any tax-exempt security issued by a
municipality or other political subdivision of any state, including without
limitation industrial development bonds and industrial revenue bonds, and as
identified more particularly on Schedule A hereto.
4. All Securities pledged by Borrower to Bank shall (a) be owned by the
Fund free and clear of all liens except as set forth in the Pledge Agreement,
(b) be held by the Bank as custodian on behalf of the Fund, and (c) have been
acquired by the Fund in its ordinary course of business in accordance with its
investment policies as set forth in its Statement of Additional Information.
-2-
5. Notwithstanding the foregoing, the Bank may reject in writing any
Securities identified by Borrower on Schedule A to be pledged to Bank if the
Bank reasonably believes that such Securities do not have the values specified
on Schedule A, do not meet the criteria set forth in Paragraph 4 or that the
Bank will not have a valid first priority, perfected security interest therein.
Upon such rejection, Borrower shall immediately pledge different Securities
acceptable to Bank in replacement of the rejected Securities.
IN WITNESS WHEREOF, on behalf of the Borrower, its two authorized
representatives have set their hands this ________ day of ___________, ____.
M.S.D. & T. FUNDS, INC.
By: ____________________________
Name:
Title:
By: ____________________________
Name:
Title:
-3-
SCHEDULE A
TO REPORT OF PLEDGED SECURITIES
SECURITIES PLEDGED BY BORROWER TO BANK
--------------------------------------
Description Actual Fair Collateral Collateral
Category of Security Market Value Percentage Value
-------- ----------- ------------ ---------- ----------
I. Cash Balances
II. U.S. Treasury
Securities
III. U.S. Government
Agency Securities
IV. Equity Securities
V. Municipal Securities
TOTAL COLLATERAL VALUE $
===========
M.S.D. & T. FUNDS, INC.
Date: _____________________ By: ____________________________
Name:
Title:
By: ____________________________
Name:
Title:
Name of Fund:________________________
-4-
APPENDIX C
TO REVOLVING CREDIT AGREEMENT
AUTHORIZATION LETTER
April __, 1999
Fifth Third Bank
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
This letter will serve as a notification that M.S.D. & T. Funds, Inc. and
Mercantile-Safe Deposit and Trust Company have the power and authority to
request and enter into borrowings on behalf of the Growth & Income Fund, Equity
Income Fund, Equity Growth Fund, Diversified Real Estate Fund, Prime Money
Market Fund, Government Money Market Fund, Limited Maturity Bond Fund, Total
Return Bond Fund, Tax-Exempt Money Market Fund, Maryland Tax-Exempt Bond Fund,
Intermediate Tax-Exempt Bond Fund and National Tax-Exempt Bond Fund (the
"Funds") pursuant to that certain Revolving Credit Agreement between M.S.D. & T.
Funds, Inc. and Fifth Third Bank dated as of even date herewith ("Revolving
Credit Agreement"). M.S.D. & T. Funds, Inc. is the Borrower referenced in the
Revolving Credit Agreement. Mercantile-Safe Deposit and Trust Company is the
Investment Adviser for the M.S.D. & T. Funds, Inc. (the "Investment Adviser").
M.S.D & T Funds, Inc. and the Investment Adviser hereby expressly authorize
Fifth Third Bank, through its Mutual Fund Services Department (the "Custodian")
to: (a) act upon the written requests of the Authorized Representative(s) of
any Fund in making Loans to such Fund as contemplated by the Revolving Credit
Agreement, and (b) to immediately apply, without any further oral or written
instruction, when available, the cash held by the Custodian on behalf of the
Fund to the repayment of principal and interest of the amounts due by such Fund
under the Revolving Credit Agreement. Upon such application, we understand that
the Custodian shall promptly report by facsimile to the Fund and the Investment
Adviser, the details of such repayment.
Fifth Third Bank
April __, 1999
Page 2
M.S.D.&T. Funds, Inc. and the Investment Adviser hereby acknowledge and
agree that certain securities of each Fund are to be pledged as security for any
and all advances made to the Fund under the Revolving Credit Agreement pursuant
to the terms of the Pledge and Security Agreement to be entered into between the
Lender and the Borrower (the Pledge Agreement") and upon the delivery of a
Report of Pledged Securities to the Lender.
M.S.D.&T. Funds, Inc. and the Investment Adviser shall be at all times
responsible for ensuring that the borrowings made by each Fund under the
Revolving Credit Agreement do not violate The Investment Company Act of 1940
(the "1940 Act") or any of the rules and regulations thereunder. Each Fund
shall from time to time promptly inform the Custodian of any applicable
limitations, restrictions and/or prohibitions on borrowings by the Fund.
However, we understand that the Custodian and Fifth Third Bank are responsible
for meeting their obligations under Section 2.6 of the Revolving Credit
Agreement.
To the extent that the Custodian takes any actions contemplated by this
Authorization Letter, the Custodian shall be held to the exercise of reasonable
care and shall be without liability to any Fund for any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim unless
arising from the gross negligence, bad faith or willful misconduct of the
Custodian. The Custodian shall not be under any obligation at any time to
ascertain whether any Fund is in compliance with the 1940 Act, the rules and
regulations thereunder, any other laws, rules or regulations applicable to any
Fund, the provisions of any Fund's charter documents or by-laws, or the Fund's
investment objectives and policies as then in effect.
Nothing contained in this Agreement shall be deemed to modify or amend the
Custody Agreement in effect between the Custodian and M.S.D. & T. Funds, Inc.
The obligations and liabilities of the Lender and the Borrower shall be as set
forth in the Revolving Credit Agreement and related loan documents.
Fifth Third Bank
April __, 1999
Page 3
M.S.D.&T. Funds, Inc. and the Investment Adviser hereby expressly authorize
the Lender to act upon written instructions of any Authorized Representative of
a Fund in making advances to such Fund under the Revolving Credit Agreement. The
authorizations and designations set forth in this Authorization Letter shall
remain in force as to each Fund until delivery to the Custodian and the Lender
of written notice by M.S.D. & T. Funds, Inc. revoking such authorizations and
designations.
Sincerely yours,
M.S.D. & T. FUNDS, INC.
By: ______________________________
Name:
Title:
MERCANTILE-SAFE DEPOSIT AND
TRUST COMPANY
By: ______________________________
Name:
Title:
Date: ______________ By: ______________________________
Name:
Title:
By: ______________________________
Name:
Title:
Name of Fund: _____________________
