Exhibit (b)
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CREDIT AGREEMENT
dated as of June 22, 1998
between
XXXXXXX XXXXX SENIOR FLOATING RATE FUND, INC.
AND
THE BANK OF NEW YORK
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$100,000,000
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TABLE OF CONTENTS
1. DEFINITIONS............................................................ 1
1.1. Defined Terms..................................................... 1
1.2. Other Definitional Provisions..................................... 9
2. AMOUNT AND TERMS OF LOANS
2.1. Loans............................................................. 10
2.2. Note.............................................................. 10
2.3. Borrowing Procedure............................................... 11
2.4. Reduction of Commitment........................................... 11
2.5. Prepayments of the Loans.......................................... 11
2.6. Interest Rate and Payment Dates................................... 12
2.7. Conversions....................................................... 13
2.8. Concerning Interest Periods....................................... 14
2.9. Funding Loss...................................................... 15
2.10. Increased Costs; Illegality, etc................................. 15
2.11. Use of Proceeds.................................................. 17
2.12. Capital Adequacy................................................. 17
2.13. Taxes; Net Payments.............................................. 18
2.14. Transaction Record............................................... 18
3. FEES; PAYMENTS......................................................... 19
3.1. Commitment Fee.................................................... 19
3.2. Payments.......................................................... 19
4. REPRESENTATIONS AND WARRANTIES......................................... 19
4.1. Subsidiaries...................................................... 19
4.2. Corporate Existence and Power..................................... 20
4.3. Corporate Authority............................................... 20
4.4. Governmental Body Approvals....................................... 20
4.5. Binding Agreement................................................. 20
4.6. Litigation........................................................ 21
4.7. No Conflicting Agreements......................................... 21
4.8. Taxes............................................................. 21
4.9. Compliance with Applicable Laws................................... 22
4.10. Governmental Regulations......................................... 22
4.11. Property......................................................... 22
4.12. Federal Reserve Regulations; Use of Loan Proceeds................ 22
4.13. No Misrepresentation............................................. 22
4.14. Plans............................................................ 23
4.15. Financial Statements............................................. 23
4.16. Material Agreements.............................................. 23
4.17. Capitalization................................................... 23
5. CONDITIONS TO EFFECTIVENESS............................................ 23
5.1. Evidence of Corporate Action...................................... 24
5.2. Note.............................................................. 24
5.3. This Agreement.................................................... 24
5.4. Certain Documents................................................. 24
5.5. Approvals......................................................... 24
5.6. Litigations....................................................... 24
5.7. Opinion of Counsel to the Borrower................................ 25
5.8. Certificate Regarding Authorized Signatories...................... 25
5.9. Fees and Expenses of Special Counsel.............................. 25
6. CONDITIONS OF LENDING-ALL LOANS........................................ 25
6.1. Compliance........................................................ 25
6.2. Borrowing Request................................................. 26
6.3. Borrowing Base Certificate........................................ 26
7. AFFIRMATIVE COVENANTS.................................................. 26
7.1. Financial Statements.............................................. 26
7.2. Certificates; Other Information................................... 27
7.3. Legal Existence................................................... 29
7.4. Regulated Investment Company...................................... 29
7.5. Insurance......................................................... 29
7.6. Payment of Indebtedness and Performance of Obligations............ 29
7.7. Observance of Legal Requirements.................................. 30
7.8. Inspection of Property; Books and Records; Discussions............ 30
7.9. Compliance with Prospectus........................................ 30
7.10. Borrowing Base................................................... 30
8. NEGATIVE COVENANTS..................................................... 30
8.1. Indebtedness...................................................... 31
8.2. Liens............................................................. 31
8.3. Compliance with ERISA............................................. 31
8.4. Consolidations, Mergers and Sales of Property..................... 32
8.5. Dividends and Purchase of Stock................................... 32
8.6. Investment Policies............................................... 32
8.7. Articles of Incorporation and By-Laws............................. 32
8.8. Fiscal Year....................................................... 33
8.9. Change in Accounting Principles................................... 33
8.10. Subsidiaries..................................................... 33
8.11. Issuance of Additional Capital Stock............................. 33
8.12. Margin Stock..................................................... 33
9. DEFAULT................................................................ 33
9.1. Events of Default................................................. 33
10. OTHER PROVISIONS...................................................... 36
10.1. Amendments and Waivers.......................................... 36
10.2. Notices......................................................... 36
10.3. No Waiver; Cumulative Remedies.................................. 37
10.4. Survival of Representations and Warranties...................... 38
10.5. Payment of Expenses and Taxes; Indemnified Liabilities.......... 38
10.6. Successors and Assigns.......................................... 39
10.7. Counterparts.................................................... 40
10.8. Governing Law................................................... 40
10.9. Headings........................................................ 40
10.10. Severability................................................... 41
10.11. Integration.................................................... 41
10.12. Consent to Jurisdiction........................................ 41
10.13. No Limitation on Service or Suit............................... 41
10.14. WAIVER OF TRIAL BY JURY........................................ 41
10.15. Set-off........................................................ 42
10.16. Confidentiality................................................ 42
EXHIBITS
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Exhibit A Form of Note
Exhibit B Form of Borrowing Request
Exhibit C Form of Borrowing Base Certificate
Exhibit D Form of Opinion of Counsel to the Borrower
Exhibit E Form of Notice of Conversion
Exhibit F Certificate Regarding Authorized Signatures
CREDIT AGREEMENT, dated as of June 22, 1998, between XXXXXXX XXXXX SENIOR
FLOATING RATE FUND, INC., a Maryland corporation (the "Borrower"), and THE BANK
OF NEW YORK (the "Bank").
1. DEFINITIONS
1.1. Defined Terms.
As used in this Agreement, terms defined in the preamble have the
meanings therein indicated, and the following terms have the following meanings:
"Accountants": Deloitte & Touche LLP, or any successor thereto, or
such other firm of independent public accountants of recognized international
standing selected by the Borrower.
"Advance": Eurodollar Advance or a Federal Funds Advance.
"Affected Advance": as defined in paragraph 2.10(c).
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, control of a Person shall mean the
power, direct or indirect, (i) to vote 5% or more of the securities having
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"Agreement": this Credit Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Applicable Margin": as to each Loan (whether consisting of a Federal
Funds Advance or a Eurodollar Advance), (i) 0.25% during the first 30 days that
such Loan is outstanding, (ii) 0.30% during the next 30 days that such Loan is
outstanding and (iii) 0.40% during the next 30 days that such Loan is
outstanding.
"Authorized Signatory": in respect of the Borrower (i) the president,
the executive vice president, the senior vice president, any vice president, the
chief financial officer, the treasurer or any other duly authorized officer of
such Person, and (ii) any employee of the Investment Adviser or the
Administrator designated by the directors of the Borrower as an Authorized
Signatory and set forth on a Certificate Regarding Authorized
1
Signatories substantially in the form attached hereto as Exhibit F, as the same
may be amended from time to time by written notice from the Borrower to the
Bank, provided, however, that until receipt by the Bank of such written notice,
the Bank shall be entitled to rely on the identity and authority of each person
listed on such Certificate Regarding Authorized Signatories.
"Borrowing Base": at any date of determination, without duplication,
an amount equal to the sum of (i) Net Asset Value and (ii) the Indebtedness of
the Borrower under this Agreement less an amount equal to 100% of Non-Performing
Assets.
"Borrowing Base Certificate": a certificate of the Borrower in
substantially the form of Exhibit C, duly executed by the chief financial
officer, a vice president or such other officer of the Borrower as shall be
reasonably acceptable to the Bank.
"Borrowing Date": any date specified in a Borrowing Request delivered
pursuant to paragraph 2.3 as a date on which the Borrower requests the Bank to
make Loans.
"Borrowing Request": as defined in paragraph 2.3.
"Business Day": means any day other than a Saturday, a Sunday or a day
on which (i) commercial banks located in New York City or (ii) The New York
Stock Exchange are authorized or required by law or other governmental action to
close, provided that when used in connection with a Eurodollar Advance, the term
shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.
"Change in Law": (i) the adoption of any law, rule or regulation after
the Effective Date, (ii) the issuance or promulgation after the Effective Date
of any directive, guideline or request from any Governmental Body (whether or
not having the force of law), or (iii) any change after the Effective Date in
the interpretation of any existing law, rule, regulation, directive, guideline
or request by any Governmental Body charged with the administration thereof.
"Code": the Internal Revenue Code of 1986, as the same may be amended
from time to time, or any successor thereto, and the rules and regulations
issued thereunder, as from time to time in effect.
"Commitment": an aggregate principal amount not to exceed at any one
time outstanding $100,000,000, as the same may be reduced from time to time
pursuant to paragraph 2.4.
2
"Commitment Fee": as defined in paragraph 3.1.
"Commitment Period": the period from the Effective Date to, but
excluding, the Termination Date.
"Commonly Controlled Entity": a Person, whether or not incorporated,
which is, as of the date of determination, under common control with the
Borrower within the meaning of Section 414(b) or 414(c) of the Code.
"Contingent Obligation": as to any Person, any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obliger") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any Property constituting direct
or indirect security therefor, (ii) to advance or supply funds (a) for the
purchase or payment of any such primary obligation or (b) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obliger, (iii) to purchase Property,
securities or services primarily for the purpose of assuring the beneficiary of
any such primary obligation of the ability of the primary obliger to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
the beneficiary of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include (i) the
indorsement of instruments for deposit or collection in the ordinary course of
the Borrower's activities or (ii) commitments of the Borrower to purchase
Corporate Loans or other investments or commitments of the Borrower to extend
credit under revolving credit or other credit facilities, in either case
incurred by the Borrower in the ordinary course of the Borrower's activities.
The term Contingent Obligation shall also include the liability of a general
partner in respect of the liabilities of a partnership in which it is a general
partner. The amount of any Contingent Obligation of a Person shall be deemed to
be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith.
"Conversion Date" means the date on which: (i) a Eurodollar Advance is
converted to a Federal Funds Advance, (ii) a Federal Funds Advance is converted
to a Eurodollar Advance or (iii) a Eurodollar Advance is converted to, or
continued as, a new Eurodollar Advance.
3
"Corporate Loan": as defined in the Prospectus.
"Custodian": The Bank of New York
"Custody Agreement": the Custody Agreement dated October 12, 1989
between the Borrower and the Custodian.
"Default": any of the events specified in paragraph 9.1, whether any
requirement for the giving of notice, the lapse of time, or any other condition,
has been satisfied.
"Dollars" and "$": lawful currency of the United States of America.
"Effective Date": the date on which each of the conditions set forth
in paragraph 5 has been fulfilled.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations issued thereunder, as
from time to time in effect.
"Eurodollar Advances": collectively, the Loans (or any portions
thereof), at such time as they (or such portions) are made and/or being
maintained at a rate of interest based upon the Eurodollar Rate.
"Eurodollar Rate" means, with respect to each Eurodollar Advance, a
rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%), as determined by the Bank, obtained by dividing:
(a) the rate of interest per annum quoted by the Bank to leading
banks in the London interbank eurodollar market as the rate at which the Bank is
offering Dollar deposits in an amount approximately equal to such Eurodollar
Advance and having a period to maturity approximately equal to the Interest
Period applicable to such Eurodollar Advance at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, by
(b) a number equal to 1.00 minus the aggregate of the then
stated maximum rates during such Interest Period of all reserve requirements
(including marginal, emergency, supplemental and special reserves), expressed as
a decimal, established by the Board of Governors of the Federal Reserve System,
and any other banking authority to
4
which the Bank and other major money center banks chartered under the laws of
the United States or any State thereof are subject, in respect of eurocurrency
funding (currently referred to as "eurocurrency liabilities" in Regulation D of
the Board of Governors of the Federal Reserve System) without benefit of credit
for proration, exceptions or offsets that may be available from time to time to
the Bank.
"Event of Default": as defined in paragraph 9.1.
"Federal Funds Advance": collectively, the Loans (or any portions
thereof), at such time as they (or such portions) are made and/or being
maintained at a rate of interest based upon the Federal Funds Rate.
"Federal Funds Rate": for any day, the rate per annum (rounded, if
necessary, to the next greater 1/16 of 1%) equal to the rate at which the Bank
is offered overnight Federal funds by a Federal funds broker selected by the
Bank at or about 2:00 p.m., New York City time, on such day, provided that (i)
if such day is not a Business Day, the Federal Funds Rate for such day shall be
such rate at which the Bank is offered overnight Federal funds by such Federal
funds broker at or about 2:00 p.m., New York City time, on the next preceding
Business Day.
"Financial Statements": as defined in paragraph 4.15.
"GAAP": generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or such other statement by such other
entity as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of determination,
consistently applied.
"Governmental Body": any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator.
"Highest Lawful Rate": the maximum rate of interest, if any, that at
any time or from time to time may be contracted for, taken, charged or received
on the Note or which may be owing to the Bank pursuant to this Agreement under
the laws applicable to the Bank and this transaction.
5
"Indebtedness": as to any Person, at a particular time, (a)
indebtedness for borrowed money, indebtedness evidenced by notes, bonds,
debentures or similar instruments (including, without limitation, the Note), (b)
indebtedness arising under acceptance facilities and the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder to the extent such Person shall not
have reimbursed the issuer in respect of the issuer's payment of such drafts,
(c) all liabilities secured by any Lien on any Property owned by such Person
even though such Person has not assumed or otherwise become liable for the
payment thereof, (d) obligations under interest rate or foreign currency hedging
arrangements, and (e) all Contingent Obligations of such Person in respect of
any of the foregoing.
"Indemnified Liabilities": as defined in paragraph 10.5.
"Interest Payment Date": (i) in the case of each Federal Funds
Advance, the last day of each month, and (ii) in the case of each Eurodollar
Advance, on the last day of the Interest Period applicable thereto.
"Interest Period" means, subject to paragraph 2.8, as to each
Eurodollar Advance, the period commencing on, as the case may be, the Borrowing
Date or Conversion Date with respect thereto and ending one or two months
thereafter, as selected by the Borrower in its Borrowing Request or Notice of
Conversion.
"Investment Adviser": Xxxxxxx Xxxxx Asset Management, L.P., a Delaware
limited partnership, or any Affiliate of Xxxxxxx Xxxxx & Co., Inc. which
succeeds Xxxxxxx Xxxxx Asset Management, L.P., as investment adviser.
"Lien": any mortgage, pledge, hypothecation, assignment, security
deposit arrangement, encumbrance, lien (statutory or other), or other security
agreement or security interest of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement and
any financing lease having substantially the same economic effect as any of the
foregoing.
"Loan" and "Loans": as defined in paragraph 2.1.
"Loan Documents": collectively, this Agreement and the Note.
"Margin Stock": any "margin stock" as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System, as the
same may be amended or supplemented from time to time.
6
"Material Adverse Change": a material adverse change in the
activities, Property, operations, or condition (financial or otherwise) of the
Borrower.
"Material Adverse Effect": a material adverse effect on the
activities, Property, operations, or condition (financial or otherwise) of the
Borrower.
"Maturity Date": as to (i) any Loan, the earlier of (x) 90 days from
the Borrowing Date in respect thereof, and (y) one Business Day prior to the
date on which the Borrower's next Tender Offer expires, or (ii) as to all Loans,
such earlier date that the Note shall become due and payable, whether by
acceleration or otherwise.
"Minimum Amount" means in respect of a Federal Funds Advance or a
Eurodollar Advance, $1,000,000 or such amount plus a whole multiple of
$1,000,000 in excess thereof.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Asset Value": as of any date of determination, the value of
securities held by the Borrower plus any cash or other assets (including
interest and dividends accumulated but not yet received) minus all liabilities
(including accrued expenses) and the aggregate liquidation value of the
outstanding shares of preferred stock, if any, determined in accordance with
GAAP. Nothing herein shall be deemed to permit the issuance by the Borrower of
preferred stock.
"1940 Act": the Investment Company Act of 1940, as amended, and the
rules and regulations promulgated thereunder.
"Non-Performing Assets": at any time of determination, without
duplication, the value included by the Borrower in its Net Asset Value of (i)
all capital stock and (ii) all loans and other extensions of credit made,
directly or indirectly, to any Person in which the Borrower has an interest,
including, without limitation, a participation interest, if either (x) such
Person has defaulted in the making of any payment of principal or interest in
respect of such loan or other extension of credit when due or (y) the Borrower
does not receive any payment of principal or interest in respect of such loan or
other extension of credit when due for any reason, including, without
limitation, any default by the Person from which the Borrower acquired a
participation.
7
"Notice of Conversion": as defined in paragraph 2.7(a).
"Note": as defined in paragraph 2.2.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA, or any Governmental Body succeeding to the
functions thereof.
"Permitted Liens": Liens permitted to exist pursuant to paragraph 8.2.
"Person": an individual, a partnership, a corporation, a limited
liability company, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture, a Governmental Body or any other
entity of whatever nature.
"Plan": any pension plan which is covered by Title IV of ERISA and
which is maintained by or to which contributions are made by the Borrower or a
Commonly Controlled Entity or in respect of which the Borrower or a Commonly
Controlled Entity has or may have any liability.
"Property": all types of real, personal, tangible, intangible or mixed
property.
"Prospectus": the Borrower's Prospectus, dated December 16, 1997, as
the same may from time to time be amended or supplemented.
"Regulated Investment Company": as defined in Section 851 of the Code.
"Single Employer Plan": any Plan which is not a Multiemployer Plan.
"Special Counsel": Xxxxx, Xxxxxx & Xxxxxx, LLP.
"Stock": any and all shares, interests, participations, warrants or
other equivalents (however designated) of capital stock.
"Subsidiary": as to any Person, any corporation, association,
partnership, joint venture or other business entity of which such Person,
directly or indirectly, either (i) in respect of a corporation, owns or controls
at least 50% of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors or similar managing body, irrespective of
whether or not a class or classes shall or might have voting power by reason of
the happening of any contingency or (ii) in respect of an association,
partnership, joint
8
venture or other business entity, is entitled to share in at least 50% of the
profits and losses, however determined.
"Taxes": any present or future income, stamp, excise or other taxes,
levies, imposts, duties, fees, assessments, deductions, withholdings, or other
charges of whatever nature, now or hereafter imposed, levied, collected,
withheld, or assessed by any Governmental Body.
"Tender Offer": an offer made by the Borrower to purchase its shares
at a price per share equal to the Net Asset Value per share as of the close of
business on the day such Tender Offer terminates as described in the Prospectus.
"Termination Date": the earlier of the date which is 364 days after
the Effective Date (provided that if such date is not a Business Day, the
immediately preceding Business Day), and the date the Commitment is terminated
pursuant to paragraph 2.4 or 9.1.
"Transaction Record": as defined in paragraph 2.14.
1.2. Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the meanings given
such terms herein when used in the Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto, unless otherwise defined
therein.
(b) As used herein, in the other Loan Documents and in any certificate
or other document made or delivered pursuant hereto or thereto, accounting terms
relating to the Borrower not defined in paragraph 1.1, and accounting terms
partly defined in paragraph 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein", "hereto" and "hereunder" and similar
words when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and paragraph and exhibit
references contained herein shall refer to paragraphs hereof or exhibits hereto
unless otherwise expressly provided herein.
(d) The word "or" shall not be exclusive; "may not" is prohibitive and
not permissive; and the singular includes the plural and the plural includes the
singular, unless the context requires otherwise.
9
2. AMOUNT AND TERMS OF LOANS
2.1. Loans.
Subject to the terms and conditions of this Agreement, the Bank agrees
to make Loans (each a "Loan" and collectively, the "Loans") to the Borrower from
time to time during the Commitment Period in an aggregate principal amount at
any one time outstanding not to exceed the Commitment. During such period, the
Borrower may borrow, prepay in whole or in part and reborrow under the
Commitment, all in accordance with the terms and conditions hereof. Each Loan
shall be due and payable on the Maturity Date in respect of such Loan.
2.2. Note.
The Loans made by the Bank shall be evidenced by a promissory note of
the Borrower, substantially in the form of Exhibit A, with appropriate
insertions therein as to date (as indorsed or modified from time to time,
including all replacements thereof and substitutions therefor, the "Note"),
payable to the order of the Bank and representing the obligation of the Borrower
to pay the lesser of (i) the Commitment and (ii) the aggregate unpaid principal
balance of all Loans, in each case with interest thereon as prescribed in
paragraph 2.6. The Bank shall record (a) the date and amount of each Loan made
by it, (b) the Maturity Date of such Loan, (c) its character as a Federal Funds
Advance or a Eurodollar Advance, (d) the initial Interest Period for each
Eurodollar Advance and (e) the amount of each payment or prepayment of such Loan
on the Transaction Record and, prior to any transfer of the Note, on the
schedule (and any continuations thereof) annexed to and constituting a part of
the Note. Any failure so to record and any error in so recording shall not
affect the obligation of the Borrower to repay the Loans, with interest thereon,
as herein provided. Notwithstanding the preceding sentence, in the event that
the Bank transfers all or a portion of the Note, any failure by the Bank to
record the information required to be recorded on the schedule annexed to the
Note, or any error in so recording, shall not obligate the Borrower to pay to
such transferee more than the actual amount due under the Note (or such
transferee's portion thereof), with interest thereon, as herein provided. The
Note shall (i) be dated the Effective Date, (ii) be stated to mature on the
Termination Date and (iii) bear interest for the period from and including the
date thereof on the unpaid principal balance thereof from time to time
outstanding at the applicable interest rate or rates per annum determined as
provided in paragraph 2.6. Interest on the Note shall be payable as specified in
paragraph 2.6.
10
2.3. Borrowing Procedure.
The Borrower may borrow a Loan on any Business Day from and after the
Effective Date to and including the day immediately preceding the Termination
Date, by giving or causing to be given to the Bank an irrevocable telephonic (to
be promptly confirmed in writing by telecopy by the close of business on such
day) or telecopy or other written notice of borrowing (each a "Borrowing
Request") substantially in the form of Exhibit B no later than 11:00 a.m., New
York City time, three Business Days prior to the requested Borrowing Date in the
case of Eurodollar Advances and no later than 12 noon, New York City time, on
the requested Borrowing Date in the case of Federal Funds Advances, specifying
(i) the aggregate amount to be borrowed under the Commitment, (ii) the requested
Borrowing Date, (iii) whether such borrowing is to consist of one or more
Eurodollar Advances, Federal Funds Advances, or a combination thereof, and (iv)
if the Loan is to consist of one or more Eurodollar Advances, the amount and
length of the Interest Period for each Eurodollar Advance. Each Advance shall
be in a principal amount equal to the Minimum Amount, or, with respect to
Federal Funds Advances, if less, the unused amount of the Commitment. Upon
receipt of each Borrowing Request, the Bank will, subject to the satisfaction of
the terms and conditions of this Agreement as reasonably determined by the Bank,
make available to the Borrower, on the Borrowing Date, the amount of each
borrowing requested by or on behalf of the Borrower, at the office of the Bank
specified in or pursuant to paragraph 10.2 by crediting the account of the
Borrower on the books of such office with such amount in immediately available
funds.
2.4. Reduction of Commitment.
(a) The Borrower shall have the right, upon at least five Business
Days, prior written notice to the Bank, to reduce permanently the Commitment in
whole at any time, or in part from time to time, to an amount not less than the
aggregate principal balance of the Loans then outstanding (after giving effect
to any contemporaneous prepayment thereof in accordance with paragraph 2.5),
without premium or penalty, provided that each partial reduction of the
Commitment shall be in an amount equal to $1,000,000 or such amount plus a whole
multiple of $1,000,000.
(b) Simultaneously with each reduction of the Commitment under this
paragraph 2.4, the Borrower shall pay the Commitment Fee accrued on the amount
by which the Commitment has been reduced.
2.5. Prepayments of the Loans.
11
(a) Voluntary Prepayments. The Borrower may, at its option, prepay the
Loans in whole or in part, without premium or penalty, by notifying or causing
such notice to be given to the Bank no later than 12 noon, New York City time,
on the proposed prepayment date in the case of Loans consisting of Federal Funds
Advances, and at least three Business Days prior to the proposed prepayment
date, in the case of Loans consisting of Eurodollar Advances, specifying the
amount to be prepaid, the date of prepayment and whether the Loans to be prepaid
consist of Federal Funds Advances, Eurodollar Advances, or a combination
thereof. If any such notice of the Borrower is given pursuant to this paragraph
2.5, such notice shall be irrevocable and payment of the amount specified in
such notice shall be due and payable on the date specified together with, in the
case of Eurodollar Advances, accrued interest to the date of such payment on the
amount prepaid. Partial prepayments shall be in a principal amount equal to the
Minimum Amount or, if less, the outstanding principal balance of the Loans.
(b) Mandatory Prepayments Relating to Tender Offers. The Borrower
shall prepay the outstanding principal balance of the Loans, together with
accrued interest to the date of such prepayment on the amount prepaid, no later
than one Business Day prior to the expiration of the Borrower's next Tender
Offer.
(c) Mandatory Borrowing Base Prepayment of the Loans. If, on any day
prior to the Termination Date, the Borrowing Base shall not exceed an amount
equal to 300% of the outstanding principal balance of the Loans and accrued and
unpaid interest thereon, the Borrower shall, within three Business Days of such
day, prepay the Loans by an amount equal to the difference between the Borrowing
Base and the amount equal to 300% of the outstanding principal balance of the
Loans and accrued and unpaid interest thereon.
2.6. Interest Rate and Payment Dates.
(a) Prior to Maturity. Prior to maturity, the outstanding principal
balance of each (i) Federal Funds Advance shall bear interest on the unpaid
principal balance thereof at the Federal Funds Rate plus the Applicable Margin
and (ii) Eurodollar Advance shall bear interest on the unpaid principal balance
thereof at the Eurodollar Rate for the applicable Interest Period plus the
Applicable Margin.
(b) Late Charges. If all or any portion of the principal balance of
or, to the extent permitted by applicable law, interest payable on any of the
Loans or any other amount payable under the Loan Documents shall not be paid
when due (whether at the stated maturity thereof, by acceleration or otherwise),
such overdue balance or amount shall bear
12
interest at a rate per annum equal to the Federal Funds Rate plus 5% from the
date of such nonpayment to but not including the date such balance is paid in
full (whether before or after the entry of any judgment thereon).
(c) General. Interest shall be calculated on the basis of a 360 day
year for the actual number of days elapsed. Interest shall be payable in arrears
on each Interest Payment Date and upon payment (including, in the case of
Eurodollar Advances, prepayment) of the Loans. Any change in the interest rate
on a Loan resulting from a change in the Federal Funds Rate shall become
effective as of the opening of business on the day on which such change in the
Federal Funds Rate shall become effective. At no time shall the interest rate
payable on the Loans, together with the Commitment Fee and all other fees and
other amounts payable hereunder, to the extent the same are construed to
constitute interest, exceed the Highest Lawful Rate. If interest payable to the
Bank on any date would exceed the maximum amount permitted by the Highest Lawful
Rate, such interest payment shall automatically be reduced to such maximum
permitted amount, and interest for any subsequent period, to the extent less
than the maximum amount permitted for such period by the Highest Lawful Rate,
shall be increased by the unpaid amount of such reduction. Any interest actually
received for any period in excess of such maximum allowable amount for such
period shall be deemed to have been applied as a prepayment of the Loans.
2.7. Conversions
(a) The Borrower may elect from time to time to convert one or more
Eurodollar Advances to Federal Fund Advances by giving the Bank at least one
Business Day's prior irrevocable notice of such election, specifying the amount
to be converted, provided that any such conversion of Eurodollar Advances shall
only be made on the last day of the Interest Period applicable thereto. In
addition, the Borrower may elect from time to time to (i) convert Federal Fund
Advances to Eurodollar Advances and (ii) continue Eurodollar Advances as new
Eurodollar Advances by selecting a new Interest Period therefor, in each case by
giving the Bank at least three Business Days' prior irrevocable notice of such
election, in the case of a conversion to, or continuation of, Eurodollar
Advances, specifying the amount to be so converted or continued and the initial
Interest Period relating thereto, provided that any such conversion of Federal
Fund Advances to Eurodollar Advances shall only be made on a Business Day and
any such continuation of Eurodollar Advances as new Eurodollar Advances shall
only be made on the last day of the Interest Period applicable to the Eurodollar
Advances that are to be continued as such new Eurodollar Advances. Each such
notice (a "Notice of Conversion") shall be substantially in the form of Exhibit
E, shall be irrevocable and shall be given by facsimile (confirmed promptly, and
in any event within five Business Days, by the delivery to the Bank of a Notice
of Conversion manually signed
13
by the Borrower). Advances may be converted or continued pursuant to this
paragraph in whole or in part, provided that the amount to be converted to, or
continued as, a Eurodollar Advance, when aggregated with any Eurodollar Advance
to be made on such date in accordance with paragraph 2.3 and having the same
Interest Period as such first Eurodollar Advance, shall equal the Minimum
Amount.
(b) Notwithstanding anything in this Agreement to the contrary, upon
the occurrence and during the continuance of an Event of Default, the Borrower
shall have no right to elect to convert any existing Federal Fund Advance to a
new Eurodollar Advance or to continue any existing Eurodollar Advance as a new
Eurodollar Advance. In such event, all Federal Fund Advances shall be
automatically continued as Federal Fund Advances and each Eurodollar Advance
shall be automatically converted to Federal Fund Advances on the last day of the
Interest Period applicable to such Eurodollar Advance.
(c) Each conversion or continuation shall be effected by the Bank by
applying the proceeds of its new Federal Fund Advance or Eurodollar Advance, as
the case may be, to its Advances (or portion thereof) being converted (it being
understood that any such conversion or continuation shall not constitute a
borrowing for purposes of paragraphs 4 or 6).
2.8. Concerning Interest Periods
(a) No Interest Period in respect of a Eurodollar Advance under a
Loan shall end after the Maturity Date of such Loan.
(b) With respect to Eurodollar Advances, any Interest Period that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar month.
(c) If an Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless, in the case of an Interest Period, the result of such
extension would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately preceding Business
Day.
(d) If the Borrower shall have failed timely to elect a Eurodollar
Advance under paragraph 2.3 or 2.7, as the case may be, in connection with any
borrowing of, conversion to, or continuation of, a Eurodollar Advance, such
borrowing or such Advance
14
requested to be converted to, or continued as, a Eurodollar Advance shall
thereafter be a Federal Fund Advance until such time, if any, as the Borrower
shall elect a new Eurodollar Advance pursuant to paragraph 2.7.
(e) The Borrower shall not be permitted to have more than five
Eurodollar Advances outstanding at any one time.
2.9. Funding Loss
Notwithstanding anything contained herein to the contrary, if the
Borrower shall fail to borrow, convert or continue a Eurodollar Advance on a
Borrowing Date or Conversion Date after it shall have given notice to do so in
which it shall have requested a Eurodollar Advance, or if a Eurodollar Advance
shall be terminated for any reason prior to the last day of the Interest Period
applicable thereto, or if, while a Eurodollar Advance is outstanding, any
repayment or prepayment of such Eurodollar Advance is made for any reason
(including as a result of acceleration or illegality) on a date that is prior to
the last day of the Interest Period applicable thereto, the Borrower agrees to
indemnify the Bank against, and to pay within 10 days of demand therefor
directly to the Bank the amount (calculated by the Bank using any reasonable
method chosen by the Bank that is customarily used by the Bank for such purpose)
equal to any loss or out-of-pocket expense suffered by the Bank as a result of
such failure to borrow, convert, or continue, or such termination, repayment or
prepayment, including any loss, cost or expense suffered by the Bank in
liquidating or employing deposits acquired to fund or maintain the funding of
such Eurodollar Advance or redeploying funds prepaid or repaid, in amounts that
correspond to such Eurodollar Advance and any reasonable internal processing
charge customarily charged by the Bank in connection therewith.
2.10. Increased Costs; Illegality, etc.
(a) Increased Costs. If any Change in Law shall impose, modify or
make applicable any reserve, special deposit, compulsory loan, assessment,
increased cost or similar requirement against assets held by, or deposits of, or
advances or loans by, or other credit extended by, or any other acquisition of
funds by, any office of the Bank in respect of its Eurodollar Advances that is
not otherwise included in the determination of a Eurodollar Rate and the result
thereof is to increase the cost to the Bank of making, renewing, converting or
maintaining its Eurodollar Advances or its commitment to make such Eurodollar
Advances, or to reduce any amount receivable under the Loan Documents in respect
of its Eurodollar Advances, then, in any such case, the Borrower shall pay the
Bank such additional amount as is sufficient to compensate the Bank for such
additional cost or
15
reduction in such amount receivable that the Bank deems to be material as
determined by the Bank.
(b) Illegality. Notwithstanding any other provision hereof, if the
Bank shall reasonably determine that any law, regulation, treaty or directive,
or any change therein or in the interpretation or application thereof, shall
make it unlawful for the Bank to make or maintain any Eurodollar Advance as
contemplated by this Agreement, the Bank shall promptly notify the Borrower and
(i) the commitment of the Bank to make such Eurodollar Advances or convert
Federal Funds Advances to Eurodollar Advances shall forthwith be suspended, (ii)
the Bank shall fund its portion of each requested Eurodollar Advance as a
Federal Funds Advance and (iii) the Bank's Loans then outstanding as such
Eurodollar Advances, if any, shall be converted automatically to Federal Funds
Advances on the last day of the then current Interest Period applicable thereto
or at such earlier time as may be required by law. If the commitment of the
Bank with respect to Eurodollar Advances is suspended pursuant to this paragraph
and the Bank shall have obtained actual knowledge that it is once again legal
for the Bank to make or maintain Eurodollar Advances, the Bank shall promptly
notify the Borrower thereof and, upon receipt of such notice by the Borrower,
the Bank's commitment to make or maintain Eurodollar Advances shall be
reinstated.
(c) Substituted Interest Rate. In the event that (i) the Bank shall
have determined (which determination shall be conclusive and binding upon the
Borrower) that by reason of circumstances affecting the interbank eurodollar
market either adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate applicable pursuant to paragraph 2.6 or (ii) the Bank shall have
determined (which determination shall be conclusive and binding on the Borrower)
that the applicable Eurodollar Rate will not adequately and fairly reflect the
cost to the Bank of maintaining or funding loans bearing interest based on such
Eurodollar Rate, with respect to any portion of the Loans that the Borrower has
requested be made as Eurodollar Advances or Eurodollar Advances that will result
from the requested conversion or continuation of any portion of the Advances
into or of Eurodollar Advances (each, an "Affected Advance"), the Bank shall
promptly notify the Borrower (by telephone or otherwise), of such determination,
on or, to the extent practicable, prior to the requested Borrowing Date or
Conversion Date for such Affected Advances. If the Bank shall give such notice,
(A) any Affected Advances shall be made as Federal Funds Advances, (B) the
Advances (or any portion thereof) that were to have been converted to Affected
Advances shall be converted to Federal Funds Advances and (C) any outstanding
Affected Advances shall be converted, on the last day of the then current
Interest Period with respect thereto, to Federal Funds Advances. Until any
notice under clauses (i) or (ii), as the case may be, of this paragraph has been
withdrawn by the Bank (by notice to the Borrower promptly upon either (x) the
Bank having determined that such circumstances affecting the interbank
16
eurodollar market no longer exist and that adequate and reasonable means do
exist for determining the Eurodollar Rate pursuant to paragraph 2.6 or (y) the
Bank having determined that circumstances no longer render the Advances (or any
portion thereof) Affected Advances), no further Eurodollar Advances shall be
required to be made by the Bank, nor shall the Borrower have the right to
convert all or any portion of the Loans to or as Eurodollar Advances.
(d) Payment; Certificates. Each payment pursuant to subparagraphs (a)
or (b) above shall be made within 10 days after demand therefor, which demand
shall be accompanied by a certificate of the Bank demanding such payment setting
forth the calculations of the additional amounts payable pursuant thereto. Each
such certificate shall be conclusive absent manifest error. No failure by the
Bank to demand, and no delay in demanding, compensation for any increased cost
shall constitute a waiver of its right to demand such compensation at any time.
2.11. Use of Proceeds.
The proceeds of the Loans shall be used to finance Tender Offers, and
the payment of the fees and expenses of Special Counsel, provided, that (i) no
portion of the proceeds of any Loan shall be used to repay any other Loan and
(ii) the use of the proceeds of the Loans shall conform with the provisions of
paragraph 4.12.
2.12. Capital Adequacy.
If the Bank determines that any Change in Law relating to capital
requirements has or would have the effect of reducing the rate of return on the
Bank's capital or on the capital of the Bank's holding company, if any, as a
consequence of this Agreement or the Loans to a level below that which the Bank
(or its holding company) would have achieved or would thereafter be able to
achieve but for such Change in Law (taking into consideration the Bank's
policies and the policies of the Bank's holding company with respect to capital
adequacy), the Borrower shall pay to the Bank, within 10 days of demand
therefor, such additional amount or amounts as will compensate the Bank (or such
holding company) for such reduction. The Bank shall calculate the amounts
payable to it under this paragraph 2.12 in a manner consistent with the manner
in which it shall calculate similar amounts payable to it by other borrowers
having provisions in their credit agreements comparable to this paragraph 2.12.
Any demand under this paragraph 2.12 shall be accompanied by a written statement
submitted by the Bank to the Borrower as to the amount that will compensate the
Bank for such reduction which certificate shall be conclusive absent manifest
error.
17
2.13. Taxes; Net Payments.
Any and all payments by the Borrower hereunder, whether of principal,
interest, fees, expenses or otherwise, shall be paid in full, free and clear of
and without deduction for any and all Taxes with respect thereto, excluding any
Taxes imposed on the income of the Bank or any successor or assign thereof, and
franchise taxes imposed on any of them, by the jurisdiction under the laws of
which the Bank or any such successor or assign or any of their respective
lending offices is organized or located or any political subdivision thereof;
provided, however, that (i) except as otherwise provided in paragraph 10.6, the
obligation of the Borrower under this paragraph 2.13 shall not extend to any
Person that purchases a participation interest in any Loan and (ii) under no
circumstances shall the obligation of the Borrower under this paragraph 2.13 to
any successor or assignee exceed the amounts for which it would be liable but
for such succession or assignment. If the Borrower shall be required by law to
deduct any Taxes from or in respect of any such sum payable hereunder to the
Bank, (i) the sum payable to the Bank hereunder shall be increased as may be
necessary so that after making all required deductions the Bank receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) subject to clause (i) above, the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. In the event
that any such deduction or withholding can be reduced or nullified as a result
of the application of any relevant double taxation convention, the Bank will, at
the expense of the Borrower, cooperate with the Borrower, to the extent
reasonable, in making application to the relevant taxing authorities seeking to
obtain such reduction or nullification, provided, however, that the Bank shall
have no obligation to engage in litigation with respect thereto.
2.14. Transaction Record.
The Bank shall establish a transaction record (the "Transaction
Record") with respect to this Agreement. The Transaction Record shall set forth
the Bank's Loans, the interest rates applicable thereto, each payment by the
Borrower of principal and interest on the Loans and fees, expenses and any other
amounts due and payable in connection with this Agreement. The Transaction
Record shall be presumptively correct absent manifest error as to the amount of
the Bank's Loans and as to the amount of principal and interest paid by the
Borrower in respect of such Loans and as to the other information relating to
the Loans and amounts paid and payable by the Borrower hereunder and under the
Note set forth in such Transaction Record.
3. FEES; PAYMENTS
18
3.1. Commitment Fee.
The Borrower agrees to pay to the Bank a fee (the "Commitment Fee")
for the period from and including the Effective Date to but excluding the date
of the expiration or other termination of the Commitment, equal to 0.05% per
annum of the unused portion of the Commitment, payable quarterly in arrears on
the last day of each June, September, December and March of each year and on the
date of the expiration or other termination of the Commitment, such payments
commencing on September 30, 1998. The Commitment Fee shall be calculated on the
basis of a 360-day year for the actual number of days elapsed.
3.2. Payments.
All payments (including prepayments) made by the Borrower on account
of principal of or interest on the Loans or fees or expenses shall be made
without set-off or counterclaim and shall be made prior to 12:00 noon, New York
City time, on the date such payment is due, to the Bank at its office specified
in or pursuant to paragraph 10.2, in each case in lawful money of the United
States of America and in immediately available funds. The failure of the
Borrower to make any such payment by 12:00 noon, New York City time, on such due
date shall not constitute a Default or Event of Default hereunder, provided that
such payment is made on such due date. The Bank agrees to use its best efforts
to notify the Borrower promptly if it shall not receive any such payment by
12:00 noon, New York City time, on the due date thereof, provided that the
failure of the Bank to give such prompt notice shall in no way affect the
Borrower's obligation to make any payment hereunder on the date such payment is
due. If any payment hereunder or on the Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate or rates during such
extension.
4. REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and to make the
Loans, the Borrower hereby makes the following representations and warranties to
the Bank:
4.1. Subsidiaries.
The Borrower has no Subsidiaries.
19
4.2. Corporate Existence and Power.
The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland, has all requisite
corporate power and authority to own its Property and to carry on its activities
as now conducted, and is in good standing and authorized to do business in each
jurisdiction in which the failure to be so authorized could reasonably be
expected to have a Material Adverse Effect.
4.3. Corporate Authority.
The Borrower has full corporate power and authority to enter into,
execute, deliver and carry out the terms of this Agreement, to make the
borrowings contemplated hereby, to execute, deliver and carry out the terms of
the Note and to incur the obligations provided for herein and therein, all of
which have been duly authorized by all proper and necessary corporate action and
are not in violation of the Borrower's Articles of Incorporation and By-Laws.
4.4. Governmental Body Approvals.
No consent, authorization or approval of, filing with, notice to, or
exemption by, the Borrower's shareholders, any Governmental Body or any other
Person is required to authorize, or is required in connection with, the
execution and delivery by the Borrower of, and the performance by the Borrower
of its obligations under, the Loan Documents or is required as a condition to
the validity or enforceability of the Loan Documents with respect to or against
the Borrower. No provision of any applicable statute, law (including, without
limitation, any applicable usury or similar law), rule or regulation of any
Governmental Body will prevent the execution and delivery by the Borrower of, or
performance by the Borrower of its obligations under, or affect the validity
with respect to or against the Borrower of, the Loan Documents.
4.5. Binding Agreement.
This Agreement constitutes, and the Note, when issued and delivered
pursuant hereto for value received will constitute, the valid and legally
binding obligations of the Borrower enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally (regardless of whether considered in a
proceeding at law or in equity).
20
4.6. Litigation.
There are no actions, suits, arbitration proceedings or claims pending
or, to the knowledge of the Borrower, threatened against the Borrower or
maintained by the Borrower, at law or in equity, before any Governmental Body
which, if determined adversely to the Borrower, could reasonably be expected to
have a Material Adverse Effect. There are no proceedings pending or, to the
knowledge of the Borrower, threatened against the Borrower which call into
question the validity or enforceability of any of the Loan Documents.
4.7. No Conflicting Agreements.
The Borrower is not in default under any mortgage, indenture,
contract, agreement, judgment, decree or order to which it is a party or by
which it or any of its Property is bound, which defaults, taken as a whole,
could reasonably be expected to have a Material Adverse Effect. The execution,
delivery or carrying out of the terms of the Loan Documents will not constitute
a default under, conflict with, require any consent under (other than consents
which have been obtained), or result in the creation or imposition of, or
obligation to create, any Lien upon the Property of the Borrower pursuant to the
terms of any such mortgage, indenture, contract, agreement, judgment, decree or
order, which defaults, conflicts and consents, if not obtained, could reasonably
be expected to have a Material Adverse Effect.
4.8. Taxes.
The Borrower qualifies as a Regulated Investment Company and, as such,
because it intends to timely distribute all of its income (including capital
gains) to its shareholders, its income will not be subject to tax at the
corporate level under the Code. The Borrower has filed all tax returns required
to be filed and has paid, or has made adequate provision for the payment of, all
Taxes shown to be due and payable on said returns or in any assessments made
against it which if not so filed or paid could reasonably be expected to result
in a Material Adverse Effect, and no tax Liens have been filed against the
Borrower. The charges, accruals and reserves on the books of the Borrower with
respect to all Taxes are, in the judgment of the Borrower, adequate, and the
Borrower knows of no unpaid assessment which is due and payable against it or
any claims being asserted which could reasonably be expected to have a Material
Adverse Effect, except such thereof as are being contested in good faith and by
appropriate proceedings diligently conducted, and for which adequate reserves
have been set aside in accordance with GAAP.
21
4.9. Compliance with Applicable Laws.
The Borrower is not in default with respect to any judgment, order,
writ, injunction, decree or decision of any Governmental Body which default
could reasonably be expected to have a Material Adverse Effect. The Borrower is
complying in all material respects with all applicable statutes and regulations,
including the 1940 Act, of all Governmental Bodies, a violation of which could
reasonably be expected to have a Material Adverse Effect.
4.10. Governmental Regulations.
The Borrower is registered under the 1940 Act as a continuously
offered, non-diversified, closed-end management investment company. The
Borrower is a Regulated Investment Company within the meaning of the Code.
Except for the 1940 Act and state securities laws to the extent applicable, the
Borrower is not subject to any statute or regulation which prohibits or
restricts the incurrence of Indebtedness under the Loan Documents.
4.11. Property.
The Borrower has good and marketable title to all of its Property,
with respect to which the absence of such marketable title could reasonably be
expected to result in a Material Adverse Effect, subject to no Liens other than
Permitted Liens.
4.12. Federal Reserve Regulations; Use of Loan Proceeds.
Except for Stock of the Borrower acquired by the Borrower with the
proceeds of a Loan in connection with a Tender Offer, no part of the proceeds of
the Loans will be used, directly or indirectly, to purchase or carry any Margin
Stock or for a purpose which violates any law, rule or regulation of any
Governmental Body, including, without limitation, the provisions of Regulations
T, U or X of the Board of Governors of the Federal Reserve System, as amended.
4.13. No Misrepresentation.
No representation or warranty made by the Borrower contained herein,
and no certificate or report furnished or to be furnished by the Borrower in
connection with the transactions contemplated hereby, contains or will contain a
misstatement of material fact, or omits or will omit to state a material fact
required to be stated in order to make the
22
statements herein or therein contained not misleading in the light of the
circumstances under which made.
4.14. Plans.
Neither the Borrower nor any Commonly Controlled Entity maintains, or
has at any time maintained, any Plan or Multiemployer Plan.
4.15. Financial Statements.
The Borrower has heretofore delivered to the Bank copies of its
audited Statement of Assets and Liabilities as of August 31, 1997, together with
the related Schedule of Investments and Statements of Operations and Changes in
Net Assets and Cash Flows (with the related notes and schedules, the "Financial
Statements"). The Financial Statements fairly present, in all material respects,
the financial condition and results of the operations of the Borrower as of the
dates and for the periods indicated therein and have been prepared in conformity
with GAAP. The Borrower has no obligation or liability of any kind (whether
fixed, accrued, contingent, unmatured or otherwise) which, in accordance with
GAAP, should have been disclosed in the Financial Statements and was not. Since
August 31, 1997, the Borrower has conducted its activities only in the ordinary
course and there has been no Material Adverse Change.
4.16. Material Agreements.
All material agreements between the Borrower and the Investment
Adviser are in full force and effect.
4.17. Capitalization.
The authorized capital stock of the Borrower consists of 1,000,000,000
shares of capital stock, $0.10 par value per share.
5. CONDITIONS TO EFFECTIVENESS
This Agreement shall become effective upon the fulfillment of the following
conditions precedent:
5.1. Evidence of Corporate Action.
23
The Bank shall have received a certificate, dated the Effective Date,
of the secretary or an assistant secretary of the Borrower (i) attaching a true
and complete copy of all documents evidencing necessary corporate action (in
form and substance satisfactory to the Bank and to Special Counsel) taken by it
to authorize the Loan Documents and the transactions contemplated thereby, (ii)
attaching a true and complete copy of its Articles of Incorporation and By-Laws,
(iii) setting forth the incumbency of its officer of officers who may sign the
Loan Documents, including therein a signature specimen of such and (iv)
attaching a certificate of good standing issued by the Department of Taxation
and Assessments of the State of Maryland, dated as of a recent date.
5.2. Note.
The Bank shall have received the Note duly executed by an Authorized
Signatory of the Borrower.
5.3. This Agreement.
The Bank shall have received counterparts of this Agreement signed by
each of the parties hereto.
5.4. Certain Documents.
The Bank shall have received a true and complete copy of each of the
Borrower's most recent (i) Form N-2 and all amendments and exhibits thereto,
(ii) semi-annual and annual reports, (iii) Prospectus and (iv) investment
advisory and administrative agreements.
5.5. Approvals.
The Bank shall have received evidence reasonably satisfactory to it
that all approvals and consents of all Persons required to be obtained in
connection with the consummation of the transactions contemplated by the Loan
Documents have been duly obtained and are in full force and effect and that all
required notices have been given and all required waiting periods have expired.
5.6. Litigation.
24
There shall be no injunction, writ, preliminary restraining order or
other order of any nature issued by any Governmental Body in any respect
affecting the transactions provided for herein and no action or proceeding by or
before any Governmental Body shall have been commenced and be pending or, to the
knowledge of the Borrower, threatened, seeking to prevent or delay the
transactions contemplated hereby, or challenging any other terms and provisions
hereof or thereof or seeking any damages in connection therewith, and the Bank
shall have received a certificate of an Authorized Signatory of the Borrower to
the foregoing effects.
5.7. Opinion of Counsel to the Borrower.
The Bank shall have received an opinion of Xxxxx & Wood LLP, counsel
to the Borrower, addressed to the Bank and dated the Effective Date,
substantially in the form of Exhibit D.
5.8. Certificate Regarding Authorized Signatories
The Bank shall have received a Certificate Regarding Authorized
Signatories substantially in the form of Exhibit F dated the Effective Date,
duly executed by a director.
5.9. Fees and Expenses of Special Counsel.
The Borrower shall have paid the reasonable fees and expenses of
Special Counsel.
6. CONDITIONS OF LENDING-ALL LOANS.
The obligation of the Bank to make any Loan on a Borrowing Date is subject
to the satisfaction of the following conditions precedent as of the date of such
Loan:
6.1. Compliance.
On each Borrowing Date and after giving effect to the Loan to be made
thereon, (i) there shall exist no Default or Event of Default, (ii) the
representations and warranties contained in the Loan Documents shall be true and
correct with the same effect as though such representations and warranties had
been made on such Borrowing Date, except as the context otherwise requires and
except for those representations and warranties which by their terms or by
necessary implication are expressly limited to a state of facts existing as
25
of or prior to the Effective Date and except such matters relating thereto as
are indicated in each Borrowing Request (which shall be satisfactory to the Bank
in its sole discretion), (iii) the Borrowing Base shall exceed an amount equal
to 300% of the outstanding principal balance of the Loans (after giving effect
to the Loan to be made on such Borrowing Date) and accrued and unpaid interest
thereon, and (iv) there shall have occurred no Material Adverse Change since
August 31, 1997. Each borrowing by the Borrower shall constitute a certification
by the Borrower as of the date of such borrowing that each of the foregoing
matters is true and correct in all respects.
6.2. Borrowing Request.
Subject to the provisions of Paragraph 2.3, with respect to any
request for a Loan, the Bank shall have received a Borrowing Request, duly
executed by an Authorized Signatory of the Borrower which Borrowing Request
shall contain a certification that no portion of the proceeds of such Loan shall
be used to repay any other Loan.
6.3. Borrowing Base Certificate.
The Bank shall have received a Borrowing Base Certificate
demonstrating that after giving effect to the Loans to be made on such date the
Borrower is in compliance with Paragraph 7.10, duly executed by an Authorized
Signatory of the Borrower.
7. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that so long as this Agreement is in effect, any
Loan remains outstanding and unpaid, or any other amount is owing under any of
the Loan Documents to the Bank, the Borrower shall:
7.1. Financial Statements.
Maintain a system of accounting in accordance with GAAP, and furnish
or cause to be furnished to the Bank:
(a) As soon as available, but in any event within 60 days after the
end of each fiscal year of the Borrower, a copy of its Statement of Assets and
Liabilities as at the end of such fiscal year, together with the related
Schedule of Investments and Statements of Operations, Changes in Net Assets and
Cash Flows as of and through the end of such fiscal year. The Statement of
Assets and Liabilities and Schedules of Investments and Statements of
Operations, Changes in Net Assets and Cash Flows shall be certified without
qualification by
26
the Accountants, which certification shall (i) state that the examination by
such Accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards and (ii) include the
opinion of such Accountants that such financial statements have been prepared in
conformity with GAAP, except as otherwise specified in such opinion.
(b) As soon as available, but in any event not later than 60 days
after the end of the first semi-annual accounting period in each fiscal year of
the Borrower, a copy of its Statement of Assets and Liabilities an at the end of
such semi-annual period, together with the related Schedule of Investments and
Statements of Operations, Changes in Net Assets and Cash Flows for such period.
The reports to be delivered to the Bank pursuant to this paragraph 7.1(b) shall
be accompanied by a certificate of the president, executive vice president or
treasurer of the Borrower (or such other Authorized Signatory as shall be
acceptable to the Bank) in detail reasonably satisfactory to the Bank (1)
stating that there exists no violation of any of the terms or provisions of the
Loan Documents or occurrence of any condition or event which would constitute a
Default or Event of Default, or, if any such violation, condition or event
exists or has occurred, specifying in such certificate all such violations,
conditions and events, and the nature and status thereof and (2) containing
computations showing compliance with the provisions of paragraphs 7.10 and 8.5.
(c) To the extent any Loans are outstanding, no later than 5 Business
Days after the end of each month and if no Loans are outstanding, no later than
the last day of each calendar quarter, a Borrowing Base Certificate showing the
Borrowing Base as of the last day of the prior month.
(d) As soon as available, but in any event not later than 10 days
after the filing thereof with the Securities and Exchange Commission, a copy of
each document filed with the Securities and Exchange Commission, including,
without limitation, each prospectus, registration statement, semi-annual report
or annual report of the Borrower.
(e) If at any time the Borrowing Base is less than 300% of the
outstanding principal balance of the Loans, a written notice to such effect
within 2 Business Days thereafter.
7.2. Certificates; Other Information.
Furnish to the Bank:
27
(a) Prompt written notice if (i) any Indebtedness of the Borrower in
excess of $1,000,000 is declared or shall become due and payable prior to its
stated maturity, or is called and not paid when due, (ii) a default shall have
occurred under any other Indebtedness (other than the Note) in excess of
$1,000,000 or the holder of any such note or other Indebtedness in excess of
$1,000,000 has the right to declare any such Indebtedness due and payable prior
to its stated maturity as a result of such default or (iii) there shall have
occurred and be continuing a Default or an Event of Default;
(b) Prompt written notice of (i) any citation, summons, subpoena,
order to show cause or other order naming the Borrower a party to any proceeding
before any Governmental Body which could reasonably be expected to have a
Material Adverse Effect or which calls into question the validity or
enforceability of any of the Loan Documents, and include with such notice a copy
of such citation, summons, subpoena, order to show cause or other order, (ii)
any lapse or other termination of any material license, permit, franchise or
other authorization issued to the Borrower by any Governmental Body, the lapse
or termination of which could reasonably be expected to result in a Material
Adverse Effect, (iii) any refusal by any Governmental Body or any other Person
to renew or extend any such material license, permit, franchise or other
authorization with respect to which such refusal could reasonably be expected to
result in a Material Adverse Effect and (iv) any dispute between the Borrower
and any Person, which dispute could reasonably be expected to have a Material
Adverse Effect;
(c) Promptly upon becoming available, copies of all financial
statements, reports and proxy statements which the Borrower may have sent to its
stockholders generally, and copies of all registration statements, prospectuses
and regular, periodic or special reports, schedules and other material which the
Borrower may now or hereafter be required to file with or deliver to any
securities exchange;
(d) Promptly after the execution thereof, copies of all amendments to
all investment advisory contracts and contracts with any principal underwriter
and any new investment advisory contracts and contracts with any principal
underwriter entered into after the Effective Date;
(e) Prompt written notice of any change in the Investment Adviser,
the directors or executive officers of the Borrower from those set forth in the
Prospectus or other informative report which has most recently been delivered to
the Bank pursuant to paragraph 7.2(c);
28
(f) To the extent the Borrower will incur any Loans hereunder in
connection with a Tender Offer, prior to the incurrence of such Loan, a copy of
each Tender Offer and all disclosure and other material furnished in connection
therewith; and
(g) Promptly, such other information and financial data as the Bank
may reasonably request.
7.3. Legal Existence.
Maintain its corporate existence in good standing in the jurisdiction
of its incorporation and in each other jurisdiction in which the failure so to
do could reasonably be expected to have a Material Adverse Effect.
7.4. Regulated Investment Company.
Maintain its qualifications as a Regulated Investment Company and,
subject to the provisions of this Agreement, distribute all of its income
(including net capital gain) so that it will not be subject to tax under the
Code.
7.5. Insurance.
Maintain insurance with financially sound insurance carriers which is
required by applicable law including, without limitation, the 1940 Act, and file
with the Bank within 10 days after request therefor a detailed list of such
insurance then in effect, stating the names of the carriers thereof, the policy
numbers, the insureds thereunder, the amounts of insurance, dates of expiration
thereof, and the risks covered thereby, together with a certificate of the
president, the executive vice president or treasurer (or such other officer
acceptable to the Bank) of the Borrower certifying that in the opinion of such
officer such insurance is adequate in nature and amount, complies with the
obligations of the Borrower under this paragraph 7.5, and is in full force and
effect.
7.6. Payment of Indebtedness and Performance of Obligations.
Pay and discharge when due all lawful Indebtedness, obligations and
claims for labor, materials and supplies or otherwise which, if unpaid, could
reasonably be expected to (i) have a Material Adverse Effect or (ii) become a
Lien upon Property of the Borrower other than Permitted Liens, unless and to the
extent only that the validity of such Indebtedness, obligation or claim shall be
contested in good faith and by appropriate proceedings diligently conducted by
the Borrower, and provided further that the Borrower
29
shall give the Bank prompt notice of any such contest and that such reserve or
other appropriate provision as shall be required in accordance with GAAP shall
have been made therefor.
7.7. Observance of Legal Requirements.
Observe and comply in all material respects with all laws (including
the 1940 Act and the Code), ordinances, orders, judgments, rules, regulations,
certifications, franchises, permits, licenses, directions and requirements of
all Governmental Bodies, which may then be applicable to the Borrower, a
violation of which could reasonably be expected to have a Material Adverse
Effect, except such thereof as shall be contested in good faith and by
appropriate proceedings diligently conducted by the Borrower, provided that the
Borrower shall give the Bank prompt notice of such contest and that such reserve
or other appropriate provision as shall be required in accordance with GAAP
shall have been made therefor.
7.8. Inspection of Property; Books and Records; Discussions.
Keep proper books of record and account in which complete, true and
correct entries in conformity with GAAP and all requirements of law shall be
made of all material dealings and transactions in relation to its activities;
and upon reasonable notice, permit representatives of the Bank to visit the
offices of the Borrower, at any reasonable time during business hours and as
often as may reasonably be desired, to discuss the operations, and financial
condition of the Borrower with the officers thereof and with the Investment
Adviser and the Accountants.
7.9. Compliance with Prospectus.
Comply at all times with the investment objectives and other
requirements and restrictions set forth in the Borrower's currently effective
Prospectus, a violation of which could reasonably be expected to have a Material
Adverse Effect.
7.10. Borrowing Base.
Maintain at all times a Borrowing Base of not less than 300% of the
outstanding principal balance of the Loans and accrued and unpaid interest
thereon.
8. NEGATIVE COVENANTS
30
The Borrower hereby agrees that, so long as this Agreement is in effect,
any Loan remains outstanding and unpaid, or any other amount is owing under any
Loan Document to the Bank, the Borrower shall not, directly or indirectly:
8.1. Indebtedness.
Create, incur, assume or suffer to exist any liability for
Indebtedness, except (i) Indebtedness hereunder and under the Note, (ii)
Indebtedness in respect of swap, cap or other interest rate or foreign currency
hedging arrangements (where used for hedging purposes), (iii) purchases of
securities on short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities as described in the Prospectus and
(iv) overdrafts extended by the Custodian under the Custody Agreement.
8.2. Liens.
Create, incur, assume or suffer to exist any Lien upon any of its
Property or assets, whether now owned or hereafter acquired, except that the
Borrower (i) may make purchases of securities on short-term credit as may be
necessary for the clearance of purchases and sales of portfolio securities as
described in the Prospectus, (ii) Liens in respect of Indebtedness permitted
under paragraph 8.1(ii), (iii) Liens for Taxes, assessments or similar charges
incurred in the ordinary course of business which are not delinquent or which
are being contested in good faith and by appropriate proceedings diligently
conducted, and for which adequate reserves have been set aside in accordance
with GAAP, provided that enforcement of such Liens is stayed pending such
contest (iv) statutory Liens arising by operation of law such as mechanics',
materialmen's, carriers, and warehousemen's liens incurred in the ordinary
course of business which are not delinquent or which are being contested in good
faith and by appropriate proceedings diligently conducted, and for which
adequate reserves have been set aside in accordance with GAAP, provided that
enforcement of such Liens is stayed pending such contest, (v) Liens arising out
of judgments or decrees which are being contested in good faith and by
appropriate proceedings diligently conducted, and for which adequate reserves
have been set aside in accordance with GAAP, provided that enforcement thereof
is stayed pending such contest and (vi) Liens of the Custodian under the Custody
Agreement.
8.3. Compliance with ERISA.
Adopt any Plan or Multiemployer Plan; or become a Commonly Controlled
Entity with respect to another Person; or engage in any "prohibited
transaction", as such term is defined in Section 4975 of the Code or Section 406
of ERISA, with respect to any
31
Plan; or incur any Accumulated funding deficiency, as such term is defined in
Section 412 of the Code or Section 302 of ERISA.
8.4. Consolidations, Mergers and Sales of Property.
Consolidate or merge into or with any Person, or sell, lease or
otherwise transfer, directly or indirectly, all or substantially all of the
Property of the Borrower, except that the Borrower may sell Property in the
ordinary course of business as described in the Prospectus.
8.5. Dividends and Purchase of Stock.
Declare or pay any dividends payable in cash or otherwise or apply any
of its Property to the purchase, redemption or other retirement of, or set apart
any sum for the payment of any dividends on, or make any other distribution by
reduction of capital or otherwise in respect of, any shares of its share capital
or other similar equity interest or warrants or other rights issued in respect
thereof, except that provided that no (a) Event of Default described in
subparagraphs 9.1(h) or 9.1(i), (b) Default described in subparagraphs 9.1(a) or
9.1(b), or (c) Default or Event of Default relating to subparagraph 7.10, in
which the Borrowing Base is less than 200% of the outstanding principal balance
of the Loans and accrued and unpaid interest thereon, in each case would exist
or be continuing after giving effect thereto (i) the Borrower may make dividend
payments to shareholders each monthly dividend period in an amount not in excess
of its net investment income and realized capital gains not previously
distributed to shareholders in accordance with the Prospectus for such period,
(ii) without duplication, may distribute each year all of its net investment
income (including net realized capital gains) so that it will not be subject to
tax (including corporate and/or excise taxes) under the Code; provided, that if
the Borrower's net investment income (including net realized capital gains)
calculated on a tax basis exceeds its net investment income calculated on a GAAP
basis, the Borrower may also distribute such excess to its shareholders, and
(iii) the Borrower may repurchase shares pursuant to Tender Offers in compliance
with its Articles of Incorporation and Prospectus.
8.6. Investment Policies.
Permit to exist at any time investments other than as described in the
Prospectus.
8.7. Articles of Incorporation and By-Laws.
32
Amend or otherwise modify its Articles of Incorporation and By-Laws in
any way which would materially adversely affect the Bank under the Loan
Documents.
8.8. Fiscal Year.
Change its fiscal year.
8.9. Change in Accounting Principles.
Change or permit any change in accounting principles applied to the
Borrower, except as required by GAAP.
8.10. Subsidiaries.
Create or acquire any Subsidiary.
8.11. Issuance of Additional Capital Stock.
Issue any additional Stock (other than common Stock).
8.12. Margin Stock.
Following application of the proceeds of the Loans provided for
herein, permit more than 25% of the assets of the Borrower to consist of Margin
Stock.
9. DEFAULT
9.1. Events of Default.
The following shall each constitute an "Event of Default" hereunder:
(a) the failure of the Borrower to make any payment of principal on
any Note on the date when due and payable; or
(b) the failure of the Borrower to make any payment of interest or
any fees or expenses payable hereunder or under any other Loan Document for five
or more Business Days after the same shall be due and payable; or
33
(c) the use by the Borrower of the proceeds of any Loan in a manner
inconsistent with or in violation of paragraph 2.11; or
(d) the failure of the Borrower to observe or perform any covenant or
agreement contained in paragraph 7.3 (solely to the extent it requires the
Borrower to maintain its legal existence) or paragraph 8; or
(e) the failure of the Borrower to observe or perform (i) the
covenant contained in paragraph 7.10 and such failure shall have continued
unremedied for a period of three Business Days, or (ii) any other term,
covenant, or agreement contained in this Agreement and such failure shall have
continued unremedied for a period of 30 days after the Borrower shall have
obtained knowledge thereof; or
(f) any representation or warranty of the Borrower (or of any
Authorized Signatory on its behalf) made in this Agreement or any other Loan
Document or in any certificate, report or other document delivered or to be
delivered pursuant to this Agreement or any other Loan Document, shall prove to
have been incorrect or misleading (whether because of misstatement or omission)
in any material respect when made; or
(g) obligations of the Borrower, whether as principal, guarantor,
surety or other obliger, for the payment of Indebtedness in an aggregate amount
in excess of $1,000,000, shall become or shall be declared to be due and payable
prior to the expressed maturity or expiration thereof, or shall not be paid when
due or within any grace period for the payment thereof, or the holder thereof
shall have the right to declare such obligation due and payable prior to the
expressed maturity thereof; or
(h) the Borrower shall (i) make an assignment for the benefit of
creditors, or (ii) generally not be paying its debts as such debts become due,
or (iii) admit in writing its inability to pay its debts as they become due, or
(iv) file a voluntary petition in bankruptcy, or (v) file any petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment of
debt, liquidation or dissolution or similar relief under any present or future
statute, law or regulation of any jurisdiction, or (vi) petition or apply to any
tribunal for any receiver, custodian or any trustee for any substantial part of
its Property, or (vii) be the subject of any such proceeding filed against it
which remains undismissed for a period of 60 days, or (viii) file any answer
(excluding motions relating to preliminary matters) admitting or not contesting
the material allegations of any such petition filed against it or any order,
judgment or decree approving such petition in any such proceeding, or (ix) seek,
approve, consent to, or acquiesce in any such proceeding, or in the appointment
of any trustee, receiver, custodian, liquidator, or fiscal agent for it, or any
substantial part of its
34
Property, or an order is entered appointing any such trustee, receiver,
custodian, liquidator or fiscal agent and such order remains in effect for 60
days, or (x) take any formal action for the purpose of effecting any of the
foregoing or looking to the liquidation or dissolution of the Borrower; or
(i) an order for relief is entered under any bankruptcy, insolvency
or similar laws or any other decree or order is entered by a court having
jurisdiction (i) adjudging the Borrower a bankrupt or insolvent, or (ii)
approving as properly filed a petition seeking reorganization, liquidation,
arrangement, adjustment or composition of or in respect of the Borrower under
any bankruptcy, insolvency or similar law, or (iii) appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator, fiscal agent (or other
similar official) of the Borrower or of any substantial part of the Property
thereof, or (iv) ordering the winding up or liquidation of the affairs of the
Borrower, and any such decree or order continues unstayed and in effect for a
period of 60 days; or
(j) judgments or decrees against the Borrower aggregating in excess
of $1,000,000 shall remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of 60 days, or
(k) the Borrower shall change the Investment Adviser.
Upon the occurrence of an Event of Default or at any time thereafter during
the continuance thereof, (1) if such event is an Event of Default specified in
clause (i) above, the Commitment shall immediately and automatically terminate
and the Loans and all accrued and unpaid interest on any thereof and all other
amounts owing under the Loan Documents shall immediately become due and payable,
and the Bank may, in its sole discretion, exercise any and all remedies and
other rights provided pursuant to the Loan Documents, and (2) if such event is
any other Event of Default, any or all of the following actions may be taken:
(x) the Bank may, in its sole discretion, by notice to the Borrower, declare the
Commitment to be terminated forthwith, whereupon the Commitment shall
immediately terminate and (y) the Bank may, by written notice of default to the
Borrower, declare the Loans, all accrued and unpaid interest thereon and all
other amounts owing under the Loan Documents to be due and payable forthwith,
whereupon the same shall immediately become due and payable, and in all cases
the Bank may, in its sole discretion, exercise any and all remedies and other
rights provided pursuant to the Loan Documents or by law. Except as otherwise
provided in this paragraph 9.1, presentment, demand, protest and all other
notices of any kind are hereby expressly waived.
35
In the event that the Commitment shall have been terminated or the Note
shall have been declared due and payable pursuant to the provisions of this
paragraph 9.1, any funds received by the Bank from or on behalf of the Borrower
shall be applied by the Bank in liquidation of the Loans and the obligations of
the Borrower hereunder and under the Note in the following manner and order: (i)
first, to reimburse the Bank for any expenses due pursuant to the provisions of
paragraph 10.5; (ii) second, to the payment of accrued and unpaid Commitment Fee
and all other fees, expenses and amounts due hereunder (other than principal and
interest on the Note); (iii) third, to the payment of interest due on the Note;
(iv) fourth, to the payment of principal outstanding on the Note; and (v) fifth,
to the payment of any other amounts owing to the Bank under any of the Loan
Documents. Any funds remaining after the foregoing applications shall be paid
over to the Borrower or as a court may otherwise direct.
10. OTHER PROVISIONS.
10.1. Amendments and Waivers.
The Bank and the Borrower may from time to time enter into written
amendments, supplements or modifications hereof and the Bank may, in its sole
discretion, execute and deliver a written instrument waiving or consenting to
the departure from, on such terms and conditions as the Bank may specify in such
instrument, any of the requirements of the Loan Documents or any Default or
Event of Default and its consequences. Any such amendment, supplement,
modification, waiver or consent shall be binding upon the Borrower, the Bank and
all future holders of the Note. In the case of any waiver, the Borrower and the
Bank shall be restored to their former position and rights under the Loan
Documents, and any Default or Event of Default waived shall not extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
10.2. Notices.
All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered
by hand, or when deposited in the mail, first-class postage prepaid, or, in the
case of telecopier notice, when sent, addressed as follows, or to such other
addresses as to which the Bank may be hereafter notified by the Borrower in
accordance with the provisions of this paragraph 10.2:
The Borrower:
36
XXXXXXX XXXXX SENIOR FLOATING RATE FUND, INC.
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: X. Xxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
XXXXXXX XXXXX ASSET MANAGEMENT, L.P.
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
The Bank:
THE BANK OF NEW YORK
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 10286
Attention: Xxx X. Xxxxxxxx, III
Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000,
except that any notice, request or demand by the Borrower to or upon the Bank
pursuant to paragraphs 2.3, 2.4, 2.5 or 2.7 shall not be effective until
received.
10.3. No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of the
Bank, any right, remedy, power or privilege under any Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges
37
under the Loan Documents are cumulative and not exclusive of any rights,
remedies, powers and privileges
provided by law.
10.4. Survival of Representations and Warranties.
All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of the Loan Documents.
10.5. Payment of Expenses and Taxes; Indemnified Liabilities.
The Borrower agrees, promptly upon presentation of a statement or
invoice therefor, and whether or not any Loan is made, (i) to pay or reimburse
the Bank for all out-of-pocket costs and expenses incurred in connection with
the development, preparation and execution of, the Loan Documents and any
amendment, supplement or modification thereto, or waiver or consent thereunder,
any documents prepared in connection therewith and the consummation of the
transactions contemplated thereby, including, without limitation, the reasonable
fees and disbursements of counsel, (ii) to pay or reimburse the Bank for its
costs and expenses incurred in connection with the enforcement of any rights
under this Agreement, the Note and any such other documents, including, without
limitation, reasonable fees and disbursements of counsel, (iii) to pay,
indemnify, and hold the Bank harmless from, any and all recording and filing
fees and any and all liabilities with respect to, or resulting from any delay in
paying, present and future stamp and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, the Loan Documents and any such other documents, and (iv) to pay,
indemnify and hold the Bank and each of its officers, directors and employees
harmless from and against any and all other liabilities, obligations, claims,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be or become payable to
any third party (including, without limitation, reasonable counsel fees and
disbursements) with respect to the execution, delivery, enforcement and
performance of the Loan Documents or the use of the proceeds of the Loans (all
the foregoing, collectively, the "Indemnified Liabilities") and, if and to the
extent that the foregoing indemnity may be unenforceable for any reason, the
Borrower agrees to make the maximum payment permitted under applicable law;
provided, however, that the Borrower shall have no obligation hereunder to pay
Indemnified Liabilities to any Person arising from the gross negligence or
willful misconduct of such Person. The agreements in this paragraph shall
survive the termination of the Commitment and the payment of the Note, and all
other amounts payable hereunder.
38
10.6. Successors and Assigns.
(a) This Agreement and the Note shall be binding upon and inure to
the benefit of the Borrower, the Bank, all future holders of the Note and their
respective successors and assigns, except that the Borrower may not assign,
delegate or transfer any of its rights or obligations under the Loan Documents
without the prior written consent of the Bank.
(b) With the prior written consent of the Borrower (which consent
shall not be unreasonably withheld), the Bank shall have the right at any time,
upon written notice to the Borrower of its intent to do so, subject to
compliance with applicable securities laws, to sell, assign, transfer or
negotiate all or any part of the Bank's rights (but not its obligations) with
respect to the Loans, the Commitment and the Note to one or more of its
Affiliates or, with the prior written consent of the Borrower (which consent
shall not be unreasonably withheld), to sell, assign, transfer or negotiate all
or any part of the Bank's rights and obligations with respect to its Loans, its
Commitment and its Note to one or more commercial banks. Upon any such
assignment, the assignee thereunder shall be a party hereto and the assignor
thereunder shall be released from its obligations under this Agreement. The
Borrower agrees upon written request of such assignor to execute and deliver (1)
to such assignee, a Note, dated the effective date of such assignment, in an
aggregate principal amount equal to the Loans assigned to, and Commitment
assumed by, such assignee and (2) to such assignor, a Note, dated the effective
date of such assignment, in an aggregate principal amount equal to the balance
of such assignor's Loans and Commitment, if any, and such assignor shall cancel
and return to the Borrower its existing Note.
(c) The Bank may without the consent of the Borrower but subject to
compliance with applicable securities laws, grant participations in all or any
part of its Loans, the Note or the Commitment to the parent, any Affiliate,
Subsidiary or branch of the Bank or to one or more commercial banks, provided
that the Bank shall not grant more than 25 participations without the prior
written consent of the Borrower and provided further that (i) the Bank's
obligations under this Agreement shall remain unchanged, (ii) the Bank shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the Borrower shall continue to deal directly with the
Bank in connection with the Bank's rights and obligations under this Agreement
and (iv) the rights of any holder of any such participation shall be limited to
the right to consent to any action taken or omitted to be taken by the Bank
under this Agreement which would (1) increase the Commitment, (2) reduce the
Commitment Fee or the interest rate payable on, or increase or forgive the
principal amount
39
of the Note or (3) extend the maturity date of the Note or extend the
Termination Date, or postpone the payment or scheduled due dates for payments of
principal, interest and Commitment Fee. The Borrower hereby acknowledges and
agrees that any such participant shall for purposes of paragraphs 2.9, 2.10,
2.12 and 2.13, be deemed to be the "Bank", provided that in no event shall the
Borrower be liable for any amounts under said paragraphs in excess of the
amounts for which it would be liable but for such participation.
(d) The Bank shall not, as between and among the Borrower and the
Bank, be relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participations in, all or
any part of its Loans, the Commitment or the Note, except that the Bank shall be
relieved of its obligations to the extent of any sale, assignment, transfer, or
negotiation of all or any part of its Loans, the Commitment or the Note pursuant
to paragraph (b) above.
(e) Notwithstanding anything to the contrary contained in this
paragraph 10.6, the Bank may at any time or from time to time assign all or any
portion of its rights under this Agreement with respect to its Loans and the
Note to a Federal Reserve Bank. No such assignment shall release the Bank from
its obligations hereunder.
10.7. Counterparts.
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one counterpart signed by the party to be charged.
10.8. Governing Law.
The Loan Documents and the rights and obligations of the parties
thereunder shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of New York, without regard to principles
of conflict of laws, but including Section 5-1401 of the General Obligations
Law.
10.9. Headings.
Paragraph headings have been inserted herein for convenience only and
shall not be construed to be a part hereof.
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10.10. Severability.
Every provision of the Loan Documents is intended to be severable, and
if any term or provision thereof shall be invalid, illegal or unenforceable for
any reason, the validity, legality and enforceability of the remaining
provisions thereof shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction.
10.11. Integration.
This Agreement and the Note embody the entire agreement and
understanding between the Borrower and the Bank with respect to the subject
matter hereof and thereof and supersede all prior agreements and understandings
between the Borrower and the Bank with respect to the subject matter hereof and
thereof.
10.12. Consent to Jurisdiction.
The Borrower hereby irrevocably submits to the jurisdiction of any New
York State or Federal Court sitting in the City of New York over any suit,
action or proceeding arising out of or relating to the Loan Documents. The
Borrower hereby irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in such a court and any claim that any
such suit, action or proceeding brought in such a court has been brought in an
inconvenient forum. The Borrower hereby agrees that a final judgment in any such
suit, action or proceeding brought in such a court, after all appropriate
appeals, shall be conclusive and binding upon it.
10.13. No Limitation on Service or Suit.
Nothing contained in the Loan Documents or in any modification,
waiver, consent or amendment thereto shall affect the right of the Bank to serve
process in any manner permitted by law or limit the right of the Bank to bring
proceedings against the Borrower in the courts of any jurisdiction or
jurisdictions.
10.14. WAIVER OF TRIAL BY JURY.
THE BANK AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO
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A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREIN.
FURTHER, THE BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE
BANK, OR COUNSEL TO THE BANK, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
BANK WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF
RIGHT TO JURY TRIAL PROVISION. THE BORROWER ACKNOWLEDGES THAT THE BANK HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS
PARAGRAPH.
10.15. Set-off.
In addition to any rights and remedies of the Bank provided by law,
upon the occurrence of an Event of Default and acceleration of the obligations
owing in connection with the Loan Documents, or at any time upon the occurrence
and during the continuance of an Event of Default under paragraphs 9.1(a) or
9.1(b), the Bank shall have the right, to the extent permitted by applicable
law, without prior notice to the Borrower, any such notice being expressly
waived, to the extent permitted by applicable law, by the Borrower, to set off
and apply against any indebtedness, whether matured or unmatured, of the
Borrower to the Bank, any amount owing from the Bank to the Borrower at, or at
any time after, the happening of any of the above- mentioned events. To the
extent permitted by applicable law, the aforesaid right of set-off may be
exercised by the Bank against the Borrower, or against any trustee in
bankruptcy, custodian, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor of the
Borrower or against anyone else claiming through or against the Borrower or such
trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit
of creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by the Bank prior to the making, filing or issuance, or service upon
the Bank of, or of notice of, any such petition, assignment for the benefit of
creditors, appointment or application for the appointment of a receiver, or
issuance of execution, subpoena, order or warrant. The Bank agrees promptly to
notify the Borrower after any such set-off and application made by the Bank,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
10.16. Confidentiality.
The Bank agrees that it will use its best efforts not to disclose
without the prior written consent of the Borrower (other than to the directors,
employees, auditors or counsel of the Bank for the sole purpose of enabling the
Bank to administer the Loans
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hereunder) any information with respect to the Borrower which is furnished
pursuant to this Agreement except that the Bank may disclose any such
information (a) as has become generally available to the public other than by a
breach of this paragraph 10.16, (b) as may be required or appropriate in any
report, statement or testimony submitted to any Governmental Body (whether in
the United States or elsewhere), (c) as may be required or appropriate in
response to any summons or subpoena or any law, order, regulation or ruling
applicable to the Bank and (d) to any prospective participant or assignee in
connection with any contemplated transfer pursuant to paragraph 10.6, provided
that prior to the delivery of any information to a prospective participant or
assignee it shall execute an agreement with such Person containing provisions
substantially identical to those contained in this paragraph 10.16.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized directors or
officers, as the case may be, as of the day and year first above written.
XXXXXXX XXXXX SENIOR FLOATING RATE FUND,INC.
By:
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Title:________________________
THE BANK OF NEW YORK
By:
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Title:________________________
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