EXHIBIT 99.(2)(k)(vi)
LOAN AND PLEDGE AGREEMENT
LOAN AND PLEDGE AGREEMENT
AGREEMENT dated as of February 21, 2003, between CUSTODIAL TRUST COMPANY
("Bank"), a bank and trust company organized and existing under the laws of the
State of New Jersey, and BOULDER GROWTH & INCOME FUND, INC. ("Borrower"), a
company organized and existing under the laws of the State of Maryland and
registered as an investment company under the Investment Company Act of 1940.
WHEREAS, Borrower may seek to obtain, and Bank may be willing to make,
loans to Borrower from time to time in an aggregate principal amount of up to
the lesser of $20,000,000 or the maximum amount Borrower is then permitted to
borrow under the Investment Company Act of 1940;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINITIONS. The following terms, unless the context otherwise requires,
shall have the following meanings as used herein:
(a) "Business Day" means any day on which banks in both the States of New
Jersey and New York are open for business.
(b) "Collateral" has the meaning given in Section 7(b) below.
(c) "Collateral Securities Account Agreement", at any time, means @ the
collateral account agreement, dated of even date herewith, among Bank, Borrower
and PFPC Trust Company, a trust company organized and existing under the laws of
the State of Delaware, or (IIJ if such agreement is then no longer in effect,
the collateral account agreement (if any) to which Bank, Borrower and another
securities intermediary acting as provided for therein are then parties.
(d) "Event of Default" has the meaning given in Section 17 below.
(e) "Effective Control" by any Person over securities means such control as
will create under the Uniform Commercial Code of New York, in favor of such
Person, a prior, perfected security interest in such securities.
(f) "Excess Collateral" at any time means (IJ all Collateral which does not
consist of cash in the Pledge Account or Pledged Securities and (I.IJ Collateral
consisting of cash in the Pledge Account, and/or Pledged Securities, having an
aggregate Initial Loan Value not greater than the difference between (A) the sum
of all cash in the Pledge Account and the aggregate Initial Loan Value of all
Pledged Securities and @the sum of the outstanding aggregate principal amount of
all the Loans and the interest accrued thereon.
(g) "Guarantee" of or by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the "Primary Obligor") in any
manner, whether directly or indirectly, and including any obligation of such
Person, direct or indirect, (i) to purchase (or advance or supply funds for the
purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such
Indebtedness, (ii) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness
or (iii) to maintain working capital, equity capital or other financial
statement condition or liquidity of the Primary Obligor so as to enable the
Primary Obligor to pay such Indebtedness; provided, however, that the term
Guarantee shall not include endorsements for collection or deposit, in either
case in the ordinary course of business.
(h) "Indebtedness" of any Person means, without duplication, (i) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person
upon which interest charges are customarily paid, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or services
which under generally accepted accounting principles would be shown on a balance
sheet of such Person as a liability, (v) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed, (vi)
all Guarantees by such Person of Indebtedness of others, (vii) all obligations
of such Person in respect of interest rate and currency swap agreements and
similar agreements obligating such Person to make payments, whether direct or
indirect or periodically or upon the happening of a contingency, and (viii) all
obligations of such Person as an account party in respect of letters of credit
and bankers' acceptances. The Indebtedness of any Person shall include the
Indebtedness of any partnership in which such Person is a general partner.
(i) "Initial Loan Value" means the collateral value assigned to the
Collateral in accordance with Section 7(e) below.
(j) "Interest Closing Date" with respect to any Loan means the day next
preceding the day that such Loan is repaid in full and, prior to such day, any
day next preceding an Interest Commencement Date for such Loan.
(k) "Interest Commencement Date" with respect to any Loan means the date on
which such Loan is made and thereafter any 21st day of any month if such day
occurs while such Loan is outstanding (or if any such 21st day is not a Business
Day, then the next succeeding Business Day).
(l) "Interest Period" with respect to any Loan means each period from and
including an Interest Commencement Date for such Loan to and including the next
succeeding Interest Closing Date for such Loan.
(m) "Lien" means, with respect to any asset, (i) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset or any assignment, hypothecation, deposit arrangement or other
preferential arrangement of or with respect to such asset, and (ii) any purchase
option, call or similar right of a third party with respect to such asset.
(n) "Loan" and "Loans" have the meaning given in Section 2 below.
(o) "Maintenance Loan Value" means the collateral value assigned to the
Collateral in accordance with Section 7(e) below.
(p) "Market Value" means the value assigned to the Collateral in accordance
with Section 7(g) below.
(q) "1940 Act" means the Investment Company Act of 1940 as from time to
time in effect.
(r) "Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, limited liability
company, corporation, government or any agency, court or political division
thereof, or any other entity.
(s) "Pledge Account" means a securities account maintained at the
securities intermediary under the Collateral Securities Account Agreement and
entitled "Special Custody Account for Custodial Trust Company as pledgee of
Boulder Growth & Income Fund".
(t) "Pledged Securities" means () all securities recorded in the Pledge
Account (including uncertificated securities recorded therein) and (ii) all
other securities and interests into which such securities are converted or for
which they are exchanged.
(u) "30-day LIBOR" means the one-month London Inter-Bank Offered Rate for
U.S. dollars as quoted on Page 3750 on the Dow Xxxxx Market Service, formerly
known as the Telerate Service (or such other page as may replace Page 3750 on
that service or such other service as may be designated for the time being by
the British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates), as of 11 :00
a.m., London time, on an Interest Commencement Date.
2. LOANS. (a) Subject to the terms and conditions of this Agreement, Bank
may, in its sole and absolute discretion, make loans to Borrower (each, a
"Loan", and, collectively, the "Loans") at such times and in such amounts as
Borrower may request, which amounts may beborrowed, repaid and reborrowed,
provided that the Loans shall not exceed, in- aggregate principal amount at any
one time outstanding, the lesser of $20,000,000 or the maximum amount Borrower
is then permitted under the 1940 Act to borrow.
(b) Each Loan shall be in a principal amount of $100,000 or more.
(c) Borrower shall request each Loan by notice to Bank, specifying (i) the
date (which shall be a Business Day) on which Borrower desires that such Loan be
made, (ii) the principal amount of such Loan, (iii) the Collateral for such Loan
and (iv) such information about the use of the proceeds from such Loan as Bank
may from time to time require, which notice shall be received by Bank no later
than the last Business Day prior to the date on which Borrower desires that such
Loan be made.
(d) The Loans shall be evidenced by a loan account maintained by Bank in
Borrower's name and by the records made therein by Bank, which shall be
conclusive, absent manifest error, as to the amount of the Loans and the
interest and payments thereon. Any failure so to record or any error in doing so
shall not limit or otherwise affect the obligation of Borrower under this
Agreement to pay any amount owing with respect to the Loans.
(e) Performance by Borrower of all the obligations and covenants it has
incurred and made under this Agreement shall in no way impair or compromise the
sole and absolute discretion of Bank to agree or not agree to make any Loan at
any time.
3. CONDITIONS PRECEDENT. (a) The obligation of Bank to make any Loan, which
it has, in its sole and absolute discretion, agreed to make, shall be subject to
the fulfillment on the date of the making of such Loan of each of the following
conditions precedent: (i) that no event has occurred and is continuing which
constitutes an Event of Default or which, upon the giving of notice, the lapse
of time, or both, would constitute an Event of Default, (ii) that the
representations and warranties of Borrower in Sections 9, 10 and 1 I below are
correct and accurate as though made on such date, (iii) that after giving effect
to the making of such Loan, Borrower's continuous asset coverage, as defined in
the 1940 Act, is no less than 300% of the aggregate principal amount of all of
its borrowings, including such Loan, then outstanding, (iv) that Borrower has
fulfilled, to the satisfaction of Bank, Borrower's obligations with respect to
such Loan and the Collateral therefor as set forth in Section 7(a) below, (v)
that after giving effect to the making of such Loan and the pledge of Collateral
therefor, the Collateral then held by Bank includes Pledged Securities, and/or
cash in the Pledge Account, having an aggregate Initial Loan Value equal to or
greater than the sum of the outstanding aggregate principal amount of all the
Loans and the accrued interest thereon, (vi) that after giving effect to the
making of such Loan and the pledge of Collateral therefor, the representation
and warranty of Borrower in Section 11(a) below continues to be correct and
accurate, and (vii) that Bank has received from Borrower such documents as Bank
may reasonably request.
(b) The obligation of Bank to make the first Loan which it has, in its sole
and absolute discretion, agreed to make shall be subject to the fulfillment of
the condition precedent that, on or prior to the date of the making of such
Loan, Bank shall have received from Borrower (i) the origination fee provided
for in Section 13 below, (ii) a statement of assets and liabilities and the
related statement of operations and statement of changes in net assets
("Financials") for Borrower's most recent (6-month or 12-month) fiscal period
for which they are available, as well as audited Financials for Borrower's most
recent fiscal year for which such audited Financials are available, and (iii) if
requested by Bank, a Statement of Purpose (Federal Reserve Form U-1) duly
completed and signed by Borrower.
4. TERMS OF REPAYMENT; WAIVERS. (a) The principal amount of each Loan shall
be repayable by Borrower at any time, whether or not an Event of Default has
occurred and is then continuing, either (i) in full (together with all accrued
interest on such Loan) upon demand by Bank to Borrower for such repayment in
full, or (ii) in part (together with all accrued interest on such part) upon
demand by Bank to Borrower for repayment of such part.
(b) Performance by Borrower of all the obligations and covenants it has
incurred and made under this Agreement shall in no way impair or compromise the
right of Bank in its sole and absolute discretion to demand, at any time,
repayment of all or any portion of any Loan.
(c) Any Loan may also become repayable by Borrower, in whole or in part, as
provided in Section 7(d) below, and shall become repayable by Borrower in its
entirety as provided in Section 17 below upon the occurrence of an Event of
Default.
(d) Borrower may repay any Loan in its entirety or in part at any time,
without premium or notice of any kind but together with all accrued interest on
the amount thereof that is repaid.
(e) Borrower hereby waives presentment and protest of any instrument and
notice thereof, notice of default and, to the extent permitted by applicable
law, all other notices to which Borrower might otherwise be entitled.
5. INTEREST AND OTHER CHARGES. (a) Borrower shall pay Bank interest, in
arrears, on the principal amount of each Loan from the date on which such Loan
is made pursuant to Section 2 above until such Loan is due under this Agreement
(whether at maturity, upon prepayment or otherwise), at a rate per annum during
each Interest Period equal to 30-day LIBOR on the Interest Commencement Date of
such Interest Period plus one percent (100 basis points).
(b) All interest payable under this Agreement shall be calculated by Bank,
on the basis of a 360-day year and for the actual number of days elapsed.
Interest accrued on a Loan pursuant to Section 5(a) above shall be payable
monthly on the 10th day of each month (or, if the 10th day is not a Business
Day, on the next succeeding Business Day), upon repayment of such Loan in full,
and as otherwise provided in this Agreement.
(c) Borrower shall pay Bank interest on any amount not paid by Borrower
when due under this Agreement, from the date payment of such amount was due
until the date such amount is paid, at a rate per annum during each Interest
Period equal to 30-day LIBOR on the Interest Commencement Date of such Interest
Period plus three percent (300 basis points). Such interest shall be payable on
demand made by Bank from time to time.
(d) Each determination of an interest rate by Bank pursuant to this
Agreement shall be conclusive and binding on Borrower in the absence of manifest
error.
(e) In no event whatsoever shall the interest rate and other charges
charged hereunder exceed the highest rate permissible under any law which a
court of competent jurisdiction, in a final determination, deems applicable
hereto. In the event that such a court determines, in a final determination,
that Bank has received interest and other charges hereunder in excess of such
highest rate, Bank shall promptly refund such excess amount to Borrower, and the
provisions hereof shall be deemed amended to provide for such permissible rate.
6. PLACE AND MANNER OF PAYMENT. Borrower shall make all payments required
to be made by it under this Agreement (whether of principal, interest or any
other amount) prior to 11:OO A.M. New York time on the date such payment is due,
at such address in the United States of America as Bank shall from time to time
indicate to Borrower, in U.S. dollars and in immediately available funds.
7. COLLATERAL SECURITY, PLEDGE AND LOAN VALUES. (a) On or before the date
of the making of any Loan, (i) Borrower shall deliver to the Pledge Account, or
otherwise give to Bank as pledgee Effective Control over, securities which are
acceptable to Bank in its sole and absolute discretion and on the date of the
making of such Loan either (A) have an aggregate Initial Loan Value of no less
than the principal amount of such Loan or (B) if there is on such date Excess
Collateral consisting of Pledged Securities, and/or cash in the Pledge Account,
have an aggregate Initial Loan Value of no less than the difference between (x)
the principal amount of such Loan and (y) the aggregate Initial Loan Value of
such Excess Collateral, and (ii) in the case of securities in physical form,
Borrower shall deliver to Bank such instruments of assignment, signed in blank
by Borrower, consents and other documents, all in form and substance
satisfactory to Bank, as may be required to enable Bank as pledgee to exercise
its rights and remedies under Section 18 below .
(b) To secure the due and punctual payment of all of the Loans, all accrued
interest thereon and all other amounts from time to time payable by Borrower
under this Agreement, and the performance by Borrower of all its obligations and
covenants under this Agreement, Borrower hereby pledges to Bank, and grants to
Bank a first priority, perfected security interest in and lien upon, (i) all
Pledged Securities at any time in the Pledge Account, including uncertificated
securities recorded therein, (ii) all other property of Borrower now or at any
time hereafter in Bank's possession including, but not limited to, all other
securities, monies, claims and credit balances, (iii) all property of Borrower
now or at any time hereafter held by or through any of Bank's affiliates,
including securities held in Borrower's accounts with securities broker-dealer
affiliates of Bank, and (iv) all proceeds, products and profits derived from any
of the foregoing (including all cash, securities, dividends and other property
at any time and from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the foregoing, proceeds of any
insurance policies, proceeds of proceeds, and claims against third parties), and
all books and records related to any of the foregoing (all of the foregoing
Pledged Securities and other property, together with all other property in which
Borrower may hereafter xxxxx x Xxxx to Bank, being herein collectively referred
to as the "Collateral").
(c) Bank and Borrower hereby agree that each partnership interest, limited
liability company member interest and other item of property (whether investment
property, financial asset, security, instrument or cash) held in or credited to
any account of Borrower at Bank or at any affiliate of Bank shall be treated as
a "financial asset" under Article 8 of the New York Uniform Commercial Code.
(d) At all times while any Loan is outstanding, Borrower shall maintain
Collateral in the Pledge Account consisting of Pledged Securities and/or cash
having an aggregate Maintenance Loan Value of not less than the sum of the
outstanding aggregate principal amount of all the Loans and the interest accrued
(and unpaid) thereon. Forthwith upon demand made to Borrower by Bank, Borrower
shall, at its option, either (i) deliver into the Pledge Account, or otherwise
give to Bank as pledgee Effective Control over, such additional Pledged
Securities, which are acceptable to Bank in its sole and absolute discretion, or
(ii) repay so much of the outstanding aggregate principal amount of the Loans,
as, in either case, may be necessary for the aggregate Maintenance Loan Value of
all Collateral consisting of Pledged Securities, and/or cash in the Pledge
Account, to be no less than the sum of the outstanding aggregate principal
amount of all the Loans and the interest accrued thereon.
(e) The Initial Loan Value and the Maintenance Loan Value of any of the
Pledged Securities or other item of Collateral in the Pledge Account are each an
amount representing a percentage of the Market Value of such Pledged Security or
other item of Collateral and shall be determined either in accordance with
Schedule A hereto (which may be supplemented or revised at any time in the sole
and absolute discretion of Bank) or from time to time by Bank in its sole and
absolute discretion if such Initial Loan Value and Maintenance Loan Value are
not set forth on such Schedule A, provided that any of such Collateral that is
subject to any Lien other than one permitted under Section 16(b)(iv) below shall
have no Initial or Maintenance Loan Value.
(f) With the prior approval of Bank as to any substitute securities and/or
other collateral and as to the manner of substitution, Borrower may at any time
and from time to time substitute such securities and/or other collateral for all
or some of the Collateral, provided that no Event of Default has occurred and is
continuing and that, immediately after giving effect to such substitution, the
aggregate Initial Loan Value of all remaining Pledged Securities, and cash in
the Pledge Account, is not less than the sum of the outstanding aggregate
principal amount of the Loans and the interest accrued thereon.
(g) If and for so long as any securities (including Pledged Securities)
belonging to Borrower are listed on a national securities exchange in the United
States of America, their Market Value shall be determined for all purposes by
the last sales price for such Pledged Securities on any such exchange on the
Business Day next preceding the date of determination or, if there was no sale
on that Business Day, by the last sales price for such Pledged Securities on the
next preceding Business Day on which there was a sale thereof on any such
exchange, all as quoted on the Consolidated Tape of the New York Stock Exchange
or, if not quoted on such Consolidated Tape, then as quoted by any such
exchange. The Market Value of any other item of Collateral, and the Market Value
of Pledged Securities if they are not listed on any such exchange, shall be
determined by Bank for all purposes (i) based upon the prices bid (on the
Business Day next preceding the date of determination) by banks and
broker/dealers which regularly quote prices on property of the same type as such
item of Collateral or (ii) if no such quotations are available for such Business
Day, based upon such factors as Bank, in its sole and absolute discretion, shall
determine. Market Value, in the case of interest-bearing Collateral, shall
include accrued interest to the date on which such Market Value is determined.
Each determination of Market Value shall be conclusive and binding on Borrower
in the absence of manifest error.
(h) Subject to Section 7(j) below, Bank shall cause to be promptly paid
over to Borrower (i) any and all cash dividends and interest paid on any of the
Collateral and credited to the Pledge Account, and (ii) any other cash credited
to the Pledge Account on account of the Collateral (whether upon the repayment,
redemption or exchange of any thereof or otherwise), unless, after giving effect
to such payment of cash dividends or interest or other cash to Borrower, the
aggregate Maintenance Loan Value of all Pledged Securities, and cash in the
Pledge Account, would be less than the sum of the outstanding aggregate
principal amount of all the Loans and the interest accrued thereon, in which
case such cash shall promptly be applied to the repayment of such aggregate
principal amount and the payment of such interest. Any and all non-cash
distributions of property (including stock dividends) made for any reason
whatsoever on or in respect of any of the Collateral shall be credited to the
Pledge Account and form part of the Collateral subject to this Agreement.
(i) Subject to Section 7(j) below, Borrower shall be entitled to exercise,
for any purpose not inconsistent with the terms of this Agreement, any and all
voting and/or consensual rights and powers relating or pertaining to the
Collateral. In furtherance of such exercise and to the extent that it receives
them, Bank shall deliver to Borrower all notices of meetings, proxy materials
(other than proxies) and other materials that are distributed (i) regarding
Pledged Securities, by the issuers thereof or, in the case of tender, exchange
or similar offers for Pledged Securities, by the party (or its agent) making the
offer and (ii) regarding Pledged Securities or any other item of Collateral, by
any court having jurisdiction over (or by any Person who is a party to)
reorganization, liquidation or other similar proceedings for the issuer of such
Pledged Securities or the obligor on such other item of Collateral. Whenever
Bank or any of its agents receives a proxy with respect to Pledged Securities,
Bank shall promptly request instructions from Borrower on how such securities
are to be voted, and shall give such proxy, or-cause it to be given, in
accordance with such instructions. If Borrower timely informs Bank that Borrower
wishes to vote any such Pledged Securities in person, Bank shall promptly seek
to have a legal proxy covering such securities issued to Borrower.
(j) If an Event of Default occurs and for so long as it continues, Borrower
shall cease to be entitled (i) to exercise any and all voting and/or consensual
rights and powers relating or pertaining to any of the Collateral and (ii) to
receive any cash dividends and interest, or other cash, payable on or on account
of any of the Collateral; and Bank shall have the sole and exclusive right and
authority to exercise such voting and/or consensual rights and powers and to
receive and retain such dividends, interest and other cash. Any money received
by Bank pursuant to this Section 7(j), shall be retained by Bank as additional
Collateral and applied in accordance with the provisions of this Agreement.
(k) (i) Any time there is Excess Collateral, and provided that no Event of
Default has occurred and is continuing, Borrower may designate to Bank, in
writing, any of such Excess Collateral, and, promptly upon such designation,
such designated Excess Collateral shall be released from the lien and security
interest granted in Section 7(b) above and, if such designated Excess Collateral
is credited to the Pledge Account, Bank shall instruct PFPC Trust Company (or
such other Person then acting as securities intermediary under the Collateral
Securities Account Agreement) to deliver it to such account of Borrower as
Borrower may designate, provided that, immediately after giving effect to such
delivery, the aggregate Initial Loan Value of all remaining Pledged Securities,
and cash in the Pledge Account, is not less than the sum of the outstanding
aggregate principal amount of all the Loans and the interest accrued thereon.
(ii) Provided that no Event of Default has occurred and is continuing,
and unless Bank and Borrower agree otherwise, Borrower shall have the right
to deal freely under this Agreement in any item of Collateral which is
neither a Pledged Security nor cash credited to the Pledge Account.
(l) Upon (i) the payment in full of all the Loans, all accrued interest
thereon and all other amounts payable by Borrower under this Agreement, and (ii)
the performance by Borrower of all its obligations and covenants under this
Agreement, the security interest and lien granted in Section 7(b) above in and
upon the Collateral shall terminate, and all of Bank's rights hereunder to the
Collateral shall revert to Borrower. Upon notice from Borrower after such
termination, Bank shall deliver to Borrower, or give Borrower Effective Control
over, all Collateral under Bank's control, and shall deliver to Borrower all
instruments and documents evidencing such Collateral and such other documents as
Borrower shall reasonably request to evidence such termination.
8. PROTECTION OF SECURITY INTEREST. (a) Borrower shall, at its expense and
from time to time, perform all steps reasonably requested by Bank at any time to
perfect, maintain, protect and enforce Bank's security interest in and lien upon
the Collateral, including, without limitation, (i) executing and filing
financing or continuation statements and amendments thereto, in form and
substance satisfactory to Bank, and (ii) obtaining such consents and
registrations of transfer, providing such endorsements and executing and
delivering such other documents as may be required for any sale, transfer or
other disposition thereof by Bank pursuant to Section 18 below. From time to
time, Borrower shall, upon Bank's written request, promptly execute and deliver
confirmatory written instruments pledging the Collateral to Bank, but any
failure by Borrower to do so shall not affect or limit Bank's security interest
in, lien upon or other rights in and to the Collateral. Until payment in full of
all the Loans, all accrued interest thereon and all other amounts payable by
Borrower under this Agreement, and the performance by Borrower of its
obligations and covenants under this Agreement, Bank's security interest in the
Collateral shall continue in full force and effect.
(b) Borrower hereby irrevocably appoints Bank its true and lawful attorney
in its name, place and stead, and at its expense, solely in connection with the
preservation and enforcement of Bank's rights and remedies under this Agreement
and whether before or after an Event of Default, to receive, endorse and collect
all checks and other orders for the payment of money made payable to Borrower
representing any dividend, interest or other distribution payable or
distributable in respect of any of the Collateral and to give full discharge for
the same, and after an Event of Default, and for so long as it continues, (i) to
give all notices, obtain aH consents, effectuate all registrations in Bank's
name or that of a proposed purchaser or other transferee and make all transfers
of all or any part of the Collateral which are necessary or appropriate in
connection with any sale, transfer or other disposition thereof pursuant to this
Agreement, (ii) to date, insert therein the name of an assignee, and deliver
each of any instruments of assignment delivered to Bank pursuant to Section 7(a)
above, and to prepare and execute all such amendments thereto as may be required
to obtain any consent necessary for Bank's sale, transfer or other disposition
of the item of Collateral to which such instrument of assignment pertains, (iii)
to execute and deliver for value all necessary or appropriate assignments and
other instruments in connection with any such sale, transfer or other
disposition, and (iv) to execute and deliver all other documents, and do all
other acts and things, which Bank deems appropriate in such connection.
9. OTHER LIENS. Borrower represents and warrants to Bank that all
Collateral is owned by Borrower free and clear of all Liens whatsoever (except
for Liens permitted under Section 16(b)(iv) and that (except for Liens permitted
under Section 16(b) below) it will continue to be so owned by Borrower.
10. USE OF PROCEEDS. Borrower represents and warrants to Bank that the
proceeds of each Loan will be used to purchase portfolio securities in its
business as an investment company registered under the 1940 Act.
11. OTHER REPRESENTATIONS AND WARRANTIES. Borrower further represents and
warrants to Bank that:
(a) at no time shall the Collateral include any Pledged Securities or other
property in an amount such that (without taking any other relationships or
assets of Bank into account) Bank, either upon exercising its rights under
Section 18 below or otherwise, would become a holder of 10% or more of any class
of any equity security of any issuer or would become (or be presumed to be) an
affiliate of any issuer of securities (as such term "affiliate" is defined for
purposes of the Securities Act of 1933);
(b) Borrower is not an affiliate (as such term "affiliate" is defined for
purposes of the Securities Act of 1933) of the issuer of any Pledged Security
(or other security included in the Collateral);
(c) if any Pledged Securities are "restricted securities" as defined in
Rule 144 under the Securities Act of 1933, then at least two years have elapsed
since the later of the date such Pledged Securities were acquired by any Person
from the issuer thereof or from an affiliate of such issuer (as such term
"affiliate" is defined for purposes of the Securities Act of 1933), and,
assuming that Bank is not an affiliate of the issuer of such securities (as such
term "affiliate" is defined for purposes of the Securities Act of 1933), Bank
may, in the exercise of its rights under Section 18 below, sell such Pledged
Securities pursuant to paragraph (k) of such Rule 144;
(d) Borrower (i) is a company duly organized, validly existing and in good
standing under the laws of the State of Maryland, (ii) is subject to and duly
registered as a management investment company in accordance with the 1940 Act,
(iii) is qualified to do business and is in good standing in all states in which
qualification and good standing are necessary in order for it to conduct its
business and own its property, and (iv) has all requisite power and authority to
conduct its business, to own its property, to execute and deliver this Agreement
and to perform its obligations hereunder;
(e) this Agreement has been duly and validly executed and delivered by
Borrower and constitutes a legal, valid and binding obligation of Borrower,
enforceable against it in accordance with its terms, subject, as to
enforceability of remedies, to bankruptcy, insolvency and other laws affecting
creditors' rights generally and to general principles of equity;
(f) Borrower has taken all necessary action to authorize the execution,
delivery and performance of this Agreement, and such authorization, delivery and
performance do not and will not (i) violate its corporate charter or by-laws or
any law, rule, regulation, order, judgment, injunction, decree, determination or
award presently in effect and applicable to it, (ii) require any consent or
result in a breach of or constitute a default under any agreement, lease or
instrument to which it is a party or by which it or any of its assets may be
bound or affected, or (111) result in or require the creation or imposition of
any Lien (other than in favor of Bank pursuant to this Agreement) upon or with
respect to any of the properties now owned or hereafter acquired by it;
(g) no recording, order, authorization, consent, license, registration,
approval, exemption, filing, notice or other similar action by or with any
governmental body, governmental official or other regulatory authority (except
such as have been obtained and copies or confirmations of which have been
delivered by Borrower to Bank) is or will be necessary (i) for the legality,
validity, binding effect or enforceability of this Agreement and the Collateral
Securities Account Agreement, (ii) to permit the performance by Borrower of its
obligations under this Agreement in accordance with the terms thereof, (iii) to
enable Bank to enforce its rights and remedies under this Agreement or under the
Collateral Securities Account Agreement, including any sale, transfer or other
disposition by Bank of all or any part of the Collateral or (iv) to create and
perfect the Lien granted under this Agreement on the Pledged Securities and
other Collateral in the Pledge Account;
(h) Borrower has no Indebtedness other than Indebtedness permitted under
Section 16(a) below;
(i) Borrower is not in default with respect to any of its Indebtedness;
(j ) except as disclosed by it to Bank in writing prior to the date of this
Agreement, there is no litigation or other proceeding pending or, to its
knowledge, threatened against or affecting Borrower which, if determined
adversely to it, would have a material adverse effect (i) on its financial
condition, operations or business or (ii) on any of the Collateral; and
(k) the audited statement of assets and liabilities of Borrower as of June
30, 2002, and the related statement of operations and statement of changes in
net assets for the 12-month period then ended and the unaudited statement of
assets and liabilities of Borrower as of November 30, 2002 and the related
statement of operations and statement of changes in net assets for the
five-month period then ended, copies of all of which have heretofore been
delivered to Bank by Borrower, and all other statements and data submitted in
writing in connection with the request for the credit contemplated by this
Agreement are true and correct, and said financials fairly present the financial
condition of Borrower as at the dates thereof and the results of its operations
for the periods then ended, and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, subject, however,
to year-end audit adjustments in the case of such financials for the five-month
period ended November 30, 2002. Since November 30, 2002, there have been no
changes in the assets or liabilities or financial condition of Borrower other
than changes in the ordinary course of business, and no such changes have been
materially adverse changes. Borrower has no knowledge of any liabilities that it
has at said dates, contingent or otherwise, not reflected in said balance
sheets, and Borrower has not entered into any commitments or contracts, or
incurred any other liabilities, which are not reflected in said balance sheets,
which may have a materially adverse effect upon its financial condition,
operations or business as now conducted.
12. REITERATION OF REPRESENTATIONS. The representations in Sections 9, 10
and 11 above shall be deemed to be repeated by Borrower each time a Loan is
made.
13. ORIGINATION FEE. Upon execution of this Agreement, Borrower shall pay
Bank an origination fee of $5,000 for the establishment of the credit facility
provided in this Agreement.
14. REPORTING. (a) As soon as available, and in any event within 45 days
after the close of each of the first six months of each fiscal year of Borrower,
commencing with the six months ending on May 31, 2003, Borrower shall deliver to
Bank its statement of assets and liabilities at the end of such six months and
its related statement of operations and statement of changes in net assets for
the portion of the fiscal year ending on the last day of such six months, all in
reasonable detail and stating in comparative form the figures for the
corresponding date and period in the previous fiscal year, prepared in
accordance with generally accepted accounting principles applied on a consistent
basis and certified by Borrower's chief financial or accounting officer,
subject, however, to year-end audit adjustments.
(b) As soon as available, and in any event within 90 days after the close
of each of its fiscal years, Borrower shall deliver to Bank its statement of
assets and liabilities as at the close of such fiscal year and its related
statement of operations and statement of changes in net assets for such fiscal
year, all in reasonable detail and stating in comparative form the figures as at
the close of and for the previous fiscal year, audited by certified public
accountants satisfactory to Bank and accompanied by a report thereon,
satisfactory to Bank, issued by such accountants.
(c) Promptly after the same are available, Borrower shall deliver to Bank
copies of all reports and other material that Borrower may send to its
shareholders.
15. BORROWER'S OTHER AFFIRMATIVE COVENANTS. Borrower covenants with Bank
that until the payment in full of all Loans, all accrued interest thereon and
all other amounts payable by Borrower under this Agreement, and the performance
by Borrower of all its obligations and covenants under this Agreement, it shall:
(a) maintain and preserve its existence and all rights, privileges,
approvals and other authority adequate for the conduct of its business;
(b) promptly notify Bank in writing of any violation by Borrower of any
law, statute, regulation or ordinance of any governmental entity, or of any
agency thereof, applicable to it which would likely materially and adversely
affect the Collateral or the financial condition, operations or business of
Borrower;
(c) promptly notify Bank in writing of any default by Borrower with respect
to any of Borrower's Indebtedness;
(d) promptly execute and deliver to Bank such Statements of Purpose
(Federal Reserve Form U-1's) under Regulation U of the Board of Governors of the
Federal Reserve System as Bank may request from Borrower with regard to any
Pledged Securities; and
(e) promptly upon Bank's request therefor, deliver to Bank such information
and documents regarding Borrower as Bank may from time to time request from
Borrower.
16. BORROWER'S NEGATIVE COVENANTS. Borrower covenants that until the
payment in full of all Loans, all accrued interest thereon and all other amounts
payable by Borrower under this Agreement, and the performance by Borrower of all
its obligations and covenants under this Agreement, Borrower shall not:
(a) create, incur, assume or permit to exist any Indebtedness, except for
accounts payable incurred in the ordinary course of business, Loans outstanding
hereunder and Indebtedness to affiliates of Bank; or
(b) create, incur, assume or permit to exist any Lien on any property or
assets now owned or hereafter acquired by Borrower, other than (i) Liens for
taxes not delinquent or which are being contested in good faith and in
appropriate proceedings, (ii) Liens in connection with workers' compensation,
unemployment insurance or social security obligations, (iii) mechanics',
workmen's, materialmen's, landlords', carriers' or other like Liens arising in
the ordinary course of business with respect to obligations which are not due or
which are being contested in good faith, (iv) Liens in favor of the securities
intermediary under the Collateral Securities Account Agreement that are fully
and unconditionally subordinated to Bank's security interest under this
Agreement, (v) Liens in favor of Bank, and (v) in the case of Collateral
consisting of property held by or through Bank's affiliates, Liens in favor of
such affiliates.
17. EVENTS OF DEFAULT. It shall constitute an Event of Default hereunder
(and upon the occurrence thereof the then outstanding principal amount of each
Loan and all accrued interest thereon shall become immediately due and payable,
without demand, presentment or notice of any kind, all of which are hereby
expressly waived) if at any time:
(a) Borrower fails to pay the principal amount of any Loan when and in the
amount due; or
(b) Borrower fails to make or pay when due any interest payment, charge or
other amount required to be made or paid by it under this Agreement, and such
failure continues for a period in excess of five Business Days; or
(c) Borrower fails to deliver into the Pledge Account, and/or otherwise
give to Bank Effective Control over, Collateral in accordance with Section 7(d)
above upon demand therefor made by Bank orally or in writing; or
(d) Borrower fails to perform or observe any other term, covenant or
condition to be performed or observed by it under this Agreement, and such
failure continues for a period in excess of ten days after Bank has given
Borrower notice of such failure to perform or observe; or
(e) any representation or warranty made by Borrower in Sections 9, 10 or 11
above proves to have been incorrect in any material respect on any of the dates
as of which made or deemed to have been repeated; or
(f) Borrower defaults in the payment when due, whether at stated maturity
or otherwise, or within any applicable grace period, of any Indebtedness of
Borrower (other than Indebtedness under this Agreement) in a principal amount of
more than $100,000, whether now or hereafter existing; or
(g) Borrower fails to perform any other term, covenant or agreement on its
part to be performed under any agreement or instrument (other than this
Agreement) evidencing or securing or relating to any of its Indebtedness
(whether now or hereafter existing) in a principal amount of more than $100,000,
or any event occurs or condition exists, if the effect of such failure, event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(with or without the giving of notice, lapse of time or both) to cause, such
Indebtedness to become due prior to its stated maturity; or
(h)(i) Borrower as debtor commences a case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, dissolution, or similar
law, or seeks the appointment of a receiver, trustee, custodian or similar
official for itself or any substantial part of its property, (ii) any such case
or proceeding is commenced against it, or another seeks such an appointment,
which (A) is consented to or not timely contested by it, (B) results in the
entry of an order for relief, such an appointment, or the entry of an order
having a similar effect, or (C) is not dismissed within 60 days, (iii) it makes
a general assignment for the benefit of creditors, or (iv) it admits in writing
its inability to pay its debts as they become due; or
(i) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $100,000 are rendered against Borrower and (A) the
same remain undischarged for a period of 14 or more consecutive days during
which execution thereof is not effectively stayed upon appeal or otherwise or
(B) any proceeding by a creditor to enforce the same is pending; or
(j) any event or circumstance occurs which in the reasonable judgment of
Bank materially impairs the creditworthiness of Borrower or its ability to
perform its payment or other obligations under this Agreement; or
(k) Borrower (i) materially violates the 1940 Act in the conduct of its
business, (ii) ceases to be registered under the 1940 Act as a management
investment company, or (iii) is dissolved or ceases to do business; or
(1) PFPC Trust Company (or such other Person then acting as securities
intermediary under the Collateral Securities Account Agreement) fails to perform
or observe any material term, covenant or condition to be performed or observed
by it under the Collateral Securities Account Agreement, which, in Bank's sole
and absolute judgment, in any way materially impairs or otherwise materially
jeopardizes the enforcement of Bank's rights in the Collateral; or
(m) the Collateral Securities Account Agreement ceases at any time and for
any reason to be in full force and effect, provided, that any termination of the
Collateral Securities Account Agreement to which PFPC Trust Company is a party
that is strictly in accordance with the terms of Section 11 thereof shall not be
an Event of Default hereunder.
18. BANK'S RIGHTS AND REMEDIES. (a) If an Event of Default occurs hereunder
and is continuing, then, in addition to having the right to exercise any rights
and remedies available to a secured creditor under applicable law, Bank shall
have (i) the right (without being required to give any notice to Borrower except
as may be required in Section 18(c) below) to sell, publicly or privately, at a
place of Bank's choosing, any or all of the Collateral and (in such order as
Bank in its sole and absolute discretion may determine) to apply the proceeds of
such sale to the payment of the principal of, and accrued (but unpaid) interest
on, the Loans and of any other amounts payable by Borrower under this Agreement,
and (ii) the right to apply to the payment of such principal, interest and other
amounts (in such order as Bank in its sole and absolute discretion may
determine) any cash held by Bank as part of the Collateral pursuant to Section
7(j) above.
(b) If any Pledged Securities or other items of Collateral are, in whole or
in part, actually convertible into or exchangeable for securities or other
property, then, upon the occurrence of an Event of Default and for so long as it
continues, Bank shall have the right, in its sole and absolute discretion,
instead of selling such Pledged Securities or other items of Collateral as
provided in Section 18(a) above, to convert or exchange them pursuant to the
terms applicable thereto, to apply any cash received by Bank in such conversion
or exchange to the payment of the principal of and accrued interest on the Loans
and of any other amounts payable by Borrower under this Agreement, and to sell
as provided in Section 18(a) above any securities or other property it receives
in such conversion or exchange.
(c) If any of the Pledged Securities and other items of Collateral are of a
type customarily sold 011 recognized markets, then no notification to Borrower
of any public or private sale thereof by Bank is required, provided, however,
that if any such notice is required by applicable law with respect to any such
sale, then one Business Day's notice thereof shall be reasonable notification to
Borrower.
19. NO WAIVER. No failure by Bank to exercise any right, power or remedy
under this Agreement, and no delay by Bank in exercising any such right, power
or remedy, shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise by Bank of any other right, power or remedy.
The rights and remedies of Bank provided for in this Agreement are cumulative
and not exclusive of any rights and remedies otherwise available.
20. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire
agreement of the parties with respect to the Loans, and, except as provided in
Section 5(e) above, no amendment, modification, termination or waiver of any
provision thereof or consent to a departure therefrom by Borrower shall be
effective unless the same is in writing and signed by both Bank and Borrower.
21. SUCCESSORS AND ASSIGNS; PARTICIPATIONS. (a) This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective representatives, successors and assigns, provided, however, that
except as provided in Section 21 (b) below it may not be assigned by either
party hereto without the prior written consent of the other party hereto, and
any purported assignment in violation of this provision shall be null and void.
(b) Section 21(a) above notwithstanding, Bank may from time to time, in its
sole and absolute discretion and without Borrower's further consent, (i) assign
this Agreement and the Loans to any affiliate of Bank, which is a bank (as
defined in the 1940 Act), or (ii) sell participations in any Loan or Loans,
provided, however, that in the case of any such sale of participations, Bank's
obligations under this Agreement shall remain unchanged and that it shall remain
solely responsible to Borrower for its performance thereof.
22. GOVERNING LAW; JURISDICTION. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to the conflict of law principles thereof. Bank's jurisdiction as a
securities intermediary shall, for purposes of the New York Uniform Commercial
Code, be the State of New York.
(b) Any suit, action or proceeding with respect to this Agreement or any
Loan may be brought in the Supreme Court of the State of New York, County of New
York, or in the United States District Court for the Southern District of New
York, and the parties hereto hereby submit to the non-exclusive jurisdiction of
such courts for the purpose of any such suit, action or proceeding, and hereby
waive for such purpose any other preferential jurisdiction by reason of their
present or future domicile or otherwise. Each of the parties hereto hereby
irrevocably waives its right to trial by jury in any suit, action or proceeding
with respect to this Agreement or any Loan.
23. NOTICES. Unless otherwise specified, all notices and demands, given or
required to be given by any party hereto to any other party hereto, shall be in
writing and shall be deemed to have been properly given if and when delivered in
person to the address set forth after the recipient's name herein below or sent
by facsimile to the telephone number set forth after the recipient' name herein
below or if sent by mail, five (5) business days after having been deposited,
registered or certified mail, postage prepaid, in any post office, branch post
office or mail depository maintained by the U.S. Postal Service and addressed as
follows:
If to Bank, at:
CUSTODIAL TRUST COMPANY
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Loan Compliance Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Borrower, at:
BOULDER GROWTH & INCOME FUND, INC.
0000 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address or telephone number as each party may designate for
itself by like notice.
24. EXPENSES. Borrower shall pay or, at the election of Bank, shall
reimburse Bank for paying, (a) all reasonable costs, fees and expenses
(including reasonable attorneys' fees) incurred by Bank in connection with the
enforcement of this Agreement and Bank's security interest in the Collateral,
and (b) all transfer, stamp, documentary or other similar taxes, assessments or
charges levied by any tax or other governmental authority in respect of this
Agreement or any Loan (but not including any taxes imposed on or measured by
Bank's overall net income).
25. SEVERABILITY. If any provision of this Agreement is invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions of this Agreement (and the validity, legality and
enforceability of such provision in any other jurisdiction) shall not be
affected or impaired thereby.
26. MISCELLANEOUS. (a) All agreements, representations and warranties
contained in this Agreement shall survive the execution and delivery of this
Agreement and the making of any Loan.
(b) Bank shall not be under any obligation at any time to ascertain whether
Borrower is in compliance with the 1940 Act, the regulations thereunder, the
provisions of its charter documents or by-laws, or its investment objectives and
policies as then in effect.
(c) Bank shall be held to the exercise of reasonable care in the custody
and preservation of the Collateral in its possession, and shall be deemed to
have exercised such care if such Collateral is accorded treatment substantially
equal to that which Bank accords to its own property.
(d) Except to the extent that pursuant to Section 26(c) above Bank may be
liable to Borrower for Bank's negligence in the custody and preservation of
Collateral in Bank's possession, and except as may be otherwise provided in the
matter of collateral by applicable provisions of the Uniform Commercial Code as
in effect in the State of New York, Bank shall be without liability to Borrower
for any loss, damage, cost, expense, liability or claim which does not arise
from willful misfeasance, bad faith or gross negligence on the part of Bank in
taking or omitting to take any action under this Agreement.
(d) Bank shall have the continuing and exclusive right to apply any and all
payments to any portion of the Loans. All payments by Borrower to Bank pursuant
to this Agreement shall be made without set-off, and none of such payments shall
be subject to any counterclaim by Borrower. To the extent that Borrower makes a
payment or Bank receives any payment for Borrower's benefit, which is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, debtor in possession, receiver or any
other party under any bankruptcy, reorganization or insolvency law, common law
or equitable cause, then, to such extent, the obligation hereunder of Borrower
which was to have been satisfied by such payment shall be revived and continue
as if such payment had not been received by Bank.
(e) The headings of sections in this Agreement are for convenience of
reference only and shall not affect the meaning or construction of any provision
of this Agreement.
(f) This Agreement may be executed in one or more counterparts and by the
parties hereto on separate counterparts, each of which shall be deemed an
original but all of which together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and on its behalf by its representative thereunto duly
authorized, all as of the day and year first above written.
BOULDER GROWTH & INCOME FUND
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Vice President and Chief Financial Officer
CUSTODIAL TRUST COMPANY
By: /s/ Xxx Xxxxxxxxxxx
Name: Xxx Xxxxxxxxxxx
Title: President
SCHEDULE A
Collateral Type Loan Value
(as a % of Market Value)
Initial Maintenance
Cash 100% 100%
Equity securities
(U.S. issuers only) 50% 66.6%
