EXHIBIT (k)(3)
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REVOLVING CREDIT AND SECURITY AGREEMENT
among
▇▇▇ ▇▇▇▇▇▇ SENIOR LOAN FUND,
as Borrower
FALCON ASSET SECURITIZATION CORPORATION,
as Conduit Lender
THE SECONDARY LENDERS PARTIES HERETO
and
BANK ONE, NA (MAIN OFFICE CHICAGO),
as Program Agent
Dated as of November 17, 2003
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TABLE OF CONTENTS
Page
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REVOLVING CREDIT AND SECURITY AGREEMENT
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definitions............................................................1
SECTION 1.02. Rules of Construction.................................................22
SECTION 1.03. Computation of Time Periods...........................................22
ARTICLE II
ADVANCES TO THE BORROWER
SECTION 2.01. Advance Facility......................................................22
SECTION 2.02. Making of Advances....................................................23
SECTION 2.03. Noteless Agreement; Evidence of Indebtedness..........................24
SECTION 2.04. Maturity of the Advances..............................................25
SECTION 2.05. Prepayment of the Advances............................................25
SECTION 2.06. Yield................................................................ 26
SECTION 2.07. Increased Costs.......................................................26
SECTION 2.08. Compensation..........................................................27
SECTION 2.09. Additional Yield on Eurodollar Rate Advances..........................28
SECTION 2.10. Termination or Reduction of the Total Commitment......................28
SECTION 2.11. Rescission or Return of Payment.......................................28
SECTION 2.12. Fees Payable by Borrower..............................................29
SECTION 2.13. Post Default Interest.................................................29
SECTION 2.14. Payments..............................................................29
SECTION 2.15. Ratable Payments......................................................30
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SECTION 2.16. Borrower's Obligations Absolute.......................................30
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to the Effectiveness of this Agreement...........30
SECTION 3.02. Conditions Precedent to All Advances..................................32
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower........................32
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Borrower.................................35
SECTION 5.02. Negative Covenants of the Borrower....................................41
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default.....................................................43
ARTICLE VII
PLEDGE OF PLEDGED COLLATERAL;
RIGHTS OF THE PROGRAM AGENT
SECTION 7.01. Security Interests....................................................46
SECTION 7.02. Substitution of Collateral and Release of Security Interest...........47
SECTION 7.03. Application of Proceeds...............................................47
SECTION 7.04. Rights and Remedies upon Event of Default.............................48
SECTION 7.05. Remedies Cumulative...................................................49
SECTION 7.06. Enforcement of Remedies under
the Custodial Agreement and the Loan Documents.................51
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ARTICLE VIII
THE PROGRAM AGENT
SECTION 8.01. Authorization and Action..............................................50
SECTION 8.02. Delegation of Duties..................................................50
SECTION 8.03. Program Agent's Reliance, Etc.........................................50
SECTION 8.04. Indemnification.......................................................51
SECTION 8.05. Successor Program Agent...............................................51
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. No Waiver; Modifications in Writing...................................52
SECTION 9.02. Notices, Etc..........................................................52
SECTION 9.03. Taxes ................................................................54
SECTION 9.04. Costs and Expenses; Indemnification...................................55
SECTION 9.05. Execution in Counterparts.............................................57
SECTION 9.06. Assignability.........................................................57
SECTION 9.07. Governing Law.........................................................58
SECTION 9.08. Severability of Provisions............................................58
SECTION 9.09. Confidentiality.......................................................59
SECTION 9.10. Merger................................................................60
SECTION 9.11. No Proceedings........................................................60
SECTION 9.12. Survival of Representations and Warranties............................61
SECTION 9.13. Loan Documents........................................................61
SECTION 9.14. Submission to Jurisdiction; Waivers...................................61
SECTION 9.15. E-Mail Reports........................................................68
SECTION 9.16. Waiver of Jury Trial..................................................62
SECTION 9.17. Several Obligations...................................................62
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SECTION 9.18. Limitation on Liability...............................................63
SCHEDULES
Schedule I Form of Investor Report
Schedule II Form of Plan Arrangements
EXHIBITS
EXHIBIT A Form of Advance Note
EXHIBIT B Form of Notice of Borrowing
EXHIBIT C Form of Assignment and Acceptance
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REVOLVING CREDIT AND SECURITY AGREEMENT
REVOLVING CREDIT AND SECURITY AGREEMENT, dated as of November
17, 2003 among FALCON ASSET SECURITIZATION CORPORATION, BANK ONE, NA (MAIN
OFFICE CHICAGO), DANSKE BANK A/S, STATE STREET BANK AND TRUST COMPANY and the
other Secondary Lenders (as hereinafter defined) from time to time parties
hereto, BANK ONE, NA (MAIN OFFICE CHICAGO), as program agent for the Secured
Parties (as hereinafter defined) (in such capacity, together with its successors
and assigns, the "Program Agent") and ▇▇▇ ▇▇▇▇▇▇ SENIOR LOAN FUND (together with
its permitted successors and assigns, the "Borrower").
W I T N E S S E T H:
WHEREAS, the Borrower desires that the Conduit Lender (as
hereinafter defined) and the Secondary Lenders from time to time make advances
to the Borrower on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, the Conduit Lender and the Secondary Lenders are
willing to make such advances to the Borrower on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definitions.
As used in this Agreement, the following terms shall have the
meanings indicated:
"Adjusted Asset Value" means in respect of any Borrowing Base
Eligible Asset an amount equal to the product of (i) the Asset Value of such
Borrowing Base Eligible Asset, and (ii) the applicable Advance Rate for such
Borrowing Base Eligible Asset.
"Advance" means each advance by the Conduit Lender or a
Secondary Lender to the Borrower on a Borrowing Date pursuant to Article II;
provided, that if the Conduit Lender assigns a portion of any Advance made by it
to a Lender pursuant to the Asset Purchase Agreement or otherwise or any
Secondary Lender assigns a portion of any outstanding Advance made by it
pursuant to an Assignment and Acceptance and in accordance with and subject to
Section 9.06(b), the portion of such Advance retained by the Conduit Lender or
Secondary Lender, as the case may be, and the portion of such Advance acquired
by such assignee shall each be deemed to constitute a separate Advance for
purposes of this Agreement.
"Advance Note" means each promissory note issued by the
Borrower to the Conduit Lender or a Secondary Lender in accordance with the
provisions of Section 2.03,
substantially in the form of Exhibit A hereto, as the same may from time to time
be amended, supplemented, waived or modified.
"Advance Rate" means (i) in respect of Cash, 100%, (ii) in
respect of Eligible Commercial Paper Notes and Eligible Government Securities,
95%, (iii) in respect of Class A Loan Assets, 80%, (iv) in respect of Class B
Loan Assets, 70%, (v) in respect of Class C Loan Assets, 60%, and (vi) in
respect of Class D Loan Assets, 50%.
"Adverse Claim" means any Lien or other right, claim,
encumbrance or any other type of preferential arrangement in, of or on any
Person's assets or properties in favor of any other Person, other than Permitted
Liens.
"Adviser" means ▇▇▇ ▇▇▇▇▇▇ Investment Advisory Corp., together
with its permitted successors and assigns.
"Adviser Material Adverse Effect" means (i) a material adverse
effect on the ability of the Adviser to perform its obligations under the Letter
Agreement, (ii) a material adverse effect on the validity or enforceability of
the Letter Agreement, or (iii) a material adverse effect on the business,
financial condition, operations, assets or properties of the Adviser.
"Advisory Agreement" means the Investment Advisory Agreement
dated as of May 31, 1997 between the Adviser and the Borrower, as the same may
be amended, supplemented, waived or modified as permitted under this Agreement.
"Affected Person" means each Lender, each Secondary Lender, or
any other entity which enters into a commitment to make or purchase Advances or
any interest therein, or to provide any liquidity or credit enhancement to the
Conduit Lender, and any of their respective Affiliates, including any assignee
or participant of any Lender or Secondary Lender.
"Affiliate" means, in respect of a referenced Person, another
Person controlling, controlled by or under common control with such referenced
Person (which in the case of the Conduit Lender and the Program Agent shall also
include any entity which is a special purpose entity that issues commercial
paper notes and has a relationship to the Program Agent comparable to that of
the Conduit Lender). The terms "control," "controlling," "controlled" and the
like mean the direct or indirect possession of the power to direct or cause the
direction of the management or policies of a Person or the disposition of its
assets or properties, whether through ownership, by contract, arrangement or
understanding, or otherwise.
"Aggregate Custodian's Advance Amount" means the sum of (i)
the aggregate unpaid Dollar amount of all outstanding Custodian's Overdraft
Advances of cash, (ii) the aggregate Value of all Custodian's Overdraft Advances
of assets (other than cash) to the extent not reimbursed by the Borrower, and
(iii) the accrued and unpaid interest, if any, on the amounts set forth above.
"Agreement" means this Agreement, as the same may from time to
time be amended, supplemented, waived or modified.
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"Alternate Base Rate" means in respect of any Advance for any
Settlement Period, a fluctuating interest rate per annum as shall be in effect
from time to time, which rate shall be at all times equal to the applicable Base
Rate for such Advance.
"Applicable Law" means any Law of any Authority, including,
without limitation, all Federal and state banking or securities laws, to which
the Person in question is subject or by which it or any of its property is
bound.
"Applicable Margin" means, with respect to the Eurodollar
Rate, 1.00% per annum.
"Asset Coverage Test" means, as of any Determination Date, the
Borrower's "senior securities representing indebtedness" (as defined in Section
18(g) of the Investment Company Act) have "asset coverage" (as defined in
Section 18(h) of the Investment Company Act) of at least 400% (computed on such
Determination Date regardless of whether or not dividends or distributions are
being made on such Determination Date, or whether Debt is being incurred on such
Determination Date and computed as if each outstanding Advance constituted a
"senior security" without regard to whether such Advance is a loan for
"temporary purposes" or otherwise excludable from the definition of "senior
securities" under Section 18(g) of the Investment Company Act).
"Asset Purchase Agreement" means the Transfer Agreement dated
as of the date hereof entered into among the Program Agent, the Conduit Lender
and each Secondary Lender, as purchaser, in connection with this Agreement, as
the same may be from time to time amended, supplemented, waived or modified.
"Assets" means a collective reference to all items which would
be classified as an "asset" on the balance sheet of the Borrower in accordance
with GAAP.
"Asset Value" means, as of any day of determination (a) in
respect of Cash, the amount of such Cash, and (b) in respect of any other Asset,
the Value of such Asset computed in the manner as such Value is required to be
computed by the Borrower in accordance with the rules, regulations and
interpretations of the SEC under the Investment Company Act; provided, that the
Asset Value of any Asset shall be net of the Borrower's liabilities relating
thereto, including without limitation all of the Borrower's obligations to pay
any unpaid portion of the purchase price therefor; provided, further, that for
any Asset for which independent reliable market quotations (which may consist of
only an independent dealer quotation) are not available (or which is not
otherwise valued for the Borrower by an independent recognized pricing source),
the Asset Value of such Asset shall be deemed zero for purposes of this
definition.
"Assignee Rate" means in respect of any Advance by a Secondary
Lender or acquired by a Lender (other than the Conduit Lender) for any
Settlement Period an interest rate per annum equal to the sum of the Applicable
Margin plus the Eurodollar Rate for such Settlement Period; provided, however,
that in case of:
(i) any Settlement Period on or prior to the first
day of which the applicable Lender (other than the Conduit
Lender) or the applicable Secondary Lender shall have notified
the Program Agent that the introduction of or any change in or
in the
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interpretation of any law or regulation makes it unlawful, or
any central bank or other governmental authority asserts that
it is unlawful, for such Lender or such Secondary Lender to
fund such Advance at the Assignee Rate set forth above (and
such Lender or such Secondary Lender shall not have
subsequently notified the Program Agent that such
circumstances no longer exist),
(ii) any Settlement Period of one to (and including)
27 days,
(iii) any Settlement Period as to which the Program
Agent does not receive notice, by no later than 11:00 a.m.
(Chicago time) on the second Business Day preceding the first
day of such Settlement Period, that such Advance will not be
funded by issuance of commercial paper, or
(iv) any Settlement Period for which the aggregate
principal amount of all outstanding Advances is less than
$1,000,000,
the "Assignee Rate" for such Settlement Period shall be an interest rate per
annum equal to the applicable Alternate Base Rate in effect on the first day of
such Settlement Period.
"Assignment and Acceptance" means the Assignment and
Acceptance, in substantially the form of Exhibit C hereto, entered into by a
Secondary Lender, an Eligible Assignee, the Program Agent and, if required by
the terms of Section 9.06(b), the Borrower, pursuant to which such Eligible
Assignee may become a party to this Agreement.
"Authority" means any governmental or quasi-governmental
authority (including the National Association of Securities Dealers, the stock
exchanges and the SEC), whether executive, legislative, judicial, administrative
or other, or any combination thereof, including, without limitation, any
Federal, state, territorial, county, municipal or other government or
governmental or quasi-governmental agency, arbitrator, board, body, branch,
bureau, commission, corporation, court, department, instrumentality, master,
mediator, panel, referee, system or other political unit or subdivision or other
entity of any of the foregoing, whether domestic or foreign, having the force of
law.
"Bank One" means Bank One, NA (Main Office Chicago) and its
successors.
"Base Rate" means the rate of interest from time to time
announced publicly by Bank One in Chicago, Illinois as Bank One's base rate. The
Base Rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer of Bank One.
"Benefit Arrangement" means an employee benefit plan within
the meaning of Section 3(3) of ERISA which is subject to the provisions of Title
I of ERISA and is not a Plan or a Multiemployer Plan and which is maintained or
otherwise contributed to by any member of the ERISA Group.
"Borrower" shall have the meaning assigned to such term in the
introduction to this Agreement.
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"Borrower Obligations" means all indebtedness, whether
absolute, fixed or contingent, at any time or from time to time owing by the
Borrower to any Secured Party under or in connection with this Agreement, the
Advance Notes, the Control Agreement or any other Program Document, including
without limitation, all amounts payable by the Borrower in respect of the
Advances, with interest thereon, and the amounts payable under Sections 2.05,
2.06, 2.07, 2.08, 2.09, 2.11, 2.12, 2.13, 7.04(b), 9.03 and 9.04 of this
Agreement. For the avoidance of doubt, Borrower Obligations do not include
indebtedness owing by the Borrower to State Street Bank and Trust Company in its
capacity as Custodian.
"Borrower's Account" means the account of the Borrower
(Account No. ▇▇▇▇▇▇▇▇, ABA No. 011-000-028) maintained with the Custodian or
such other account as the Borrower shall from time to time designate in writing
to the Program Agent.
"Borrowing Base" means on the date any determination thereof
is made, an amount equal to (i) the aggregate Adjusted Asset Value of all
Eligible Collateral as of such date of determination minus (ii) the Borrowing
Base Excess Amount as of such date of determination.
"Borrowing Base Eligible Asset" means Cash, any Eligible Loan
Asset, any Eligible Commercial Paper Note and any Eligible Government Security
which the Borrower is permitted to purchase in accordance with the Investment
Policies and Restrictions which are free and clear of all Adverse Claims;
provided, that such Asset does not constitute (i) a Derivative Transaction,
Modified Margin Stock, an Equity Security, a Non-OECD Loan Asset, a Foreign
Security System Asset or a Foreign Currency Asset, (ii) an Asset which is the
subject of a reverse repurchase agreement, dollar roll, securities lending
transaction or other Derivatives Transaction (other than Derivatives
Transactions entered into solely to protect against interest rate risk which
have not been entered into for speculative purposes), including, without
limitation, any cash or other Asset maintained in a segregated account with the
Custodian relating to any outstanding reverse repurchase agreement entered into
by the Borrower; or (iii) an Asset held by a sub-custodian of the Custodian
which is not located in the United States.
"Borrowing Base Excess Amount" means as of any date any
determination thereof is made, an amount equal to the sum (without duplication)
of:
(i) the amount by which the aggregate Adjusted Asset
Value of all Eligible Collateral (other than Cash and Eligible
Government Securities) issued or Guaranteed by any Person
(together with all Affiliates of such Person), exceeds five
percent (5%) of the aggregate Adjusted Asset Value of all
Eligible Collateral;
(ii) the amount by which the aggregate Adjusted Asset
Value of all Eligible Collateral issued or Guaranteed by
Persons in a single Industry Class, exceeds twenty percent
(20%) of the aggregate Adjusted Asset Value of all Eligible
Collateral;
(iii) the amount by which the aggregate Adjusted
Asset Value of all Eligible Collateral which constitute
Foreign Loan Assets exceeds twenty
5
percent (20%) of the aggregate Adjusted Asset Value of all
Eligible Collateral;
(iv) the amount by which the aggregate Adjusted Asset
Value of all Eligible Collateral which constitute Foreign Loan
Assets relating to Obligors in any single OECD Country (other
than the United States) exceeds ten percent (10%) of the
aggregate Adjusted Asset Value of all Eligible Collateral;
(v) the amount by which the aggregate Adjusted Asset
Value of all Eligible Collateral which constitutes Distressed
Loan Assets exceeds ten percent (10%) of the aggregate
Adjusted Asset Value of all Eligible Collateral;
(vi) the amount by which the aggregate Adjusted Asset
Value of all Loan Assets which constitute Eligible Collateral
which have a scheduled final maturity date later than the
tenth (10th) anniversary of the Origination Date of such Loan
Assets, exceeds ten percent (10%) of the aggregate Adjusted
Asset Value of all Eligible Collateral;
(vii) the amount by which the aggregate Adjusted
Asset Value of all Loan Assets which constitute Eligible
Collateral which constitute participation interests purchased
or otherwise acquired from any Selling Institution (together
with all Affiliates of such Selling Institution), exceeds ten
percent (10%) of the aggregate Adjusted Asset Value of all
Eligible Collateral;
(viii) the amount by which the aggregate Adjusted
Asset Value of all Eligible Collateral which constitutes
Unsecured Loan Assets exceeds fifteen percent (15%) of the
aggregate Adjusted Asset Value of all Eligible Collateral;
(ix) the amount by which the aggregate Adjusted Asset
Value of all Eligible Collateral which constitutes Loan Assets
in respect of which the interest payable on the principal
amount thereof is not calculated by reference to a Floating
Rate, exceeds ten percent (10%) of the aggregate Adjusted
Asset Value of all Eligible Collateral; and
(x) the aggregate maximum commitments of the Borrower
to fund future advances or extensions of credit under the Loan
Documents relating to the Pledged Collateral.
"Borrowing Base Test" means as of any Determination Date, that
the Borrowing Base shall be equal to or greater than Credits Outstanding.
"Borrowing Date" shall have the meaning assigned to such term
in Section 2.02.
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"Business Day" means any day on which (i) banks are not
authorized or required to close in Chicago, Illinois and the New York Stock
Exchange is not authorized or required to close, and (ii) if this definition of
"Business Day" is utilized in connection with a Eurodollar Rate Advance,
dealings are carried out in the London interbank market.
"Cash" means a demand deposit of United States Dollars
immediately available on the day in question in an account maintained by the
Custodian.
"Class A Loan Asset" means as of any date of determination, a
Borrowing Base Eligible Asset which (i) is a Loan Asset, (ii) is not a
Distressed Loan Asset, and (iii) has an Asset Value which is at least ninety
percent (90%) of its par value as of such date of determination.
"Class B Loan Asset" means as of any date of determination, a
Borrowing Base Eligible Asset which (i) is a Loan Asset, (ii) is not a
Distressed Loan Asset, and (iii) has an Asset Value which is less than ninety
percent (90%) of its par value as of such date of determination.
"Class C Loan Asset" means as of any date of determination, a
Borrowing Base Eligible Asset which (i) is a Distressed Loan Asset, and (ii) has
an Asset Value which is at least ninety percent (90%) of its par value as of
such date of determination.
"Class D Loan Asset" means as of any date of determination, a
Borrowing Base Eligible Asset which (i) is a Distressed Loan Asset, and (ii) has
an Asset Value which is less than ninety percent (90%) of its par value as of
such date of determination.
"Closing Date" means the first date on which the conditions
precedent specified in Section 3.01 shall have been fully satisfied.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute.
"Collateral Account" means account number BO041427, ABA Number
▇▇▇-▇▇▇-▇▇▇ and account number JL20, ABA Number ▇▇▇-▇▇▇-▇▇▇ established at State
Street Bank and Trust Company each entitled "VKSLF-Bank One as Secured Party".
"Compliance Certification Date" shall have the meaning
assigned to such term in Section 2.05(b).
"Conduit Lender" means Falcon Asset Securitization
Corporation, together with its successors and assigns that constitute special
purpose entities managed by Bank One that issue commercial paper notes.
"Control Agreement" means the Control and Collateral Agency
Agreement, dated as of the date hereof among the Borrower, the Program Agent and
the Custodian, as the same may from time to time be amended, supplemented,
waived or modified.
"CP Rate" for each day during a Settlement Period for any
Advance means to the extent the Conduit Lender funds such Advance on such day,
the per annum rate notified by the Conduit Lender to the Program Agent for such
Advance, which rate shall (a) reflect the actual
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cost of funds to the Conduit Lender of making and maintaining such Advance on
such day, including fees payable by or on behalf of the Conduit Lender to any
dealer or placement agent in respect of commercial paper notes issued by the
Conduit Lender to fund such Advance, and (b) be calculated in the manner in
which the Conduit Lender typically calculates its cost of funds in similar
transactions; provided, however, that if any component of such rate is a
discount rate, in calculating the "CP Rate" for such day, the Program Agent
shall for such component use the rate resulting from converting such discount
rate to an interest bearing equivalent rate per annum.
"Credits Outstanding" means at any time a determination
thereof is made, an amount equal to the sum of (i) the outstanding principal
amount of all Advances, plus (ii) the Yield that would accrue on the aggregate
outstanding principal amount of the Advances through the sixty (60) day period
following such date of determination, computed by reference to the Assignee Rate
based upon the applicable Eurodollar Rates for a thirty (30) day period in
effect as of the time of determination, plus (iii) the Aggregate Custodian's
Advance Amount.
"Custodial Agreement" means the Custodian Contract dated as of
August 1, 1997 between the Borrower and the Custodian, as the same may from time
to time be amended, supplemented, waived or modified as permitted under the
Program Documents.
"Custodian" means State Street Bank and Trust Company, as
custodian, securities intermediary and collateral agent under the Custodial
Agreement and the Control Agreement, and its permitted successors and assigns.
"Custodian's Overdraft Advances" means any advance of cash,
assets or securities by the Custodian to or for the benefit of the Borrower
pursuant to or in connection with the Custodial Agreement.
"Debt" means with respect to any Person, at any date, without
duplication, (i) all "senior securities representing indebtedness" (as defined
in Section 18(g) of the Investment Company Act), (ii) all obligations of such
Person for borrowed money, including without limitation, all obligations of such
Person which are evidenced by letters of credit or letter of credit
reimbursement, (iii) all obligations of such Person evidenced by bonds,
debentures, notes, acceptances or other similar instruments, (iv) all
obligations of such Person to pay the deferred purchase price of property or
services, (v) all obligations of such Person as lessee which are capitalized in
accordance with GAAP, (vi) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such Person, (vii) payment
obligations, fixed or contingent, under investment, financial derivative or
similar contracts (other than covered short sales), (viii) all Debt of others
Guaranteed by such Person, and (ix) to the extent not otherwise included, all
items which in accordance with GAAP would be included in determining total
liabilities as shown on the liabilities side of such Person's balance sheet.
"Default" means any event which, with the passage of time, the
giving of notice, or both, would constitute an Event of Default.
"Defaulting Banks" means any Secondary Lender that (i)
defaults in its obligation to make any Advance pursuant to Section 2.02, or (ii)
in its capacity as a purchaser under the
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Asset Purchase Agreement, defaults in its obligation to purchase any interest in
any Advance under the Asset Purchase Agreement.
"Derivatives Transaction" means any financial futures
contract, option, forward contract, warrant, swap, swaption, collar, floor, cap
and other agreement, instrument and derivative and other transactions of a
similar nature (whether currency linked, index linked, insurance risk linked,
credit risk linked or otherwise).
"Determination Date" means (i) each Borrowing Date, (ii) each
Weekly Determination Date, (iii) each date any Restricted Payment is made or any
Permitted Senior Security is issued, and (iv) during the continuance of an Event
of Default, each Business Day which the Program Agent may, or upon the direction
of the Majority Banks, shall, designate as a "Determination Date" (which may be
daily).
"Distressed Loan Asset" means a Loan Asset (i) the Obligor of
which is the subject of a bankruptcy, insolvency, liquidation or other similar
proceedings, (ii) which is in default (unless cured or waived) beyond the
applicable grace periods, if any, as to payment of principal or interest or
other amount owing under the applicable Loan Documents, or (iii) which is
otherwise classified by the Adviser or the Borrower as "non-performing", (iv) in
respect of which the related Obligor is rated "Caa" or lower by Moody's or "CCC"
or lower by S&P or which, if unrated, are in the reasonable judgment of the
Adviser, of equivalent credit quality, (v) which is not part of a senior credit
facility, or (vi) which is otherwise not classified as a "Senior Loan" by the
Adviser.
"Dollars" and "$" mean lawful money of the United States of
America.
"Eligible Assignee" means Bank One, any of its Affiliates, any
Person managed by Bank One or any of their respective Affiliates, or any
financial or other institution acceptable to the Program Agent.
"Eligible Collateral" means at any time the Pledged Collateral
which constitutes Borrowing Base Eligible Assets.
"Eligible Commercial Paper Note" means a promissory note
issued in the commercial paper market by an obligor having its principal office
in the United States, having a maturity of not more than 270 days and which (i)
if rated by both S&P and ▇▇▇▇▇'▇ is rated at least "A-1" by S&P and at least
"P-1" by Moody's, and (ii) if rated by S&P or Moody's (but not both), is rated
at least "A-1" by S&P or at least "P-1" by Moody's.
"Eligible Government Securities" means all "Government
Securities" (as defined in the Investment Company Act and which for the purposes
hereof shall include any securities issued or guaranteed as to principal and
interest by an agency of the government of the United States) held in an account
maintained by the Custodian.
"Eligible Loan Asset" at any time means a Loan Asset:
(i) with respect to which the interest payable on the
principal amount thereof by the related Obligor is payable in cash;
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(ii) in respect of which the Borrower's interest is not a
subparticipation;
(iii) which has a scheduled final maturity date no later than
the twelfth (12th) anniversary after the related Origination Date;
(iv) which is part of a senior credit facility, with respect
to which such Loan Asset is not by its terms subordinated (pursuant to
contractual provisions or otherwise) to the prior payment of any other
liabilities or any equity interests of the related Obligor;
(v) which is part of a syndicated credit facility where the
sum of the aggregate revolving loan commitment amount plus the
aggregate outstanding principal amount of all loans under such facility
on the Origination Date of such Loan Asset is at least equal to
$100,000,000;
(vi) which relates to Loan Documents in which the Borrower's
interest (direct or participating) in the aggregate outstanding
principal amount of all loans thereunder is no greater than
thirty-three and one-third percent (33.33%);
(vii) in respect of which the related Loan Documents are not
subject to any confidentiality arrangement which would preclude the
Program Agent from reviewing such Loan Documents;
(viii) in which the Borrower's interest in all collateral
security therefor and principal and interest payments thereunder is no
less than pro rata and pari passu with all other lenders thereunder or
participants therein, as the case may be;
(ix) in respect of which the credit rating of the related
Transaction Agent or its controlling Affiliate is no less than "A-"
from S&P or "A3" from Moody's;
(x) in respect of which, if the Borrower's interest therein is
that of a participant, the credit rating of the related Selling
Institution is no less than "A-" from S&P and "A3" from Moody's; and
(xi) the pledge of which under Article VII of this Agreement,
would not conflict with or constitute a default under or be prohibited
by any anti-assignment or other provisions contained in the related
Loan Documents, except for anti-assignment provisions rendered
ineffective by applicable law.
"E-Mail Report" shall have the meaning assigned to such term
in Section 9.15.
"Equity Securities" means common and preferred stock,
warrants, membership interests or partnership interests and securities that are
convertible into common or preferred stock, membership interests or partnership
interests, including without limitation common stock purchase warrants and
rights, equity interests in trusts, partnerships, limited liability companies,
joint ventures or similar enterprises.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
10
"ERISA Group" means the Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414(b), (c), (m) or (n) of the Code.
"Eurocurrency Liabilities" shall have the meaning assigned to
such term in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Eurodollar Additional Yield" means additional Yield on the
outstanding principal of each Advance during the Settlement Period in respect of
such Advance in respect of which Yield is computed by reference to the
Eurodollar Rate, for such Settlement Period, at a rate per annum equal at all
times during such Settlement Period to the remainder obtained by subtracting (i)
the Eurodollar Rate for such Settlement Period from (ii) the rate obtained by
dividing such Eurodollar Rate referred to in clause (i) above by that percentage
equal to one-hundred percent (100%) minus the Eurodollar Rate Reserve Percentage
of the applicable Lender (other than the Conduit Lender) or Secondary Lender for
such Settlement Period.
"Eurodollar Rate" means, in respect of any Advance for any
Settlement Period, an interest rate per annum equal to the rate per annum at
which deposits in Dollars are offered by the principal office of Bank One in
London, England to prime banks in the London interbank market at 11:00 A.M.
(London time) two (2) Business Days before the first day of such Settlement
Period in an amount substantially equal to the outstanding principal amount of
such Advance on such first day and for a period equal to such Settlement Period.
"Eurodollar Rate Advance" means an Advance the Yield on which
is computed with reference to the Eurodollar Rate.
"Eurodollar Rate Reserve Percentage" for any Settlement Period
for any Eurodollar Rate Advance means the reserve percentage applicable during
such Settlement Period under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) (or if more than
one such percentage shall be applicable, the daily average of such percentages
for those days in such Settlement Period during which any such percentage shall
be so applicable) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement) for any applicable Lender (other than the Conduit Lender) or
Secondary Lender with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or any other category of liabilities that
includes deposits by reference to which the interest rate on Eurocurrency
Liabilities is determined) having a term comparable to such Settlement Period.
"Event of Default" means any of the events, acts or
occurrences set forth in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder, all as from time
to time in effect, or any successor law, rules or regulations, and any reference
to any statutory or regulatory provision shall be deemed to be a reference to
any successor statutory or regulatory provision.
11
"Facility" shall have the meaning assigned to such term in
Section 9.09.
"Fee Letter" means that certain letter agreement dated the
date hereof between the Borrower and the Program Agent, as the same may from
time to time be amended, supplemented, waived or modified.
"Floating Rate" means an interest rate calculated by reference
to the prime rate, the London interbank offered rate, the certificate of deposit
rate, the federal funds rate or any other per annum rate commonly referred to in
the United States banking industry as a "floating rate".
"Foreign Currency Asset" means any Asset which is denominated
or payable in a currency other than Dollars.
"Foreign Loan Asset" means any Loan Asset the Obligor of which
is organized under the laws of any OECD Country (other than the United States of
America).
"Foreign Security System Asset" shall have the meaning
assigned to such term in Section 3(a) of the Control Agreement.
"GAAP" means generally accepted accounting principles in the
United States, in effect from time to time.
"Governmental Authorizations" means all franchises, permits,
licenses, approvals, consents and other authorizations of all Authorities.
"Governmental Filings" means all filings, including franchise
and similar tax filings, and the payment of all fees, assessments, interests and
penalties associated with such filing with all Authorities.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Indemnified Party" shall have the meaning assigned to such
term in Section 9.04(b).
"Industry Class" means, for purposes of computing the
Borrowing Base, each industry class as determined by applying, in separate
tests, the classification categories provided
12
by Moody's, or, in the event that Moody's does not classify a particular Person,
as classified by the Adviser based upon the Moody's industry classifications.
"Investment Company Act" means the Investment Company Act of
1940, as amended, and the rules and regulations of the SEC thereunder, as
modified or interpreted by orders of the SEC, or other interpretative releases
or letters issued by the SEC or its staff, all as from time to time in effect,
or any successor law, rules or regulations, and any reference to any statutory
or regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
"Investment Policies and Restrictions" means the provisions
dealing with investment policies, distributions, investment restrictions, tender
offers, repurchases, leverage and diversification status as set forth in the
Prospectus, as modified in accordance with Section 5.02(i).
"Investor Report" means the Investor Report of the Borrower
substantially in the form of Schedule I hereto.
"Law" means any action, code, consent decree, constitution,
decree, directive, enactment, finding, guideline, law, injunction,
interpretation, judgment, order, ordinance, policy statement, proclamation,
promulgation, regulation, requirement, rule, rule of law, rule of public policy,
settlement agreement, statute, or writ, of any Authority, or any particular
section, part or provision thereof.
"Lender" means the Conduit Lender, together with all Persons
which acquire or are obligated to acquire any interest in any Advance from the
Conduit Lender under an Asset Purchase Agreement or under any similar
arrangement.
"Letter Agreement" means the Letter Agreement dated as of the
date hereof from the Adviser to the Program Agent on behalf of the Secured
Parties, as the same may from time to time be amended, supplemented, waived or
modified.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien or security interest (statutory or
other), or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement) and any financing lease
having substantially the same economic effect as any of the foregoing.
"Liquidation Fee" means, in respect of any Advance for any
Settlement Period which is funded by the Conduit Lender during which the
principal on such Advance is repaid by the Borrower in whole or in part, upon
less than two (2) Business Days prior written notice of such repayment, prior to
the end of said Settlement Period, the amount, if any, by which (i) the
additional Yield (calculated without taking into account any Liquidation Fee or
any shortened duration of such Settlement Period) which would have accrued
during such Settlement Period on the reduction of the outstanding principal
amount of such Advance relating to such Settlement Period had such reductions
remained as outstanding principal, exceeds (ii) that income, if any, received by
the Conduit Lender's investing the proceeds of such reductions of principal.
13
"Loan Asset" means a direct or participation or
subparticipation interest in or assignment or novation of a loan or other
extension of credit.
"Loan Documents" means with respect to any Loan Asset, each
loan agreement, promissory note, collateral security agreement, participation
certificate, guarantee and any other agreement or document evidencing, securing,
governing or executed in connection with such Loan Asset, including without
limitation, the agreements and instruments in respect of which the Borrower
acquired such Loan Asset.
"Majority Banks" means, as of any determination date (i) if on
such determination date, any Secondary Lender in its capacity as a purchaser
under the Asset Purchase Agreement has a commitment to purchase additional
interests in Advances from the Conduit Lender under the Asset Purchase
Agreement, such Secondary Lenders whose Commitment Amounts (as defined in the
Asset Purchase Agreement) aggregate in excess of fifty percent (50%) of the
aggregate Commitment Amounts under the Asset Purchase Agreement; provided, that,
the Commitment Amounts of any Defaulting Bank shall be excluded from the
computation of Majority Banks, (ii) if on such determination date no Secondary
Lender in its capacity as a purchaser under the Asset Purchase Agreement has any
commitment to purchase additional interests in Advances from the Conduit Lender
under the Asset Purchase Agreement, the Persons with Advances, the outstanding
principal amount of which exceeds fifty percent (50%) of the outstanding
principal amount of all Advances; provided, that if on any determination date
there are multiple Secondary Lenders which are not Defaulting Banks and the
Majority Banks on such determination date as determined by clause (i) or clause
(ii) above, as applicable, is a single entity (for such purpose treating Bank
One and the Conduit Lender (if the Conduit Lender is administered by Bank One)
as a single entity) (the "Controlling Bank"), then the term "Majority Banks"
shall be deemed to mean such Controlling Bank and at least one other Secondary
Lender which is not a Defaulting Bank.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" means a (i) material adverse effect
on the ability of the Borrower to perform its obligations under this Agreement
or the Control Agreement or to perform any material obligation under any other
Program Document to which it is a party or any Loan Document, (ii) a material
adverse effect on any Secured Party's right, title and interest in the Pledged
Collateral or on the rights and remedies of any Secured Party under any Program
Document, (iii) a material adverse effect on the validity or enforceability of
this Agreement or any other Program Document to which the Borrower is a party or
any Loan Document, (iv) a material adverse effect on the business, financial
condition, operations, Assets or properties of the Borrower, (v) a material
Adverse Claim on any of the Assets of the Borrower, or (vi) a Default or Event
of Default.
"Maturity Date" means in respect of any Advance, the earlier
of (i) the date which is sixty (60) days following the Borrowing Date of such
Advance (or if such day is not a Business Day, the Business Day immediately
preceding such date), and (ii) the Termination Date (or if such day is not a
Business Day, the Business Day immediately preceding such date).
14
"Modified Margin Stock" shall mean "Margin Stock" as defined
in Regulation U (without giving effect to the exclusions from such definition in
clauses (5)(i) through (5)(iv) thereof).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., together with
its successors.
"Multiemployer Plan" means an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA.
"Non-Funding Notice" shall have the meaning assigned to such
term in Section 2.02.
"Non-OECD Loan Asset" means any Loan Asset the Obligor of
which is organized outside of any OECD Country.
"Notice of Borrowing" shall have the meaning assigned to such
term in Section 2.02.
"Notice of Exclusive Control" shall have the meaning assigned
to such term in the Control Agreement.
"Obligor" means in respect of any Loan Asset, the Person
primarily obligated under the related Loan Documents to repay the loan or
extension of credit which is the subject of such Loan Asset.
"OECD Country" means any country which is a member of the
Organization for Economic Cooperation and Development and which has a sovereign
credit rating for "foreign currency" of at least "AA-" and "Aa3" from S&P and
Moody's, respectively.
"Origination Date" means in respect of any Loan Asset the
initial date on which the proceeds of the loan or other extension of credit
which is the subject of such Loan Asset was advanced to the Obligor under the
related Loan Documents.
"Other Taxes" shall have the meaning assigned to such term in
Section 9.03(b).
"Parent" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., together with its
successors.
"Permitted Debt" means (i) Debt arising under this Agreement
or the other Program Documents to the Secured Parties, (ii) Debt in favor of the
Custodian relating to Custodian's Overdraft Advances incurred in the ordinary
course of the Borrower's business, which are not overdue and which do not exceed
the amount permitted by Section 5.02(o), (iii) fee and expense obligations to
the Custodian and other similar agents which are providing services in respect
of the Borrower's Assets arising in the ordinary course of the Borrower's
business which are not overdue for a period in excess of thirty (30) days, (iv)
Debt (other than Debt for borrowed money) arising in connection with
transactions in the ordinary course of the Borrower's business in connection
with its purchasing of securities, Derivatives Transactions or dollar rolls to
the extent such transactions are permitted under the Investment Company Act and
the Investment Policies and Restrictions, (v) obligations of the Borrower to
fund future
15
extensions of credit under the Loan Documents relating to its Loan
Assets which do not exceed twenty percent (20%) of the aggregate Asset Value of
the Borrower's Assets and which meet the Borrower's diversification requirements
set forth in the Prospectus, which are not overdue, (vi) Debt representing
accrued expenses and current trade account payables incurred in the ordinary
course of the Borrower's business which are not overdue for a period beyond the
customary practices in the industry or which are being diligently contested in
good faith, (vii) Debt in respect of judgments or awards that have been in force
for less than the applicable period for taking an appeal so long as such
judgments or awards do not constitute an Event of Default and so long as
execution is not levied thereunder or in respect of which the Borrower (A) shall
at the time in good faith be diligently prosecuting an appeal or proceeding for
review and in respect of which a stay of execution shall have been obtained
pending such appeal or review, or (B) shall have obtained an unsecured
performance bond in respect of such judgment or award, and (viii) Debt arising
in connection with reverse repurchase agreements which are permitted under the
Investment Company Act and the Investment Policies and Restrictions and which
have been entered into in the ordinary course of the Borrower's business.
"Permitted Liens" means (a) in respect of any Asset of the
Borrower, (i) Liens of any Secured Party created by or pursuant to this
Agreement or the Control Agreement, (ii) Liens of the Custodian securing the
Custodian's Overdraft Advances to the extent such Custodian's Overdraft Advances
do not exceed the amount permitted by Section 5.02(o), (iii) Liens of the
Custodian which are by the terms of the Control Agreement expressly subordinated
to the payment of the Borrower Obligations, and (iv) Liens (other than
non-possessory Liens which pursuant to applicable law are, or may be, entitled
to take priority (in whole or in part) over prior, perfected liens and security
interests) with respect to taxes, assessments and other governmental charges or
levies for amounts not yet due or which are being contested in good faith by
appropriate proceedings diligently conducted and with respect to which adequate
reserves have been set aside in accordance with GAAP, provided that enforcement
of such Liens is stayed pending such contest, and (b) in respect of any Asset of
the Borrower other than any Pledged Collateral (i) Liens incidental to the
conduct of the Borrower's business securing the performance of fee and expense
obligations to the Custodian and other similar agents which are providing
services in respect of the Borrower's Assets arising in the ordinary course of
the Borrower's business which are not overdue for a period in excess of thirty
(30) days, and (ii) Liens in respect of Debt permitted under clauses (iv) and
(viii) of the definition of Permitted Debt.
"Permitted Senior Securities" means "senior securities" within
the meaning of the Investment Company Act which constitute Advances under this
Agreement, Derivatives Transactions, repurchase transactions, reverse repurchase
transactions, preferred shares or commitments of the Borrower to fund future
advances or other extensions of credit under any Loan Document, to the extent
the issuance of any such senior security by the Borrower is not in contravention
of the Investment Company Act or the Investment Policies and Restrictions.
"Person" means an individual or a corporation (including a
business trust), partnership, trust, incorporated or unincorporated association,
joint stock company, limited liability company, government (or an agency or
political subdivision thereof) or other entity of any kind.
16
"Plan" means an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code.
"Pledged Collateral" shall have the meaning assigned to such
term in Section 7.01.
"Post-Default Rate" means in respect of all amounts payable to
any Secured Party under any Program Document not paid when due (whether at
stated maturity, by acceleration or otherwise), including, without limitation,
the principal and Yield on any Advance not paid when due, a rate per annum
during the period commencing on the due date until such amount is paid in full
equal to the applicable Base Rate as in effect from time to time plus two (2)
percent (2%).
"Preliminary Borrowing Notice" shall have the meaning assigned
to such term in Section 2.02.
"Private Authorizations" means all franchises, permits,
licenses, approvals, consents and other authorizations of all Persons (other
than Authorities) including, without limitation, those with respect to
trademarks, service marks, trade names, copyrights, computer software programs,
technical and other know-how.
"Proceeds" shall have, with reference to any asset or
property, the meaning assigned to it under the UCC and, in any event, shall
include, but not be limited to, any and all amounts from time to time paid or
payable under or in connection with such asset or property.
"Product Information" shall have the meaning assigned to such
term in Section 9.09(a).
"Program Agent" shall have the meaning assigned to such term
in the introduction to this Agreement.
"Program Agent's Account" means the special account of the
Conduit Lender (Account No. 51-14810, ABA No. ▇▇▇▇▇▇▇▇▇, Reference: VK Senior
Loan Fund) maintained at the principal office of Bank One or such account of the
Program Agent which the Program Agent has designated in writing to the other
parties hereto.
"Program Documents" means this Agreement, the Advance Notes,
the Letter Agreement, the Asset Purchase Agreement, the Control Agreement,
Advisory Agreement, the Custodial Agreement, the Fee Letter, the Loan Documents
and the other agreements, documents and instruments entered into or delivered in
connection herewith or therewith.
"Program Termination Date" means the later to occur of (i) the
Termination Date, and (ii) the date that all Borrower Obligations have been
finally paid in full; provided, however, that if any payment in respect of any
Borrower Obligation made to any Secured Party must be rescinded or returned for
any reason whatsoever (including the insolvency or bankruptcy of the Borrower)
such Borrower Obligation shall be deemed to be reinstated as though such payment
had not been made and the Program Termination Date shall be deemed to have not
occurred.
17
"Prospectus" means with respect to the Borrower the prospectus
dated June 17, 2003 filed with the SEC as a part of the Borrower's registration
statement on Form N-2, as amended (or any successor SEC form), and shall
include, without limitation, the related statement of additional information, if
any, included in such registration statement, and all supplements, amendments
and modifications thereto as of the Closing Date, and as further supplemented,
amended or modified in accordance with Applicable Law, including, without
limitation, the Securities Act and the Investment Company Act.
"Regulation T" means Regulation T of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Regulation X" means Regulation X of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Requested Amount" shall have the meaning assigned to such
term in Section 2.02.
"Responsible Officer" means in respect of any Person, the
president, any vice president, the chief financial officer, controller,
treasurer or any assistant treasurer; provided, that the Program Agent shall
have received a manually signed certificate of the Secretary or Assistant
Secretary of such Person as to the incumbency of, and bearing a manual specimen
signature of, such duly authorized officer.
"Restricted Payments" means (a) the declaration of any
distribution or dividends (other than distributions payable solely in shares of
beneficial interest in the Borrower) on, or the payment on account of, or the
setting apart of assets for the purchase, redemption, retirement or other
acquisition of, any shares of beneficial interests in the Borrower, including,
without limitation, all common and preferred shares, whether now or hereafter
outstanding, either directly or indirectly, whether in cash, property or in
obligations of the Borrower, and (b) the payment of fees and expenses to the
Adviser or any Affiliate of the Adviser as compensation for the provision of
managerial, administrative services or otherwise.
"S&P" means Standard & Poor's Ratings Group, together with its
successors.
"SEC" means the Securities and Exchange Commission or any
other governmental authority of the United States of America at the time
administrating the Securities Act, the Investment Company Act or the Exchange
Act.
"Secondary Lender Commitment" means (a) with respect to each
Secondary Lender party to this Agreement on the Closing Date, the amount set
forth on the signature page to this Agreement in respect of such Secondary
Lender, as such amount shall be adjusted by any Assignment and Acceptance
entered into between such Secondary Lender and an Eligible Assignee in
accordance with and subject to Section 9.06(b), or (b) with respect to a
Secondary Lender that has entered into an Assignment and Acceptance, the amount
set forth therein as such Secondary Lender's "Secondary Lender Commitment", in
each case as such amount may be
18
reduced by an Assignment and Acceptance entered into between such Secondary
Lender and an Eligible Assignee in accordance with and subject to Section
9.06(b), and as may be further reduced (or terminated) pursuant to the next
sentence. Any reduction (or termination) of the Total Commitment pursuant to the
terms of this Agreement shall reduce ratably (or terminate) each Secondary
Lender's Secondary Lender Commitment.
"Secondary Lender Percentage" of any Secondary Lender means,
(a) with respect to each Secondary Lender party to this Agreement on the Closing
Date, the percentage set forth on the signature page to this Agreement in
respect of such Secondary Lender, as such percentage shall be reduced by any
Assignment and Acceptance entered into by such Secondary Lender with an Eligible
Assignee in accordance with and subject to Section 9.06(b), or (b) with respect
to a Secondary Lender that has entered into an Assignment and Acceptance, the
percentage set forth therein as such Secondary Lender's Secondary Lender
Percentage, as such percentage shall be reduced by an Assignment and Acceptance
entered into between such Secondary Lender and an Eligible Assignee in
accordance with and subject to Section 9.06(b).
"Secondary Lender Stated Expiration Date" means November 12,
2004, unless, prior to such date (or the date so extended pursuant to this
clause), upon the Borrower's request, made not more than sixty (60) days nor
less than thirty (30) days prior to the then current Secondary Lender Stated
Expiration Date, one or more Secondary Lenders having 100% of the Total
Commitment shall in their sole discretion consent, which consent shall be given
not less than twenty (20) days prior to the then current Secondary Lender Stated
Expiration Date (the date any such consent is given, the "Extension Date"), to
the extension of the Secondary Lender Stated Expiration Date to the date
occurring 364 days after such Extension Date; provided, however, that any
failure of any Secondary Lender to respond to the Borrower's request for such
extension shall be deemed a denial of such request by such Secondary Lender.
"Secondary Lenders" means Bank One, Danske Bank A/S, State
Street Bank and Trust Company (in their capacities as lenders under this
Agreement) and each Eligible Assignee that becomes a party to this Agreement
pursuant to and in accordance with the requirements of Section 9.06(b).
"Secured Parties" means the Program Agent, the Lenders, the
Secondary Lenders and their respective successors and assigns.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provisions shall be deemed to be a reference to any
successor statutory or regulatory provision.
"Selling Institution" means in respect of any Loan Asset which
constitutes a participation interest, the Person which has granted or sold to
the Borrower a participation interest in the loan or other extension of credit
which is the subject of such Loan Asset.
"Settlement Date" means the date which is the twelfth (12th)
day of each calendar month, or if such day is not a Business Day, the next
succeeding Business Day; provided, that, for purposes of the payment of Yield,
with respect to any Settlement Period for which Yield is
19
computed by reference to the Eurodollar Rate, the Settlement Date shall be the
last day of such Settlement Period, or if such day is not a Business Day, the
next succeeding Business Day.
"Settlement Period" means in respect of any Advance:
(a) in the case of any Settlement Period in respect of which
Yield in respect of such Advance is computed by reference to the CP Rate, the
period beginning on the date such Advance was made and ending on the last day of
the calendar month in which such Advance was made and thereafter each successive
period commencing on the first day of each calendar month during the term of
this Agreement and ending on the last day of such calendar month during the term
of this Agreement; provided, however, that in the case of any Settlement Period
for any Advance which commences before the Maturity Date for such Advance and
would otherwise end on a date occurring after such Maturity Date, such
Settlement Period shall end on such Maturity Date and the duration of each
Settlement Period which commences on or after the Maturity Date for such Advance
may be any period (including, without limitation, a period of one day) as shall
be selected from time to time by the Program Agent;
(b) in the case of any Settlement Period in respect of which
Yield in respect of such Advance is computed by reference to the Eurodollar
Rate, the period beginning on the date such Advance was made and ending on the
last day of the calendar month in which such Advance was made and thereafter
each successive period commencing on the first day of each calendar month during
the term of this Agreement and ending on the last day of such calendar month
during the term of this Agreement; provided, however, that any Settlement Period
which is other than the monthly Settlement Period shall be of such duration as
shall be selected by the Program Agent; and
(c) in the case of any Settlement Period in respect of which
Yield is computed by reference to the Alternate Base Rate, such Settlement
Period shall be of such duration as shall be selected by the Program Agent.
"Specified Loan Documents" shall have the meaning assigned to
such term in the Control Agreement.
"Taxes" shall have the meaning assigned to such term in
Section 9.03(a).
"Termination Date" means the earlier of (i) the Secondary
Lender Stated Expiration Date, and (ii) the date the Total Commitment shall
terminate pursuant to Section 2.10 or Section 6.01.
"Total Commitment" means $300,000,000, as such amount may be
reduced pursuant to Section 2.10. References to the unused portion of the Total
Commitment shall mean, at any time, the Total Commitment then in effect, minus
the outstanding principal amount of the Advances.
"Transaction Agent" means a commercial bank, insurance
company, finance company or other financial institution that is acting as agent
or trustee under the Loan Documents relating to any Loan Asset.
20
"UCC" means the Uniform Commercial Code, as from time to time
in effect in the applicable jurisdictions.
"Unsecured Loan Assets" means Loan Assets which are not fully
secured under the related Loan Documents by a first priority perfected Lien on
assets or properties of the related Obligor with value as reasonably determined
by the Adviser at the time of the Borrower's purchase of such Loan Asset in
reliance upon appraisals, financial statements or market valuation techniques,
in an amount no less than the outstanding debt of such Obligor under the related
Loan Documents.
"Value" shall have the meaning assigned to such term in
Section 2(a)(41) of the Investment Company Act.
"Weekly Determination Date" means the last Business Day of
each calendar week.
"Yield" means for each Advance for each Settlement Period:
(i) for each day during such Settlement Period to the extent
such Advance will be funded or maintained on such day by the Conduit
Lender,
CPR x P + LF
-------
360
(ii) for each day during such Settlement Period to the
extent such Advance will be funded or maintained on such day by a Secondary
Lender or a Lender (other than the Conduit Lender),
AR x P + LF
------
360
where:
AR = the applicable Assignee Rate for such
Advance for such Settlement Period
P = the outstanding principal amount of
such Advance on such day
CPR = the applicable CP Rate for such Advance
on such day
LF = the Liquidation Fee, if any, for such
Advance for such Settlement Period
(expressed as a daily amount);
21
provided, further, that Yield for any Advance shall not be considered paid by
any distribution to the extent that at any time all or a portion of such
distribution is rescinded or must otherwise be returned for any reason.
SECTION 1.02. Rules of Construction.
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires (i) singular words
shall connote the plural as well as the singular, and vice versa (except as
indicated), as may be appropriate, (ii) the words "herein," "hereof" and
"hereunder" and other words of similar import used in this Agreement refer to
this Agreement as a whole and not to any particular appendix, article, schedule,
section, paragraph, clause, exhibit or other subdivision, (iii) the headings,
subheadings and table of contents set forth in this Agreement are solely for
convenience of reference and shall not constitute a part of this Agreement nor
shall they affect the meaning, construction or effect of any provision hereof,
(iv) references in this Agreement to "including" shall mean including without
limiting the generality of any description preceding such term, and for purposes
hereof the rule of ejusdem generis shall not be applicable to limit a general
statement, followed by or referable to an enumeration of specific matters, to
matters similar to those specifically mentioned, and (v) each of the parties to
this Agreement and its counsel have reviewed and revised, or requested revisions
to, this Agreement, and the usual rule of construction that any ambiguities are
to be resolved against the drafting party shall be inapplicable in the
construction and interpretation of this Agreement.
SECTION 1.03. Computation of Time Periods.
Unless otherwise stated in this Agreement, in the computation
of a period of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" both mean "to
but excluding".
Article II
ADVANCES TO THE BORROWER
SECTION 2.01. Advance Facility.
On the terms and conditions hereinafter set forth, including
without limitation, Sections 3.01 and 3.02, the Conduit Lender may, in its sole
discretion, make an Advance to the Borrower on any Borrowing Date from the date
hereof to the Termination Date in an amount equal to the Requested Amount. On
the terms and conditions hereinafter set forth, including without limitation,
Sections 3.01 and 3.02 and during the period from the date hereof to the
Termination Date if the Conduit Lender has declined to make an Advance, the
Secondary Lenders shall make Advances to the Borrower, ratably in accordance
with their respective Secondary Lender Percentages as provided in Section 2.02.
Under no circumstances shall the Conduit Lender or any Secondary Lender be
obligated to make any such Advance, to the extent that after giving effect to
the making of such Advance (i) the aggregate principal amount of all outstanding
Advances would exceed the Total Commitment, or (ii) the aggregate principal
amount of all outstanding Advances funded by any Secondary Lender under this
Agreement and
22
in its capacity as a purchaser under the Asset Purchase Agreement would exceed
such Secondary Lender's Secondary Lender Commitment.
SECTION 2.02. Making of Advances.
If the Borrower desires to receive a borrowing under this
Agreement it shall (i) give the Program Agent written notice (each such notice a
"Preliminary Borrowing Notice") of such desire not later than 11:00 a.m.
(Chicago time) on the Business Day immediately preceding the proposed borrowing
date of such borrowing, which notice shall specify (x) the proposed borrowing
date therefor which shall be a Business Day (each such date, a "Borrowing
Date"), and (y) the aggregate principal amount of the proposed borrowing (the
"Requested Amount"), and (ii) no later than 7:00 a.m. (Chicago time) on the
Borrowing Date specified in the related Preliminary Borrowing Notice, confirm
its desire to receive a borrowing on such Borrowing Date by giving the Program
Agent a final borrowing notice in substantially the form of Exhibit B hereto
(each such notice a "Notice of Borrowing") which shall be signed by a
Responsible Officer of the Borrower and shall specify the Borrowing Date and
Requested Amount specified in the related Preliminary Borrowing Notice and shall
otherwise be appropriately completed. Each Notice of Borrowing shall be
irrevocable upon receipt by the Program Agent. If the Borrower fails to deliver
a Notice of Borrowing in accordance with this Section 2.02 its Preliminary
Borrowing Notice shall be deemed to be revoked by the Borrower without incurring
any costs, penalties, expenses or other liability (including, without
limitation, under this Section 2.02 or Section 2.08 or as a Liquidation Fee).
The Requested Amount specified in any Notice of Borrowing shall be at least
$1,000,000 and in integral multiples of $100,000 in excess thereof. The Borrower
shall not request more than two (2) borrowings in any calendar week. During the
period prior to the Termination Date, the Conduit Lender shall promptly notify
the Program Agent whether it has determined to make an Advance in an amount
equal to the Requested Amount and the Program Agent shall promptly thereafter
notify the Borrower whether the Conduit Lender has determined to make such
Advance. If the Conduit Lender has declined to make a proposed Advance, the
Program Agent shall promptly send notice of the proposed borrowing to each of
the Secondary Lenders concurrently by telecopier, telex or cable specifying the
Borrowing Date for such borrowing, each Secondary Lender's Secondary Lender
Percentage of the Requested Amount and whether the Yield for such Advance is
calculated based on the Eurodollar Rate or the Alternate Base Rate. Provided
that the Borrower has delivered a Preliminary Borrowing Notice and a Notice of
Borrowing in accordance with this Section 2.02, on each Borrowing Date the
Conduit Lender or the Secondary Lenders shall, subject to the terms and
conditions of this Agreement, make available to the Borrower at the Borrower's
Account (or such other account specified in the applicable Notice of Borrowing)
Advances in an amount equal to the Requested Amount in immediately available
funds. To the extent not covered by Section 2.08, the Borrower shall indemnify
the Conduit Lender, each Secondary Lender and the Program Agent against any loss
or expense incurred by them as a result of any failure by the Borrower to accept
any Advance requested in a Notice of Borrowing or as a result of the failure of
the Borrower to receive any Advance requested in a Notice of Borrowing as a
result of the failure of any condition precedent to the making of such Advance
to be satisfied, including, without limitation, any loss or expense incurred by
reason of the liquidation or reemployment of funds acquired or requested to fund
such Advance.
23
SECTION 2.03. Noteless Agreement; Evidence of Indebtedness.
(a) Each Lender and each Secondary Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender or such Secondary Lender, as
applicable, in respect of each Advance funded by it, from time to time,
including the amounts of principal and Yield thereon and paid to such Lender or
Secondary Lender, as applicable, from time to time hereunder.
(b) The Program Agent shall maintain accounts in which it will
record (i) the amount of each Advance funded by the Lenders and the Secondary
Lenders and the Settlement Period with respect thereto, (ii) the amount of any
principal and Yield due and payable or to become due and payable from the
Borrower to each Lender and Secondary Lender hereunder, and (iii) the amount of
any sum received by the Program Agent hereunder from the Borrower and each
Lender's and Secondary Lender's share thereof. If consent of the Majority Banks
is required by the terms of this Agreement for any action or inaction then being
taken or not taken under this Agreement, then upon the written request of the
Borrower, the Program Agent shall use reasonable efforts to as promptly as
possible notify the Borrower (i) of the Commitment Amount (as defined in the
Asset Purchase Agreement) of each Secondary Lender in its capacity as a
purchaser under the Asset Purchase Agreement, (ii) if any Secondary Lender
constitutes a Defaulting Bank, and (iii) of the outstanding principal amount of
the Advances of each Lender and each Secondary Lender; provided, that the
Program Agent shall have no liability for any error in any notice provided by it
pursuant to this Section 2.03(b) or for any delay in providing such notice.
(c) The entries maintained in the accounts maintained pursuant
to clauses (a) and (b) of this Section 2.03 shall be rebuttable presumptive
evidence of the existence and amounts of the Borrower Obligations therein
recorded (absent manifest error); provided, however, that the failure of the
Program Agent, any Lender or any Secondary Lender to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Borrower Obligations in accordance with their terms.
(d) The Conduit Lender and any Secondary Lender may request
that its Advances be evidenced by an Advance Note. In such event, the Borrower
shall (as soon as reasonably practicable) prepare, execute and deliver to the
Conduit Lender or Secondary Lender, as applicable, an Advance Note payable to
the order of the Conduit Lender or Secondary Lender, as applicable. Thereafter,
the Advances evidenced by such Advance Note and interest thereon shall at all
times (including after any assignment pursuant to Section 9.06) be represented
by one or more Advance Notes payable to the order of the payee named therein or
any assignee pursuant to Section 9.06, except to the extent that any such
Conduit Lender, Secondary Lender or assignee subsequently returns to the
Borrower any such Advance Note for cancellation and requests that such Advances
once again be evidenced as described in clauses (a) and (b) of this Section
2.03. In connection with any assignment pursuant to Section 9.06, if such
assigning Secondary Lender shall have an Advance Note issued to it, such
assigning Secondary Lender shall promptly return its Advance Note to the
Borrower marked "cancelled".
24
SECTION 2.04. Maturity of the Advances.
The principal amount of, and the accrued and unpaid Yield on
each outstanding Advance shall be due and payable by the Borrower on the
Maturity Date for such Advance.
SECTION 2.05. Prepayment of the Advances.
(a) The Borrower shall have the right at any time and from
time to time, upon not less than two (2) Business Days' prior written or
telephonic notice (in the case of telephonic notice, promptly confirmed in
writing) to the Program Agent specifying the date and amount of such prepayment,
to prepay (without any premium or penalty, except for any Liquidation Fee or
amount payable under Section 2.08) all or a portion of the outstanding Advances,
together with unpaid Yield thereon, on a Business Day; provided, that any such
prepayment, if a partial prepayment, shall be at least $1,000,000.
(b) If on any Determination Date the Borrower is not in full
compliance with the Borrowing Base Test, the Borrower shall on such
Determination Date (I) notify the Program Agent of such failure to comply, and
(II) on the Business Day next succeeding such Determination Date (each such
date, a "Compliance Certification Date") prepay Advances (together with Yield
thereon) in an amount necessary to cause the Borrower to be in full compliance
with the Borrowing Base Test on such Compliance Certification Date; provided,
however, that to the extent the Borrower does not have sufficient available
funds to fully cure such compliance shortfall on such Compliance Certification
Date, then the Borrower shall (i) on such Compliance Certification Date prepay
outstanding Advances in the amount of its available funds; (ii) no later than
the close of business on the tenth (10th) Business Day following such
Determination Date either (A) acquire and pledge to the Program Agent under this
Agreement and the Control Agreement additional Borrowing Base Eligible Assets
having an Adjusted Asset Value at least sufficient to cause the Borrowing Base
to be at least equal to the product of (x) 1.05, and (y) Credits Outstanding, as
determined on such Compliance Certification Date, or (B) prepay Advances in a
principal amount (and pay the Yield thereon) at least sufficient to cause the
Borrowing Base to be at least equal to the product of (x) 1.05 and (y) Credits
Outstanding, as determined on such Compliance Certification Date; and (iii) no
later than the close of business on such Compliance Certification Date, deliver
to the Program Agent a certificate, signed by an Responsible Officer of the
Borrower, that (1) certifies the amount of the compliance shortfall, (2)
specifies whether the Borrower shall either (x) prepay the Advances in
accordance with clause (B) above, or (y) acquire additional Borrowing Base
Eligible Assets in accordance with clause (A) above and specifies the identity
and Adjusted Asset Value of the Borrowing Base Eligible Assets for which the
Borrower has entered into corrective trades in order to satisfy the requirements
of clause (A) of this Section 2.05(b), and (3) certifies that the requirements
of this Section 2.05(b) shall be satisfied on or prior to the tenth (10th)
Business Day following such Determination Date.
(c) The amount of each prepayment under this Section 2.05
shall be applied ratably to the Advances of each Lender and each Secondary
Lender in the order in which such Advances were made by such Lender or Secondary
Lender.
25
SECTION 2.06. Yield.
The Borrower hereby agrees to pay the Yield computed with
reference to the principal amount of each Advance outstanding from time to time.
Yield accruing in respect of any Advance for any Settlement Period shall be due
and payable on the Settlement Date immediately succeeding such Settlement Period
and as required by Section 2.05. It is the intention of the parties hereto that
the Yield on the Advances shall not exceed the maximum rate permissible under
applicable law. Accordingly, anything herein or in any Advance Note to the
contrary notwithstanding, in the event any Yield is charged to, collected from
or received from or on behalf of the Borrower by the Lenders or the Secondary
Lenders pursuant hereto or thereto in excess of such maximum lawful rate, then
the excess of such payment over that maximum shall be applied first to the
payment of amounts then due and owing by the Borrower to the Secured Parties
under the Program Documents (other than in respect of principal and Yield on
Advances), then to the reduction of the outstanding principal balance of the
Advances then due and then any excess amount to be returned to the Borrower.
SECTION 2.07. Increased Costs.
(a) If, due to either (i) the introduction of or any change
(other than any change by way of imposition or increase of reserve requirements
reflected in the Eurodollar Rate Reserve Percentage) in or in the interpretation
of any Applicable Law or (ii) the compliance with any guideline or request from
any central bank or other Authority (whether or not having the force of law),
there shall be any increase in the cost to any Affected Person of agreeing to
make or making, funding or maintaining Eurodollar Rate Advances to the Borrower,
then the Borrower from time to time shall, as promptly as practicable upon
written demand by such Affected Person pay to the Program Agent for the account
of such Affected Person additional amounts sufficient to compensate such
Affected Person for such increased cost; provided, however, that no additional
amounts shall be required under this Section 2.07 with respect to (i) income or
profits taxes (or franchise taxes imposed in lieu thereof), (ii) Taxes or Other
Taxes in effect on the date that such Affected Person became a party to this
Agreement or otherwise became committed to purchase or acquire any interest in
any Advances (whether by assignment, participation or otherwise), except to the
extent that such Affected Person's assignor or predecessor was entitled to such
additional amounts, and (iii) Taxes to the extent avoidable had such Person
complied with the provisions of Section 9.03(f). In determining such amount,
such Affected Person may in good faith use any reasonable averaging and
attribution methods, consistent with the averaging and attribution methods
generally used by such Affected Person in determining amounts of this type with
respect to other borrowers. Each such Affected Person shall, together with its
written demand therefor, deliver to the Borrower and the Program Agent a
certificate setting forth in reasonable detail the amount of such increased cost
and the basis for the calculation of such amount, which certificate shall be
conclusive and binding for all purposes, absent manifest error.
(b) If an Affected Person determines that compliance with any
Applicable Law enacted after the Closing Date or request from any central bank
or other Authority charged with the interpretation or administration thereof
(whether or not having the force of law) affects the amount of capital required
or expected to be maintained by such Affected Person and that the amount of such
capital is increased by or based upon the existence of such Affected Person's
26
commitment under the Program Documents or upon such Affected Person's making,
funding or maintaining Advances, then, as promptly as practicable upon written
demand of such Affected Person (with a copy of such demand to the Program
Agent), the Borrower shall pay to the Program Agent for the account of such
Affected Person, from time to time as specified by such Affected Person,
additional amounts sufficient to compensate such Affected Person in light of the
circumstances. Each such Affected Person shall, together with its written demand
therefore, deliver to the Borrower and the Program Agent a certificate setting
forth in reasonable detail such amounts and the basis for the calculation of
such amounts, which certificate shall be conclusive and binding for all
purposes, absent manifest error.
(c) Upon the occurrence of any event giving rise to the
Borrower's obligation to pay additional amounts to any Affected Person pursuant
to Sections 2.07(a), 2.07(b) or 9.03, such Affected Person will, if requested by
the Borrower, use reasonable efforts (subject to overall policy considerations
of such Affected Person) to designate a different lending office; provided,
however, that such designation is made on such terms that such Affected Person
and its lending office suffer no significant economic, legal or regulatory
disadvantage, with the object of avoiding future consequence of the event giving
rise to the operation of any such Section. If such additional amounts are not
eliminated by any such designation and such Affected Person does not waive
payment of such additional amounts, the Program Agent, may at its sole
discretion within sixty (60) days, recommend a replacement Affected Person not
so affected. If after the sixty (60) day period described in the preceding
sentence a replacement for such Affected Person has not been procured, the
Borrower may propose a replacement for such Affected Person and, upon approval
of the Program Agent (which approval shall not be unreasonably withheld or
delayed), such Affected Person shall assign its interests under the applicable
Program Documents to such replacement entity. The parties hereby agree that
unless and until the Affected Person to be replaced (i) is paid in full for all
amounts due and owing to it hereunder and under any other Program Document, and
(ii) enters into assignment documents with the replacement entity which are
reasonably satisfactory to such Affected Person, it shall have no obligation to
assign any of its rights and interests hereunder. Each such Affected Person
agrees to take all actions necessary to permit a replacement entity to succeed
to its rights and obligations hereunder and under the other Program Documents.
The Borrower agrees to pay all reasonable expenses incurred by any Affected
Person in utilizing another lending office of such Affected Person or in
assigning its interest pursuant to this Section 2.07(c). Nothing in this Section
2.07(c) shall affect or postpone any of the obligations of the Borrower or the
rights of any Secured Party.
SECTION 2.08. Compensation.
Without duplication of any amount due by the Borrower in
respect of any Liquidation Fee, the Borrower shall compensate each Affected
Person, upon its written request (which request shall set forth in reasonable
detail the basis for requesting such amounts and the details showing the basis
of the calculation of such amounts), for all reasonable losses, expenses and
liabilities (including, without limitation, any interest paid by such Affected
Person to lenders of funds borrowed by it to make or carry its Eurodollar Rate
Advances and any loss sustained by such Affected Person in connection with the
re-employment of such funds), which such Affected Person may sustain: (i) if for
any reason (other than a default by such Affected Person) a
27
borrowing of any Eurodollar Rate Advance by the Borrower does not occur on a
date specified therefor in the Notice of Borrowing, (ii) if any prepayment of
any of the Borrower's Eurodollar Rate Advances occurs on a date which is not the
last day of a Settlement Period applicable thereto, (iii) if any prepayment of
any of the Borrower's Eurodollar Rate Advances is not made on any date specified
in a notice of prepayment given by the Borrower, or (iv) as a consequence of any
other default by the Borrower to repay its Eurodollar Rate Advances when
required by the terms of this Agreement.
SECTION 2.09. Additional Yield on Eurodollar Rate Advances.
So long as any Affected Person shall be required under
regulations of the Board of Governors of the Federal Reserve System to maintain
reserves with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, the Borrower shall pay as promptly as practicable
following written demand therefor to such Affected Person Eurodollar Additional
Yield on the principal amount of each outstanding Eurodollar Rate Advance on
each date on which Yield is payable on such Advance. Such Eurodollar Additional
Yield shall be determined on a reasonable basis by such Affected Person and
notified to the Borrower through the Program Agent within thirty (30) days after
any payment is made with respect to which such additional Yield is requested.
Each such Affected Person shall, together with the written demand therefor,
deliver to the Borrower and the Program Agent a certificate setting forth in
reasonable detail the amount of such Eurodollar Additional Yield and the basis
for the calculation of such amount, which certificate shall be conclusive and
binding for all purposes, absent manifest error.
SECTION 2.10. Termination or Reduction of the Total
Commitment.
The Borrower may at any time, upon thirty (30) days prior
written notice to the Program Agent terminate in whole or reduce in part the
unused portion of the Total Commitment; provided, that each such partial
reduction of the Total Commitment shall be in an amount equal to at least
$5,000,000 or an integral multiple thereof. Any reduction of the Total
Commitment shall reduce ratably (or terminate) the Secondary Lender Commitment
of each Secondary Lender.
SECTION 2.11. Rescission or Return of Payment.
The Borrower further agrees that, if at any time all or any
part of any payment theretofore made by it to any Secured Party or their
designees is or must be rescinded or returned for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy or reorganization of
the Borrower or any of its Affiliates), the obligation of the Borrower to make
such payment to such Secured Party shall, for the purposes of this Agreement, to
the extent that such payment is or must be rescinded or returned, be deemed to
have continued in existence and this Agreement shall continue to be effective or
be reinstated, as the case may be, as to such obligations, all as though such
payment had not been made.
28
SECTION 2.12. Fees Payable by Borrower.
The Borrower agrees to pay to the Program Agent for the
benefit of the applicable Secured Parties such fees as are set forth in the Fee
Letter.
SECTION 2.13. Post Default Interest.
The Borrower hereby promises to pay interest on the unpaid
principal amount of each Advance and any other amount payable by the Borrower
hereunder, in each case, which shall not be paid in full when due, for the
period commencing on the due date thereof until but not including the date the
same is paid in full at the Post-Default Rate. Interest payable at the
Post-Default Rate shall be payable on the Program Agent's demand.
SECTION 2.14. Payments.
(a) All amounts owing and payable by the Borrower to any
Secured Party, any Affected Person or any Indemnified Party under this
Agreement, including, without limitation, the principal amount of outstanding
Advances, Yield, fees, indemnities, expenses or other amounts payable by the
Borrower to any Secured Party, any Affected Person or any Indemnified Party
under the Program Documents, shall be paid in Dollars, in immediately available
funds on or prior to 12:00 noon (Chicago time) on the date due without
counterclaim, setoff, deduction, defense, abatement, suspension or deferment.
Subject to Section 2.14(d) and Section 7.03 all payments in respect of the
Borrower Obligations, payable by or on behalf of the Borrower to the Lenders,
Secondary Lenders, any Affected Person, any Indemnified Party and the Program
Agent shall be paid to the Program Agent's Account. Any payment paid after 12:00
noon (Chicago time) on any day shall be deemed to have been made on the next
Business Day for all purposes of this Agreement.
(b) All computations of interest at the Post-Default Rate and
all computations of Yield, fees and other amounts hereunder and under the Fee
Letter shall be made on the basis of a year of 360 days for the actual number of
days elapsed. Whenever any payment or deposit to be made hereunder and under the
Fee Letter shall be due on a day other than a Business Day, such payment or
deposit shall be made on the next succeeding Business Day and such extension of
time shall be included in the computation of such payment or deposit.
(c) Subject to Sections 2.14(d) and 7.03(a), upon the Program
Agent's receipt of funds deposited into the Program Agent's Account, the Program
Agent shall distribute such funds, first to the Lenders and the Secondary
Lenders on a pro rata basis in accordance with such amounts owed to each Lender
and Secondary Lender in payment of all accrued and unpaid Yield owing to such
Lenders and Secondary Lenders, second to such Lenders, such Secondary Lenders
and itself as Program Agent on a pro rata basis in accordance with such amounts
owed to each such Person in payment of any other fees or other amounts owed by
the Borrower to the Lenders, the Secondary Lenders and the Program Agent under
this Agreement and the other Program Documents (other than in respect of the
principal amount of the Advances), and third to the payment of the principal
amount of the Advances owing to such Lenders and Secondary Lenders on a pro rata
basis in accordance with such amounts owed to each such Lender and Secondary
Lender.
29
(d) During the continuance of an Event of Default all payments
in respect of the Borrower Obligations, payable by or on behalf of the Borrower,
including all Proceeds resulting from the sale or disposition of the Pledged
Collateral shall be remitted to the Program Agent's Account and applied in
accordance with Section 7.03(a).
SECTION 2.15. Ratable Payments.
If any Secondary Lender or Lender (other than the Conduit
Lender), whether by set-off, bankers' lien, counterclaim or otherwise, has
payment made to it with respect to any Borrower Obligations owing to it in a
greater proportion than that received by any other Lender or Secondary Lender
entitled to receive a ratable share of such payments, such Lender or Secondary
Lender agrees, promptly upon demand, to purchase for cash without recourse or
warranty a portion of the unpaid Borrower Obligations held by the other Lenders
and Secondary Lenders so that after such purchase each Lender and Secondary
Lender will hold its ratable proportion of such unpaid Borrower Obligations;
provided that if all or any portion of such excess amount is thereafter
recovered from such Secondary Lender or Lender, as the case may be, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
SECTION 2.16. Borrower's Obligations Absolute.
The Borrower's obligations to each Secured Party, each
Affected Person and each Indemnified Party under this Agreement and under the
other Program Documents (other than the Loan Documents) to which it is a party
shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms hereof and thereof, under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrower, the Adviser or any other Person may have or have had against any
Secured Party or any other Person.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to the Effectiveness
of this Agreement.
The effectiveness of this Agreement and the Conduit Lender's
and any Secondary Lender's obligations hereunder shall be subject to the
conditions precedent that the Program Agent shall have received (or waived
receipt thereof) on or before the initial Borrowing Date the following, each
(unless otherwise indicated) in form and substance reasonably satisfactory to
the Program Agent and the Secondary Lenders in sufficient copies for the Conduit
Lender and the Secondary Lenders:
(a) each of the Program Documents (other than the Loan
Documents) duly executed and delivered by the parties thereto, which shall each
be in full force and effect;
(b) the Prospectus;
30
(c) the signed opinions of counsel to the Borrower and the
Adviser addressed to the Program Agent, the Conduit Lender and each Secondary
Lender as to such matters as the Program Agent shall have reasonably requested;
(d) if requested by the Conduit Lender or any Secondary Lender
pursuant to Section 2.03 on or prior to the Closing Date, an Advance Note duly
executed and completed by the Borrower to the Conduit Lender or such Secondary
Lender, as applicable;
(e) copies of all Governmental Authorizations, material
Private Authorizations and Governmental Filings, if any, which may be required
to be made or obtained by the Borrower in connection with the transactions
contemplated by this Agreement;
(f) a certificate of the Secretary or Assistant Secretary of
each of the Borrower and the Adviser certifying (i) as to its certificate of
incorporation or declaration of trust, as applicable and by-laws, (ii) as to the
resolutions of its Board of Directors or Board of Trustees, as applicable,
approving this Agreement and the other Program Documents (other than the Loan
Documents) to which it is a party and the transactions contemplated hereby and
thereby, (iii) that its representations and warranties set forth in the Program
Documents (other than the Loan Documents) to which it is a party are true and
correct in all material respects, and (iv) the incumbency and specimen signature
of each of its officers authorized to execute the Program Documents (other than
the Loan Documents) to which it is a party;
(g) copies of proper financing statements naming the Borrower
as debtor and the Program Agent as secured party to be filed under the UCC in
all jurisdictions that the Program Agent may deem necessary or desirable in
order to perfect the Program Agent's interests in the Pledged Collateral
contemplated by this Agreement;
(h) copies of proper termination financing statements, if any,
necessary to release all Adverse Claims of any Person in the Assets of the
Borrower previously granted by the Borrower;
(i) completed requests for information, dated on or before the
date of the initial Borrowing Date, listing all effective financing statements
filed in the jurisdictions referred to in subsection (g) above that name the
Borrower (under its present name and any previous name) as debtor, together with
copies of such other financing statements; and
(j) a pro forma Investor Report, which shall evidence
compliance with the Borrowing Base Test, the Asset Coverage Test and certain
other terms of the Program Documents (other than the Loan Documents) after
giving effect to the initial borrowing of Advances under this Agreement.
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SECTION 3.02. Conditions Precedent to All Advances.
The obligation of the Conduit Lender and the Secondary Lenders
to make any Advance (including the initial Advances) on any Borrowing Date shall
be subject to the fulfillment of the following conditions:
(a) each of the representations and warranties of the Borrower
contained in this Agreement and the Control Agreement and each of the
representations and warranties of the Adviser contained in the Letter Agreement
shall be true and correct as of such date and shall continue to be true
immediately after giving effect to such Advance;
(b) no Default or Event of Default shall have occurred and be
continuing or shall result from the making of such Advance;
(c) immediately after giving effect to such Advance the
Borrower shall be in full compliance with each of the Borrowing Base Test and
the Asset Coverage Test;
(d) immediately after the making of any such Advance, the
aggregate outstanding principal amount of all Advances shall not exceed the
Total Commitment; and
(e) the Program Agent shall have received an Investor Report.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the
Borrower.
The Borrower represents and warrants to each of the Secured
Parties on and as of the Closing Date, each Borrowing Date and each Weekly
Determination Date (except solely in respect of clause (l) below, each date such
information is provided), as follows:
(a) Due Organization. The Borrower is a business trust duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, with full power and authority to own and operate
its Assets, conduct the business in which it is now engaged and to execute and
deliver and perform its obligations under this Agreement and the other Program
Documents to which it is a party, except where the failure to hold such power
and authority could not reasonably be expected to result in a Material Adverse
Effect.
(b) Due Qualification and Good Standing. The Borrower is duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of its business, assets and properties, including, without
limitation, the performance of its obligations under this Agreement and the
other Program Documents to which it is a party, requires such qualification,
except where the failure to be so qualified or to be in good standing could not
reasonably be expected to have a Material Adverse Effect.
(c) Due Authorization; Execution and Delivery; Legal, Valid
and Binding; Enforceability. The execution and delivery by the Borrower of, and
the performance by the Borrower of its obligations under the Program Documents
to which it is a party are within its
32
powers and have been duly authorized by all requisite action by the Borrower and
have been duly executed and delivered by the Borrower and constitute the legal,
valid and binding obligations of the Borrower enforceable against the Borrower
in accordance with their respective terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
(d) Noncontravention. Neither the execution and delivery by
the Borrower of this Agreement, the other Program Documents to which it is a
party nor the consummation of the transactions herein or therein contemplated,
nor compliance with the terms, conditions and provisions hereof or thereof by
it, will (i) conflict with, or result in a breach or violation of, or constitute
a default under its declaration of trust or other organizational documents, (ii)
conflict with or contravene (A) any Applicable Law the contravention of which
could reasonably be expected to have a Material Adverse Effect, (B) any
contractual restriction binding on or affecting the Borrower or any of its
Assets the contravention of which could reasonably be expected to have a
Material Adverse Effect or which could reasonably be expected to result in any
material liability to a Secured Party, or (C) any order, writ, judgment, award,
injunction or decree binding on or affecting the Borrower or any of its Assets,
except to the extent non-compliance therewith could not reasonably be expected
to have a Material Adverse Effect, or (iii) result in any Adverse Claim upon any
Asset of the Borrower.
(e) Governmental Authorizations; Private Authorizations;
Governmental Filings. The Borrower has obtained all necessary Governmental
Authorizations and Private Authorizations, and made all Governmental Filings
necessary for the execution and delivery by the Borrower of, and the performance
by the Borrower of its obligations under this Agreement, the other Program
Documents to which it is a party and the agreements, certificates and
instruments contemplated hereby or thereby, except in the case of Private
Authorizations, where the failure to obtain such Private Authorizations could
not reasonably be expected to have a Material Adverse Effect.
(f) Security Interest. This Agreement and the Control
Agreement and the actions required to be taken pursuant to the terms hereof are,
and at all times shall be, effective to create and perfect in the Program Agent
for the benefit of the Secured Parties a first priority perfected security
interest in the Pledged Collateral (subject to the Lien of the Custodian
securing the Custodian's Overdraft Advances to the extent permitted by Section
5.02(o) and other Permitted Liens) free and clear of all Adverse Claims.
(g) Borrowing Base Eligible Assets, Adverse Claims, Etc. The
Borrower owns each Borrowing Base Eligible Asset free and clear of Adverse
Claims and as of the initial Borrowing Date and at all times thereafter, the
Program Agent has a first priority perfected security interest in the Pledged
Collateral (subject to the Lien of the Custodian securing the Custodian's
Overdraft Advances to the extent permitted by Section 5.02(o) and other
Permitted Liens) free and clear of all Adverse Claims.
33
(h) No Financing Statement. No effective financing statements
or other instruments similar in effect covering any Asset of the Borrower are on
file in any recording office, except those filed in favor of the Program Agent
pursuant to this Agreement.
(i) Principal Office; Organization. The Borrower's principal
place of business and chief executive office is at the addresses referred to in
Section 5.01(d), the Borrower's jurisdiction of organization is the Commonwealth
of Massachusetts and during the prior five (5) year period the Borrower has not
transacted any business under any name other than "▇▇▇ ▇▇▇▇▇▇ Senior Loan Fund",
"▇▇▇ ▇▇▇▇▇▇ Prime Rate Income Trust" and "▇▇▇ ▇▇▇▇▇▇ Senior Floating Rate Fund".
(j) Pending Litigation or Other Proceeding. There are no
pending or, to the best of the Borrower's knowledge, threatened investigations,
litigation, suits or proceedings involving the Borrower which could reasonably
be expected to have a Material Adverse Effect.
(k) Investment Company Act, Etc. The Borrower is and will
continue to be registered as a closed-end management investment company as such
term is used in the Investment Company Act and is in compliance in all material
respect with the Investment Company Act and the Investment Policies and
Restrictions.
(l) Information and Reports. The Prospectus, each Investor
Report, each Notice of Borrowing and all other written information, written
reports, certificates and written statements provided by or on behalf of the
Borrower to any Secured Party for purposes of or in connection with this
Agreement, the other Program Documents to which the Borrower is a party or the
transactions contemplated hereby or thereby to be performed by the Borrower is,
and all such information hereafter provided by or on behalf of the Borrower to
any Secured Party is and will be (except for projections and forward looking
statements (other than any pro forma Investor Report)) true and accurate in all
material respects on the date such information is stated or certified and no
such information contains, or will contain, any material misrepresentation or
any omission to state therein matters necessary to make the statements made
therein not misleading in any material respect under the circumstances in which
they were made when considered in their entirety.
(m) Applicable Law. The Borrower is in full compliance with
all Applicable Law, including, without limitation, the Securities Act and the
Investment Company Act, including the rules and regulations promulgated
thereunder, except where the failure to so comply could not give rise to a
reasonable possibility of a Material Adverse Effect.
(n) ERISA. The Borrower is not nor has during the past five
(5) years been a member of an ERISA Group and does not have nor during the past
five (5) years had any liability or obligation with respect to any Plan,
Multiemployer Plan or Benefit Arrangement; provided, however, that the Borrower
may incur liabilities or obligations under a plan or arrangement substantially
in the form of the Form of Retirement Plan For Each Closed End Fund or the Form
of Amended and Restated Deferred Compensation Agreement, each attached hereto as
Schedule II.
34
(o) No Default or Event of Default. No Default or Event of
Default has occurred and is continuing and on each Borrowing Date each of the
conditions precedent to the making of Advances set forth in Section 3.02 have
been fully satisfied.
(p) Borrowing Base Test; Asset Coverage Test, Etc. The
Borrowing Base Test and the Asset Coverage Test are fully satisfied and will be
fully satisfied and immediately after the making of each Advance; provided, that
if on any date this representation is made (other than a Borrowing Date) the
Borrower is in full compliance with the requirements set forth in Section
2.05(b), the Borrower shall be deemed to be in compliance with this clause (p)
to the extent it relates to the Borrowing Base Test as of such date.
(q) Internal Revenue Code. The Borrower is qualified, and
intends to continue to qualify, as a "regulated investment company" within the
meaning of the Code.
(r) Taxes. The Borrower has filed all United States Federal
income tax returns and all other material tax returns which are required to be
filed by it, if any, and has paid all material taxes due pursuant to such
returns, if any, or pursuant to any assessment received by the Borrower, except
for any taxes or assessments which are being contested in good faith by
appropriate proceedings and with respect thereto adequate reserves have been
established in accordance with GAAP.
(s) Financial Condition. The statement of assets and
liabilities of the Borrower as at July 31, 2003, certified by Deloitte & Touche
LLP, certified public accountants, fairly present in conformity with GAAP the
financial position of the Borrower at such date and since such date there has
been no material adverse change in the business, financial condition or results
of operations of the Borrower.
(t) Regulations T, U and X. Neither the making of any Advance
nor the use of proceeds thereof will violate the provisions of Regulation U or
Regulation X. The Borrower's use of the proceeds of the Advances will not
violate Regulation T.
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Borrower.
The Borrower covenants and agrees that it shall from the date
hereof until the Program Termination Date:
(a) Compliance with Agreements, Laws, Etc. (i) Duly observe,
comply with and conform to all requirements of Applicable Law relative to the
conduct of its business or to its Assets, including without limitation the
Investment Company Act, (ii) preserve and keep in full force and effect the
legal existence of the Borrower and the rights, privileges, qualifications and
franchises of the Borrower, (iii) comply in all material respects with the terms
and conditions of each Program Document to which it is a party, and (iv) obtain,
maintain and keep in full force and effect all Governmental Authorizations,
Private Authorizations and Governmental Filings which are necessary or
appropriate to properly carry out its business and the transactions contemplated
to be performed by the Borrower under this Agreement and the other Program
35
Documents to which it is a party, except with respect to clauses (i) through
(iv) above where the failure to so observe, comply, preserve, keep, obtain,
maintain and conform could not reasonably be expected to have a Material Adverse
Effect.
(b) Taxes. Cause to be computed, paid and discharged when due
all material taxes, assessments and other governmental charges or levies imposed
upon it, or upon any income or Assets of the Borrower, prior to the day on which
penalties are attached thereto, unless and to the extent that the same shall be
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been established on the books of the Borrower in
accordance with GAAP.
(c) Further Assurances. Promptly, at its expense, execute and
deliver such further instruments and take such further action as is necessary in
order to (i) establish and protect the rights, interests and remedies created,
or intended to be created, in favor of the Secured Parties including, without
limitation, all such actions which are necessary or reasonably advisable to
maintain and protect the Secured Parties' first priority perfected (subject to
the Lien of the Custodian securing the Custodian's Overdraft Advances to the
extent permitted by Section 5.02(o) and other Permitted Liens) security interest
in the Pledged Collateral free and clear of Adverse Claims, and (ii) enable the
Secured Parties to enforce their rights and remedies under the Program Documents
to which the Borrower is a party, including, without limitation, to do all
things necessary at the reasonable request of the Program Agent during the
continuance of an Event of Default to have each Loan Asset which constitutes
Pledged Collateral and the related Loan Documents assigned to the Program Agent
or its designee. Further, without limiting the obligations of the Borrower set
forth above, the Borrower hereby authorizes the filing of any financing
statements or continuation statements, and amendments to financing statements,
in any jurisdictions and with any filing offices as the Program Agent may
determine, in its reasonable discretion, are necessary to perfect the security
interest granted to the Program Agent in connection herewith. Such financing
statements may describe the collateral in the same manner as described herein or
in the Control Agreement or may contain an indication or description of
collateral that describes such property in any other manner as the Program Agent
may determine, in its reasonable discretion, is necessary to ensure the
perfection of the security interest in the collateral granted to the Program
Agent in connection herewith, including, without limitation, describing such
property as "all assets of the debtor whether now owned or hereafter acquired"
or "all personal property of the debtor whether now owned or hereafter
acquired".
(d) Continued Existence. Keep the Commonwealth of
Massachusetts as its jurisdiction of organization and keep its principal place
of business and chief executive office at the address of the Borrower set forth
in Section 9.02 or, upon thirty (30) days' prior written notice to the Program
Agent, in any other jurisdiction of organization or at any other locations in
jurisdictions where all actions to protect and perfect the Program Agent's first
priority perfected (subject to the Lien of the Custodian securing the
Custodian's Overdraft Advances to the extent permitted by Section 5.02(o) and
other Permitted Liens) security interest in the Pledged Collateral have been
taken and completed.
(e) Financial Statement; Accountants' Reports; Other
Information. Provide to the Program Agent (with enough additional copies for the
Conduit Lender and each Secondary Lender):
36
(i) as soon as available, and in any event within ninety (90)
days after the end of each fiscal year of the Borrower, a statement of assets
and liabilities of the Borrower as at the end of such fiscal year, and
statements of operations and of changes in net assets of the Borrower for such
fiscal year, and the Borrower's portfolio of investments as of the end of such
fiscal year, with an audit report thereon issued by Deloitte & Touche LLP or
other independent certified public accountants of nationally recognized
standing, together with the comparable report for the prior fiscal year;
(ii) as soon as available and in any event within seventy-five
(75) days after the end of each first semi-annual fiscal period of the Borrower,
a statement of assets and liabilities of the Borrower as at the end of such
period, a statement of operations and of changes in net assets of the Borrower
for such period, and the portfolio of investments as of the end of such period,
all in reasonable detail and stating in comparative form the respective figures
for the comparable period in the preceding year, prepared in accordance with
GAAP, consistently applied and all certified (subject to normal year-end
adjustment) as to fairness of presentation in all material respects by a
Responsible Officer of the Borrower;
(iii) as soon as available, and in any event within sixty (60)
days after the end of the first and third fiscal quarters of the Borrower's
fiscal years, a list setting forth each of the senior loan assets held by the
Borrower and the Value thereof, in each case, as of the last day of such
quarter;
(iv) simultaneously with the delivery of each set of financial
statements referred to in clauses (i) and (ii) above, a statement of a
Responsible Officer to the effect that nothing has come to the attention of such
Responsible Officer to cause him/her to believe that any Default or Event of
Default existed on the date of such statements;
(v) as soon as possible, and in any event within three (3)
Business Days of the Borrower's actual knowledge of the occurrence of any
Default or Event of Default, a certificate of a Responsible Officer of the
Borrower setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(vi) as soon as possible, and in any event within two (2)
Business Days, after the Borrower has actual knowledge of any failure by the
Custodian to perform or observe any term, covenant or agreement on its part to
be performed under the Custodial Agreement which failure gives rise to a
reasonable possibility of a Material Adverse Effect, written notice thereof
executed by a Responsible Officer of the Borrower;
(vii) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(viii) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and unless duplicative of any
deliveries to be made under clauses (i) or (ii) above, annual and semi-annual
reports which the Borrower shall have filed with the SEC;
37
(ix) so long as any Advance or Borrower Obligation shall be
outstanding, within one (1) Business Day after the written request (which
request shall not be made more than weekly) of the Program Agent, a report in
substantially the form of the Investor Report in respect of the Assets of the
Borrower as of the determination date designated in such Program Agent's
request, together with a certificate of a Responsible Officer of the Borrower in
substantially the form of Annex A to the Investor Report;
(x) on or before the day which is two (2) Business Days prior
to each Settlement Date (or during the continuance of a Default or Event of
Default more frequently as the Program Agent shall reasonably request (which may
be daily)), an Investor Report substantially in the form of Schedule I hereto,
for the immediately preceding calendar month (or other relevant period if
delivered on a daily or weekly basis), together with a certificate of a
Responsible Officer of the Borrower in substantially the form of Annex A to the
Investor Report;
(xi) promptly upon its receipt of and contemporaneously with
its giving of any notice relating to the termination of the Custodial Agreement
or the Control Agreement, copies of any such notice;
(xii) prior to the issuance by the Borrower of any preferred
shares, notice of such issuance which notice shall include the offering
materials to be used in connection with the issuance of such preferred shares;
(xiii) prompt notice of any amendment or modification to the
Investment Policies and Restrictions which notice shall include, in reasonable
detail, a description of any such change; and
(xiv) from time to time such additional information regarding
the financial condition or business of the Borrower as the Program Agent may
reasonably request.
(f) Maintenance of Insurance. Maintain in force with
financially sound and reputable insurers, policies with respect to its assets
and property and business against such risks and in such amounts as are usually
insured against in the same general area in the case of entities engaged in
similar lines of business and as may be required by the Investment Company Act.
(g) Maintenance of Business. Remain at all times a closed-end
investment company for the purposes of the Investment Company Act and continue
to engage in business of the same general type as now conducted by the Borrower,
and will preserve, renew and keep in full force and effect its existence and
rights, privileges and franchises necessary or reasonably desirable in the
normal conduct of business and will at all times remain registered under the
Investment Company Act.
(h) Audits. Annually (or more frequently as the Program Agent,
for itself and as agent for the Secured Parties may require after the occurrence
of and during the continuance of a Default or an Event of Default) and at the
sole cost and expense of the Borrower (i) cause an independent nationally
recognized accounting firm reasonably satisfactory to the Program Agent, to
enter the premises of the Borrower and any Person to whom the Borrower delegates
all or any portion of its duties under any Program Document to which it is a
party (including, without
38
limitation, the Adviser) and examine and audit the books, records and accounts
of the Borrower and such other Person relating to its business, financial
condition, operations and the Borrower's and such other Person's performance
under the Program Documents to which it is a party, (ii) permit such accounting
firm to discuss the Borrower's and such other Person's affairs and finances with
the officers, partners, employees and accountants of any of them, (iii) cause
such accounting firm to provide to the Program Agent a certified report in
respect of the foregoing, which shall be in form and scope reasonably
satisfactory to the Program Agent, and (iv) authorize such accounting firm to
discuss such affairs, finances and performance with representatives of the
Program Agent and their designees; provided, that, such examination and audit of
information provided to the Borrower in connection with any Loan Document
(which, for the avoidance of doubt, does not include the Loan Documents relating
to any Eligible Loan Asset) shall be subject to any prohibition set forth in
written confidentiality agreements entered into by the Borrower with respect
thereto.
(i) Access to Records. Annually (or more frequently as the
Program Agent, for itself and as agent for the Secured Parties may require after
the occurrence of and during the continuance of a Default or an Event of
Default) permit the Program Agent and the Secondary Lenders or any Person
designated by the Program Agent and the Secondary Lenders to, upon reasonable
advance notice and during normal hours, visit and inspect at reasonable
intervals its and any Person to which it delegates any of its duties under the
Program Documents to which it is a party (including, without limitation, the
Adviser) books, records and accounts relating to its business, financial
condition, operations, Assets and its performance under the Program Documents to
which it is a party and to discuss the foregoing with its and such Person's
officers, partners, employees and accountants; provided, that the Program Agent
and each Secondary Lender shall use reasonable efforts to coordinate their
inspections; provided, however, that if under the terms of any agreement with
any Person which is not an Affiliate of the Adviser or the Borrower to whom the
Adviser or the Borrower has delegated any of its duties under any Program
Document, only the Borrower or the Adviser, as the case may be, is permitted to
visit and inspect such Person's books, records and accounts, it shall at the
request of the Program Agent, exercise or cause the applicable Adviser or the
Borrower, as the case may be, to exercise the rights specified in this Section
5.01(i) on behalf of such requesting parties; provided, further, that the
Program Agent's, each Secondary Lender's and their respective designees' right
to review information provided to the Borrower in connection with any Loan
Document (which, for the avoidance of doubt, does not include the Loan Documents
relating to any Eligible Loan Asset) shall be subject to the prohibitions of any
written confidentiality agreements entered into by the Borrower with respect
thereto, provided, that the Borrower had used reasonable efforts to permit the
Program Agent, the applicable Secondary Lenders or their respective designees to
review such information by complying with any terms of such confidentiality
agreement which would permit disclosure of confidential information to the third
parties.
(j) Investment Policies and Restrictions. At all times be in
compliance in all material respects with Investment Policies and Restrictions
and maintain necessary liquidity to meet its obligations to fund future advances
or other extensions of credit under the Loan Documents relating to its Loan
Assets.
39
(k) Defense of Secured Parties' Interest. Warrant and defend
each of the Secured Parties' right and interest in, to and under the Pledged
Collateral against all Adverse Claims of all Persons whomsoever.
(l) Custody and Control. At all times cause all Borrowing Base
Eligible Assets of the Borrower (including all investments, if any, evidencing
the same and all Specified Loan Documents) to constitute Pledged Collateral and
to be (i) custodied with the Custodian or a sub-custodian of the Custodian
pursuant to the Custodial Agreement, and (ii) subject to the Custodian's control
and custody in accordance with the Control Agreement; provided, that if such
Borrowing Base Eligible Asset or Pledged Collateral is a Loan Asset,
concurrently with any request to register such Loan Asset in the name of the
Borrower, the Borrower shall deliver instructions to all Selling Institutions,
Transaction Agents and Obligors related to such Loan Asset requiring that any
instrument evidencing such Loan Asset be delivered to the Custodian. At all
times cause all Loan Documents (other than the Specified Loan Documents) to be
held at the address of the Borrower set forth in Section 9.02 or, such other
location in Illinois as the Borrower shall designate upon twenty (20) day's
prior written notice to the Program Agent.
(m) Notice of Litigation or Other Proceedings. Promptly give
notice in writing to the Program Agent of all litigation, arbitration
proceedings and regulatory proceedings affecting the Borrower or the Assets of
the Borrower, except such litigation, arbitration proceedings and regulatory
proceedings which could not reasonably be expected to have a Material Adverse
Effect.
(n) Maintenance of Books of Record and Account. Keep proper
books of record and account in which full, true and correct entries shall be
made of all dealings and transactions in relation to its business and activities
in accordance with the requirements of the SEC or under the Investment Company
Act.
(o) Proceeds of Pledged Collateral. Cause all Proceeds of the
Pledged Collateral to be remitted to the Collateral Account if a Default or
Event of Default shall be continuing or would occur as a result of the failure
to so remit such Proceeds.
(p) Use of Proceeds. Use the net proceeds of any Advance made
hereunder for the purpose of short-term liquidity and other temporary emergency
purposes, which purposes are permitted under and in compliance with the
Investment Company Act and by the Prospectus of the Borrower.
(q) Investment Adviser. Except as consented to by the Program
Agent and the Secondary Lenders (which consent shall not be unreasonably
withheld or delayed), or as otherwise permitted by Section 6.01(n), at all times
maintain the Adviser as the Borrower's investment adviser.
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SECTION 5.02. Negative Covenants of the Borrower.
The Borrower covenants and agrees that from the date hereof until the
Program Termination Date the Borrower shall not:
(a) Impairment of Rights. Enter into any agreement containing any
provision which would be violated or breached by the performance of its
obligations under any Program Document to which the Borrower is a party the
continuation of which could reasonably be expected to have a Material Adverse
Effect or which could reasonably be expected to result in any material liability
to a Secured Party.
(b) Prospectus and Investment Policies and Restrictions. Purchase any
Assets or engage in any line of business not contemplated by the Prospectus or
the Investment Policies and Restrictions.
(c) Creation of Debt. Create, assume or suffer to exist any Debt,
except for Permitted Debt.
(d) Mergers; Sale of Assets. Adopt or carry out any plan of
liquidation, partial liquidation, reorganization, incorporation,
recapitalization, merger or consolidation nor sell, transfer or otherwise
dispose of all or substantially all of its Assets (whether in one transaction or
a series of transactions), without the prior written consent of the Program
Agent and the Secondary Lenders (which consent shall not be unreasonably
withheld or delayed).
(e) Advances and Extensions of Credit. Make any advance or other
extension of credit to any Person except in the ordinary course of the
Borrower's business and as expressly contemplated by the Investment Policies and
Restrictions.
(f) Custodial Agreement. Without the prior written consent (which
consent shall not be unreasonably withheld or delayed) of the Program Agent,
permit or consent to any material amendment, modification or waiver of the
Custodial Agreement, unless the Borrower has delivered to the Program Agent a
certificate of a Responsible Officer of the Borrower certifying that such
amendment, modification or waiver could not reasonably be expected to have a
Material Adverse Effect.
(g) Amendments to Organizational Documents. Except in connection with
the issuance of preferred stock, amend, terminate, supplement or otherwise
modify in any material respect its declaration of trust, by-laws or other
organizational documents, unless the Borrower has delivered to the Program Agent
a certificate of a Responsible Officer of the Borrower certifying that to the
actual knowledge of such Responsible Officer such amendment, modification or
waiver could not reasonably be expected to have a Material Adverse Effect.
(h) ERISA. Become a member of an ERISA Group or incur any liability or
obligation with respect to any Plan, Multiemployer Plan or any Benefit
Arrangement; provided, however, that the Borrower may incur liabilities or
obligations under a plan or arrangement substantially in the form of (i) the
Form of Retirement Plan For Each Closed End Fund or (ii) the Form of Amended and
Restated Deferred Compensation Agreement each attached on Schedule II hereto;
provided, further, that the Borrower gives the Program Agent at least ten (10)
days
41
prior written notice of any such amendment to the forms of the plan or
agreement that materially increases the Borrower's liabilities under the plan or
agreement.
(i) Investment Policies and Restrictions. Without the prior written
consent (which consent shall not be unreasonably withheld or delayed) of the
Program Agent and solely with respect to clause (i) without the prior written
consent (which consent shall not be unreasonably withheld or delayed) of the
Secondary Lenders (i) unless required by a change in Applicable Law (including,
without limitation, the Investment Company Act and the Securities Act), make or
permit any material change in the Investment Policies and Restrictions, or (ii)
make or permit any change in any Industry Class used to compute the Borrowing
Base.
(j) Liens. Create, assume or suffer to exist any Adverse Claim on any
Asset now owned or hereafter acquired by it (including without limitation the
Pledged Collateral).
(k) Senior Securities. Issue any "senior securities", as such term is
defined and used in the Investment Company Act other than Permitted Senior
Securities.
(l) Margin Requirements. Extend credit to others for the purpose of
buying or carrying any "margin stock" in such a manner as to violate Regulation
T, Regulation U or Regulation X or use the proceeds of any Advance to purchase
or carry Margin Stock or, without limiting the foregoing, have more than twenty
percent (20%) of its total Assets constitute Margin Stock.
(m) Restricted Payments. Make any Restricted Payment (i) if any Default
or Event of Default shall be continuing or shall result therefrom, (ii) if
immediately after giving effect to such payment the Borrower will not be in full
compliance with the Borrowing Base Test and the Asset Coverage Test, (iii) at
any time after the Program Agent shall have delivered a Notice of Exclusive
Control to the Custodian (unless such Notice of Exclusive Control has been
revoked in writing by the Program Agent), or (iv) at any time after the
Termination Date.
(n) Name Change. Change its name (i) without giving the Program Agent
at least ten (10) days prior written notice, and (ii) unless all actions
necessary and reasonably appropriate to protect and perfect the Secured Parties'
first priority perfected security interest (subject to any Permitted Liens) in
the Pledged Collateral have been taken and completed.
(o) Custodian's Overdraft Advances. Permit the Aggregate Custodian's
Advance Amount to at any time exceed $50,000,000.
(p) Notice of Exclusive Control; Pledged Collateral. After the Borrower
has received written notice of delivery by the Program Agent to the Custodian of
a Notice of Exclusive Control, unless such Notice of Exclusive Control is
revoked in writing by the Program Agent, give any instruction to the Custodian
in respect of the Pledged Collateral without the prior written consent of the
Program Agent.
42
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default.
If any of the following events shall occur and be continuing (each an
"Event of Default"):
(a) the Borrower shall fail to make or cause to be made in the manner
and when due (i) except as expressly provided in Section 2.05(b), any payment of
principal to be made or to be caused to be made by it under this Agreement and
such failure shall continue for one (1) Business Day, or (ii) any payment of
interest, fees or other deposit to be made or caused to be made by it under this
Agreement or any of the other Program Documents to which it is a party and such
failure shall continue for three (3) Business Days; or
(b) the Borrower shall (i) fail to be in compliance with the Asset
Coverage Test, provided that if a Responsible Officer of the Borrower has
certified that the Borrower is taking all steps necessary to cause the Borrower
to be in full compliance with the Asset Coverage Test within ten (10) Business
Days after the first date of the Borrower's knowledge of such noncompliance,
such event shall not constitute an Event of Default unless such failure shall
continue for ten (10) Business Days after such first date, or (ii) fail to
comply with Section 2.05(b), Section 5.01(g) or clauses (c), (d), (e), (f), (g),
(h), (i), (k), (l) or (m) of Section 5.02; or
(c) (i) the Borrower shall fail to perform or observe any other term,
covenant or agreement on its part to be performed or observed under this
Agreement or any other Program Document to which it is a party, or (ii) the
Adviser shall fail to perform any of its obligations under the Letter Agreement,
which could reasonably be expected to have an Adviser Material Adverse Effect,
or (iii) the Custodian shall fail to perform or observe any term, covenant or
agreement on its part to be performed or observed under the Control Agreement,
which could reasonably be expected to have a Material Adverse Effect, or (iv)
the Custodian shall fail to perform or observe any term, covenant or agreement
on its part to be performed under the Custodial Agreement, which in the case of
this clause (iv), could reasonably be expected to have a Material Adverse Effect
and such failure described in the cases of clauses (i) through (iv) shall
continue unremedied for thirty (30) days after such person has knowledge of such
failure; or
(d) any representation or warranty made or deemed made by the Borrower,
the Adviser or the Custodian under or in connection with this Agreement, the
Control Agreement, the Letter Agreement or any certificate or report delivered
by or on behalf of the Borrower, the Adviser or the Custodian in connection
therewith shall have been false or incorrect in any material respect on or as of
the date made or deemed made or any material representation or warranty made or
deemed made by the Borrower, the Adviser or the Custodian in any other Program
Document to which it is a party or any certificate or report delivered by or on
behalf of the Borrower, the Adviser or the Custodian in connection therewith
shall be false or incorrect in any material respect when made or deemed made or
delivered; provided, however, that, with respect to the representation set forth
in Section 4.01(l), such event (except to the extent relating to any Investor
Report) shall not constitute an Event of Default under this clause (d) if (i)
such
43
breach has not resulted in a Material Adverse Effect, and (ii) the incorrect or
incomplete information or report giving rise to such breach was promptly
corrected by the Borrower; or
(e) the Program Agent shall for any reason cease to have a valid and
perfected first priority security interest in the Pledged Collateral (subject to
the Lien of the Custodian securing the Custodian's Overdraft Advances to the
extent permitted by Section 5.02(o) and other Permitted Liens) free and clear of
all Adverse Claims or the Custodian, as collateral agent and/or securities
intermediary under the Control Agreement, shall not have custody and control, as
contemplated by the Control Agreement, of the Pledged Collateral; or
(f) the Borrower or the Custodian shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Borrower or the Custodian
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of sixty (60)
days, or any of the actions sought in such proceeding (including an order for
relief against, or the appointment of a receiver, trustee, custodian or other
similar official for, it or for any substantial part of its property) shall
occur; or the Borrower or the Custodian shall take any corporate action to
authorize any of the actions set forth above in this subsection; or
(g) any provision of any Program Document shall cease to be a legal,
valid and binding obligation of any of the parties purported to be bound
thereby, enforceable in accordance with its respective terms or the Borrower,
the Adviser or the Custodian shall so assert in writing; or
(h) any judgment or order, or any series of judgments or orders, shall
have been entered against the Borrower, provided that (i) such judgments or
orders that have not been vacated, discharged, settled, paid or satisfied shall
aggregate to $5,000,000 or more at any one time outstanding (excluding any
judgments or orders related to any payment to or application by the Borrower
that is rescinded or must otherwise be returned or paid over as a result of any
bankruptcy, insolvency or similar proceeding involving any other Person), and
(ii) enforcement actions have been commenced with respect thereto and have not
been dismissed or stayed or bonded pending appeal within sixty (60) days of such
entry; or
(i) either (1) State Street Bank and Trust Company shall at any time
cease to serve as Custodian under the Custodial Agreement or the Control
Agreement, unless a successor thereto reasonably satisfactory to the Program
Agent shall have assumed the duties of Custodian thereunder and in accordance
with the terms of the Program Documents, or (2) the Custodian or the Borrower
shall have given notice of the termination of the Custodial Agreement or the
Control Agreement; provided, however, that events specified in clause (2) above
shall not constitute an Event of Default if prior to the tenth (10th) Business
Day immediately preceding the effective date of such termination a successor
custodian reasonably satisfactory to the Program
44
Agent shall have been appointed as custodian under the Custodial Agreement and
shall have assumed the obligations of the Custodian under the Custodial
Agreement and the Control Agreement and the Program Agent shall have received
such certificates and opinions as they shall have reasonably requested; or
(j) any event or condition shall occur which results in the
acceleration of the maturity of any Debt of the Borrower which Debt in the
aggregate is at least $3,000,000 or enables (or, with the giving of notice or
lapse of time or both would enable) the holder of such Debt or any Person acting
on such holder's behalf to accelerate the maturity thereof; or
(k) any change in Applicable Law (including, without limitation, the
Investment Company Act and the Securities Act) shall be enacted or promulgated
which (i) would limit in any material respect the ability of the Program Agent,
or any Secured Party to foreclose upon its interest in, or in the event of such
foreclosure to dispose of, the Pledged Collateral or to be granted the security
interest in Pledged Collateral as contemplated by this Agreement and the Control
Agreement, or (ii) unless such changes have been consented to in writing by the
Program Agent and the Secondary Lenders (which consent shall not be unreasonably
withheld or delayed), would require any material change to the Investment
Policies and Restrictions; or
(l) the Adviser shall cease to be a wholly owned direct or indirect
subsidiary of the Parent; or
(m) unless consented to in writing by the Program Agent (which consent
shall not be unreasonably withheld or delayed), the Advisory Agreement in effect
on the Closing Date or any replacement advisory agreement approved of in writing
by the Program Agent shall be (i) amended, waived or otherwise modified in any
material respect, or (ii) shall be terminated unless a replacement investment
advisory agreement has been entered into with a successor investment adviser
which is substantially similar in all material respects to the Advisory
Agreement in effect prior to any such termination; or
(n) ▇▇▇ ▇▇▇▇▇▇ Investment Advisory Corp. or another wholly-owned direct
or indirect subsidiary of the Parent (or another entity consented to in writing
by the Program Agent and the Secondary Lenders (which consent shall not be
unreasonably withheld or delayed) which has executed a letter agreement in favor
of the Program Agent on behalf of the Secured Parties substantially identical in
all material respects to the Letter Agreement), is not the current investment
adviser for the Borrower;
then, and in any such event, in addition to all rights and remedies specified in
this Agreement, including without limitation, Article VII, and the rights and
remedies of a secured party under Applicable Law including, without limitation
the UCC, the Program Agent may, or upon the direction of the Majority Banks
shall, by notice to the Borrower, declare the Termination Date to have occurred
and declare the outstanding Advances to be due and payable (in which case the
Termination Date and the Maturity Date for all outstanding Advances shall be
deemed to have occurred); provided, that, upon the occurrence of any event
(without any requirement for the passage of time or the giving of notice, or
both) described in subsection (f) of this Section 6.01,
45
the Termination Date and the Maturity Date for all outstanding Advances shall be
deemed to have automatically occurred.
ARTICLE VII
PLEDGE OF PLEDGED COLLATERAL;
RIGHTS OF THE PROGRAM AGENT
SECTION 7.01. Security Interests.
In consideration of the Lenders and the Secondary Lenders making and
maintaining the Advances, and as collateral security for the prompt, complete
and unconditional payment and performance of all of the Borrower Obligations,
the Borrower hereby pledges (and in the case of all Pledged Collateral other
than the Loan Assets), hypothecates, assigns, transfers, sets over and delivers
to the Program Agent for the benefit of the Secured Parties and grants to the
Program Agent for the benefit of the Secured Parties a continuing Lien upon and
security interest in, all of the Borrower's right, title and interest in, to and
under the following assets and properties, whether now owned or existing or
hereafter arising or acquired and wheresoever located (the items specified in
clauses (i) through (viii) below, collectively, the "Pledged Collateral"):
(i) all of the Cash, Assets, investments and property from time
to time credited to the Collateral Account, and all security entitlements
with respect to the Collateral Account and all Loan Assets of the Borrower
evidenced by, secured by, or governed by any Loan Document;
(ii) the Collateral Account (together with all other accounts in
which the distributions referred to in clause (iii) below are remitted);
(iii) all interest, dividends, stock dividends, stock splits,
distributions and other money or property of any kind distributed in
respect of the assets, investments, property and security entitlements
described in clause (i) above, including without limitation the principal
payments in respect of such Loan Assets;
(iv) all rights and remedies of the Borrower under the Loan
Documents and the Custodial Agreement in respect of the assets,
investments, property and security entitlements described in clause (i)
above;
(v) all security interests, liens, collateral, property,
guaranties, supporting obligations, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of the assets, investments, property and security entitlements
described in clause (i) above;
(vi) all accounts, contract rights, documents, instruments,
securities, investment property, chattel paper, general intangibles
(including payment intangibles), inventory, goods, equipment and all other
property of every kind and nature, now owned or hereafter acquired in
respect of the assets, investments, property and security entitlements
described in clause (i) above);
46
(vii) all books, records and other information (including,
without limitation, computer programs, tapes, discs, punch cards, data
processing software and related property and rights) relating to the
assets, investments, property and security entitlements described in clause
(i) above; and
(viii) all Proceeds of any and all of the foregoing.
Notwithstanding the foregoing provisions of this Section 7.01, the
Pledged Collateral shall not include Modified Margin Stock.
SECTION 7.02. Substitution of Collateral and Release of Security
Interest.
(a) Subject to Section 5.02(p), so long as no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence of
such sale, disposition or substitution and the Borrowing Base Test will be
satisfied immediately following such sale, disposition or substitution, the
Borrower may originate entitlement orders with respect to the Collateral Account
and may sell or dispose of or substitute Pledged Collateral in accordance with
the terms of this Agreement and the Control Agreement.
(b) On the Program Termination Date the Lien granted under this
Agreement shall be automatically terminated and released and the Program Agent
at the written request of the Borrower shall execute, deliver and file such
instruments as the Borrower shall reasonably request in order to reassign,
release or terminate its security interest in the Pledged Collateral. Any and
all actions under this Section 7.02 shall be without any recourse to, or
representation or warranty by, the Program Agent or any Secured Party and shall
be at the sole cost and expense of the Borrower.
SECTION 7.03. Application of Proceeds.
(a) After the occurrence and during the continuance of an Event of
Default, all amounts remitted to the Program Agent's Account in respect of the
Borrower Obligations, including without limitation all Proceeds resulting from
the sale or other disposition of the Pledged Collateral shall be applied by the
Program Agent in the following order and priority:
First, to the payment of all amounts advanced or expended by the
Program Agent and all costs and expenses incurred by the Program Agent in
connection with the enforcement of the Secured Parties' rights and remedies
under the Program Documents;
Second, to the extent funds are remaining after the above application,
to the Lenders and the Secondary Lenders to the payment of all accrued and
unpaid Yield on all outstanding Advances on a pro-rata basis according to the
amount of accrued Yield owing to each Lender and each Secondary Lender;
Third, to the extent funds are remaining after the above applications,
to the Secured Parties to the payment of all fees payable under the Fee Letter
on a pro rata basis according to the amount of such fees owing to each such
Secured Party;
47
Fourth, to the extent funds are remaining after the above applications,
to the Lenders and the Secondary Lenders to the payment of the principal amount
of each outstanding Advance on a pro-rata basis according to the amount of
principal owing to each Lender and each Secondary Lender;
Fifth, to the extent funds are remaining after the above applications,
to the Secured Parties to the payment of all other amounts payable to the
Secured Parties pursuant to this Agreement and the other Program Documents on a
pro rata basis according to the amounts owed to each such Secured Party.
The Program Agent shall, once the Program Termination Date has
occurred, remit the remaining excess Proceeds which it had received from the
sale or disposition of the Pledged Collateral to the Borrower's Account.
(b) For purposes of determining the application to be made of such
monies and other cash proceeds by the Program Agent to other Secured Parties
pursuant to this Section 7.03, the Program Agent may rely exclusively upon a
certificate or other statement of such Secured Party setting forth in reasonable
detail the amount then owing to such Secured Party. The Program Agent shall not
be liable for any application of funds in accordance with any certificate or
direction delivered pursuant to this Section 7.03; provided, however, that no
application of funds in accordance with any certificate delivered pursuant to
this Section 7.03 shall be deemed to restrict or limit the right of any party to
contest with the purported obligee its respective liability in respect of the
amount set forth in such certificate.
SECTION 7.04. Rights and Remedies upon Event of Default.
(a) The Program Agent (for itself and on behalf of the other Secured
Parties) shall have all of the rights and remedies of a secured party under the
UCC and other Applicable Law. Upon the occurrence and during the continuance of
an Event of Default, the Program Agent or its designees may (i) deliver a Notice
of Exclusive Control to the Custodian; (ii) instruct the Custodian to deliver
any or all of the Pledged Collateral and any Loan Documents relating to the
Pledged Collateral to the Program Agent or its designees and otherwise give all
instructions and entitlement orders to the Custodian regarding the Pledged
Collateral; (iii) sell or otherwise dispose of the Pledged Collateral, all
without judicial process or proceedings; (iv) take control of the Proceeds of
any such Pledged Collateral; (v) subject to the provisions of the applicable
Loan Documents, exercise any consensual or voting rights in respect of the
Pledged Collateral; (vi) release, make extensions, discharges, exchanges or
substitutions for, or surrender all or any part of the Pledged Collateral; (vii)
enforce the Borrower's rights and remedies under the Custodial Agreement with
respect to the Pledged Collateral; (viii) institute and prosecute legal and
equitable proceedings to enforce collection of, or realize upon, any of the
Pledged Collateral; (ix) require that the Borrower and the Custodian promptly
take action to liquidate the Pledged Collateral to pay amounts due and payable
in respect of the Borrower Obligations; (x) remove from the Borrower's, the
Adviser's and their respective agents' place of business all books, records and
documents relating to the Pledged Collateral unless copies thereof shall have
been provided to the Program Agent which copies of such books and records shall
thereafter be deemed to be originals thereof; and/or (xi) notify all Selling
Institutions, Transaction Agents and Obligors related to the Loan Assets which
constitute Pledged Collateral
48
to make payments in respect thereof directly to the Program Agent's Account;
(xii) at the request of the Program Agent execute all documents and agreements
which are necessary or appropriate to have the Pledged Collateral which
constitutes Loan Assets to be assigned to the Program Agent or its designee; and
(xiii) endorse the name of the Borrower upon any items of payment relating to
the Pledged Collateral or upon any proof of claim in bankruptcy against an
account debtor. For purposes of taking the actions described in Subsections (i)
through (xiii) of this Section 7.04(a) the Borrower hereby irrevocably appoints
the Program Agent as its attorney-in-fact (which appointment being coupled with
an interest is irrevocable while any of the Borrower Obligations remain unpaid),
with power of substitution, in the name of the Program Agent or in the name of
the Borrower or otherwise, for the use and benefit of the Program Agent, but at
the cost and expense of the Borrower and with notice to the Borrower.
(b) All sums paid or advanced by the Program Agent in connection with
the foregoing and all reasonable out-of-pocket costs and expenses (including,
without limitation, reasonable outside attorneys' fees and expenses) incurred in
connection therewith, together with interest thereon at the Post-Default Rate
from the date of payment until repaid in full, shall be paid by the Borrower to
the Program Agent on demand and shall constitute and become a part of the
Borrower Obligations secured hereby.
SECTION 7.05. Remedies Cumulative.
Each right, power, and remedy of the Program Agent and the other
Secured Parties, or any of them, as provided for in this Agreement or in the
other Program Documents or now or hereafter existing at law or in equity or by
statute or otherwise shall be cumulative and concurrent and shall be in addition
to every other right, power, or remedy provided for in this Agreement or in the
other Program Documents or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of the exercise by the
Program Agent or any other Secured Party of any one or more of such rights,
powers, or remedies shall not preclude the simultaneous or later exercise by
such Persons of any or all such other rights, powers, or remedies.
Section 7.06. Enforcement of Remedies under the Custodial Agreement and
Loan Documents.
(a) The Borrower agrees that it shall, (i) during the continuance of a
Default or an Event of Default, upon the request of the Program Agent (and at
the Borrower's own expense) diligently enforce the rights and remedies under the
Custodial Agreement and at law or equity against the Custodian for any material
breach by the Custodian of any term, covenant or agreement thereunder relating
to or affecting any Pledged Collateral, and (ii) diligently enforce its rights
and remedies under the Loan Documents relating to the Pledged Collateral. The
Borrower, shall at all times enforce its rights and remedies under the Custodial
Agreement and the Loan Documents with the same degree of care and diligence that
it would exercise if this Agreement had not been entered into; provided, that,
during the continuance of a Default or an Event of Default, the Borrower shall
not, in enforcing such rights and remedies, settle any claim against the
Custodian without the prior written consent of the Program Agent (which consent
shall not be unreasonably withheld or delayed).
49
(b) The Borrower agrees that to the extent not expressly prohibited by
the terms of the related Loan Documents, after the occurrence and during the
continuance of an Event of Default, it shall (i) upon the written request of the
Program Agent promptly forward to the Program Agent all information and notices
which it receives under or in connection with the Loan Documents relating to the
Pledged Collateral, and (ii) act and refrain from acting, in respect of any
request, act, decision or vote under the Loan Documents relating to the Pledged
Collateral only in accordance with the direction of the Program Agent.
ARTICLE VIII
THE PROGRAM AGENT
SECTION 8.01. Authorization and Action.
Each of the Secured Parties hereby irrevocably appoints and authorizes
the Program Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Program Documents as are
delegated to the Program Agent by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. The Program Agent shall not
have any duties or responsibilities, except those expressly set forth herein or
in the other Program Documents, or any fiduciary relationship with any Secured
Party, and no implied covenants, functions, responsibilities, duties or
obligations or liabilities on the part of the Program Agent shall be read into
this Agreement or any other Program Document or otherwise exist for the Program
Agent. As to any matters not expressly provided for by this Agreement or the
other Program Documents, the Program Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Banks; provided, however, that the Program
Agent shall not be required to take any action which exposes the Program Agent
to personal liability or which is contrary to this Agreement, the other Program
Documents or Applicable Law. Each Secured Party agrees that in any instance in
which the Program Documents provide that the Program Agent's consent may not be
unreasonably withheld, provide for the exercise of the Program Agent's
reasonable discretion, or provide to a similar effect, it shall not in its
instructions to the Program Agent withhold its consent or exercise its
discretion in an unreasonable manner.
SECTION 8.02. Delegation of Duties.
The Program Agent may execute any of its duties under this Agreement
and each other Program Document by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Program Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
SECTION 8.03. Program Agent's Reliance, Etc.
Neither the Program Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement or any of the other Program
Documents, except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Program
50
Agent: (i) may consult with legal counsel (including counsel for the Borrower or
the Adviser) and independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (ii) makes no warranty or representation to any Secured Party or any
other Person and shall not be responsible to any Secured Party or any Person for
any statements, warranties or representations (whether written or oral) made in
or in connection with this Agreement or the other Program Documents; (iii) shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of this Agreement, the other
Program Documents or any Loan Documents on the part of the Borrower, the
Adviser, the Custodian or any other Person or to inspect the property (including
the books and records) of the Borrower or the Adviser; (iv) shall not be
responsible to any Secured Party or any other Person for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, the other Program Documents, any Loan Document or any other
instrument or document furnished pursuant hereto or thereto; and (v) shall incur
no liability under or in respect of this Agreement or any other Program Document
by acting upon any notice, consent, certificate or other instrument or writing
(which may be delivered by telecopier, telegram, cable or telex) believed by it
to be genuine and signed or sent by the proper party or parties.
SECTION 8.04. Indemnification.
Each of the Secondary Lenders agrees to indemnify and hold the Program
Agent harmless (to the extent not reimbursed by or on behalf of the Borrower)
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Program Agent in any way relating to or arising out of this
Agreement or any other Program Document or any action taken or omitted by the
Program Agent under this Agreement or any other Program Document; provided, that
no Secondary Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Program Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each of the Secondary
Lenders agrees to reimburse the Program Agent promptly upon demand for any
out-of-pocket expenses (including reasonable counsel fees) incurred by the
Program Agent in connection with the administration or enforcement (whether
through negotiations, legal proceedings or otherwise) or legal advice in respect
of rights or responsibilities under this Agreement or the other Program
Documents, to the extent that the Program Agent is not reimbursed for such
expenses by or on behalf of the Borrower. Each Secondary Lender shall be
obligated to pay its Proportionate Share of all amounts payable to the Program
Agent under this Section 8.04. As used in this Section 8.04, the term
"Proportionate Share" in respect of any Secondary Lender means the fraction,
expressed as a percentage, the numerator of which is the Secondary Lender
Commitment of such Secondary Lender and the denominator of which is the Total
Commitment.
SECTION 8.05. Successor Program Agent.
The Program Agent may, upon thirty (30) days' notice to the Borrower,
the Conduit Lender and the Secondary Lenders, resign as Program Agent. If the
Program Agent
51
shall resign, then the Majority Banks during such thirty (30) day period shall
appoint from among the Secondary Lenders a successor program agent. If for any
reason a successor program agent is not so appointed and does not accept such
appointment during such thirty (30) day period, the Program Agent may appoint a
successor program agent. Any resignation of the Program Agent shall be effective
upon the appointment of a successor program agent pursuant to this Section 8.05
and the acceptance of such appointment by such successor. After the
effectiveness of any retiring Program Agent's resignation hereunder as Program
Agent, the retiring Program Agent shall be discharged from its duties and
obligations hereunder and under the other Program Documents and the provisions
of this Article VIII and Section 9.04 shall continue in effect for its benefit
with respect to any actions taken or omitted to be taken by it while it was
Program Agent under this Agreement and under the other Program Documents.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. No Waiver; Modifications in Writing.
No failure or delay on the part of any Secured Party in exercising any
right, power or remedy hereunder or with respect to the Advances shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to any
Secured Party, at law or in equity. No amendment, modification, supplement,
termination or waiver of this Agreement shall be effective unless the same shall
be in writing and signed by each of the Borrower, the Conduit Lender and the
Program Agent. Any waiver of any provision of this Agreement, and any consent to
any departure by the Borrower from the terms of any provision of this Agreement,
shall be effective only in the specific instance and for the specific purpose
for which given. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances. Notwithstanding the foregoing, in no event shall the
Secondary Lender Commitment of any Secondary Lender be extended or increased
without the written consent of such Secondary Lender.
SECTION 9.02. Notices, Etc.
Except where telephonic instructions are authorized herein to be given,
all notices, demands, instructions and other communications required or
permitted to be given to or made upon any party hereto shall be in writing and
shall be personally delivered or sent by registered, certified or express mail,
postage prepaid, or by prepaid telegram (with messenger delivery specified in
the case of a telegram), or by facsimile transmission, or by prepaid courier
service, and shall be deemed to be given for purposes of this Agreement on the
day that such writing is received by the intended recipient thereof. Unless
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 9.02, notices, demands, instructions and
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses (or to their respective facsimile
numbers) indicated below, and, in the case of telephonic instructions or
notices, by calling the telephone number or numbers indicated for such party
below:
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If to the
Conduit Lender: Falcon Asset Securitization Corporation
▇/▇ ▇▇▇▇ ▇▇▇, ▇▇ (▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
▇▇▇▇▇ ▇▇▇-▇▇▇▇, 1-19
1 Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Portfolio Management
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Bank One, as
Program Agent or
Secondary Lender: Bank One, NA (Main Office Chicago)
Suite IL1-0079, 1-19
1 Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Portfolio Management
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Danske
Bank A/S: Danske Bank A/S
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Vice President
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to State Street
Bank and Trust
Company: State Street Bank and Trust Company
Mutual Fund Lending, LCC2N
IS Risk Management and Credit Services
▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.:(▇▇▇) ▇▇▇-▇▇▇▇
53
If to the Borrower: ▇▇▇ ▇▇▇▇▇▇ Senior Loan Fund
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Senior Loan Group
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.03. Taxes.
(a) Any and all payments owed to any Secured Party, Affected Person or
Indemnified Party by the Borrower under this Agreement or any other Program
Document (other than any Loan Document) to which it is a party shall be made, in
accordance with this Agreement, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of the Secured Parties, (i) United States federal withholding taxes and (ii)
income, profits and franchise taxes imposed on it by any taxing Authority in any
jurisdiction which asserts jurisdiction to impose such taxes on the basis of
contacts which the Secured Party in question maintains with such jurisdiction
other than contacts arising solely out of the execution, delivery or performance
of the Program Documents or the transactions contemplated thereby (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any other Program Document (other than any Loan Document) to
which it is a party to any Secured Party, (i) the sum payable shall be increased
as may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 9.03) such
Secured Party receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with Applicable Law.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made by the Borrower to any Secured Party,
any Affected Person or any Indemnified Party hereunder or under any other
Program Document (other than any Loan Document) to which the Borrower is a party
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or under any other Program Document (other than any Loan
Document) to which it is a party (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each of the Secured Parties for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
9.03) paid by any Secured Party in respect of the Borrower and any liability
(including penalties, interest and expenses) (other than such as are the result
of such Person's action or failure to take action) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within thirty (30) days
from the date the Secured Party makes written demand therefor to the Borrower.
54
(d) Within thirty (30) days after the date of receiving a receipt for
any payment of Taxes or Other Taxes, the Borrower will furnish to the Program
Agent the original or a copy of a receipt evidencing payment thereof.
(e) With respect to an assignment or appointment of a successor program
agent, the assignee or successor program agent (including such that is already a
party to this Agreement) shall not be entitled to increased amounts or Other
Taxes pursuant to this Section 9.03 in excess of the amount to which its
transferor or predecessor, as the case may be, was entitled.
(f) To the extent legally entitled to do so, each Secured Party and
participant shall provide to the Borrower and Program Agent (as applicable) such
forms or other certifications at such time(s) and in such manner(s) as will
permit payments to be made under this Agreement without deduction for, or at a
reduced rate of, withholding taxes.
(g) If any Secured Party determines, in its sole discretion, that it
has actually received or realized any refund or tax, any reduction of, or credit
against, its tax liabilities or otherwise recovered any amount that would not
have been received, realized or recovered but for any deduction or withholding,
or payment of any additional amount, by the Borrower pursuant to this Section
9.03 or Section 2.07, then so long as no Default or Event of Default shall have
occurred and be continuing, such Secured Party shall reimburse the Borrower an
amount that the Secured Party shall, in its sole discretion, determine is equal
to the net benefit after tax, and net of all expenses incurred by the Secured
Party in connection with its receipt or realization of such refund, reduction,
credit or recovery; provided, that nothing in this paragraph (g) shall require
any Secured Party to make available its tax returns (or any other information
relating to its taxes which it deems to be confidential). The Borrower shall
return such amount to the applicable Secured Party in the event that the Secured
Party is subsequently required to repay such refund of tax or is not entitled to
such reduction of, or credit against, its tax liabilities.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreement and obligations of the Borrower contained in
this Section 9.03 shall survive the termination of this Agreement and the
payment in full of principal and Yield hereunder until the expiration of all
applicable statutes of limitation.
SECTION 9.04. Costs and Expenses; Indemnification.
(a) The Borrower agrees to promptly pay on written demand all
reasonable costs and expenses (excluding any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, in each case, now or hereafter imposed, levied, collected,
withheld or assessed) of each of the Secured Parties, in connection with the
preparation, review, negotiation, reproduction, execution, delivery,
modification, amendment and enforcement of this Agreement and the other Program
Documents to which the Borrower is a party, including, without limitation, the
reasonable fees and disbursements of counsel for the Secured Parties with
respect thereto and with respect to advising the Secured Parties, as to its
rights, remedies and responsibilities under this Agreement and the other Program
Documents to which the Borrower is a party, UCC filing fees, periodic auditing
expenses
55
incurred in connection with clauses (h) and (i) of Section 5.01 and all other
related fees and expenses.
(b) The Borrower agrees to indemnify and hold harmless each Secured
Party and each of their Affiliates and the respective officers, directors,
employees, agents, managers of, and any Person controlling any of, the foregoing
(each, an "Indemnified Party") from and against any and all claims, damages,
losses, liabilities, obligations, expenses, penalties, actions, suits, judgments
and disbursements of any kind or nature whatsoever, (including, without
limitation, the reasonable fees and disbursements of counsel), but excluding in
all cases any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, in each case,
now or hereafter imposed levied, collected, withheld or assessed (collectively
the "Liabilities") that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of the execution, delivery, enforcement, performance, administration of
or otherwise arising out of or incurred in connection with this Agreement, any
Loan Document or any other Program Document to which the Borrower is a party or
any transaction contemplated hereby or thereby (and regardless of whether or not
any such transactions are consummated), including, without limitation any such
Liability that is incurred or arises out of or in connection with, or by reason
of any one or more of the following: (i) preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with this Agreement or any other Program Document to which the
Borrower is a party or any of the transactions contemplated hereby or thereby;
(ii) any breach or alleged breach of any covenant by the Borrower contained in
any Program Document to which the Borrower is a party; (iii) any representation
or warranty made or deemed made by the Borrower contained in any Program
Document to which the Borrower is a party or in any certificate, statement or
report delivered in connection therewith is, or is alleged to be, false or
misleading; (iv) any failure by the Borrower to comply with any Applicable Law
or contractual obligation binding upon it; (v) any failure to vest, or delay in
vesting, in the Secured Parties a first priority perfected (subject to the Lien
of the Custodian securing the Custodian's Overdraft Advances to the extent
permitted by Section 5.02(o) and other Permitted Liens) security interest in all
of the Pledged Collateral; (vi) any action or omission, not expressly authorized
by the Program Documents to which the Borrower is a party, by the Borrower which
has the effect of reducing or impairing the Pledged Collateral or the rights of
the Program Agent or the Secured Parties with respect thereto; (vii) any Default
or Event of Default relating to the Borrower; (viii) any claim that any Secured
Party has assumed any obligation or liability of the Borrower under any Loan
Document or otherwise; and (ix) any transactions related to the funding,
carrying or repayment of the outstanding principal amount of the Advances in
connection with the Program Documents to which the Borrower is a party; except
to the extent any such Liability is found in a final, non-appealable judgment by
a court of competent jurisdiction to have resulted from such Indemnified Party's
gross negligence, bad faith or willful misconduct.
(c) For the avoidance of doubt, neither the payment of any Liability by
the Borrower under Section 9.04(b) nor the terms of Section 9.04(b) shall be
deemed to limit any right or cause of action the Borrower may have against any
Indemnified Party or any other Person. Without prejudice to the survival of any
other agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 9.04 shall survive the termination of this
Agreement and the payment in full of principal and Yield on the Advances.
56
SECTION 9.05. Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same
agreement.
SECTION 9.06. Assignability.
(a) This Agreement and the Conduit Lender's rights and obligations
herein (including the outstanding Advances) shall be assignable by the Conduit
Lender to an Eligible Assignee; provided, that without the prior written consent
of the Borrower (which consent shall not be unreasonably withheld or delayed and
which consent shall, in any event not be required if an Event of Default shall
have occurred and be continuing) the Conduit Lender shall not assign its
obligations under this Agreement to any Person other than to a U.S. Affiliate of
the Program Agent which is a special purpose entity that issues commercial
paper. Each such assignor shall notify the Program Agent and the Borrower of any
such assignment. Each such assignor may, in connection with the assignment or
participation, disclose to the assignee or participant any information relating
to the Borrower, including the Pledged Collateral, furnished to such assignor by
or on behalf of the Borrower or by the Program Agent; provided that, prior to
any such disclosure, the assignee or participant agrees to preserve the
confidentiality of any confidential information relating to the Borrower
received by it from any of the foregoing entities. Notwithstanding the
foregoing, without the consent of the Borrower, the Conduit Lender may, pursuant
to the Asset Purchase Agreement or otherwise, sell, assign, transfer and convey
all or any portion of the Advances maintained by the Conduit Lender, together
with all rights hereunder and under the Program Documents in respect thereof, to
any bank or financial institution which is also a Secondary Lender.
(b) Each Secondary Lender may, with the consent of the Borrower (which
consent shall not be unreasonably withheld or delayed and which consent shall,
in any event, not be required if an Event of Default shall have occurred and be
continuing), assign to any Eligible Assignee or to any other Secondary Lender
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Secondary Lender Commitment and the
outstanding Advances or interests therein owned by it); provided, that the
Borrower's consent to any such assignment shall not be required if the assignee
is an existing Secondary Lender or a U.S. Affiliate of an existing Secondary
Lender. The parties to each such assignment shall execute and deliver to the
Program Agent an Assignment and Acceptance. Notwithstanding the foregoing, each
Secondary Lender may assign any of its rights (including, without limitation,
rights to payment of principal and Yield on the Advances) under this Agreement
to any Federal Reserve Bank without notice to or consent of the Borrower.
(c) The Program Agent may, with the consent of the Borrower (which
consent shall not be unreasonably withheld or delayed and which consent shall
not be required if an Event of Default has occurred and is continuing), assign
this Agreement and its rights and obligations hereunder; provided, that the
Borrower's consent to any such assignment shall not be required if the assignee
is a U.S. Affiliate of the Program Agent.
57
(d) Except for an assignment by operation of law to the extent
expressly permitted by Section 5.02(d), the Borrower may not assign its rights
or obligations hereunder or any interest herein without the prior written
consent of the Program Agent and the Secondary Lenders.
(e) The Borrower acknowledges and agrees that each Lender's (other than
the Conduit Lender) and each Secondary Lender's source of funds may derive in
part from its participants. Accordingly, references in Sections 2.06, 2.07,
2.08, 9.03 and 9.04 and the other terms and provisions of this Agreement and the
other Program Documents (other than the Loan Documents) to rates,
determinations, reserve and capital adequacy requirements, expenses, increased
costs, reduced receipts and the like as they pertain to the Lenders (other than
the Conduit Lender) and the Secondary Lenders shall be deemed also to include
those of each of its participants; provided, that no participant shall be
entitled to any amount under any such Sections or provisions, which is greater
than the amount the related Lender or Secondary Lender, as the case may be,
would have been entitled to under any such Sections or provisions if the
applicable participation had not occurred.
(f) The Program Agent shall maintain at its address specified in
Section 9.02 or such other address as the Program Agent shall designate in
writing to the Conduit Lender and Secondary Lenders, a copy of this Agreement
and each signature page hereto and each Assignment and Acceptance delivered to
and accepted by it and a register (the "Register") for the recordation of the
names and addresses of such Secondary Lenders, their Secondary Lender
Commitments, effective dates and Secondary Lender Stated Expiration Dates, and
the aggregate outstanding principal amount of the outstanding Advances made by
each such Secondary Lender under this Agreement. The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Program Agent and the Secondary Lenders may treat each Person
whose name is recorded in the Register as a Secondary Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Secondary Lender at any reasonable time and from time to
time upon reasonable prior notice.
SECTION 9.07. Governing Law.
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF
THE STATE OF ILLINOIS, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF SAID STATE.
SECTION 9.08. Severability of Provisions.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
58
SECTION 9.09. Confidentiality.
(a) The Borrower agrees that it shall (i) keep this Agreement, the
Control Agreement, the Fee Letter, the Letter Agreement, the proposal relating
to the structure of the facility contemplated by this Agreement, (the
"Facility"), any analyses, computer models, information or document prepared by
the Program Agent or any of its Affiliates in connection with the Facility, the
Program Agent's or any of its Affiliate's written reports to the Borrower, the
Adviser or any of their respective Affiliates and any related written
information (collectively, the "Product Information") confidential and to
disclose Product Information only to those of its officers, employees, agents,
accountants, regulators, financial advisors, trustees, directors, legal counsel
and other representatives (collectively, the "Borrower Representatives") who may
have a need to know or review such Product Information for the purpose of
assisting in the negotiation, evaluation, completion and administration of the
Facility; (ii) use the Product Information only in connection with the Facility
and not for any other purpose; and (iii) cause the Borrower Representatives to
comply with the provisions of this Section 9.09 and to be responsible for any
failure of any Borrower Representative to so comply. The Borrower shall not
disclose Product Information to any third-party for the purpose of enabling such
third-party to provide senior debt to the Borrower.
The provisions of this Section 9.09(a) shall not apply to any Product
Information that is a matter of general public knowledge or that has heretofore
been made available to the public by any Person other than the Borrower, the
Adviser, any of their respective Affiliates or any Borrower Representative or
that is required to be disclosed by applicable law or regulation or is requested
by any Authority with jurisdiction over the Borrower, the Adviser, any Borrower
Representative or any of their respective Affiliates, it being understood that
any such disclosure or filing shall not relieve the Borrower, the Adviser, any
of their respective Affiliates or any Borrower Representative of any of its
obligations under this Section 9.09(a). Each of the Borrower and the Adviser
agree that if any Product Information is required by applicable law or
regulation to be included by it in any filing with the SEC or any other
Authority it shall, in consultation with the Program Agent, use its reasonable
best efforts to "black-out" all information which is not necessary under
applicable law or regulation to be included in such filing which the Program
Agent deems is of a sensitive nature and in no event shall the Fee letter or the
Investor Report be disclosed in any such filing.
(b) Each of the Secured Parties agrees (i) to keep all non-public
information with respect to the Borrower and the Adviser and their respective
Affiliates which such Secured Party receives pursuant to the Program Documents
(collectively, the "Borrower Information") confidential and to disclose Borrower
Information only to those of its officers, employees, agents, accountants, legal
counsel and other representatives of the Secured Parties (collectively, the
"Secured Party Representatives"), to providers of program-wide credit
enhancement for the Conduit Lender, and to S&P, ▇▇▇▇▇'▇ or any other rating
agency that rates the promissory notes of the Conduit Lender which, in each
case, may have a need to know or review such Borrower Information for the
purpose of assisting in the negotiation, completion, administration and
evaluation of the Facility; (ii) to use the Borrower Information only in
connection with the Facility and not for any other purpose; and (iii) to cause
its related Secured Party Representatives to comply with the provisions of this
Section 9.09(b).
59
The provisions of this Section 9.09(b) shall not apply to any Borrower
Information that is a matter of general public knowledge or that has heretofore
been made available to the public by any Person other than any Secured Party or
any Secured Party Representative or that is required to be disclosed by
applicable law or regulation or is requested by any Authority with jurisdiction
over any Secured Party or Secured Party Representative or any of its Affiliates.
Notwithstanding the foregoing, the Borrower Information may be
disclosed by any Secured Party Representative to permitted assignees and
participants and potential assignees and participants in the Facility to the
extent such disclosure is made pursuant to a written agreement of
confidentiality substantially similar to this Section 9.09(b).
(c) Notwithstanding anything in this Section 9.09 to the contrary, the
parties hereto (and each of their respective employees, representatives or other
agents) may disclose to any and all Persons, without limitation of any kind, the
"tax treatment" and "tax structure" (in each case within the meaning of Treasury
Regulation Section 1.6011-4) of the Facility and all materials of any kind
(including opinions or other tax analyses) that are provided to it, relating to
such tax treatment and tax structure of the Facility, other than any information
for which non-disclosure is reasonably necessary in order to comply with
applicable securities laws.
SECTION 9.10. Merger.
The Program Documents (other than the Loan Documents) taken as a whole
incorporate the entire agreement between the parties thereto concerning the
subject matter thereof. The Program Documents (other than the Loan Documents)
supersede any prior agreements among the parties thereto relating to the subject
matter thereof.
SECTION 9.11. No Proceedings.
Each of the parties to this Agreement and each assignee of any Advance
or any interest therein and each entity which enters into a commitment to make
Advances to the Borrower hereunder hereby agrees that it will not institute
against the Conduit Lender any proceeding of the type referred to in Section
6.01(f) so long as any commercial paper or other senior indebtedness issued by
the Conduit Lender shall be outstanding or there shall not have elapsed one year
plus one day since the last day on which any such commercial paper or other
senior indebtedness shall have been outstanding. The obligations of the Conduit
Lender under and in connection with this Agreement and the other Program
Documents are solely the obligations of the Conduit Lender. It is expressly
agreed that no recourse shall be had for the payment of any amount owing by or
in respect of the Conduit Lender in respect of this Agreement or any other
Program Document or for any other obligation of, or claim against, the Conduit
Lender arising out of or based upon this Agreement or any other Program
Document, against any member, stockholder, employee, officer, manager, director,
organizer or incorporator of the Conduit Lender or against any member,
stockholder, employee, officer, manager, director, organizer or incorporator of
any such member, stockholder or manager.
60
SECTION 9.12. Survival of Representations and Warranties.
All representation and warranties made hereunder, in the other Program
Documents (other than the Loan Documents) and in any document, certificate or
statement delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery of this Agreement and the
making of the Advances hereunder.
SECTION 9.13. Loan Documents.
No obligation or liability of the Borrower is intended to be assumed by
the Program Agent or any other Secured Party under or as a result of this
Agreement or the other Program Documents, and the transactions contemplated
hereby and thereby, including, without limitation, under any Loan Document and,
to the maximum extent permitted under provisions of law, the Program Agent and
the other Secured Parties expressly disclaim any such assumption.
If an Event of Default under Section 6.01(f) in respect of the Borrower
shall have occurred and is continuing or the Program Agent shall have delivered
a Notice of Exclusive Control to the Custodian, and such notice has not been
revoked by the Program Agent, the Borrower will use its best efforts to obtain
and give all necessary consents under all Loan Documents relating to any Pledged
Collateral and execute and deliver all agreements and documents which are
necessary or appropriate in order to enable the Secured Parties to enforce their
rights and remedies hereunder and under the other Program Documents, including
without limitation, to permit the Pledged Collateral which constitutes Loan
Assets to be assigned to the Program Agent or its designees. In addition, the
Borrower shall pay all assignment fees which are required to be paid pursuant to
the Loan Documents relating to the Pledged Collateral in connection with the
foregoing. The Program Agent and the Secured Parties acknowledge that in order
to enforce certain of their remedies in respect of the Pledged Collateral which
constitutes Loan Assets after the occurrence and during the continuance of an
Event of Default, certain provisions of the related Loan Documents may need to
be complied with, including provisions requiring the consent of the related
Transaction Agent and/or Obligor.
The Program Agent agrees that if it would be prevented from reviewing
any Loan Document relating to an Eligible Loan Asset in connection with the
exercise of its rights under Section 5.01(i) or Section 7.04, as a result of any
confidentiality agreement entered into by the Borrower in respect thereof, and
if it's review of such Loan Documents would be permitted if it agrees to
maintain the confidentiality of such Loan Documents in accordance with the terms
of such confidentiality agreement (each such confidentiality agreement a
"Subject Confidentiality Agreement"), the Program Agent hereby agrees to abide
by the terms of such Subject Confidentiality Agreement in respect of such Loan
Documents.
SECTION 9.14. Submission to Jurisdiction; Waivers.
The Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement or the other Program Documents (other than
the Loan Documents) to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-
61
exclusive general jurisdiction of any United States Federal or Illinois State
court sitting in Chicago, Illinois, and the appellate courts of any of them;
(b) consents that any such action or proceeding may be brought in any
of such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 9.02 or at such other address as may be permitted
thereunder;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to ▇▇▇
in any other jurisdiction or court; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
SECTION 9.15. E-Mail Reports.
Subject to the following terms and conditions the Borrower may, unless
otherwise notified to the contrary by the Program Agent, transmit Investor
Reports to the Program Agent by electronic mail (each an "E-Mail Report"). Each
E-Mail Report shall be formatted as the Program Agent may reasonably designate
from time to time. Each E-Mail Report shall be sent to the Program Agent at an
electronic mail address designated by the Program Agent, and the executed
"summary sheet" for each E-Mail Report shall be transmitted via facsimile
transmission to the Program Agent at the facsimile numbers specified for the
Program Agent in Section 9.02.
SECTION 9.16. Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER PROGRAM DOCUMENT (OTHER THAN ANY LOAN DOCUMENT) TO WHICH
THE BORROWER IS A PARTY OR FOR ANY COUNTERCLAIM THEREIN OR RELATING THERETO.
SECTION 9.17. Several Obligations.
Except for the commitment of the Secondary Lenders to make Advances if
the Conduit Lender has declined to make an Advance to the extent expressly
required by Section 2.02, no Lender or Secondary Lender shall be responsible for
the failure of any other Lender or Secondary Lender to make any Advance or to
perform any obligation under this
62
Agreement or any other Program Document. The Program Agent shall not have any
liability to the Borrower, any Lender or any Secondary Lender for the
Borrower's, any Lender's or any Secondary Lender's, as the case may be,
performance of, or failure to perform, any of their respective obligations and
duties under this Agreement or any other Program Document.
SECTION 9.18. Limitation on Liability.
No claim may be made by the Borrower or any other Person against the
Program Agent, any Lender or any Secondary Lender or their respective
Affiliates, directors, officers, employees, attorneys or agents for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory or liability arising out of or related to the
transactions contemplated by this Agreement or any other Program Document, or
any act, omission or event occurring in connection therewith; and the Borrower
hereby waives, releases, and agrees not to ▇▇▇ upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
As provided for in Section 5.5 of the Amended and Restated Declaration
of Trust, made as of September 19, 1989 and subsequently amended, of the
Borrower (under which the Borrower is organized as a voluntary association with
transferable shares under the laws of the Commonwealth of Massachusetts), the
shareholders, trustees, officers, employees and other agents of the Borrower
shall not personally be bound by or liable for the matters set forth herein or
in any other Program Document, nor shall resort be had to their private property
for the satisfaction of any obligation or claim hereunder or under any other
Program Document.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
▇▇▇ ▇▇▇▇▇▇ SENIOR LOAN FUND,
as Borrower
By: /s/ ▇▇▇▇▇▇ TIFFEN
---------------------------
Name: ▇▇▇▇▇▇ Tiffen
Title: Vice President
FALCON ASSET SECURITIZATION CORPORATION,
as the Conduit Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Authorized Signer
BANK ONE, NA (MAIN OFFICE CHICAGO),
as Secondary Lender and Program Agent
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Director, Capital Markets
Secondary Lender Percentage: 66.666667%
Secondary Lender Commitment: $200,000,000
DANSKE BANK A/S,
as Secondary Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇ ▇▇▇▇ Nielse
Title: Vice President
Secondary Lender Percentage: 16.666667%
Secondary Lender Commitment: $50,000,000
STATE STREET BANK AND TRUST COMPANY,
as Secondary Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
Secondary Lender Percentage: 16.666667%
Secondary Lender Commitment: $50,000,000