EXHIBIT (K)(3)
================================================================================
REVOLVING CREDIT AND SECURITY AGREEMENT
among
▇▇▇ ▇▇▇▇▇▇ SENIOR LOAN FUND,
as Borrower
THE CONDUIT LENDERS PARTIES HERETO,
THE SECONDARY LENDERS PARTIES HERETO,
THE DIRECT LENDERS PARTY HERETO,
and
CITICORP NORTH AMERICA, INC.,
as Program Agent
Dated as of August 21, 2009
================================================================================
[Type VII-C]
TABLE OF CONTENTS
Page
-----
REVOLVING CREDIT AND SECURITY AGREEMENT
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definitions.................................................................................. 1
SECTION 1.02. Rules of Construction........................................................................ 28
SECTION 1.03. Computation of Time Periods.................................................................. 28
ARTICLE II
ADVANCES TO THE BORROWER
SECTION 2.01. Advance Facility............................................................................. 28
SECTION 2.02. Making of Advances........................................................................... 29
SECTION 2.03. Noteless Agreement; Evidence of Indebtedness................................................. 30
SECTION 2.04. Maturity of the Advances..................................................................... 31
SECTION 2.05. Prepayment of the Advances................................................................... 31
SECTION 2.06. Optional Conversions......................................................................... 33
SECTION 2.07. Yield. ...................................................................................... 33
SECTION 2.08. Increased Costs.............................................................................. 34
SECTION 2.09. Compensation................................................................................. 35
SECTION 2.10. Additional Yield on Eurodollar Rate Advances and Direct Lender Eurodollar Rate Advances...... 36
SECTION 2.11. Termination or Reduction of the Total Commitment............................................. 36
SECTION 2.12. Rescission or Return of Payment.............................................................. 36
SECTION 2.13. Fees Payable by Borrower..................................................................... 37
i
SECTION 2.14. Post Default Interest........................................................................ 37
SECTION 2.15. Payments..................................................................................... 37
SECTION 2.16. Ratable Payments............................................................................. 38
SECTION 2.17. Borrower's Obligations Absolute.............................................................. 38
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to the Effectiveness of this Agreement.................................. 39
SECTION 3.02. Conditions Precedent to All Advances......................................................... 40
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower............................................... 40
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Borrower........................................................ 44
SECTION 5.02. Negative Covenants of the Borrower........................................................... 49
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default............................................................................ 52
ARTICLE VII
PLEDGE OF PLEDGED COLLATERAL;
RIGHTS OF THE PROGRAM AGENT
SECTION 7.01. Security Interests........................................................................... 55
SECTION 7.02. Substitution of Collateral and Release of Security Interest.................................. 56
SECTION 7.03. Application of Proceeds...................................................................... 57
SECTION 7.04. Rights and Remedies upon Event of Default.................................................... 58
SECTION 7.05. Remedies Cumulative.......................................................................... 59
ii
SECTION 7.06. Enforcement Of Remedies Under the Custodial Agreement and the Loan Documents................. 59
ARTICLE VIII
THE PROGRAM AGENT
SECTION 8.01. Authorization and Action..................................................................... 59
SECTION 8.02. Delegation of Duties......................................................................... 60
SECTION 8.03. Program Agent's Reliance, Etc. .............................................................. 60
SECTION 8.04. Indemnification.............................................................................. 61
SECTION 8.05. Successor Program Agent...................................................................... 61
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. No Waiver; Modifications in Writing.......................................................... 62
SECTION 9.02. Notices, Etc. ............................................................................... 63
SECTION 9.03. Taxes........................................................................................ 65
SECTION 9.04. Costs and Expenses; Indemnification.......................................................... 67
SECTION 9.05. Execution in Counterparts.................................................................... 68
SECTION 9.06. Assignability................................................................................ 68
SECTION 9.07. Governing Law................................................................................ 70
SECTION 9.08. Severability of Provisions................................................................... 70
SECTION 9.09. Confidentiality.............................................................................. 70
SECTION 9.10. Merger....................................................................................... 72
SECTION 9.11. No Proceedings............................................................................... 72
SECTION 9.12. Survival of Representations and Warranties................................................... 73
SECTION 9.13. Loan Documents............................................................................... 73
SECTION 9.14. Submission to Jurisdiction; Waivers.......................................................... 74
iii
SECTION 9.15. E-Mail Reports............................................................................... 74
SECTION 9.16. Waiver of Jury Trial......................................................................... 75
SECTION 9.17. Several Obligations.......................................................................... 75
SECTION 9.18. Limitation of Liability...................................................................... 75
SECTION 9.19. USA PATRIOT Act Notice....................................................................... 75
SCHEDULES
Schedule I Form of Investor Report
Schedule II Payment Accounts
Schedule III List of Advance Rates
Schedule IV Industry Classifications
EXHIBITS
EXHIBIT A Form of Advance Note
EXHIBIT B Form of Notice of Borrowing
EXHIBIT C Form of Assignment and Acceptance
EXHIBIT D Form of Direct Lender Assignment and Acceptance
EXHIBIT E Form of Notice of Conversion or Continuation
iv
REVOLVING CREDIT AND SECURITY AGREEMENT
REVOLVING CREDIT AND SECURITY AGREEMENT, dated as of August
21, 2009 among ▇▇▇▇▇▇, LLC, CITIBANK, N.A. and the other Secondary Lenders (as
hereinafter defined) from time to time parties hereto, STATE STREET BANK AND
TRUST COMPANY and the other Direct Lenders (as hereinafter defined) from time to
time parties hereto, CITICORP NORTH AMERICA, INC., 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 Lenders (as
hereinafter defined), the Direct Lenders 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 Lenders, the Direct Lenders 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:
The following terms are used herein as defined in the New York
UCC (if any term is defined in Article 9 of the New York UCC and in another
article of the New York UCC, the term as used herein shall be as defined in
Article 9 of the New York UCC): Account, Certificated Security, Chattel Paper,
Deposit Account, Document, Financial Asset, General Intangible, Goods,
Instrument, Investment Property, Letter-of-Credit Right, Money, Security
Entitlement, and Uncertificated Security.
"Accounting Based Consolidation Event" means the
consolidation, for financial and/or regulatory accounting purposes, of all or
any portion of the assets and liabilities of a Conduit Lender that are the
subject of this Agreement, the Asset Purchase Agreements or any other Program
Document with all or any portion of the assets and liabilities of Citibank or
the Program Agent or any of their affiliates as the result of the existence of,
or occurrence of any change in, accounting standards or the issuance of any
pronouncement, interpretation (including any change in interpretation by
independent accountants or regulators with direct application to
financial statements of regulatory financial reports of Citibank or the Program
Agent or any of their Affiliates) or release, by any accounting body or any
other body charged with the promulgation or administration of accounting
standards, including, without limitation, the Financial Accounting Standards
Board, the International Accounting Standards Board, the American Institute of
Certified Public Accountants, the Federal Reserve Board of Governors and the
Securities and Exchange Commission, and shall occur as of the date that such
consolidation (i) shall have occurred with respect to the financial statements
of Citibank or the Program Agent or any of their affiliates or (ii) shall have
been required to have occurred, regardless of whether such financial statements
were prepared as of such date.
"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 a Conduit Lender, a Direct
Lender or a Secondary Lender to the Borrower on a Borrowing Date pursuant to
Article II; provided, that if any Conduit Lender assigns a portion of any
Advance made by it to a Lender pursuant to an Asset Purchase Agreement or
otherwise or any Secondary Lender or Direct Lender assigns a portion of any
outstanding Advance made by it pursuant to an Assignment and Acceptance or
Direct Lender Assignment and Acceptance and in accordance with and subject to
Section 9.06(b) or (c), as the case may be, the portion of such Advance retained
by such Conduit Lender, Direct 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 a Conduit Lender, a Direct 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 in respect of any Asset, the percentage
corresponding to such Asset or the ratings category for such Asset set forth on
Schedule III hereto.
"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 ▇▇▇ ▇▇▇▇▇▇ Asset Management (formerly ▇▇▇
▇▇▇▇▇▇ 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.
2
"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 Direct 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 a Conduit Lender, and any of their respective Affiliates,
including any assignee or participant of any Lender, Direct 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 any 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
such 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.
"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 sum of the
Applicable Margin plus 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, (i) with respect to the Eurodollar
Rate, 4.50% per annum, and (ii) with respect to the Alternate Base Rate, 4.50%
per annum; provided, however, that during the continuance of any Event of
Default the "Applicable Margin" shall mean with respect to the Eurodollar Rate,
6.00% per annum, and with respect to the Alternate Base Rate, 6.00% per annum.
"Approved Pricing Service" means, in respect of any Borrowing
Base Eligible Asset, any of the following pricing services: Bloomberg, Bridge
Information Services, Data Resources Inc., FT Interactive Data Services,
International Securities Market Association, Loan
3
Pricing Corp., Markit Partners, PricingDirect, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Securities Pricing
Service, ▇▇▇▇▇▇ Data Corp., Reuters, Standard & Poor's Securities Evaluations or
Telerate.
"Asset Coverage Determination Date" shall have the meaning
assigned to such term in Section 2.05(c).
"Asset Coverage Test" means, as of any Business Day, the
Borrower's "senior securities representing indebtedness" (as defined in Section
18(g) of the Investment Company Act) have "asset coverage" (as defined in
Section 18(h) of the Investment Company Act) of at least 300% (computed on such
Business Day regardless of whether or not dividends or distributions are being
made on such Business Day, or whether Debt is being incurred on such Business
Day).
"Asset Purchase Agreement" means the Asset Purchase Agreement
entered into by a Secondary Lender (other than Citibank) concurrently with the
Assignment and Acceptance pursuant to which it became party to this Agreement.
"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,
(I) in connection with a determination of Asset Value solely for purposes of
calculating the Borrowing Base, the lower of (i) the price provided by an
Approved Pricing Service or if no such price has been so provided, the lower of
the prices provided by two independent recognized pricing sources selected by
the Adviser (one of which must be in writing), and (y) 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, and (II) in connection with a determination of Asset
Value for any other purpose, the lower of (x) the price provided by an Approved
Pricing Service or if no such price has been so provided or if on such day the
Adviser reasonably determines that the price provided by an Approved Pricing
Service does not accurately reflect the actual market price of such Asset on
such day of determination, the mid-point price provided by an independent
recognized pricing source selected by the Adviser which the Adviser in good
faith believes to be the most accurate representation of the actual market price
of such Asset on such day, and (y) 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 the Asset Value of any Borrowing Base Eligible Asset
shall be zero if the Value of such Asset is not determined as expressly set
forth above.
"Assignee Rate" means in respect of any Advance by a Secondary
Lender or acquired by a Lender (other than a Conduit Lender) for any Settlement
Period an interest rate per
4
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 a Conduit Lender) or the
applicable Secondary Lender shall have notified the Program Agent that
the introduction of or any change in or in the interpretation of any
law or regulation makes it unlawful, or any central bank or other
governmental authority asserts that it is unlawful, for such Lender or
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 do not receive notice, by no later than 12:00 noon (New York City
time) on the third Business Day preceding the first day of such
Settlement Period, that such Advance will not be funded by a Conduit
Lender, or
(iv) any Settlement Period for which the aggregate
principal amount of all outstanding Advances is less than $1,000,000,
solely with respect to the affected Lender's or Secondary Lender's pro rata
share of such Advances in the case of clause (i) above, but with respect to the
aggregate principal amount of such Advance in the case of clauses (ii) through
(iv) above, 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 Financial Industry Regulatory Authority (successor to
the National Association of Securities Dealers, Inc.), 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.
"Base Rate" means (i) in respect of any Advance other than any
Advance made by a Direct Lender or any Borrower Obligation other than any
Borrower Obligation owed to a Direct Lender, the rate of interest from time to
time announced publicly by Citibank at its Principal Office as its base rate,
and (ii) in respect of any Advance made by a Direct Lender or
5
any Borrower Obligation owed to a Direct Lender, the rate of interest from time
to time announced publicly by State Street at its Principal Office as its base
rate. The Base Rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer of Citibank or the
applicable Direct Lender, as the case may be.
"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.
"Bloomberg Page BBAM" means the display designated as page
"BBAM" on the screens maintained by Bloomberg, L.P. (or on any successor or
substitute page of Bloomberg, L.P., or any successor to or substitute for
Bloomberg, L.P., providing rate quotations comparable to those currently
provided on such page of Bloomberg, L.P., as determined by the applicable Direct
Lender from time to time for purposes of providing quotations of interest
rates).
"Borrower" shall have the meaning assigned to such term in the
introduction to this Agreement.
"Borrower Obligations" means all indebtedness, whether
absolute, fixed or contingent, at any time or from time to time owing by the
Borrower to any Secured Party under or in connection with this Agreement, the
Advance Notes, the Letter Agreement, the Control Agreement, the Fee Letters 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, 2.10, 2.12, 2.13, 2.14,
7.04(b), 9.03 and 9.04 of this Agreement.
"Borrower's Account" means the account of the Borrower
designated on Schedule II hereto, or such other account as the Borrower shall
from time to time designate in writing to other parties hereto.
"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 Determination Date" shall have the meaning
assigned to such term in Section 2.05(b).
"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,
Margin Stock, an Equity Security, a Non-OECD Loan Asset, a Citigroup Asset, a
Distressed Loan 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
6
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 three
percent (3%) 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 fifteen percent
(15%) 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 ten percent (10%) 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 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 five
percent (5%) 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
eighth (8th) anniversary of the Origination Date of such Loan
Assets, exceeds five percent (5%) 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
in respect of which the related Obligor is rated "B3" by
Moody's or "B-" by S&P, exceeds ten
7
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 is not rated by either
S&P or Moody's exceeds twenty-five percent (25%) 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 Business Day, 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.
"Business Day" means any day on which (i) banks are not
authorized or required to close in New York, New York 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 or a
Direct Lender 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.
"▇▇▇▇▇▇" means ▇▇▇▇▇▇, LLC, together with its successors and
assigns that constitute special purpose entities managed by Citicorp North
America, Inc. that issue commercial paper notes.
"Citibank" means Citibank, N.A. and its successors.
"Citigroup Asset" means an Asset for which Citigroup Inc. or
any Affiliate of Citigroup Inc. is the issuer or guarantor.
"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.
8
"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.
"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 a collective reference to account
number 69-780096, ABA Number ▇▇▇-▇▇▇-▇▇▇ and account number JL20, ABA Number
▇▇▇-▇▇▇-▇▇▇, each established at State Street Bank and Trust Company entitled
"Citicorp as Secured Party-▇▇▇ ▇▇▇▇▇▇ Senior Loan Fund".
"Compliance Certification Date" shall have the meaning
assigned to such term in Section 2.05(b).
"Conduit Lender" means ▇▇▇▇▇▇, together with its successors
and assigns.
"Conduit Lender Related Commitment" means the aggregate
outstanding principal amount of Advances which can be funded by the Conduit
Lender, which is $150,000,000 in the aggregate, as such amount may be reduced
pursuant to Section 2.11. References to the unused portion of the Conduit Lender
Related Commitment shall mean at any time the Conduit Lender Related Commitment
then in effect, minus the aggregate outstanding principal amount of the Advances
funded by the Conduit Lender or any Lender or Secondary Lender.
"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 a Conduit Lender funds such Advance on such day, the
per annum rate equivalent to the weighted average of the per annum rates paid or
payable by such Conduit Lender from time to time as interest on or otherwise (by
means of interest rate ▇▇▇▇▇▇ or otherwise) in respect of those commercial paper
notes issued by such Conduit Lender that are allocated, in whole or in part, by
the Program Agent (on behalf of such Conduit Lender ) to fund the making or
maintenance of such Advance on such day during such Settlement Period as
determined by the Program Agent (on behalf of such Conduit Lender) and reported
to the Borrower, which rates shall reflect and give effect to the commissions of
placement agents and dealers in respect of such commercial paper notes, to the
extent such commissions are allocated, in whole or in part, to such commercial
paper notes by the Program Agent on behalf of the Conduit Lender; 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; provided, further,
9
that for each day during the continuance of any Event of Default the "CP Rate"
shall mean the CP Rate as computed above plus 6.00% 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) all fees that would accrue
under the Fee Letters through the thirty (30) day period following such date of
computation, computed as if the outstanding principal amount of the Advances on
each day during such period was equal to the Total Commitment, plus (iv) the
Aggregate Custodian's Advance Amount, plus (v) the amount of any judgment or the
amount of any taxes that give rise to a Permitted Lien on any Assets of the
Borrower, of which a Responsible Officer or any employee or officer of the
Borrower or the Adviser which is responsible for or significantly involved in
the administration or monitoring of the transactions contemplated by this
Agreement has actual knowledge.
"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 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.
10
"Defaulting Lenders" means (i) any Secondary Lender that (a)
defaults in its obligation to make any Advance pursuant to Section 2.02, or (b)
in its capacity as a purchaser under the Asset Purchase Agreement, defaults in
its obligation to purchase any interest in any Advance under the Asset Purchase
Agreement, and (ii) any Direct Lender that defaults in its obligation to make
any Advance pursuant to Section 2.02.
"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).
"Direct Lender Alternate Base Rate" means in respect of any
Advance made by a Direct Lender for any Settlement Period (i) to the extent no
outstanding Advances are made by a Secondary Lender, 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; provided, that during
the continuance of an Event of Default, the Direct Lender Alternate Base Rate
shall be equal to the applicable Base Rate for such Advance plus 6.00%, and (ii)
to the extent there are any outstanding Advances made by a Secondary Lender, 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 sum of the Direct Lender
Applicable Margin plus the applicable Base Rate for such Advance.
"Direct Lender Alternate Base Rate Advance" means an Advance
by a Direct Lender, the Yield on which is computed with reference to the Direct
Lender Alternate Base Rate.
"Direct Lender Applicable Margin" means, (i) with respect to
the Direct Lender Rate, 4.50% per annum, and (ii) with respect to the Direct
Lender Alternate Base Rate, 4.50% per annum; provided, however, that during the
continuance of any Event of Default the "Direct Lender Applicable Margin" shall
mean with respect to the Direct Lender Rate, 6.00% per annum, and with respect
to the Direct Lender Alternate Base Rate, 6.00% per annum.
"Direct Lender Assignment and Acceptance" means the Direct
Lender Assignment and Acceptance, in substantially the form of Exhibit D hereto,
entered into by a Direct Lender, an Eligible Assignee, the Program Agent and, if
required by the terms of Section 9.06(c), the Borrower, pursuant to which such
Eligible Assignee may become a party to this Agreement.
"Direct Lender Commitment" means (i) in the aggregate, the
outstanding principal amount of Advances which a Direct Lender is committed to
fund under this Agreement, which is $150,000,000 in the aggregate, as such
amount may be reduced pursuant to Section 2.11, and (ii) with respect to (a)
each Direct Lender party to this Agreement on the Closing Date, the amount set
forth on the signature page to this Agreement in respect of such Direct Lender,
or (b) a Direct Lender that has become party to this Agreement pursuant to a
Direct Lender Assignment and Acceptance, the amount set forth therein as such
Direct Lender's "Direct Lender Commitment", in each case as such amount may be
adjusted by any assignments by or to such Direct Lender in accordance with and
subject to Section 9.06(c), and as may be
11
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 Direct Lender's Direct Lender
Commitment with respect to the reduction of the portion of the Total Commitment
attributed to the Direct Lender Commitment. References to the unused portion of
the Direct Lender Commitment shall mean at any time the Direct Lender Commitment
then in effect, minus the aggregate outstanding principal amount of the Advances
funded by any Direct Lender.
"Direct Lender Eurodollar Rate" means (i) in respect of any
Advance made by any Direct Lender for any Settlement Period of one week, one
month, two months or three months, an interest rate per annum determined by such
Direct Lender to be equal to the quotient (rounded upwards, if necessary, to the
next higher 1/100 of 1%) of (y) (i) the rate of interest for deposits in Dollars
for a period equal to the number of days in such Settlement Period which appears
on Bloomberg Page BBAM at approximately 9:30 A.M., London time, on the day that
is two (2) Business Days prior to the first day of such Settlement Period, or
(ii) if such rate does not appear on Bloomberg Page BBAM at such time, the rate
per annum at which deposits in Dollars are offered by such Direct Lender in
immediately available funds at its Eurodollar Lending Office in an amount
comparable to the principal amount of such Advance for a period equal to such
Settlement Period at approximately 10:00 A.M., New York City time, on the date
two (2) Business Days before the first day of such Settlement Period, divided by
(z) a number equal to 1.00 minus the Eurodollar Rate Reserve Percentage; and
(ii) in respect of any Advance made by any Direct Lender for any Settlement
Period of one day, a rate equal to the Overnight Rate.
"Direct Lender Eurodollar Rate Advance" means an Advance made
by any Direct Lender the Yield on which is computed with reference to the Direct
Lender Rate.
"Direct Lender Rate" means in respect of any Advance by a
Direct Lender for any Settlement Period (i) to the extent no outstanding
Advances are made by a Secondary Lender, an interest rate per annum equal to the
Direct Lender Eurodollar Rate for such Settlement Period; provided, that during
the continuance of an Event of Default, the Direct Lender Rate shall be equal to
the Direct Lender Eurodollar Rate for such Settlement Period plus 6.00%, and
(ii) to the extent there are outstanding Advances made by a Secondary Lender,
the sum of the Direct Lender Applicable Margin plus the Direct Lender Eurodollar
Rate for such Settlement Period.
"Direct Lender's Account" means in respect of any Direct
Lender, the account designated on Schedule II hereto, or such other account of
such Direct Lender as it shall from time to time designate in writing to other
parties hereto.
"Direct Lenders" means State Street and each Eligible Assignee
that becomes party to this Agreement pursuant to and in accordance with the
requirements of Section 9.06(c).
"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; provided,
12
however, that if such Loan Asset is past due as to the payment of principal or
interest or otherwise for a period of time equal to or greater than forty-five
(45) consecutive days, such Loan Asset shall be deemed to constitute a
Distressed Loan Asset regardless of whether or not the applicable grace period
in respect of such Loan Asset has expired, (iii) which is otherwise classified
by the Adviser or the Borrower as "non-performing", (iv) in respect of which the
related Obligor is rated "Caa1" 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 Citicorp North America, Inc.,
Citibank, State Street, any of their respective Affiliates, any Person managed
by State Street, Citibank, Citicorp North America, Inc. 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, which mature in five (5) years or less from the
date of issuance thereof.
"Eligible Loan Asset" as of any date of determination means a
Loan Asset:
(i) with respect to which the interest payable on the
principal amount thereof by the related Obligor is payable in cash;
(ii) in respect of which the Borrower's interest is not a
subparticipation;
(iii) which has a scheduled final maturity date no later than
the tenth (10th) anniversary after the related Origination Date;
(iv) which is part of a senior secured 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;
13
(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;
(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;
(xii) which does not constitute a Non-OECD Loan Asset;
(xiii) which is denominated and payable in Dollars; and
(xiv) which relates to Loan Documents in full force and effect
which are legal, valid and binding obligations of the parties
purported to be bound thereby, enforceable against such parties in
accordance with their respective terms.
"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.
14
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Group" means the Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414(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 or the Direct Lender Rate, as the case may be, 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 or the
Direct Lender Eurodollar Rate, as the case may be, for such Settlement Period
from (ii) the rate obtained by dividing such Eurodollar Rate or the Direct
Lender Eurodollar Rate, as the case may be, 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 a Conduit Lender) or
Secondary Lender or the Eurodollar Rate Reserve Percentage of the applicable
Direct Lender, as the case may be, for such Settlement Period.
"Eurodollar Rate" means, in respect of any Advance funded or
maintained by a Lender (other than a Conduit Lender) or a Secondary Lender for
any Settlement Period, an interest rate per annum equal to the rate per annum at
which deposits in Dollars are offered by the principal office of Citibank in
London, England to prime banks in the London interbank market at 11:00 A.M.
(London time) two (2) Business Days before the first day of such Settlement
Period in an amount substantially equal to the outstanding principal amount of
such Advance on such first day and for a period equal to such Settlement Period.
"Eurodollar Rate Advance" means an Advance made or maintained
by a Lender (other than a Conduit Lender) or a Secondary Lender 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 or Direct Lender 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 a Conduit Lender), Secondary Lender or Direct
Lender with respect to liabilities or assets consisting of or including
15
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.
"Facility" shall have the meaning assigned to such term in
Section 9.09.
"Federal Funds Rate" means, for any day, a fluctuating rate
per annum equal to the rate appearing on Bloomberg Page BBAM as of 9:30 a.m.
(Boston, Massachusetts time) as the "Federal Funds Ask Rate" or, if such page is
unavailable, on any successor or substitute page of such service, or any
successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such page of such service, as
determined by a Direct Lender from time to time for purposes of providing
quotations or, if such rate is not so published, an interest rate per annum
equal to the quotation received by such Direct Lender at approximately 9:30 a.m.
(Boston, Massachusetts time) on such date from a Federal funds broker of
recognized standing selected by such Direct Lender in its sole discretion on
overnight Federal funds transactions.
"Fee Letters" means collectively (i) 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, and
(ii) that certain letter agreement dated the date hereof between the Borrower
and the Direct Lender, 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).
"GAAP" means generally accepted accounting principles in the
United States, in effect from time to time.
16
"Governmental Authorizations" means all franchises, permits,
licenses, approvals, consents and other authorizations of all Authorities.
"Governmental Filings" means all filings, including franchise
and similar tax filings, and the payment of all fees, assessments, interests and
penalties associated with such filing with all Authorities.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Industry Class" shall mean, for purposes of computing the
Borrowing Base, each industry class as determined by applying, in separate
tests, the classification categories provided by Moody's, and to the extent
different, the industry classifications set forth on Schedule IV hereto, or, in
the event that Moody's or the industry classifications set forth on Schedule IV
do 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
17
policy, settlement agreement, statute, or writ, of any Authority, or any
particular section, part or provision thereof.
"Lenders" means the Conduit Lenders, together with all Persons
which acquire or are obligated to acquire any interest in any Advance from any
Conduit Lender under an Asset Purchase Agreement or in the case of Citibank,
under any similar arrangement.
"Lender Termination Date" means (i) the date which is the
earlier to occur of (i) one (1) Business Day prior to the Stated Expiration
Date, and (ii) the date on which the Total Commitment shall terminate pursuant
to Section 2.11 or Section 6.01.
"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 a Conduit Lender during which the principal
on such Advance is repaid by the Borrower in whole or in part 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
applicable Conduit Lender's investing the proceeds of such reductions of
principal.
"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 Lenders" means, as of any determination date, (i) if
the principal amount of any Advances are outstanding on such determination date,
the Lenders, Secondary Lenders and Direct Lenders with Advances the outstanding
principal amount of which exceeds fifty percent (50%) of the outstanding
principal amount of all Advances, and (ii) if on such determination date no
principal amount of any Advance is outstanding, (a) the Lenders, and (b) the
Secondary Lenders and the Direct Lenders with Secondary Lender Commitments or
18
Direct Lender Commitments, as the case may be, which exceeds fifty percent (50%)
of the Total Commitment; provided, that, the Direct Lender Commitments and
Commitments of any Defaulting Lender shall be excluded from the computation of
Majority Lenders; provided further, that if the Majority Lenders on such
determination date as determined by clause (i) or clause (ii) above, as
applicable, is a single entity (for such purpose treating Citibank and the
Conduit Lender (if the Conduit Lender is administered by Citibank) as a single
entity) (the "Controlling Lender"), then the term "Majority Lenders" shall be
deemed to mean such Controlling Lender and at least one other Direct Lender or
Secondary Lender which is not a Defaulting Lender.
"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" shall mean (i) with respect to any Advance
funded by a Lender, the Lender Termination Date (or if such day is not a
Business Day, the Business Day immediately preceding such date), and (ii) with
respect to any Advance made by a Secondary Lender or a Direct Lender, the
Termination Date (or if such day is not a Business Day, the Business Day
immediately preceding such date).
"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.
"NAV" means in respect of the Borrower, the net asset value of
the Borrower computed in the manner such net asset value is required to be
computed by the Borrower in accordance with the Investment Company Act and as
described in its Prospectus.
"New York UCC" means the UCC as in effect in the State of New
York.
"Non-Funding Notice" shall have the meaning assigned to such
term in Section 2.02(a).
19
"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.
"Overnight LIBOR Rate" means the rate per annum equal to the
BBA LIBOR, as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as designated by a Direct Lender from time to
time) at approximately 11:00 a.m., London time, on the date of determination of
the Overnight LIBOR Rate, for Dollar deposits (for delivery on such day) with a
term equivalent to one day.
"Overnight Rate" means, for any day, the higher of (i) the
Federal Funds Rate as in effect on such day, and (ii) the Overnight LIBOR Rate
as in effect on such day.
"Parent" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., together with its
successors.
"Permitted Debt" means in respect of any Asset of the Borrower
(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 entered into solely for the purpose of hedging high yield
credit, currency or interest rate risk, Derivatives Transactions for investment
purposes solely to the extent that the aggregate notional amount of such
Derivates Transactions entered into for investment purposes does not exceed ten
percent (10%) of the Borrower's NAV, or dollar rolls, in each case to the extent
such transactions are permitted under the Investment Company Act and
20
the Investment Policies and Restrictions, (v) obligations of the Borrower to
fund future 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 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 (v) Liens in respect of Debt
permitted under clauses (iii), (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.
21
"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 and
one half percent (2.50%).
"Principal Office" means (i) with respect to Citibank, the
principal office of Citibank presently located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ or at such other location as Citibank shall designate in writing to the
Borrower, or (ii) with respect to State Street, the principal office of State
Street presently located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇, ▇▇▇▇▇
▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ or at such other location as State Street shall
designate in writing to the Borrower.
"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 account of the Program
Agent designated on Schedule II hereto, or such other account as the Program
Agent shall from time to time designate in writing to the other parties hereto.
"Program Documents" means this Agreement, the Advance Notes,
the Letter Agreement, the Asset Purchase Agreements, the Control Agreement,
Advisory Agreement, the Custodial Agreement, the Fee Letters, the Loan Documents
and the other agreements, documents and instruments entered into or delivered in
connection herewith or therewith.
22
"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.
"Pro Rata Share" means as of any Borrowing Date (i) in respect
of the Lenders and the Secondary Lenders in the aggregate, a fraction expressed
as a percentage, the numerator of which is the Conduit Lender Related Commitment
as of such Borrowing Date and the denominator of which is the Total Commitment
as of such Borrowing Date, and (ii) in respect of the Direct Lenders, a fraction
expressed as a percentage, the numerator of which is the Direct Lender
Commitment of all Direct Lenders as of such Borrowing Date and the denominator
of which is the Total Commitment as of such Borrowing Date.
"Prospectus" means with respect to the Borrower the prospectus
dated December 19, 2008 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 and the
Direct Lenders 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
23
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 in respect of the Conduit
Lender Related Commitment, (a) with respect to each Secondary Lender party to
this Agreement as of the Closing Date, the amount set forth on the signature
page to this Agreement, or (b) with respect to a Secondary Lender that has
become party to this Agreement pursuant to 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 adjusted by any assignments by
or to such Secondary Lender 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 with respect to the reduction of the portion of the Total
Commitment attributed to the Conduit Lender Related Commitment.
"Secondary Lender Percentage" of any Secondary Lender means
(a) with respect to Citibank, the percentage set forth on the signature page to
this Agreement, as such percentage shall be adjusted by any assignments by or to
Citibank in accordance with and subject to Section 9.06(b), or (b) with respect
to a Secondary Lender that has become party to this Agreement pursuant to an
Assignment and Acceptance, the percentage set forth therein as such Secondary
Lender's Secondary Lender Percentage, as such percentage shall be adjusted by
any assignments by or to such Secondary Lender and an Eligible Assignee in
accordance with and subject to Section 9.06(b).
"Secondary Lenders" means Citibank 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, the Direct 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.
24
"Settlement Date" means the date which is five (5) Business
Days after the end of each Settlement Period; provided, that, for purposes of
the payment of Yield, (i) with respect to any Settlement Period for which Yield
is computed by reference to the Eurodollar Rate or the Direct Lender Rate, the
Settlement Date shall be the last day of the Settlement Period, and (ii) with
respect to any Settlement Period for which Yield in respect of such Advance is
computed by reference to the Direct Lender Rate and such Settlement Period is
one calendar week or less, the Settlement Date shall be the last Business Day of
the calendar month during which such Settlement Period ends.
"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 Assignee Rate,
the period beginning on the date such Advance was made and ending on the last
day of the calendar month in which such Advance was made and thereafter each
successive period commencing on the first day of each calendar month during the
term of this Agreement and ending on the last day of such calendar month during
the term of this Agreement; provided, however, that any Settlement Period which
is other than the monthly Settlement Period shall be of such duration as shall
be selected by the Program Agent;
(c) in the case of any Settlement Period in respect of which
Yield in respect of such Advance is computed by reference to the Direct Lender
Rate, the period beginning on the date such Advance was made by the applicable
Direct Lender or converted from a Direct Lender Alternate Base Rate Advance, and
ending, as selected by the Borrower, on (i) the immediately succeeding day, (ii)
the date which is one calendar week thereafter, or (iii) the same date in the
first, second or third calendar month thereafter, except that each such one
month, two month or three month Settlement Period which would end on a date
other than on the last Business Day of a calendar month (or for any Settlement
Period of one month, two months or three months which commences on a date for
which there is no numerically corresponding date in the appropriate subsequent
calendar month) shall end on the last Business Day of the appropriate subsequent
calendar month; and thereafter each such successive daily, weekly, one month,
two month or three month period, as the case may be, during the term of this
Agreement, subject to Section
25
2.06; provided, that each Settlement Period which would otherwise commence
before and end after the Termination Date shall end on the Termination Date;
(d) in the case of any Settlement Period in respect of which
Yield is computed by reference to the Alternate Base Rate or during the
continuance of a Default or Event of Default, the Direct Lender Alternate Base
Rate, such Settlement Period shall be of such duration as shall be selected by
the Program Agent; and
(e) except during the continuance of a Default or Event of
Default, in the case of any Settlement Period in respect of which Yield is
computed by reference to the Direct Lender Alternate Base Rate, such Settlement
Period shall be of such duration as shall be selected by the applicable Direct
Lender.
"Specified Loan Documents" shall have the meaning assigned to
such term in the Control Agreement.
"Stated Expiration Date" means August 19, 2010, 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 Stated Expiration Date, the Secondary Lenders and
Direct 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 Stated Expiration Date (the date any such consent is
given, the "Extension Date"), to the extension of the Stated Expiration Date to
the date occurring 364 days after such Extension Date; provided, however, that
any failure of any Direct Lender or Secondary Lender to respond to the
Borrower's request for such extension shall be deemed a denial of such request
by such Direct Lender or Secondary Lender.
"State Street" means State Street Bank and Trust Company, and
its successors.
"Taxes" shall have the meaning assigned to such term in
Section 9.03(a).
"Termination Date" means the earlier of (i) the Stated
Expiration Date, and (ii) the date the Total Commitment shall terminate pursuant
to Section 2.11 or Section 6.01.
"Total Commitment" means an amount equal to the sum of (i) the
Conduit Lender Related Commitment, and (ii) the aggregate Direct Lender
Commitments of all Direct Lenders, as such amount may be reduced pursuant to
Section 2.11. 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.
"UCC" means the Uniform Commercial Code, as from time to time
in effect in the applicable jurisdictions.
26
"Value" shall have the meaning assigned to such term in
Section 2(a)(41) of the Investment Company Act.
"Withdrawal Notice" shall have the meaning assigned to such
term in Section 2.02(a).
"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 a
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 a Conduit Lender),
AR x P
---------
360
(iii) for each day during such Settlement Period to the
extent such Advance will be funded or maintained on such day by a
Direct Lender,
DLR x P
---------
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);
DLR = the applicable Direct Lender Rate or Direct
Lender Alternate Base Rate, as the case
may be,for such Settlement Period;
27
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, each Conduit Lender may, in its sole
discretion, make an Advance to the Borrower on any Borrowing Date from the date
hereof to the Lender Termination Date in an amount equal to the Conduit Lender's
Pro Rata Share of the Requested Amount. On the terms and conditions hereinafter
set forth, including without limitation, Sections 3.01 and 3.02, each Direct
Lender shall make an Advance to the Borrower on any Borrowing Date from the date
hereof to the Lender Termination Date in an amount equal to its ratable share of
the Direct Lenders' Pro Rata Share of 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 a
Conduit Lender has declined to make an Advance, the
28
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 any Conduit Lender, any Secondary Lender or any
Direct Lender 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, (ii) the aggregate principal amount
of all outstanding Advances funded by any Secondary Lender would exceed such
Secondary Lender's Secondary Lender Commitment, (iii) the aggregate principal
amount of all outstanding Advances funded by the Conduit Lender and the
Secondary Lenders would exceed the Conduit Lender Related Commitment, or (iv)
the aggregate principal amount of all outstanding Advances funded by any Direct
Lender under this Agreement would exceed such Direct Lender's Direct Lender
Commitment.
SECTION 2.02. Making of Advances.
The Borrower shall give the Program Agent and the Direct
Lenders written notice (which notice shall be irrevocable (unless the Borrower
shall have delivered a Withdrawal Notice to the Program Agent and the Direct
Lenders in accordance with the provisions of this Section 2.02) and effective
only upon receipt by the Program Agent and the Direct Lenders) of each request
for Advances (each such request a "Notice of Borrowing") not later than 12:00
noon (New York City time) on the day which is two (2) Business Days prior to the
proposed borrowing date, which notice shall specify (i) the proposed borrowing
date therefor (each such date, a "Borrowing Date"), (ii) the aggregate principal
amount of the proposed borrowing (the "Requested Amount"), and (iii) with
respect to such Requested Amount which is to be made by a Direct Lender, whether
such Advance is a Direct Lender Eurodollar Rate Advance or a Direct Lender
Alternate Base Rate Advance, and if such Advance is a Direct Lender Eurodollar
Rate Advance, the Settlement Period requested by the Borrower thereof (which
shall be one day, one week, one month, two months or three months).
Notwithstanding anything to the contrary contained in this Agreement or any
Notice of Borrowing, if the Direct Lenders do not receive a Notice of Borrowing
with respect to a proposed Advance to be made by the Direct Lenders by 12:00
noon (New York City time) on the second Business Day preceding the Borrowing
Date of such proposed Advance to be made by the Direct Lenders, such Advance to
be made by the Direct Lenders shall be deemed to be a Direct Lender Alternate
Base Rate Advance. Any such Notice of Borrowing shall be substantially in the
form of Exhibit B hereto, dated the date such request is being made, signed by a
Responsible Officer of the Borrower and otherwise appropriately completed. The
Requested Amount specified in any Notice or Borrowing shall be at least
$2,000,000 and in integral multiples of $1,000,000 in excess thereof. The
Borrower shall not request more than two (2) borrowings in any calendar week.
During the period prior to the Lender Termination Date, each Conduit Lender
shall promptly notify the Program Agent whether it has determined to make an
Advance in the amount of the Conduit Lenders' Pro Rata Share of the Requested
Amount and the Program Agent shall promptly thereafter notify the Borrower
whether such Conduit Lender has determined to make such Advance. If prior to the
Lender Termination Date a Conduit Lender has declined to make such proposed
Advance, the Program Agent shall promptly send notice thereof (each such notice
a "Non-Funding Notice") to the Borrower no later than 5:00 p.m. (New York City
time) on the Business Day immediately
29
preceding the proposed Borrowing Date. Upon receipt of a Non-Funding Notice from
the Program Agent, the Borrower may withdraw its Notice of Borrowing to the
Program Agent and the Direct Lenders without incurring any cost, penalty,
expense or other liability (including under this Section 2.02 or Section 2.09 or
as a Liquidation Fee) provided that the Borrower shall have delivered to the
Program Agent and the Direct Lenders written notice withdrawing such Notice of
Borrowings (which notice shall be irrevocable and effective only upon receipt by
the applicable Agent, and each such withdrawal notice being a "Withdrawal
Notice") not later than 12:00 noon (New York City time) on such proposed
Borrowing Date. If a Conduit Lender has declined to make a proposed Advance and
the Borrower shall not have issued a Withdrawal Notice to the Program Agent and
the Direct Lenders in accordance with the provisions of the preceding sentence,
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 multiplied by the Conduit Lenders' Pro Rata Share of the Requested
Amount and whether the Yield for such Advance is calculated based on the
Eurodollar Rate or the Alternate Base Rate. On each Borrowing Date the Direct
Lenders and the Conduit Lenders or the Secondary Lenders shall, subject to the
terms and conditions of this Agreement, make available to the Borrower at the
Borrower's Account Advances in an amount equal to the Requested Amount in
immediately available funds. To the extent not covered by Section 2.09, the
Borrower shall indemnify each Conduit Lender, each Secondary Lender, each Direct
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.
SECTION 2.03. Noteless Agreement; Evidence of Indebtedness.
(a) Each Lender, each Secondary Lender and each Direct Lender
shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower to such Lender, such Secondary
Lender or such Direct Lender, as applicable, resulting from each Advance made by
the applicable Conduit Lender, such Secondary Lender or such Direct Lender, as
applicable, from time to time, including the amounts of principal and Yield
thereon and paid to such Lender, Secondary Lender or Direct 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 made hereunder by the Lenders and
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.
30
(c) Each Direct Lender shall maintain accounts in which it
will record (i) the amount of each Advance made hereunder by such Direct Lender
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 such
Direct Lender hereunder, and (iii) the amount of any sum received by such Direct
Lender hereunder from the Borrower and such Direct Lender's share thereof
(d) The entries maintained in the accounts maintained pursuant
to clauses (a), (b) and (c) 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, any Secondary Lender or any Direct 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.
(e) Any Conduit Lender, any Secondary Lender and any Direct
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 such Conduit Lender, Secondary Lender or Direct Lender, as
applicable, an Advance Note payable to the order of such Conduit Lender,
Secondary Lender or Direct 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, Direct 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), (b) and (c) of this Section
2.03. In connection with any assignment pursuant to Section 9.06, if such
assigning Secondary Lender or Direct Lender shall have an Advance Note issued to
it, such assigning Secondary Lender or Direct Lender shall promptly return its
Advance Note to the Borrower marked "cancelled".
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 and each Direct Lender 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 2.09) 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
$2,000,000 and in integral multiples of $100,000 in excess thereof.
31
(b) If on any Business Day the Borrower is not in full
compliance with the Borrowing Base Test (any such date, a "Borrowing Base
Determination Date"), the Borrower shall on such Borrowing Base Determination
Date (I) notify the Program Agent and each Direct Lender of such failure to
comply, and (II) on the Business Day next succeeding such Borrowing Base
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 Borrowing Base 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 (as determined on such
Compliance Certification Date) 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 (as determined on such
Compliance Certification Date) 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 and each Direct Lender 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
Borrowing Base Determination Date.
(c) If on any Business Day the Borrower is not in full
compliance with the Asset Coverage Test (determined regardless of whether or not
dividends or distributions are being made on such Business Day, or whether Debt
is being incurred on such Business Day 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) (any such date,
an "Asset Coverage Determination Date"), the Borrower shall (I) on such Asset
Coverage Determination Date notify the Agent of such failure to comply, (II) no
later than the close of business on the second Business Day following such Asset
Coverage Determination Date, deliver to the Agent a certificate, signed by an
authorized officer of the Borrower, that (1) certifies the amount of the
compliance shortfall, (2) 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 this Section 2.05(c),
and (3) certifies that the requirements of this Section 2.05(c) shall be
satisfied on or prior to the tenth (10th) Business Day following such Asset
Coverage Determination Date, and (III) no later than the close of business on
the tenth (10th) Business Day following such Asset Coverage Determination Date
prepay the
32
Advances in an amount necessary to be in full compliance with the Asset Coverage
Test as determined on the first Business Day after such Asset Coverage
Determination Date.
(d) The amount of each prepayment under this Section 2.05
shall be applied ratably to the Advances of each Lender, each Secondary Lender
and each Direct Lender based on their respective Pro Rata Shares and (I) with
respect to each prepayment to any Lender or Secondary Lender, such prepayment
shall be applied to its Advances in the order in which such Advances were
originally made, and (II) with respect to each prepayment to any Direct Lender,
such prepayment shall be applied to its Advances in the order directed by the
Borrower.
SECTION 2.06. Optional Conversions.
The Borrower may, at its option, (i) on the last day of any
Settlement Period, convert a Direct Lender Eurodollar Rate Advance into a Direct
Lender Alternate Base Rate Advance, (ii) on the last day of any Settlement
Period, continue a Direct Lender Eurodollar Rate Advance as a Direct Lender
Eurodollar Rate Advance, and (iii) on any Business Day, convert a Direct Lender
Alternate Base Rate Advance into a Direct Lender Eurodollar Rate Advance;
provided, that, except as otherwise provided in this Agreement to the contrary,
the Borrower shall deliver to the Program Agent and the Direct Lenders written
notice (each such notice a "Notice of Conversion or Continuation") in the form
of Exhibit E hereto (which notice shall be irrevocable and effective only upon
receipt by the Program Agent and the Direct Lenders) by 12:00 noon, New York
time, not less than two (2) Business Days prior to the date of each such
conversion or continuation. Each Notice of Conversion or Continuation shall
specify (x) the amount of each Advance to be continued or converted, (y) the
date of such continuation or conversion, and (z) if such Advance is to be
converted into a Direct Lender Eurodollar Rate Advance, the Settlement Period.
If the Borrower fails to give a Notice of Conversion or Continuation for any
Advance maintained by a Direct Lender in accordance with the terms hereof, the
Borrower shall be deemed to have elected on the last day of the Settlement
Period applicable to such Advance to convert such Advance to, or continue such
Advance as, a Direct Lender Eurodollar Rate Advance with a Settlement Period of
one day.
SECTION 2.07. 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, the Secondary
Lenders or the Direct 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
33
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 2.08. 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 change in the
interpretation of 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 or Direct Lender 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, or to such Affected Person in the case
of a Direct Lender, additional amounts sufficient to compensate such Affected
Person for such increased cost; provided, however, that no additional amounts
shall be required under this Section 2.08 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) or the occurrence of any Accounting
Based Consolidation Event after the Closing Date 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 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, or to such Affected Person in the case of a
Direct Lender, 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
34
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 2.08(a), 2.08(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 , or such Affected Person
in the case of a Direct Lender, 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 or such
Affected Person in the case of a Direct Lender (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 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 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 2.08(c). Nothing in this
Section 2.08(c) shall affect or postpone any of the obligations of the Borrower
or the rights of any Secured Party.
SECTION 2.09. 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 or Direct Lender 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 borrowing of any Eurodollar Rate Advance or Direct
Lender Eurodollar Rate Advance by the Borrower does not occur on a date
specified therefor in the Notice of Borrowing (unless a Withdrawal Notice has
been delivered in respect of such Notice of Borrowing in accordance with the
requirements set forth in Section 2.02(a)),
35
(ii) if any prepayment of any of the Borrower's Eurodollar Rate Advances or
Direct Lender 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 or Direct Lender 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 or Direct Lender Eurodollar Rate Advances
when required by the terms of this Agreement.
SECTION 2.10. Additional Yield on Eurodollar Rate Advances and
Direct Lender 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 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, or by such Affected Person in the case of a
Direct Lender, 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 2.11. 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 Conduit Lender Related
Commitment and the Direct Lender Commitment and such reduction or termination of
the Conduit Lender Related Commitment shall reduce ratably (or terminate) the
Secondary Lender Commitment of each Secondary Lender. In addition, such
reduction or termination of the Direct Lender Commitment shall reduce ratably
(or terminate) the Direct Lender Commitment of each Direct Lender.
SECTION 2.12. 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
36
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.
SECTION 2.13. Fees Payable by Borrower.
The Borrower agrees to pay to the Program Agent and the Direct
Lenders such fees as are set forth in the Fee Letters.
SECTION 2.14. 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 or a Direct Lender's
demand.
SECTION 2.15. Payments.
(a) All amounts owing and payable under this Agreement,
including, without limitation, the principal amount of outstanding Advances,
Yield, fees, indemnities, expenses or other amounts payable under the Program
Documents, shall be paid in Dollars, in immediately available funds on or prior
to 12:00 noon (New York City time) on the date due without counterclaim, setoff,
deduction, defense, abatement, suspension or deferment. Subject to Section
2.15(d) and Section 7.03(a), (i) all payments in respect of the Borrower
Obligations, payable by or on behalf of the Borrower to the Lenders, Secondary
Lenders and the Program Agent shall be paid to the Program Agent's Account, and
(ii) all payments in respect of the Borrower Obligations payable by or on behalf
of the Borrower to a Direct Lender shall be paid to the Direct Lender's Account
of such Direct Lender. Any payment paid after 12:00 noon (New York City time) on
any day shall be deemed to have been made on the next Business Day for all
purposes of this Agreement.
(b) All computations of interest at the Post-Default Rate and
all computations of Yield, fees and other amounts hereunder and under the Fee
Letters 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 Letters shall be due on a day other than a Business Day, such payment or
deposit shall be made on the next succeeding Business Day and such extension of
time shall be included in the computation of such payment or deposit.
(c) Upon 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
37
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.
(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). Any application of payment to the Direct
Lenders pursuant this Section 2.15(d) in accordance with Section 7.03(a) shall
be made to the applicable Direct Lender's Account.
(e) If, after the Program Agent has paid any Direct Lender or
any Secondary Lender its allocable share of any amounts pursuant to Sections
2.15 or 7.03 of this Agreement, such amount must be returned for any reason
(including the bankruptcy, insolvency or similar circumstance relating to the
Borrower), such Secondary Lender or Direct Lender, as the case may be, will
repay to the Program Agent promptly the amount the Program Agent so paid to such
Secondary Lender or Direct Lender.
SECTION 2.16. Ratable Payments.
If any Secondary Lender, Lender (other than a Conduit Lender)
or Direct 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, Secondary Lender or
Direct Lender entitled to receive a ratable share of such payments, such Lender,
Secondary Lender or Direct 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, Secondary Lenders and Direct Lenders so that after
such purchase each Lender, Secondary Lender and Direct 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, Lender or Direct 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 2.17. Borrower's Obligations Absolute.
The Borrower's obligations under this Agreement and under the
other Program 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.
38
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to the Effectiveness of
this Agreement.
The effectiveness of this Agreement and any Conduit Lender's,
any Secondary Lender's and any Direct Lender's obligations hereunder shall be
subject to the conditions precedent that the Program Agent and each Direct
Lender 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 each Direct Lender in
sufficient copies for the Conduit Lenders and the Secondary Lenders:
(a) each of the Program Documents duly executed and delivered
by the parties thereto, which shall each be in full force and effect;
(b) the Prospectus;
(c) the signed opinions of counsel to the Borrower and the
Adviser addressed to the Program Agent, each Conduit Lender each Secondary
Lender and each Direct Lender as to such matters as the Program Agent and the
Direct Lenders shall have reasonably requested;
(d) if requested by any Conduit Lender, any Secondary Lender
or any Direct Lender pursuant to Section 2.03 on or prior to the Closing Date,
an Advance Note duly executed and completed by the Borrower to such Conduit
Lender, such Secondary Lender or such Direct 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 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 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 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;
39
(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 after giving effect to the initial
borrowing of Advances under this Agreement.
SECTION 3.02. Conditions Precedent to All Advances.
The obligation of the Conduit Lenders, the Secondary Lenders
and the Direct 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 and each Direct Lender shall have
received an Investor Report, which shall include, among other things, evidence
of compliance with Section 3.02(c).
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 date that
an Investor Report is delivered pursuant to this Agreement(except solely in
respect of clause (l) below, each date such information is provided), as
follows:
40
(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 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, contravene or violate (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
41
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.
(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 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
42
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 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.
(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 clauses (b)
and (c) of Section 2.05, 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, 2008, 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.
43
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
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
44
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" or words of similar meaning.
(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 and each Direct Lender, 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, each Direct Lender and S&P with
respect to clauses (i), (vii), (x) and (xi) below (in each case with enough
additional copies to the Program Agent for each Conduit Lender and each
Secondary Lender):
(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;
45
(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) as soon as possible, and in any event within one
(1) Business Day, notice if the Borrowing Base is less than the
product of (x) 1.1, and (y) Credits Outstanding;
(viii) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all financial
statements, reports and proxy statements so mailed;
(ix) 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;
(x) an Investor Report substantially in the form of
Schedule I hereto, together with a certificate of a Responsible
Officer of the Borrower in substantially the form of Annex A
thereto, (w) on any Business Day upon the reasonable request of the
Program Agent, with respect to the period from the last day covered
under the Investor Report most recently delivered through and
including the immediately preceding Business Day (which may be
daily), (x) on the Monday of each calendar week, with respect to the
immediately preceding week; provided that if such Monday is not a
Business Day, the immediately succeeding Business Day, (y) on or
before the tenth (10th) Business Day of each calendar month, with
respect to the immediately preceding calendar month, and (z) on any
Business Day in respect of which the Borrowing Base is less than the
product of (i) 1.1 and (ii) Credits Outstanding, with respect to the
period from the last day covered under the Investor Report most
recently delivered through and including the immediately preceding
Business Day (which may be daily);
(xi) promptly upon its knowledge thereof with respect to
each calendar month, sufficient information setting forth the
details of the redemptions of the shares of beneficial interest in
the Borrower for such calendar month;
46
(xii) 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;
(xiii) 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;
(xiv) 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
(xv) from time to time such additional information
regarding the financial condition or business of the Borrower as the
Program Agent or any Direct Lender 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 and the
Direct Lenders, 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 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 and each Direct Lender, with a certified report in respect of the
foregoing, which shall be in form and scope reasonably satisfactory to the
Program Agent and each Direct Lender, and (iv) authorize such accounting firm to
discuss such affairs, finances and performance with representatives of the
Program Agent and each Direct Lender and their designees; provided, that, such
examination and audit of information provided to the Borrower in connection with
any Loan Document (which,
47
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, the Direct Lenders or any Person designated
by the Program Agent or the Direct 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, all as often as the Program Agent or the Direct Lenders, as the
case may be, may reasonably request; provided, that, the Program Agent and the
Direct Lenders 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 or the Direct Lenders, 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, as frequently as the
terms of any such agreement permit, but in no event less frequently than
annually; provided, further, that the Program Agent's and each Direct 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 Direct Lenders or
their 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.
(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 of its Assets
(including all investments, if any, evidencing the same and all 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
48
accordance with the Control Agreement; provided, that if such Asset is a Loan
Asset and 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 and each Direct Lender.
(m) Notice of Litigation or Other Proceedings. Promptly give
notice in writing to the Program Agent and each Direct Lender 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 solely for the purpose of (i) purchasing Assets, (ii) paying principal
and Yield in respect of outstanding Advances, or (iii) for general corporate
purposes.
(q) Investment Adviser. Except as consented to by the Program
Agent and the Direct Lenders (which consent shall not be unreasonably withheld),
at all times maintain the Adviser as the Borrower's investment adviser.
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.
49
(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 Direct 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 and each Direct Lender, permit or consent to any material amendment,
modification or waiver of the Custodial Agreement, unless the Borrower has
delivered to the Program Agent and each Direct Lender 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 and each Direct Lender 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 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; provided, further, that the Borrower
give the Program Agent at least ten (10) days 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 each Direct Lender (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
50
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
Maturity Date of the Advances shall have occurred.
(n) Name Change. Change its name (i) without giving the
Program Agent and each Direct Lender 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 $20,000,000.
(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.
51
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 clauses (b) and (c) of
Section 2.05, 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 fail to comply with clauses (b) or (c)
of Section 2.05, 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 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
52
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, the Adviser 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, the Adviser 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, the Adviser 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 and each Direct Lender 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
Agent and each Direct Lender shall have been appointed as custodian under the
Custodial Agreement and shall have assumed the obligations of the Custodian
under
53
the Custodial Agreement and the Control Agreement and the Program Agent
and the Direct Lenders 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 Direct 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, unless consented to in writing by the Program
Agent and the Direct Lenders; or
(m) unless consented to in writing by the Program Agent and
each Direct Lender, the Advisory Agreement in effect on the Closing Date or any
replacement advisory agreement approved of in writing by the Program Agent and
each Direct Lender shall be (i) amended, waived or otherwise modified in any
material respect, or (ii) shall be terminated unless a replacement investment
advisory agreement substantially similar in all material respects to the
Advisory Agreement in effect prior to any such termination has been entered into
with a successor investment adviser which either (i) has been approved of in
writing by the Program Agent and the Direct Lenders, or (ii) (x) has at least
the mutual fund management and advisory expertise, experience and capacity as
▇▇▇ ▇▇▇▇▇▇ Asset Management, (y) has Total Operating Revenues (within the
meaning of GAAP) for the twelve month period reported in its most recent annual
financial statements which are at least equal to the Total Operating Revenues of
▇▇▇ ▇▇▇▇▇▇ Asset Management for the twelve month period ended June 30, 2009, and
(z) has expressly agreed to be bound by the agreements and obligations of the
Adviser under the Letter Agreement; or
(n) ▇▇▇ ▇▇▇▇▇▇ Asset Management or another wholly-owned direct
or indirect subsidiary of the Parent (or another entity consented to in writing
by the Program Agent and each Direct Lender 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; or
54
(o) notwithstanding anything to the contrary set forth in this
Agreement, including without limitation Section 2.05, the Borrower shall not be
in full compliance with the Asset Coverage Test or the Borrowing Base Test for
ten (10) consecutive Business Days;
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 Lenders
shall, by notice to the Borrower, declare the Lender Termination Date and the
Termination Date to have occurred and declare the outstanding Advances to be due
and payable (in which case the Lender Termination Date, the Termination Date and
the Maturity Date shall be deemed to have occurred); provided, that, upon the
occurrence of any event (without any requirement for the passage of time or the
giving of notice, or both) described in subsection (f) of this Section 6.01, the
Lender Termination Date, the Termination Date and the Maturity Date 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, the Secondary Lenders and the
Direct 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, 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 all Accounts, General Intangibles,
Chattel Paper, Instruments, Documents, Money, Deposit Accounts, Security
Entitlements, Goods, Letter of Credit Rights, Certificated Securities,
Uncertificated Securities, Financial Assets and Investment Property, whether now
owned or existing or hereafter arising or acquired and wheresoever located
including without limitation, the following (collectively, the "Pledged
Collateral"):
(i) all of the Assets, investments and property from
time to time credited to the Collateral Account, and all security
entitlements with respect to the Collateral Account and all Loan
Assets of the Borrower evidenced by, secured by, or governed by any
Loan Document, and all Loan Assets held by the Custodian for the
benefit of the Program Agent pursuant to the Control Agreement;
(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,
55
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);
(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.
56
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, the Secondary Lenders and the Direct 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,
each Secondary Lender and each Direct 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 Letters on a pro rata basis according to the amount of such fees owing
to each such Secured Party;
Fourth, to the extent funds are remaining after the above
applications, to the Lenders, the Secondary Lenders and the Direct 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, each Secondary
Lender and each Direct 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.
57
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 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.
58
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).
(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 and each
Direct Lender 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 Secure 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
59
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 Lenders;
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 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 Lender, any Secondary Lender, any
Direct Lender or any other Person and shall not be responsible to any Lender,
any Secondary Lender, any Direct Lender or any Person for any statements,
warranties or representations (whether written or oral) made in or in connection
with this Agreement or the other Program Documents; (iii) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of this Agreement, the other Program
Documents or any Loan Documents on the part of the Borrower, the 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 Lender, any Secondary Lender, any Direct Lender or any other Person for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, the other Program Documents, any Loan
60
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 and Direct 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 or Direct 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 and Direct 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 and Direct 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 or Direct Lender means
the fraction, expressed as a percentage, the numerator of which is the Secondary
Lender Commitment or Direct Lender Commitment of such Secondary Lender or Direct
Lender, as the case may be, 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 Lenders, the Secondary Lenders and the Direct Lenders,
resign as Program Agent. If the Program Agent shall resign, then the Majority
Lenders during such thirty (30) day period shall appoint from among the
Secondary Lenders and the Direct 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
61
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.
(a) No failure or delay on the part of any Secured Party
exercising any right, power or remedy hereunder or with respect to the Advances
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to any Secured Party, at law or in equity. No amendment, modification,
supplement, termination or waiver of this Agreement shall be effective unless
the same shall be in writing and signed by each of the Borrower, the Conduit
Lenders, the Majority Lenders and the Program Agent. The Agent shall have
received the prior written consent of S&P (which consent shall not be
unreasonably withheld or delayed) prior to the effectiveness of any material
amendment or modification of this Agreement. 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 Direct Lender Commitment of any Direct Lender
be extended or increased without the written consent of such Direct Lender.
(b) Notwithstanding anything in Section 9.01(a) of this
Agreement to the contrary, the Program Agent agrees that it shall not, without
the prior written consent of each affected Direct Lender:
(i) amend, modify or waive (or consent to any
amendment, waiver or modification of) any
provision of this Agreement or any other Program
Document which in any way would:
(A) reduce the outstanding principal balance
of the Advances or the amount of principal
or interest that is payable in respect of
the Advances made by such Direct Lender or
delay any scheduled date for payment
thereof, or
(B) impair any rights expressly granted to
such Direct Lender under any Program
Document, or
(C) reduce the fees, indemnities or other
amounts payable under the Program Documents
to or for the account of any Direct Lender,
or out of which fees, indemnities or other
amounts to such Direct
62
Lender shall be paid, or delay the dates on
which such fees, indemnities or other
amounts are payable, or
(D) change the definition of Aggregate
Custodian's Advance Amount, Asset Coverage
Test, Asset Value, Advance Rate (including
Schedule III hereto), Borrowing Base,
Borrowing Base Eligible Asset, Borrowing
Base Excess Amount, Borrowing Base Test,
Adjusted Asset Value, Class A Loan Asset,
Class B Loan Asset, Credits Outstanding,
Custodian's Overdraft Advances, Distressed
Loan Asset, Eligible Collateral, Eligible
Commercial Paper Note, Eligible Government
Security, Eligible Loan Asset, Foreign
Currency Asset, Foreign Loan Asset, Industry
Class, Loan Asset, Majority Lenders,
Non-OECD Loan Asset, OECD Country, or Value,
or
(E) amend any provision of any Program
Document which by the express terms of such
provision requires the consent of all of the
Secondary Lenders or Direct Lenders to any
waiver of such provision or requires the
consent of all Secondary Lenders or Direct
Lenders as a condition of the Borrower's
non-compliance with such provision, or
(F) amend any provision of any Program
Document in order to change the percentage
of Secondary Lenders or Direct Lenders
required for any consent, waiver or
amendment to such provision, or
(ii) amend or waive this Section 9.01(b); or
(iii) amend or waive any Default or Event of Default or
similar event relating to the bankruptcy of the
Borrower or any Affiliate of the Borrower.
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
63
below, and, in the case of telephonic instructions or notices, by calling the
telephone number or numbers indicated for such party below:
If to the Conduit Lender: ▇▇▇▇▇▇, LLC
▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: U.S. Securitization
If to the Program Agent: Citicorp North America, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: U.S. Securitization
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Citibank: Citibank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Portfolio Management
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Direct Lender: State Street Bank and Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Place Tower 2, Floor 4
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
64
If to the Borrower: ▇▇▇ ▇▇▇▇▇▇ Senior Loan Fund
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Senior Loan Group
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to S&P: Standard & Poor's Ratings Group
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: CDO Leveraged Fund Surveillance
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
SECTION 9.03. Taxes.
(a) Any and all payments by the Borrower under this Agreement
or any other Program 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 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 hereunder or
under any other Program Document to which it is a party or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or
under any other Program Document to which it is a party (hereinafter referred to
as "Other Taxes").
65
(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.
(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 and the Direct Lenders 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 2.08, 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.
66
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, the fees of S&P,
Moody's or any other rating agency that rates the promissory notes of any
Conduit Lender in connection with the review and evaluation of the Facility,
periodic auditing expenses 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
67
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.
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 each Conduit Lender's rights and
obligations herein (including the outstanding Advances) shall be assignable by
such 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) such Conduit Lender
shall not assign its obligations under this Agreement to any Person other than
to a U.S. Affiliate 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 Lenders 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 Lenders,
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
of such Conduit Lender.
68
(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 or pledge or grant a security
interest in any or all 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) Each Direct 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 existing Secondary
Lender or Direct Lender all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its Direct
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 Direct Lender, Secondary Lender or a
U.S. Affiliate of an existing Direct Lender or Secondary Lender. The parties to
each such assignment shall execute and deliver to the Program Agent a Direct
Lender Assignment and Acceptance. Notwithstanding the foregoing, each Direct
Lender may assign or pledge or grant a security interest in any or all 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.
(d) 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.
(e) 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 Direct Lenders.
(f) The Borrower acknowledges and agrees that each Lender's
(other than a Conduit Lender), each Secondary Lender's and each Direct Lender's
source of funds may derive in part from its participants. Accordingly,
references in Sections, 2.07, 2.08, 2.09, 9.03 and 9.04 and the other terms and
provisions of this Agreement and the other Program Documents to rates,
determinations, reserve and capital adequacy requirements, expenses, increased
costs, reduced receipts and the like as they pertain to the Lender, the
Secondary Lenders and the Direct 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
69
amount the related Lender, Secondary Lender or Direct Lender, as the case may
be, would have been entitled to under any such Sections or provisions if the
applicable participation had not occurred.
(g) 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 its related Lenders, Secondary Lenders and Direct Lenders, a copy of
this Agreement and each signature page hereto and each Assignment and Acceptance
or Direct Lender 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, the Direct Lenders, their
Direct Lender Commitments, effective dates and Stated Expiration Dates, and the
aggregate outstanding principal amount of the outstanding Advances made by each
such Secondary Lender or Direct 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, the Secondary Lenders and the Direct
Lenders may treat each Person whose name is recorded in the Register as a
Secondary Lender or a Direct Lender, as the case may be, as a Secondary Lender
or Direct Lender, as applicable, hereunder for all purposes of this Agreement.
The Register shall be available for inspection by the Borrower or any Secondary
Lender or any Direct 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 NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE.
SECTION 9.08. Severability of Provisions.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 9.09. Confidentiality.
(a) The Borrower agrees that it shall (i) keep this Agreement,
the Control Agreement, the Fee Letters, 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, any Direct Lender or any of their respective Affiliates in
connection with the Facility, the Program Agent's, any Direct Lender's or any of
their 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,
70
accountants, 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 and the
Direct Lenders, 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 any Conduit Lender, and to S&P, Moody's or
any other rating agency that rates the promissory notes of any 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).
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.
71
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 taken as a whole incorporate the entire
agreement between the parties thereto concerning the subject matter thereof. The
Program Documents supersede any prior agreements among the parties relating to
the subject matter thereof.
SECTION 9.11. No Proceedings.
Each of the 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 any 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 such 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 each Conduit Lender under and in connection with this Agreement and the other
Program Documents are solely the obligations of such Conduit Lender. It is
expressly agreed that no recourse shall be had for the payment of any amount
owing in respect of this Agreement or any other Program Document or for any
other obligation or claim arising out of or based upon this Agreement or any
other Program Document, against any member, stockholder, employee, officer,
manager, director, organizer or incorporator of any Conduit Lender or against
any member, stockholder, employee, officer, manager, director, organizer or
incorporator of any such member, stockholder or manager.
Notwithstanding anything to the contrary contained herein, the
obligations of each Conduit Lender under this Agreement are solely the corporate
obligations of such Conduit Lender and, in the case of obligations of such
Conduit Lender other than the commercial paper notes of such Conduit Lender,
shall be payable at such time as funds are received by or are available to such
Conduit Lender in excess of funds necessary to pay in full all of such Conduit
72
Lender's outstanding commercial paper notes and, to the extent funds are not
available to pay such obligations, the claims relating thereto shall not
constitute a claim against such Conduit Lender but shall continue to accrue.
Each party hereto agrees that the payment of any claim (as defined in Section
1010 of Title 11 of the United States Code (Bankruptcy)) of any such party shall
be subordinated to the payment in full of all of such Conduit Lender's
commercial paper notes and other senior indebtedness."
SECTION 9.12. Survival of Representations and Warranties.
All representation and warranties made hereunder, in the other
Program 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.
73
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 to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and the appellate courts of any of them;
(b) consents that any such action or proceeding may be brought
in any of such courts and waives any objection that it may now or hereafter have
to the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 9.02 or at such other address as
may be permitted thereunder;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to ▇▇▇ 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 (the
"Recipient"), transmit Investor Reports to the Program Agent by electronic mail
(each an "E-Mail Report"). Each E-Mail Report shall be formatted as the
Recipient may reasonably designate from time to time. Each E-Mail Report shall
be sent to the Recipient at an electronic mail address designated by the
Recipient, and the executed "summary sheet" for each E-Mail Report shall be
transmitted via facsimile transmission to the Recipient at the facsimile numbers
specified for the Recipient in Section 9.02.
74
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 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 their related Conduit Lender has declined to make an Advance to the
extent expressly required by Section 2.02, no Lender, Direct Lender or Secondary
Lender shall be responsible for the failure of any other Lender, Direct Lender
or Secondary Lender to make any Advance or to perform any obligation on this
Agreement or any other Program Document. The Program Agent shall not have any
liability to the Borrower, any Lender or any Secondary Lender or any Direct
Lender for the Borrower's, any Lender's, any Secondary Lender's or any Direct
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 of Liability.
No claim may be made by the Borrower or any other Person
against the Program Agent, any Lender, any Direct 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.
SECTION 9.19. USA PATRIOT Act Notice.
Each of the Lenders and the Direct Lenders hereby notifies the
Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of
Pub. L. 107-56 (signed into law on October 26, 2001)) (the "Patriot Act"), it is
required to obtain, verify and record
75
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender or
Direct Lender to identify the Borrower in accordance with the Patriot Act. The
Borrower shall, and shall cause each of its subsidiaries, if any, to, provide to
the extent commercially reasonable, such information and take such actions as
are reasonably requested by any Lender or Direct Lender in order to assist such
Lender in maintaining compliance with the Patriot Act.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
76
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:
-----------------------------------
Name:
Title:
▇▇▇▇▇▇, LLC,
as Conduit Lender
By: Citicorp North America, Inc.,
By:
-----------------------------------
Name:
Title:
CITICORP NORTH AMERICA, INC.,
as Program Agent
By:
-----------------------------------
Name:
Title:
CITIBANK, N.A.,
as Secondary Lender
By:
-----------------------------------
Name:
Title:
Secondary Lender Percentage: 100%
Secondary Lender Commitment: $150,000,000
STATE STREET BANK AND TRUST COMPANY
as Direct Lender
By:
-----------------------------------
Name:
Title:
Direct Lender Commitment: $150,000,000